Here's our summary of key economic events overnight that affect New Zealand with news rising consumer demand in the world's largest economy is still driving the world's economy, a trend that started nearly a century ago - and still shows no sign of ending anytime soon.
First we should note that the American Thanksgiving holiday starts tomorrow, so there is a big data dump today. Most Americans will have a four day 'holiday' (although the bond market will trade on their Friday). That frees them up for the start of the end-of-year retail rush. Given the good shape their economy is in, it is likely to be a positive retail season.
US jobless claims rose last week but by less than seasonal factors would have accounted for, so the headline change was regarded positively. The level of continuing claims rose too, but not as sharply as they did in the same week a year ago. So no early signs of labour market stress here.
And there was a good rise in mortgage applications last week from the week before (+6.3%), and slightly better that can be accounted for by seasonal factors (+1.7%). Perhaps more impressive is that these rises came despite benchmark mortgage interest rates rising to their highest level since July.
And the October pending home sales rose +2.0% to be +5.4% higher than a year ago. This is a further sign the US housing market may have touched bottom.
US durable goods orders rose in October, up +5.3% from the same month in 2023, but by less than expected. And that was because the 2023 level was slightly weaker than normal. Capital goods orders rose +5.4% although non-defence capital goods orders were only up +2.9%.
The Chicago area PMI came in weak in November, continuing its year-long retreat in a result that would have disappointed everyone.
There were no surprises in the second estimate of the American Q3-2024 GDP growth rate, coming in unchanged from the first estimate at +2.8%, and a consistent expansion since Q3-2022. This is an expansion fuelled by consumer spending.
But the same data showed core PCE rose to +2.8%, up a tick from +2.7% in Q2. Although this was as expected, this inflation measure is the one favoured by the US Fed, so it is a shift that they will take into account.
Today's UST bond auction of seven year paper was very well supported, and for the first time in a long while, the median yield fell from the prior equivalent event. Today it came in at 4.14%, whereas a month ago it was at 4.17%.
China industrial profits were expected to fall -3.0% in the nine months to September and in the end they came in down -4.3% on that same basis. Not a huge slip, you may think. But ytd comparisons hide a lot and for September alone, they were -23% lower than in the same month a year ago. There is a definite profit squeeze going on in China.
In India, their parliament was suspended so that debate on the links between the ruling BJP political party, and the American-indicted Adani Group could not proceed.
In France, their government is close to collapse.
In the EU, the European Parliament is moving to get the bloc to “revoke Hong Kong’s special customs treatment” and review the status of its economic and trade office in Brussels over a long-running national security trial that last week saw 45 opposition figures jailed for between four and 10 years.
Markets thought the October CPI indicator in Australia would report a rise from the September level of 2.1%. But in the end there was no change. (Food, however, was up +3.3%, and also unchanged from September.) This overall result eased financial market fears that the RBA would have to weigh harder against inflation. However, the 'hold' puts rate cuts there back in the frame earlier than otherwise assumed.
Australian construction work completed in Q3-2024 also came with a positive surprise, up +3.2% from, the same quarter a year ago. Dragging on this result was virtually no change in residential construction. But unlike in the June quarter, every sector made some positive contribution to the overall gain. The actual result was way better than the limp +0.3% expectation.
The UST 10yr yield is now at just on 4.24% and falling -8 bps from this time yesterday. The key 2-10 yield curve is still positive, by +3 bps. Their 1-5 curve inversion is more inverted however, now by -22 bps. And their 3 mth-10yr curve inversion is also more inverted, by -40 bps. The Australian 10 year bond yield starts today at 4.40% and down -9 bps. The China 10 year bond rate is unchanged at 2.06%. The NZ Government 10 year bond rate has bucked the trends and is up +3 bps from this time yesterday at 4.54%.
Wall Street is in its Wednesday session and is down -0.4% on the S&P500 ahead of their long weekend. Overnight European markets were mixed with London up +0.2% and Paris down -0.7%. Tokyo ended its Tuesday down -0.8%. Hong Kong however was up a strong +2.3% and Shanghai rose +1.5%. Singapore ended down -0.1%. The ASX200 was back up +0.6%. And the NZX50 rose +0.8% with another good gain.
The price of gold will start today at US$2642/oz and up +US$13 from this time yesterday.
Oil prices are down -US$1 at just over US$68.50/bbl in the US while the international Brent price is just on US$72.50/bbl.
The Kiwi dollar starts today at 59.1 USc and up a full +80 bps from this time yesterday. Against the Aussie we are +70 bps higher at 90.9 AUc. Against the euro we up +20 bps at 55.8 euro cents. That all means our TWI-5 starts today at just under 68.6, and up +50 bps from yesterday.
The bitcoin price starts today at US$96,058 and up +1.7% from this time yesterday. Volatility over the past 24 hours has been high at +/- 3.1%.
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35 Comments
https://surplusenergyeconomics.wordpress.com/
The latest post is worth reading, re GDP and inflation. Also mentions the US, thoughtfully...
'Nowhere has the conflict between promise and performance been more acute than in the United States. America is, supposedly, enjoying “the greatest economy ever”. Americans have been enjoying it so much that, in their gratitude, they turned against the incumbency and handed Mr Trump a clean sweep.'
Also, just quietly, can I suggest that in these interesting times, folk bother to read the links others put up? I was told, yesterday, to try a 'thought experiment' which I'd been referencing - as part of the Limits to Growth discussion hereabouts - for years. That suggested the suggester hadn't bothered with the links I'd bothered to reference.
I read some of your links pdk. Today's link basically says our economic growth is becoming fake because fossil fuels are fading and we are becoming reliant on fake credit-fueled expansion. Dude, we've been reliant on credit (govt and private) for growth for thousands of years!
It's the laboured takedown of debt and money supply expansion blah that puts me off a lot of the links. The real issue is an economic system that is destroying the planet. Money is just one of the technologies being used to achieve that destruction.
"The real issue is an economic system that is destroying the planet."
Ah, what else exactly do you think Growth in economic activity entails? The economy is the business of transforming one form of energy to another.
How you imagine it can possibly function in some way independent of the environment im unsure...
All wealth is just a call on future energy surplus - the envt's ability to serve this up in a form which we can use...
Third world type stuff in New Zealand...
https://www.nzherald.co.nz/nz/elevated-levels-of-arsenic-detected-in-wa…
The level of arsenic is above what we’ve described as a maximum acceptable value, but it’s not at a level that we would suggest has a significant health effect.
“There’s no health risk in drinking that water,” Taylor said.
Concerning...?
Its only slightly above the level that might be a problem if you drank it for a very long time. Assuming they get it sorted fairly quickly I wouldn't be concerned.
So many commentators on this site you the term "third world" to describe one off problems that third world countries face every day. We supposedly have a third world electricity network too, yet their power goes out multiple times a day while ours goes out almost never. I guess when you have life so good, every tiny issue seems insurmountable.
I liken it to when I talk to people about going camping. The thought of even a minute amount of discomfort horrifies many of us.
In South Africa water and/or power are off for hours every day, the roads are shite and corruption is everywhere. Here we just have ineptitude and unaccountability.
True. We're undoubtedly seeing our living standards dwindle but that's nothing unique to NZ. That's just crony capitalism and globalisation at play.
Surely there is an industrial emitter dumping toxic effluents in the water upstream from the Waikato River with zero regulatory repercussions.
We have duopolies pulling oversized returns out of our major consumer markets and no politician has the gall to fix it out of the fear of being viewed as "unfriendly" to businesses.
But by the time the river reaches the sea at Port Waikato - and makes its way into the taps of Aucklanders - more than 7000 tonnes of nitrogen and 367 tonnes of phosphorus have been added to the background levels each year, doubling the natural level of phosphorus in the river, and more than doubling the amount of nitrogen.
The dirty truth about the Waikato River
Covid-19 report. This is very interesting. Seems like it will be nicely balanced, possibly the first of its kind.
https://www.stuff.co.nz/nz-news/360502235/if-you-think-im-ardern-puppet…
The mandates were designed before Delta was supplanted by Omnicron and COVID became a lot more contagious and a lot less deadly, and they charged ahead anyway. Bureaucrats with power over people and inabiltity to change direction in response to new data. The mandates killed JA's political career.
I got the vaccine because I saw what Delta did elsewhere and wanted no part in it, then i got boosted to travel and it was a requirement for Japan. But it never eventuated here because of the Auckland lockdowns and, more importantly, the virus became far less deadly.
I'm not going to read the review or any of the undoubtedly triggered response to it because I am sick to death of the subject and if I learned one thing through COVID, its that people will make their minds up and seek only information that validates their view. Waste of energy .
If it was forward looking I would eagerly read it. It is not. It is a taxpayer-funded election bribe from Winnie to buy votes last year. I'm sure I'll catch the gist as I scroll past the headlines or my anti-vax friends eagerly share their take on social media.
I have limited bandwidth and something else I learned during COVID is people will get upset if you don't deep-dive on matters paramount to them, even if you're simply busy and have other priorities.
Agree, once we had enough people vaxed and Delta had turned into Omicron, there was no need for all the crap. Enforcing vaccination on people after Omicron was just crazy, the vaccine didn't stop the spread and people should be able to choose to take a very small risk on their own life. I think the Labour party relied too much on the "scientists" who seemed to have no ability to weigh up the costs of lockdown and mandates and wanted to save every possible life at any expense.
Also agree it is a waste of energy, not sure why I brought it up...
One's view of the Covid vaccines I guess are coloured by our own experiences as well. My husband saliled through the vaccines and now reports the fortnightly problem of cold sores he had prior have now totally stopped. He only 'noticed' the lack of recently. However my own experience following the vaccines were frightening with heart muscle pain. For me I now do not have the vaccines. However the flu and other vaccines I have I lined up for repeats.Neither of us have had Covid.
The initial lock down succeeded in elimination. That created a fortress mentality out of which the then government created a bunker mentality for itself and descended into blanket over control going on draconian. Opening up to Australia let Delta in and all of NZ resultantly exposed and locking down Auckland again was as futile as it was destructive but the government just couldn’t bear to let go of their control and right there, is the legacy of their subsequent downfall.
Because PM Morrison put PM Ardern on the mat, the media were baying for it, and so NZ opened its border to Australia. At that point NZ’s border control became only as good as Australia’s. Simultaneously, yet to be named Delta, a new variant was ripping through India, had already arrived in Australia and thus readily carried on to NZ. Not sure if any other nations ever reached the vaunted status of elimination. That NZ thought that it had, and at the time became “globally famous” was probably a double edged sword as it produced some sort of false impression of invincibility. That’s why I got heartily sick and tired of the continual bleating by the powers that be, of “world leading” everything.
Chaired by an "unofficial" advisor to the Govt during the period.
Yeah im sure it will be very balanced!
Kind of odd dont you think they didnt want to go near vaccine efficiacy, when so much "faith" and action was based around the vaccine?
Or why isnt Health data at the centre of the enquiry? No - best to investigate touchy feelie "decision making" and "communications" measures
This paper will undoubtedly by filed and propping doors open within weeks.
I am tracking the Rusky ruble with interest.....Russian Ruble Collapses As Putin's Economy in Trouble - Newsweek
Increasing sanctions and a likely lower oil price will be squeezing the blond czars nuts.
Putins economy is in serious trouble - always be mindfull of the cornered rat
The US consumer to the rescue?
"Target is struggling to gain traction with inflation-weary consumers, with many seeking bargains or refocusing on essential items, said Neil Saunders, an analyst with GlobalData. The retailer's struggles in the most recent quarter and its lowering of its forecast for the current quarter may not bode well for its holiday season, he added.
"Sales have virtually flatlined and have done so against the backdrop of a very poor prior year," Saunders said in a Wednesday research note. "And this has occurred during a quarter when multiple banner events — among them, back to school, Halloween, and deal weeks and days — should have helped to drive spending."
https://www.cbsnews.com/news/target-stock-down-earnings-miss-what-went-…
Perhaps Santa Trump will do the impossible and provide the wherewithal before inauguration.
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