Here's our summary of key economic events overnight that affect New Zealand with news markets are quiet while the northern hemisphere is on vacation. But China is taking the opportunity to adjust.
However, first in the US, jobless claims came in as expected at 320,000 new applicants, taking the total on these benefits to 2.8 mln. This latest data is neither an improvement nor a deterioration but there is still a long way to go until you can say their labour market has recovered.
American producer price inflation in July rose and by more than expected. It was running at +7.3% in June and a similar level was expected in July. But what was reported was +7.8%. Core PPI jumped from 5.6% in June to 6.2% in July and even faster increase.
The USDA is forecasting tighter grain supply in the year ahead as northern hemisphere heat stunts output, higher beef prices, higher imports by the US, but also lower US dairy prices.
There was a US$39 bln US Treasury 30yr bond auction overnight where the Fed took US$12 bln. The balance was reasonably popular, attracting US$59 bln in bids. But at 1.96% median yield, it wasn't much advance on the 1.90% of the prior equivalent auction a month ago.
Also overnight, the Mexican central bank raised its policy rate by +25 bps to 4.5% to counter rising inflation.
In China, there was another notable drop in iron ore prices yesterday. It is now down -28% in four weeks. China is taking tough decisions about steelmaking output, targeting a -23% drop in the July-December 2021 period so it can meet environment goals and this is having a magnified impact on Australia's key mineral export. The slowdown in China's economy is also a background effect.
State-owned Beijing Capital, which owns New Zealand's Waste Management business, is looking to quit its ownership and looking for someone to buy its stake. It has owned the business since 2014.
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The EU reported that industrial production fell in June, and although this was less than for May and less than expected, it is unfortunate as it takes the top off their industrial recovery.
Back in the US, new census data released overnight shows that the country has continued to diversify, while growing more rapidly in the South and Southwest than elsewhere. It's white population is shrinking fast to under 62%, (NZ is 70%) no doubt a spur to some of extreme racist and culture war stresses bubbling away there. This data will have echoes in electorate redistricting and the Republicans will be desperate to gerrymander to hold on to what they have.
Back to economic matters, there has been no respite in the rises in the cost of shipping container freight rates, although the pace of increase seems to be slowing. Rates out of China to both Europe and Los Angeles rose this week, although trans-Atlantic rates dipped rather sharply. This isn't helping either.
In Australia, there are reports that the country is scouring the world in a 'mad scramble' to find vaccine supplies, especially the Pfizer one. Bad decision making at the Federal level seem to have made Australia into a vaccine predator. They are certainly not 'all in this together'.
The Australian Capital Territory is now in lockdown with a case popping up there. There were another 347 new community cases in NSW yesterday with another 217 not assigned to known clusters, so they are still not getting on top of their outbreak. Victoria is reporting another 20 new cases yesterday and their lockdown is to be extended. Queensland is reporting 11 new cases. Overall in Australia, more than 24% of eligible Aussies are fully vaccinated, 45% have now had at least one shot.
Wall Street is up a marginal +0.1% in Thursday afternoon trade but a recovery from a negative start. Overnight, European markets were up another +0.5%, led by Frankfurt's +0.7% and trailed by London's-0.4% drop. Yesterday, Tokyo fell by -0.2%, Hong Kong by -0.5% and Shanghai by -0.2%. The ASX200 ended flat, while the NZX50 Capital Index dropped by -0.5% in another selloff.
The UST 10yr yield starts today at 1.36% and up +2 bps since yesterday. The US 2-10 rate curve is steeper at +114 bps. Their 1-5 curve is also steeper at +75 bps, and their 3m-10 year curve is also steeper at +133 bps. The Australian Govt ten year benchmark rate starts today at 1.22% and little-changed. The China Govt ten year bond is at 2.89% and also little-changed. The New Zealand Govt ten year is now at 1.71% and down -2 bps overnight.
The price of gold has changed little from this time yesterday at US$1753/oz.
Oil prices are marginally softer from this time yesterday, so in the US they are just under US$69/bbl, while the international Brent price is just over US$71/bbl.
The Kiwi dollar opens today at just under 70.1 USc and down -½c since this time yesterday. Against the Australian dollar we are marginally softer at 95.4 AUc. Against the euro we are also soft at 59.7 euro cents. That means our TWI-5 starts today at 73.3 and giving up yesterday's gain but still in the narrow range of between 72 and 74 we have been in for ten months now.
The bitcoin price has weakened today and is now at US$45,197 and is down -2.8% from this time yesterday. Volatility in the past 24 hours has been moderate at just over +/- 3.3%.
The easiest place to stay up with event risk today is by following our Economic Calendar here ».
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60 Comments
https://www.nzherald.co.nz/business/reserve-bank-to-get-bigger-hose-as-…
Buyers be ware....they should but not because Orr will douse the fire on house price BUT will screw them as has been doing till now with his many notorious excusesin following his policy wait and watch.
Why discussion when end result is :
No Change / Excuse to delay in OCR
No Change in LVR - for speculators LVR to be untouched at 40%
No Change / excuse to delay DTI - may be next year when need is today.
Only waiting to see how cunning mind spin and manipulate to suit their motive.
OCR won't rise that fast because of delta Covid. It's a matter of time before we have a level 4 lockdown.
The government is scrambling because it is a matter of time hence opening first jab vacs to everyone 16 and over on 1 Sept and warning us about lockdowns without too much warning should it get out.
Best comment of the decade :)
Volcono has not erupted in North Island for last 500 years - good news and bad news that 500 years oare over :)
https://www.odt.co.nz/news/national/nz-volcano-due-eruption-report
Another probability to look and prepare
Global financialisation is an economic model on the rise in the western world.
Home Prices Soar At The Fastest Pace On Record As Affordability Hits All Time Low
I find this chart amusing:
https://cms.zerohedge.com/s3/files/inline-images/bfm2A34_1_0.jpg?itok=P…
You are so right. It is hilarious. Previous rises of home builder sentiment Following rises in Home Buyer sentiment,now a contrarian great divergence, builders here had better nail down their sales contracts and secure those buyer deposits ,firmly in their own control. Otherwise a big whoopsie in 18 months.
Appears to be a leading indicator,as FOMO wanes, over -bidding decreases, margins get squeezed ,pre-purchase valuations become more conservative,banks extend less mortgage credit, bidding decreases further,margins evaporate, banks start restricting builders credit lines,as well as buyers pre-approval limits,the whole shebang wraps up quickly, Bulls take the stairs up,two at a time , Bears fall through the rotten upper floor.
Or any other combinatiin of similar factors , making similar narrative,similar outcome. RBNZ acts too late and too hard on on OCR, which could do it ,on it's own,for instance.
"Nearly half of American workers do not earn enough to rent a one-bedroom apartment, according to new data."
https://www.theguardian.com/society/2021/aug/12/housing-renter-affordab…
Yes. Data-based facts like this suggest illuminate how unsustainable bubbles are. We can talk about neo-feudalism and fitting in more people into overpriced hovels, but then you start to run out of people. And yes, like any business, you need customers who have income.
The RBNZ M14 data as touched upon by Mr Smyth this morning sees the house price index rising a further 6.74 percent in the coming year. Although the headline was the OCR was being raised next week , the survey of the 33 "expert" professional forecasters and business leaders saw a "significant minority"( about 35 percent) seeing no hike. Indeed like the Federal Reserve dot plot , a couple saw the OCR being cut.
Cowpat. A comment this morning from the credible Grant Swanepoel of Jardens caught my eye. He's suggesting a 9% house price decline over the next two years. I don't normally place too much stock in property commentators predictions but have found Swanepoel to be sound on equities for many years. Interesting to see the divergence between NZX investors where sentiment turned sluggish over recent months vs the property crowd still reaching for the stars; except those who invest in property by proxy through the retirement sector who are no longer looking skyward.
We can all look forward to a more violent future thanks to the policies of successive governments:
https://www.nzherald.co.nz/nz/crime-in-the-city-assaults-in-auckland-cb…
I was amazed at how badly Auckland had declined, in particular the CBD on a recent trip there. Noticed there was a lot of graffiti on trains, buildings, signs...which on previous period in Auckland I hadn't noted or to no where near that extent. It was my first visit in a few years.
Walking down Queen St, I noticed the significant increase in homelessness as well as people with mental health disorders. I watched people fighting over blankets, then running up the street in bare feet screaming at people and talking to themselves - clear signs of insanity.
I watched a male and female professional bump into one another while on phones waiting at an intersection, and then start a verbal altercation that lasted a full minute of calling one another a 'stupid bitch' and an 'arrogant arsehole'. Couldn't get out of the city fast enough to be honest, only to go to the suburbs to see streets full of rentals that have had no maintenance done on them, with multiple vehicles parked on front lawns, with grass that hasn't been cut, looking more and more run down - more similar to the back streets of Apia or Nuku'alofa than what one remembered of Auckland of the past.
That is Auckland now
No one cares about presentation or maintaining their properties
No one cares about the homeless
No one cares about the violence
No one knows their neighbours
No one helps out a stranger
No one talks to each other at the bus stop or on the bus
we've come a long way since I was a kid in the 70s and 80s
In Australia, there are reports that the country is scouring the world in a 'mad scramble' to find vaccine supplies, especially the Pfizer one.
Global third shot demand will make that a difficult task.
"Wakeup Call": Pfizer Vax Only 42% Effective Against Infection In July
Fauci Confirms "Likely, Inevitable" Everyone Will Need COVID Vaccine Booster Shot
and given that we all know that covid will be here for a vey long time to come - and that we still have the annual flu vaccine -- MMR and other needs - not to mention that Covid will not be the last new pandemic -- it would seem very prudent and wise to build our own facility -- perhaps even an Australasian one -- after all there will be a significant overseas market with 7 billion potential customers and at a minimum an annual booster needed
Seems a bit better than investing in migrant fruit pickers !
plant can be retooled easily - just sourcing the ingredients - A friend of mine in America redesigned a factory to start producing ventilators in under two weeks- its not actually that hard -- and so what if its not totally economic -- its already cost us billions to be locked down and billions more to be closed off to teh world - not that i want open borders yet -- so if its a loss leader i dont care -- and we only need the best option or best two options - not everything - its about the will to do it
The Aussies don't need us https://www.tga.gov.au/media-release/melbourne-made-covid-19-vaccine-no…
But much like Gumboot Friday we will not invest in things that are useful, for us it is cycle-bridges, kiwibuild and motels for everyone be they a returning kiwi or a homeless kiwi. Good times.
Expecting everyone to take semi-annual boosters of a vaccine with significant side effects is not a plan. If the booster does not last significantly longer the vaccination program will be a waste of time.
Eventually Pfizer will come up with "fixed" version of their vaccine and we will get to see if our government signs another contract forcing them take delivery of another untested vax.
You would have to extrapolate to the fourth shot from the first two or three, not retirees or the older getting their first jab. 12% are saying the third is worse.
Consider the age band where there the majority of AEFI reports are occurring when we have yet to start vaccinating the age groups.
https://www.medsafe.govt.nz/COVID-19/safety-report-21.asp
Maybe we learn who gets the really bad side effects and give them a pass but this a terrible idea rely on making people ill twice a year (and it will really need to be more often to keep the headline protection). The cumulative illness and risk will quickly add to being worse than the disease for the young. Half the port workers wont even get the first jab.
https://www.cnbc.com/2021/08/12/herd-immunity-is-mythical-with-the-covi…
Sir Andrew Pollard, head of the Oxford Vaccine Group, told British lawmakers Tuesday that as Covid vaccines did not stop the spread of the virus entirely — with vaccinated people still able to be infected and transmit the virus — the idea of achieving herd immunity was “mythical.”
“I suspect that what the virus will throw up next is a variant which is perhaps even better at transmitting among vaccinated populations and so that’s even more of a reason not to be making a vaccine program around herd immunity.”
https://www.scmp.com/week-asia/health-environment/article/3144722/delta…
" there is no firm consensus on the threat posed by emerging variants. Experts widely agree that Sars-CoV-2 will continue to circulate in some form or another for years to come, but there is no way of knowing exactly how it will evolve, and not all mutations are necessarily more dangerous or concerning."
"Other experts have sounded more alarming warnings about the threat of mutant strains, particularly the risk of a variant emerging that is resistant to current vaccines.
In a survey of 77 epidemiologists carried out by the People’s Vaccine Alliance in March, two-thirds of respondents said they believed the virus would mutate to the extent that first-generation vaccines were rendered ineffective within a year or less."
its a flu virus -- more deadly yes -- but plain and simple a flu virus -- we vaccinate every year those that chose to have it and the vulnerable -- and every year the vaccine is different responding to the changes in Flu strains and which ones are more contagious and harmful -- Exactly the same thing will happen with Covid and we will need pretty much the same response
Likewise the part you are ignoring are there are scientists who believe it the vaccines that are driving the "deadly" bit
Who have maintained from the get go it is madness to vaccinate in the middle of a pandemic
Remember, we have never developed a successful "vaccine" for a corona virus
at the risk of being barred from interest for misinformation .. here are links on just that
eg https://www.geertvandenbossche.org/
https://www.quantamagazine.org/how-vaccines-can-drive-pathogens-to-evol…
https://childrenshealthdefense.org/defender/vaccinated-covid-mutations-…
https://www.israelnationalnews.com/News/News.aspx/309762
https://charleseisenstein.substack.com/p/mob-morality-and-the-unvaxxed
https://www.cure-hub.com/post/sars-cov-2-vaccines-breakthrough-infectio…
analysis of how the antibodies from a real infection differ from those from vaccines indicating much better immunity from a real infection.
If you widely vaccinate with a non lethal (to the virus) dose of a vaccine that applies a narrow selection pressure on the organism, you will by definition breed new novel variants, much like MRSA developed as a response to widely used antibacterials. To implement a population wide vaccination strategy is to invite nature to try her best to select for the vaccine resistant strains. Now, if we all went out and got natural immunity, you'd have t cell memory, antibodies, and a broad range of antigen markers the immune system would latch on to, not just the ACE2 receptor spike protein. I feel this is bad science, like when we went hard on weed, and now we have a meth problem. We're going hard on a 0.26% CFR virus, we may get what we wish for.
"I feel this is bad science"
Yes i agree. Its interesting that (most) doctors are very silent on the whole - i know the near retired gp near me doesnt agree with the one source of truth
Im wondering whether its
a) they think its good science
b) they are in a silo thinking induced coma of overwork and go with flow of whatever is centrally advised
c) they question the science but dont want to put their heads up
https://i.stuff.co.nz/opinion/126051411/sorry-homeowners-prices-must-fa…
Please don't say such a thing as Orr and Robertson may have a stroke and Jacinda will panic even with the very thought that ponzi may stop - leave fall even if it stops rising, poor Orr's and Robertson's will have sleepless night.
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