Here's our summary of key economic events over the long weekend that affect New Zealand, with news we are seeing falls in some key commodity prices (like oil and copper), and a sharpish retreat in benchmark interest rates today. That is probably all due to rising risks in the Middle East.
But looking ahead, this short week we will be looking at the second estimate of the US Q3 GDP growth rate which will come on Friday and is widely expected to be very much better than the initial estimate. Their economy was expected to be slowing down by now; instead it is revving up. They will also release data for their PCE Price index, and personal income and spending, followed by durable goods orders and PMI survey data for October. We will also get American housing market sales data.
It will be a peak week for Q3 earnings reports, with releases by majors like Alphabet, Microsoft, Meta, Amazon, 3M, Coca-Cola, GM, and Spotify.
There will be central bank interest rate decisions this week from the ECB, Bank of Canada, and Turkey. And we will get Australia's Q3 inflation rate, some European data, and the GDP growth rate in South Korea.
Overnight, the US Chicago Fed's tracking of their national activity index moved up from a negative to a positive, but only just, suggesting the US is expanding at its long-run average now.
In Canada, retail sales stagnated in September, according to preliminary estimates. That follows a small decrease in August.
In Ottawa, their main banking regulator has told lenders to hold more capital against mortgages that have had their repayment terms extend beyond the original terms due to the stress of interest rate hikes. They are moving to contain risks building in the Canadian home loan system.
In Japan, their CPI inflation rate fell to 3.0% in September from 3.2% in August, the lowest level in a year.
In China, foreign direct investment fell -8.4% in the first nine months of 2023, a faster pace of retreat than the -5.1% fall in August and the -4.0% fall in the seven months to July. This is a retreat and disengagement that must be worrying the Beijing economic mandarins.
Foreign money managers are bailing on some of the biggest names in China’s technology sector as a global exodus from the nation’s equities deepens.
And staying in China, they held lending rates steady at the October fixing, as widely expected. The one-year loan prime rate, which is the medium-term lending facility used for corporate and household loans, was left unchanged at a record low of 3.45%; and the five-year rate, a reference for mortgages, was maintained at 4.2% for the fourth straight month. This decision came amid growing signs that the Chinese economy is stabilising.
China says it is on track to produce an all-time record high grain harvest, significantly easing food security fears.
Taiwanese export orders rose sharply in September from August, up almost +12% to US$51.4 bln. But they were down -15.6% from a year ago, the same year-on-year decrease in the prior month.
Staying in Taiwan, industrial production was little-changed in September from August, and now its least year-on-year shrinkage since August 2022. Retail sales came in +6.0% higher than a year ago, benefiting from a low base. But they also rose from August.
Indonesia’s central bank unexpectedly raised its benchmark rate by +25 bps to 6% late on Thursday after months of standing pat, as it looks to support the stability of the rupiah and guard against inflation.
Singapore's September consumer inflation is proving sticky at 4.1%, the same level for the past four months, although it is down from well over a 6% rate a year ago.
In Russia, their Federal State Statistics Service (Rosstat) published a new demographic forecast for the Russian Federation on Friday night that predicts that Russia's current 146.5 mln population will decrease to 138.8 mln people by 2046 as war, low birth rates and emigration combine to shrink the country. Nationalists there also decry that the situation is much worse for ethnic Russians because it is very poor migrants and minorities who are keeping it from a much faster retreat.
In Australia, they are successfully going after tax-shifting, especially by the fossil-fuel industry. In a 'normal' year their tax office wins about AU$3 bln in recoveries from companies who haven't paid their correct taxes - usually with the advice of tax accountants. In the past year they recovered AU$6 bln+ from the likes of Rio Tinto and Ampol (the company that used to be known as Chevron AU/Caltex, and who now own Z Energy in NZ)
Globally, a UN agency for trade is noting that 'friendshoring' is picking up speed more quickly now as big power rivalry unstitches years of trade integration.
The UST 10yr yield has fallen back sharply today after very briefly hitting over 5%. It is now at 4.84% and down a net -9 bps from this time Saturday. Their key 2-10 yield curve is more inverted, now at -25 bps. A week ago this key inversion was -43 bps. Their 1-5 curve is much more inverted at -62 bps. Their 3 mth-10yr curve inversion is also much more more inverted, now at -63 bps. The Australian 10 year bond yield is now at 4.71% and down -2 bps from Saturday. The China 10 year bond rate is unchanged at 2.74%. The NZ Government 10 year bond rate is -1 bp softer at 5.61%. A week ago it was at 5.51%.
Wall Street is starting the week firmer in its Monday trade with the S&P500 up +0.6%. Overnight European markets were mixed; London was down -0.4% while Paris was up +0.5%. Yesterday, Tokyo ended its Monday session down -0.8%. Hong Kong fell another -0.7%. Shanghai fell -1.5% yesterday. The ASX200 ended its Monday trade -0.8% lower. And of course the NZX50 didn't trade yesterday.
The price of gold will start today at US$1972/oz and down -US$10/oz from this time Saturday.
Oil prices have fallen -US$3 today to be now at just on US$85.50/bbl in the US. The international Brent price is now just over US$89/bbl. These are very similar level to where we were at the start of last week.
The Kiwi dollar starts today at 58.5 USc and up +20 bps from Saturday. Against the Aussie we are still at 92.2 AUc. Against the euro we have slipped slightly to 54.9 euro cents. That all means our TWI-5 starts today at just on 68.4, unchanged from Saturday but down -85 bps from this time last week. We are starting to get into territory where the lower exchange rate can itself be inflationary.
The bitcoin price starts today at US$31,277 and up a sharp +6.1% from this time Saturday with most of that coming within the past 24 hours. Volatility over the past 24 hours has been moderate at just over +/- 2.6%.
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54 Comments
Did you get his signature? I used to have a $5 note with his signature on it.
On an unrelated note, when airliners crash land, the rear passengers move forward quite speedily and crush the forward passengers. Just saying. Best off at the back, right beside the toilets.
The was an Irish comedian who used to talk about airline flying; Dave Allen. He always argued that he preferred to sit in the back row. He figured that when the aircraft flew into a mountain it would have slowed a bit by the time the mountain got to him and all the squishy bits ahead of him would mean he got a soft landing, and would get to walk a way.
I guess he shouldn't have slept through the physics lessons at school!
I wonder what his definitive view was 5 years ago?
For once I tend to agree with Brash, it is very hard to know whether inflation will be a problem in a few years time, or will deflation be the problem again. I still think inflation was caused solely by Covid and will disappear very quickly from here, but it would be very risky for central banks to assume that.
Every one is different, metabolism etc. Each to their own you might say. My father flew with the RNZAF first in the 1930s and then in the Pacific WW2. He was a steady beer & gin drinker but I remember he once sadly reflected that either in training or combat it was the pilots that didn’t touch alcohol that were too often the first to go.
I welcome the progress we have made to return Australian products, including Australian wine, to the Chinese market. On 4 November, I will travel to China. This will be another step to stabilise relations between Australia and China, in the interests of both our countries. Link
Or rather late.
Current monetary policy subdues stock prices but there's nice juicy dividend payments to collect and always good to get into the market before it turns.
Inflation IS dropping albeit slowly.
The next stage in the cycle will be interest rate cuts which will send stock prices upwards.
Their economy was expected to be slowing down by now; instead it is revving up.
1/2 Biden also made an impassioned plea in his address to the nation on Thursday that the bulk of arms aid to Ukraine actually went into American defence industry, which created jobs (as in World War 2 under FDR). It’s America First, stupid!
2/2 And of course, by a happy coincidence, those defence industries are based in states like Arizona, Pennsylvania, Ohio, Texas, which happen to be swing states, too, (what Americans call "battleground states”) in the 2024 election. Link
Two days ago U.S. President Joe Biden spoke at a campaign even. Among lots of the usual blah-blah this paragraph stood out:
We were in a post-war period for 50 years where it worked pretty damn well, but that’s sort of run out of steam. Sort of run out of steam. It needs a new — a new world order in a sense, like that was a world order.
There it is - one can see the penny, slipping out of his hand and falling down. Link
I have just read the link above. Poor old Joe's controllers should be deeply ashamed having their man get up and talk such rubbish. Let him have a bit of dignity and go away and sort out all his corruption charges. But please not in a way that lets that woman who had a bad obvious facelift halfway through the election campaign get a go at his job.
In Russia, their Federal State Statistics Service (Rosstat) published a new demographic forecast for the Russian Federation on Friday night that predicts that Russia's current 146.5 mln population will decrease to 138.8 mln people by 2046 as war, low birth rates and emigration combine to shrink the country. Nationalists there also decry that the situation is much worse for ethnic Russians because it is very poor migrants and minorities who are keeping it from a much faster retreat.
Nationalists decry it? They are actively sending young men to Ukraine during the years when they would normally start to think about forming families not to mention the economic shock Russia is undergoing having been clobbered with the sanctions stick.
Further to the weekend discussion on methane
https://www.rnz.co.nz/news/national/500881/why-nz-invested-29m-in-a-met…
Other peoples money, no worries
Up 14% at one point for the day. It's been quite a while since we've seen that.. The worm has definately turned.
Coming into the halving around 33K USD is incredibly bullish to say the least.
At this time in the last cycle, around 6 months pre-halving we were at $7,500 USD (24/10/19).
That bull market went on to reach $68k by November 2021.
Which we also now know was likely artifically low, due to SBF and FTX illegally selling customers BTC to prop up their own tokens.
Draw your own conclusions.
I'm long.
Find it here - as usual at the bottom of the what happened.
BITCOIN RANGEBOUND
The bitcoin price is firmer again today, now at US$28,413 and up just +0.02% from where we were at this time yesterday. And volatility over the past 24 hours has been modest at just over +/- 1.4%. By being on the sidelines, this crypto is not acting as a safe haven.
Yawn, best performing asset of the last decade but still not enough for some.
When it breaks 150k will that be enough, what about 1.5m?
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