Here's our summary of key economic events overnight that affect New Zealand, with news the US Treasury’s debt issuance plan eased investors’ fears of a looming deluge of long-term government debt that had triggered a bond market rout and bond markets have rallied very sharply.
But first in the US initial jobless claims rose last week by a mere +2800 last week to 197,000 and there are now 1.58 mln people on these programs. But after seasonal adjustment the rises were magnified as reported elsewhere and stated to be the highest since April and an indication their labour market is turning (even if that is not what the actual data shows yet).
Meanwhile, American factory orders rose a sharp +2.8% in September from August, the most since January 2021. (Year-on-year they are up +2.2%.) Durable goods orders were up a remarkable +4.7% as orders for aircraft roared back, up +65% from a year ago.
October vehicle sales were expected to dip slightly from September, to an annual rate of 15.3 mln from 15.7 mln. But the actual dip was a lesser 15.5 mln annual rate. This is very much higher than the year-ago levels of about 14.5 mln rate.
In American factories making all this stuff, labour productivity surged in the September quarter, up a remarkable +4.7%.
In New York, authorities there have prevailed in a case that held ride sharing companies like Uber have "systematically cheated" New York drivers out of pay and benefits. They are making huge restitution.
In Toronto, the gloss is coming off their housing market and sales volumes are falling. October brought the third straight monthly drop and the fastest pace of decline in 15 months. In Vancouver, things are steady.
In Japan, their government has approved a program of tax cuts and other measures to help households battle inflation's pressures. The overall package is worth about NZ$190 bln.
Singapore's factory PMI expanded more in October than September, a second consecutive expansion and a fifth straight rise.
In Norway, their central bank kept its policy rate unchanged at 4.25%, but signaled that a hike is likely before the end of the year, because they are not on top of inflation yet.
Meanwhile the Bank of England kept is key policy rate at a 15-year high of 5.25% for a second consecutive meeting, in line with market forecasts. They are grappling with persistently high inflation and signs of an economic slowdown. Three of nine policymakers actually voted for a rate hike, but that is less than the four at their prior review.
In Germany, their unemployment rate is holding. The number jobless fell by -20,000 in October from September (when a +15,000 rise was expected) and there are now just over 2.6 mln people without jobs there, an unchanged 5.7% rate. But the rise is up +165,000 from a year ago.
In Australia, Westpac’s new business banking boss says the fate of many struggling small firms will hinge on the December-January period. Might be so here too. The new Westpac Australia chief economist, ex the RBA, says her old employer may be forced into more than one more rate rise because inflation isn't tamed there yet. That won't help those SMEs either.
Australia's merchandise trade surplus fell to a 30-month low of +AU$6.8 bln in September from an upwardly revised AU$10.2 bln in August. The September result was well below market forecasts of an AU$9.4 bln surplus as exports fell -1.4% while imports surged +7.5% from the prior month.
Housing investor demand (+2.6% from a year ago) is keeping mortgage lending up in Australia, while owner occupiers are borrowing less. Lending for new houses remained at 20 year lows. On the commercial side, construction loans rose, and rather sharply (+55%).
Bank in the US, President Biden officially nominated long-time “Asia hand” Kurt Campbell as deputy secretary of state earlier today (Thursday NZT), a move analysts said showed Biden’s commitment to his Indo-Pacific strategy which involves containing China's expansion. Campbell is an 'old friend' of New Zealand. We awarded him an honorary Companion of the New Zealand Order of Merit for services to New Zealand-United States relations in 2014.
In global container freight markets there was a surprise +5% rise in freight rates last week, driven by very sharp +11% increases on the China-Los Angeles route. Meanwhile, bulk cargo rates continued last week's retreat.
The UST 10yr yield is down a sharpish -14 bps from this time yesterday, now at 4.67% as bond markets rally after the US Treasury’s debt issuance plan. It has had a global flow-through. But their key 2-10 yield curve is much more inverted today, now by -30 bps. Their 1-5 curve is inverted by -73 bps and that is also more. Their 3 mth-10yr curve inversion is much more too, now by -71 bps. The Australian 10 year bond yield is now at 4.73% and down -13 bps from yesterday. The China 10 year bond rate is down -2 bps at 2.69%. The NZ Government 10 year bond rate is a very sharp -23 bps lower at 5.59%.
Wall Street is in its Thursday trading with the S&P500 up +1.8% and taking the Fed at its word it is done raising rates. Overnight, European markets were all up by another +1.5%, topped by Paris's +1.9%. Yesterday Tokyo ended its Thursday session up +1.1%. Hong Kong ended up +0.8%. But Shanghai fell -0.5% with a sharp late sell-off. The ASX200 ended its Thursday session up another +0.9%, while the NZX50 ended up +1.8% and a rare second successive gain, and one that topped most others.
The price of gold will start today at US$1982/oz and up +US$6/oz from this time yesterday.
Oil prices have risen +50 USc to US$82/bbl in the US. The international Brent price is now at US$86.50/bbl.
The Kiwi dollar starts today at 58.8 USc and up +½c from yesterday. Against the Aussie we are firmish at 91.7 AUc. Against the euro we are marginally firmer at 55.4 euro cents. That all means our TWI-5 starts today +30 bps higher at just under at 68.7.
The bitcoin price starts today at US$34,604 and +0.4% higher than this time yesterday. Volatility over the past 24 hours has been moderate at just on +/- 2.3%.
Daily exchange rates
Select chart tabs
The easiest place to stay up with event risk is by following our Economic Calendar here ».
56 Comments
Ice on the wings and the stall-warning has gone off. That Gareth Vaughan / RBA article yesterday pointed to the dashboard.
This interview is a must for anyone too steeped in the economic mantra:
https://www.thegreatsimplification.com/episode/96-david-holmgren
Two of the best thinkers on the planet, looking ahead. All I could see while watching, was our past-their-use-by-date new leadership, and I guessed at how they will flounder.
It wasn't a pretty image...
Many small businesses in Australia struggling, hanging on for Xmas. Undoubtedly ditto for NZ given stats revealing in recent years, one in four start up businesses in NZ have failed. The pandemic certainly was a wallop with a sting in its tail but the cost of finance coupled with associated deflation in consumer spending, must surely have been the rabbit punch. Hard to see much environment on the horizon for anyone wanting to give it a go with a new business.
What percentage of new business operators fail to meet their own expectations for success.
Or the commitment required in "giving it a go". I doubt I would have bought my business if I had known this. Still, I willingly chose it so have no one else to blame... A willing lamb to the slaughter.
I heard Mr Luxon doubling down on his tough on the gangs approach but really unsure how that’s going to play out in reality. Focussing on dress codes and the way an individual looks seems completely wrong in so many respects ie basic freedom of expression. Focussing on anti-social behaviour is all the police can hope to accomplish but they also need support from the communities involved and a safety net of support services for people who find themselves on the fringes of mainstream NZ. I’m no gang apologist but forcing the culture further underground will not solve the issues or improve public safety going forwards.
A *lot* of gang members here in Napier and I feel there are more now than there were several years ago. It's not unusual to see gang patches when I venture in to town. My morning walk takes me past two gang houses, one of which could reasonably be described as a "fortress". In fairness, I have never see a problem with them in the suburbs or in town, but I still think they're a bunch of evil sods.
Four or so years ago we drove up to Keri Keri for a holiday and took the inland route north of Whangārei. Glad we did, beautiful rolling green peaceful countryside. At about half way we passed an old farmhouse with parked outside, a couple dozen black motorbikes and then coming towards us on the same, a squad of gang members. No problems, we in our little rental hatchback hardly looked like an undercover police patrol, but suddenly keenly aware of being isolated and alone. Sufficiently uneasy too, to reconsider ever taking unknown back roads again.
To really crack down, you need a group in the police like raptor in NSW. They use intimidation tactics to accomplish. I dont know how palatable that is here. Luxons gang is talking tough, but they dont have to physically carry out the toughness. Some of the cops I have seen around the place arent exactly large physical specimens. They are going to need to hire the crims they are trying to shut down.
Has the situation actually improved in NSW? Some suggest it hasn't helped at all - https://www.stuff.co.nz/national/crime/117768385/australian-excop-blast….
The plan is that police will be required to take the jackets off the gang members on site. There is apparently a rule in most gangs that you can never give up your jacket. So the police will be arresting them for failure to remove their jackets. Not sure what happens afterwards, but they won't get the jackets from them without using exceptional force.
And Luxon is proposing that the police hit up the gang funerals also. That effectively means trying to arrest everyone on site, when they are trying to grieve for the death of a member.
I can imagine it being increasingly difficult to recruit police officers in NZ. I sure wouldn't want that job. Risking life and limb to take someone's jacket is not what cops join up for.
"the fate of many struggling small firms will hinge on the December-January period. Might be so here too."
I'd suggest many of these firms pre-covid may have been doing reasonably well only in the economic good times. Covid and post Covid drying up of certain discretionary expenditure will drive these firms to the wall. Its a natural cycle, exacerbated by Covid and there'll always be someone to take there place or ones who already exist who can weather the economic storm. Specialist clothing shops, cafes, restaurants come to mind.
I'm not sure why the small firms feature in financial articles. Is it so alert the Reserve Banks to use it as an excuse not to raise rates further?
Natural cycle? That assumes 'all else will always be equal'. Which is not so; global growth is clearly going into reverse, showing up as repercussions because we don't measure stocks (resources, not shares), merely flows. Stocks remaining, are the driver now.
Yes, discretionary spending will be the first to go. Food tends to be last. It would be interesting to know the amount of 'growth expectation' overreach, assuaged by defaults. The collection of forward bets is already more than the planet can underwrite; without defaults it would have been bigger, presumably.
Many years ago when I was struggling in minimum wage, casual employment, I used to prioritise rent payments over all else - even food. Living off weetbix and toast.
Now that I have a family, that would no longer be the case - you can always pay the rent later [or be chased for it if you don't] - but you can't eat later. With rising rents and food prices, I won't be surprised to see families making that choice in the year ahead - and other bills be damned entirely.
The consequences of non-rent payment are bad. The consequences of not eating are worse.
Moderators - could we take a stance of this ‘DGM’ name calling? It appears anyone that is bearish by nature is a doom merchant - even if it might be completely justifiable.
If we don’t moderate this, then anyone that is bullish by nature should be tarred repeatedly and relentlessly with the ‘spruiker’ brush. So if DGM isn’t moderated, then it is regrettably my social responsibility to endlessly ridicule anyone that is bullish with ‘self interested spruiker’ responses in order to balance out the discourse.
Comments like the one above also add zero value to the quality of the conversation on this site.
Over to you on what direction you want the quality of this comments section to move towards - if DGM isn’t moderated, then I’m going to pointlessly call people spruiker in response to DGM name calling (I won’t initiate this but I will respond to it) and drag the comments section down until banned. See an example response below.
Based on my observation the vast majority of 'name calling' on this site is directed at the so called 'self interested spruikers' AKA anyone who dares to go against the grain and suggest we might not be heading for some apocalyptic reset. Bit pathetic to go crying to the mods and threatening something that's already happening because you can't take what you dish out.
I can take it and I can give it. But that just causes more of the problem.
My position is that weak arguments using name calling only (as opposed to intelligent discourse with real world observations and data of what is happening) should be banned - this both for those who are bullish and those who are bearish.
I’d prefer it if both sides stopped the name calling - if this attempt to improve the quality of the comments section is viewed as crying to the teacher then so be it - that is not my intention - my intention is to stop the comments section turning into something you’d find at stuff.co.nz.
If you want to call me a crybaby for trying to improve the comments section, then perhaps your comment exactly highlights the problem I was pointing out in the initial post (people resorting to name calling when they don’t have an intelligent argument to make).
I could respond to you to stop whinging about me being a crybaby - but as you can see this adds nothing to this website.
You can just block them: https://chromewebstore.google.com/detail/interestconz-commenter-bl/kbfa…
Fair enough - but it doesn’t fix the underlying problem.
I guess it’s a bit like school than when people get scared or lack social skills/ability they start name calling to try and bring other people down.
(I’m certainly guilty of this on this site in the past so not certainly not perfect but tired of this DGM/spruiker stuff - it is actually crazy and a sign of how unhealthy our society has become).
Looks like by the number of upvotes you’re getting on here shows that people prefer tit for tat name calling over the intelligent discourse.
A sign of the times (across the wider society).
Perhaps we should just be more like Jesus and if called a DGM or spruiker turn the other cheek and ask for more insults until the party with the unintelligent discourse has released all of their fear and anger.
The editor throws around the term ‘doomster’ or equivalent from time to time and seems to have a bullish bias, so good luck with that.
I have got over the DGM slur - whatever! It’s a bit like people throwing ‘socialist’ around as a slur, with no apparent understanding of what socialism is.
Following on from above. John if you call bearish people DGMs it is my responsibility to call you out as a self interested spruiker to balance out this conversation.
Do you have a lot of debt or want house prices to go even higher for your own gain?
(moderators - see that this adds zero value to the commentary to the site - but is a suitable response to represent the opposing side of the argument)
True I might take a biblical view and offer the other cheek to the offending parties until they have vented their insanity (might be painful for people reading the comments though - how many times do we need to call a person a DGM or spruiker until we find peace with one another?).
Jimbo Jones - incorrect, you conflate.
Firstly, calling someone a DGM, is a strawman argument. The usual arrangement is that the person you're calling DGM, has stated something you don't wish to be true (or wish to know). By denigrating, you have - in your mind at least - lessened their status, thus their argument. That is a needed step in your desire to disagree; to prove them wrong. The obvious point, is that you should just prove them wrong via sequential facts/ case-mounting; the fact that you haven't; that you've descended to name-calling - suggests you haven't the facts on your side.
That's a metaphorical 'your', not you personally :)
As for 'everything', you could perhaps learn something from understanding Systems (Donella Meadows' primer: Thinking in Systems is an excellent read); if the problem is in a bigger System than the one you are considering, chances are that it will seem like 'everything'. The trick is to identify the System you're discussing, in relation to others. The sinking of the Titanic, for instance, made the onboard washing/folding/re-distributing of bed linen System, somewhat irrelevant. Telling the steward to not bother folding any more, is not DGM - it's a Systems appraisal.
PDK I wouldn't call you a DGM as I agree to some extent with what you are saying. You have a long term view based on finite energy which makes some sense (although technology will probably solve that problem for us IMO).
But there are DGMs here that find every individual piece of news to be gloomy. Every year the housing market is going to crash for sure, interest rates are going up for sure, we must be in a recession and if not then stats NZ has fabricated the data, etc. There isn't much point in reading their comments when you pretty much know what it is going to say.
Use of DGM is a form of gaslighting - you’re doing it right now Jimbo but you’re not even aware you are doing it.
(spruiker is also gaslighting - it is trying to make people feel crazy for believing what they actually really think/believe - it isn’t a healthy thing to be doing to each other).
You could have just disagreed with PDK but you couldn’t without saying that people who are bearish are crazy (ie they are just DGMs). It’s a sign of a really unhealthy society. Trying to make people feel uncomfortable for what they think is true.
Higher for longer is a concept about the economy - doom gloom merchant and spruiker are name calling labels against people in the attempt to belittle them.
Attacking the person is something we should to move beyond/avoiding but attacking their argument with intelligent discourse is what we should be aiming at (eg links to graphs, charts, data that would show rates are going lower is a good argument against HFL) DGM/spruiker names aren’t an argument they are just name calling which is unintelligent and pointless.
https://wolfstreet.com/2023/11/02/anything-unusual-in-the-drop-of-the-1…
Relief drop is temporary
Unsustainable rise in debt and interest continues
Debt rising twice as much as GDP
TradeMe have hiked fees by 50% or more in two waves over the last year or so. Edit: 100% on the cost of listing a property over 18 monthsl.
Their official statement is they are innovating and adding new services, which is nonsense. Listing volumes are way down and since they're owned by an offshore corporate they can only protect revenue (and jobs) by jacking up prices.
We welcome your comments below. If you are not already registered, please register to comment.
Remember we welcome robust, respectful and insightful debate. We don't welcome abusive or defamatory comments and will de-register those repeatedly making such comments. Our current comment policy is here.