Here's my summary of the key events overnight that affect New Zealand, with news all eyes have been on interpreting the latest Federal Reserve minutes.
The minutes of the last Fed meeting were out a few minutes ago and they show policy makers struggling to decide exactly when to raise rates - not if. Most agreed they need to go up "relatively soon". Remember, at this meeting there were three dissenters, and that was the most since 2011. There are two more meetings scheduled this year, on November 2 and December 14. Traders have all but ruled out a move at the meeting that takes place just a week before the November 8 US presidential election. They currently see about a 70% probability the Fed will raise rates in December.
There is data out for August new job vacancies today. We already have the September non-farm payrolls survey, so today's job openings data is a little dated. But it confirms a steady August American labour market even though it reported a dip in the level of job openings. This fall was driven by a decline in vacancies for professional and business services. Overall vacancies may have been down, but the level of new hires was stable, as was the rate of separations.
And staying in the US, their recent splurge in milk production is taking a toll on their dairy farmers. Even organic milk producers are failing to get any premium. The European drop in production is about to be followed by an American one.
In Australia, their CommInsure scandal prompted regulator ASIC to investigate the life insurance industry. They found one life insurance company declining more than one in three total and permanent disability claims made by its customers. Three other life insurers dismissed a quarter of total and permanent disability claims. The number one denier of claims rejected 37% of them! ASIC didn't name any of them so it is impossible for customers to know how to avoid the worst insurers. (See page 106.)
World food prices were up in September, driven largely by the rising cost of sugar, the FAO reported overnight. They found prices had increased by +10% year on year and +2.9% on August. Sugar surged almost 7% between August and September, largely because of unfavourable weather conditions in Brazil. Meat, dairy and vegetable oil prices also rose, but cereal prices declined slightly.
In New York, the UST 10yr yield is now up to 1.77%. Maybe one background reason interest rates are rising is that Saudi Arabia is borrowing huge amounts to fund its government, following the sharp slump in oil prices. Following the Fed minutes, rates eased a little.
The US benchmark oil price is a little lower today, now just on US$50 a barrel, while the Brent benchmark is now just over US$52 a barrel.
The gold price is lower as well, down -US$2 and now at US$1,252/oz.
The New Zealand dollar has held yesterday's levels overnight, and has then risen following the Fed minutes release. It is now at 70.9 US¢, and on the cross rates it is at 93.5 AU¢, and it's at 64.2 euro cents. The NZ TWI-5 index is now at 74.9.
If you want to catch up with all the local changes yesterday, we have an update here.
The easiest place to stay up with event risk today is by following our Economic Calendar here ».
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In New York, the UST 10yr yield is now up to 1.77%. Maybe one background reason interest rates are rising is that Saudi Arabia is borrowing huge amounts to fund its government, following the sharp slump in oil prices.
Or maybe this borrower was paying more to get $20 billion away to primary dealers ahead of the FOMC minutes.
There is data out for August new job vacancies today. We already have the September non-farm payrolls survey, so today's job openings data is a little dated.
Yes indeed.
The Federal Reserve’s Labor Market Conditions Index (LMCI) fell back -2.2 in September. Revisions to the last few months were also downward, suggesting once again that there is no positive economic momentum this year. Apart from a positive change in July, the LMCI declined in every other month of 2016. Read more
The thing with the oil price is that I recall commenting here about the massive wedge that it formed over a few years, and that it was going to break out big time. It was going to move big up or down, so why didn't people/governments position themselves for that event?
External event anyone?
http://www.nzherald.co.nz/world/news/article.cfm?c_id=2&objectid=117279…
When asked about the report, Kremlin spokesman Dmitry Peskov said it was the first time he had heard about the alleged pull-out of officials’ family members. Read more
But sane heads are calling for a calm approach.
The world faces cold-war-era threat levels, Sir John Sawers, the former head of MI6, has said, due to the west vacating the stage in Syria and failing to recognise that the growth of Russian military power over the past 15 years required the development of a new strategic relationship with Moscow. Read more
Yes, a cup of tea and a lie down might be in order.
Alternatively, a closer look at US foreign policy over the past 30 years would expose the fallacy of thinking the world would be a safer place without the Russian threat - https://sputniknews.com/politics/201610121046255935-us-foreign-policy-f…
Ah well, we can always celebrate the success of The War On Drugs - oh wait a minute......
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