Here's my summary of the key events overnight that affect New Zealand.
Hurricane Harvey could impact the timing of the need to raise the US’s debt ceiling. US Treasury Secretary Steven Mnuchin says September 29 remains the date by which Congress should raise the borrowing limit, but adds that Treasury's spending will be affected by an aid package for flood-affected areas. He says there could be an impact by a couple of days.
The US government has a statutory limit on how much money it can borrow to cover the budget deficit that results from Washington spending more than it collects in taxes.
New data shows incomes in the US rose faster than expected in July, however this didn’t see Americans spend more than expected. Incomes rose 0.4% in July - the quickest monthly increase since February. Meanwhile personal spending climbed 0.3% - a rise from the previous month, but below expectations.
The core personal consumption expenditures price index, a measure that excludes volatile food and energy prices, rose 0.1% in July and was up 1.4% from the prior year. While in line with expectations, this undershoots the Federal Reserve’s 2% inflation target.
Turning to Europe, new data for July shows its unemployment rate remained 9.1% - the lowest it’s been since 2009.
Germany’s unemployment rate is the lowest it’s been since the fall of the Berlin Wall at 5.7% in August.
As for inflation, the European Union estimates Europe’s annual inflation will rise to 1.5% in August, from 1.3% in July. Higher energy costs are expected to be the driver behind this.
In New York, the UST 10yr yield is has dropped to 2.13% overnight.
The price of crude oil has increased to US$47 a barrel, while the Brent benchmark is up to US$52.
The price of gold has risen to US$1,316/oz.
The Kiwi dollar is continuing to track down against the US to 71.8 US. It’s dropped to 90.3 AU¢ and 60.3 euro cents. And the TWI-5 index is now at 74.0.
If you want to catch up with all the changes on 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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14 Comments
An interesting side issue of the Hurricane Harvey story is how many people are uninsured. There doesn't seem to be any analysis why. Are people the world over realising just how big a rip off insurance companies are, charging high premiums and then using every little ploy to avoid paying out? What will that cost the US?
The Insurances that people do have appears to exclude flood damage for some reason, and government aid is in the form of a loan so there will be hardship for many. I just wonder where will everyone live and work with so many homes uninhabitable and businesses out of action. It's a pretty big deal.
"The Associated Press reports that 80 percent of Harvey’s victims do not have flood insurance. Thousands of families will have to take on more debt or spend much more to fix their homes. Others will sell their property to move out. Robert Hunter, director of insurance at the Consumer Federation of America, estimated that flood damage alone cost at least $35 billion.
Hunter explained to the AP that if you don’t have flood insurance, you can apply for federal disaster benefits. However, these are low interest loans that will add more debt. Homeowners insurance covers water damage caused by wind damage, but not if the water comes through the floor or walls, the AP explains.
“Homeowners with water damage can get paid through their homeowners insurance but only if wind blows out a window or sends a roof aloft first, allowing the water in,” the AP notes. “If the water rushes through the floorboard or walls, you’re not covered.” http://heavy.com/news/2017/08/hurricane-harvey-damage-cost-estimate-hou…
From what I've read, the reason a lot of them didn't have flood insurance is because the properties were in known flood prone areas and the insurance premiums were therefore very high.
One I saw said their flood damage cover would have been an additional US$15k per year.
Here's an explanation;
http://abcnews.go.com/Politics/wireStory/flood-insurance-policies-plung…
New data shows incomes in the US rose faster than expected in July, however this didn’t see Americans spend more than expected. Incomes rose 0.4% in July - the quickest monthly increase since February.
Hmmmm...
Real Personal Income excluding Transfer Receipts was last month revised considerably lower for last year, suggesting some severe labor market strain as a result of the downturn. As of the latest benchmarks, the BEA figures that this important core part of national income actually contracted year-over-year for three straight months to end 2016. Despite such heavy weakness there is as yet no acceleration in 2017. Read more
As a consequence?
The bond bull market is staging its biggest leap forward this year, much to the chagrin of Wall Street prognosticators.
Even after a late-July Federal Reserve meeting made it clear that policy makers would begin reducing the bank’s $4.5 trillion balance sheet in short order, 10-year Treasury yields have dropped 16 basis points in August, the steepest monthly decline since June 2016. At 2.13 percent, the yield is within spitting distance of this year’s low, set this week. At the start of 2017, most strategists expected it to be almost 50 basis points higher by now. Read more
MAGA?
“Made in America” will soon grace the labels of T-shirts produced by a Chinese company in Little Rock.
By early 2018, Tianyuan Garments Co., based in the Suzhou Industrial Park in eastern China, will unveil a $20 million factory staffed by about 330 robots from Atlanta-based Softwear Automation Inc. The botmaker and garment company estimate the factory will stitch about 23 million T-shirts a year. The cost per shirt, according to Pete Santora, Softwear’s chief commercial officer: 33¢. Read more
The Curia poll data is not "a poll". Rather it is a weighted average of all the latest polls (the current ones weight higher than older ones). The one shown today actually does include the Colmar Brunton/OneNews poll released yesterday.
Click in the 'methodology' link in the Curia poll box.
Bloomberg says; "Houston exulted in sprawling, hands-off growth. That’s no way to prepare for natural catastrophes."
Thanks for the link. I suspect this will be talked about in planning circles for a great while.
And the above refers to this article posted yesterday;
And the latest polling from the well respected Daggy Enz pollsters shows a clear lead for Labour. Daggy Enz spokesperson Trev explained that they did not rely on outmoded methods of polling such as asking people who they intended to vote for, rather that close observation of trends gave a far better picture.
The heifers seem to be heading for green pastures but since these are in the back-blocks this trend can be largely discounted, Trev said.
The chocks, traditional National voters, are running around with their heads chopped off. This time last month they still had their heads down contentedly eating juicy worms.
Winston Peter’s figures are hard to decipher since the bull did a big **** right on the results. When we get to the bottom of it we will let you know, said Trev, the Daggy Enz media release person, but we think it could take some time.
The sheep are flocking to Jacinda with her winning smile and bucket of feed pellets. And since they are the most common animal here we see a clear victory for Labour, said Trev, the CEO of Daggy Enz.
The poll was conducted sometime in the last few days just after milking and before fixing the fence the heifers knocked down.
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