Here's our summary of key economic events overnight that affect New Zealand with news inflationary pressures remain intense.
But first in the US, the US FDA has approved the Pfizer vaccine for children 5-11 years. Multi-country trials show it has the same effectiveness and the same safety as for the 12-16 year old peer group already approved. Medsafe will no doubt follow quickly.
Staying in the US, the inflation number the Fed watches was out today, core PCE, and that came in unchanged from August at +3.6% and well above its policy target but well below the headline CPI rate of 5.4%. Of equal interest was that personal income retreated quite sharply in September as pandemic support was withdrawn. Personal expenditure rose a modest amount, and it was an unexpected surprise that it rose in these circumstances.
But that tightening didn't affect sentiment much, at least according to the University of Michigan survey. It slipped just a minor amount but it is recording high uncertainty levels again.
The Chicago PMI reported a pickup to quite a high level after two months of consecutive slippages. New orders were up, but prices paid rose again and to a 42 year high. But supply chain issues dominate sentiment here.
Q3-2021 GDP data for Mexico disappointed with an unexpected slip from Q2.
In China, Evergrande has made a second overdue bond interest payment late on Friday, late but not so late as to trigger default. It seems to be successfully buying time to organise its finances and negotiate with creditors. But it is one thing to make interest payments; it is quite another to repay the bond principal amounts none of which are due quite yet.
Japanese consumer confidence rose again in October continuing its recovery, even if it isn't quite back to pre-pandemic levels yet. But data for Japanese industrial production wasn't so flash, in fact quite disappointing given most other recent industrial measures like their PMIs. Supply chain issues are crimping production and shipments still.
Also slightly less than expected was the Taiwanese Q3 economic expansion. However strong investment levels probably mean this will improve well from here and rate hikes are less than a year away now.
Singapore business confidence is holding and looks better ahead. But Singaporean producer prices are rising faster that the expected fast rise. But again, this is really all about energy (oil) costs.
Annual consumer inflation in the Eurozone jumped to 4.1% in October of 2021 from 3.4% in September and higher than market forecasts of 3.7%. It is all about energy costs there.
Economic activity expanded +3.7% from a year ago in the EU in Q3-2021 and that was more than anticipated.
Australian retail sales rose in September, but it is hard to know what to make of the data given the pandemic effects. But most analysts saw it as "encouraging".
And staying in Australia, the RBA turned down another chance to suppress runaway bond yields yesterday, reinforcing the view the central bank will bring forward its cash rate guidance to no later than 2023 amid rising inflation. By skipping the opportunity, that has powered up their wholesale market yields - and it has turned a consolidating market in New Zealand into one where earlier falls were cancelled.
In Australia Delta cases in Victoria have risen to 1655 cases reported there yesterday, and less than the day before's spike. There are now 23,730 active cases in the state and there were another 10 deaths yesterday. In NSW there were another 268 new community cases reported yesterday with 3,951 active locally acquired cases which is lower, and they also had 2 deaths yesterday. Queensland is reporting zero new cases. The ACT has 10 new cases. Overall in Australia, more than 76% of eligible Aussies are fully vaccinated, plus 12% have now had one shot so far.
On Wall Street, the S&P500 is ending its week flat on the day but up +1.0% for the week to record high levels. The good earnings reports just keep coming, althouigh Apple disappointed. Overnight, European markets were also flat, but Paris rose again by +0.4% to be +1.2% higher in a week. Frankfurt gained +0.7% for the week, London +0.5%. Yesterday, Tokyo closed up +0.3% on the day for a +1.3% weekly gain. Hong Kong ended its Friday down -0.7% for a -2.5% weekly retreat. Shanghai was up +0.8% yesterday, limiting its weekly loss to -0.8%. The ASX200 dropped -1.4% yesterday consigning the week to a -1.2% loss. The NZX50 rose almost a full +1.0% so that it could end the week just shy of unchanged.
The UST 10yr yield opens today down -2 bps to 1.55% and down -9 bps in a week. The US 2-10 rate curve recovered some steepness today at +107 bps. Their 1-5 curve is also at +107 bps, while their 3m-10 year curve is unchanged at +149 bps. The Australian Govt ten year benchmark rate has held yesterday's sharply higher level, now at 1.95%. A week ago it was at 1.79%. The China Govt ten year bond is unchanged at 2.99%. The New Zealand Govt ten year is holding at 2.60%. A week ago it was at 2.44%. See this.
The price of gold is down -US$19 from this time yesterday, now at US$1783/oz. At this level it is -US$10 below the week-ago price.
And oil prices are back up by +US$1.50 to just under US$83/bbl in the US, while the international Brent price is now just under US$84/bbl. But these are still slightly lower than week-ago levels
The Kiwi dollar opens today -½c weaker at 71.6 US. Against the Australian dollar we are soft at 95.2 AUc. Against the euro we are a firmer at 62 euro cents. That means our TWI-5 starts today marginally lower at just under 75.2, up +30 bps in a week and still well over the top of the 72-74 range of the past eleven months, possibly now resetting this range.
The bitcoin price has recovered by +2.2% since this time yesterday, and now at US$62,524. Volatility over the past 24 hours has been very high at just over +/-4.3%.
The easiest place to stay up with event risk today is by following our Economic Calendar here ».
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59 Comments
Will be interesting to see how quickly we can get the pediatric vaccine into NZ. Based on the governments last efforts it might be sometime before we see it on these shores.
The question is does it make any medical or scientific sense to vaccinate children in this case, at this stage the evidence really does not seem to support the necessity of vaccinating young children.
And the other point is that if the vaccine is approved for children in New Zealand will they come under the vaccine certificate and will that be required for them to say go to school in person.
These are ethical questions that need to be answered along with whether there is any scientific or medical justification for vaccine certificates and vaccine mandates.
https://www.stuff.co.nz/national/health/coronavirus/126811054/covid19-s…
https://nymag.com/intelligencer/2021/09/covid-19-vaccine-status-age-dis…
Does it make sense to vaccinate all children? I don’t know. Does it make sense to vaccinate the thousands of vulnerable children in NZ, including my 7 year old son, yes definitely.
Would you care to provide some medical or scientific backing for your assertion.
Read the stuff article above
Stuff didnt used to pass as science... but granted, these are strange times
I'm pretty sure our doctors now refer to Hillary Barry for their second opinion
Failing that, some plonker off the street who says it didn't hurt a bit
I never said stuff was a peer reviewed scientific journal, it doesn’t have to be to convey scientific knowledge. The article makes direct quotes from pediatric respiratory specialists. Is that not scientific backing? Im not arguing the fact there are no larger studies to draw conclusions from but the same could be said about the adult population when the vaccine was in its infancy.
Same could be said about adult vaccines.... Absolutely!
Hence we need Hillary Barry to steer the ship
https://i.stuff.co.nz/national/health/coronavirus/300441329/your-unvacc…
Here's another excellent Stuff science piece...
20 x ..!!!!
Wow!
Yes it's a "thought experiment " in the author's words.... but still....
Can't argue with the single source of truth
Good points!
Its good how after 18 months people can't understand why you need to vaccinate as much of a population as possible to suppress a highly infectious virus.
https://www.bbc.com/news/health-59077036
Vaccinated just as infectious as unvaccinated. Main reason to be vaccinated is to prevent people ending up in hospital and needing beds required by cancer patients etc. kids not at risk so no need to vaccinate them. The older you are the more vaccination makes sense. Evidence suggests 12-18s need one dose, adults need two and no benefit from vaccination of under 12s unless they have underlying health conditions. That’s my understanding from reading of UK data from NHS, BBC and Guardian articles. I am vaccinated.
Vaccinated just as infectious as unvaccinated.
Go read the study, that is not what the authors concluded. Its a tiny sample and the huge range in the confidence interval makes it incredibly hard to form firm conclusions, such as what you are claiming.
The study authors summed it up what could be concluded from the study nicely:
Vaccination reduces the risk of delta variant infection and accelerates viral clearance. Nonetheless, fully vaccinated individuals with breakthrough infections have peak viral load similar to unvaccinated cases and can efficiently transmit infection in household settings, including to fully vaccinated contacts. Host–virus interactions early in infection may shape the entire viral trajectory.
The second bullet point says they also appear to be just as infectious.
I believe in the vaccine for my age group and it will reduce the pressure on hospitals. I think the risk in kids is overstated by the NZ government and they have also overplayed the vaccines ability to stop the spread.
I would like to see more of this information shared here so that we have a more complete picture.
Also the vaccines reduce in effectiveness over time so we might need to have some spread whilst we are protected, in order to build natural immunity on top of that from the vaccine.
https://www.bbc.com/news/health-57888429
This is a useful article. Good case for a single dose. Not much evidence that a double dose is needed for under 15s.
This push to vax kids is just another reason I'm not getting it. Something is just not right with this stuff when they are pumping it into kids that have next to no risk. Does this not at least make you stop and think ? you know like a kid that goes why ? why ? why ?
The vaccine still requires CDC approval at next weeks meeting. Watch the ACIP meeting live
1https://www.cdc.gov/vaccines/hcp/acip-recs/vacc-specific/covid-19.html
Evergrande servicing debt but highly doubtful on repaying debt. That’s the thing isn’t it, bit like in simple terms interest only mortgages, all can carry on regardless provided no one calls it in. The whole global debt mountain similarly structured, an ever increasing circuit of debt, so long as ticket clicks can provide enough to keep it onwards.
"Evergrande servicing debt". Are they? Or is someone else making payments on their behalf (You know. To keep the ship afloat until, say, after the Winter Olympics are over. Let's all remember what happens after the Beijing Olympics.... Late August 2008, they closed. 4 weeks later....Kaboom!)
Can't wait for the kids version of Pfizer to be available for my asthmatic 10 year old. Once we have that, and if as predicted the MIQ system turns back to home isolation next year, we are off for a 3 month trip. At some point you simply have to get on with it.
Totally agree. We will feel a lot more comfortable once we know our little guy has had the same opportunity as adults to reduce the chance of serious illness. It is however disappointing that a “new” formulation is required rather than using a third of the dose of the adult formulation. This will mean greater delays and the cynic in me suggests Pfizer did this mainly for profiteering.
Please provide some medical for scientific backing it's so much better than emotion.
As above
Amen!
Word. We are going to rage travel so hard. Been spending fuck all the last 2 years and need to gtfo of NZ. Got money to burn and not in NZ (lol sorry Queenstown is not a holiday).
Evergrande has made a second overdue bond interest payment late on Friday.
Saying this for a second time, no Lehman Bros moment.
Folks hoping for a contagious global real estate crash to buy the dip in NZ must had been disappointed.
Waiting is such a costly virtue.
"Saying this for a second time, no Lehman Bros moment."...your track record is fair to meddling CB..not sure anyone is taking note? Have you been buying big on SHIBA INU this week I hear?
Sounds like a brand of dunny paper. Is it smooth?
Do you think Evergrande or their 'friends' made the payment to bide some time? They are far from out of the woods yet
"[Evergrande] still has nearly $338m in other offshore coupon payments coming due in November and December...Fantasia Holdings Group Co Ltd, Sinic Holdings (Group) Co Ltd, China Properties Group Ltd and Modern Land (China) Co Ltd have all defaulted on dollar debt obligations this month."
https://amp.theguardian.com/business/2021/oct/29/evergrande-averts-defa…
People tend to underestimate the collective financial powers in China.
Really!!! Buy real estate in NZ? The most dumbest investment of anyone buys any Real estate in NZ at this time.
Just sell if you own some and invest that money in something which will generate something good for the future.
Auckland businesses lobby the PM to be able to operate - move to 3.3 at least
https://www.rnz.co.nz/news/business/454550/covid-19-business-groups-urg…
I am no fan of the CCP but I do like their style in suggesting Hui the owner of evergrand contribute his own money to the conglomerate, probably with an implicit threat as to what would happen if he failed to do so , the west could take a lead from that book with some of the financial failures that have occurred only to see the owners not held to account financially or criminally.
Inflation again. The prices of some things are going up, people are paying more for those things, so other people must be getting paid more for those things. Inflation just redistributes wealth from some people to others. The questions to ask therefore are:
- Is the re-distribution desirable? Are the winners inside or outside the country? Are they already very wealthy and therefore unlikely to do anything useful with the money they make?
- Is the re-distribution permanent or will the market adjust? For example, are tradies making loads of money because they are in short-supply, meaning more people will become tradies and labour prices will adjust back down? Will people innovate and find alternative better building methods / materials?
- What actions are required to tackle any permanent or undesirable re-distributional impact - e.g. a temporary rent freeze, changes to tax structures, etc?
On Wall Street, the S&P500 is ending its week flat on the day but up +1.0% for the week to record high levels. The good earnings reports just keep coming, althouigh Apple disappointed.
And Amazon.
40% Of The Bull Market Is Due Soley To Buybacks
Exxon Surprises With $10 Billion Stock Buyback Announcement As Cash Flow Soars
In real terms, Q3 real GDP remains more than a half a trillion below its pre-COVID baseline (annual rates), therefore a significant deficit to that minimum level of recovery (never mind the utterly mind boggling $6 trillion plus that’s missing on top – in just this one quarter – from the last time the economy broke).
What should be most concerning, especially in this same context of “stimulus”, is that this huge gap remains despite historic levels of government intervention (I’m neither including nor counting the QE fairy tale). In the GDP figures, meaning GDI, both the growth rate and the output gap suffered even with (annual rate) another half trillion in “stipends” flushed into the third quarter.
That alone should be, but won’t be outside any honest interpretation of yields, a huge red flag.
Rather contradicting reports there Audaxes! Earnings are good, share prices up, but actual productivity is bad...how can this be....
Not sure if you replied yesterday but would be interested on your take of the inverted yield curve in the US with the 30 year falling below the 20 year..
I did. Pension funds are the main buyers of the UST 30 year to match term liabilities for the reasons pointed out in the article I linked.
Much appreciated - will take a look. Thanks.
Interesting read. Thanks for the link
Anyone else confused about when we go to the traffic light system?
The PM said "and when every DHB reaches this target that is when we will move into a new framework called the COVID-19 Protection Framework"
But this article says " Auckland, which has now clocked up 10 weeks in lockdown, will almost certainly be the first to transition from the alert levels into the traffic light system that will govern New Zealand’s approach to Covid-19 for the foreseeable future."
?
I also wondered what the meaning is regarding the traffic light system , has the government gone from allowing each area to enter the system as 90% is reached to nobody enters until all dhbs reach 90% ? , this needs clarifying urgently as the outcomes are vastly different.
Who knows really? Probably not anyone in the govt. The thing is there is no real plan as such just a bunch of empty statements and broken promises. Mumbo jumbo if you will.
I imagine we will all move onto traffic light in mid December because boomers will want to go to beach houses over Xmas. So that's the plan I guess.
Areas outside of Auckland appear to be better off staying on the old system at level 2 than to move to the traffic lights so there’s a disincentive for business to have areas get to 90% (which seems difficult to achieve anyway in some low rate places).
But if Auckland moves first to Red Light after the PM decides 87% or so is good enough across the 3 DHBs - then Auckland will only obtain some internal freedoms but not be able to travel across the borders unless they show their certificates (which are still to be implemented).
Then later, after Xmas the regions might move to Red or Orange? And lose their level 2 freedoms.
The whole thing is a big confusing mess - mainly invented to protect South Auckland as long as possible before greater Auckland revolts.
Traffic lights needed for the growing protests? which seems to be growing wider now including Groundswell, business owners & midwives etc
https://www.nzherald.co.nz/nz/covid-19-delta-outbreak-auckland-domain-l…
Is this Arderns Hurricane Katrina? Prime ministers and presidents normally visit disaster zones to offer support and show empathy. Auckland is an economic disaster and our leader is nowhere to be seen. Happily supping flat whites in Wellington whilst Auckland businesses go bust.
The price of gold is down -US$19 from this time yesterday, now at US$1783/oz
Treasury real yield curves traded less negative.
160 new cases!
And only 1 fully vaccinated!
Or did they leave that bit out?
Any journalists want to ask the question? Anyone? Hello? Anyone there?
I don't think it is true that out of the 160 new cases only one was fully vaccinated. The cases in the rest home in Auckland would be fully vaccinated. Or am I 'not getting' your comment?
Vaccination doesn't stop infection, it just means, we hope, that symptoms are less severe.
No, you're right ...
They omit information if it doesn't suit the narrative... a. whole truth full of half truths...
But if vaccination doesn't stop infection, and kids are not high risk, WHY are we so mad on jabbing them...?
Doctors not questioning this should hang their heads in shame
"NEW YORK, NY—Experts are encouraging everyone to get their kids vaccinated, and are predicting dire consequences if this is not done. According to several top scientists, Pfizer executives won't meet their sales goals if you don't vaccinate your 5 to 11-year-old.
"This would be absolutely catastrophic for struggling Pfizer execs," said Dr. Wexner, an expert. "Not vaccinating your kindergartener could jeopardize their ability to make their Porsche payments, pay off their mistresses, or remain platinum members at their golf clubs. We just can't let that happen."
https://babylonbee.com/news/experts-warn-that-if-children-between-the-a…
https://www.news.com.au/finance/economy/interest-rates/global-inflation…
David why is everyone talking and are worried about inflation.
Has governor of reserve bank ( Bird of feather flock together) not confirmed that one need not worry about inflation as is time pass even 8f it touches double digit as is bound to fall back if not in few quarters than in year or in decade.
Unless Governors are lying and manipulating and are allowed by government as it suits them too as who does not like free and easy unlimited money.
If governors are wrong should face trial for deceit.
The weekend summary omitted the words "Emergency Use" in the covid vaccine update. Does that mean it can only be used in emergency for immuno-compromised kids or that corners can be cut to approve it more quickly/more profitably?
"FDA News Release
FDA Authorizes Pfizer-BioNTech COVID-19 Vaccine for Emergency Use in Children 5 through 11 Years of Age"
It must be an emergency... we are wearing face diapers
The pfivser vaccine is only approved provisionally for adults. This means it is only necessary for people with "urgent clinical need".
You can't really justify giving the vaccine to 5 year olds on that basis as covid is effectively just another common cold for children. I am sure they will though.
This pandemic has turned completely fear driven now. All logic has gone out the window with mandated vax and now they are trying to get you to pump this into your kids. Starting to think there is some hidden agenda here now. Not much of a conspiracy theorist myself but I'm beginning to look for one !
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