Here's our summary of key economic events overnight that affect New Zealand with news the global manufacturing sector is in good shape.
Overnight a set of factory PMIs for October were released worldwide and were generally reporting improving economic activity.
The widely-watched US ISM one reported strongly expanding conditions, little changed from September. But they aren't yet reporting any easing of pricing and supply-chain pressures. That was matched by the internationally-benchmarked Markit version although this one recorded a small pull-back from very healthy conditions, driven by production constraints. New order levels were very strong.
Hong Kong economic activity disappointed in Q3-2021, turning in a limp result and well below the expected result. Q2-2021 shrank, and a bounceback was expected in Q3, but what they got was a stall.
The China Caixin PMI was a bit more positive than the retreating official one, suggesting things are not completely dire in their private manufacturing sector.
The October PMI for Japan was positive with a moderate expansion and better than for September. For India, it was similar.
It was also a similar story for Taiwan, Thailand, Indonesia, and Malaysia. But South Korea's factory expansion slipped back a bit.
In financial market news, rising bond interest rates are causing big losses in the hedge fund sector and they are pulling back. This is creating less liquid market conditions, and it may only get tighter with a Fed taper, and rate hikes for them down the road that are now getting priced in. The problem with the hedge fund industry and risk pullback is that the US Treasury market is struggling for liquidity, and those conditions could spill over into other financial markets.
At the same time, the UST yield curve is flattening, usually a sign that markets are worried about longer term growth prospects.
In commodity markets, the Baltic Dry Index is signaling that the period of strong demand for cargo ships may be over. And related, global wheat volumes may be declining, and that is causing a surge in the price for this staple food, now back at a ten year high.
And a legacy commodity looks like it is at the end of the road. Newsprint paper manufacturers are seeking up to a +40% price increase to continue manufacturing the product in Australia. The end of the road for hard-copy newspapers is now at hand.
The two Australian factory PMIs delivered contrasting results. The locally-watched one recorded conditions that were decelerating and now barely expanding, whereas the Markit one reported their manufacturing sector growth accelerated in October as restrictions eased. It is hard to know why they would diverge.
The Aussie property market continued to rise in October but the rate of growth has slowed dramatically since the start of the year, as a lack of affordability, less government stimulus and more listings hit the market, new figures show. The compiler of the data says things may turn lower soon.
In fact, investor lending rose in September in a minor way but was overshadowed by chunky a fall in owner occupier lending leading to an overall reduction in housing lending.
In Australia Delta cases in Victoria have risen to 1471 cases reported there yesterday. There are now 21,959 active cases in the state and there were another 4 deaths yesterday. In NSW there were another 136 new community cases reported yesterday with 3,495 active locally acquired cases which is lower, and they also had 4 deaths yesterday. Queensland is reporting zero new cases. The ACT has 5 new cases. Overall in Australia, more than 77% of eligible Aussies are fully vaccinated, plus 11% have now had one shot so far.
The UST 10yr yield opens today at 1.57% and up +1 bp overnight. The US 2-10 rate curve starts today still at +106 bps. Their 1-5 curve is steeper at +108 bps, while their 3m-10 year curve is also steeper at +154 bps. The Australian Govt ten year benchmark rate has slipped slightly to 1.94%. The China Govt ten year bond is down -3 bps at 2.96%. The New Zealand Govt ten year is -4 bps lower at 2.56%.
On Wall Street, the S&P500 has opened the week with a hesitant start, up a minor +0.1% in the Monday afternoon trade. Overnight, European markets opened much more positively, generally up +0.8% although Paris was up +1.0%. Yesterday, Tokyo started its week with a very strong +2.6% post-election gain. But Hong Kong fell -0.9% and Shanghai ended its session down -0.1%. The ASX200 ended its Monday session up +0.6% while the NZX50 finished down -0.5%.
The price of gold will start today at US$1791/oz. At this level it has recovered +US$7 from this time yesterday..
And oil prices are little-changed but softish at just under US$83.50/bbl in the US, while the international Brent price is now just under US$84.50/bbl.
The Kiwi dollar opens today just over 71.9 US and a slight firming overnight. Against the Australian dollar we are marginally firmer too at 95.5 AUc. Against the euro we are unchanged at 62.1 euro cents. That means our TWI-5 starts today firmer that at this yesterday at just under 75.5, still well over the top of the 72-74 range of the past eleven months, and moving to resetting this range.
The bitcoin price has firmed just +0.9% since this time yesterday, and now at US$61,156. Volatility over the past 24 hours has been moderate at just over +/-2.4%.
The easiest place to stay up with event risk today is by following our Economic Calendar here ».
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.