Here's our summary of key economic events overnight that affect New Zealand with news the US economy seems to be settling in for a longish positive run.
But first, the overnight dairy auction brought higher prices, up +1.9% in US dollar terms. This is the sixth consecutive rise since September during which period the index has risen +14%. Perhaps butter was the standout, rising +3.5% from the prior event, but WMP rose the average +1.9% and SMP was up +1.4%. Volumes sold at this auction exceeded 30,000 tonnes, the highest of the year. In NZ dollars, today's prices are up +3.5%, taking them to their highest since 2007. So this event will underpin current farmgate payout price forecasts, perhaps give them some upside.
US retail sales data for October came in quite positive, up +1.7% with both prior months being revised higher too. These were the largest rises in seven months. The rises were broad-based and better than analysts were expecting. At the same time, business inventories remain unusually low.
October industrial production bounced back stronger than was expected too, with a healthy rise in October. This was broad-based as well, with capacity utilisation rising even if it remains well below where it should be.
Housing data was better than expected in the US too.
Meanwhile, the heat has gone out of US reverse repo volume growth even if it does remain high.
And the US debt ceiling can will need kicking again soon, along with its usual partisan brinkmanship, with the temporary measure due to expire in early December.
Canadian housing starts disappointed again in October, extending a lowering track since March.
In Vancouver, a big mudslide has effectively closed their port operations, removing an alternative to the large backlog of ships on the US West Coast
In China, the opening of the Beijing stock exchange has been greeted enthusiastically - even frenetically. The day before it opened, 45,000 accounts were established to trade there. On the day (Monday) 180,000 accounts were opened to trade there.
In Australia, their central bank governor doesn't think inflation is coming there any time soon. In fact, he has signaled that there will be no rate hikes there in 2022. In fact, the latest RBA minutes say they are "prepared to be patient" until their inflation and jobs targets are met - which means no change of settings until "inflation [is] between 2 and 3 per cent on a sustainable basis, the labour market will need to be tight enough to generate materially higher wages growth than at the time of the meeting."
And staying in Australia, Delta cases in Victoria have slipped to 797 cases reported there yesterday, and a noticeable easing. There are now 14,131 active cases in the state (a big decrease) and there were another 8 deaths yesterday. In NSW there were another 212 new community cases reported yesterday, another drop, with 2,864 active locally acquired cases (an increases), and they had another 2 deaths yesterday. Queensland is reporting zero new cases again. The ACT has 12 new cases. Overall in Australia, just over 82% of eligible 12+ Aussies are fully vaccinated, plus 8% have now had one shot so far.
The UST 10yr yield opens today at 1.63% and +1 bp firmer than this time yesterday. The US 2-10 rate curve starts today unchanged at +110 bps. And their 1-5 curve is also little-changed at +110 bps, while their 3m-10 year curve is holding too at +157 bps. The Australian Govt ten year benchmark rate is +5 bps firmer at 1.87%. The China Govt ten year bond is unchanged at 2.94%. The New Zealand Govt ten year is +3 bps firmer at 2.63%.
In equity markets, the S&P500 has started their Tuesday session up +0.5% on Wall Street. Overnight, European markets all rose +0.5% except London which dipped another -0.3%. Yesterday the very large Tokyo market closed up +0.1%. Hong Kong closed up a strong +1.3%, but Shanghai closed down -0.3%. The ASX200 ended with a -0.7% dip, and was matched with the NZX50 down -0.5%.
The price of gold will start today down -US$7 to US$1856/oz.
And oil prices are firmer by about +US$1 at just on US$80/bbl in the US, while the international Brent price is now just under US$82/bbl.
The Kiwi dollar opens today a -½c weaker at just under 70 USc. Against the Australian dollar we are soft at 95.7 AUc. Against the euro we are softish at 61.7 euro cents. That means our TWI-5 starts today at 74.4 and almost -40 bps lower than this time yesterday.
The bitcoin price has fallen away since this time yesterday, down -5.5% to US$60,605. At one point it got down to US$58,674. Volatility over the past 24 hours has been very high at just over +/-4.9%.
The easiest place to stay up with event risk today is by following our Economic Calendar here ».
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44 Comments
Was MIQ ever legal? Clearly courts are not happy: https://thespinoff.co.nz/politics/29-10-2021/andrew-geddis-our-miq-syst…
I wouldn't be surprised if New Zealand taxpayers end up paying repetitions, the duration it's been in place for is unlikely to be easy to defend for Government.
Not sure I'd want to travel yet Foxy.
Besides I'd bet the travel insurance companies either won't cover against cancellations or health costs without some very steep premiums.
Still another year away at least, before the risk falls away enough. Plus global warming will put extra charges on air travel that may make it unaffordable., for all bar the rich. it's like we are going back to the 30s again!
True. It's always been there, but covering it will be harder. I just hope the airlines, particularly AirNZ get better at serving their customers, like enabling people (or making them) not fly if they are ill.
Some years ago my wife and went to Europe to visit her family in Holland, my first ever visit, and my AirNZ flight to Singapore had me sitting next to a chap who was very ill with a cold or flu. Needless to say despite trying to stay away from him, by the time we got to Holland, I was coming down with it. What really annoyed me was that we were staying with her elderly parents and her mother caught it. Pissed me off big time.
In the US there are laws that require airlines to refund the cost of flights that are cancelled and so on, we need those laws in NZ.
Meanwhile, the heat has gone out of US reverse repo volume growth even if it does remain high.
by Audaxes | 16th Oct 21, 10:02am
Reverse QE Begins: Treasury To Drain $480 Billion Starting Monday
What does this mean in practice? As the Treasury announced today, T-Bill sizes are set to jump. Indeed, the size of its three- and six-month bill auctions will rise for the first time since March as the department rebuilds its cash buffer following the short-term extension of the debt ceiling. Specifically, the Treasury plans to sell $48 billion of three-month bills on Oct 18, up from $42 billion as of Oct 12, and $45 billion of six-month bills up from $42 billion.Additionally, as part of the cash rebuild, the Treasury will flood the market with a flurry of Cash Management Bill issuance, the first of which hits on Tuesday, Oct 19, for $60 billion
Well if we were "listening to the science" then presumably that should be the case ... but considering that we are now squarely in the "politics masquerading as science" phase of the response I imagine there are some nervous looking sheep in the Wellington region, wondering if they will be hauled off to the Beehive to have their entrails read so our esteemed leaders can decide what to do next.
Probably because they are quite different viruses. It would actually be pretty hard for measles to mutate into a form that would render its vaccine ineffective (in contrast to Covid19).
You could read this paper here if you want to understand why the Measles virus is quite different in this regard. You probably won't be able understand much of it but I hope it shuts up further stupid comments. Happy reading.
https://www.cell.com/cell-reports-medicine/fulltext/S2666-3791(21)00041…
Given that a minimum of five immunodominant antigenic sites must be disrupted to affect the susceptibility of MeV-H to serum neutralization, the probability of it happening naturally is vanishingly small. Further, simultaneous disruption of fewer than five major antigenic sites would confer no selective advantage on the virus, making stepwise evolution an unrealistic pathway to achieve a neutralization-resistant phenotype. However, even a MeV insensitive to anti-MeV-H antibodies would still be efficiently neutralized by MeV-F-specific antibodies in immune human sera and, even more critical, would lack the SLAMF1 and nectin-4 receptor tropisms required for pathogenicity and transmission. In addition, the requirement of H-F cooperation in fusion triggering is likely an additional constraint to antigenic evolution. This presents a stark contrast with results from other respiratory RNA viruses, such as influenza and coronavirus, where a much smaller number of amino acid substitutions at key positions within a single virus-embedded glycoprotein can cause escape from polyclonal antibody responses in sera.
We therefore conclude that there is a near-zero probability for the accidental emergence of a pathogenic MeV capable of evading vaccine-induced immunity.
https://ourworldindata.org/grapher/covid-stringency-index?tab=chart&cou…
We now have the dubious distinction of being more locked down than China!
Is this really the New Zealand that we want?
No!
What I am saying is that we are currently one of the most stringently locked down countries, even more so than China, a country many bash for being authoritarian.
Whether this is good or bad would depend on having an open and fair debate, unfortunately the debate has become one sided and political, leaving science and medicine on the side line.
What we must remember is countries that go down the route of totalitarianism or authoritarianism don't have a good track record in history, and the extreme cancer caused the the marginalisation of one sector to boost the power of the other, takes many decades to come right.
Perhaps you could have continued on to say if vaccination had got underway in volume last March or earlier, if saliva testing had been widely available and those two vital tools employed and targeted efficiently geographically and ethnically, then NZ would not be so restricted as at present and could have achieved relief from that much earlier?
But I see no evidence to support this assertion!
The result is that even if vaccination were universal, the coronavirus would probably continue to spread.
“We would discourage” thinking in terms of “a strict goal,” he said.
https://www.latimes.com/science/story/2021-11-12/cdc-shifts-pandemic-go…
The RBA is saying lots at the moment. Perhaps they're starting to acknowledge the obvious; the obvious that we've all known for some time?
The Reserve Bank essentially blamed itself for the long-term run-up in home prices. "At some level, that was our doing," Dr Ellis admitted ...."Financial deregulation in the 1980s and the global decline in inflation in the 1990s combined to reduce nominal interest rates...with lower interest rates, people could service a bigger mortgage with the same repayment....because most of the housing stock was already in place, the main effect was to bid up housing prices; this was captured in land prices."
https://www.abc.net.au/news/2021-11-16/housing-affordability-inquiry-rb…
Other CB heads will be swearing at him over this as he is essentially admitting that by doing what they all did, they caused some fundamental problems in the economy. Most other central bankers and Governments are still in denial.
The first step in fixing a problem is knowing what caused it. Now how to fix it
In Australia, their central bank governor doesn't think inflation is coming there any time soon. In fact, he has signaled that there will be no rate hikes there in 2022.
From his speech, the relevant quote seems to be "...the latest data and forecasts do not warrant an increase in the cash rate in 2022".
We'll see. You can only defy the markets for so long. We all know how accurate central bank forecasts tend to be, and if these ones turn out to be wrong then they will end up raising.
Anybody else notice this?
The bank charges 22.95 per cent interest on “cash advances” on its Hotpoints Mastercard, and from November 30 payments to gambling accounts, or to buy cryptocurrencies will be considered cash advances.
Ordinary purchases made on Westpac's standard Mastercard incur interest of 20.95 per cent, unless the cardholder clears their balance by their monthly payment date.
The move has prompted the Problem Gambling Foundation to call for an planned review of gambling laws to consider following the Britain’s Gambling Commission in banning payments from credit cards to gambling companies.
https://www.stuff.co.nz/business/126989708/westpac-raises-interest-rate…
congratulations! now we have tax on air! need to pay every 6 months. if you want to go outside. probably next step will be they will ask us to pay for it. brilliant! now it is trial and free. next is subscription for the air. do you want to go to restaurant? to the mall or even have hair cut??
I was thinking. The framework for leaving Auckland. The Novax Clan must submit a negative test. The Vax Tribe not so much. Blissfully confident in the efficacy of a leaky, short lived therapeutic "vaccine" that does not eliminate the virus from the nasopharynx. So inevitably when Covid spreads, can we blame the Vax Tribe? Because that's who will spread it. In the music festivals. Vax Tribe. Bars, restaurants. Silent spreaders, asymptomatic, everywhere. Rest homes, Christmas with grandma. The second half of December is going to be a shocker. Merry Christmas.
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