Here's our summary of key economic events overnight that affect New Zealand with news higher inflation is spreading everywhere.
But first, new housing starts in the US were unchanged in October from September, but a small rise was expected. That extends the 2021 tailing off that began in the second quarter, probably due to supply-chain issues mostly. However, building permits did rise in October after an unexpected drop in September.
This constrained supply is driving up US house prices. And now both their huge mortgage guarantors are having to back mortgages of sharply increased size.
Today's US Treasury 20yr bond auction was pretty much a non-event, with US$55 bln bid for US$25 bln on offer and the yield achieved was 1.99% pa, little different to the 2.00% in the prior equivalent event a month ago. The Fed took less than $2 bln this time.
The Canadian inflation rate in October came in at 4.7% as expected, but that is up from 4.4% in September. That's a 19 year high.
The flooding in British Columbia isn't easing and Vancouver is largely cut off; certainly its rail link is.
Data out yesterday for Japanese machinery orders for September didn't rise from August and that wasn't expected - although it is probably due to supply-chain issues rather than demand. However, it is expected to recover over the next three months.
Japan's exports for October were slightly softer than expected with their growth slowing, but again, probably due to manufacturers supply-chain issues. It was still +9.4% higher than the same month in 2020. They imported +19% more from New Zealand, but exported +59% more to us for an expanding surplus with us.
In the UK, CPI inflation rose to 4.2% in October, up from 3.1% in September and above the expected October rate of 3.9%. That's a ten year high. What was startling about this data is that it was up +1.1% in October from September, a pace that surely can't be repeated. The main upward pressure came from electricity, gas and other fuels.
In Australia, the iron ore price has fallen further, now a -63% drop since its recent peak and now back to levels it was at in 2019-2020.
In Australia Delta cases in Victoria have risen to 996 cases reported there yesterday, and a noticeable easing. There are now 14,260 active cases in the state (also an increase) and there were another 9 deaths yesterday. In NSW there were another 231 new community cases reported yesterday, another drop, with 2,862 active locally acquired cases, but they had no deaths yesterday. Queensland is reporting zero new cases again. The ACT has 12 new cases. Overall in Australia, just over 84% of eligible Aussies are fully vaccinated, plus 7% have now had one shot so far.
The UST 10yr yield opens today at 1.60% and -3 bps softer than this time yesterday. The US 2-10 rate curve starts today a little steeper at +112 bps. And their 1-5 curve is flatter at +107 bps, while their 3m-10 year curve is holding at +156 bps. The Australian Govt ten year benchmark rate is -4 bps lower at 1.83%. The China Govt ten year bond is unchanged at 2.94%. The New Zealand Govt ten year is +1 bp firmer at 2.64%.
In equity markets, the S&P500 dropped when they opened their Wednesday session but has now recovered to be flat on Wall Street. Overnight, European markets were all flat as well except London which fell another -0.5%. Yesterday the very large Tokyo market closed down -0.4%. Hong Kong closed down -0.3%, but Shanghai closed up +0.4%. The ASX200 ended with another -0.7% retreat, and was matched with the NZX50 down another -0.5%.
The price of gold will start today up +US$11 to US$1867/oz.
And oil prices are weaker by about +US$2 at just over US$78/bbl in the US, while the international Brent price is now just on US$80.50/bbl.
The Kiwi dollar opens today marginally weaker at just on 69.9 USc. Against the Australian dollar we are +½c firmer at 96.2 AUc. Against the euro we are little-changed at 61.8 euro cents. That means our TWI-5 starts today at 74.4 and unchanged since this time yesterday.
The bitcoin price has slipped again since this time yesterday, down -0.4% to US$60,338. Volatility over the past 24 hours has been moderate at just over +/-2.3%.
The easiest place to stay up with event risk today is by following our Economic Calendar here ».