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 India, they have an air pollution crisis, one that is shutting down cities, including New Delhi. Even their rich are frustrated now.
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 ».
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87 Comments
How much cool aid did you swallow?
Even the whole truth is basically saying the evidence is non existent.....
https://interactives.stuff.co.nz/2021/the-whole-truth-covid-19-vaccine/…
This makes little difference. It is the "waning effect" that causes cases to surge in these so called "fully vaccinated" countries. As the uptake on boosters is quite dismal compared to the uptake of the initial vaccine. We are going to experience the same issue here next Autumn/Winter irregardless of what colour the traffic light is.
Yep give it 6 months and government ministers and journalists various will furiously be doing a "find and replace" to swap out references from 'unvaccinated' to 'unboosted'.
"It's a pandemic of the unboosted".
"The unboosted are threatening the great Kiwi winter"
"The virus WILL come and find the unboosted in their homes"
Looks like the impact on deaths is quite dramatic. 98 deaths through the whole pandemic, of which 4 have occurred in the 6 months since the majority were vaccinated.
I.e. mortality over a population of 30,000 odd mostly vaccinated people is comparable to that of a nasty car crash.
https://www.worldometers.info/coronavirus/country/gibraltar/
Yup and that is why we should be opening this country up. The cost/benefit ratio of staying locked down for a fully vaccinated population doesn't stack up. Instead we are masking children, creating a system that discriminates against the unvaccinated & appear to have no plans to open up internationally. Read the article below. How is this right at this point in the covid repsonse?
https://www.nzherald.co.nz/nz/covid-19-delta-outbreak-womans-plea-for-m…
I love vaccines. Just not so sold on the waning efficacy after 3 months requiring boosters for non sterilizing non mucosal immunity against an airborne respiratory virus by way of purposefully instructing the body to produce pathophysiological spike protein vaccines.
I have a different take. My question is why are they so concerned?
Health officials added one person was hospitalised with Covid and another is in intensive care.
That is 0.006% of their population of 33,000.
https://www.express.co.uk/news/world/1522994/Gibraltar-news-covid-cases…
Will do. I think I can spare an hour a year to reduce my risks from Covid by an order of magnitude - if I have an up to date vaccine it really is no more concerning than the flu for me. Clear benefit on any reasonable risk assessment, even for a young healthy adult like me.
NZ punching above its weight yet again -
https://financialpost.com/investing/david-rosenberg-canada-second-froth…
Really? I read/watch/listen to a lot of "news" and I don't see much about how "Bad" the housing market it. A lot of puff pieces on how this house went for x above expectations, and how little Jimmy and Jane bought a house through hard work. Nothing actually critical of the market, let alone the Governments absolute failure of a response.
I am yet to see a single piece in NZ media showing we are now the sh!ttest country on earth for housing affordability, with the single highest price rises in 4 years (ironically, since the Crisis was acknowledged and a specific person voted in to fix it)
I believe the most likely response from our PM if asked, would be "I reject that, next question, ummmm Tova, Get Vaxxed, Aroha!"
"Doctors Might Have Been Focusing on the Wrong Asthma Triggers
The pandemic was a big social experiment that sent asthma attacks plummeting.
...If viruses indeed play a bigger factor in asthma attacks than initially thought, doctors might have been mistakenly fixating on other factors.
...This has the effect of blaming patients or parents of patients, when factors outside the home might actually play a bigger role. “We have this paternalistic attitude in medicine,” adds Janine Zee-Cheng, a pediatrician in Indiana. “You’re noncompliant with your medicines. Or you’re not monitoring your kid’s meds. Or you’re smoking indoors.” It’s “doctor knows best”—but the pandemic has exposed how much doctors did not know.
https://www.theatlantic.com/health/archive/2021/07/the-pandemic-drove-a…
Northman46,
The figure that stands out for me is the 10 yr. CAGR. AT 7.20% we are over 3 times the average and not far short of twice that of Canada in 2nd place.
No doubt some will take a perverse pleasure in NZ being 'No 1', but I cannot, even though I appear to have become wealthier as a result. There is a great deal of evidence available to show that the more unequal a society becomes, the more it fragments.
Your only wealthier if you can cash out some / all of your capital holdings.
For the majority of Kiwis it's perceived wealth not yet accessed, or leverage (debt).
What does it matter if your house appreciates 30% each year. Your salary doesn't. And you still need a house to live in.
Yeah, well, the decline of New Zealands housing market has been prematurely forecast by most of the countries economists, our own Reserve Bank multiple times and even the Prime Minister had a stab at that game. You'd think by now people would have learned that in New Zealand you never bet against housing. It's a widow maker.
Indian cities forced to close down by their own foul air. China has many not much better. Friend has son in Jakarta where too it is dire. Many many more similar globally. Doesn’t appear that noise & head nodding in the exalted ranks of world powers is making the slightest dent. Perhaps Greta & her screaming cohorts should just concentrate on these sort of huge and critical targets rather than lambasting the small easy ones such as our country who in reality are contributing scarcely an iota of the global problem. Just suggesting.
Not doubting the numbers PDK, but I have some confusion about them. I've seen the pollution in Jakarta and Los Angeles, and know that Auckland or Wellington do not have that problem. So where is most of our pollution generated? 18.9 tons per year per head is a lot, but for most driving our car to work wouldn't do it, even if we add in the log fire some of us have for heating?
What is the distribution of our pollution?
Something I've wondered. If farting cows are a problem. What would be the cost /feasibility of converting more diary land into land that produces plant based protein?
Like is it feasible from like a land / climate perspective?
And is it better for the environment (global warming /energy needs) to grow crops like soy etc, rather than grass for cows to eat?
The process of animals eating the crops and then humans eating the animals is certainly highly inefficient compared to humans eating crops directly. Converting the land use is part of the challenge, but the real blocker is converting human habits. Unfortunately, as soon as we feel wealthy we want to pile into dairy and dead animal.
Several problems there. Most of our farmland is only suitable quality for grazing or forestry, due to contour and soil type. Of our good stuff, plenty is gobbled up by cities and housing, some is in horticulture and market gardening, and some is dairy. There's potential to transfer some dairy into horticulture, but certainly it wouldn't be economic to grow a low value commodity like soy that can be produced much more efficiently elsewhere.
Then there's also the problem that ploughing up grassland to grow crops releases the tonnes of carbon per hectare it contains into the atmosphere, not exactly a win for carbon emissions.
On a global scale, making the humans eat the soy or other crop directly rather than feeding it to animals would be more efficient. The other thing that would help would be to improve the efficiency of agriculture in the developing world, there's an awful lot of ruminants out there with high emissions per unit of food produced because of the farming systems (for instance India has around 300 million cattle and buffalo).
About a quarter comes from fonterra, presumably largely the big coal milk powder plants? Not sure if this accounts for supplying farm emissions too.
Another quarter from the big fuel companies, so driving, transport and deliveries etc.
https://i.stuff.co.nz/business/114431409/nzs-biggest-greenhouse-gas-emi…
We all know the main things we can do. Get on a bike instead of into a car, especially if you're just hauling your own body around town. Eat less meat, and easy seasonally. Fly less. Insulate your house.
The reason you don't see in as much in Auckland or Wellington is threefold:
1. Yes there is less, but not as much as you can see. It's a density thing, after all on a per head basis we put out more than India for example.
2. Because of their geographical position, no chance for inversion layers to trap pollutants.
3. Not all pollutants are visibly equal, ie they are there but you can't see them.
No one appears to be able to answer my question Dale. In#1 you sort of admit that.
I do understand your perspectives. My daily commute for example is 12 minutes. I've lived in AK and understand that some are up to or over 2 hours. But does that make up almost 20 tons CO2 per head? If not where does the rest come from? We are all going to pay, but I suggest there should be some effort put into ensuring those costs go where they are generated.
Murray 86.. I too have seen the pollution in Los Angeles, but not since about 1986. premium grade California unleaded gas together with catalytic converters mandated throughout US since 1970's have put paid to LA pollution. The mountains are now seen throughout Southern California. Hardly ever decades ago.
The comment made the other day Foxy "We need to fix the rich who are preventing us from fixing the problem" is the issue. Their denial has meant that major world manufacturers have denied, avoided, dodged, prevaricated and outright lied to prevent technology being developed that would compete with or replace their products. As a consequence our Government will implement changes to combat climate change without the technology being available to replace existing problem areas. Places like Indonesia and India have a huge issue of large numbers of old, inefficient vehicles, that are cheap and easy to fix for a population that has very low incomes. These will be the cause of most of that pollution. Fixing that issue will be a nightmare by any measure.
If the big corporations hadn't moved to protect the status quo, and instead being visionary to see, understand and lead the way to alternative options, they could be leading the world into a cleaner future. But instead they are leading us to a struggle for our very lives in a battle we cannot win. Greed will kill us all.
The housing bubble bursting in 2008-09 basically destroyed the wealth of the bottom 50% whose primary asset (if any) is a home. Net worth of the bottom 50%--over 60 million American households-- fell to a near-zero in 2011, at the nadir of the housing market....The (rich's) fortunes have climbed in a series of higher lows and much higher highs; each spot of bother (collapse of the bubble du jour) dented their net worth, but their wealth never even declined to previous troughs.....the pendulum of wealth-power concentration has reached an extreme, and when it swings back, it will reach an equally extreme position at the other end of the spectrum. (CH Smith)
Maybe - So Elon Musk and Tesla is not the answer then - I am still more inclined to trust capitalism to provided the answers than socialism (remember chernobyl) but political leadership has been woefully lacking for a long time and as a result we have allowed corporations but also individuals to consume resources without paying the full cost. I think its called the tragedy of the commons.
Carbon in the atmosphere is only but one measure of our impact and right now I think we have too much focus on the one measure. An outcome of such a singular focus is that we may stop or reduce the consumption of fossil fuels while we increase the depletion of other resources such as copper and lithium and rear earths
The problem is capitalism, or more precisely, capitalists protecting their patch that has driven the problem, preventing the solutions from coming out until it is too late. I agree that socialism won't fix it. But assigning some form of political ideological bias is also a part of the problem. Whatever system of Government we operate under, entrepreneurialism should be encouraged and supported, and the wealth prevented from stymieing efforts to bring these efforts to fruition.
Those UK price increase figures are amazing. They also clearly show that CPI increases are being driven energy and fossil fuel prices, which are hoovering spending money out of peoples' pockets. Anyone who thinks the answer to this is raising interest rates, which will take more spending money out of peoples' pockets, is simply mad. As if the Bank of England raising rates will persuade Russia to stop playing games.
It's interesting the way it works here compared with the US. I brought up the market pricing of inflation in the US at 1.09%. That is clearly not the inflation rate in the real economy as everyone is being hit with higher prices for everything, and has more to do with the Fed manipulating the pricing of treasuries across the entire range. Due to the massive government debt there is no tollerance for higher interest rates.
Whereas here the government debt is very low and the interest rates will make little difference to the budget. It's the mortgage holders that get burnt instead but RBNZ doesn't have control like the Fed does.
I'm betting that many mortgage holders here will rapidly find themselves in trouble with interest rates at 5% (that would be around your ocr of 1.75%). The economy would probably melt down at 6-7%.
It's a problem, isn't it!
If "Raising Interest rates' isn't the answer, then what is?
It can't be "Wage Rises!", because that just feed back into higher prices = higher wage demands (+Lay-off of non-essential workers), and higher prices etc etc etc. (NB: Any Wage Rises have to be for more than the CPI headline rate, if for no other reason that we all pay for CPI goods with after-tax income. So any Wage Rise has to be for a minimum of CPI + Tax Rate just to break-even)
Eventually, we get a last desperate gasp of 'we have to do something' about this' and interest rates go from 5% to +15% in short order, as there's nothing left to break the Wages/Prices Increase Cycle. Of course, that breaks most of society as a by-product.
The obvious answer - to put purchasing power back into prices (lower prices; current wages) appears to have escaped us. But perhaps, only for the time being.
The answer is probably the same as it was during the GFC, let some of our too-big-to-fail banks collapse, take a hit, find some new bankers and move on to recovery.
But since that is completely out of the question for our dear leaders, what will actually happen is stagflation and printing money.
My experience is that it is often not what is said but who is saying it. Recently I have run into a number of managers who I would suggest were intellectually and professionally dishonest, complaining about language from some which they have argued is inappropriate and offensive, but which I struggled to see why. In their roles they hear a lot of discussion, and will accept comments from some without question or challenge but others making the same comments get crucified for them. In addition, they often take those comments out of context to establish and exaggerate the offence they cause.
Ordinarily many terms and language usage in the english language have strong contextual connotations, that are not intended to be offensive but are adjectively descriptive. Even swear words take on entirely different contextual meanings in some usage. People should be smart enough to understand this.
There aren't any entirely non-vulnerable populations. This thing might well kill any of us.
But the vast majority of each population is not vulnerable to the disease and some groups much more so than others (young, non-obese).
The policies used to combat the disease also have costs (in terms of lives lost). So we have a very lively debate about appropriate response and a lot of dissenting views.
Point being Language is important.... its trying to appeal to the emotive rather than scientific ... maybe because the science is not clear and policy is a deliberate mess of fiction and moving goalposts ...
Fear, guilt, isolation... all are the tools of propaganda , not science
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