Here's our summary of key economic events over the weekend that affect New Zealand with news the fourth pandemic wave rolling over Europe presents them with brutal choices, and will have global consequences.
But first up, we can report that Jay Powell will be re-nominated for a second four-year term as the head of the US Fed. Lael Brainard, an ex-academic, will be nominated as his deputy, replacing Trump appointed Richard Clarida, an ex-PIMCO adviser and academic.
Clarida has signaled that the Fed will likely taper faster when it announces the decisions at its mid-December meeting.
The Chicago Fed's National Activity Index bounced back strongly in October after a weak September result and activity levels picked up noticeably.
Completed home sales in October were unchanged from September, a slowing in this market. But the median price rise to US$393,900 (NZ$565,100) and the available inventory is now low at 10 weeks sales.
The Chinese central bank reviewed its loan prime rates and left them unchanged yesterday. That's 19 straight months of no-change.
In Hong Kong, they are getting inflation rising, +1.7% in October from -2.3% in September, even as economic activity is shrinking, a bad case of stagflation there.
In Hong Kong, HSBC is struggling to find an auditor big enough and brave enough to handle its requirements, despite a US$1 bln fee for a ten year contract. The job may go to a second-tier auditor.
In Taiwan we are starting to see some weakness in their export machine, unusual for them. Export orders rose only +14.6% in October, the lowest expansion in a year, and well below the +23% rise expected.
With the spreading fourth wave of the pandemic spreading fast in Europe, consumer confidence was expected to fall from already negative levels. But it is actually falling faster than expected as public safety lockdowns test the tolerance of the vaccine hesitant who despite the risks, are quite high in much of Europe. Despite that, consumer confidence is still above its long term average (which has always been quite negative).
In Germany, Angela Merkel said many citizens don’t seem to understand the severity of the situation. Her health minister said dramatically, by the end of their winter “just about everyone in Germany will probably be either vaccinated, recovered or dead”, leaving little possibility to survive as an unvaccinated German.
In Australia, banking behemoth CBA thinks Aussie house prices will fall -10% in 2023. They say the housing market is in the twilight of an incredible boom but when higher interest rates arrive in 2023, things will turn lower. Not all Aussie bank economists are as negative in their forecasts.
In Australia Delta cases in Victoria have slipped to 1029 cases reported there yesterday. There are now 9,533 active cases in the state and there were another 3 deaths yesterday. In NSW there were another 180 new community cases reported yesterday, another drop, with 2,696 active locally acquired cases, and they had one death yesterday. Queensland is reporting zero new cases again. The ACT has 11 new cases. Overall in Australia, just under 85% 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 up +5 bps since this time yesterday. The US 2-10 rate curve starts today flatter at +102 bps. And their 1-5 curve is steeper at +111 bps, while their 3m-10 year curve is much steeper at +151 bps. The Australian Govt ten year benchmark rate is +7 bps firmer at 1.85%. The China Govt ten year bond is still unchanged at 2.94%. The New Zealand Govt ten year is down -2 bps at 2.57%.
In New York, the S&P500 started its Monday session up +0.9% but has since given up much of that to be up just +0.2% in early afternoon trade. European markets all closed lower by about -0.2$, although London bucked that rend and ended up +0.4%. Yesterday, Tokyo ended up a minor +0.1%, Hong Kong fell -0.4%, while Shanghai finished up +0.6%. The ASX200 fell -0.6% and the NZX50 fell -1.0% yesterday.
The price of gold will start today much softer at US$1813 and down by -US$32 since this time yesterday, and a two week low.
And oil prices are +50 USc firmer at just over US$76/bbl in the US, while the international Brent price is now just over US$78.50/bbl. The US and some other consumer nations are getting ready to release some supplies from their strategic reserves. OPEC is threatening to curtail supplies, in response.
The Kiwi dollar opens today softer at just under 69.7 USc. Against the Australian dollar we are soft too at just over 96.2 AUc. Against the euro we are lower at 61.9 euro cents That means our TWI-5 starts today at 74.4 and actually its lowest since mid October.
The bitcoin price is -3.4% lower since this time yesterday, down to US$57,716. Volatility over the past 24 hours has been high at just over +/-3.0%.
The easiest place to stay up with event risk today is by following our Economic Calendar here ».