US jobless claims low, eyes on Nov jobs report; global food prices soar; air cargo volumes surge; Aussie home loans retreat; UST10yr 1.46%; oil and gold languish; NZ$1 = 68.2 USc; TWI-5 = 72.9

Here's our summary of key economic events overnight that affect New Zealand with news that rising inflation is due to more than just oil prices - food prices are now reaching extreme levels.

But first, US jobless claims came in low again reporting only +212,000 new claimants with the prior week's low level revised lower. Now only 1.56 mln people are on these benefits. (This is the actual number; most reports focus on the seasonally adjusted level which is at 1.96 mln, so it may take a while for that statistical twist to work through.)

Supporting these very low rates are the data for layoffs which came in at only 14,875 in November, the lowest monthly total since May 1993.

All eyes are now on tomorrow's non-farm payrolls report where a rise of +550,000 is expected in November. There will be interest too in the tracking of overall hours being worked.

Meanwhile, the threat of another Federal government shutdown seems to have eased with a bipartisan deal agreed, one that still needs to pass votes in both Congressional bodies. It should pass but the Trump desire to cause havoc plays hard in these chambers still.

Japanese consumer confidence remained unchanged but still quite depressed in November. It is showing no sign of returning to pre-recession levels.

Global food prices pushed up to a new recent high in November and now only marginally lower than the record high in February 2011. But in inflation-adjusted terms, these prices are now at their highest levels in 45 years. Meat and dairy prices are not driving the overall index, but they are rising and near their highs as well. It is hard to see conditions coming where food prices will fall back, so this pressure could be long term. 

Inflation in the OECD area surged to +5.2% in October, the highest rate since 1997.

European producer prices shot up more than expected in October, and the expectation was for a high rate. Only they got more.

But that hasn't inhibited international trade in goods - yet. Air cargo activity in October shot up +10.4% above the October 2019 level, up +8.6% in Europe, up +18.8% in North America, and up +7.9% in the Asia/Pacific region.

In Australia, demand for home loans fell in October, down by -2.5% from September. For owner occupiers, the drop was -4.1%. The year-on-year data looks spectacular but it is pandemic-affected and it is the monthly retreat that is catching eyes. Not only is housing churn lower, regulatory pressures are building and there is a sense that a credit crunch is coming just as the market itself is tailing off after a long period of unbridled enthusiasm in Australia. With the many regulatory levers being pulled in New Zealand, the latest being the rolling out of the new CCCFA requirements which come on top of a string of others, a credit crunch is probably more likely to bite, and hard, in New Zealand.

In Australia, pandemic cases in Victoria have risen to 1480 cases reported yesterday, and quite a surge. There are now 12,728 active cases in the state - and there were another 10 deaths yesterday. In NSW there were another 271 new community cases reported yesterday, with 2692 active locally acquired cases, and they had no deaths. Queensland is reporting no new cases. The ACT has 8 new cases. Overall in Australia, just over 87% of eligible Aussies are fully vaccinated, plus a bit over 5% have now had one shot so far.

The UST 10yr yield opens today at 1.46% and +2 bps higher from this time yesterday. But the real story is the flattening of the rate curves as short rates rise faster than long rates. The UST 2-10 rate curve starts today flatter again at +84 bps. Their 1-5 curve is a little steeper at just over +96 bps, while their 3m-10 year curve is actually unchanged at +137 bps. The Australian Govt ten year benchmark rate has firmed +1 bp to 1.68%. The China Govt ten year bond is up +2 bps at 2.91%. The New Zealand Govt ten year is down another -3 bps at 2.38%.

Wall Street has pushed on up another +1.5% in early Thursday afternoon trade. Overnight, European markets fell however and by more than -1%. Yesterday Tokyo fell -0.7%. Hong Kong rose +0.6% while Shanghai was fell -0.1%. The ASX200 fell -0.2% yesterday, while the NZX50 closed down -0.4%.

The price of gold will start today at US$1767/oz and down by -US$18 or -1.0% from this time yesterday.

And oil prices are languishing, just marginally softer at US$66.50/bbl in the US, while the international Brent price is now just over US$69.50/bbl. But this overlooks a sudden temporary dive to just over US$62/bbl four hours ago.

The Kiwi dollar opens today softer at 68.2 USc. Against the Australian dollar we are firmer at 96.1 AUc. Against the euro we are also softer at 60.2 euro cents. That means our TWI-5 starts today at 72.9 and at a level it has changed from very little all week.

The bitcoin price has fallen to US$56,199 which is -4.3% below the level at this time yesterday. Volatility over the past 24 hours has been moderate at just over +/- 2.6%.

The easiest place to stay up with event risk today is by following our Economic Calendar here ».