Here's our summary of key economic events overnight that affect New Zealand, with news August data is starting to show the turn in global economic sentiment is turning 'south'.
But first, after the prior week's recovery in the American retail impulse, last week's same-store survey built on that, returning to the good year-on-year weekly gains we have seen since early July. These are gains far better than can be accounted for by inflation.
However American new home sales fell sharply again in July to an annual rate of only +511,000 and way lower than that +575,000 rate expected. In fact, that is now the slowest pace of new home building in six years.
And there are increasing reports of company layoffs, and we would expect the data to start to show that, and a turn down in their long-running labour market expansion. The 'Great Resignation' trend may be over, in the US at least.
The Richmond Fed's factory survey, covering the active mid-Atlantic states region, was another that is reporting a contraction now. But to be fair, they report a 3 month average, whereas the month result itself for August isn't a contraction. But the trend is definitely lower, led by retreating new order levels.
There were a raft of 'flash' PMI's released overnight for August, and the one for the US reported a slower expansion in their factory sector, but a further contraction in their services sector. Having noted that, the factory sector expansion was its weakest in two years. The survey results point to "weak client demand" to explain the retreats.
It was the same story in Japan where the same survey found a factory sector still expanding but at a much reduced pace in August - and a services sector that moved down into a small contraction.
In China, another dairy company has been caught with undeclared additives in their 'pure milk' products. The downturn in China is starting to have ripple impacts regionally, including in the Australian mining industry.
Taiwanese inflation is picking up, now at 3.4% in July. And their industrial production rose but at a slower pace and consistent with the sharp slowing in export orders we noted yesterday. Meanwhile their retail sales, which has lagged for years, is now rising quite sharply.
Singapore's inflation rose to 7.0% in July from a year ago, although the month-on-month rise was tamer than they have had recently.
In a surprise hawkish pivot, the Indonesian central bank hiked its policy rate by +25 bps yesterday to 3.75%, saying it needs to mitigate rising inflation risks there.
After falling to an all-time low in July, the EU's consumer sentiment survey in August stayed worryingly weak even if it did 'improve' marginally. They are building a 'fear of winter' given the Russian shutoff of energy shipments.
The EU 'flash' August PMI's reported small contractions in their factory sectors, but a steady-state in their service sectors. Things are tougher in Germany than France, but they are not easy anywhere.
The 'flash' Australia manufacturing PMI fell to 54.5 in August 2022 from 55.7 in July, hitting the lowest level in a year but marking the 27th consecutive month of expansion within their factory sector. The same report suggests their services sector is contracting in August.
The UST 10yr yield starts today at 3.05% and little-changed from this time yesterday. The UST 2-10 rate curve is less inverted at -26 bps. Their 1-5 curve is slightly less inverted at -12 bps. Their 30 day-10yr curve is now at +88 bps and steeper than this time yesterday. The Australian ten year bond is up another +7 bps at 3.67%. The China Govt ten year bond is staying lower at 2.65%. And the New Zealand Govt ten year will start today up +8 bps at 3.80%.
Wall Street is down a relatively minor -0.2% in Tuesday trade today on the S&P500 index. Overnight, European markets closed lower about -0.2% similarly, except London which was down -0.6%. Tokyo ended its Tuesday session yesterday down -1.2%. Hong Kong ended sown -0.8%, while Shanghai was a mere -0.1% lower. The ASX ended its Tuesday session down -1.2% as well, while the NZX50 was down -1.0%.
The price of gold will open today at US$1748/oz which is up +US$11/oz from this time yesterday.
And oil prices start today at just under US$94/bbl in the US which is a sharp +US$4.50 rise, while the international Brent price is still just under US$99/bbl.
The Kiwi dollar will open today at 62.1 USc and +½c higher than this time yesterday. Against the Australian dollar we are little-changed at 89.7 AUc. Against the euro we have risen about +¼c to just over 62.3 euro cents. That all means our TWI-5 starts today at 71.3 and a further firming.
The bitcoin price is now at US$21,429 and a +1.0% rise from this time yesterday. Volatility over the past 24 hours has been modest at just on +/- 1.8%.
The easiest place to stay up with event risk today is by following our Economic Calendar here ».
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Gov of Indiana visits Taiwan. Another poke the panda moment. No sign of warships, missiles or fighter jets screeching across the straits. Only raised hackles now.
The Treasury announces the syndicated tap of the 2.50% coupon 20 September 2035 inflation-indexed bond, and concurrent repurchase of the 2.00% coupon 20 September 2025 inflation-indexed bond. Given the timing of the launch, the Treasury also announces the cancellation of the tender scheduled for 25 August 2022.
As previously announced, the Treasury expects to issue between NZ$1.5 billion and NZ$2.5 billion of the 20 September 2035 inflation-indexed bond in the syndicated tap. Initial price guidance is 57 to 63 basis points over the 20 September 2030 inflation-indexed bond.
As previously announced, concurrent to the tap, the Treasury is open to repurchasing up to NZ$1.5 billion of the 20 September 2025 inflation-indexed bond at a yield of 126 basis points under the 20 September 2030 inflation-indexed bond.
The transaction will be priced on 24 August 2022. Further issuance of the 20 September 2035 inflation-indexed bond will not occur prior to November 2022.
ANZ Bank New Zealand Limited; Bank of New Zealand; UBS AG, Australia Branch; and Westpac Banking Corporation, New Zealand Branch are Joint-Lead Managers for the issue. Link
In other news:
"All-cause deaths in New Zealand are running at a record level of 930 per week and rising, which is 35 per cent above the long-term average, whilst weekly ‘because of Covid’ deaths peaked at 143 and are now decreasing."
https://www.conservativewoman.co.uk/admit-the-vaccine-death-link-now-an…
Our population is ageing and this is a demographic outcome, our vaccination rate is 95% so they will all have been vaccinated. In other news the sun came up today.
A further breakdown by age and co-morbidities would be more compelling.
Theses statistics warrant some government investigation to get to that level of detail, because if healthy individuals are being sacrificed to protect the old and weak, the one size fits all approach needs to be abandoned
Are these sacrifices broadcast nationally? How are they carried out? Thrown into a volcano or blood drained on a pyre?
"Are these sacrifices broadcast nationally?"
I believe there was a daily sermon that covered it. Some of the reporters were horrifically butchered live on air.
If we have an aging population and a historically underfunded health system, those who voted for underfunding govts while not thinking ahead to a time they might not afford private health insurance will have really shot themselves in the foot - potentially fatally.
Cumulative excess mortality since the start of the pandemic is still negative, we are just catching up on flu deaths that were deferred by lockdowns.
https://ourworldindata.org/grapher/cumulative-excess-mortality-p-scores…
Even the Sun '"coming up" has been thrown into doubt. Apparently,some are claiming the earth is spherical,and rotates,so sun rising or setting is just a millenial meme.
https://www.telegraph.co.uk/columnists/2022/08/23/lockdown-hysteria-led…
Or worse outcomes in cancer diagnosis and treatment delay?
It's probably just a catch up of the several thousand less deaths than expected in 2020 and 2021, as lockdowns kept flu and other nasties at bay.
Couldn't possibly be an unproven experimental gene therapy?
I am assuming you have done your own research here...
No, it is "seasonal", I was told on this forum.
Keep burying your head in the sand Just an Opinion, Covid is far from over, this Big Pharma experimental 'vaccine' (as the expert's like to call it) is still in the trial phase. Already had 2 booster friends that their bodies could not overcome infections and ended up in hospital. An increase of 35% all cause deaths is not an aging population and still government is pushing booster shots. The psychosis continues.
It certainly does...
Cmon fossil. Are you able to understand the graph nzdano posted above 20 minutes before your misinformation ? The 35% excess deaths you blindly quote is misleading because you omit the reduced cull of the old and frail during the lockdowns. Of course you would expect a catchup during the next flu season.
If you see a long term rise in cumulative excess deaths, then by all means come and tell us. But you won't know that for at least another 6 months.
It would be useful to see a breakdown of the death rate between vaccinated/unvaccinated, age adjusted. The fact that we are not seeing this may suggest something.
Roger did you catch Covid and if so, how long did it take for you to recover?
"The downturn in China is starting to have ripple impacts..."
China is tearing down tower blocks and pausing construction on buildings that could house 75m people as Xi Jinping’s government seeks to prop up the country’s stalling property market. Beijing has adopted a “build, pause, demolish, repeat” strategy as Chinese officials seek to restrict supply to avoid a plunge in house prices and boost economic activity through more construction.
A boost to GDP akin to paying people to dig holes, and fill them back in.
Seems hard to believe that that is all that there is to it.
It may be that the authorities know that there is too little reinforcing in these buildings, inadequate foundations, things like that.
Some interesting coverage of build quality from these two fellows: https://www.youtube.com/watch?v=XopSDJq6w8E
Where is this quote from? Not the article you link? If there is destruction of standing apartments that would be interesting, can you link that article?
Thanks, and yes that is interesting :)
The ultimate in resource wastage!
Indeed! This has actually been happening for decades in China, particularly in infrastructure. I remember one road in the city I lived was "rebuilt" 3 times over the course of 3 years. Became a yearly "tear up and rebuild it!" operation, for clearly no reason. Meanwhile not far away a well built road wasn't maintained so developed larger and larger potholes until you were swerving all over the road to avoid them.
Classic Communist government idiocy, although it did keep people employed when they otherwise might be let go. Totally inefficient, a "feature" of large monolithic governments and fairly corrupt practices around who wins construction projects. Hopefully we get less and less of this as it's a waste of resources, exposure to actual competition has helped a lot of the other parts of the economy in China transform to be efficient, but it's obviously still not yet hit the construction sector.
The CPC has picked the nation's construction sector particularly as a winner for its huge role in supporting millions of direct jobs as well as upstream and downstream employment.
Over the years, national and territorial authorities have pumped billions in subsidies to vertically integrated the entire supply chain within its national borders (ranging from businesses tooling building material manufacturers to real estate agencies).
Even the OBOR initiative lists boosting construction and allied sector jobs as a key benefit to the Chinese economy.
Classic Communist government idiocy, although it did keep people employed when they otherwise might be let go. Totally inefficient, a "feature" of large monolithic governments and fairly corrupt practices around who wins construction projects.
NZ, CCC roads
Madness. Authoritarianism at play. Akin to scrubbing the airport runways to stop covid spreading.
Those home builds in the US; could that be a consequence of builders being busy building replacement houses for those destroyed by bush fires? Thousands of houses have been destroyed in the last few years, most will have been insured, and will be being rebuilt. Take all the tradies out of the normal 'new' house building and put them on replacement house building and surely that would put a dent into their 'new' house building capability?
Yes it may be a factor but I would suggest a far larger factor is that the raise in Mortgage interest rates has moved affordability out of the reach of many Americans. Don't forget they have a much fairer banking system over there, the house loan is on the house not the borrower and so they are much more careful (need to be) on who they lend to.
bushfires not a factor
only approx 3500 residences burned in bush fires in 2021 compared to around 8000 in 2020
No houses being rebuilt in fire infected Superior, Colorado. Homeowners were underinsured. Most have left or moved to less expensive neighborhoods.
It's bad news for sure, 5% down from 60% to 55% yield does not seem worthy of the drama however.
Maybe people will wake up and realise that climate change is actually a thing that you should be worried about, instead of "oh it will be a bit warmer, that's great!".
Maybe, I dream of retirement to my Banana plantation in Northland. Well suited to the Banana Republic we could become,at this rate of social climate change.
Not sure how I'm meant to ram-raid a plantation, can you please choose another retirement hobby with more obvious street frontage, thanks.
You might find you can't actually get to your plantation, so can't harvest anything as well. Looks like another road (likely the Havelock-Linkwater also) will be abandoned soon: https://www.stuff.co.nz/national/129653037/one-slip-too-many-landslides…. Add to this a bunch of other roads around Nelson/Marlborough/Northland/West Coast that are becoming outrageously costly to fix with increasing amounts of AGW driven events occurring and we will soon be abandoning entire towns.
SH1 in Northland is still closed, I imagine that area is going to potentially be abandoned as well in the future.
Return to coastal routes and the power of the wind...
I hear the manifold cries of Aucklanders stranded after selling up and moving to Central Otago.
where did you see link water to Havelock at risk of closure? while possible, I think this one wilI reopen for sure
Waka Kotahi local managers were saying in stuff the other day, that they had spent millions trying to fix it from the storm last year and now they have to pretty much start again. It hints at the feasibility of the road at all, considering both ends can be got to by boat (well not linkwater itself but Anikiwa nearby). I can't seem to find the article now either. The road isn't closed at the moment though, so it could be that it just escaped the brunt of it... this time.
I cycle toured over the road at Easter and it was in pretty bad shape then, lots of temporary traffic lights and many of the fixes looking to be huge engineering jobs to be done properly, so not really done properly. You could probably spend $200m on that road and it still come down in a bad rain event. At some point you just have to abandon it. Climate change events will make this a normal activity going forward, we will have to choose what we save as the unstable climate causes greater and greater havoc. Just look at what insurance companies are saying to understand the ramifications.
I think he means the Linkwater out to top of Kenepuru. But that will eventually reopen...too many houses, farms, forestry out there.
Maybe people will wake up and realize record highs are merely changes in temperature, within a climate. You should see my worried look.
Greater temperatures, more water in atmosphere, more energy, pretty basic physics. But yeah, let's pretend it's all a hoax, despite all the evidence which is becoming clearer and clearer with every extreme.
I'm unsure whether folk truly believe scientists around the world are all in on a giant hoax, or they simply don't want their own lifestyles to be inconvenienced at all just to pass the next generations a more viable planet.
The latter drives the former, though most will not admit such.
The US has drought stricken fields every year, since they started planting maize.
great overview of the US housing market, its now reaching GFC levels
https://wolfstreet.com/2022/08/23/sales-of-new-houses-collapse-in-the-w…
History repeats! And we know the solution, money money money, and it will happen again
Correct. Inflate or die!
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