Here's our summary of key economic events overnight that affect New Zealand, with news financial markets have ended the week nursing some big losses.
But first, the inflation measure the US central bank takes note of, the PCE, slipped in August from July to be +6.2% higher than a year ago. But the "core" result rose slightly to 4.9% and "stubbornly high". Personal income rose again at the expected rate, but personal spending rose faster than expected.
Overall American grain stocks are holding up and came in very much as expected and larger than a year ago. But corn stocks were lower than expected and that juiced its price today. Soybean stocks were high and its price has fallen sharply today. Both were outsized moves that will have global impacts.
The latest University of Michigan consumer sentiment survey has stayed very low, even if it did rise marginally from July.
New official data shows that last week, Japan's government spent about NZ$34 bln intervening in the foreign exchange market last week to prop up the yen, draining nearly 15% of funds it has readily available for these types of interventions (so they have about NZ$225 bln left in these reserves).
Japanese industrial production surged unexpectedly in August to be +5.1% higher than a year ago, its best non-pandemic result since 2014.
Meanwhile Japanese retail sales rose by +4.1% in August from a year ago, exceeding market consensus of +2.8% and following a +2.4% gain a month earlier.
In China, there were PMIs released late yesterday. The official factory PMI reports a very slight improvement to a steady state (neither expanding not contracting). But the private Caixin version has it going the other way, a growing contraction.
The official release also included data on their services sector and that was negative, falling from a modest expansion in July to no expansion in August. That is the third straight month of a decrease in their services expansion.
Hong Kong retail sales were reported for August too, and they weren't flash, falling -2.9% year-on-year.
And staying in Hong Kong, Bloomberg is reporting that the value of Chinese firms listed there has sunk -14% to their lowest valuation on record. They are now trading at just 60% of their book value, the cheapest ever.
India reviewed its policy interest rate late yesterday and as expected it raised it by +50 bps to 4.9%.
German reported that its labour force didn't grow in August, the first time in 18 months that that has happened. They also said the numbers out of work fell by -125,000 and their jobless rate stayed at 3.0%.
Meanwhile the EU said its overall inflation rate rose to +10.0% in September. German inflation was higher at +10.9% whereas French inflation was at 6.2% which was about the lowest of the larger countries in the block.
European Union countries agreed to impose emergency taxes on energy firms' windfall profits, and began talks on their next move to tackle Europe's energy crunch - possibly a bloc-wide oil and gas price cap.
More globally, according to Dealogic data, global M&A fell for the third consecutive quarter in Q3-2022 as rising interest rates forced lenders to pull back from financing large deals and the soaring American dollar failed to spur US companies into snapping up foreign targets.
In Australia, their Productivity Commission is reminding policymakers that first home buyer subsidies push up housing values is counter-productive and doesn't make home ownership more affordable. "This money would be better spent preventing homelessness", they say.
The UST 10yr yield starts today at 3.83% and +6 bp higher than this time yesterday in a late surge. A week ago it was at 3.70%. The UST 2-10 rate curve is less inverted at -41 bps. But their 1-5 curve is totally flat. And their 30 day-10yr curve is less positive +102 bps. The Australian ten year bond is lower, down -6 bps at 3.89%. The China Govt ten year bond is unchanged at 2.77% and a two month high. The New Zealand Govt ten year will start today at 4.32%, up +10 bps and up +16 bps in a week.
Wall Street is down again today in its Friday session, with the S&P500 down -0.9% in late trade and slipping to a -2.1% a loss for the week. Overnight European markets all posted gains of about +1.2% except London which was up only +0.2%. London ended -1.8% lower for the week. Frankfurt ended almost -1.0% lower. And Paris ended its week +0.3% higher. Yesterday Tokyo ended down -1.8% for a weekly loss of -3.2%. Hong Kong rose +0.3% yesterday to end the week -3.1% lower, and Shanghai ended its Friday session down -0.6% to book a -1.4% weekly retreat. The ASX200 ended its Friday session down -1.2% and down -1.5% for the week, while the NZX50 also fell -1.2% yesterday to drop -3.9% for the week in a tough environment.
The price of gold will open today at US$1662/oz. This is up +US$3 from this time yesterday and up +US$20 from this time last week.
And oil prices start today -US$2.50 USc lower at just over US$79.50/bbl in the US while the international Brent price has risen to be just under US$85.50/bbl. These levels are similar to where we were at last week and eight month lows. Natural gas prices are still falling.
The Kiwi dollar will open today at just under 56 USc more than -1c lower than this time yesterday and back to a 13 year low (pandemic excepted). Against the Australian dollar we are unchanged at 87.7 AUc. Against the euro we more than -¾c lower 57.5 euro cents. That all means our TWI-5 starts today at just 66.3, and down -100 bps in a day and -160 bps in a week. That is an 11 year low (also pandemic excepted).
The bitcoin price is now at US$19,786 and up +1.6% from this time yesterday and up +5.5% from this time last week. Volatility over the past 24 hours has been moderate at just on +/- 2.7%.
The easiest place to stay up with event risk today is by following our Economic Calendar here ».
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80 Comments
Depends how spicy things got.
Life would definitely not be as good, but surely better than having things explode in close vicinity.
We'd all probably be fed, have electricity, water, etc. Maybe you wouldn't be able to drive your new car down to *insert retailer* and pick up whatever takes your fancy.
Don't worry, oil is fungible.
A Professor of Economics at Waikato told us this:
https://www.odt.co.nz/opinion/stating-case-favour-economic-growth
Saddest little piece I've read in quite a while.
You could say the US escalated things in 2014 when the engineered the toppling of the government and placing their puppet at the head.
Even after that had the Minsk agreements been followed through with, and Donbas and Luhansk been given their independent governance, we wouldnt be where we are today.
Even early in the Russian invasion Zelensky was supposedly close to negotiating but Boris Johnson and the US insisted that not happen
At every road the imperialist US has been opposed to peace. They are happy to fight this war to the last Ukranian. Anyone who believes Ukraine are winning are are going to be sadly disappointed.
Do you ever get the feeling that we are on the wrong side? We pretend that the US is the leader of the free world, but history says they are more the problem than the solution.
Should always have strived for peace!!! But the bloody war mongers, couldn't have that now could they...
https://en.wikipedia.org/wiki/Minsk_agreements
https://peoplesdispatch.org/2022/05/09/ukrainian-news-outlet-suggests-u…
You forgot to mention that the US Navy 6th fleet just used sophisticated underwater drone technology to destroy Nord Stream 1 and 2. The operation was run specifically from the USS Kearsarge which was operating close by in the Baltic at the time. To add insult to injury, joint NATO military operations run during the summer of 2022 (BALTOPS22) included the USA testing underwater drone technology for “de-mining” operations. In light of what’s happened it’s obvious that the US used the NATO operation as a dry run for it’s attack on Germany’s critical energy infrastructure. Those pipelines, worth tens of billions of dollars, were a source of shared prosperity for Germany Russia, and the whole of Europe. The neocons in the US however, will not tolerate a united Eurasia because it has a combined GDP far greater than that of the US. The US has a non compos mentis president, and arguably the last one was too. I don’t know who’s running the USA, maybe it's the CIA or NSA, or maybe advisers from Lockheed Martin, Raytheon, General Dynamics. Whoever it is, it sure isn't run by Joe Biden. Is the USA one of the good guys? Are we the good guys? When you're blowing up infrastructure of allays, and deliberately making economic misery for your allays then you have to start asking questions.
Russia is playing straight into NATOs hands. NATO wants Russia to be drawn into the Ukraine conflict, to lose any sense of proportion and desperately throw ever more men into the meat grinder. They want Russia in a very high intensity "forever" war over a small strip of farmland.
Ideally we could get Russia to use a few nukes because that would galvanized every adjacent country to Russia into splashing out on a nuclear armament for defense. Realistically though Russia may not be that stupid, but we can dream.
EU politicians stupid enough to pretend the US did not bomb the pipeline to force them into line with an energycrisis. But cold EU citizens are not so stupid, they know and EU politics will change. It's that important.
Trump raged against the pipe and sanctioned participants, Biden said they would physically shut it. No mystery when it happened.
Next steps are that Ukraine will seek to regain the annexed regions, and I predict they will make big gains in doing so over the next few months.
If Ukraine looks like it will reclaim those territories, what does Putin do next???
Since he has declared the regions part of Russia, he will consider it an existential threat.
I can’t see this ending well, and I struggle to see a diplomatic solution.
It really does seem like chances for diplomacy is over.
There is no way Russia will relinquish land it says it now owns.
Ukraine have the wind at their backs and are unlikely to settle for anything other than their territory back.
Best case is years and years of contested territory and random acts of violence throughout Eastern Europe.
Putin has backed himself into a corner. Will he use nukes - he may but don't forget the military are the ones who have to actually carry out those orders - if they don't carry out Putin's orders it is a defacto coup and there is a distinct possibly Putin can do nothing. Putin (and I say Putin as a opposed to Russia) wasn't able to enlist significant number of new volunteers so he turned to limited mobilization - how well is that going. The average Russian was happy to ignore the war so long as Putin ignored them. Now the war has come to the average Russian, Putin may find he doesn't have the support he believes he has.
Did you both miss the The Bank of England will suspend the planned start of its gilt selling next week and begin temporarily buying long-dated bonds in order to calm the market chaos unleashed by the new government’s so-called mini-budget.
Print baby print..
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Today, I released a strategy to meet our bold goal of tackling hunger in America. We're going to help more Americans access the food they need to stay healthy, give folks options and information around healthy choices, and help more Americans be physically active. Link
Today is the fourth day in around 9 days where cryptos have had a solid green day while equities are heavily in the red. Before this period, the correlation was about 98%.
Cryptos officially the best performing asset in Q3 by a long margin (and that is just basic spot prices, it ignores yield). Lets see if it keeps up.
Few people in the early stages wouldve been bullish on asset prices given the unknown quantity of the pandemic and it's economic ramifications.
What was apparent were disruptions to supply, and trade in many industries. Cheap money is what's been used to try and smooth that, but it does seem like things will be catching up to us.
Anything other than cash seems like quite the gamble at this point in time, but if you have some hot take for the next 12-24 months I'm all ears. Becoming more self sufficient in basic life requirements is about the best I have.
In the past, the flight to USD has reversed quickly so I’m consolidating back to NZD but have no idea where to put that, except TDs. I’m not sure if it’s realistic to expect any real return in this market. Some level of buying power survival seems the best outcome. I don’t have any long term purchases to bring forward.
You'd certaintly hate to be sitting on a ton of cash if there's a bank run...
The run has extended beyond banks to sovereign states - If Truss becomes prime minister, sterling will crash
"Forced Selling Of Everything" - UK Pension Funds Are Still Liquidating Assets, Seeking Bailouts
FHB who wanted to us KS funds as deposit are now decimated. Anyone aged 60 plus with KS been decimated before retirement As those companies BS take a hammering it's only a matter of time before job losses come. I said this earlier this year, come election time the full might of the sh** hitting the fan will be in full swing.
Gold about flat at the moment (down US$3) but against the NZ$? Up ....NZ$55.
If the NZ$ keeps falling, I shudder to think what imported costs are going to look like. Asset prices are going to come under extreme pressure as current holders are increasingly forced to sell, just to meet every day commitments.
Requests for property valuations have collapsed, according to a valuation franchise owner in Auckland. Last year his team could be declining 20 requests for valuations a day because they did not have the capacity. He said these days he was getting about two jobs a week, and valuers were having to work with sellers who had an overinflated idea of what their properties were worth, and were sometimes angry when they were told otherwise. “You get some people who are just on another planet thinking they will get the same value they got a year ago,”
We keep hearing that there is a floor that house building costs can't get below,but a lot of the costs involved are either 'ticket clippers' or labour inputs,so if times are tight ,the valuer may not be able to charge what he wants and the blocky,sparky etc,may not be able to say he's not getting out of bed for less than $1k a day,take it or leave it pricing,especially when the developer or other client can't just pass on this cost as in the past environment of rising prices.
Denmark, New Zealand, Finland, Singapore, and Sweden are perceived as the least corrupt nations in the world, ranking consistently high among international financial transparency, while the most apparently corrupt are Syria, Somalia (both scoring 13), and South Sudan (11
I suppose Putin is just the latest of a long line of dictators that the Russian populace have had to live with over the past century or so. Living under a repressive regime seems to be the norm and might explain the lack of protest about an unjust war. With the media being state controlled and all opposition politicians silenced in one way or another Putin can rely on the national narrative since at least 1945 that the ‘west’ is evil and is coming for you. That would capture near to 100% of the current population. So no surprises really. At least a minority of the population are voting with their feet. A drastic way of protesting by leaving your home. Possibly for ever.
https://i.stuff.co.nz/national/130045236/police-urge-caution-as-carnage…
In Queensland the roads Authority is required to compensate any such incidents to the vehicle owners directly so they dont have to claim against their insurance & lose their no claim bonus.
The view there is that the roading authority is responsible for the state of the roads. Whereas NZTA admitted last week that they’d run down maintenance for 10 years to save money & were planning to cause major disruption to NZ travel by doing a catchup this summer.
This is a good one about the property market collapse starting to appear in MSM. A lot of people still in the denial phase:
https://www.stuff.co.nz/business/130014540/from-passing-up-20-property-…
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