Here's our summary of key economic events overnight that affect New Zealand, with news wars and holidays are the features of today's roundup.
First up today, it is a Federal holiday in the US, Columbus Day (which is morphing into Indigenous Peoples' Day in a growing number of States and communities). But many businesses there don't treat it as a day-off - and that includes the stock exchanges.
Nor the currency markets of course, and the US Dollar is rising again and at a 20 year high. It is now +20% higher than a year ago. This is a sharp headwind against the onshoring movement which is happening due to logistics pressures. It is also a sharp headwind against profits of American companies that have substantial international operations. It will only help countries hurt by a rising greenback if the domestic US economy stays healthy and imports more. So far, that has been the case. The domestic US economy remains the engine of the global economy.
In Canada, it is their Thanksgiving Day holiday.
In Ukraine, Russia is lashing out with indiscriminate bombing of population centers, using terror tactics in reaction for its invasion failures. This angry change is driving up the cost of wheat, with worries that that Russia could suspend the safe grain trade corridor from Ukrainian Black Sea ports that was agreed to in an UN-brokered deal. Prices have risen +15% in a month.
In England, their central bank expanded its support of pension funds at the heart of their bond-market crisis even as borrowing costs jumped. It is a clear sign that stress in the British financial system isn't going away.
In Sweden, they handed out the Nobel Prize in Economics to, among others, Ben Bernanke, the former US Fed boss. It is for research he did in helping build policy responses that protect jobs in economic crises. They were used widely in the 2020 pandemic emergency.
In Australia, the AiGroup services PMI fell rather sharply, from a moderate expansion (53.3) to a contraction (48). The increasingly uncertain economic environment is dragging on their service industries. All services activity indicators have worsened in the last month. Lower consumer and business confidence following repeated interest rate rises and persistent inflation were major factors in the fall-off. The indicators for sales, new orders, and selling prices all fell, while input prices continued their upward march adding to inflationary pressures which is boosting nominal turnover levels.
And staying in Australia, the OECD's chief economist has come out in favour of their Stage 3 tax cuts going ahead, on the basis that they will tackle the issue of bracket creep. He told the ABC. “This is important. High inflation means that people are getting pushed to high-income brackets even when the real income does not warrant that,” he said.
The UST 10yr yield starts today at 3.89% and unchanged. The UST 2-10 rate curve is little-changed at -42 bps. But their 1-5 curve is unchanged at -3 bps. And their 30 day-10yr curve is unchanged at +92 bps. The Australian ten year bond is holding at 3.97% and up +6 bps. The China Govt ten year bond is unchanged at 2.76%. The New Zealand Govt ten year will start today at 4.39%, and up +10 bps.
Wall Street is open and the S&P500 has started their week down -1.4%. Perhaps they wish they hadn't opened. Overnight, European markets fell by about -0.5% although Frankfurt closed essentially unchanged. Yesterday Tokyo was closed for a holiday, Hong Kong closed down almost -3.0%. And Shanghai ended its Monday session, it fell after a week-long holiday, down -1.7% with a late sell-off. Chinese tech stocks were hit hard after the US imposed sweeping export controls on chips. The ASX200 ended -1.4% lower, and the NZX50 also fell away heavily at the end, finishing down -1.7%.
The price of gold will open today at US$1668/oz. This is down -US$27 from this time yesterday.
And oil prices start today down -US$1.50 from this time yesterday at just on US$91/bbl in the US while the international Brent price has fallen to be just under US$96.50/bbl.
The Kiwi dollar will open today at 55.6 USc and a -½c lower from this time yesterday. Against the Australian dollar we are marginally firmer at 88.3 AUc. Against the euro we are -¼c softer at 57.3 euro cents. That all means our TWI-5 starts today at 66.2 and down about -30 bps.
The bitcoin price is now at US$19,154 and -1.8% lower than this time yesterday. Volatility over the past 24 hours has been modest at just over +/- 1.0%.
The easiest place to stay up with event risk today is by following our Economic Calendar here ».
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