Here's our summary of key economic events overnight that affect New Zealand, with economic stress rising relentlessly in China, the US, and Europe.
First however we should note that it is the long Thanksgiving holiday weekend ahead in the US, so agencies are releasing data ahead of that shutdown. All eyes will be on their Friday retail numbers, and expectations aren't that great, it has to be said.
Some of the data released today was modestly positive however.
Their durable goods order data for October was strong, and much stronger than expected. They were up +1.0% from September, the second best gain in nine months, and that puts them more than +10% ahead of year-ago levels. Orders for capital goods were up +16% on that same basis.
Not so positive, the Markit factory PMI fell into a contraction in November from a minor expansion in October. This was well below forecasts of a steady-state. It is their first contraction in factory activity since the pandemic hit in mid-2020. There was a renewed fall in output and a sharper decline in new orders as demand conditions were stymied by inflation and economic uncertainty. On the other hand, firms signaled the first improvement in supplier performance since October 2019.
This Markit PMI had already recorded the giant US services sector in contraction in October, and that continued into November, they report.
US jobless claims inched up to 248,000 last week, a higher level than we have had in a long time, but still relatively low. There are now 1.34 mln people on these benefits. It seems likely that jobless claims are entering a new rising phase as the fight against inflation bites, but in the US case we should remember that the insured unemployment rate is still only 0.9% of their workforce, unusually low.
Breaking the recent down-trend, mortgage applications actually rose last week although they remain sharply lower than year-ago levels. They were helped by a small shift lower in mortgage interest rates.
American new home sales are ambling along at a modest pace, up in October from September, but softer than year-ago levels.
The expected fall in consumer sentiment as recorded by the University of Michigan survey update happened, but it wasn't anywhere near as fierce as was expected. Most of this fall is from the current 'mood'; ahead, the expectations are little-changed.
It is very noticeable how little data China releases, given its size. But late yesterday, their State TV channel indicated that more "support" is coming from their central bank, probably a sharp cut in the reserve requirement. Analysts are expecting a -25 or -50 bps cut from 11.25% and it may come as early as today or tomorrow.
Pressure is on in other areas as well. Foxconn factories are being hit by protests that started after employees learned bonus payments they expected to get would be delayed. Police moved in.
Taiwanese industrial production data was weak again in October and their retail sales weren't anything to write home about either in the same month.
Singapore reported that its economic activity expanded at over +4% in Q3-2022 but that they see 2023's activity slowing to a crawl, perhaps as low at +0.5%. They also said inflation was running at 6.7% in October, but that is a down-shift from the 7.5% they reported in September.
In Europe, their economic contraction eased in November as price pressures cooled, as measured by their factory and services PMIs. Germany is doing it the 'hardest', but it is joined by France now. To be fair, 'hardest' is relative, and the pressures, while unusual because they relate to the Ukraine war, are nothing like the 2020 pandemic pressures
In Australia, they report a still-expanding factory sector. But their services sector is now contracting.
The UST 10yr yield starts today at 3.74% and down another -3 bps from yesterday. The UST 2-10 rate curve is little-changed at -76 bps. And their 1-5 curve is still inverted at -84 bps. And their 30 day-10yr curve is marginally more inverted at -11 bps. The Australian ten year bond is up +5 bps at 3.62%. The China Govt ten year bond is little-changed at 2.84%. And the New Zealand Govt ten year will start today up +6 bps at 4.26%.
Wall Street has started its Wednesday session up a mere +0.1% on the S&P500. Overnight, European markets all ended +0.4% higher. Yesterday Tokyo ended its Wednesday session up +0.6%, Hong Kong also ended up +0.6% and Shanghai ended up +0.3% The ASX200 rose +0.7%, but the NZX50 posted a -0.9% retreat and hurt by the RBNZ hawkishness.
The price of gold will open today unchanged at US$1742/oz.
And oil prices start today down -US$4.50/bbl from this time yesterday at just on US$77.50/bbl in the US while the international Brent price is just on US$84.50/bbl.
The Kiwi dollar will open today at 62.3 USc, up almost a full +/-1c and back to where we were in mid August. Against the Australian dollar we are a tad higher again at 92.8 AUc and another new high since April. Against the euro we are up at 60.1 euro cents. That all means our TWI-5 starts today at 71.1 and up another +40 bps.
The bitcoin price is now at US$16,374 and up +1.2% from this time yesterday. Volatility over the past 24 hours has been modest at +/- 1.9%.
There will be no video version today, or podcast due to Covid.
The easiest place to stay up with event risk today is by following our Economic Calendar here ».
We welcome your comments below. If you are not already registered, please register to comment
Remember we welcome robust, respectful and insightful debate. We don't welcome abusive or defamatory comments and will de-register those repeatedly making such comments. Our current comment policy is here.