Here's our summary of key economic events overnight that affect New Zealand, with news global food prices are falling, led by dairy.
But first up, the Americans reported that their household net worth rose to a record US$154 tln in Q2-2023, a rise of +4.8% in a year. They managed that because their household liabilities only rose +3.6% in the same period. Helping is the surprisingly quick recovery suggests that the residential real-estate downturn is turning out to be shorter and shallower than expected.
US consumer credit rose a modest +US$10.4 bln in July, a second month with a solid but unspectacular rise. Household debt isn't an overall problem for them.
Meanwhile, under-scrutiny American regional banks saw their profits and deposits broadly steady in Q2-2023, suggesting the turmoil earlier in the year has eased considerably. But a regulator watch is still on for unrealised losses, especially around commercial property loans.
The Canadian economy added almost +40,000 new jobs in August, far exceeding market expectations of a +15,000 increase. Full-time work rose +32,000 and part-time jobs increased by +8,000 in the month from July. But there were some notable distortions. The number of self employed rose by +50,000. And the overall population rose +103,000 in the month. That meant that their jobless rate stayed at a relatively high 5.5%. Those in jobs saw their pay rise +5.5% from a year ago, and well above their inflation rate of +3.3%.
The Japanese economy expanded +1.2% in Q2-2023 from the prior quarter, compared with a flash reading of a +1.5% gain and after a downwardly revised +0.9% rise in Q1. This was the second straight quarter of growth, coming slightly less than market forecasts of a +1.3% rise, and despite being the fastest growth for a year, it was downgraded because of weaker-than-expected household consumption, and investment. Year-on-year, the Japanese economy was +2.0% larger. although the Q2-2023 grew at an annualised +4.8% rate, so relatively fast recently. Just not as fast as earlier indicated.
All eyes will be on the CPI and PPI inflation rates coming out of China later today (Saturday). Markets expect to see CPI at just +0.2% from a year ago, and producer prices fall -3% on the same basis. At these levels, that would be a moderation of the deflationary forces we reported for July.
Meanwhile car sales in China, especially of EVs, returned to growth in August.
'Rights' wise, things are getting even tougher in China. They are moving to criminalise "hurting the feelings" of Chinese people in a new 'legal' move. Who decides that? The CCP of course.
Meanwhile, global food prices fell -2.1% in August to now be at their lowest since April 2021. These prices are now -25% below their peak in March 2022. A key reason for the latest fall is the retreating dairy price which was down -4% as the world seem to have a dairy surplus now. Meat prices are falling too, related to the fall in grain feed prices.
The UST 10yr yield starts today down -1 bp at 4.26%. That is a weekly change of +8 bps. Their key 2-10 yield curve is more inverted at -73 bps. And their 1-5 curve is now at -103 bps. Their 3 mth-10yr curve inversion is also more inverted at -114 bps. The Australian 10 year bond yield is now at 4.12% and down -1 bp from yesterday. The China 10 year bond rate is little-changed at 2.68%. And the NZ Government 10 year bond rate is now at 5.00% and -5 bps lower. A week ago it was 4.89%.
Wall Street is little-changed in their Friday session, heading for a -1.7% weekly retreat. Overnight European markets were up about +0.5%. Yesterday, Tokyo ended its Friday session down -1.2% for a weekly loss of -0.6%. Hong Kong didn't trade yesterday because of the typhoon there and ended its week down -2.1%. Shanghai fell -0.2% to end the week down -0.9%. The ASX200 ended its Friday session down -0.2% and was down -0.7% for the week. The NZX50 was down -0.7% on Friday and down -1.6% for the week.
The price of gold will start today at just on US$1920/oz and up +US$2 from yesterday. But that is down -US$21 from a week ago.
And oil prices are up +50 USc from yesterday at just on US$87/bbl in the US. The international Brent price is now Up +US$1 at just over US$90.50/bbl. A week ago these prices were US$85.50 and US$88.50, so +US$2/bbl rises (+2.3%) from there.
In Australia, strike action at natural gas facilities in WA, responsible for about 6% of the world’s supply of that fuel, came as talks over pay and work conditions failed.
The Kiwi dollar starts today little-changed from yesterday at 58.9 USc. A week ago it was 59.4 USc, so a net -0.8% devaluation in that period. Against the Aussie we are back up +¼c at 92.4 AUc. Against the euro we are unchanged at 55 euro cents. That all means the TWI-5 has edged up by +10 bps to 68.5. A week ago it was at 68.7.
The bitcoin price is again little-changed from this time yesterday, and is now at US$25,820, a net fall of just -0.4% in a day. Over the past week, the net rise is only +0.8%. Volatility over the past 24 hours has been modest at just on +/-1.5%.
The easiest place to stay up with event risk today is by following our Economic Calendar here ».
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19 Comments
The US economy appears very resilient (or in deep denial). In either case through continued reduction of the bloated FED balance sheet, global interest rates will likely remain high. This is a new normal that replaces the old when ultra cheap money was foolishly taken for granted.
Perhaps, perhaps not. Even if it as good as that the American people are not thanking Biden for the effort. Approval rating remains in the doldrums. The Dems now have a real problem. Biden is so obviously not coping, physically, mentally now and they expect the people to support him to go another five years. Eighty six at the end of a second term should he last that long and therein lies the second problem, the Vice President is even less credible. Trump will win by default, and so too any other Republican, if the Dems don’t sort themselves out with a bit of hard cold logic.
If Donny is allowed to run in all states (14th Ammendment).
Trump is the only Republican Biden can beat. Hopefully he will see sense and not run or will have a small medical issue that will decide it for him.
I think it's a buffer for when things fall over, but we'll see in the next 6-18 months.
There’s not a lot of talk about the re-start of US student loan repayments. Even with a 12-month default grace period, it won’t help the upward trend of credit card and car loan defaults.
yes the US 10 yr has been holding over 4% for a long time now, currently 4.25%
FYI anyone looking for auctions Fight Club results check the recent articles tab
Editor ??
One poster got so upset he stayed awake all night - https://www.rabobank.co.nz/term-deposits/
Higher for longer....
The articles upsetting too many DGM's... if the Allblacks lose this morning it could be too much to handle for some.
Odds for ABs not making quarters will have shortened
Very flawed team. How TAB had them as world cup favourites at $3.50 is beyond me.
Flawed playing in 29 C..I thought this was a winter sport .?
Guess one team thawed and the other didn’t then?
You can hang on to kiwi bias if you wish 😂
All our problems lie in our decidedly average tight five. Anyone who knows rugby knows it’s effectively won or lost there. We occasionally flatter to deceive
Having said that, as the fourth best team in the tournament we are still an outside chance, and I would never write off the ABs (especially if we have some key forwards back for the quarters)
Ireland will be better than the SBs. The latter will have taken a bit out of them. Also Ireland have a bit of a mental climb to get thru a QF. As far as the tight five they are not helped, nor the team, by playing two, or more, #7s against big packs determined to dominate there, before anything else.
More global debt to extend the wealth of the rich to only be erased on the battlefields of Ukraine at all taxpayer's expense.
And this year, we expect NATO Allies to increase defense spending by more than 8% in [inaudible] terms. This is the biggest increase in decades, and most of them are also EU members, are now taking this very seriously. More money for defence also enable us to invest more in production of ammunition, which is extremely critical. I welcome the efforts. I welcome the decisions by the European Union, which go hand in hand what we do in NATO. In NATO we have different arrangements for joint procurement of ammunition, we have done that for many years. We have something called a NATO support and procurement agency. I welcome efforts by EU members, NATO Allies, to ramp up production and we work closely with the defence industry throughout the Alliance, in EU but also in non EU Allied countries. To produce more and more spending, is a precondition for also increased production.
Then lastly on Sweden. First of all, it is historic that now Finland is member of the Alliance. And we have to remember the background. The background was that President Putin declared in the autumn of 2021, and actually sent a draft treaty that they wanted NATO to sign, to promise no more NATO enlargement. That was what he sent us. And was a pre-condition for not invade Ukraine. Of course we didn't sign that.
The opposite happened. He wanted us to sign that promise, never to enlarge NATO. He wanted us to remove our military infrastructure in all Allies that have joined NATO since 1997, meaning half of NATO, all the Central and Eastern Europe, we should remove NATO from that part of our Alliance, introducing some kind of B, or second class membership. We rejected that.
So he went to war to prevent NATO, more NATO, close to his borders. He has got the exact opposite. He has got more NATO presence in eastern part of the Alliance and he has also seen that Finland has already joined the Alliance and Sweden will soon be a full member. Because at Vilnius Summit, we agreed a statement where it was clearly expressed how Sweden will do more, follow up the agreement we had in Madrid on fighting terrorism, and also address issues related to export of military equipment, and then Türkiye made it clear that they will ratify as soon as possible. Link
The Europeans citizens, not the political class, are now probably waking up to the fact that in order not to get NATO involved they have to prop up Ukraine and so suffer economically. One or two general elections coming up in the EU might throw a spanner in the works upsetting the Brussels elite.
In Fed's Sept '23 Beige Book the word "recession" showed up 15 times. That compared to just 3 in July and at most 9 in May (when people were still rightly worried about banks and credit crunch). It's the most references to recession in a lot of years of Beige Books. Link
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