More positive US data threatened by big US strike; India exports fall; China data dodgy; Russia hikes again; UST 10yr 4.33%; gold and oil rises; NZ$1 = 59 USc; TWI-5 = 68.6

Here's our summary of key economic events overnight that affect New Zealand, with news the start of a strike at the major American carmakers might threaten the soft-landing they were expecting and which increasingly seemed baked in.

In the US, industrial production rose +0.4% from a month earlier in August 2023, above market expectations of a +0.1% increase and compared with a downwardly revised +0.7% rise in July. Year-on-year it is a small gain of +0.2%. One sector keeping these levels positive is their mining industry (which includes oil production).

However, the New York state factory survey turned quite positive in September. The headline general business conditions index rose twenty-one points to +1.9. New orders and shipments increased. Delivery times remained steady, and inventories continued to contract. And perhaps more importantly, looking ahead, firms continued to grow more optimistic about the six-month outlook.

American factory data however won't be flash in September because of those strikes starting at their big three carmakers.

Not quite so upbeat was the August University of Michigan consumer sentiment survey, however. It slipped from July, but is still at a higher level than at any time since late 2021, apart from the prior two months. Consumer views on current sentiment, current conditions and expectations of future conditions are all very much higher than a year ago.

Meanwhile, the US Fed balance sheet continues its wind-down even if the sell-off in the past week was relatively small.

Indian exports rose in August from July on the usual seasonal basis, but were down -6.9% year-on-year due to elevated commodity prices and weakening foreign demand. Imports fell too, but by less so their trade deficit rose.

China said the cost of new houses slipped -0.1% in August from July, the same slippage the month before. Given the known low sales levels, this seems a dubious outcome, especially as only 16 of the 70 largest cities reported prices holding or advancing very slightly. The rest fell. For pre-owned houses, prices inched up in only 3 of the 70 major cities in August from July. The reported slippages in the other 67 cities were remarkably similar, which also doesn't pass the smell test. This all has significant implications for international travel volumes, and visitor levels from China.

China also said that "the total retail sales of consumer goods was 3,793.3 billion yuan, a year-on-year increase of 4.6%. Among them, the retail sales of consumer goods other than automobiles were 3.382 billion yuan, an increase of 5.1%". It is simple math to extract from that "retail sales of automobiles" and that showed virtually zero growth.

Meanwhile, Chinese electricity production stalled in August from July, coming in -2.5% lower, which for a country as large as China is quite a drop. Year on year, electricity production rise only +1.1%, also not indicative of an expanding economy. But nevertheless, they reported industrial production rose +4.5% from a year ago. Either China is undergoing a recent spectacular burst of energy efficiency and reduced energy density, or one of those statistics is unreliable.

And also retreating was foreign direct investment. "The actual amount of foreign capital used was 847.17 billion yuan, a year-on-year decrease of -5.1%" on an 8 month-to-date basis, they reported. But given they reported the seven month total as ¥767 bln that means the August inflow was ¥80 bln or less than NZ$19 bln which is a decline in the pace we have seen recently.

Overnight, the Russian central bank raised its policy rate by +100 bps to 13% to both battle rising inflation and defend the ruble. They can't seem to get it up from the 1 USc value. Meanwhile, Russian inflation is rising again, currently at 5.2% and the central bank expects it to rise to 7% by the end of the year.

The UST 10yr yield starts today up +4 bps at 4.33% and again near their August highs. A week ago this rate was 4.26% so up +7 bps from then. Their key 2-10 yield curve is less inverted at -70 bps. And their 1-5 curve is now at -100 bps and also a little less inverted. Their 3 mth-10yr curve inversion is less inverted too, now at -118 bps. The Australian 10 year bond yield is now at 4.16% and up +5 bps from yesterday. The China 10 year bond rate is up +4 bps at 2.68%. And the NZ Government 10 year bond rate is now at 5.00% and down -1 bp. A week ago it was also at 5.00%.

Wall Street is down -1.2% on the S&P500 in its Friday session with it down +0.6% for the week. Overnight, European markets were all up about +0.5%, except Paris which gained +1.0%. Yesterday, Tokyo ended its Friday session up +1.1% for a weekly gain of +2.6%. Hong Kong was up +0.8% on the day and +1.3% for the week. Shanghai ended down -0.3% and was unchanged for the week. The ASX200 ended up +1.3% on Friday and up +1.7% for the week. But that completely overshadowed the NZX50 which was up only +0.3% yesterday and was unchanged for the week.

The Fear & Greed Index is still in 'neutral', where is was yesterday, a week ago, and a month ago. No warning signs there.

The price of gold will start today at just on US$1922/oz and up +US$13 from yesterday. But this is little-changed from the week ago level of US$1920/oz.

And oil prices are +50 USc higher from yesterday at just under US$90/bbl in the US and back to its ten month high. The international Brent price is now over US$93/bbl and unchanged. But for the week these are rises of +US$3/bbl or +3.4%.

The Kiwi dollar starts today little-changed from this time yesterday at 59 USc, still settled in its tight range. A week ago it was at 58.9 USc so little-change from then also. Against the Aussie we are softer at 91.7 AUc. Against the euro we are softer too at 55.3 euro cents. That all means our TWI-5 is actually little-changed at 68.6 and little-changed in a week too.

The bitcoin price has moved a bit lower from this time yesterday, and is now at US$26,369, a net dip of -1.0%. A week ago, this price was US$25,820 so a +2.1% rise since then - in fact its first weekly gain since August. Volatility over the past 24 hours has been modest at just on +/-1.1%.

The easiest place to stay up with event risk today is by following our Economic Calendar here ».