Here's our summary of key economic events overnight that affect New Zealand, with news investors are ignoring the geopolitical risks.
The main talking point today is how little financial and commodity markets have reacted to the sudden Gaza-Israel conflict threats. Yes, bond markets are having a 'flight to safety' with yields falling somewhat, but is it limited. Yes, oil prices have risen, but they are hardly back to week-ago levels yet. Equity markets have hardly reacted. And yet geopolitical risks have clearly risen and the world is a much more dangerous place. Rogue nations are chancing their arm for positioning in a multipolar world. Things are getting messier as authoritarians see their chance.
But markets are yawning. Investors are sidelining those risks, 'happy' they don't involve the major economic blocks in North America, Japan, the EU or even China.
However, there are risks to worry about, especially in China.
It was a national holiday there last week. There is evidence that travel-related activity was quite strong, but that retail activity was not especially strong. Levels this year barely exceeded 2019, it seems.
And the return to work there isn't starting with great signals. China is a very big place so it is possible to find evidence of all trajectories. But there is one that accentuates the drag of a stuttering property market. Steel rebar futures fell to their lowest since August (which itself was a false dawn) and threatening 2017 levels. Confidence construction activity will recover isn't high. That doesn't augur well for New Zealand sales of logs to China.
And in China a copper billionaire has 'gone missing' as his company wobbles, essentially grinding to a halt.
The UST 10yr yield starts today down -13 bps from yesterday at 4.65% with a clear 'flight to safety' underway that raises the price of benchmark bonds and lowers their yield. Their key 2-10 yield curve is more inverted by -11 bps and now by -41 bps. Their 1-5 curve is now at -69 bps and unchanged. Their 3 mth-10yr curve inversion is deeper by -12 bps today at -76 bps. But none of these are back to week-ago levels yet. The Australian 10 year bond yield is now at 4.45% and down -13 bps from yesterday. But the China 10 year bond rate is up +1 bp at 2.71%. The NZ Government 10 year bond rate is down only -2 bps at 5.59% and hardly reacting to global events.
Also not reacting is Wall Street. The S&P500 is up +0.6% in its Monday trade. Overnight, London closed little-changed as well but both Paris and Frankfurt closed down more than -0.5%. Yesterday, Tokyo ended its Monday session down a minor -0.3%. Hong Kong re-opened after the typhoon-watch was lifted in the afternoon and ended up +0.2%. Shanghai closed down -0.4% however. The ASX200 rose +0.2%. The NZX50 ended its Monday session down a sharpish -0.7%.
The price of gold will start today at just on US$1850/oz and up +US$17 from this time yesterday. But that only takes it back to where we were a week ago, well before the Gaza explosion.
Oil prices have risen +US$3 to US$85/bbl in the US. The international Brent price is just under US$87/bbl. Yes, there is a lot of talk the oil price 'surges' but in fact both are lower than week-ago levels and both lower than you might have expected given the new Middle-East conflict. Maybe it will come, but it hasn't come yet.
The Kiwi dollar starts today at 60 USc and a very minor firming from yesterday. Against the Aussie we are up +20 bps at 94.1 AUc extending our steady gains. Against the euro we are up almost +½c at just under 57 euro cents. That all means our TWI-5 starts today at just on 70.2 which is up +20 bps from yesterday and a three month high.
The bitcoin price starts today at US$27,379 which is down -2.0% from this time yesterday. Volatility over the past 24 hours has been modest at +/-1.3%.
The easiest place to stay up with event risk is by following our Economic Calendar here ».
74 Comments
I raised this point during a much earlier election, but my wife asked the question last night. if National is so worried about having to work with Winnie, and Chippy seems hell bent on burning his bridge there, why can't National and Labour get together and form a grand coalition to cut out the minor parties?
I thought Helen Clark should have done it after one of her elections, but she didn't. But more than ever we are saying the two parties are so close, that it is hard to choose between the two. But that should really make it easier for them to hammer out their differences and forge a way forward. It would certainly be more democratic than a left or right coalition? But will ego and ideology get in the road, again?
That negotiation falls over on the first point....who gets to be PM. Chippy and Luxon are proving that they will say and do anything to be PM. Both are terrible options without any real vision or the ability to put forward a credible plan of any substance. The standard of our politicians has been on the downward spiral ever since MMP came in. Before that you had a proper Left vs Right contest of ideas and the associated "thinkers" that went along with either side. Now, it's all focus groups, social media and soundbites.
Don't disagree. But who gets to be PM is easy. Which ever party has the most seats. it would be highly unlikely that both would be exactly equal, so one would be the PM and one the DPM. In the event of parity, then one is PM for 18 months and the other the remaining 18 months.
The biggest barrier that I see is that this requires grown ups to make it work, so not likely.
Some of us would see this as a complete disaster - teaming a party that has failed to deliver with one without vision doesnt sound like a great formula for NZ
Come on now, don't soft soap it. I think disaster will probably not even come close to what will happen, especially if either get in on their own. There is though the possibility that each will be the brake on the other if they form a grand coalition.
Or a massive success, teaming a party with vision with one that says it can deliver?
That would make it too obvious that both parties are largely the same and it doesn't matter who you vote for.
This is the real reason it won't happen (even though I agree it would make sense from a policy perspective).
Both Red and Blue have large followings that have voted that way for ever and see the other as the 'enemy'. Many of these Red/Blue faith followers would have to question their beliefs and become thinking/swing voters in the aftermath. Much safer (job security) to wait for your turn in 3-6 years than let in minor parties and risk never getting another turn.
Oil prices have risen +US$3 to US$85/bbl in the US. The international Brent price is just under US$87/bbl.
Just as we hoped we where over the hump.
There is near constant war in the middle east, markets can't possibly react every time things kick off again between two religious groups.
Guess it will depend if Iran will sit back and watch, or if it escalates, then the markets may react. As the two groups involved have very little in resources that affect global markets.
Maybe. The Israeli counter is going to be savage to say the least. There will be dire humanitarian consequences. Impossible for outsiders to anticipate the reaction from neighbouring and other nations deeply hostile to Israel.
I hear Israel has cut off water, food, power and medicine deliveries to the Gaza strip. There are 2.3 million people living there, and Israel has completely cut them off from the outside world over the years...
Hamas is the problem in both cases I understand.
I don't think you do..
You are right, but no enlightenment is coming from you.
My limited understanding is Hamas took control by force in 2006 and have not held an election since.
Try Yvils link for a start your journey..
Already knew that. That is what I consider limited understanding.
Understand as an oxymoron
The day can only get better.
:)
Dont waste energy on me PDK, there is only so much left...
Actually, the problem is too much Right
:)
Hamas knew the likely consequences before they conducted the attack.
Context and perspective are everything.
Go back to who 'created' Israel, and drew the other crayon-lines over the Middle East, creating 'nations' without telling the locals. Read: Seven Pillars of Wisdom. Read: Allenby. Read: Daughter of the Desert (re Gertrude Bell). Read: Adventure in Oil.
This is colonisation, repression, in just as extreme a form as we all diss in others. But we don't diss Israel because. Because?
And so we see reactions as pre-emptive. Hamas are reacting - maybe as an irruption reacting to long-term repression (so it looks more severe to certain short-term-thinking-types) but reaction it is. Alle same Putin re Ukraine (read: While America Sleeps (Kagan/Kagan) and tie that to Victoria Nuland 2014 on). 9/11 was reactive, not pre-emptive too - but most short-term self-oriented thinking doesn't do scoping very well.
The next iteration of homo whatever, will likely be more sapient. https://dothemath.ucsd.edu/2015/04/programmed-to-ignore/
But we don't diss Israel because. Because?
I'd say because of the sympathies following the holocaust. I still have visions in my head as a kid of the black and white tv footage of bulldozers heaping up bodies form the 'camps'.
No wonder the Jews have a mindset that they do. Hard to criticize a people with a history ingrained like that.
Doesn't make it right..just explains the mess.
The West can’t stay out starting with the Crusades. Even Napoleon dallied there until Nelson wrecked his fleet. Then WW1 and the oil catalysed the mechanisation of the military, tanks, trucks, aircraft & battleships no longer had to coal up. Selected Western friendly rulers, Faisal etc in power, and regionally carved up and mapped, fit for purpose. British & French predominantly with “missions” to ensure the “status quo” was maintained
Perhaps if we banned religion, banned the teaching of history and made all our kids go to the same schools wearing the same uniform they would grow up without hang-ups?
> Hard to criticize a people with a history ingrained like that.
Hard to believe they can turn the whole gaza stip into a modern ghetto with the history they have.
What happened in the history doesn't justify the massacre and holding hostage of innocent civilians by Hamas. This is pure evil...
On both sides ..At least 13 family members, including four toddlers, were killed in an Israeli airstrike in Khan Younis in the southern Gaza Strip on Sunday, according to a relative and journalist Hassan Eslayeh. They hit us with two or three barrels of explosives and brought the entire buildings down," Abu Daqqa said. "We call on the Arab and European countries to interfere ... and UN to solve this situation, because we are in a dire situation," Abu Daqqa added.
This a difference between an astray missile and shooting at random into a sea of festival goers. Yes there’s innocence on both sides, it’s a horrible situation but to cross the border and open fire is taking it to another level.
Israel maintains complete control over everything entering and leaving the Gaza strip area, nobody is allowed to enter or leave. It is effectively an open-air prison. Israel slowly but surely bulldoze and expand their own territory, kicking out the people who used to live there.
Hamas and their actions were not created by a vacuum.
"stray missile'. ? You believe fantasy Ramparts.
It is very sad indeed that wars happen, and innocent lost their lives. But I think you need to understand the difference between "civilians' casualties in war" and "intentionally massacre and taking hostage of innocent civilians". These two scenarios are on completely different levels. And it is no news that Hamas uses the civilians in the areas they are controlling as human shield.
Arab and European countries to interfere. Lost in translation perhaps but intervene would be a better word. Perhaps a freudian slip though. Such intervention going on interference may likely be what Hamas has calculated
CoH - yours is a classic comment.
I call it illogical, but I'm coming to realise that the majority of humanity think short-term-ly, based on a brief status-quo. Reactive to short-perspective events, then.
Given what is ahead of us, I think we need to address that style of thinking, and help it along. Interestingly, Hipkin's mother has written a book about applying Systems thinking to Education - it would be a start, but we are very late. Maybe evolution and social imperatives drove this (thinking-style) difference; there can only be a few Merlins, Gandalfs, Getafixes; the majority just need to churn.
You can call it whatever you want. But I don't choose side with either party in conflict, I choose the side of humanity. When someone intentionally massacre many innocent civilians' lives, that's not humanity, doesn't matter what reasons / excuses they have.
War crimes on both sides are inevitable, and have already happened. War is ugly.
I'll lock you in the toilet of your own home and you can listen to me partying in the lounge for 50 years. Someone throws a gun in through the window and unlocks the door - let's see your humanity at work then.
Don't be silly, the issue here is not only about the home or land, it's about some people wanting to completely erase Israel from its existence. And your analogy example is quite bad, doesn't explain the situation at all....
are you serious - it's all about home and land.
It's all about home and land so people can just go out and massacre innocent people, families and children? Wow. I don't know which era you live in, but the rest of us are living in a modern civilized world at the moment...
So your cool with ethnic cleansing then??
I wouldn't call what's happened in Palestine since the Balfour Declaration modern nor civilised.
'doesn't explain the situation at all - means: doesn't fit with your take on reality.
Who were already incumbent, that Israel displaced - and indeed imprisoned?
Cause, causal.
Savage is an understatement.
Hamas targeting a music festival.
Israel laying siege to an entire civilian populace.
This will make Russia/Ukraine look like a kids playfight.
Courtesy of Stuff quiz this am. T E Lawrence (of some fame in this region) “small things have small beginnings.” This uprising though may be no small thing especially if Russia & perhaps China too, are pulling strings.
The only country "Pulling Strings" is Iran.
All of the major national conflicts since WW2 are between the current title holder (USA) and the two contenders (China and Russia).
It just depends who is backing who at the time.
While Iran might appear to be pulling the strings of Hamas, they themselves will be getting guidance from someone a bit higher up the global foodchain (or should that be oilchain)
Reports out that hostages have already been killed with strikes from Israel in Gaza...I suppose we will hear "sending thoughts and prayers" shortly from around the globe?
Yep. I really don't agree with and like Israels attitude towards settlements, and in general towards Palestinians (they're doing unto others what was done unto them, which cannot be justified) but Hamas has shot itself in the foot here. Politics underpinned with religion is so dangerous. There is no good way out of this at all.
The bigger concern is if there are external players and manipulators. I would have thought at least a couple of smart people would have bubbled to the top of Hamas over the years. People who understood their own recent history. So why would they do this, this way? It doesn't make sense. I tend to think they are being played as part of a bigger game?
Oil! If this grows into a sizeable conflict regionally, that upsets the oil cart doesn't it. That puts obvious pressure on the West in just about every regard.
Israel's behaviour towards Gaza has been brutal for a long time. This attack from Gaza was always going to happen.
Short video to help understand the origin of the Palestine vs Israel conflict.
Thnks Yvil. A 2 minute watch and a bit of an 'Oh f##k me moment' for me. What an unresolvable mess.
That's an unbalanced video. What the video glosses over is that the war in 1948 wasn't just Palestinian forces fighting Israel, but expeditionary forces from Egypt, Transjordan, Syria and Iraq, which were aimed not at just a redistribution of land, as the video implies, but the complete elimination of the state of Israel. Israel has been locked in a struggle for its very existence for its entire modern life. Its expansion into the West Bank and Golan Heights was partly to ensure its security - imagine if the groups which have vowed to wipe Israel and the Jews from the planet had flanking positions everywhere?
Exactly, Israel humiliated it's neighbours. Hard to negotiate peace with people who want to exterminate you, Israel have an opportunity to deal with Palestine once and for all, I doubt they will waste it with Bibi in charge.
At least we agree on one point.
It’s a CF for both sides. Hoping it doesn’t draw in surrounding states.
I understand that and the annihilation of Israel desire. The brief synopsis though is sound. It provides historical context as to why this has become an endless war with such resolve on each side..
The US bond market is closed for the Columbus Day holiday, so how is it down 13bps to 4.65%?
Flight to safety. Geopolitical uncertainty generally leads to a flight to US bonds.
US bonds and safety in the same sentence?
The day of the oxymoron!
The biggest, visibly failing (politically, entropically, socially, economically) hegemony the planet has ever seen, or ever will. Irretrievable in debt, ever-extended (an inevitable result of being the petrodollar).
And betting on the future of that is seen as safe?
Ok I see some media saying the attack by Hammas was on the 50th anniversary of the yom kipper war...yet my research says the Yom Kipper started on the 6 Oct 1973...further research says that the alleged anniversary initial attack began on the 7 October 2023. If this is so then the attack did not actually occur exactly on the 50th anniversary as is portrayed . Am I wrong.... October 7, 6.30am Israel ? Numbers are important...lol... Theres a coincidence and quite possibly that is all it is... nonetheless it is there. Have fun figuring it out for it is worthy of consideration....lol
https://en.wikipedia.org/wiki/Yom_Kippur_War
https://abcnews.go.com/International/timeline-surprise-rocket-attack-ha…
https://www.youtube.com/watch?v=OmBxVfQTuvI
All the reports on the MSM i have seen described it as the day after the anniversary. So you and the MSM are correct, aside from that abc article.
e.g.
The unprecedented attack came a day after the 50th anniversary of the surprise attack by Egypt and Syria in 1973 that started a major Middle East war.
Another clue and this should give it away ... Lets be clear here, I am not insinuating anything here , I am just seeing a fact that coincides with 7 October . Believe it or not ?....
No sympathy for the Palestinians from me. You have to realise that the Israelis are smart people, take a look at how many companies they have in the top 500 or the number of Billionaires they have, hence they have influence. Arabs all out protesting around the world, why don't they let them move out of Gaza into their countries if they feel so strongly about it?
I have always found it curious as to why other wealthy Arab nations show absolutely no solidarity with Palestine. It's insightful, I mean if they don't assist why should the West? I have a number of Jewish friends, they are extraordinarily well connected globally - it's like being a member of an elite gentlemens club. They are entreprenurial, support each other etc etc.
sounds like a gang - do they wear patches? or just the funny hats.
That's why they got into trouble last time.
But have a think :) about thinking; ask what real wealth is?
It's access to energy and resources. Money is only a proxy, and there's a lot of bluff to that too. The Middle East has been resource-raided longer than just about anywhere - it is no longer the Fertile Crescent and nobody could spare water if the Hanging Gardens still existed. Atop that, the West have a history of de-stabilising those who think they own what is under them, and installing compliant puppets (like the Shah). The folk on the ground, have so little tangible stuff to trade, that their culture has had to outlaw usury (can't support exponential growth). In terms of sustainable population, probably ALl of the desert states are full or over-full. They have no surplus to offer.
Then there's sects, of course. When life is choice-scarce, belief in a better one next go-around, seems to become popular. But definitions can become narrow - belief is a regressive thinking-style - so: competition.
The other states have always used the poor Palestinians as pawns in their game of geopolitical chess. That said, Palestinians (excluding those who just want to live their lives in peace) have never wanted to be a part of Jordan.
Statements like your overlook the fact that Jews were persecuted all over Europe for hundreds of years up until western powers decided they needed a Jewish solution after WW2. Their solution was the State of Israel. A state effectively taken from the people who already lived there.
It might have turned okay if militant Jewish factions hadn't decided that that the State belonged to them and they could practice a form of apartheid to keep the existing inhabitants below them, both economically and socially. Alas, the inhabitants supported by their familial ties to surrounding countries started to push back.
And the Israeli thing to do when pushed against, is to push back ten times harder.
And it's been like that since the State of Israel was formed.
Which is why less than half of Israelis elect corrupt politicians like Bibi. He appeals to some Israeli's sense of machoism. Many Israelis will tell you Pootin looks like a saint compared to Bibi. For those that don't know, half of Israel detests Bibi. It is one of the reasons Bibi has placed government above the courts. That half is now powerless before the authoritarians. Israel will eventually collapse and the meek will inherit what's left.
The rest of the world will collapse before Israel. They are about to turn Gaza into a carpark.
Perhaps they will turn it into a carpark. The murderous bastards are at least consistent.
At this point i am very conccerned about the insidious nature of Israeli tech with its built in backdoors and data breaches, I recall seeing one of Mr Netanyahu's speeches from a cybertech expo i can't remember which one where he proudly states " do you know the five eyes what is Israel the sixth eye, No Israel is the second eye" in another spech he proclaims "cyber is the real domain of power"
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