Here's our summary of key economic events overnight that affect New Zealand, with news the impact wars and geopolitical tensions are cascading over financial markets, setting in play tectonic shifts in trade and influence. The NZD is taking a hit from all this risk aversion today.
But first a reminder: if you haven't already done so, please vote. Polls close at 7pm today, nationwide.
In the US, consumer sentiment as monitored by the widely-watched University of Michigan survey fell rather sharply in October. It fell to an index level of 63 this month from 68.1 in September, the lowest in five months, and missing market estimates of 67.2. But to be fair it is still well ahead of year-ago levels and it has been in this general range since late 2021. However, it's lower-than-expected reading has moved financial markets in the US.
Meanwhile, the Wall Street earnings results are coming in pretty much as expected, maybe a general uplift. Big banks are reporting stronger earnings.
Indian exports were marginally lower in September and slipped -2.5% from a year ago. India however is not a powerhouse exporting force yet, exporting only an eighth of the goods that China does. And there is little indication Indian exports are firing up.
In China, consumer prices were unexpectedly unchanged in September from a year ago, missing market forecasts of a +0.2% gain. Meanwhile their PPI fell -2.5% in September from a year ago.
Exports from China declined by -6.2% from a year ago to US$300 bln in September, which was an improvement from the -8.8% drop in August and compares with the market's expected -7.6% decrease. This marked the fifth consecutive month of declining exports but was the least severe in the series. However, the result was underpinned by a very sharp +21% rise to Russia. Exports to normal countries were all very weak; to the US down -9.3%, the EU down -11.6%, to Japan down -6.4% and to Australia down more than -17%. This is a sign of the international trading blocs sharply cleaveing.
And staying in China, the IMF is warning there are heightened spillover risks from the country's property woes.
In Singapore, their central bank announced it would shift from half-yearly policy reviews to quarterly.
In Australia, they go to the polls today on their innovative referendum on a non-binding Voice to Parliament for Aboriginal and Torres Strait Island peoples. This effort to address the mammoth power imbalance that has built up since the arrival of Europeans seems bound to fail in a sea of misinformation and fears that seem unfounded. The imbalance benefiting the status quo will likely be maintained.
The UST 10yr yield starts today down -8 bps from yesterday at 4.63% which is -15 bps lower than a week ago. Their key 2-10 yield curve is more inverted, now by -43 bps. Their 1-5 curve is now still at -76 bps. Their 3 mth-10yr curve inversion is much more today at -81 bps. The Australian 10 year bond yield is now at 4.44% and unchanged from yesterday. But the China 10 year bond rate is back down -2 bps at 2.72%. The NZ Government 10 year bond rate is up +8 bps at 5.51%. A week ago it was at 5.61%.
The S&P500 is down -0.6% in Friday trade and limiting its weekly gain to +0.8%. Overnight, European markets all fell by about -1.5% except London which was down -0.6% on the day. Yesterday, Tokyo ended its Friday session down -0.6% to be up +4.2% for the week. Hong Kong ended down a sharp -2.3% to only book a +1.3% weekly gain. And Shanghai closed down -0.6% for a -0.4% weekly retreat. The ASX200 was also down -0.6% on the day but it managed a +1.4% gain for the week. The NZX50 ended its Friday session down -0.2% and a similar weekly dip.
The Fear & Greed index we follow is still hard over on the 'fear' side even if not as extreme as this time last week.
The price of gold will start today at US$1928/oz abd up a sharp +US$59/oz from this time yesterday. That has cumulated to a heady +5.4% rise for the week.
Oil prices have turned around and risen a very sharp +US$4.50/bbl to be now at just on US$86/bbl in the US. The international Brent price is now just on US$89.50/bbl. A week ago these prices were US$82 and US$84 respectively.
The Kiwi dollar starts today at 58.9 USc and down another -½c from yesterday as commodity currencies stay out of favour. Recall a week ago this rate was 60 USc so more than a -1c fall for the week. Against the Aussie we are slightly softer at 93.6 AUc. Against the euro we are down to 56.1 euro cents. That all means our TWI-5 starts today at under 69.3 which is down -40 bps from yesterday and down -60 bps for the week.
The bitcoin price starts today at US$26,713 which is a mere +0.1% firmer that this time yesterday. A week ago this price was US$27,897 so it has fallen -4.2% since then Volatility over the past 24 hours has again been low at +/-0.8%.
The easiest place to stay up with event risk is by following our Economic Calendar here ».
31 Comments
Oil prices have turned around and risen a very sharp +US$4.50/bbl to be now at just on US$86/bbl in the US. The international Brent price is now just on US$89.50/bbl.
U.S. Sanctions Two Tanker Owners For Breaching The Russian Oil Price Cap
The choice before us: International law or a ‘rules-based international order’?
The price of gold will start today at US$1928/oz abd up a sharp +US$59/oz from this time yesterday
Looks like new all-time high in Kiwi pesos. Silver price also flying -- 4.8% overnight. One of those rare days for precious metals.
Can't wait to watch the big show unfold this weekend. Go ABs!
It’s going to be an epic match. Can’t wait!
I'm in a reflective mood...
As my household prepares to go out and vote, we're thankful that for this one day we are spared the relentless "slogans over substance" narrative that has filled our eyes and ears... I think I'll make my decision when looking at the ballot...
Equally, with the world news we're being constantly fed highlighting a reality that those few with the power make dreadful decisions for the horrified many who "elected" them - one has to shake a deflated head at what we've become.
I guess we have to cling to the hope that at least one of (if not the majority of) the gods people believe in find a beneficent streak?
Not to worry, AI will take over and slap some sense into us.
I mean, it couldn't have worse judgement than us.
I was of a similar disposition Duncan when voting this morning. It appeared to be a case of voting for the least worst option as opposed to something that gave you hope for a better future (across society, with a utilitarian perspective).
What a beautiful photo of a simply idyllic scene. Is this though where this government, probably others as well, was thinking of relocating Port of Auckland?
I have spent many a day fishing off that rock.
Those oil prices starting to come through into diesel now, which will quickly put upwards pressure on other prices. It's time RBNZ asked Govt to use their balance sheet to smooth out oil price shocks - the OCR is basically impotent in the face of global swings. Well, impotent in terms of managing inflation; obviously hiking rates is effective at increasing inequality, killing housing supply, and adding a crap tonne of cost into the NZ economy.
Well, impotent in terms of managing inflation; obviously hiking rates is effective at increasing inequality, misery and driving cost into the NZ economy.
I guess that's the price you pay for prolonged suppression of the price of money in the first place. This seems to be an important piece that nobody really wants to face up to, let along the likes of Orr, Robbo, Lord Key....or pretty much any of the ruling elite and our economic thought leaders.
They will never admit that it is their government policies or central bank monetary policies causing inflation. It's always someone else or something nobody could see coming.
I am not sure what NZ can do other than basically follow the US Fed rate - our trade deficit reduces our monetary sovereignty considerably. What we could have done (and could do) is use other tools to prevent cheap credit flowing into asset bubbles.
It's funny that this election we have heard endless misinformed stories on govt debt levels, but zero attention has been given to the debt that actually matters - our $550bn private sector debt. When private debt levels are at 150% of GDP and credit costs increase, the rate of transfer of workers' money to wealthy asset owners quickly becomes ridiculous.
Haha I was saying to people from around 2013 that we should be implementing DTI's to prevent asset bubbles forming in real estate as global rates dropped.
I got laughed at - and abused by those who intended to 'get rich/get ahead' by speculating on property.
If we experience a great deal of pain in resolving the problems we face, we cannot say that we don't deserve the suffering.
Suffering follows foolishness, like night follows day.
The time to stop credit booming was the around 1990 - the twenty years that followed saw Govt basically transfer debt from its balance sheet to households and businesses. That's how Govt got its debt down to basically zero in 2008 - by letting the private sector pump up the debt from 70% of gdp to 150% of gdp! We have tracked around that level since.
The price of money? Before debt became money, or did money become debt, what was the price?
I'd suggest it's our belief in amassing and hoarding "wealth", combined with the disconnect between finance and the real world, that is the cause of inflation. It requires neverending debt creation which eventually overflows.
Government policies, monetary policy, economic theory are simply tools created to enable this and the checks and balances have been eroded. Add divide and conquer, fear based narratives, and it's why I don't believe politics or government are able to lead us to any resolution.
Real change will only be led from the bottom up, and that may rest on many of the systems crashing and burning first before the masses choose differently.
It's funny, the mentally unwell are institutionalized yet one could consider the "normal" are already institutionalised, they just don't see it.
"....use their balance sheets to smooth out oil price shocks....." Are you serious Jfoe?
That's just hiding from reality, sticking head in the sand.
What do we end up with? Fuel staying price stable here, out of sync with world realities. And a stonking great bill foisted on us via many channels.
Several EU countries have done this over the last few years - it's not complicated and needn't cost anything (you smooth out the rises and the falls). Bufferstocks were commonplace for decades - before we decided that unbridled markets were the way forward..
The inequality was caused by dropping rates too low for too low and causing asset prices to become too far detached from incomes.
Rising rates may reverse this - but only after we face the pain that we have been attempting to avoid by kicking the can down the road.
I would argue that inequality is caused primarily by our economic model - whether rates are high or low, the wealthy amass ever more assets from which they can extract ever more rent. If workers earn more, the rent extracted by the rentiers just increases (see Auckland rents increase in the year to September - 9.4%!!!) I think it is true that low interest rates / asset bubbles accelerate this process, but how much do high rates slow things down? For example, landlords in NZ have 75% equity, private sector profits are running at $105 billion per year vs private sector wages at $120 billion. High interest rates are also net beneficial for households in NZ who earn more interest than they pay. Who is paying more? Workers. Who is getting more? Wealthy people. I could go on - our whole economy is geared wrong. Needs a fundamental rethink.
The TWI has been wrong in the heading for a couple days now. It's a good way to know at a glance how the currency is doing.
Very apt for today. The Australian:
‘Promised the moon, delivered a flashlight’: How Ardernism died.
“They never really did anything for us ordinary New Zealanders,” says former schoolteacher Kevin Hunter. “They were so busy being kind and giving things to Maori and poor people they forgot about the rest of us.”
I miss The Australian. When I lived in Adelaide it was one of my rituals to read the weekend version of it, over a big breakfast and a good coffee. I don’t know about now, but 8 years ago when I lived there had a cast of very good writers.
Not really a fan. One of their most fearless writers - Anthony Klan - had a bust up with them and left. A marketing guru Mark Ritson recently wrote a puff piece on how great the Qantas brand is. All the marketing sycophants won't challenge Mark as he's a professor. He just did something similar with a Tourism Australia campaign.
I couldn't have said it better myself Kevin Hunter.
To be honest, I don't think they've done much for poor people, Maori or non-Maori. For the Maori elite, they've done plenty in terms of enrichment. The same could be said for consulting grifters, Maori or non-Maori.
"...very sharp +21% rise to Russia. Exports to normal countries were all very weak..."
LOL.
Lol.
One minute David encourages us to vote in order to protect our democracy, nek minit he has a sook because the Ozzie referendum will reflect the views of the majority.
I just voted. Special vote for me. For some reason more than half the voters there were in the Special queue. I said to the woman in charge we can't all be special and she insisted that we are. Best Day Ever.
" This effort to address the mammoth power imbalance that has built up since the arrival of Europeans seems bound to fail in a sea of misinformation and fears that seem unfounded."
Well not the case here. Co-governance, Maori health, maybe not the watered down version of 3-waters etc is alive and well between Labour, the Greens and TPM. The fears are founded.
I remember a Willy Jackson interview on Newshub where he was asked "what is co-governance?" I sat up and paid attention as I truly wanted to hear the answer. Willy replied, " there is nothing to fear". That was it. When a politician says "there is nothing to fear", that's when I know to be afraid.
A Kiwi I wish I'd heard of before passed away this week.
Phyllis Latour: The secret life of a WW2 heroine revealed
https://www.bbc.com/news/uk-67100792
https://i.stuff.co.nz/national/63516307/pippas-astonishing-story-recogn…
https://en.m.wikipedia.org/wiki/Phyllis_Latour
Her life story reflects quite a contrasting perspective to a lot of our political rhetoric
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.