Here's our summary of key economic events overnight that affect New Zealand, with news away from the guns and hatred consuming the US at present. Our challenge is to keep it out of our society.
Markets had been waiting for the American August CPI inflation data and it came in higher, although no more than expected. It rose to 2.9% in August, the highest since January, after holding at 2.7% in both June and July. Prices rose at a faster pace for food (3.2%) and energy costs rose for the first time in seven months. On a monthly basis, the CPI went up 0.4%, the most since January, above forecasts of 0.3%. Rents rose 0.4%, the largest upward pressure. On the other hand, core inflation remained steady at 3.1%, the same as in July and at February’s peak, while core CPI rose 0.3% month-on-month, matching July’s pace and market forecasts.
In a stable world, this level of inflation would not bring market expectations of a Fed rate cut next week, but there are widespread expectations of one anyway. And that is because their labour market is weakening quite fast now.
Initial jobless claims in the US came in sharply higher last week at +263,000 s.a. a four year high and well above the expected high 235,000. In actual terms they rose +204,500 when a solid end-of-summer-holiday seasonal decrease was expected. There are now 1,815,000 on these benefits, +110,000 more that at the same time last year.
Also getting much worse much faster is the US Federal government finances. The US Budget Statement was expected to hold at a very high -US$290 bln monthly deficit, but it has blown out to -US$345 bln in August. And this is after collecting US$30 bln in tariff-taxes in the month, US$165 bln so far in the fiscal year.
Whatever way you look at it, the US economy is being mismanaged on a massive scale. Too much inflation, too little job creation, too large tax avoidance by the uber-wealthy, and self-imposed tariff-taxes on themselves. And unfortunately their social programs are making things worse at a fundamental level too.
New independent analysis shows that the long-held view that American demographics would remain very positive to the end of the century have suddenly turned. Now US deaths will exceed births by 2031, far faster than expected. And the deaths will rise quicker until 2055 when they will match immigration. And these estimates are before the Kennedy/Trump health mistakes which will undoubtedly speed up deaths. And the Trump heavy-handed immigration crackdowns that will likely mean the immigration assumptions are far too optimistic. If demographics are destiny, the destiny of the US looks grim and we can no longer hold the assumption that it will be a major power by 2100. That is a sharp change from the demographic outlook just a few years ago.
New data out in Canada shows Canadians are wealthier with an increase of over a quarter of a trillion dollars to C$17.9 tln, the seventh consecutive quarterly increase. This wealth accumulation happened despite headwinds of global trade pressures and a weakening economy. Per capita GDP is now C$76,100 (NZ$92,100).
Across the Pacific in Japan’s producer prices there rose +2.7% in the year to August, up from a marginally revised +2.5% increase in the previous month. This data doesn't really add stress or new factors for Japan. A year earlier their PPI rose at a 2.6% rate.
In China, new vehicle sales recovered in August, up +10.1% after the unexpected -10.7% fall in July. Total vehicle sales are expected to grow +4.7% in 2025 to almost 33 mln units from 31.4 mln in 2024, with the NEV sector surging +24% to 16 mln units. That will keep it almost twice the size of the US vehicle market. China's car market is a global goliath. (The US vehicle market is running at 16.1% mln annual sales, a dip in August from July.)
In Europe, the European Central Bank kept its three key interest rates unchanged, with the deposit facility at 2.00%, the main refinancing rate at 2.15%, and the marginal lending rate at 2.40%, all as expected. Inflation remains close to the 2% medium-term target, and the outlook is broadly unchanged from June. New staff projections see headline inflation averaging 2.1% in 2025, easing to 1.7% in 2026 before rising slightly to 1.9% in 2027.
Occasionally we check in with what is happening in Turkey, an authoritarian regime that has made massive mistakes with capricious monetary policy moves, and is paying the price with tough consequences. The Central Bank of Turkey cut its benchmark interest rate overnight by a surprisingly large -250 bps to 40.5% in its September meeting, its lowest since 2023. The move follows signs of slowing underlying inflation in August, though food and services prices continue to pressure inflation. Domestic demand remains weak.
In Australia, consumer inflation expectations rose to 4.7% in the September survey by the Melbourne Institute, from August’s five-month low of 3.9%. The increase came as stronger domestic demand raised concerns about renewed inflationary pressures, with household consumption proving resilient in Q2-2025. This is the sort of news the RBA will not welcome. No rate cut is priced in for September 30 but one is for November 4, although that might get reassessed now.
Global container freight rates fell -3% last week from the prior week on very much weaker outbound rates from China to Europe. Interestingly, outbound rates from China to the USWC actually rose last week by +6%. (Year-on-year comparisons are still affected by last year's Red Sea stress.) Bulk freight rates rose +8% over the past week to be +8.5% higher than year ago levels.
The UST 10yr yield is now on 4.00%, down -3 bps from yesterday at this time. The key 2-10 yield curve is holding at +49 bps. Their 1-5 curve is less inverted, now by -6 bps. And their 3 mth-10yr curve is still inverted -12 bps. The China 10 year bond rate is down -1 bp at 1.80%. The Australian 10 year bond yield starts today at 4.21% and down -3 bps from yesterday. The NZ Government 10 year bond rate starts today at just on 4.33%, down -3 bps from yesterday.
Wall Street is firmer again with the S&P500 up +0.8%. Overnight, European markets also closed up +0.8% except Frankfurt which only rose +0.3%. Yesterday Tokyo rose +1.2%, Hong Kong was down -0.4%, but Shanghai soared +1.7% and unusually strong gain for them. Singapore closed up +0.2%. The ASX200 ended its Thursday session down -0.3%. And the NZX50 fell -0.4% on the day.
The price of gold will start today at US$3,635/oz, down -US$10 from yesterday.
American oil prices are down -US$1 at just over US$62.50/bbl with the international Brent price is similarly lower at just on US$66.50/bbl.
The Kiwi dollar is now at just over 59.7 USc and up another +20 bps from yesterday. Against the Aussie we are down -10 bps at 89.7 AUc. Against the euro we are up +10 bps at 50.9 euro cents. That all means our TWI-5 starts today at just over 66.8, unchanged from yesterday.
The bitcoin price starts today at US$114,552 and up +0.7% from this time yesterday. Volatility over the past 24 hours has been low, at just over +/- 0.6%.
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27 Comments
US10Y yields falling.... looking very recession warning, in all likely hood US in recession by q1 2026
"Witness assumed Charlie Kirk shooter was just ordinary gunman on campus" - The Onion
Sometimes satire is all that makes sense.
Yes it is a crazy world. I'm fascinated that an administration which is promoting hatred in many forms can't seem to understand why people would hate them?
Assassinations are fairly common all over the world and the USA is no exception.
"..it is a crazy world" - always has been.
Aye it’s neither novel nor new. The first assassination attempt was 190 years ago on Presidents Jackson. Since then there has been no shortage of similar events, some successful, some not, on both presidents and candidates. That’s how it’s always been and it’s not changing to anything better either.
All part of the American dream, apparently
Isn't the idea that this was caused by violent rhetoric on the Left? The Trump administration have been paragons of peacefulness and restraint.
In unrelated news, anyone see Trump's post over the weekend? "Chicago about to find out why it's called the Department of WAR", followed by three helicopter emojis and some AI art of an exploding Chicago skyline with Trump in the foreground.
I think everyone is missing the point of this assassination. It is not about guns and violence it is about the silencing of political views or ideas
This is a more dangerous and insidious issue and something that we need to fight hard against - and that is on both sides of the political and ideological spectrums.
Can't it be both? I mean, there was another school shooting over there yesterday as well as this assassination, these things aren't normal in countries with better gun controls.
The irony in this case is particularly strong - a pro-gun rights advocate being shot on a campus, while responding to a question about gun violence.
In this instance the gun was just the means the motive was to silence.
Hateful dehumanizing rhetoric led to this outcome
To reduce this human being to "a pro-gun advocate" is a massive reason we are seeing the joy and glee at his death and that will be the reaction from the "other side" if another human is reduced to their ideas and also killed, this is identity politics at its zenith and in my mind is a greater threat.
and to call a brutal assassination ironic, seriously we need to search our souls
The gun is always just the means. The motives are varied.
"I think it's worth to have a cost of, unfortunately, some gun deaths every single year so that we can have the second amendment to protect our other God-given rights. That is a prudent deal".
If that's your position, isn't this a case a 'live by the sword, die by the sword'?
I don't applaud or celebrate the death, and like you I hope it leads to softened dialogue on all sides. The administration and some of their opponents have been normalizing dehumanizing language and behaviour which makes society more violent and less caring. In addition, I hope that the realization that this can happen to 'one of their own' leads to some deeper examination on tightening up the rules around guns in the US.
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A few examples of inflammatory language which should not be accepted by either side:
"Charlie Kirk is a casualty of war. We are at war in this country." - Steve Bannon
"If they won't leave us in peace, then our choice is to fight or die." - Elon Musk
"They are at war with us, whether we want to accept it or not. What are we gonna do about it?" "It ends now. This is a turning point and we know which direction we're going" - Jesse Watters, Fox News host
"The best way President Trump can reinforce Charlie's legacy is by cracking down on the left with the full force of the government" - Laura Loomer
All posted before the suspect has been arrested and his motives understood.
How is this possible? According to the gun lobby group, "guns don't kill".
Agree it is both. No one should be shot for political reasons, but there is an irony. Kind of like if a democrat was shot by someone who should have been in jail but wasn't due to woke crime legislation.
I disagree, i don't think anyone here is missing the point. We all understand the complexities. But the Trump administration is promoting and using violence as a means to suppress any opposition to them, and to garner favour. The question Charlie was asked just before he was shot was literally about gun violence and as usual he was dismissive of it as he has always been. The irony is that he became a victim of it.
Yes the assassination was in effect the suppression of one political voice, but not the voice of the administration. But understand that for some in society the only way they feel they can be heard when they are violently oppressed and suppressed is by responding with violence. The US political system has created this situation,.
If I was the Fed I would say that CPI is increasing and Trump reckons the labour market stats are all wrong and unemployment is decreasing, hence time for an interest rate increase.
long-held view that American demographics would remain very positive to the end of the century - anyone who held that view was ignorant of globally plummeting TFR's and the massive scale of immigration. NZ and Oz of course being world leaders in immigration masking low TFR's.
"The United States is on the precipice of a historic, if dubious, achievement. If current trends hold, 2025 could be the first year on record in which the US population actually shrinks.
The math is straightforward. Population growth has two sources: natural increase (births minus deaths) and net immigration (arrivals minus departures). Last year, births outnumbered deaths by 519,000 people. That means any decline in net immigration in excess of half a million could push the U.S. into population decline. A recent analysis of Census data by the Pew Research Center found that between January and June, the US foreign-born population fell for the first time in decades by more than one million. While some economists have questioned the report, a separate analysis by the American Enterprise Institute predicted that net migration in 2025 could be as low as negative 525,000. In either case, annual population growth this year could easily turn negative.
...Census tabulations analyzed by Brookings show that among the 54 large metros that grew in 2023–24, immigration accounted for all of the growth in about 20 and at least half in another 24. Without the inflow of foreign-born folks, many of the country’s marquee hubs—including New York, Los Angeles, San Francisco, and Boston—would see a declining workforce in a few years, if not within a few months.
...In 1965, there were about 4 workers for every Social Security beneficiary. Today there are fewer than 3. By the end of the century, there could be fewer than 2. In a long-term political environment that was hostile to immigration, it could be closer to 1."
https://www.derekthompson.org/p/the-us-population-could-shrink-in
At some stage the general public of the western world will be begging for immigration. By then our countries may be less attractive economically than where they come from.
Meanwhile,
Wellington homeowners who bought at peak prices now face steep losses when selling https://www.rnz.co.nz/news/business/572821/wellington-homeowners-who-bo….
With stories like this appearing in the mainstream news outlets, perhaps we will see a change in people's thinking about property as an investment.
While housing is less risky than most other forms of investment, leverage is very risky. You can put a 100k deposit on a house and end up not only losing your 100k, but being hundreds of thousands in the red too. In other investments you normally only lose what you invested in the worst case. Kind of makes Bitcoin a safer investment in a way, and recently that has been much more profitable.
Would you be prepared to borrow in BTC and have a debt in BTC on a home?
"owners who bought at peak prices now face steep losses"
No s#!t Sherlock, if you buy something at the peak of its price you face losses later on. Amazing news.
A reality of investing in anything, unfortunately many buyers were oblivious of such risk before they took on as much debt as they could to "win" that house auction
"And these estimates are before the Kennedy/Trump health mistakes which will undoubtedly speed up deaths."
surprisingly political comment for an economic summary - banning some food colourings and challenging "big pharma" are health mistakes?
Trump and his mates all trust their own limited knowledge much more than that of the experts, whether they be economists, doctors, scientists, etc.
Treating big pharma with skepticism is logical, they clearly have their own interests. The way I would approach that would be strengthening government research, strong governance of clinical trials and the peer review process, strengthening of the organisations who assess drugs for public use. I don't think that is RFK's approach - he seems to be taking the approach of throwing out long-debunked conspiracy theory talking points while reducing spending on research.
Whether there will be any short-term health effects, I don't know. He hasn't yet stopped vaccine programs and I don't know if his fog of disinformation has lead to reduced vaccination rates yet - if they do then yes this will lead to higher morbidity and mortality. Long term, his cutting back on research and organisation funding will almost certainly lead to poorer outcomes although that will be very difficult to assess accurately. If another pandemic hits in the near-term it will be a disaster.
I support his efforts to clean up food in the US - they are way out of step with the rest of the world on what they allow companies to put in their food and that should be a bipartisan issue.
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