Here's our summary of key economic events overnight that affect New Zealand, with news the US is throwing out its existing economic playbooks and replacing it with personal revenge and retribution.
First, there is no progress on the US federal government shutdown, other than Trump declaring it an 'unprecedented opportunity' to defund his opponents. The childishness of the approach by a world power is something to behold.
Almost certainly, there will be no US non-farm payrolls report tomorrow due to the Federal government shutdown. That will save the Administration from what would likely be an embarrassing result of job atrophy.
US-based employers announced 54,064 job cuts in September, the least in three months, compared to 85,979 in August. But of course, October is off to a very rocky start. So far this year, companies have announced 946,426 job cuts, the highest such level in five year when 2,082,262 were announced. It is up +55% from the 609,242 job cuts announced through the first three quarters of last year and is up +24% from the 2024 full year total of 761,358.
In Japan, it may have been only a small improvement from August, but Japan’s consumer confidence index rose in September, reaching its highest level since December 2024. Most components improved, including overall livelihood, employment outlook, and willingness to buy durable goods.
In Australia, household spending inched higher by just +0.1% in August to be +5.0% than year-ago levels. It was held back by lower spending on booze and recreation, lifted by higher spending on transport.
Aussie exports were weak in August, mainly because of lower gold exports. This means August goods exports were -3.5% lower than year ago levels. Imports were +4.5% higher on the same basis.
And the Australian First Home Buyer scheme is open and accepting applications. The word is that demand is strong. The scheme allows buyers to buy with extreme leverage - as little as a 2% deposit - all backed up by the taxpayer. The extra demand will come at a time of low listing availability, low new build activity, and already high prices. Analysts expect to be watching future house prices zooming higher because of these new incentives and the existing pressures.
Global container freight rates were down another -5% last week from the prior week, and it was the same story; the decline was led by outbound rates from China. Bulk cargo rates fell -11% in the past week to be very similar to year-ago levels.
The UST 10yr yield is still at 4.09%, down another -2 bps from yesterday on risk aversion. The key 2-10 yield curve is now up at +54 bps. Their 1-5 curve is positive by +5 bps. And their 3 mth-10yr curve is now inverted again, now by -3 bps. The China 10 year bond rate is unchanged at 1.88%. The Australian 10 year bond yield starts today at 4.32%, down -3 bps from yesterday. The NZ Government 10 year bond rate starts today at just over 4.22%, down -2 bps from yesterday.
Wall Street is little-changed in Thursday trade, with the S&P500 level-pegging (+0.1%). Overnight, European markets were quite mixed with London down -0.2% but Frankfurt and Paris up more than +1%. Tokyo ended its Thursday session up +0.9%. Hong Kong rose +0.9% and of course Shanghai was closed for their Golden Week holiday. Singapore rose +1.7%. The ASX200 ended its Thursday up +1.1 while the NZX50 managed only a +0.1% gain.
The price of gold will start today at US$3841/oz, down -US$29 from yesterday.
American oil prices are down another -US$1.50 at just on US$60.50/bbl, with the international Brent price now just over US$64/bbl. In the US, these much lower prices are not really flowing through to pump prices with current prices little-different to year-ago levels even though US crude prices are -18% lower than then.
The Kiwi dollar is at just on 58.2 USc and up +10 bps from yesterday. Against the Aussie however we are up +30 bps at 88.3 AUc. Against the euro we are up +10 bps at 49.7 euro cents. That all means our TWI-5 starts today at just on 65.4, and up +10 bps.
The bitcoin price starts today at US$119,725 and up +1.7% from yesterday. Volatility over the past 24 hours has been modest at just on +/- 1.4%.
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11 Comments
Shutdown Days Senate majority
1995–1996 21 Republican (53 - 47)
2013- 16 Democratic (53 - 45 - 2)
Jan 2018 3 Republican (51 - 47 - 2)
2018–19 35 Republican (51 - 47 - 2)
The world will not end if history is a guide
Trump 2.0 and his cronies are far more extreme than previous versions…hundreds of thousands of government workers may also disagree with you
Systems thinking tells us that the dominant system subsumes all others, to keep itself going.
The dominant system is economic growth. As available surplus energy - and increasing maintenance demands - curtail it, it is cannibilising other systems. Democracy is a discretionary load; the poor are another. Nice-to-have public 'services' are in trouble.
Add in that the rich and powerful are looking after themselves - well aware of the malaise (but they are controlling more and more of the social discourse - why else Musk/X etc? They have usurped traditional political groupings (the Clintons are elite, not left). And they can afford what the masses need to collectively own - so the latter will be dropped.
You're making an assumption; "The dominant system is economic growth."
I agree that the political goals for many are that, but politically the dominant system should be for stable, just, and equitable societies. This is where strength and durability are rooted. Is economic growth a requirement for stable, just, and equitable societies? I don't think so. Economic growth is a myth propounded by economic theorists that ignore finite limits. That thinking has dominated most governmental and political discussions for centuries I suggest many have stopped asking some very fundamental questions. I keep asking why inflation is necessary, and with in the general discourse is disagree that it is required. I do agree within very specific frameworks it is a tool to regulate and manage resource consumption, but it is not a requirement of stable and just societies.
" I keep asking why inflation is necessary, and with in the general discourse is disagree that it is required."
Inflation is necessary to pay interest...the namesake of this site.
Murray - great post but yes, I am.
You are advocating an alternative dominant system - and I agree.
But until the dominant one hits the limits and collapses or reverses (which it will), no attempt to displace has been successful. The system controls the rules, the policing and the deterrence. Hard to buck all that.
But collapse it will; it's a cancer on a body; an infinite demand on the finite. So it is entirely legitimate to plan for a different time, and not too far ahead...
"The world will not end if history is a guide."
No, it won’t. However, to downplay and simply think that the shutdown is just a repeat of the past is under estimating the current situation.
It is of concern that Trump is sending the National Guard into Democratic cities when there is no obvious threat of civil unrest yet he did not do so during the 6 January attack on Congress. Now this week his unprecedented - and illegal - call for the use of the military against the “enemy within,” is alarming.
Trump playbook seems that he intends to provoke divisiveness and civil conflict and is clearly preparing and normalising the use of these Federal forces to counter any opposition. Sadly, his Maga base will be accepting and supportive.
Feels a lot like NZ where spending cuts will lead to low GDP growth and unemployment which will then create less tax and even worse government debt.
"The scheme allows buyers to buy with extreme leverage - as little as a 2% deposit - all backed up by the taxpayer."
What could possibly go wrong offering this in a country that includes 3 of the most expensive housing markets in the world?
https://www.canstar.com.au/home-loans/expensive-cities-buy-property/
CBA at 169 doubt it will reach ATH again, the 182-190 run looks like a blow off top
Many of those cities are in the US, none in NZ. I thought the US was the poster child for cheap housing?
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