Here's our summary of key economic events overnight that affect New Zealand, with news it seems the absence of official US economic data isn't holding back financial market risk takers, and even the data that is available, none of it very positive, isn't restraining them either.
First in the US, consumer debt growth seems to have evaporated in August. They were expecting a 'normal' +US$12 bln expansion, better than last year's +US$9 bln rise. But they only got +US$0.3 bln and far below anticipations. It rose at the slowest pace in six months, held back by a decline in credit card balances. Even car loan growth slowed to a crawl. It is a notable cooling in household borrowing, consistent with the expectation survey we noted yesterday that reported worries about jobs and interest rates are on the rise.
US mortgage applications fell again last week, extending the big fall the previous week. This came even though mortgage interest rates also fell.
A host of alternative jobs data from Wall Street are pointing in the same direction: the American labour market is losing steam. Many of these reports and surveys are private, for subscribers only, and so give a new advantage to a few. But even this data is still ignored by frothy markets.
There was a less-well supported US Treasury auction overnight for their ten year Note, and that delivered a median yield of 4.06% which was up from the 3.99% at the prior equivalent event a month ago.
Meanwhile the release of the minutes from the last Fed meeting saw benchmark rate rise slightly, the US dollar halt its rise, and the S&P500 yawn.
In Japan, the Reuters Tankan business confidence survey came in quite positive again in September, although lower than for August which was unusually buoyant. Since April this survey has been quite positive.
In Taiwan, their September inflation rate fell to 1.25%, their lowest since March 2021 and down from 1.6% in August. It is also now well below their central bank's target of 2%.
In China, they return from holiday today and businesses and financial markets will re-open. By official accounts, the level of economic activity during this break was high.
The UST 10yr yield is now at 4.14% and up +2 bps from yesterday at this time. The key 2-10 yield curve is still at +54 bps. Their 1-5 curve is positive by +6 bps. And their 3 mth-10yr curve is still +2 bps positive. The China 10 year bond rate is holding at 1.88% at the end of their holiday. The Australian 10 year bond yield starts today at 4.33%, down -2 bps from yesterday. The NZ Government 10 year bond rate starts today at just on 4.21%, down -5 bps from yesterday.
Wall Street is back up +0.6% on the S&P500 today and regaining yesterday's retreat. European markets were up between +0.7% (London) and +1.1% (Paris). Tokyo ended Wednesday trade down -0.5%. Hong Kong was also down -0.5% in their Wednesday trade. Shanghai was still closed but will reopen later today. Singapore ended down -0.4%. The ASX200 ended its Wednesday down -0.1%. But the NZX50 was up another +0.3%.
The price of gold will start today at US$4053/oz, up +US$80 from yesterday and a new high. Silver is taking off again, now at US$49.50. (By the way its record high was just under US$51 in March 2011.)
American oil prices are up +US$1 at just on US$62.50/bbl, with the international Brent price now just under US$66.50/bbl.
The Kiwi dollar is at just on 57.8 USc, down another -30 bps from yesterday. Against the Aussie we softened -30 bps at 88.7 AUc. Against the euro we are down -10 bps at 49.8 euro cents. That all means our TWI-5 starts today at just on 65.4, down -20 bps from yesterday.
The bitcoin price starts today at US$123,124 and up +1.1% from this time yesterday. Volatility over the past 24 hours has been modest at just on +/- 1.0%.
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30 Comments
That US consumer spending data shift is stunning and will show up on Q3 balance sheets very soon.
The people hunkering down? Waiting for the final collapse?
The fear index, not the economic one, but related, seems to be increasing in the US. The enemy within, the one they gave themselves.
Getting rid of Trump - which the rump Republicans may well do soon - won't solve the US dilemma. It has lived beyond its means, used thuggery globally to do so, and is fast running out of friends (we are somewhat laggardly in that regard).
As soon as those 'friends' develop the capabilities to produce what they relied on the US to provide, they will unfriend the US!
The Republicans did it to America. Their greed and lust for power has achieved the opposite to MAGA. But in the US there are layers of it. MSNBC have a report discussing the Supreme Court making decisions that support the rewriting of electoral boundaries and undermining democracy in the country. Going against all the expert opinions. Comey is in court to. So far it appears his team haven't raised the issue of 'Vindictive Prosecutions' which legal commentary suggests should lead to the charges being thrown out. But time will tell. Perhaps he has another agenda?
The US consumer is still needed
By whom?
These things called businesses that make stuff and sell it and employ people.
I'm guessing you still haven't read...
I love your doombunker thinking, but is it contagious
I'll leave that to the doombunker types. Go ahead and throw a fit that I'm not conforming.
Avoidance comes in many forms.
Chosen ignorance is the one I wonder at most - seems a sad way to live.
Shooting the messenger as if that will change the message, is another.
And calling the messenger(s) names, is shooting the messenger.
:)
a sad way to live
You obviously have little to no insight of how you come across to me and others. When there are viable alternatives I'll use them, until then life goes on. The brainwashed can keep ranting, that's a sad way to live
As PDKs link states we are all brainwashed from birth about the sustainability of our economies.
Some aware bacteria are starting to question that brainwashing...but sadly only some.
The statement in itself is flawed. Although I am not religious there is a fundamental premise in it that we have risen above the multitude of animal life. (It's an interesting discussion) The implication is that we are more intelligent, smarter. But for civilization to succeed we as a species must learn to set aside the more base emotions and urges that are sourced in survival instincts, and work together as a species for all, in tune with the environment. Basically the Garden of Eden story is the beginning, AND THE END of our journey through time.
Without us applying all the faculties we have been gifted towards that end, developing and growing beyond our base animal instincts then that premise will be true. Fulfilling the promise that our biology contains results in a different outcome.
Just thinking about what PDKs comment and what I wrote and some of the bigger picture in the US. A part of their right wing (?) ideology has morphed into thinking that anything democratic is in effect 'socialism', read communist. But this demonstrates a marked ignorance and utter lack of understanding as well as just a lack of basic ability to think things through. Combine this with a fairly common human trait of being reactive rather than considered (which in some respects Trump and the Republicans are actively promoting) then the levels of violence are not just understandable but could be expected to even increase. From a history perspective this could be seen as a classic societal breakdown. The big difference - it being actively promoted by the leadership.
PDKs comments are becoming truer. everyday. Will the Republicans remove Trump? They would to all intents essentially have to ferment an insurrection to do so, from which they might also find themselves purged.
From what I'm reading the Maga crowd is starting to re-focus and even turning. Driven by the Epstein issue and now the Charlie Kirk shooting.
The predictable early flash points are showing up. First, the deportations are now beyond the easy to get to stage and to penetrate further into the urban fortresses of the targets, greater military presence and equipment and force needs to apply. Second economic reality and coast to coast reaction such as “what about us then,” if the soy bean producers are going to be subsidised.
Yes as per the caption here “the froth” and likely soon to be sludge too.Nothing much more stark than the soy bean farmers’ predicament. An outcome caused purely by the Trump administration’s intervention and interference by way of tariffs unlimited worldwide, their main vital market China in response, is no longer. What to do. Simply speaking, have the US government purchase the crops. This is reminiscent of way back when NZ produced more lamb and mutton than market availability and PM Muldoon introduced SMPs to allow the farmers to produce more. Not a happy ending for the tax payer out of that one either.
- Typical annual soybean production: ~4.1 billion bushels
- Typical farm-gate price: about US $12–13 per bushel (average varies year to year)
-Total annual value: roughly US $50–55 billion (can range from ~$40 billion in low-price years to ~$60 billion in high ones)
So, even the upper end of the proposed bailout ($15 billion) equals only 25–30 percent of total U.S. soybean farm revenue. Note that total U.S. agricultural output is closer to $500 billion annually. Then there is the wider community and transport sector that would have been involved and getting paid. They are up shite creek right now
And where to store it?
Yes that is rather pertinent. Re my earlier reference to Muldoon and his SMPs, freezing companies approached him for funding to build new cold stores to accommodate the surplus stock. Turned them down rather rudely. Doubt that he could acknowledge that his policy had caused the problem.
But the Canadians are rocking it! New contracts all over. Plus their anti-GM stance is stronger.
Also they are running out of time to finalise their position on their F35 buy. Early commentary had it looking like SAABs Gripen E the most likely alternate, and most if not all would be built in Canada too. France's Rafale and the Eurofighter didn't even get a look in.
The SAAB position on local manufacturing could be seen as a strength. Embraer are manufacturing significant portions of the Gripens Brazil are buying. Outsourcing manufacturing creates resilience for SAAB if Europe gets tangled into a war with Russia and makes them less vulnerable at home. It is possible that SAAB are really keen to make that happen.
As to other aspects Boeing makes a big deal about stealth, but small size is a strong component of stealth. SAAB redesigned the Gripen to be more stealthy in the E model, and also has 'sensor fusion', but is very much played down by SAAB (perhaps because it is better than Boeings?). The Gripens life cycle costs are reported to be around 1/4 to 1/3 of the F35's. A major selling point.
Drones are changing the face of war, but there remains a place for manned fighters to deliver long range precision weapons, as well as flexible defence.
A solution presents itself!
I just read this on Newsweek. "On October 6, the Treasury Department announced that Secretary Scott Bessent has instructed the issuing of special coinage to celebrate the 250th anniversary of American independence in 2026, adding: “There is no profile more emblematic for the front of this coin than that of our serving President, Donald J. Trump.”"
But then; "The move has sparked controversy with a number of commentators arguing it is illegal due to an 1866 American law which they say prohibits living people from being displayed on coinage."
Well that's easily solved. Just arrange another outdoor event (they are slow learners).
Posthumorosity - the way to live on...
:)
Wellington rents tanking.
More free electricity. Now that Flick has caved to Meridian is there any retailer left doing spot pricing?
https://app.em6.co.nz/?stackedgwap.filter.gridZone=15&stackedgwap.filte…
American data weakens quite quickly but it is not holding back financial markets
You're old school DC, thinking that the market is somehow connected to economic data, lol.
Let alone reality.
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