Here's our summary of key economic events over the weekend that affect New Zealand, with news rising inflation pressures are now appearing everywhere in the West, underpinned by poor economic judgements.
This week will be a busy one on the economic data front, even with the US federal agencies shut down.
Locally, all eyes will be on the Q3 labour market data and most observers expect it to show our jobless rate rise to 5.3%.
In Australia, the key economic event will be the RBA's rate review late on Tuesday and there will be heightened interest on how they view their rising inflation. That will drive a reassessment by financial markets about where their interest rates are heading. Australia's September trade balance is due and a big surplus is anticipated.
Other central banks will chime in this week with rate reviews of their own, including Sweden, Norway and England, among others.
In the US while they won't have any official data, focus will turn to the ADP Employment Report, ISM PMIs, and the University of Michigan Consumer Sentiment Index. Canada will release its labour market data too.
In China, the October trade surplus is expected to widen to around US$100 bln, although the latest official NBS manufacturing PMI showed a decline in new export orders for October. The broader RatingDog (Caixin) Manufacturing PMI is also expected to signal a further slowdown in factory activity, and its services counterpart will also be closely watched.
China's official October PMIs came in over the weekend without any significant improvements from September. They say their factory PMI is now contracting marginally more and a noticeable step lower than last month, and their services PMI is barely expanding, when a small improvement was expected.
Japanese industrial production rose +3.4% in September from a year ago, a much better surge in the month than the +0.5% rise that was anticipated.
In the US, the Chicago PMI rose in October from its worryingly low August and September levels, but it is still contracting and it has done so for 23 consecutive months now. This month's slight improvement is on the back of a rise in new orders, modest as it may be. Basically this metric is just contracting slower now.
But some companies are doing well there. An example is Warren Buffett's Berkshire Hathaway which reported profits of US$48 bln in its latest nine month result, US$31 bln in Q3 alone. They now have cash holdings of US$382 bln. Buffett himself is fading from view now and it will be a challenge for his replacement to maintain the charisma.
The EU said its October inflation level is down to 2.1%, the expected dip from September's 2.2%.
In Australia, there is more evidence inflation is embedding at levels well above 3%. On Friday they released their Q3 PPI and that came in at 3.5%, unchanged from Q2, and up +1.0% for the latest quarter. Analysts had expected it to reduce in Q3, but that isn't happening. The RBA will be as unhappy with this as it was with the equally high CPI result. Only recently, a rate cut tomorrow was a sure bet, but no longer.
And staying in Australia, bank lending grew +7.3% in September, up +6.3% for housing but up +9.5% for business from the same month a year ago. But there is a noticeable dip in business lending in September from August which surprised some. Going the other way, observers were equally surprised by the monthly surge in housing loans.
The surge is worrying APRA. The combination of demand from the FHB guarantee scheme, and exuberance by investors is joining to create the rush. And it is only expected to increase. So the regulator is stepping in with warnings to banks to reign in the party. High DTI lending is their special focus.
The UST 10yr yield is now at 4.10%, unchanged from Saturday at this time. A week ago it was at 4.00% and a month ago at 4.16%. The key 2-10 yield curve is now at +50 bps. Their 1-5 curve is +2 bps positive and the 3 mth-10yr curve is now +12 bps positive. The China 10 year bond rate is up +1 bp at 1.76%. The Australian 10 year bond yield starts today at 4.31%, down -1 bp from Saturday. That is +15 bps higher than a week ago. The NZ Government 10 year bond rate starts today at just on 4.09%, unchanged from Saturday but up +7 bps for the week.
The price of gold will start today at US$4001/oz, down -US$5 from this time Saturday. That is down -US$107 from this time last week. But it is up +US$141 or +3.6% for the month.
American oil prices are +50 USc firmer from Saturday at just on US$61/bbl, with the international Brent price now just over US$64.50/bbl.
The Kiwi dollar is now at just on 57.2 USc, and unchanged from Saturday. It is down -20 bps for the week, and down -70 bps or -1.2% for the month. Against the Aussie we are unchanged at 87.5 AUc. Against the euro we are also little-changed at 49.7 euro cents. That all means our TWI-5 starts today at just over 61.8 and down -30 bps from Saturday, down -20 bps for the week, down -40 bps for the month.
The bitcoin price starts today at US$110,113 and up +0.8% from this time Saturday. Volatility over the past 24 hours has been low at just on +/- 0.6%.
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20 Comments
Two days off when President Trump became President in waiting. Whether or not the majority of Americans start their expectations from that date there is certainly now very large numbers of them claiming that they are now worse off rather than better off as he had promised both effusively and convincingly. When the worm turns in America it becomes both hot and dicey for any administration.
They got the circuses, in spades.
Bit short on the bread, but...
"Convincingly"??? He really didn't say how he would do it. He did ask a question that is coming back to bite him; "Are you better off under the Biden administration?"
That they don't think past the superficial sets them up for failure. As always they get what they deserve.
Oh undoubtedly not convincing to you or me, but that’s immaterial. It is the millions and millions of Americans that were convinced, that counts.
I don't think either side of the political spectrum has the solutions required to fix the current problems. So blaming Trump or whoever replaces him, or whoever the Democrats nominate is going to change anything (other than feeling superior/dominant/happy (be it democrat or republican) in the short term by having control of the social paradigm and legal influence of the nation for a period of a 4 year presidential term - ie what we saw under Biden and what we are now seeing under Trump).
Until there is a willingness from both sides of the political spectrum to compromise for the greater good, with a shared common goal (national social and economic prosperity) - then I think the US is in real trouble. If the democrats run with Harris/AOC/Sanders at the next election then it is going to be just as bad as the Trump presidential term is now (but just polar opposite in terms of policies which is going to cause social discord for approx 50% of the population).
But it is pretty much playing out how Dalio described in his book 'The Changing World Order' I read a few years ago.
100% they don't have the answers. The real solutions, if they dared to speak them out loud, would get them hung drawn and quartered from the nearest lamp post.
Its not blaming Trump for not fixing it, it's holding him to account for using a BS approach to win favour with no intention of delivering anything of substance. But the people got what they deserve. Unfortunately who they voted for has a major impact on the rest of the world too.
For the Harris/AOC/Sanders group - are they really "socialist" or just for a functioning democracy?
It appears that Kamala and AOC (with the support of Bernie Sanders) are positioning themselves as frontrunners for the democratic primaries at the next election (assuming they actually allow debates this time around (unlike last time) and allow the people to determine the presidential candidate and not the party itself!) - but Kamala/AOC and Sanders with their socialist ideas will be sure to fix whatever is wrong with the US economy - including their severe debt/government spending problems!! (yeah right!!)
George Orwells 'animal farm' comes to mind.
Newsom is clear favourite at the moment, 38% on Polymarket. AOC second at 14%, Kalama is just behind Buttigieg (5 and 6% respectively)
Yeah well that might be even worse! Newsom will polarise the nation just as badly as Trump does now.
The solution to the American problem is a presidential candidate that can turn discord into union. That brings all the people together with a common purpose of social and economic cooperation/prosperity.
Newsom, Kamala/AOC are not that (nor is Trump) - they polarise 50% of the population which is a disaster. I don't think JD Vance for the republicans is the solution to the American problem either. He's very divisive.
Marco Rubio is something of a dark horse. Seemingly able to adeptly navigate in a difficult role. Well perceived and received at home and in Europe. Still no Secretary of State has succeeded to President in 175 years and the Hispanic ethnicity would work both ways in terms of favourability.
"The solution to the American problem is a presidential candidate that can turn discord into union"
I would like to suggest that the real problem is USD 38 trillion and climbing debt, not a single president. Sadly, IMO, there is only one true "solution" and it's in the form of a whole lot of pain that no one in the US is ready to accept yet. That "solution" is war, (probably civil war). Only after a period of true misery, will people of different paths of life agree to come together again in unison to build something new and constructive for the majority.
There is no longer the energy or resource-base for a re-boot.
That has been obvious for a decade or more.
There is no way that a ‘good presidential candidate’ (either D or R) has any chance of being selected by their D or R political convention. The people that run those systems select candidates that will suit the interests of ‘the powers that be’. Good candidates get ignored by the media and in debates etc. Ron Paul (R) was a good example of that.
I always thought and said that Trump would be humiliated win or lose. Lose --> Jailbird, Win --> train wreck. Pity that America and the world has to suffer
It doesn’t matter whether is the puppet on the left or right. This is late stage capitalism. Each generation is now worse off than their parents. What comes next will be interesting to say the least.
Exactly.
As I've long said, Trump is a symptom, not a cause.
On overpopulation, overconsuming a finite planet - what could possibly go wrong?
Except that's not the same thing. The issues we're seeing now have underpinnings with far greater breadth and depth than resource scarcity. Much of it's phenomenon we've observed for very long periods of time now.
Knowledge is now practically open source. There is no industrial disparity now separating most populations and nations. Things are finding a new equilibrium.
We just get to sit and watch. Or pretend it's manifesting perfectly in line with our own core beliefs and assumptions.
A symptom, arguably so but more so a product, and a finely finished one at that, of American society, commerce and academia and the whole damn shooting box actually. It would not be difficult to locate millions of males in America who would aspire to be just as Trump and millions of females who would dote on him, equal to he dictators that were arising to power about 109 years ago. Trump has barrelled his way to the forefront of all of that. Had to go and look this up but there is something of a resonance here to Powys “it brought their minds back from the vibrations of the ideal to the agitations of the real” in so much Trump represents personal and resplendent features and status that are coveted by quite a lot more than a few, and somehow in turn, some of the powdery shifty gilt might blow down their way.
I hear that term (late stage capitalism) bandied around a lot, maybe that's why the West are flooding themselves with migrants?
The only certainty is going to be growing inequality, as ever greater returns flow to capital as opposed to labour. My own personal network supports this, with some friends growing increasingly wealthy and others increasing poor. I have friends who have had to sell houses and will rent forever and others who spend $30m on a house and not even move into it. I read over the weekend that currently 3% of NSW electricity is used to power data centres, this is forecast to rise to 18% over a period I don't recall. The ramifications of what is coming are not really understood by the average person. (btw, NSW Labor government have just issued a bunch of new gas exploration permits off the back of these forecasts.)
Late stage capitalism is a bit of a subjective term. Economies the world over are at varying stages of ascent and decline at all times.
Wealth is consolidating in some areas and migrating in others.
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