US hiring shrinks; wholesale trade lower, inventories jump; Fed minutes focus on inflation; aircargo in decline; OECD races for BEPS solution; Aussie sentiment drops; UST 10yr yield at 1.58%; oil and gold up; NZ$1 = 62.9 USc; TWI-5 = 68.6

US hiring shrinks; wholesale trade lower, inventories jump; Fed minutes focus on inflation; aircargo in decline; OECD races for BEPS solution; Aussie sentiment drops; UST 10yr yield at 1.58%; oil and gold up; NZ$1 = 62.9 USc; TWI-5 = 68.6

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Here's our summary of key events overnight that affect New Zealand, with news of more evidence of a global slowdown.

American job openings have come in -4% lower in August than the same month a year ago, and an 18 month low. Hiring was lower too, down -1% on the same basis. Their labour market is shifting gears to match the recent weaker underlying economic data.

And that includes wholesale trade which was -0.7% lower in August than the same month in 2018 and inventories are up +6.2% from a year ago. Neither is a healthy signal.

However, not everyone thinks the American economy is turning lower. The Fed chief said overnight it is "in a good place", despite the obvious risks. Fed thinking about where they stand in the policy cycle was revealed with today's release of the minutes from their September meeting. Their main worry is the lack of inflation which is why they cut.

In Mexico, they are proposing a crackdown on tax evaders, especially corporate tax evaders, with penalties as harsh as those for drug offenses.

In China, their shadow banking assets shrank to a three-year low in the first half of 2019 amid a government crackdown on shadow banking.

Japan machine tool orders in September look grim. Overall they took in -35% few orders than a year ago, which is bad enough. But export orders are -41% lower. Because this is high-end product, the levels are ugly.

The August data for international air cargo traffic is now very gloomy with volumes -4.6% lower than the same month a year ago. It is even worse in the Asia Pacific area which is down -5.8%. North American international traffic is down -4.3% and European traffic down -3.3%. These reversals are sharp from just a few months ago. This data is unlikely to improve in September.

As many countries start unilateral programs to tax the tech giants and other multinational company profits that escape any tax nets, the OECD is moving forward with its "unified" tax proposals, hoping to avoid an international patchwork of individual regimes.

The Westpac MI consumer sentiment index in Australia has fallen hard and is now at a four year low. The leaking away of confidence since the RBA rate cuts is stark - they are doing exactly the opposite of the regulatory intention. Now we have both the business sentiment sinking after the rate cuts, and now consumer sentiment as well. Lets hope the RBA stops cutting soon.

The UST 10yr yield is up +3 bps to 1.58%. Their 2-10 curve is positive at +12 bps. Their negative 1-5 curve is narrower at -20 bps. Their 3m-10yr curve is narrower at -11 bps. The Aussie Govt 10yr is up +1 bp at 0.90%. The China Govt 10yr is down -2 bps at 3.12%. The NZ Govt 10 yr is now at 1.04%, and a +1 bp blip up this morning.

Gold is up +US$6 to US$1,505/oz.

US oil prices are slightly firmer today at now just under US$53/bbl. The Brent benchmark is just on US$58.50.

The Kiwi dollar is marginally softer this morning, now at 62.9 USc. On the cross rates we are at 93.5 AUc. Against the euro we are at 57.4 euro cents. That puts the TWI-5 at just on 68.6.

Bitcoin is now at US$8,578 and that is +4.8% higher than at this time yesterday. The bitcoin rate is charted in the exchange rate set below.

The easiest place to stay up with event risk today is by following our Economic Calendar here ».

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14 Comments

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15
up

Jobs, trade, sentiment, cargo all down.... How long before the central banks realise they are the ones leading this and stop lowering rates?

12
up

"Typically, an interest rate cut boosts confidence particularly around consumers' expectations for and assessments of their own finances" - That's from Westpac expressing surprise on dipping consumer consumer confidence in Australia despite rate cuts.
This is how out of touch economists in general are about what's going on. Wages barely keeping up with cost of living, job insecurity growing, very little investment pulse outside of public sector and mining, global sentiments getting clobbered.
I guess households today just aren't as ill-informed about current affairs as economists would like them to be.

ridiculous logic
do you really think having higher interest rates would boost demand or affordability?
The Ponzi needs more debt, not less

And as with all Ponzi scheme it will collapse, just a question of when, and how the PTB handle it.

They know.

DC, you should re-name "90 at 9" "300 at 7:30"LOL
More, earlier, thanks Interest, I wish more of the people I do business with were like you

Echo your statements, makes for great reading first thing at work

All is well. Trump has just ensured that the US war factories have an outlet for their ageing stock, new orders about to flood in. The war based economy gets a reprieve.

Repo markets still very concerning

https://www.youtube.com/watch?v=lL1qFJ7kwrQ

Fed Chairman Powell:

So as you can see from our policy statement and from the SEP, we see a favorable economic outlook, with continued moderate growth, a strong labor market, and inflation near our 2% objective. Link

IMF Chief Christine Lagarde:
Then:

The steady expansion under way since mid-2016 continues, with global growth for 2018–19 projected to remain at its 2017 level.

Yesterday:

Two years ago, the global economy was in a synchronized upswing. Measured by GDP, nearly 75 percent of the world was accelerating.
Today, even more of the world economy is moving in synch but, unfortunately, this time growth is decelerating.
In 2019, we expect slower growth in nearly 90 percent of the world.
The global economy is now in a synchronized slowdown.This widespread deceleration means that growth this year will fall to its lowest rate since the beginning of the decade. Link

Great articles

specifically liked this one

"From 2003 to 2009, it went: globally synchronized growth, decoupling, globally synchronized downturn. From 2010 to 2012, it went: globally synchronized growth, decoupling, globally synchronized downturn. From 2013 to 2016, it went: strong global growth (not synchronized), decoupling, synchronized downturn.
Last year to this year, it has gone: globally synchronized growth, decoupling. What comes next?"

SKY TV's share price has collapsed again , now below $1 for the first time ever ... this one time $ 2 billion media giant , is now a mere $ 300 million shadow of its former self ...

... Spark has announced a deal with NZ cricket for the 2020 domestic season ... the future is live streaming , for all its faults , not cable ...

The sky has fallen ....

The future is spark and not cable?

How can that be when spark sport requires a cable, and sky does not?

. . the only time my stupid smart phone has a cable attached to it is when the battery goes flat ...