American jobs situation turns ugly; factory PMIs turn up globally; China gets holiday boost but clamps Hong Kong down; TransTasman opening rumours rife; UST 10y at 0.67%; oil and gold down; NZ$1 = 66.5 USc; TWI-5 = 69.8

American jobs situation turns ugly; factory PMIs turn up globally; China gets holiday boost but clamps Hong Kong down; TransTasman opening rumours rife; UST 10y at 0.67%; oil and gold down; NZ$1 = 66.5 USc; TWI-5 = 69.8

Here's our summary of key economic events overnight that affect New Zealand, with news job-loss benefit lifelines are running out fast in the US.

Markets have eyes on tomorrow's non-farm payrolls report and expect new jobs to recover about +850,000 of the earlier losses, less than in prior months.

But today, job retrenchment data was released for September and they were higher than for August, and +160% higher than this time last year. And a new round of major job cuts and furloughs is just starting.

New US jobless claims came in at +837,000. Although this was a fraction less than expected, the August levels were revised higher. There are now 11.8 mln people on these claims, falling faster than expected now (down almost -1 mln in a week) as qualifications expire at a much more rapid pace. The social cost of expiring support is really biting now.

And that is being revealed in the US personal income data. It's a month behind (today's data is for August) but that fell a very sharp -2.7% from July. That involves a spending decline of -NZ$800 bln - in just one month. Year-on-year it is down more than -NZ$2.2 tln. That is big-time annual hurt for even an economy as big as the US, a stunning -11% of their GDP.

However, it is not all bad news there. Their factories are expanding, even if at a reduced pace. There were two PMI measures for September out overnight. The widely-watched local one recorded a slower expansion even if the employment sub-index is still contracting. The internationally-benchmarked one is less upbeat but does show factory employment growing.

In Canada they are seeing insurers hike premiums and reduce coverage for the hospitality industry, a trend that may show up here and one that will hurt a very fragile sector.

In Japan, September PMI data indicated that the Japanese manufacturing sector moved another step closer to stabilisation, helped by the slowest fall in new orders since January.

In South Korea, their exports rose much more than expected in September, up +7.7% year-on-year when a +2% rise was expected. Their imports were up +1.1% when a substantial decline was expected. South Korea's exporting machine seems to be reviving quite quickly.

Remember, China is in its second day of a week-long Golden Week holiday, so economic news is sparse. But their domestic travel activity is huge.

In Hong Kong, there is a very heavy police clampdown on the city for China's CCP national day events as protesters rally.

The EU jobless rate ticked up to 8.1% in August data out overnight. Their long-run improvement from the awful levels reached in 2014 is well and truly over.

In Australia, factory PMIs for September have been released too. The internationally benchmarked one shows their recovery gathered pace at the end of the third quarter, with the sector recording solid increases in both production and sales. Even jobs rose. The local AIGroup one however was no-where near as positive, signaling a contraction driven by the Victorian contraction. One of them is wrong, but we don't know which yet. Your choice, but with no mention of Victoria in the CBA one, that upbeat version seems less likely.

And staying in Australia, there are expectations that a Trans Tasman travel bubble will be announced "within days". It is said to be state-specific.

Wall Street has started today up another +0.7% in midday trade on stimulus hopes. But they are still elusive. European markets were mixed although most showed small gains. Shanghai is closed for its week's long holiday, Hong Kong is closed for just two days. Tokyo didn't trade yesterday either but that was due to a computer glitch. It is the first time ever they have had to skip a day. The ASX200 closed higher, up +1.0% and making back half of the prior day's drop, while the NZX50 Capital Index rose +0.6%.

The latest global compilation of COVID-19 data is here. The global tally is 34,080,000 and up +337,000 in one day. The European resurgence is gathering steam again, like the one in the US. Global deaths reported now exceed 1,016,000 but clearly many are going unreported.

The largest number of reported cases globally are still in the US, which is up +42,000 overnight to 7,463,000. The number of active cases are stable at 2,539,000 so as many new cases as recoveries and making no real progress. Their death total is just over 212,000 and still rising at +1000 per day. At 640/million population, it is the worst western death rate bar Belgium and Spain.

In Australia, there have now been 27,096 COVID-19 cases reported, and that is only +18 more cases than yesterday. Deaths are up to 888 (+2). Their recovery rate is still at 91%.

The UST 10yr yield is relatively weaker today, dipping -2 bps to 0.67% but holding most of yesterday's rise. Their 2-10 rate curve is unchanged at +56 bps, their 1-5 curve is also unchanged at +16 bps, while their 3m-10 year curve is marginally flatter at just over +60 bps. The Australian Govt 10 year yield has also dipped -1 bp at 0.87%. The China Govt 10 year yield is unchanged at 3.16%. The New Zealand Govt 10 year yield is up +1 bp at 0.52%.

The price of gold is much higher this morning at US$1909/oz and a +$US14 rise. Silver has risen proportionately more.

Oil prices are weaker today, down by nearly -US$2 to just over US$38/bbl in the US, while the international price is not down as much at just over US$40.50/bbl.

The Kiwi dollar starts today higher yet again, now back up to at 66.5 USc and capping a +1c rise over the past week as commodity currencies have generally risen. Against the Australian dollar we have hardly moved and are now at 92.5 AUc. Against the euro we firmer at 56.6 euro cents. And that means our TWI-5 has risen to 69.8.

The bitcoin price is a lot lower this morning, now at US$10,486 and a -2.7% retreat and its lowest in 18 days. 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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29 Comments

Stimulus and support received by housing market in most developed countries to fight adverse affect of panademic has turned it into Hyper bubble. One has to be cautious.

These Are the Cities With the Riskiest Housing Markets ["https://www.bloomberg.com/news/articles/2020-10-01/real-estate-bubble-ri..."]

From linked article:

The most unaffordable cities — where people need to work 10 years or more to buy a 650-square-foot apartment — are Paris, London, Singapore, Tokyo, Tel Aviv and New York.

They just don't know how lucky they are!

650sqare foot is about 60sq metres. On $70k pa ($54,965 after tax) you'd need 12 years to pay off this 52 sq m 1 bed Auckland lovely.

"10 years or more"
Which from the chart in the article shows it's about 14 years for London, 17 years for Paris, 20 years for Hong Kong.

Slight doup house in Goodwood heights was sold for 820000 in March and got pocession in May and spent approx 30000 and was resold recently for $1060000- profit of approx 260000 in few months and data suggest rise of few percentage. Earned approx 11000 per week and that too tax free.

Was FHB but as condition changed sold but not disappointed.

Sounds like you might have tax to pay..trying to duck that one are we?

It was my own home mr taxman. I swear I was living it while it was under a complete renovation.

If Australia opens but NZ doesn’t reciprocate, maybe a few kiwis may go & stay?

Reunite with family.

that is because it is the wrong states that want to open, NSW still has community transmission and is not running an elimination strategy, and runs with restrictions a bit like our level two at all times
if it was WA (perth) NT (darwin) or queensland it would be ok as they are running an elimination strategy even though there PM does not want to. it is all about politics over there and which party runs which state
• There were 14 locally-acquired cases reported in the last two weeks. Most were reported in
residents of South Western Sydney (36%, 5/14) and Sydney Eastern Sydney (29%, 4/14)
LHDs.
https://www.health.nsw.gov.au/Infectious/covid-19/Documents/covid-19-sur...

Youve kind of shot yourself in the foot there mate with your aged data. 12 local cases two weeks ago, 2 last week and 1 this week, which is a historic amendment. So thats two community transmission last week, none this week.

https://www.health.nsw.gov.au/Infectious/covid-19/Pages/stats-nsw.aspx

If theres going to be 40,000 people at the NRL GF, NZ wanting to open its borders with NSW first and other Australian states having already opened its borders with NSW maybe the issue isnt the lack of elimination strategy, but your understanding of the situation.

Just a thought. What was your virus knowledge like pre February?

Trans Tasman bubble? Blimey, let’s just hope then NZ & NZrs are prepared physically and psychologically for the inevitable odd case(s) that will occur here as a result. For a start, some in the media have had only a short time to untwist their knickers from the recent Auckland cluster(s.)

it wont happen unless its WA , queensland or NT that say ok, NSW and Vic both have community transmission and run with restriction at all times, unless you want the whole of NZ in level two no thanks
https://www.nsw.gov.au/covid-19
https://www.nsw.gov.au/covid-19/what-you-can-and-cant-do-under-rules/fou...

More hogwash.

The very Australian states you want to open borders up with instead of NSW on health grounds have already or are opening their borders with NSW. Its a long weekend here in NSW and I can get $200 return airfares to both Brisbane and Adelaide.

Queensland/NSW border: Open.
SA/NSW border: Open.
NSW residents allowed to travel to NT with no quarantine from next week.
NSW residents do not need to quarantine when arriving in WA.

Keep going mate.

Will the recovery be worse than the disease

Oliver Hartwich:
https://youtu.be/k_GlU2qMGWQ
Remember this was 6 days before Auckland in lockdown (7 weeks last Wednesday).

Adds great perspective to the last 8 weeks.
(Remember Australian cost is estimated to be $319 bn & 23% of GDP).

When the median age of death is higher than life expectancy then the cure is always going to be worse than the disease. "The median age of deaths is 86 years".
https://www.health.gov.au/sites/default/files/documents/2020/10/coronavi...

Puzzled scientists seek reasons behind Africa's low fatality rates from pandemic.
"A 2019 United Nations report said 62% of sub-Saharan Africa’s population was under 25 and just 3% 65 or over. In the U.N.’s Europe and North America region, 28% were under 25 while 18% were age 65 and up."
https://www.reuters.com/article/us-health-coronavirus-africa-mortality-i...

The problem with COVID19 is its "novelty", the immune systems of the elderly are basically unable to respond to a new virus. Young people's immune system's are excellent at fighting "novel" viruses while at the same time "remembering them" so that when the young get the same virus later in life they have immunity. The immune system has a surprisingly good memory. All virus's are novel to children at some point. IMHO there is a good chance that COVID19 could eventually turn into a "nasty" common cold with a similar IFR of the flu. It will just take 30 years for this to happen.

The problem is, its gone political.

Shoutout for:
Critical thinking is the analysis of facts to form a judgment.[1] The subject is complex, and several different definitions exist, which generally include the rational, skeptical, unbiased analysis, or evaluation of factual evidence.

Critical thinking is self-directed, self-disciplined, self-monitored, and self-corrective thinking.[2] It presupposes assent to rigorous standards of excellence and mindful command of their use. It entails effective communication and problem-solving abilities as well as a commitment to overcome native egocentrism[3][4] and sociocentrism

https://en.m.wikipedia.org/wiki/Critical_thinking

GBH is indeed missed.

USA "At 640/million population, it is the worst western death rate bar Belgium and Spain"
To me it is the clearest and most telling statistic of Covid failure and while clearly it is not one Trump would use, I find it difficult to understand why it isn't used against him by media or Biden.
New Zealand is 5/million.

Because it is just as much a reflection of their compromised food chain and lifestyles as it is of Covid, their declining life expectancy has been predicted for decades based on this.

But to be honest I think including the term "worst" is dishonest reporting showing a clear bias. Worst is only accurately applied to the last on the list. It is simply bad, but bad has context as I've pointed out. I mean you'd have to include a demographic profile at a minimum given it only hits oldies.

It is a state level response. Hence when Cuomo, like the UK, Italy and Spain shoved Covid sick in rest homes the death rate sky rocketed. Difficult to blame Trump for Cuomo actions. New Jersey deaths - 1820/million.
"New York state issued a blanket rule on March 25 requiring nursing homes to admit new or returning residents regardless of their COVID-19 status. The guidance also prohibited the facilities from testing patients before admission. New Jersey and California have implemented similar requirements."
https://www.nbcnews.com/news/us-news/new-york-will-no-longer-require-nur...

"New York stuck with the lethal policy until May 10, way too long. Why? Hospitals inundated with COVID-19 patients insisted on clearing out the elderly and sending them to whatever nursing homes had empty beds. The state Health Department willingly complied, nursing home residents be damned.

In New York, the Health Department works for the hospital industry, not for patients and families. The Greater New York Hospital Association (GNYHA) bundles millions of dollars from the hospitals and funnels the money to New York politicians, including Cuomo and the state Democratic Party’s housekeeping committee. Hospital interests give more and hold more sway in Albany even than the real estate industry or Wall Street. Often it’s GYNHA’s president, Ken Raske, who gets a prized seat at Cuomo’s table at political dinners."
https://pjmedia.com/news-and-politics/matt-margolis/2020/05/27/cuomos-de...

And in the UK...
"We discharged known, suspected, and unknown cases into care homes which were unprepared, with no formal warning that the patients were infected, no testing available, and no PPE to prevent transmission. We actively seeded this into the very population that was most vulnerable."
https://www.telegraph.co.uk/business/2020/05/12/governments-handling-cov...

JBS have done amazing well given the communities they operate in. The core bank support has been transformative.
- applying Guardian sensitivities to day to day life in Brasil is a mugs game.

Europe is full of scandal and lucky escapes.
If you want a reference case, look at Larry.
https://en.m.wikipedia.org/wiki/Larry_Goodman

Housing will be like dairy farms, what we payed for it in 2008 they not even close today.

The New Zealand Govt 10 year yield is up +1 bp at 0.52%.

‘’The ultimate reason for all real crises remains the poverty and restricted consumption of the masses as opposed to the drive of capitalist production to develop the productive forces as though only the absolute consuming power of society constituted their limit.’’- Marx, Capital Volume 3, p.404(1)

What's going on with all these fair-weather NZ returnees still flocking into the country from the sub-continent and bringing Covid with them.....12 yesterday! Can we assume that a large percentage of our recent returnees from that quarter are merely using NZ as a convenient bolt-hole with luxury hotel accommodation and first-world medical treatment laid on and perhaps unemployment benefits after that? I mean it's over 6-months since the plague first hit.

And again original source is....
A Hypothesis the answer being nobody knows!

“While we cannot be certain, our hypothesis is that the virus may have been transmitted to a person ... via the surface of a rubbish bin which was used by another returnee who was likely infectious at the facility.”

https://i.stuff.co.nz/national/health/coronavirus/300122564/rubbish-bin-...

Best Stuff stop putting the frighteners on us all.
If it was surface transfer its more a cleaning routine failure, or personal hygiene routine slip.