US service sector expanding; Canada's rise peters out; Taiwan posts impressive gains; Aussie business confidence weak, eyes on Budget; UST 10y at 0.75%; oil and gold up; NZ$1 = 66.4 USc; TWI-5 = 69.6

US service sector expanding; Canada's rise peters out; Taiwan posts impressive gains; Aussie business confidence weak, eyes on Budget; UST 10y at 0.75%; oil and gold up; NZ$1 = 66.4 USc; TWI-5 = 69.6

Here's our summary of key economic events overnight that affect New Zealand, with news markets have turned positive today, even as officials warn of a difficult period ahead for the pandemic.

There were two services sector temperature checks out overnight in the US. Both show a good expansion, now getting the post-pandemic bounce the factory sector got earlier. The widely-watched local one expanded at a good level driven by new orders. However their employment component was tame but at least it wasn't negative. The internationally-benchmarked version expanded at a similar pace and recorded better employment growth but lesser new order growth.

There is no news on progress on more fiscal stimulus; it is still tied up in Congressional disagreement and Administration confusion.

In Canada, consumer confidence recorded its smallest monthly gain since the start of the pandemic, another sign the swift economic recovery of Summer is petering out there.

In Japan, their services sector is still declining even if it is at a slower rate than since the pandemic started.

Meanwhile in South Korea, their factory sector has stabilised as new orders are no longer a drag - even if they aren't expanding just yet.

In Taiwan, their factory sector did expand faster in September at a rising pace and is back to levels last seen in 2018 - and those were very good levels too. This latest improvement is on the back of a sharp rise in new orders.

Today is the final day of China's Golden Week holiday and hundreds of millions will be heading back to work tomorrow. They have been subdued while on this break, spending a full -30% less than in the same period a year ago, even though this 'week' included an extra day.

Even though it improved in September, the Australian NAB business sentiment survey confirmed it is still very weak. It was undermined by the Victorian situation, but overall new orders are still very weak. Capacity utilisation will only recover very gradually until orders pick up.

And staying in Australia, they get another RBA rate review today and they are getting ready for a new Budget announcement from Canberra (late evening NZT). Expectations are high for a tax cut, and one that will backdated to July 1. But top-end tax rates will still be 45% for earnings over AU$200,000 although those on incomes above $AU90,000 will get significant relief but to rates that are still higher than in New Zealand. They expect FBT and investment allowance rollbacks. New spending on infrastructure, FHB subsidies, and grants for manufacturers are also expected. This Budget will be announced this evening.

In New York, the S&P500 is up +1.2% in early afternoon trade. They follow European markets which were up about +1.0% overnight. Yesterday Tokyo ended up +1.2%. Shanghai is still closed but Hong Kong returned and was up +1.3%. The ASX200 ended up a strong +2.6% on the expected Budget stimulus, while the NZX50 Capital Index ended yesterday up a more modest +0.6%.

Internationally, the IMF has changed its tune, no longer warning about the dangers of excessive public debt, rather now saying this is the time for much higher government spending (and ignore the debt consequences).

The latest global compilation of COVID-19 data is here. The global tally is 35,274,000 and up +287,000 in one day. Global deaths reported now exceed 1,038,000 but clearly many are going unreported. In fact, Russia issued a mea culpa overnight saying more than twice as many people have died there as has been officially reported so far.

The head of emergencies at the WHO said overnight its “best estimates” indicate that roughly 1 in 10 people worldwide may have been infected by the coronavirus - more than 20 times the number of confirmed cases - and warned of a difficult period ahead.

The largest number of reported cases globally are still in the US, which is up +35,000 on their Sunday to 7,650,000 and of course that includes the White House cluster. The number of active cases are rising at 2,571,000 so more new cases than recoveries and they are going backwards again. Their death total is just under 215,000 and still rising at +1000 per day. They have had 648/million population, the worst western death rate bar Belgium and Spain.

In Australia, there have now been 27,149 COVID-19 cases reported, and that is only +13 more cases than yesterday. Deaths are unchanged to 894 which is a milestone for them.

The UST 10yr yield is a lot firmer today, up +5 bps at 0.75% in what is a big move for this benchmark. Their 2-10 rate curve is steeper at +61 bps, their 1-5 curve is also steeper at +19 bps, while their 3m-10 year curve is up at just under +65 bps. The Australian Govt 10 year yield is up +4 bps at 0.91%. The China Govt 10 year yield is unchanged at 3.16%. The New Zealand Govt 10 year yield is up +1 bp to 0.52%.

The price of gold is up +US$16 this morning at US$1915/oz. Silver has jumped +2.5% in enthusiastic trade.

Oil prices start today firmer, but still very weak, now just over US$39.50/bbl in the US, while the international price is up to just over US$40.50/bbl. These are levels +US$1.50 higher than this time yesterday.

The Kiwi dollar starts today unchanged at 66.4 USc. Against the Australian dollar we are lower at 92.4 AUc. Against the euro we also lower at 56.3 euro cents. And that means our TWI-5 is at 69.6.

The bitcoin price is firmer today, now at US$10,746 and +1.3% higher than 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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67 Comments

Fundamentals by one big property investor in US

https://youtu.be/h56S5BA7AyI

Listen to author of Rich Dad Poor Dad - Robert Kiyosaki

https://youtu.be/6YcWDPwUEgo

"Imitation is the sincerest form of flattery"

Don’t think the “world” thinks that. Just some well established rather caustic & cynical satirical commentators. Recall David Lange being lampooned similarly, don’t think Piggy Muldoon got the honour though.

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We have lost the ability to laugh at ourselves, let alone others. It is one of the warning signs that society as we temporarily knew it, is losing control of itself. And of being able to project truth.

I level the same accusation at those who project 'growth' as good, this late in the game and with the obvious ramifications unfolding all over the planet.

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Go to the mount or queenstown and you will be well aware that growth is not only 'not good' but is actually very destructive.

I think Qtown & the Mount are wonderful places made better by a vast array of great restaurants, coffee shops, visitor accommodation, activities, events etc...

Didn't think it was just about her, lots of digs at NZ in general and even turn it around and look at the Brits having a go at their performance on the subject.
Damn good satire

At least they got the teeth right. A grill that could replace the cow-catcher on any train in history.

Careful, opening the floodgate's on Politician physical looks could end in tears..."who's eating all the donuts"?

Interest, how do people log into this website via Press Patron on their mobile devices? When I log in it takes me to Press Patrons dashboard and then nothing. Highly frustrating not being able to read this site on the phone anymore as it won't allow browsers like Safari to use it without being financially subscribed.

On firefox ios here, works fine without press patron, just make sure you have tracking protection switched off.

Same - I use Duck Duck and now it wont allow it?

AUS FHB subsidies. Still trying to blow the bubble. Aid for the bwankers dressed up as help for the young. AUS is still a country of criminals.

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Well, there's a headline here saying FHB'ers are 'the winners' of rising house prices.

This late in a ponzi, there are no winners. The only question is how big the reset will be? And will the system endure it?

You have to have faith in humanities ability to dig itself out of the mire and get back on its feet, or life has no meaning, everything reverts back to dust and we are just chasing the wind. Which reminds me I hope you doing lots of sailing? sounds like you have some decent wind

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I was thinking during the 1st lockdown that the quiet and lack of activity is actually closer to the natural order of things. Very enjoyable and not something to be feared.

"the quiet and lack of activity is actually closer to the natural order of things." Some could say that about defines prison too ;-) Even the Stone Age people moved about, hunted and gathered, meet in social groups, all of which didn't occur in lockdown. Nothing 'natural' about it.

Yes but there weren't 5 million of them, burning a couple of million barrels of oil a week.

Burning oil is part of natural order of humanity in present times. Whether or not is right, is an entirely different debate.

Certainly a more peaceful state
But only as long as theres a free tab running which stocks the supermarkets

The System has already been re-set - it's what we see about today, and it bears little resemblance to the fundamentals that applied even 20 years ago.
How long will it last before the next re-set? Not long, in my opinion! That's why whoever gets in at this election probably has one last shot at getting us ready.

Agreed. Whoever is in for the next three years, will traverse the morphing.

And I'd rather it wasn't a dinosaur. Even a fossilised prayng-mantrist.

:)

"getting us ready .."

The first part is the narrative
And all i can hear is bigger, stronger, faster, MORE

Of greater interest is the beef news from NZ

Which i haven't heard anything about?
Prices in US are falling but they have record exports, biggest beef export year since 2011. Our bulls are piling on weight in this very dry spring, top bulls are over 400kgs Live weight, not bad for yearlings. All we need is one good rain and a break from the wind.
Im burning fires just in case we get early fire restrictions. These early dry patches normally break early, at least around here. Weak el Nino not giving us the rain we expected.

sorry, you are right it's a very weak la Nina

Yesterday on "The Country" Jamie MacKay interviewed the head of the "NZ Red Meat" Lobby Council who said red meat exports have fallen seriously but you can now get a meat meal at an Auckland Restaurant for $22 where before it was $35

How do you cypher that? We are exporting beef to Aussie as prices are so high over the ditch.

“It is our strongest market in the world at the moment, particularly for certain items,” analyst Simon Quilty told a recent webinar.

Illustrating this, New Zealand beef has over the past month or so been imported into Australia – “simply because of how strong the Australian domestic market has been,” Mr Quilty said. “It’s been arriving in volumes that we haven’t seen in this country for ten years.”

New Zealand is one of only three countries, including Vanuatu and Japan, currently eligible to export beef to Australia.'

https://www.beefcentral.com/trade/domestic-beef-market-risks-getting-swa...

https://www.beefmagazine.com/exports/china-s-beef-imports-continue-soar-...

I'm just the messenger - that's what she said - someone is BS'ing
You can go back and listen to it on week-on-demand
https://www.newstalkzb.co.nz/on-demand/week-on-demand/
Midday yesterday The Country - interview towards the end

I would think the drought lead to a much bigger autumn kill, which then collapsed as we got into winter with very low kills right through to now. I don't think the beef kill will start for another couple of weeks.

I hear prime lamb cuts are now hard to move. Some cheaper on line prices with some offering free delivery on orders over $80. Anyone else heard similar?

I talked to a friend, he was told by one of the works that they were not optimistic about lamb schedules after Christmas, they thought beef would be fine but sheep are in for a correction. So i suspect the works have been quietly informing farmers by the back door, they should expect to get less for sheep and not to go crazy in the store and get as many as possible away before new year .

Had to laugh while in Kaikoura (helping out by a roadie spending our $$ around the regions)..they wanted $89 for a full crayfish and $44 for a half at local pub. We walked up and down the main drag looking at local prices -$ 24 burgers - to $28 for a flounder meal? These are the same people bleating poverty after the earthquake but now happy to rip local kiwi tourists off. Seriously how hard is it to lay a pot and bring back to shore..wonder what the mark up is from catcher to Pub?
Brought a delicious pizza up the road instead and basically thought Kaikoura go stuff itself for all I care.

Chinese paying 140 dollars a kg for lobster made those Crayfisherman very rich men.

The Ngawi Village cray fishermen were reputed to be millionaires in the late 60's.

I was massively surprised that dining at a well-known, highly respected Queenstown restaurant actually worked out cheaper for mains than most places in Auckland. I've basically given up on eating out in Auckland and Taupo isn't much better. Many places aren't priced for locals. One place I stay in Taupo manages it well - they discount for longer stays, booking in advance, etc. The other place I've stayed just has a fixed board rate, no exceptions, just a paltry discount for signing up to their mailing list and no active pricing. Guess which one I reward with my dollars more often.

Family went out on the town in Queenstown, and in a bar commented to the barman how beer price had dropped $4/5. "Locals won't pay those prices" was the reply. Similar comments being made in eateries that relied on offshore tourists for clientele.

When the touristas return - stuff the locals

I was massively surprised that dining at a well-known, highly respected Queenstown restaurant actually worked out cheaper for mains than most places in Auckland.

Average Auckland restaurants can be as expensive as Michelin starred restaurants in Tokyo. It will take some time for people to adjust to the new reality. Mind you, expensive restaurants in Auckland are all about the wealth effect working its magic.

Did a two week South Island road trip recently and as lovely as Kaikoura is, it was also far and away the most expensive place we visited, far eclipsing even Queenstown. Won’t bother stopping in Kaikoura next time apart from Ttop Shop for fish and chips.

Same.... Recommend Black Rabbit Pizza - they even had craft beer!

"On the whole, the New Zealand meat industry has done well, exporting $9.4 billion worth of meat in the year ending June 2020, up 7 per cent on last year, a result that reflects a strong global demand for protein.

But with the overseas food sector – cafes, restaurants and hotels – in Covid disarray, Kiwi producers of meat normally exported to the hospitality industry have been hard-hit. Prices and volumes have dropped, and some of that meat has found its way onto the New Zealand retail market.

This year local shoppers won't have had to look hard to find specials on French racks (rack of lamb), normally too expensive for a family meal, veal fillets once destined for export, whole eye fillets and cuts like sirloin and scotch fillet on special. Even well-priced venison fillets and mince are appearing in New Zealand supermarkets and online." https://www.nzherald.co.nz/the-country/news/article.cfm?c_id=16&objectid...

The price of "luxury" meat (lamb rack, venison, eye fillet) has dropped with restaurants closing.

Farmers must be turning a decent profit from splitting their usual export volumes between the low-margin local grocers and high-margin overseas food sector.
If things don't get better soon, those poor souls will be forced to swap their Ranger for a Hilux, or worse LDV!

Would not the high margins go to the meat companies and their shareholders Advisor, not the farmers?

We are on a restricted season here now Andrewj. Fruit crops could be a bumper season this year very heavy fruit set district wide across cherries. Though its still a way to go yet before that can be confirmed - 1 super frost or rain close to harvest could turn it all very quickly. Had a nice 8mls of rain here last 24hrs.
Meanwhile down on the farm the main access road to farm is closed due to culvert/road washing out (lucky we have an alternative route) and soil moisture is at max due to heavy rain/flooding in our area. If only we could send some of the rain up your way - it would be a win/win. ;-) Got to love living and working in ag - no room for complacency.

We need to ask ourselves if this is progress?

(This guy already owns 14 houses in NZ).

https://youtu.be/eaLgERMaG14

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No. A symptom of a Ponzi economy.

Simply an excess of money created through the banking system going to assets supported by an increase in imported fire-apes oblivious to the unfolding ecological catastrophe all around them but absolutely convinced that growth will continue forever.

Exactly. Terrible. Lazy. Tax it.

do you really have to ask yourself?

Another billion down the gurgler. At least the media seem to be waking up.
https://www.newsroom.co.nz/cynical-delay-on-jobs-for-nature-figures
"Massey University journalism lecturer Cathy Strong says if details aren’t provided on a big Government promise, involving huge sums of taxpayer money, it ends up being “election clickbait”. “I think it’s appalling if they can’t answer it, and they can’t answer it quickly.”

Worse

Lake Ohau Fires destruction of hamlet. Yesterday on "The Country" Jamie McKay interviewed a farmer who laid much of the blame at the feet of DoC who have ceased light grazing, allowing the fuel load to increase and cutting wilding pines and leaving them lying on the ground as fuel load

Last night in a 10 second sound-bite interview Eugenie Sage disputed the claim the wildfire was a result of Wilding Pines saying they were on top of the wilding pines problem having cut down a 1000 hectares- End of sound-bite

In noticed they had cut the wilding pines along the roadside but back a few Km's they hadn't got around to it...

Yes we need to cut down every tree in the country to reduce fuel load.....jeesh.

Yes the only trees that burnt were on DOC land..the trees and slash in the local village were privately owned and mysteriously did not burn? We need to sweep our forests regularly is the problem. Nothing to do with unseasonable high tempratures and high winds.

A good summary on the issue. There is more to fuel load than wilding pines. The landscape has been modified since the moa hunters. One only has to look to California and Oz to see what happens if you don't manage fuel load.
The government is following the do nothing and blame climate change ideology - though I spose it is in their interests to do so.
https://homepaddock.wordpress.com/2020/10/06/doc-policy-fueling-fires/

You are an energetic denier Profile.

In the right conditions, high wind, dry etc, fire will start anywhere. The great Raetihi fire burnt thousands of hectares of not only cut native bush but standing native in the central Nth Island.

..

The real question to ask, is how many 'new' jobs are actually 'new' and how many were going to happen anyway. e.g. many catchment groups had plans/contracts in place for the growing and planting of trees, and in some cases fencing. Then along came the $ lolly scramble. So now those plans/contracts will be, in some cases, funded by this 'new' money. These aren't new jobs, rather than an alternative funding source. So it would be interesting to know, how many are truly new jobs and how many were going to happen anyway. It's a bit like the billion trees. Govt announced a billion trees to be planted and initially failed to acknowledge approx 50% where already planned to be planted.

Yeah 50% of new plantings are in fact replanting cutover forest. So the great take over of farmland is basically a myth. In fact there is less plantation forest in NZ today by about 70k hectares than 10 yrs ago.

Morrison is obsessed with bringing manufacturing jobs back to fast-track COVID recovery, outlining six key areas — defence, space, medicine and medical products, food and beverages, resources technology and recycling and clean energy.

Yeah, that's not going to happen in their current high-wage, high-energy cost environment.
For reference, an average Texan business pays a-third of the price per kWh than what an Aussie business pays.

Scomo is a clown. Manufacturing industries are cultivated over time, not as a reaction to the external environment.

That's right. The country has generated very little IP, a prerequisite to high-cost manufacturing, over the years outside of their mining, engineering and few other service sectors.

Only countries with either a low-cost manufacturing base (e.g. Vietnam) or high skill/knowledge availability (e.g. Germany) or both (only China comes to mind) can expect foreign firms to bring their productive activities to their shores.

You know you’ve made it when you are on spitting image! Probably something that the average kiwi might not understand the gravitas of. This is massively positive for Jacinda and New Zealand. Boris Johnson is portrayed as a daft dog and we get Mary Poppins. If Judith Collins is elected and they deem her worthy she would likely be portrayed along the lines of “on yer bike leather clad Norman Tebbit.