Jobless claims rise in the US, benefits expire fast; US consumers cautious; Canada eyes negative rates; Canadian and Australian house building slows; UST 10y at 0.77%; oil up and gold down; NZ$1 = 65.8 USc; TWI-5 = 69.1

Jobless claims rise in the US, benefits expire fast; US consumers cautious; Canada eyes negative rates; Canadian and Australian house building slows; UST 10y at 0.77%; oil up and gold down; NZ$1 = 65.8 USc; TWI-5 = 69.1

Here's our summary of key economic events overnight that affect New Zealand, with news the pandemic resurgence is snuffing out any chance of a near-term economic recovery.

In the US, the level of jobless claims came in higher than expected for last week at +840,000 and similar to the previous week. But the number of people still accessing unemployment benefits fell again as more people are seeing this support expire. This fell by more than -1 mln in a week and is now down to under 11 mln. There is still no Congressional or Administration agreement of benefit extensions.

And most experts don't see the American jobs numbers turning up until "2023 or later". That's two or three years of tough conditions ahead.

Yesterday the US Fed released its August household debt data. Instead of the expected +$14 bln rise from July, this debt fell by -US$7.2 bln, an unexpected -US$21 bln shift lower, and indicating American households are not helping their economic recovery by extra spending. The August level is only +0.4% more than the equivalent 2019 level.

In Canada, their central bank governor said that negative policy rates are an option there too.

And Canadian housing start data for September came in way less than expected and the August data was also revised lower.

In Australia, their August level of building consents was flat year-on-year, masking a huge -18% fall in approvals for apartments and townhouses.

Wall Street is up today by +0.6% in afternoon trade on the S&P500. European markets were up a similar amount last night. Yesterday Hong Kong was down -0.2% and Tokyo closed up a full +1.0%. Shanghai is back trading later today. Yesterday the ASX200 ended up +1.1% and the NZX50 Capital Index was up +1.8%.

The latest global compilation of COVID-19 data is here. The global tally is 36,281,000 and up at the new faster pace of +334,000 per day. Europe, and especially in the UK, and South America which is where the next wave is occurring. Global deaths reported now exceed 1,057,000 (+5000) but clearly many are going unreported.

The largest number of reported cases globally are still in the US, which is up +57,000 in one day to 7,793,000 which is a rising pace. The number of active cases is at 2,578,000 so many more new cases that recoveries and going backwards on that front. Their death total is over 217,000 and still rising at about +1000 per day.

In Australia, there have now been 27,206 COVID-19 cases reported, and that is +24 more cases than yesterday with a spike in NSW. Deaths are unchanged, up to 897.

The UST 10yr yield is down -1 bp to 0.77%. Their 2-10 rate curve is unchanged at +62 bps, their 1-5 curve is also unchanged at +20 bps, while their 3m-10 year curve is also little-changed at +69 bps. The Australian Govt 10 year yield is up +1 bp to 0.87%. The China Govt 10 year yield is unchanged at 3.16%. The New Zealand Govt 10 year yield is up +2 bps to 0.55%.

The price of gold is down another -US$4 this morning at US$1882/oz in New York trade.

Oil prices start today up by about +US$1.50, now just over US$41/bbl in the US, while the international price is up to just under US$43.50/bbl.

The Kiwi dollar starts today marginally lower at 65.8 USc. Against the Australian dollar we are down at 91.9 AUc. Against the euro we little-changed at 56 euro cents. And that means our TWI-5 has slipped slightly to 69.1.

The bitcoin price is higher today, now at US$10,921 and +2.8% 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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52 Comments

Just to pre-empt the COVID scare monger conspiracy theorists about how poorly NZ has done with COVID: https://www.theguardian.com/world/2020/oct/08/new-zealands-covid-19-resp...

11
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I'm sure Henry will disagree and post some YouTube evidence of NZ failure?

*awaiting Henry_Tull's reply*

Nzdan You have to use some Trump bait by reporting the truth. Like this article highlighting that Trump is being unreasonable and a big baby.
BBC article: Presidential debate: Trump refuses to take part in virtual TV event. https://www.bbc.com/news/election-us-2020-54465139

It is just a meaningless survey. How about what health professionals are seeing?
https://gbdeclaration.org/

10
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What do you favour for NZ right now? Continue as is and hold the disease at the border (hopefully) and have freedom for everyone in NZ, or open the borders and restrict the freedoms of anyone who is considered at risk, while subjecting the rest of us to a higher degree of sickness than normal?

My prediction has been from early on that we will won't keep it out. I've been right once. Do you like being lied to? The CFR has proven to be 1/10th of what was used to justify management of it.

I just came across this and thought it was sort of relevant in an interesting way:

"A study at New York University in 2007 found that most people had about two hundred different species of microbe on their skin, but the species load differed dramatically from person to person. Only four types appeared on everyone tested. In another widely reported study, the Belly Buttom Biodiversity Project, conducted by researchers at North Carolina State University, sixty random Americans had their belly buttons swabbed to see what was lurking their microbially. The study found 2368 species of bacteria, 1458 of which were unknown to science. (that is an average of 24.3 new to science microbes in every navel). The number of species per person varied from 29-107. One volunteer harboured a microbe that had never been recorded outside Japan – where he had never been."

I'll be honest, I'm struggling to see the relevance that study has to COVID19.

11
up

The pandemic has been marked by people pulling surprising data out of various orifices.

Covid has shown how little science actually knows about immunity. Yet people like yourself are behaving like they do. Chris Martensen commented on this way back in April, the lack of integrity in science. People unwilling to change their position despite the evidence. I call it the arrogance of science. Actually I've said here for years that it is second rate people that go into science, the real innovators go elsewhere. Plus it has been dumbed down by teh sheer numbers of people getting degrees, it is lowered the average IQ and capability of someone with a degree. It is more about who can promote themselves the best, mind you it has always been so.

12
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As someone who works as a Clinical Scientist, albeit in a quite different corner of Medicine than we're discussion, I want to say that some of us do work quite hard to keep following the evidence and overruling our biases. It is a shame that evidence based medicine is currently under such attack from the President of the USA who does not understand or care about it one bit, so it is something we all have to continue to fight for.

Your just showing political bias bring Trump into this, its got nothing to do with him.
If you were genuine you would have followed the massive amount of studies coming out about how effective Ivermectin+ and HCQ+ has been. You clearly have not read the outright fraud reports put out by Lancet and UK studies with lethal doses.

As I said, this is not my area so I have no requirement to put my time into reviewing the literature. The reason I bring in Trump is he was shouting from the rooftops about the effectiveness of hydroxychloroquine before there was any evidence relating it to this disease. Right now he is shouting from the rooftops about his Remdesivir 'cure' and proclaiming that everyone should have this medicine, based on his own personal anecdote. This is not how medicine should work, and he is doing real harm to Science. I believe this is from his own ignorance rather than malice, but that is barely an excuse.

No he's been talking about Regeneron therapeutics and not Remdesivir which has been shown to be useless by its own study.
Again your just showing bias bringing Trump into it, he can have an opinion that is everyone's right to have.
What you should be complaining about is the truly fraudulent articles that deny how effective Ivermectin+ and HCQ+ are.

My mistake - I did mean Regeneron.

Ordinary citizens are welcome to have their own opinions, just as I am able to criticise opinions I disagree with. Presidents are usually held to a higher standard and can absolutely be criticised when they make such damaging statements. The bias that I cannot understand is those who support Trump unquestioningly - he produces such a smorgasbord of strange statements that any right-thinking individual should find some things to disagree with. The inverse is also true, and I don't disregard everything he says out of hand.

Yes my view is you should not believe everything especially the bias way the media presents things and should look at the studies is my point.
Your welcome to your view as is Trump who may have been briefed I would expect about this in more detail than you or I.
I try and watch the full clips of him rather than the warped segments you get in the MSM.

I agree, primary sources are always preferred. I also try to watch the full clips and I do find he is frequently taken out of context which is unfortunate as there is plenty to criticise without any exaggeration needed. The long-form interviews a month or two ago which discussed coronavirus in depth were particularly illuminating, and I have to say he did not give the impression of a man who had been well briefed and had taken the information on board. I don't know why I would give him the benefit of the doubt on other covid related information.

Yes I'm sure he has a heap of conflicting advice as well from so called experts like the WHO and Faucci (clear conflict of interest).
But as with science you have to look at the studies and facts which for normal scientists can mean you change your position.
When Trump talked about HCQ in the past there was a heap of information indicating HCQ+ was effective taken early. It has been a safe drug for 70 years and CDC studies had shown its effectiveness against viral flu strains prior to Trump mentioning it.

Let's burn these scientists at the stake!

I’m not saying I agree with you, but I do think there’s a lot more to our relative good fortune than good management - of which there has been. Seasonal timing, strong UV light, relatively high vitamin D, fairly low population density (even in our mainly single detached home cities and towns), relative lack of major events and pub culture, who knows? Can we dodge the bullet for ever? Who knows?

It's called "conventional wisdom" Scarfie, and many times through history it is accepted as fact when it has been very wrong. And so many organisations are so politically corrupt that anyone challenging the "conventional wisdom" are either gagged or kicked out.

Covid has shown how little science actually knows about immunity.

How so? You still need to elaborate on why your article relates to COVID. I'm aware scientists don't know everything, however, I struggle to see how this realization validates your position.

There's certainly been (and continues to be) a lot of confusion about the CFR. Early on when the big decisions were made here, I don't think we were lied to. We simply didn't know everything about the disease that we do now, and any decision to go for herd immunity at that stage carried huge risks of underestimating the disease.

It turns out that it's less dangerous for most of the population than first feared, but we simply didn't know that with the early levels of testing and lack of information on asymptomatic patients. Despite that, it is still dangerous enough to overwhelm a health system if nothing is done to keep infections down. All up, right now I think keeping the borders sealed is the best response at present.

I did read a very interesting article the other day which gives an interesting perspective:

https://www.theatlantic.com/health/archive/2020/09/k-overlooked-variable...

The main point everyone misses is that disease is predictable, and was predicted. This is the start of a trend. You won't ever stop disease because the correct cause has not been identified. You address a problem by dealing with the cause, not the symptoms.

To what extent are you willing to predict the next pandemic? When will it arrive, what kind of disease will it be, what will be the approximate R and K values and fatality rate? Can anything useful be predicted, or just a general sense of foreboding?

Accidentally reported. Sorry I

mfd,
I agree with you that there is great confusion about the CFR.
One common flaw is the failure to recognise that the CFR is highly dependant on whether or not the hospital system is overwhelmed.
Availability of oxygen plus dexamethasone appear to be the key treatments in reducing CFR.
KeithW

Bobbles, good stuff, have you got a link to the Bloomberg survey.

Tough Condution Ahead

Really : https://www.nzherald.co.nz/business/herne-bay-homes-make-almost-seven-ti...

Most news in nzheralad under paid premium but not this news - FOMO

Will be interesting to see if housing market continues (should as RBNZ and governmt are doung all it can to promite price rise) or.......

Whim will FHB vote now as both National = Labour. May be Green as vite for TOP is wasted though needed another extreme to balance.

Seems we're not running out of greater fools just yet.

18
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No we never will run out of fools. As an example Ms Sage of the Greens interprets the offer of farmers in the fire ravaged Lake Oahu, to let stock reduce the overgrowth allowed on DOC land, as the farmers just wanting free grazing. Wonderfully unwise, negative attitude bordering on that of a personal vendetta, ie the Greens want farmers to be banished. Reminiscent of a previous Labour Minister, Hodgson I think, stating it would not be practical to direct revenue from speed camera to road upgrades and safety, as that would encourage people to speed. Yep, fools and horses, we sure have got em.

One of the only plus sides if Labour would govern alone would be getting rid of her.

unfortunately that doesn’t look likely now. and even so, Labour would invite the Greens in anyway. that way they can renege on policy statements, such as their one tax increase, that’s how you have to govern in a coalition don’t you know.

14
up

So as others suggested, I was wrong yesterday. The RBNZ knows exactly what they are doing.
In my opinion, [ excessive personal abuse removed. Ed ]
And as Canute pointed out, even he knew he couldn't stop tidal action.
(Why the edit? Isn't the property market conducive to deceit and criminality? Ask anyone who sells a house 'what their intention was' on purchase, or ask some bringing in suspect cash from overseas 'where it came from'?
RBNZ action IS supporting all of that)

Irrational actions to save an asset class from a speculative bust engineered as far back as 2008 which has failed to drag the whole economy along with it could be a recipe to trigger a call for IMF assistance.

12
up

The implication by the RBNZ being that they will address market distortions when "things get better!"
Don't they realise 'now' is as good as it's going to get, and that's applied for 12 long years!? Now, is when these distortions need fixing, because the future is going to be worse, and the errors they are making are going to be compounded into the worst of all possible times.
They're like that junior trader that we've all watched having his first bad position - waiting and hoping for a better time to come, to get out. It never does. It just gets worse and worse. And by the time they get taken out - it's the bottom.
That's what the RBNZ et al are staring at; transfixed by fear - fixing things, at the bottom of the proverbial cliff.

Deputy Governor does not want house price to fall as understand that is the only cover for falling economy in general in NZ but the very fact that they are concerned and bringing policy further to boost in itself indicate how bad the overall economy is and going future(when they want to further release the policy) will be worse.

RBNZ and Government are artificially keeping the house price up by pushing the demand.

Our dear Prime Minister talks about increasing the supply but is silent on why they are supporting and promoting speculative demand - definitely houses that are been sold for million plus are not FHB for whom the PM sheds crocodile tears/concern.

All this breed of politicans should be exposed as many FHB and people nearing retirement / savings are being pushed into uncertainity. FHB in Auckland will be extinct unless ready to pay million for pigeon hole for life time of debt.

Its fantastic news if the reduced spending by the US public is because they are buying less crap from China. That would be a great outcome.

Square invests 1% of its cash reserves into bitcoin, causing its stock price to jump to an all time high (the second such move by a listed company this year)

https://www.coindesk.com/square-buys-50m-in-bitcoin

Lots of interesting points around this story. $50m is a relatively small amount for a company their size. They've written a white paper about the buying process. Jack Dorsey (CEO of square and Twitter) is a well known btc maximalist. And these purchases are happening otc outside of the exchanges. https://mobile.twitter.com/jack/status/1314239421504393221

21
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Dear asset less class, especially you non home owners.

Thing are getting tough, but we do not think it fair that assets drop in value, instead we think your cash and savings should be sacrificed instead. After all, asset owners worked hard to get where they are, the took huge risks gearing up with other peoples money.

Regards,
RBNZ

https://www.nzherald.co.nz/business/reserve-bank-outlines-plans-for-powe...

Ironically, Taxpayer Union wants the NZ government to follow Sweden's strategy to cut income taxes and stimulate our GDP.
The tax cuts remove the 65% marginal top tax rate from those earning the equivalent of NZ $115k a year but the next highest bracket remains at 60%, still much higher than our top tax rate.

http://business.scoop.co.nz/2020/10/08/growing-evidence-for-new-zealand-...

Interview with TOP leader worth a listen for those (like me) who have wasted votes on Nat and Lab over recent years. Refreshing to listen to.

https://www.mixcloud.com/Radioactive_FM/top-leader-geoff-simmons-joins-m...

I know the 5% threshold gives the impression of a wasted vote to many, but as your comment indicates there's been way more wasted votes for the main parties. Voters just really need to think it through.

It's a wasted vote until it isn't. It took the Greens a while to get over the 5% and into the club.

Big picture Covid landscape.
UnHerd.
Prof Balloux
https://youtu.be/r8pi8ALdWZA
Trust v fear.

This is why politicians don't care about low interest rates.

Lets say their retirement super is $80k per anum forever.
When interest rates were at 5%, this represented a retirement fund of $1.6 million
At interest rates of 1.2% this represents a retirement fund of $6.6 million.

I bet your kiwi saver hasn't responded like that!

The RB, bankers and politicians playing us.

Thank your direct for the reply, David:

"You are very welcome to comment pointing out how you disagree with policies or positions.
But please do not sink to invective or insults. You wouldn't like it if your integrity or honesty was impugned just because someone else has a different view.
Please do not insult others. The above is over the line."

But I'll just point out what you will already be aware of:

'When it becomes serious, you have to lie'

- Jean-Claude Juncker. And guess what? It's serious, now!

Did the WHO just confirm that covid is no worse than the flu?
https://www.zerohedge.com/medical/did-who-just-accidentally-confirm-covi...