US jobless claims jump; benefit qualifications expire; Canada in a housing boom; China inflation retreats; India tries new infrastructure spending; UST 10y at 0.73%; oil and gold unchanged; NZ$1 = 65.9 USc; TWI-5 = 69.4

US jobless claims jump; benefit qualifications expire; Canada in a housing boom; China inflation retreats; India tries new infrastructure spending; UST 10y at 0.73%; oil and gold unchanged; NZ$1 = 65.9 USc; TWI-5 = 69.4

Here's our summary of key economic events overnight that affect New Zealand, with news that as American jobless benefits expire, the rise in poverty distress follows.

New claims for unemployment benefits in the US came in just under 900,000 last week and that was much higher than the 825,000 expected. And the number of people still qualified and getting these benefits fell by more than -1.2 mln last week to just on 10 mln, as the pace rises whereby the six month entitlement periods end. Remember, at its peak in March it was at almost 25 mln. Many will have gotten jobs since then (about +700,000) but that leaves a huge 14 mln who have lost benefit qualification. And there is still no progress on any Congressional plan to extend benefit entitlements. The social pressures are building to an ugly level.

The next set of regional Fed factory surveys are mixed although both are expanding. The Philly Fed one reports rising activity, but the New York one reports a pull-back in their region. Both have huge industrial bases.

Canada’s September home sales set a new record, soaring +45% from last year. And prices were up +10% year-on-year nationally although the biggest gains were in Ontario.

And that comes despite a larger-than-expected drop in payroll employment there.

In China, American investors have piled in to a big US$6 bln Chinese Government bond issue. More such issues are on the way.

China's consumer inflation fell to +1.7% above the same month a year ago and a 19 month low in September, as pork price growth eased. Observers say CPI still has someway to fall yet as the pork price gets back to some sort of normal after the ASF crisis. But the price of beef still rose sharply, although lamb prices less so. Factory prices are still falling there however.

In India, they have launched a US$10 bln infrastructure spending boost to try and arrest their downturn.

In Australia, the number of jobs fell there in September by a bit less than -30,000 and -20,000 of that loss was full-time employment. The Victorian lockdown caused this retreat. Their national jobless rate is now up to 6.9% and their participation rate fell to 64.8%. Underemployment is now at 11.4% there. Interestingly, the unemployment rate in Victoria is still much lower than the national average, coming in at 6.7%. NSW is now at 7.2% and Queensland is now 7.7%.

And the RBA has raised expectations of a November rate cut, possibly from 0.25% to 0.10%.

Meanwhile, consumer inflation expectations rose in Australia in the latest survey, now up 3.4% pa from 3.1% last time the survey was run.

Wall Street is -0.4% lower today as recorded by the S&P500 and adding to yesterday's similar retreat. Overnight, European markets more than -2.1% lower on average. Yesterday, Shanghai traded down -0.3%, Hong Kong ended down -2.1% in a late fall away, and Tokyo was down -0.5%. The ASX200 ended its session up +0.5% from the prior day, but the NZX50 Capital Index was down -0.5% and ending its recent run of gains.

The latest global compilation of COVID-19 data is here. The global tally is 38,687,000 and up at a faster pace of +383,000 in one day which is an all-time record one-day rise. The case growth is concentrated in Russia, the UK, Iran, France and Italy. Global deaths reported now exceed 1,094,000 (+6,000) but clearly many are going unreported.

The largest number of reported cases globally are still in the US, which rose +60,000 in one day to 8,169,000. The number of active cases is at 2,656,000 so as many new cases as recoveries and not making real progress yet. Their death total is over 222,000 and still rising at +1000 per day.

In Australia, there have now been 27,362 COVID-19 cases reported, and that is +21 more cases than we reported yesterday. Again, most were in NSW yesterday. Deaths are unchanged at 904.

The UST 10yr yield is unchanged this morning at just on 0.73%. Their 2-10 rate curve is unchanged at +58 bps, their 1-5 curve is still at +18 bps, while their 3m-10 year curve is also little-changed at +64 bps. The Australian Govt 10 year yield will start today down by a sharp -8 bps at just on 0.75%. The China Govt 10 year yield is firmer by +2 bps at 3.25%. The New Zealand Govt 10 year yield is down -3 bps at 0.55%.

The price of gold is virtually unchanged at US$1904/oz.

Oil prices are little-changed, now just on US$40.50/bbl in the US, while the international price is a bit softer at US$42.75/bbl.

The Kiwi dollar starts today lower by about -½c at 65.9 USc. Against the Australian dollar we are firmer at 93 AUc and holding on to yesterday's gain. Against the euro we are softish at 56.3 euro cents. And that means our TWI-5 is also down about -40 bps at 69.4.

The bitcoin price is marginally firmer today, now at US$11,392. 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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47 Comments

Ironic that for years we have been hearing about how much US debt the Chinese owned, and now we are hearing US investors buying up Chinese bonds?

I'm curious though what rates were on offer? With the political relationship between the US and China, there must be a fair amount of risk involved, and those investors are banking on those tensions not escalating to blows? Or would such investments survive a shooting war?

Imagine a shooting war is not contemplated. USA military philosophy was largely developed & honed by Curtis Le May, once you start you are flat out until the other guy is finished. That didn’t work too well in Vietnam but it would have not the slightest chance against China. They must know that.

The US leadership during the Vietnam War completely ignored previous lessons, sidelined their military leadership and out of shear arrogance tried to micromanage the war from the Whitehouse. No one at the top then had a clue, and those who did, didn't have the balls to stand up to their leadership and tell them NO. They put their carreers and wealth ahead of the lives of the troops they were supposed to protect. So the politicians squandered 53,000 US lives and I don't know how many Vietnamese, although over a million i think, and others in a war they had no business being in. Shocking and shameful piece of US political history.

Aye, an abysmal waste of everything. Le May didn’t say it, but it was attributed to him nevertheless, we will bomb them back to the stone age. And even more shocking was McNamara’s inhumane , shocking Project 100000, special selection process for low IQ soldiers.

They also created the environment in Cambodia for Pol Pot by dropping a couple of million tons of bombs on the place and destroying the natural order of things.
My father in law fought in Malaysia and went to Vietnam very early on in the conflict. He was shocked how poorly trained for jungle warfare were the US soldiers, some of his troops had been in Burma, they knew about fighting in the jungle and he loved living in the jungle.

I met a ex US soldier in Germany years ago. When he found out I was from NZ he said the only reason he was alive was due to the Kiwi SAS being being assigned to their patrols, one out the front and another at the back. If it wasnt for them he would have been killed several times over, he explained. He owned a small dairy kind of a shop and basically closed the doors when it was busy and told customers (there were at least 10) that he was going to have a beer with me as a thank you. I was an hour late to work and I was in a power of crap until I told my boss the story of what just happened.
I've also sat with an acquaintance shortly before he passed away from cancer who was ex SAS from the Vietnam days, he told us stories in vivid detail of what he did and witnessed in those times after years of not talking about it, he kind of off loaded his experiences before he tipped over.
Two amazing experiences that I will never forget. For your father in law to be living in the jungle, he must have been one of the elite, it is not for the faint hearted.

Aj, you might find it in the library but Jack Belden’s retreat with Stillwell is a fascinating read, given it was published 1942, so unmassaged by time. Illustrates the desperate fighting, withdrawal west out of Burma, lessons learned and put to great effect for the subsequent campaign to retake Burma.

Thanks Foxglove, I will look it up.

Father in law
https://www.dnw.co.uk/auction-archive/past-catalogues/lot.php?auction_id...

appreciated. made me recall wandering around Norfolk Castle museum long ago, & reading the summaries of the VCs of the Norfolk Regiment. Just googled that & the action in Burma of Captain John Randle in particular, similar circumstances. Yep that would certainly have battle hardened anyone for the future combat. Understatement that actually.

He was put forward by the regiment for a Victoria cross but the Queen wouldn't give it to a 19 year old second lieutenant on National service. His father was in the desert rats and then went on to Tedder staff as wing commander .

Vietnam, and all their random wars since.

Another fascinating thing about the whole war is one of their top military advisers - Henry Kissenger - still advises their government today. He should have been put on trail a long time ago for war crimes, the indiscriminate carpet bombing of Laos and Cambodia etc during operation Menu which still kills and maims people today from all the left over UXO. Instead, he won the Nobel Peace prize for helping to end the war (I guess he felt guilty?). He is a true monster, somehow celebrated by being on the side of the US.

The Trial of Henry Kissinger by Hitchens. Well worth a read.

So in lieu of a Hot War, you take hostages.
If China encourages investment from the USA it cn take hostage any funds under its control in the event the USA turns up the sanctions.
Funds held by both parties would be 'seized' and then exchanged in a hostage swap to unblock the funds.

Putting aside what Huawei may have allegedly done or not done, the detainment and process to extradite Meng Wanzhou points to this.

Why send soldiers when you can destroy a country with cyber attacks and destablising? The future of war is cyber. Not to say that there won't be any more boots on the ground, but drones and cyber attacks are where thing are are moving atm.

Does the money the USA is using actually exist ? Perhaps its an offset so that when the USD finally collapses the Chinese debt can be written off ? You know how it works, you owe us a Trillion and we owe you a Trillion so we are all square right ?

China exchanges real goods/products for digital US $ they create at the push of a button. I still wonder who is the smart one.

ditto NZ
we leverage our land to get some of that petrodollar sugar hit

It seems Canada’s (particularly the major cities) housing market parallels NZ’s. What are the commonalities between these two countries?

29
up

High immigration, high international students with open access and free work visas/residency, leftish secular govts, big neighbour dependency, open to foreign ownership, no boundaries.

Yep nice low interest rates too, circa 1.75%.

Superb succinct answer. I'd add English speaking - I expect most potential immigrants would prefer a Scandinavian country if they spoke one of their languages. What do you mean by 'No boundaries'?

I have often noticed a strong sense of pride among Austrian and Swedish businesses in keeping their ownerships, operations and employment local as much as possible.

We, in the English-speaking world, lack the drive for anything that doesn't bring us instant gratification.

Well said Mortgage Belt.

I'd add that Canada was impacted by the GFC in the same way NZ was. ( did not have a banking crisis or deep recession )
SO...when the big countries that were on their knees crashed interest rates, cheap money flowed into Austrailia , Canada and New Zealand.
Financial Globalization + computerization has kinda forced small countries with open borders to "step in line" with the heartbeat of the Globalized Financial World.
Cheap interest rates became rocket fuel to drive House prices resulting from the forces Mbelt mentions.

Twitter and Facebook go in to full censor mode for Biden. I guess they aren't a platform after all.

"Twitter and Facebook on Wednesday censored an article from the New York Post that obtained newly-released emails showing Hunter Biden's involvement with the corrupt natural gas company Burisma Holdings. Hunter was being paid in excess of $50,000 a month to sit on the board of Burisma despite having no natural energy experience. He was being paid for access to his father, then-Vice President Joe Biden. Because the information is unfavorable to Joe Biden, Big Tech has worked overtime to protect the presidential candidate."

https://townhall.com/tipsheet/bethbaumann/2020/10/14/watch-tucker-carlso...

https://nypost.com/2020/10/14/voters-have-right-to-know-what-joe-biden-d...

"Biden’s campaign would not rule out the possibility that the former VP had some kind of informal interaction with Pozharskyi, which wouldn’t appear on Biden’s official schedule."

https://www.politico.com/news/2020/10/14/biden-campaign-lashes-out-new-y...

A rabidly alt-right computer tech I know desperately wants to believe the latest lies about the Bidens but he’s too afraid his employer would learn just how incompetent he is.

Anyone using fakebook or twitter are complicit with right wing fascists and their conspiracy theories to undermine the truth. These platforms are not news platforms. They are simply means of communication that have evolved into something no one could ever fathom and now provide a platform for distorting the truth to the uneducated sheeple who think they have legitimacy.
If trump uses the likes of twitter you automatically know that they have no interest in reporting the truth. Facebook also has an unrepentant ally in zuckerberg. These companies have made a half hearted attempt to reduce the flow of lies before the US election that the sheeple lap up because they are too lazy to take the time to read or listen from real news outlets. That is the fate of democracy today. You either take the more difficult high road or you follow the sheeple through your outright lack of education and laziness by buying into these pathetic platforms.
trump is the most pathological liar in politics the world over and is a total threat to democracy and an insult to decent people all over the earth.
Bottom line is, you don't need to consult any so called media company to form an opinion about trump, you just have to listen to him open his mouth for about 10 seconds.

Good luck the polytechs.
Apologies to those that thought a plan in place. Looks like new mgt, plus new layer of mgt, yet no answers, just same old questions.
- where are we now.....

"We are engaging consistently with our union partners about the challenges that we’re facing, and we are trying to bring a network-wide view to that, and we are trying to preserve capacity and to retain employment where we can.

"But the reality is, we can’t guarantee every single job in our system because of the magnitude of what is occurring."

https://www.odt.co.nz/news/dunedin/polytech-offered-no-guarantees-staffing

This is the new umbrella organisation - newly named, that will take govern all the Polytechnics
https://xn--tepkenga-szb.ac.nz/about-us/leadership/
Currently positioned to allow all campuses to carry on BAU, but eventually all qualifications will carry the central name.

Looking like things are going to get very ugly at the unis, too, unless things change after the election.

i have always been surprised by how the polytechnics grew and grew and starting competing against each other , take auckland and manukau, both have campus all over the place and offer up the same courses, Auckland is not that big in international sense to duplicate facilities.
it is now the same with doctors training they are talking of opening a third one but do you know how many that get through the training can find places now in NZ, not as many as you would think, a lot have to go overseas within the two year window, it not about training for what we need now its a business

They have core delivery for locals.
But in order to survive financially they have been forced to chase the international market & create programmes specifically to capture this market - changing their offerings according to the work visa rules (changing constantly).

Don't those Aussie Covid numbers include managed isolation?

It would be insightful to report the community transmission numbers. Certainly more relevant to hopes of a transtasman bubble.

The link in David's story goes to health.gov.au... click on 'Total Cases..last 24 hours' and the answer is 111 cases of community transmission and 55 imported over the last 7 days ie: two thirds of new cases are community transmission.

they split them same as we do, victoria does not have isolation at the moment but they are down to two cases today, so shows their lockdown worked meanwhile NSW has unknown community cases and they are still releasing restrictions, lets hope their track and trace is as good as they say and its just not politics because all the other states are making them look bad
NSW recorded six new locally acquired coronavirus cases in the 24 hours to 8pm on Wednesday –
The NSW tally included a man in south-east Sydney with no known links to any of Sydney's active outbreaks, and three linked to the growing Lakemba GP cluster – its source still a mystery.

We have had over 40 mm of rain, officially not dry anymore, grass will bolt. I am looking at getting cover crops in next week, giving the seed drill a look over and grease, guy coming today to fix my brakes, (he thinks it's just air in the system) before someone gets hurt. It's cold with snow on the hills but I think we will miss a frost as everything is so wet we will probably just fog, drizzle now and frost forecast is for tonight so hopeful it won't happen.

Labour day is traditionally when we get out last frost and pretty much the end of our frost risk, however we can get ground frosts anytime through summer.

With the longer days and warmth it's more about trying to keep the grass under control than growing it. That's a good time for me to take some paddocks out and put in mixed species cover crops and tighten the other paddocks up a bit. I am struggling without dogs, these bulls are inclined to ignore me.

Always good to hear news direct from the back paddock.

going to be one hell of a strong spring market, after the drought stock numbers are low, availability of finance from stock finance companies takes away the credit problem, so it's in boots and all. Be interesting to see if there are any margins left for traders, especially now sheep markets are looking very soft. The $200 lamb is definitely in the rear vision mirror.

Barfoot & Thompson latest Auction
Bare Land in Remuera
An 806sqm plot of empty land at 22 Ingram Road and 27 Spencer Street, in Remuera. Sold for $3.81 million
That's $4727 per square metre
it sets a new benchmark for land at $4727 per square metre. Around there it’s been around $4000 per square metre and people were aghast at that,” “striong enquiries from developers and people wanting to build their dream home
https://www.barfoot.co.nz/property/residential/auckland-city/remuera/sec...
All dated properties sitting on 1000 sqm of land in Remuera are now worth minimum $5,000,000

That's the scariest thing I have read this year.

Cheap for prime real estate in Elysium.

Here we go the old Elysium theory is back...

Two pre-existing houses have been removed
Rubbish bins still on the property
Dated Art Deco house north-side
State house opposite on north-east corner
Nice mansions on the opposite south eastern and south western-corners
Most likely outcome will be 2 town houses or 3 or 4 terraced houses
https://www.google.co.nz/maps/@-36.8698573,174.7971943,3a,75y,137.22h,93.56t/data=!3m6!1e1!3m4!1sL91_v0XJUkEu0HqM7tn1Yg!2e0!7i16384!8i8192

Seems like they must have something else in mind. Don't see how 4 terraced houses can possibly make a profit paying $3.8m for the land. What, $2m to build. You're going to have to get $1.5m each just to break even?