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US jobs growth returns; US services sector very healthy; China services weaken; EU inflation returns; Aussie housing consents jump; global air cargo recovers; UST 10yr at 1.13%; oil up and gold down; NZ$1 = 72 USc; TWI-5 = 73.9

US jobs growth returns; US services sector very healthy; China services weaken; EU inflation returns; Aussie housing consents jump; global air cargo recovers; UST 10yr at 1.13%; oil up and gold down; NZ$1 = 72 USc; TWI-5 = 73.9

Here's our summary of key economic events overnight that affect New Zealand, with news of stronger US economic data contrasting with its main rivals.

This weekend we get the January non-farm payrolls report in the US and a recovery of +50,000 jobs is expected after the unexpected fall in December. Today the pre-cursor ADP Employment report was out and indicated a much stronger rise of +174,000 net new jobs.

Also positive was the widely watched January ISM services PMI which edged higher from an already high level. And that was bolstered by rises in new orders. The equivalent Markit report on services was equally bullish and also finding new orders strong. It also pointed out the sharp rise in business inflation, costs that are being passed on to customers.

Strong gains are also being reported in the American mortgage market. So far, rising long term wholesale benchmark interest rates aren't yet being reflected in mortgage rates.

In China, their private services sector PMI is weakening and is now approaching a stall. Companies had their weakest increase in business activity for nine months. New orders rose at the softest rate in five months. It is quite the turn-around.

In Europe, inflation has replaced deflation suddenly in January. And the continued rise in the oil price promises to make that trend more pronounced in February.

In Australia, there is a dramatic surge in building consents for houses and an equally dramatic collapse in consents for apartments and townhouses. Data out for December shows a +62% rise on a year-ago basis for houses (and a record high), and a -26% fall for apartment building consents on the same basis.

Things are not so great for Australian office landlords. Six months ago they were struggling with office vacancy rates of a pandemic-induced 9.6%. Things have gotten worse since, with their January rate now at 11.7% and a 24 year high. It ranges from 5% in Hobart to 20% in Perth.

Worldwide, international aircargo volumes are recovering with the latest December data showing it only -2.3% below the same month in 2019 which in the circumstances isn't considered too bad. It was slightly less of a recovery in the Asia/Pacific region (-3.9%). It was North American activity that underpinned this December result. Things are nowhere near as sanguine for passenger travel however with December volumes for international travel down -85%.

Wall Street is posting another rise today with the S&P500 up a more modest +0.3% in early afternoon trade. Overnight European markets rose about +0.5% (although London fell). Yesterday, the very large Tokyo market rose another +1.0%, Hong Kong was up +0.2% but Shanghai retreated -0.5%. The ASX200 rose another +0.9% yesterday while the NZX50 Capital Index turned around an won back +0.4%.

The latest global compilation of COVID-19 data is here. The global tally is still rising, now at 104,043,000 and up +470,000 in one day. It is still very grim everywhere except in our region. Global deaths reported now exceed 2,258,000 and +14,000 since yesterday.

More countries (75) have started their vaccination programs. And although 103.9 doses have been given so far (+2.5 mln more overnight), nowhere has the tide turned on infections - except perhaps in Israel and the USA. However, there is clear evidence the vaccines are working to reduce or even eliminate deaths for those who have taken it.

The largest number of reported cases globally are still in the US, which rose +117,000 overnight for their tally to reach 27,041,000. The US remains the global epicentre of the virus. The number of active cases fell overnight and is now just on 9,828,000 and -7,000 less in one day, so more recoveries than new infections. And there are now more vaccinated people than active cases in the US, which is a milestone. Their death total is up to 459,000 however (+4000). The US now has a COVID death rate of 1381/mln, rising still but made to look 'good' by the disastrous UK level (1606) where deaths are still rising faster (109,000).

In Australia, their community control is impressive. Their all-time cases reported is now 28,829 and only +5 more cases overnight, all new arrivals and all in managed isolation. 55 of these cases are 'active' (unchanged). Reported deaths are also unchanged at 909.

The UST 10yr yield is up another +3 bps at just over 1.13%. Their 2-10 rate curve is steeper at 101 bps, their 1-5 curve is up at +38 bps, while their 3m-10 year curve is also much steeper at +110 bps. The Australian Govt 10 year yield is up +1 bp at 1.18%. The China Govt 10 year yield is also up +2 bps at 3.23%, while the New Zealand Govt 10 year yield is racing higher, up sharp +11 bps at 1.34% and its highest in over a year.

The price of gold will start today down -US$2 at US$1836/oz.

Oil prices are up another +US$1.50 at just on US$56/bbl in the US while the international price is now just over US$58.50/bbl and +US$1 higher.

And the Kiwi dollar will open today up the +½c it gained yesterday at 72 USc. Against the Australian dollar we are also firmer at just on 94.5 AUc. Against the euro we are just under at 59.9 euro cents and also almost a +½c gain. That means our TWI-5 is now up at 73.9.

The bitcoin price has risen again overnight and by another +6.5% and is now at US$37,125 which is near the top of its 24 hour range. Volatility has been a relatively low +/- 3.5%. 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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43 Comments

NZD/AUD Parity please.

yes imagine selling a bunch of your rentals in south ak for 1.3 mill and what you can pick up in melbs or syd with the proffs

Well, an OO can buy new on 5% deposit with a $25k grant for new buy/build in Aus.
Certainly cheaper than NZ for a new build in an outer new suburb.

pdk,

I particularly enjoyed the second link. Though we disagree on some things, I agree with you on GDP. Infinite growth in a finite world is not possible. I would reference just 2 books both of which you may well have read; Doughnut Economics and The growth Delusion.
The energy equation is fascinating. Of course the world's supply of oil is finite and climate change 'demands' that we reduce our dependence on it, But, there is still plenty of it and i believe that many countries will go to great lengths to extract it irrespective of the costs-financial and environmental to preserve our standard of living. At some point, an irresistible force will meet an immovable object but not yet.

That time unhinged hatred of a political opponent denied sick people effective early treatment medication.

“Hydroxychloroquine (HCQ) is also a zinc ionophore that conveys zinc intracellularly to block the SARS-CoV-2 RNA-dependent RNA polymerase, which is the core enzyme of the virus replication.
…when started earlier in the hospital course, for progressively longer durations and in outpatients, antimalarials may reduce the progression of disease, prevent hospitalization, and are associated with reduced mortality.
…HCQ was approved by the US Food and Drug Administration in 1955, has been used by hundreds of millions of people worldwide since then, is sold over the counter in many countries, and has a well-characterized safety profile that should not raise undue alarm.”
https://www.amjmed.com/action/showPdf?pii=S0002-9343%2820%2930673-2

"May" and "associated with" are qualifiers that you seem to have missed in your little diatribe.

besides, good news, trials are indicating the vaccine out of Oxford is reducing transmission virulence by around 67%? Courtesy Mr Hancock via BBC news.

On what variant though? If the vaccine reduces the virulence on one variant then the variants (South Africa, Amazon, Kent) will out compete this variant & become dominant. It is the ultimate game of wack a mole. I don't see why we have to wait till 2022 to realize this.
I know what your thinking. If we vaccinate everyone then the virus won't have a breeding ground to mutate? This is rubbish logic. There is no way in hell that they are going to vaccinate everyone in in 1st world countries. The virus won.

Mr Hancock just wants to save his career.

Interestingly on BBC as well Zaria Gorvett writes about transmission post vaccination and draws a comparison to a mumps outbreak in 2009 that probably, to a lay perspective at least, indicates the likely scenario unfolding with CV19? Regret haven’t the means to post the link, but somebody else might?

I guess you just missed the multiple papers and studies referenced and the reference link. But hey keep keep up the virtue signalling bro - it does so much good.

"when started earlier in the hospital course, for progressively longer durations and in outpatients, antimalarials may reduce the progression of disease, prevent hospitalization, and are associated with reduced mortality. 22, 23, 24, 25
In a retrospective inpatient study of 2541 patients hospitalized with COVID-19, therapy associated with an adjusted reduction in mortality was HCQ alone (hazard ratio [HR] = 0.34, 95% confidence interval [CI] 0.25-0.46, P <0.001) and HCQ with azithromycin (HR = 0.29, 95% CI 0.22-0.40, P <0.001).23

"Hydroxychloroquine provided a 66% hazard ratio reduction, and hydroxychloroquine + azithromycin 71% compared to neither treatment (p < 0.001)"
https://www.ijidonline.com/article/S1201-9712(20)30534-8/abstract

https://www.amjmed.com/action/showPdf?pii=S0002-9343%2820%2930673-2

Trump Delusion Syndrome at its most destructive.

The coronavirus was a blessing in disguise for the Dems as without it Trump would certainly have been re-elected. I am sure in their sickened minds a couple of hundred thousand dead is a small price to pay to get the power back.

The haste at which Biden is unwinding Trump policies without even considering if they are cutting off their noses to spike their faces is evident. Trump once said that if he cured cancer the Dems would have a problem with it..... I cant disagree

And if Obama had cured Aids, Trump would have worked to unwind that too.

The fault for the entirety of this issue can be laid at trump's door. He had no place venturing opinions on what medicines may have worked before the evidence was in, and should have kept out of it while the trials progressed. He simply created a distraction from important work and politicised science. Lives would have been saved if he had kept to his brief.

BS. It is a very well known, safe drug, and it's mechanism in regard to corona viruses was known in 2005. The blood is on the hands of the deranged Trump political opponents who actively suppressed and denigrated medical doctors and researchers who were utilising the drug to help people. Shame on them, but I guess that is the world we live in today.

"Chloroquine is effective in preventing the spread of SARS CoV in cell culture. Favorable inhibition of virus spread was observed when the cells were either treated with chloroquine prior to or after SARS CoV infection. In addition, the indirect immunofluorescence assay described herein represents a simple and rapid method for screening SARS-CoV antiviral compounds."
https://virologyj.biomedcentral.com/articles/10.1186/1743-422X-2-69

If it was going to be effective, medicine would have picked up on it. The fact that you are sharing data about it proves this - many, many drugs were investigated simultaneously at the start of the pandemic. The best way to do this is to leave the trials to run and see what the results are. The absolute worst way to do this is for an extremely divisive proven liar to stand on his pulpit and pick his favourite. He has no medical background and should have kept his nose out. Do you really think what he did was appropriate and helpful?

profile,

https://www.nih.gov/news-events/news-releases/hydroxychloroquine-does-no....

And presumably you still believe that there have been no excess deaths.

Profile, the articles cited as support in your linked article are dated 07 February 2020, May 11, 2020, 30 June 2020, July 01, 2020.

Are you sure your thinking is up to date?

It was belatedly approved by the AMA. Damage was done though. " A proposed regimen to treat COVID-19 for Stage 1, includes 10 days of 27 hydroxychloroquine, Azithromycin, zinc, and on occasion Vitamin D (6); and 28 29 Whereas, This regimen is not being advocated for Stage 2 and Stage 3 COVID therapy; and30 31 Whereas, The original studies published in The Lancet and The New England Journal of 32 Medicine(NEJM) initially citing harm due to hydroxychloroquine and chloroquine use were 33 retracted by said journals due to dubious research methodology and incorrect conclusions"
https://www.ama-assn.org/system/files/2020-10/nov20-handbook-addendum.pdf

I think the spruikers need to stop trying to pump the US economy, its in dire trouble and you cannot hide it. There is not one thing but there are now several things that could bring a total collapse of the USD.

Na the US will be fine. There is a sort of tenaciousness to the USA. I'd be more worried about Europe. Their lockdowns there are going to bankrupt their elaborate social welfare systems.

Do rising bonds mean the end of super low mortgage rates, if so is the great kiwi property lolly scramble coming to an end?

10
up

Carlos, Gypsyman and David Chaston; have a good, slow read of the links I put up.

The problem is that money-issuance is flying blind, and has been doing so increasingly since the 2005/8 inflection, and the 1970-ish inflection before that. Even Rod Carr (who at face value is only half-way to the full epiphany) has mentioned that the debt is perhaps unrepayable, and debt is all it is. If mortgage (interest) rates 'go up', there will be an increase in the 'wealth-transfer' upwards - from defaulter to banker.

The problem is that we wrongly defined wealth. The real wealth has to be in life-support mechanisms, and they are ganging aft agley.

"If mortgage (interest) rates 'go up', there will be an increase in the 'wealth-transfer' upwards - from defaulter to banker."

Can you explain this wealth-transfer, I'm not sure how your logic works here?

Really simple - read the Grapes of Wrath.

:)

The opposite

NYSE overnight - Google (GOOG) up 9.63%

Ethereum hit a record high a few hours ago.

Mistakenly bought something that needed gas to sell back, now I have a fraction of ETH I can literally never use.

Pleasing to see that after yesterdays unemployment data , unusually unquestioned for its accuracy by our economists, New Zealand is now on course to raising the OCR , years earlier than any other central bank appears willing to if not likely to. Having reduced the OCR 18 times since July 2008, in effect reducing it 97 percent and currently on the longest dry spell ever, following the last modest attempt in 2014 to raise , there appears no reason why any increase will either be only short lived or/and minor in its amount.

I think any increases will be minor and slow. There will lingering concern around covid, as well as concern on whacking mortgage holders.
I can't see any increases this year.
I will lock in a longer term mortgage later this year.

by bw | 1st Feb 21, 8:46am

"It is looking quite ominous for the opening this week on Wall Street. On Friday, the S&P500 fell -1.9% and the S&P500 futures suggest it will fall another -2.2% when it opens tomorrow.

Yep nope... maybe tomorrow

You didn't read my comment correctly did you?!
That was a direct quote written by Mr Chaston in his "Breakfast Briefing" above the comment I made.
But here's a thought for you for today (courtesy CH Smith)

This is how the price of oil crashed to a negative number in the 2020 mini-crash. The market went bidless, meaning there were no buyers at any price.....This is the consequence of managing markets to only melt up and reversing every decline with trillions in freshly created "money." The market structure has been stripped of actual market dynamics, leaving it exquisitely fragile and brittle....this heavily managed market structure is far from equilibrium and extremely prone to instability.....To understand the fragility at the heart of the market, we must return to the Global Financial Meltdown of 2008-09 and former Fed Chairman Alan Greenspan's explanation of why he and all the other experts failed to understand the market's vulnerabilities and thus failed to forecast the global crash.

A sidestep like that you would make a good wing... its wasnt me who spread the malicious rumour sir, I only repeated it to others

Given US strength and NZ strength, it seems to.me that our sharemarket may have a fair bit of gain left in it.

Translated: Purser Titanic to Captain Titanic.

Subject - Casino activity.

Sir,
last night we had record attendance, and chip-issuance increased night-on-night by 3%. This is the eleventh such night in a row.
I therefore suggest an increase in engine revolutions to 78, having ascertained the remaining onboard capital this voyage divided by days remaining.
I also respectfully request the ordering of 1.8 trillion fresh chips for the return voyage.

Yours etc......

I get what you're saying NZ/US-wise, but they're all in the same boat.......

Fritz,

I have been involved professionally and individually in stockmarkets for over 40 years and I have been cautious now for the past few years-wrongly. It is quite possible that the sharemarket may have further to rise, but as it goes up, I get more cautious and just keep taking profits. I now have close to 25% of my total portfolio in cash and the fact that i am earning nothing-0.25% on kiwibonds- doesn;t bother me at all. it will still be there as and when I need it and that may be to buy back in after the crash.

I moved 25% to cash as soon as Covid took off globally.

NZ's state of financial disparity

An analysis of the most recent data available, from the 2017-18 Household Economic Survey, shows a massive disparity between the top 10 per cent (aged 15 years and over), who have a collective $800 billion in wealth, and the bottom 10 per cent, who owe a combined debt of $13 billion. The richest 1 per cent (about 38,000 people) are worth 68 times more than a typical New Zealander and have a total of $141 billion tucked away in trusts.

Max, whose original research drew from the 2014-15 survey, says the poorest now have essentially the same disposable income after housing costs that they did in the 1980s, while incomes for the richest have doubled. Public perception, however, has yet to catch up.

"People are startled when I point out that the distribution of income and wealth [in New Zealand] is identical to that of the UK. We're still feeding off the good times, in a sense, and running down the reserves of that social cohesion we built up when we had a more egalitarian society because it doesn't look and feel like living in the UK." Link

Your link is paywalled

Not for me on Firefox browser with Bypass Paywalls extension.

Interesting that apart from their big pay day pharmas have signed agreements with governments that protects them against prosecution..... Hhmmm.

Accountability is for poor people, not rich people.