Here's our summary of key economic events overnight that affect New Zealand with news markets are quiet while the northern hemisphere is on vacation. But China is taking the opportunity to adjust.
However, first in the US, jobless claims came in as expected at 320,000 new applicants, taking the total on these benefits to 2.8 mln. This latest data is neither an improvement nor a deterioration but there is still a long way to go until you can say their labour market has recovered.
American producer price inflation in July rose and by more than expected. It was running at +7.3% in June and a similar level was expected in July. But what was reported was +7.8%. Core PPI jumped from 5.6% in June to 6.2% in July and even faster increase.
The USDA is forecasting tighter grain supply in the year ahead as northern hemisphere heat stunts output, higher beef prices, higher imports by the US, but also lower US dairy prices.
There was a US$39 bln US Treasury 30yr bond auction overnight where the Fed took US$12 bln. The balance was reasonably popular, attracting US$59 bln in bids. But at 1.96% median yield, it wasn't much advance on the 1.90% of the prior equivalent auction a month ago.
Also overnight, the Mexican central bank raised its policy rate by +25 bps to 4.5% to counter rising inflation.
In China, there was another notable drop in iron ore prices yesterday. It is now down -28% in four weeks. China is taking tough decisions about steelmaking output, targeting a -23% drop in the July-December 2021 period so it can meet environment goals and this is having a magnified impact on Australia's key mineral export. The slowdown in China's economy is also a background effect.
State-owned Beijing Capital, which owns New Zealand's Waste Management business, is looking to quit its ownership and looking for someone to buy its stake. It has owned the business since 2014.
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The EU reported that industrial production fell in June, and although this was less than for May and less than expected, it is unfortunate as it takes the top off their industrial recovery.
Back in the US, new census data released overnight shows that the country has continued to diversify, while growing more rapidly in the South and Southwest than elsewhere. It's white population is shrinking fast to under 62%, (NZ is 70%) no doubt a spur to some of extreme racist and culture war stresses bubbling away there. This data will have echoes in electorate redistricting and the Republicans will be desperate to gerrymander to hold on to what they have.
Back to economic matters, there has been no respite in the rises in the cost of shipping container freight rates, although the pace of increase seems to be slowing. Rates out of China to both Europe and Los Angeles rose this week, although trans-Atlantic rates dipped rather sharply. This isn't helping either.
In Australia, there are reports that the country is scouring the world in a 'mad scramble' to find vaccine supplies, especially the Pfizer one. Bad decision making at the Federal level seem to have made Australia into a vaccine predator. They are certainly not 'all in this together'.
The Australian Capital Territory is now in lockdown with a case popping up there. There were another 347 new community cases in NSW yesterday with another 217 not assigned to known clusters, so they are still not getting on top of their outbreak. Victoria is reporting another 20 new cases yesterday and their lockdown is to be extended. Queensland is reporting 11 new cases. Overall in Australia, more than 24% of eligible Aussies are fully vaccinated, 45% have now had at least one shot.
Wall Street is up a marginal +0.1% in Thursday afternoon trade but a recovery from a negative start. Overnight, European markets were up another +0.5%, led by Frankfurt's +0.7% and trailed by London's-0.4% drop. Yesterday, Tokyo fell by -0.2%, Hong Kong by -0.5% and Shanghai by -0.2%. The ASX200 ended flat, while the NZX50 Capital Index dropped by -0.5% in another selloff.
The UST 10yr yield starts today at 1.36% and up +2 bps since yesterday. The US 2-10 rate curve is steeper at +114 bps. Their 1-5 curve is also steeper at +75 bps, and their 3m-10 year curve is also steeper at +133 bps. The Australian Govt ten year benchmark rate starts today at 1.22% and little-changed. The China Govt ten year bond is at 2.89% and also little-changed. The New Zealand Govt ten year is now at 1.71% and down -2 bps overnight.
The price of gold has changed little from this time yesterday at US$1753/oz.
Oil prices are marginally softer from this time yesterday, so in the US they are just under US$69/bbl, while the international Brent price is just over US$71/bbl.
The Kiwi dollar opens today at just under 70.1 USc and down -½c since this time yesterday. Against the Australian dollar we are marginally softer at 95.4 AUc. Against the euro we are also soft at 59.7 euro cents. That means our TWI-5 starts today at 73.3 and giving up yesterday's gain but still in the narrow range of between 72 and 74 we have been in for ten months now.
The bitcoin price has weakened today and is now at US$45,197 and is down -2.8% from this time yesterday. Volatility in the past 24 hours has been moderate at just over +/- 3.3%.
The easiest place to stay up with event risk today is by following our Economic Calendar here ».
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