Here's our summary of key economic events overnight that affect New Zealand with news we are in to the final ten days before the US Labor Day holiday and most northern hemisphere participants are taking vacations ahead of what could be an active and volatile economic period through to the end of year holiday season.
Yesterday, wholesale interest rates started to rise again in New Zealand. That was just a pre-cursor for the international bond market overnight where the benchmark UST 10yr yield jumped back to 1.35% despite some weak economic data.
Part of the reason for the turn up is the US Fed's focus on the Jackson Hole meeting and the signals Fed boss Powell will be giving. Markets suspect he will acknowledge that the current inflation impulse is likely to be less transitory and have longer term implications.
In the US, new orders for manufactured durable goods in July decreased slightly although the fall was less than expected. But non-defense capital goods orders fell quite sharply although that was from an unusually strong June. Aircraft orders were especially weak. From the same 2019 month these capital goods orders were -8% lower, so that is a poor result. It is not clear however how much the logistics supply chain constraints are having on these results.
US mortgage applications rose last week but not in a significant way, continuing its yoyoing trend around zero for the past year. US mortgage interest rates didn't move significantly either.
However, the yield on the overnight US Treasury 5yr bond auction rose to 0.78% pa from 0.66% at the prior equivalent event. Today's tender was as well supported as the prior one.
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In China, their central bank has been telling their commercial banks to lend more, especially to SMEs. And to lower interest rates. They are clearly worried about the slowing momentum in the Chinese economy.
Aluminium prices are expected to jump from already high levels as China's refiners are ordered to cut back, and a fire at a very large Jamaican refinery will also crimp global supply, especially to the US.
There were another 919 new community cases in NSW yesterday with another 741 not assigned to known clusters, so they are completely out of control. They now have 12,286 locally acquired cases all in their leaky pseudo lockdown. Victoria reported another 50 new cases yesterday, so it is still bad there too and their lockdown is extended, also with a curfew. Queensland is now reporting six new cases with growing threats there. It has instituted a two week ban on interstate arrivals, throwing many things into confusion, including scheduled sports. ACT has 9 new cases. Overall in Australia, more than 31% of eligible Aussies are fully vaccinated, plus 23% have now had one shot so far.
In the US, health insurance plans are adding premiums for members who remain unvaccinated. And employers are generally adopting a no-jab, no-job stance.
Wall Street has opened their Wednesday session with another +0.3% rise for the S&P500. Earlier, European markets were mixed with Frankfurt lagging, down -0.3%, and London leading with a +0.3% rise. Yesterday, Tokyo ended yesterday flat, Hong Kong was down -0.1% at their close but Shanghai posted a +0.7% rise for the day. The ASX200 managed a modest +0.4% rise yesterday, and the NZX50 Capital Index rose +0.8%.
The UST 10yr yield is up +6 bps today at 1.35% and extending its strong rise. The US 2-10 rate curve is steeper by +4 bps at +110 bps. Their 1-5 curve is also steeper at +76 bps, and their 3m-10 year curve is +6 bps steeper at +132 bps. The Australian Govt ten year benchmark rate starts today at 1.20% and another +4 bps firmer. The China Govt ten year bond is at 2.87% and soft. And the New Zealand Govt ten year is now at 1.67% and up another +4 bps.
The price of gold is lower today, down -US$17/oz from this time yesterday, and now at US$1789/oz.
Oil prices have risen again, this time by another +50 USc, so in the US they are now just over US$68/bbl, while the international Brent price is just over US$71/bbl.
The Kiwi dollar opens today firmer again, back up to 69.6 USc. Against the Australian dollar we are slightly firmer at 95.9 AUc. Against the euro we are also firmer at 59.2 euro cents. That means our TWI-5 starts today at just over 72.9 and back in the 72-74 range of the past ten months.
The bitcoin price has risen +1.9% from this time yesterday to US$48,945. Volatility in the past 24 hours has been moderate at just over +/- 2.0%.
The easiest place to stay up with event risk today is by following our Economic Calendar here ».
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