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Here's our summary of key economic events overnight that affect New Zealand with news of steps forward and back in the global economy.
First, American pending home sales tumbled in July, down -1.8% from June, which takes them -8.5% lower than for July 2020. This was unexpected weakness. The real estate industry reports that while inventories of homes for sale are rising, buyers have become much more circumspect, especially in the North East states.
Also falling back rather noticeably was the Dallas Fed factory survey. Conditions are still expanding there, just not as vigorously. Prices and wages continued to increase strongly in August, but new order growth slowed.
The OECD is reporting that the United States is the only major-seven economy that has returned to pre-pandemic economic output levels in the second quarter of 2021, with GDP exceeding the pre-pandemic level by +0.8%. All the other majors have yet to achieve that with the UK the furthest away.
We should keep an even closer eye on China, because official commentary says the country is about to enter another 'profound revolution', warning anyone who resisted would face punishment.
“This is a return from the capital group to the masses of the people, and this is a transformation from capital-centered to people-centered,” the commentary said. “Therefore, this is a political change, and the people are becoming the main body of this change again, and all those who block this people-centered change will be discarded.”
And China is moving to require ships who enter the broader South China Sea to first obtain their approval. At this stage it is only for 'dangerous cargoes', but the longer term intention is clear.
In Japan, new data out yesterday shows retail sales rose for a fifth straight month in July, beating expectations as the consumer sector continued its recovery, although the August pandemic resurgence has cast doubts over the spending outlook.
Both business and consumer sentiment remained elevated in the EU in August, both well above their long-term levels. Labour market sentiment is still rising noticeably.
Inflation in Germany was unchanged in August from July, which means their CPI rate remained at a high-for-them +3.9%.
The EU says it will reimpose travel restrictions on visitors from the US due to the risks they impose spreading the delta variant of the pandemic.
In South Africa, scientists said they identified a new coronavirus variant with a concerning number of mutations that allow it to evade antibodies.
Our watch of key prices has thrown up coffee as another that has run up sharply so far in 2021. Aluminium prices just keep on rising.
In Australia, there were another 1290 new community cases in NSW yesterday with another 1145 not assigned to known clusters, so they remain completely out of control. They now have 16,866 locally acquired cases. Despite that, they are mulling easing further restrictions. Madness. Victoria reported another 73 new cases yesterday, so it is still bad there too and their lockdown is extended. Queensland is now reporting two new cases. ACT has 21 new cases. Overall in Australia, more than 34% of eligible Aussies are fully vaccinated, plus 24% have now had one shot so far.
Wall Street has started its Monday session with the S&P500 up +0.6%. The Dow is unchanged however, but the Nasdaq is up more than +1.0%. Overnight, European markets were generally up about +0.2% on average. Yesterday, Tokyo closed up +0.5%, as did Hong Kong. Shanghai closed up +0.2%. The ASX200 ended its session up +0.2% and the NZX50 ended up +0.9%.
The UST 10yr yield opens today at 1.29% which is -2 bps lower than this time yesterday. The US 2-10 rate curve is now at +108 bps. Their 1-5 curve is flatter at +70 bps, and their 3m-10 year curve is flatter at +125 bps. The Australian Govt ten year benchmark rate starts today at 1.16% and down -2 bps. The China Govt ten year bond is at 2.88% and down -3 bps. And the New Zealand Govt ten year is now at 1.73% which is up +1 bp from this time yesterday.
The price of gold is -US$7 lower from this time yesterday, now at US$1810/oz.
Oil prices have risen back by +50 USc so in the US they are now just on US$69/bbl, while the international Brent price is just over US$72/bbl.
The Kiwi dollar opens today at just over 70 USc. Against the Australian dollar we are now at 96 AUc. Against the euro we are still at 59.4 euro cents. That means our TWI-5 starts today still at 73.2 and still in the middle of the 72-74 range of the past ten months.
The bitcoin price has slipped -1.2% from this time yesterday to US$48,146. Volatility in the past 24 hours has been moderate at just under +/- 2.1%.
The easiest place to stay up with event risk today is by following our Economic Calendar here ».
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