Here's our summary of key economic events overnight that affect New Zealand with news American economic data is softening now, but there is a sense the Chinese economy may have bottomed out.
In the US, the number job openings rose by +749,000 to a record high 10.9 mln in July. That was well above analyst expectations of 10 mln and it reinforces the notion that firms face significant labour market constraints. Those jobless don't seem to have either the skills or qualifications for what the post-pandemic economy needs. The largest shortages are in health care, finance, and hospitality. The regions where it is hardest to hire are the Northeast, the South, and in the West.
Separately, new official estimates of American labour market growth shows that they won't be back to pre-pandemic employment levels until about 2025. The pandemic labour market shock came at a time many baby boomers were in the last few years on working anyway and they seem to have used the even to bring forward 'retirement', leaving the labour market all together and depressing the overall participation rate. This effect is expected to extend for the next ten years, probably making the demand for skilled workers higher and harder to find.
The US Fed released its September Beige Book review this morning, showing a US economy that "downshifted" in July and August, mainly due to sharp cutbacks in the hospitality sector as the delta virus raised the risks of going out. They noted that growth also slowed because of supply disruptions and labour shortages in manufacturing. Car manufacturing and house construction were noted as suffering. "Inflation was reported to be steady at an elevated pace, as half of the Districts characterized the pace of price increases as strong, while half described it as moderate."
US vehicle sales fell to just a 13 mln annual rate in August due to those chip supply shortages, and this is the lowest level since the GFC (ignoring the 2020 pandemic freeze).
US consumer credit growth came in less than expected in July, and much less than for June. But at lease it was 'growth'.
In the latest US Treasury bond auction, this one for their 10 year Note, the Fed only took US$4 bln of the US$42 bln offered. This is sharply less than the US$18 bln it took at the prior equivalent event a month ago. Market demand for the remainder was slightly less, and the median yield achieved was slightly lower too. The Fed seems to be backing off this support quite quickly now.
Meanwhile, the risks of a debt default rise in Washington.
On a brighter note, we can report that a new wave of battery technologies are about to come to market, transforming how we power most devices. There are big developments with existing technologies as well.
In Canada, their central bank kept its policy rate unchanged at 0.25% in their latest review, surprising no-one. They also kept their QE program at a target pace of C$2 bln per week, following a -C$1 bln cut in the previous meeting.
In China, high frequency data suggests that economic activity has risen steadily in the past few weeks. This turn up means that new major stimulus is now less likely now.
And that is being reflected in sudden, sharp increases in cement demand and prices.
Japan reported a better Q2 GDP outcome in its latest update, up +1.9% (real) rather than the initial +1.3% originally reported. That was better than analysts had expected. But the Q1 retreat was revised to a worse level however.
In the UK, a new +1.25% tax increase has been approved to fund their woeful public health system (one the locals seem to love despite its gross failings).
In Australia, new inter-state fault-lines are rising over vaccine passports for travel.
And staying in Australia, there were another 1480 new community cases in NSW yesterday with another 1379 not assigned to known clusters, so they remain completely out of control. They now have 25,690 locally acquired cases. Victoria reported another 221 new cases yesterday, so it is still bad there too. Queensland is still reporting no new cases. The ACT has 20 new cases. Overall in Australia, more than 39% of eligible Aussies are fully vaccinated, plus 25% have now had one shot so far.
The UST 10yr yield opens today at just over 1.33%, so down -4 bps and giving up all of yesterday's rise. The US 2-10 rate curve is at +111 bps and marginally flatter. Their 1-5 curve is also flatter at +73 bps, while their 3m-10 year curve is flatter too at +129 bps. The Australian Govt ten year benchmark rate starts today at 1.27% and down -3 bps from this time yesterday. The China Govt ten year bond is at 2.87% and unchanged. The New Zealand Govt ten year is now at 1.94% and up another +1 bp in a day and its highest since March.
Wall Street is languishing in its Wednesday session, with the S&P500 currently down a further -0.2%. Overnight, European markets fell rather sharply with Frankfurt down -1.5% at one end, and Paris and London only down -0.8% each at the other. Yesterday, Tokyo rose another +0.9%, but Hong Kong fell by -0.1% and Shanghai by a similar amount. The ASX200 closed -0.2% lower. The NZX50 fell by almost a full -1.0%.
The price of gold is softer again and down by another -US$4 and now at US$1793/oz.
Oil prices have risen by +US$1/bbl, so in the US they are now just on US$69/bbl, while the international Brent price has risen to just over US$72/bbl.
The Kiwi dollar opens today at 71.1 USc and little-changed since this time yesterday. Against the Australian dollar we firmer at just over 96.4 AUc. Against the euro we are also firmer at 60.1 euro cents. That means our TWI-5 starts today at just under 74.1 and still right at the top of the 72-74 range of the past ten months.
The bitcoin price has stayed down overnight, dipping by a further -1.5% from this time yesterday to US$46,239. Volatility in the past 24 hours has been moderate at +/- 3.3%. Things didn't go well in El Salvador.
The easiest place to stay up with event risk today is by following our Economic Calendar here ».
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