Here's our summary of key economic events overnight that affect New Zealand with news markets are brushing off signs of rising financial risk, preferring to accent the positives. They are aided by some generally hawkish central bank comments.
But first in the US, their debt ceiling negotiations have come down to the wire with the traditional bipartisan resolution now very unlikely. The Democrats will have to do it on their own.
Meanwhile, new US initial jobless claims rose last week to +306,000 in a surprise bounce. And the total number of people on these claims rose also, up to 2,535,000 which as also an unexpected rise. It doesn't really help however that the four week moving average is now at its lowest since the start of the pandemic.
The August report by the Chicago Fed of the national activity index notes a slowing economic expansion even if it is still expanding well above average.
The Kansas City Fed factory survey backs that up, reporting a good but slowing expansion. But cost and price rises remained very high, they said.
These reports reinforce the latest PMI reports for the US factory sector - fast expansion but just not as fast in September as in August. Except for costs and prices which were reported as rising faster. In the services sector, the overall picture is very similar. Costs are a problem there too, but optimism is rising faster.
New June data out from the US Fed shows that American household net worth hit a record high of US$ 142 tln, up +20% in a year, driven by surging home values. (Sound familiar?) This is the second consecutive quarter their net worth gains have exceeded +US$20 tln in a quarter.
There were flash PMIs reported in the EU as well where there was slower growth as bottlenecks curb activity and their input price gauge hit a 21-year high.
In China, it looks like the Evergrande crisis hasn't passed after all. There are reports that Beijing has decided to let the company fail, and it is racing to prepare all its national and local agencies to brace themselves "for the possible storm" and wait to handle the aftermath after a failure, not prevent it from happening.
China is also facing sharp but regional output cutbacks amid a shortage of electricity supply as authorities respond to Beijing directions to achieve targets for lower overall energy use. They need to act now so that they aren't embarrassed in the coming winter surge.
Taiwan's central bank reviewed its monetary policy position and left all its settings unchanged. The country is in a period of strong export-led growth.
Turkey's central bank stunned markets overnight by cutting its key interest rate a full -1.0% to 18%, which immediately caused their currency to plunge to record low levels. And that will sharply raise inflation. It was a cut demanded by their President, who has fired the past three central bank governors for keeping interest rates higher than he wants.
In England, their central bank left all its settings unchanged as expected as well, but two officials there called for an end to its QE program. This is despite the regulator downgrading its economic growth expectations.
There was a September PMI report out for Australia too, and that reported a continuing contraction in both their manufacturing and services sectors, even if it was slightly less in September than August.
And staying in Australia, there were another 1064 new community cases in NSW reported yesterday with another 851 not assigned to known clusters, and these numbers are no improvement. They now have 12,434 active locally acquired cases. Victoria reported another 766 new cases yesterday, and worse again as an far-right anti-vax plague rises there. Queensland is reporting one new case again. The ACT has 16 new cases yet again. Overall in Australia, more than 48% of eligible Aussies are fully vaccinated, plus 25% have now had one shot so far.
The S&P500 is up another +1.6% in afternoon Thursday trade in a broad rally, but it is not yet quite back to a record high. That follows an strong +1.0% rally in European markets everywhere except London which fell -0.1%. Yesterday, the very large Tokyo market was closed for a public holiday, but Hong Kong was up +1.4% and Shanghai was up a more modest +0.4%. The ASX200 ended up +1.0% and the NZX50 Capital Index ended the day up +0.7%.
The UST 10yr yield opens today up sharply at just under 1.40% and +9 bps higher from this time yesterday. The US 2-10 rate curve is steeper at +114 bps. Their 1-5 curve is also steeper at +84 bps, while their 3m-10 year curve is steeper at +135 bps. The Australian Govt ten year benchmark rate starts today at 1.33% and also up +8 bps. The China Govt ten year bond is at 2.88% and unchanged. But the New Zealand Govt ten year is now at 1.83% and down -6 bps from this time yesterday.
The price of gold will start today sharply lower again, down -US$24 at US$1752/oz.
But oil prices have moved higher again overnight and compared to yesterday's levels are up +$1 to just over US$73/bbl in the US, while the international Brent price is even higher at just under US$76.50/bbl.
The Kiwi dollar opens today at just on 70.8 USc and more than +½c firmer since this time yesterday. Against the Australian dollar we are little-changed at just over 96.9 AUc. Against the euro we are +40 bps firmer at 60.3 euro cents. That means our TWI-5 starts today at 74.1 and back at the top of the 72-74 range of the past eleven months.
The bitcoin price has risen again today, and is up at US$44,860 and a +3.7% gain from this time yesterday. Volatility in the past 24 hours has been moderate at just under +/- 2.3%.
The easiest place to stay up with event risk today is by following our Economic Calendar here ».