Here's our summary of key economic events over the weekend that affect New Zealand with news China's services sector is stirring again despite some bumps in the road.
But first, the OECD has achieved its big reform of how and where multinational companies will be taxed; their BEPS reform. It is an agreement between 136 countries, and brings a reluctant US on board. The deal included a 15% minimum rate for corporations and the main parameters of how much profits of multinationals would be taxed in more countries: 25% of profits over a 10% margin. The bottom line is it should see countries collect around US$ 150 bln in new revenues annually. That will be massive for many countries, and will be felt in the largest corporate boardrooms. In the US, anti-tax Republicans are already lining up to try and neuter it.
And the UN-FAO released its September food price data showing another rise in overall prices globally. In nominal terms prices are approaching their highest ever levels achieved first in September 2011. In real terms, they are the highest since 1974 when droughts, an oil crisis and raging inflation all conspired to hit food at the same time.
China is still getting its share of adverse weather. 1.75 mln people have been affected by days of flooding and landslides in the normally arid northern Chinese province of Shanxi and these will have a national impact. 120,000 people have been evacuated and more than 17,000 buildings had collapsed. This in turn has affected important national supplies of coal and other minerals. About 60 coal mines, 372 non-coal mines and 14 chemical factories had been forced to close.
Staying in China, their services sector is expanding again, and at a moderate pace, and bouncing back from a weak August. At least, that is according to the private Caixin services PMI released over the weekend. Still, it can't hide the general softer trend evident in 2021. And their 'Golden Week' travel activity is down -40% from last year, suppressing service sector enthusiasm in October.
However Taiwanese exports impressed again, rising +29% above year-ago levels when a +25% gain was expected. These are now +37% higher than for September 2019. It is a standout export success story.
In the US, the expected +500,000 gain to their non-farm payrolls didn't eventuate for September. The headline number was only a +194,000 gain, the smallest rise in 2021 and a big miss.
However we may be the only one noting this, but we need to be extra careful of following the herd and using these seasonally adjusted numbers, when perhaps the pandemic twists are screwing around with seasonal adjustment mechanisms.
The actual data is far more positive and more consistent with the falling jobless claims data. There are now actually 147.7 mln people employed in the US as at the end of September, up +654,000 from the end of August, and up +5.7 mln from a year ago. That paints quite a different picture than the seasonally adjusted monthly +194,000 gain. The same distortion happened in August (actual = +492,000 whereas the s.a. result was +366,000. Actual employment is what is important. By this data, US hiring is actually rising, not slowing.
Either way, over the longer term there were 151 mln people employed in the US in February 2020 before the pandemic. They are still underwater with -3.3 mln net jobs lost as at September 2021. They still have a long way to go, even if recent gains are actually more than most media are reporting.
Markets sense the under-reporting and still think the Fed will push ahead with its tapering, undeterred.
In Canada they reported very positive employment data for September, with a gain of +157,000, and topping both estimates and for August. It is the inverse story in Canada when you look past seasonal adjustment however. They actually only added +8,300 jobs from August. But from the pre-pandemic benchmark of February 2020, their current employment levels are ahead by an impressive +376,100.
In Australia, their central bank issued its latest update to its Financial Stability Review. One aspect stands out: it thinks it is only a matter of time before a large bank is crippled by a cyber attack and "the defences of a significant financial institution will be breached". (p 39). They are also directly concerned about the "risk of excessive borrowing due to low interest rates and rising house prices".
Staying in Australia, the explosion of Delta cases in Victoria has risen to 1965 cases reported there yesterday in a relentless rise. There are now 17,199 active cases in the state. In NSW there were another 478 new community cases reported yesterday with another 361 not assigned to known clusters. They now have 6,926 active locally acquired cases which is lower, but they had 5 deaths yesterday, now featuring younger patients. Queensland is still reporting zero new cases. The ACT has 30 new cases, including babies. Overall in Australia, more than 61% of eligible Aussies are fully vaccinated, plus 20% have now had one shot so far.
The UST 10yr yield opens today at just over 1.61% and up another +1 bps from this time Saturday and a +13 bps rise in a week taking it to its highest in 20 weeks. The US 2-10 rate curve is steeper at +129 bps. Their 1-5 curve is also steeper at +95 bps, while their 3m-10 year curve is much steeper at +159 bps. The Australian Govt ten year benchmark rate is +10 bps firmer at 1.67%. The China Govt ten year bond up by +3 bps at 2.92%. And the New Zealand Govt ten year is also up sharply, by almost +6 bps at 2.06%.
The price of gold will start today little-changed again at US$1757/oz. Over the past week, the gold price has also changed very little.
And oil prices are up +US$1 to just over US$79/bbl in the US, while the international Brent price is unchanged at US$82/bbl.
The Kiwi dollar opens today unchanged at just on 69.3 USc. Against the Australian dollar we are also unchanged at 94.8 AUc. Against the euro we marginally softer at 59.9 euro cents. That means our TWI-5 starts today unchanged at just on 73, and right in the middle of the 72-74 range of the past eleven months. It is also unchanged over the past week.
The bitcoin price is higher again than this time Saturday, up +1.7% to be now at US$55,269. A week ago it was at US$47,496 so it has risen more than +16% in the past seven days. Volatility in the past 24 hours has been modest at just over +/-1.8%.
The easiest place to stay up with event risk today is by following our Economic Calendar here ».
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43 Comments
I would like for the west, including us, to completely decouple from CCP, pity we didn't do it at least a decade ago, when it was becoming clear to many of us what their agenda was.
Taiwanese want to choose their way of life, I think those of us who cherish that need to get behind them, or we are a bunch of hypocrites.
Interesting that you specifically add 'us' to the west. As a UK immigrant to NZ who has trouble when asked my ethnicity and it seems authorities are obsessive in their asking. Today a leader of the Fijian Indian community in NZ is asking the govt to declare him 'Pacifica' (or Pasifika?). So why not me too?
https://www.1news.co.nz/2021/10/10/fijian-indian-community-fighting-for…
While proud of my origins I really do not think of myself as either British or European. It seems obvious I'm now a Kiwi because my thoughts and interests are New Zealand.
In context your 'west' should be 'Developed free world'. It could include many of our pacific neighbours too.
Lapun. Those who want to divide our country on racial grounds are obsessed with ethnicity indeed. But worse they pull some additional tricks.
For example you can't be recorded as 'New Zealander'. If you try, it gets converted to 'New Zealand European'. Nasty indeed.
Division of catagory into Maori and NZ Euro is ridiculous anyway, given 200 years of DNA and cultural mixing. There is greater diversity within those two groups than between them.
Firstly I apologise for my own obsession with ethnicity - I am part of a multi-ethnic family which is making me hypersensitive about what is really a fairly minor issue. However here is an example of our govt in action:
From the NZStats website: ... from 2004 Review of the Measurement of Ethnicity. Prioritised ethnicity data are not recommended. Prioritisation re-classifies a person with multiple ethnicity responses to just one ethnicity or ethnic group. There are several problems with choosing one ethnicity for a person who has said that they belong to more than one ethnicity.
From Ministry of Health Covid-19 vaccination webpage: The prioritised ethnicity classification system allocates each person to a single ethnic group, based on the ethnic groups they identify with. Where people identify with more than one group, they are assigned in this order of priority: Māori, Pacific Peoples, Asian, and European/Other. So, if a person identifies as being Māori and New Zealand European, the person is counted as Māori.
The last time I filled in a survey I identified with all ethnic groups (I'm humanitarian) so maybe the govt has me marked down as Maori.
The whole thing with 'ethnicity' is barmy. It is more about culture, although for research purposes, there can be a case made for knowing how different ethnicities fare.
And I get pretty damned angry about what seems to specifically be, against the renaissance of Maori culture, as if somehow or other that signifies apartheid. Honestly, I do not know where to start with that sort of attitude.
Edited, missed a word that changed entirely what I meant to say
Yes and Maori culture is making a renaissance as I said, and will take its rightful place in its own country and that is not apartheid, in fact it is the polar opposite, that it has largely been suppressed and not taken into account for so long in decision making, is.
As for the ethnicity bit, it can have applications, especially in health, disregarding it can hide any systematic racism. It does exist, so don't even try.
I'm a bit dubious of that mantra systematic racism in the health sector. I grew up in the area where you have people of the poorer social economic area and many do not take care of there health (whatever the race).
The trouble with this way of thinking is now people can blame many things that come down to personal responsibility from parenting, work ethic to health choices on other thing such as systematic racism.
Many Maori and Pacific Islanders are sick of this term as well. How much do we really blame on society or other people of different ethnicity? Let's look at the Jab for the vaccine for going to KFC. Is that a healthy message? or now we are in such a situation that we need to give goodies to people for common sense actions? As for the Maori culture making a renaissance this is not exactly true, what is happening it's a evolving form or Maori culture. It's nothing like it's ancestors were and thank goodness. All cultures 200 years ago were darn hard times. People romanticize the past cultures when in fact most were a scary and hard time to live.
I really do believe the total movement to not look at the many factors of health. Only focusing on myopic issue of race will not help health parity.
https://www.newshub.co.nz/home/money/2021/10/house-price-growth-climbs-…
RBNZ is not taking action on DTI under lockdown but house price growth is not - another $10000 growth per WEEK in September in Auckland $6000 per week nationwide.
Terabytes of data, 12.9 million documents, all detailing how billionaires and over 300 corrupt politicians have avoided taxes, and Bitcoin was not used a single time by them.
How can it be that exactly the politicians who claim that crypto would be the main accelerator of financial crime and tax evasion have used exclusively the broken old financial system to do that which they blame crypto on supporting.
Panama papers were the same a few years back. Of course, nothing really happened as a result, except the journalist who leaked it was mysteriously killed by a car bomb.
https://www.theguardian.com/world/2017/oct/16/malta-car-bomb-kills-pana…
We may see some big changes today or this week with very hard internal borders being put in place to stop spread and force people to get double shots and tests to cross.
If government does not act very soon it will spread to entire country with ease.
It seems strange to have level 4 and then no other plan to slow it down???? but then again that would involve thinking about solving problems which Labour have so far not showing much interest any any major changes that may upset someone.
... my today's announcement prediction : Queen Jacinda will fluff & preen , she'll gush about the wonderful time she had in the boonies with the great unwashed ... she'll fluff a bit more ... after 10 minutes of self congratulatory praise , she'll hand over to Saint Ashley to give us the actual numbers ... after which , she'll resume fluffing on about " the roadmap to recovery " ... confuse everyone , say nothing tangible , and take questions from Tova & Jessica ....
A few years back, I was assisting a friend in her wine store - when staff called in sick. She also sold other beverages to cater for the passing trade.
When two well-spoken, young, patched gang members rolled up to the bus stop just outside, parked their lowered ute and made an entry, I was somewhat concerned. But the owner just gave me a nod and said "They get a 10% discount".
"40 cases of beer" one said, to which I enquired "What kind?' and was told "It doesn't matter"
The point of this ditty? When they paid from a rather large role of cash, the parting words were "Oh. And can we get a GST receipt for that".
Can't see it myself with 60 cases yesterday and lots of vaccination still to do. Schools might but retail is still some weeks off. But my (biased) social media feed is full of people saying they won't send their kids back even if schools do open, so I suspect they may do some middle ground - school open to more than kids of essential workers but recommend keeping kids at home where possible.
What are they going to do? Close schools indefinitely?
Generally the online learning works well at wealthy well resourced schools. It doesn't work well in poorer, under resourced schools.
By keeping schools closed we are in effect creating a system where poor kids are going to get screwed out of there education. I am against that personally. As I believe that all members of our society should be given an equal educational opportunity.
donny11. I agree with you completely on the difficulties for poorer schools, and the disadvantage these students are going to be put at with closure. It's not good. But I also think their health, and the health of their severely under-vaccinated families is more important. As we've seen overseas, covid is going to rip through the schools if we open them too early. The long term ramifications of that for many students may be immense.
The steadily rising crude oil price is something that New Zealand may soon find really hard to deal with especially when the Government is forced to stop throwing money at every difficulty that may affect voter sentiment. Serious inflation is looming and bumping the OCR up to dampen demand won't have any affect this time, quite the opposite with the way Kiwi's are geared with housing.
Not just New Zealand. From the UK this morning:
Homeowners face the biggest surge in mortgage costs since the property market collapse in 2008 as investors brace for a string of interest rate rises to rein in inflation.
The time for the RBNZ and Government to get ready for this was many yesterdays ago - when it was still relatively manageable.
They got it worse than that. Gas prices through the roof. A gas levy added on top to encourage them to swtich to electric heating along with a warning from the National Grid (electric grid that is) that there may be blackouts this winter.
And to top it all off, the christmas supermarket delivery slots are all booked out already after people pannicked about food shortages, after seeing the supermarkets had food shortages.
Of the 11 deaths four were unvaccinated, four partially vaccinated 3 fully vaccinated. and yesterday in Singapore latest report
" 9 more cases have passed away from complications due to COVID-19 infection.2 Of these, 8 were male Singaporeans and 1 was a female Singaporean, aged between 70 and 88 years. Amongst them, 4 had been unvaccinated against COVID-19, 3 had been partially vaccinated and 2 had been vaccinated. All of them had various underlying medical conditions. " Tested Infection rates are running at 60 times those of New Zealand.
Scale that up and the evidence is pretty obvious. Regardless of the vaccination your in trouble if your old and have a whole string of underlying health conditions. This really shouldn't come as a surprise but some out there think by getting the jab they are now going to live to be 100. We are paying a huge social cost now for trying to save people that probably only had a couple of years left to live anyway.
As one of those with just a couple of years to live I wonder what you want our govt to do? Open up and when our hospitals and medical staff are overwhelmed do you process the sick by (a) first come first served and leave many younger people untreated or (b) prevent older people being treated - either by banning them from hospital or applying a quota.
Everything has to be taken in context
" Case 82792, a 97 year-old female Singaporean, has passed away from complications due to COVID-19 infection on 25 September 2021. She tested positive for COVID-19 infection on 18 September. She had not been vaccinated against COVID-19, and had a history of hyperlipidaemia. "
Case 78524, a 93 year-old female Singaporean, has passed away from complications due to COVID-19 infection on 23 September 2021. She tested positive for COVID-19 infection on 17 September. She had not been vaccinated against COVID-19, and had a history of heart failure, diabetes mellitus, hypertension and hyperlipidaemia.
Case 76462, a 71 year-old female Singaporean, has passed away from complications due to COVID-19 infection on 25 September 2021. She tested positive for COVID-19 infection on 14 September. She had not been vaccinated against COVID-19, and had a history of diabetes, end stage renal failure, hypertension and hyperlipidaemia.
Case 74791, a 90 year-old female Singaporean, has passed away from complications due to COVID-19 infection on 21 September 2021. She tested positive for COVID-19 infection on 13 September. She had been vaccinated against COVID-19, and had a history of stroke, asthma, hypertension and hyperlipidaemia which, together with her advanced age, made her more susceptible to severe illness.
Case 78675, a 90 year-old male Singaporean, has passed away from complications due to COVID-19 infection on 17 September 2021. He had been conveyed to the National Centre for Infectious Diseases on 17 September with symptoms, and tested positive for COVID-19 infection on the same day. He had not been vaccinated against COVID-19, and had a history of cancer, heart disease and pneumonia. In total, 60 have passed away from complications due to COVID-19 infection.
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