Here's our summary of key economic events overnight that affect New Zealand with news competition for resources is heating up, and none more so than for energy resources.
But first in the US, data out overnight for September shows retail sales have been stronger than in earlier indications. They increased +0.7% from August, and August was revised up to a +0.9% gain, both beating market forecasts of a small fall. It is another sign of resilience from consumers despite supply constraints affecting vehicles and computers, The biggest increases were seen in sales at sporting goods, general merchandise stores, and at petrol stations.
But American shoppers aren't feeling that buoyant. The widely-watched University of Michigan survey slipped back slightly to levels that were as weak in the early stages of the pandemic. Something doesn't quite square between spending freely and feeling apprehensive.
Even though the New York Fed's Empire State survey of factories fell back to August levels, they are reporting growth above its long term trend, widespread price increases that seem to be able to be passed on, and optimism about the future.
However, American firms generally are finding it almost impossible to pass those rising costs on in their export prices, and are just having to suck it up with sharply rising import prices.
Canadian factories have the same cost pressures with producer prices up +15% year-on-year to September, although there has been a small slowing over the past few months.
The northern hemisphere winter is approaching and every country from China to the US is struggling with high energy costs that will sharply raise the costs of winter heating this year. In the US, a new analysis shows that those using heating oil will pay more than +40% more than last year; those using propane +50% more.
Every country is hungry for fuel, and none more so than China.
Globally, future energy use will be dominated by electricity generation, and the big increases required to 2050 will come from solar, it has been forecast. The same estimates also show that while they won't grow, the use of coal and natural gas will still be a big and important fuel sources for electricity generation for the next 30 years at least. These estimates don't see nuclear making any comeback.
In China, there has been a rare public comment from Beijing on the Evergrande situation, and it was to squash fears of systemic risk. Their central bank has rebuked the company calling it "poorly managed" and wants Evergrande to step up asset disposals and resume its stalled projects. And the official said most individual financial institutions did not have highly concentrated exposures to Evergrande.
Despite these soothing comments, the Chinese Communist Party's anti-corruption unit has dispatched inspectors to 25 financial institutions, including top state-owned banks, in what appears to be a crackdown prompted by the Evergrande debt crisis.
More generally in China, poor retail sales, surging raw material costs, widespread power outages and Delta outbreaks have slowed the country's economic recovery over the past three months. And the combination of these factors is expected to show up in Monday's GDP release with (for them) just a +0.5% economic expansion in their Q3.
Meanwhile, the price of copper is taking off again. Its price hit a record high on yesterday as surging power prices threaten to curb supply at a time when stocks are at rock bottom. The crunch will hurt China the most, as it consumes more than all other countries combined. However, it controls little production and is on a fast hunt for supplies it can control, especially in Africa.
The economic implications of being left out are also worrying the Australians. Their prime minister looks like he is ready to adopt some sort of soft carbon target, but not because it is the right thing to go for the global climate, but because "climate change is as much about the global economy as the environment, and Australia will be left behind if it does not respond". And it looks like he has been shamed into going to the Glasgow COP26 climate summit.
And staying in Australia Delta cases in Victoria have risen to 2179 cases reported there yesterday, and that was far more than expected. Deaths were 11 yesterday. There are now 21,324 active cases in the state and there were six deaths yesterday. In NSW there were another 399 new community cases reported yesterday with another 284 not assigned to known clusters. They now have 5,243 active locally acquired cases which is lower, but they had another 17 deaths yesterday. Queensland is reporting zero new cases again. The ACT has 35 new cases. Overall in Australia, more than 65% of eligible Aussies are fully vaccinated, plus 18% have now had one shot so far.
The UST 10yr yield opens today up +6 bps to be now at 1.58%. The US 2-10 rate curve is marginally steeper at +118 bps. Their 1-5 curve is steeper too at +101 bps, while their 3m-10 year curve is steeper at +153 bps. The Australian Govt ten year benchmark rate is up +7 bps at 1.68%. The China Govt ten year bond is up +2 bps and now at 3.00% and its highest in 3 months. The New Zealand Govt ten year is up +5 bps today at 2.18%.
In equity trading, the S&P500 is up another +0.7% in afternoon trade in their Friday session and heading for a weekly gain of +1.9%. They are still some way off the September 3 all-time record high however. Strong earnings reports plus the very good retail sales data are behind today's jump. Overnight European markets were all up by +0.7% except London which lagged again with only a +0.4% rise. Yesterday, Tokyo ended with a +1.8% gain to be an impressive +3.9% ahead for the week. Hong Kong closed up +1.5% to end their weather and holiday interrupted week up +1.1%. Shanghai was up only +0.4% yesterday and ended its week down -0.8%. The ASX200 ended yesterday up +0.7% for an overall weekly gain of 0.6%. The NZX50 had a tough week, falling -0.3% on Friday to end its week down -0.6%.
The price of gold has fallen back by -US$29 to US$1768/oz.
And oil prices are another +US$1 higher at just over US$81.50/bbl in the US, while the international Brent price is now just under US$84.50/bbl.
The Kiwi dollar opens today another +40 bps firmer at just on 70.7 USc. Against the Australian dollar we are +50 bps firmer at 95.3 AUc. Against the euro we up nearly another +½c at 61 euro cents. That means our TWI-5 starts today at just on 74.4, and now well over the top of the 72-74 range of the past eleven months.
The bitcoin price has risen sharply, up +7.8% today from this time yesterday to be now at US$61,326. Volatility over the past 24 hours has been very high at just over +/-4.2%.
The easiest place to stay up with event risk today is by following our Economic Calendar here ».