Here's our summary of key economic events overnight that affect New Zealand with news of a rising risk mood among investors and that is generally 'helping' commodity producers.
But for us, the overnight dairy auction brought mixed results. Overall prices were up +2.2% in USD terms, but with the fast-rising NZD, they actually slipped -0.5% in local currency terms. It is obvious from the results that demand is highest for foodservice commodities with butter up +4.7%, cheese up +2.9%, and SMP up 2.5%. WMP only rose +1.5% in USD terms. This was the fifth straight auction that has avoided a fall in USD prices. Nothing in today's event will change the forecasts of the new season farmgate milk payout.
US housing starts in September were little-changed from August, but they didn't push on ahead to the extent expected. And building permit levels were also much softer than expected. Behind both trends are supply-chain woes - no builder needs the weight of partially built houses they can't sell.
And speaking of property developers, in China, Evergrande made an interest payment due for some of its local currency debt. But concerns continue to linger about the developer’s huge overall debt load. And foreign holders look like their investment will be worthless.
The OECD has updated its long term global fiscal outlook and found that the world has much larger problems that the recent run up of debt to handle the pandemic. Population aging and the related rising demand for public services pose very large funding problems for governments in the period to 2060. But they also say, taxes don't need to rise so long as reforms to boost employment rates and raise retirement ages are put in place soon. The problem of older people quitting the workplace early, as we have seen in the pandemic, is an especially corrosive trend and we are starting on the back foot. Unless it is addressed and soon, much higher taxes will come into play - or much reduced services.
In the minerals world, the price of copper it touching record highs in spot markets.
Australia's central bank bravely expects their economy to return to growth in Q4-2021 after the Delta outbreak derailed a Q3 recovery which they had also earlier projected. But hedging its bets it still does not expect to raise interest rates until 2024, board minutes showed.
And staying in Australia, Delta cases in Victoria have risen to 1903 cases reported there yesterday, and more than expected. There are now 23,376 active cases in the state and there were six deaths yesterday. In NSW there were another 266 new community cases reported yesterday with 4,490 active locally acquired cases which is lower, but they had another 5 deaths yesterday. Queensland is reporting zero new cases again. The ACT has 17 new cases. Overall in Australia, more than 68% of eligible Aussies are fully vaccinated, plus 17% have now had one shot so far.
The UST 10yr yield opens today up +5 bps to be now at 1.63%. The US 2-10 rate curve is unchanged at +118 bps. Their 1-5 curve is steeper at +107 bps, while their 3m-10 year curve is steeper at +156 bps. The Australian Govt ten year benchmark rate is softer by -1 bp at 1.75%. The China Govt ten year bond is down -3 bps to 3.03%. The New Zealand Govt ten year is essentially holding its new higher level and is now at 2.34%.
Wall Street has opened its Tuesday session with a good +0.7% gain on the S&P500, driven by good corporate earnings reports. In overnight European markets, most were up about +0.3% - except Paris which dipped -0.1%. Yesterday, Tokyo and Shanghai each rose +0.7%. Hong Kong rose double that, up +1.5%. The ASX200 ended its Tuesday session -0.1% lower. But the NZX50 rose a creditable +0.5%.
The price of gold has risen by +US$3 to US$1769/oz.
And oil prices are up strongly, up +US$1.50 at just under US$83/bbl in the US, while the international Brent price is now just under US$85/bbl.
The Kiwi dollar opens today also on the rise and now at just on 71.6 USc and up +½c since this time yesterday. Against the Australian dollar we are now at 95.8 AUc. Against the euro we are up sharply at 61.6 euro cents. That means our TWI-5 starts today at just on 75.1, and now well over the top of the 72-74 range of the past eleven months.
The bitcoin price has risen +2.0% from this time yesterday and is now at US$62,955. Volatility over the past 24 hours has been moderate at just over +/-2.2%.
The easiest place to stay up with event risk today is by following our Economic Calendar here ».