US home builders confident; US growth expected to top 3%; China electricity use up; China house prices rise again; London's status threatened; UST 10yr yield at 1.69%; oil and gold unchanged; NZ$1 = 73 US¢, TWI-5 = 76.5

US home builders confident; US growth expected to top 3%; China electricity use up; China house prices rise again; London's status threatened; UST 10yr yield at 1.69%; oil and gold unchanged; NZ$1 = 73 US¢, TWI-5 = 76.5

Here's my summary of the key events overnight that affect New Zealand, with news Q3 growth in the US may better than many expect.

An American industry survey of new home builders showed confidence 'surged' in September to its highest level in almost a year.

And the good run of economic data has economists forecasting that the US Q3 growth will top +3% when it is first released next month.

An interesting Reuters analysis says, while still a long shot, actually now would be a good time for Janet Yellen to have a 'surprise' rate hike. The economics line up, they say, and it would do wonders for the Fed's credibility they claim.

Data out of China today is both encouraging and worrying, in turns. Electricity consumption, long a preferred marker for what is happening in the real economy (and long showing much lower growth than other official measures), is up sharply in 2016 and matching official growth data.

On the other hand, China's real estate bubble shows no signs of moderating. This is the 17th straight increase and the biggest since January 2011. Observers are suggesting that it has grown so large that it is now "too big to pop". And because state and local government agencies are so woven into these markets the political will to unwind the froth is just not there.

In Australia, there has been an embarrassing glitch on their stock exchange which saw it open late, and then have to close early due to "technical issues".

And also in Australia, the Government has retained its inflation-targeting mandate for the RBA, pretty much unchanged.

In Europe, some practical realities are becoming apparent for London as a key financial centre, and they are not good for them. UK-based banks will lose the automatic right to trade in the EU when the UK leaves by losing their valuable "passporting rights", forcing some to relocate from London.

In New York the UST 10yr yield is little changed again today at 1.69%.

The oil price is also little changed but if anything marginally firmer, with the US benchmark price now just over US$43 a barrel, while the Brent benchmark is now just over US$46 a barrel.

The gold price is unchanged too, still at US$1,306/oz.

The New Zealand dollar is just a touch higher today, at 73 US¢, and on the cross rates it is at 96.8 AU¢, and 65.3 euro cents. The TWI index is now at 76.5.

If you want to catch up with all the local changes on Friday, we have an update here.

The easiest place to stay up with event risk today is by following our Economic Calendar here ».

Daily exchange rates

Select chart tabs »

The 'US$' chart will be drawn here.
Loading...
Daily benchmark rate
Source: RBNZ
The 'AU$' chart will be drawn here.
Loading...
Daily benchmark rate
Source: RBNZ
The 'TWI' chart will be drawn here.
Loading...
Daily benchmark rate
Source: RBNZ
The '¥en' chart will be drawn here.
Loading...
Daily benchmark rate
Source: RBNZ
The '¥uan' chart will be drawn here.
Loading...
Daily benchmark rate
Source: RBNZ
The '€uro' chart will be drawn here.
Loading...
Daily benchmark rate
Source: RBNZ
The 'GBP' chart will be drawn here.
Loading...
Daily benchmark rate
Source: RBNZ
The 'Bitcoin' chart will be drawn here.
Loading...
USD 
NZD
End of day UTC
Source: CoinDesk

We welcome your help to improve our coverage of this issue. Any examples or experiences to relate? Any links to other news, data or research to shed more light on this? Any insight or views on what might happen next or what should happen next? Any errors to correct?

We welcome your comments below. If you are not already registered, please register to comment.

Remember we welcome robust, respectful and insightful debate. We don't welcome abusive or defamatory comments and will de-register those repeatedly making such comments. Our current comment policy is here.

20 Comments

Comment Filter

Highlight new comments in the last hr(s).
11
up

"political will to unwind the froth is just not there."

Sounds the same as here then.

unlike here though when it pops the civil unrest will be dramatic

She's a truly epic bubble alright.
I posted this up yesterday but it's worth another look since we're on the subject. Housing in Shenzhen is now at 70 times income. Thats right; you would need to work for seventy years spend absolutely nothing save the lot to be able to buy yourself a house. I'll have two please!
http://www.cnbc.com/2016/09/15/china-tulip-fever-sees-house-prices-skyro...

"BROOKLYN, NY—Urging apartment hunters to keep their search within reasonable bounds and avoid excessively high leases, real estate broker Katherine Rivera recommend Friday that Brooklyn residents spend no more than 150 percent of their income on rent. “When you’re looking for a new place in Brooklyn, limiting yourself to a budget of one and a half times your monthly pay is always a good rule of thumb,” said Rivera, who noted that residents willing to live with multiple roommates or in a less desirable neighborhood might be able to allocate as little as 125 percent of their income to rent. “Anywhere from 140 percent to 175 percent of your paycheck is considered a healthy range to set aside for housing in Brooklyn."

In a world where change is constant, there is one thing that never changes - human nature. To think NZ is immune from social unrest equivalent to the rest of the world is analogous to thinking planet earth is square.
#classic nimby

"too big to pop" I love it....remember banks were too big to fail.

But they mostly didn't - that's the point. Too big to fail means they have to supported whatever dumb moves they make - so that's what happened - apart from Lehmans.

Maybe "too big to fail" was back then. Nowdays they might expect the bailout and just might get the cold shoulder.

Except most of them were unable to support their dumb moves and required Govt assistance.

U.S home builders surge in confidence.
Must be good news for Tenon and by default Rubicon..

Art dealer and collector Niels Kantor paid $100,000 two years ago for an abstract canvas by Hugh Scott-Douglas with the idea of quickly reselling it for a tidy profit. Instead, he is returning the 28-year-old artist’s work to the market this week at an 80 percent discount.

Such is the new art season. At auction houses in London and New York, sellers are preparing to bail on their investments after the emerging-art bubble burst and the resale market for once sought-after artists dried up. Read more

Dangerous subtext - prolongs the view that one day Auckland's property balloon will deflate

I have serious doubts that that will happen

The Art Market is like a canary in the mine...sign of bigger things to come?

Have you read some of the comments from just before the Great Crash in 1929? I get the distinct feeling of the day was why work when you could just buy and sell [shares] for a huge profit. The thing is like oil in July 2008 getting to 148US a barrel the speculators only stayed in as long as they thought there were bigger fools, when that game was over oil went to $35. For me the value of a good is always what it returns in income not what it might be worth to someone else.

That article refers to punters in NY and London taking a punt on some up-and-coming artists

meanwhile back in NZ

Colin McCahon's Tainui panels fetched a record and Goldie and Lindauer's running strong

Next it will be tulips......oh wait....

Advertise your way to the top. "To put all this another way, of the $149,912,723 millon in booked TV and radio spending through election day for these three presidential candidates, $145,299,727 is being spent by the Clinton campaign combined with pro-Clinton PACs."

Gary's bars are to short to show up on the chart.

http://adage.com/article/campaign-trail/trump-clinton-johnson-tv-radio-a...

Not to mention, Assad, sad situation brought about by a war on want.

Even first aid is secondary to fighting this war of attrition, greed and stupid idiots, with vested interests.