Here's my summary of the key events overnight that affect New Zealand, with news of a prediction there is about to be an explosion of travelers coming from both China and India.
But first, this morning's dairy auction saw little change in prices with the overall index up just +1.4% in US dollar terms, the same in NZ dollar terms. The cheddar cheese price was the main component that was lower, keeping a lid on the overall index, but the main volume is in the WMP, and its price only rose a modest +2.9%. Prices have essentially held for the past four auctions. This level is far off the bottom, but it is still not high enough to signal that the dairy industry is out of the woods yet. Prices at this level do not support a rising payout level.
American headline CPI inflation climbed from +1.1% to +1.5% in September, strengthening the case for a Fed rate rise this year. The increase was largely due to oil prices: the energy CPI climbed 2.7% between August and September, while the annual rate of change is now only -2.9%, a big difference from the -9.2% the prior month. Low fuel price levels seem to have passed through the American economy. Rents and electricity also recorded notable rises. These tend to be sticky, so will underpin future levels.
British inflation also took a jump in September.
In China, coal is not dead yet. In fact, prices there rose +12% in a month, taking them to a +23% rise in a year. The main customers are their dirty thermal power plants.
Speaking of products that foul the air, the international airline industry says it expects 7.2 bln passengers to travel in 2035, a near doubling of the 3.8 bln air travelers in 2016. They see a +3.7% annual growth rate in their 20-Year Air Passenger Forecast. China will become the largest travelers, but the forecast shows an eye-popping increase from India as well.
In Australia, a prominent economist has warned that their apartment market glut is "going to get ugly", predicting a -10% to -15% decline in prices with highly leveraged investors getting burned.
In New York, the UST 10yr yield is unchanged at 1.75%. Locally, our wholesale swap rates surged higher yesterday with the two year up +5 bps to a 3 month high. The five year is up +7 bps.
The US benchmark oil price is unchanged, still just on US$50 a barrel, while the Brent benchmark is now just under US$51.50 a barrel.
The gold price is up US$6, now at US$1,261/oz.
The New Zealand dollar is a higher too, at 72.1 US¢, and on the cross rates it is almost at 94 AU¢, and 65.5 euro cents. The NZ TWI-5 index is now just touching 76.
If you want to catch up with all the local changes yesterday, we have an update here.
The easiest place to stay up with event risk today is by following our Economic Calendar here ».
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