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Strong American data with durable goods orders rising; house sales up; consumer confidence up; UK forced to borrow big; PMIs healthy; UST 10yr yield at 2.35%; oil down, gold up; NZ$1 = 70US¢, TWI-5 = 76

Strong American data with durable goods orders rising; house sales up; consumer confidence up; UK forced to borrow big; PMIs healthy; UST 10yr yield at 2.35%; oil down, gold up; NZ$1 = 70US¢, TWI-5 = 76
24th Nov 16, 7:32am by David Chaston

Here's my summary of the key events overnight that affect New Zealand, with news mainly out of the US today.

The American dollar and Wall Street have been energised by today's data release of the American durable goods orders report for October. This shows strong gains, up +4.8%.

New house sales levels also impressed, up +17.8% in October from the same month a year ago (although analysts were expecting even more).

And the latest survey on American consumer sentiment (post election) saw a positive turn as well. All this has pushed the American dollar to a 13 year high ahead of the important Thanksgiving Day retail sales weekend.

And the prospect of American rate rises has seen new mortgage applications rise briskly.

Across the Atlantic, things are not so rosy. Britain will need to borrow £122 bln (NZ$210 bln) more over the next five years than it expected in March, before the Brexit vote, the country's budget forecasters said in the first fiscal update since the that vote in June.

There were factory PMI data out overnight as well, and the American one rose to an 18 month high. In Germany the result was solidly positive, in France there was also an improvement.

In New York, the UST 10yr yield is higher today, now at 2.35%. (At one point it was over 2.41%.)

The US benchmark oil price is marginally lower and now just over US$48 a barrel, while the Brent benchmark is now just over US$49 a barrel.

The gold price is up a little to US$1,214/oz. In India, demand for gold is rising during the chaotic transition of official banknotes that is putting a crimp on corruption and tax evasion. Untraceable gold allows the black market to adjust.

The New Zealand dollar will start today lower at 70 US¢. On the cross rates it is a bit lower too at 94.8 AU¢, and against the euro at 66.4 euro cents. The NZ TWI-5 index is now at 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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14 Comments

by  OnwardsUpwards  |  24th Nov 16, 8:07am 1479928031

Gold up? $1189

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by  David Chaston  |  24th Nov 16, 9:33am 1479933203

Yes. It fell sharply after we wrote and published. That is quite some slump.

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by  Zachary Smith  |  24th Nov 16, 8:54am 1479930847

Rising 'consumer' (I do hate that term!) sentiment reflects the Trump Effect. People are happy that normal people are back in control and that the interests of the country will come first.

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by  murray86  |  24th Nov 16, 9:13am 1479932010

Agreed Zac, all emotional, not necessarily any rational basis to it.

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by  Anarkist  |  24th Nov 16, 9:56am 1479934581

Wow, pretty disturbing to describe the next Administration "normal people" considering Trump is proudly misogynist, and his team is rife with white supremacists affiliated with flagrant Nazis, corporate lobbyists, religious nutters, apologists for illegal and ineffective torture techniques, and violators of American citizen's constitutionally protected civil liberties.

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by  JimboJones  |  24th Nov 16, 10:00am 1479934814

Or maybe people are happy now that the democrats have returned the country to a reasonable economic position since the last Republican military spend up?

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by  dtcarter  |  24th Nov 16, 2:30pm 1479951023

Normal people indeed. US back to born-into-wealth-rich-elite-white-men running the show. Are you suggesting sentiment was supressed because a black guy was president? If not, what was abnormal about the Obama presidency?

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by  Zachary Smith  |  24th Nov 16, 2:57pm 1479952670

People weren't confident in the direction the country was going, mostly due to the wars in the ME, supporting terror groups, fomenting rebellions, poor border control, not supporting the police and pandering to aggressive minority pressure groups, increased racial hostility....that sort of thing. The whole thing didn't leave people feeling optimistic about the future. The leadership didn't feel strong. People were starting to admire Putin more.

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by  BadRobot  |  24th Nov 16, 5:43pm 1479962597

Lets wait and see if it's any different under Trump....

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by  BadRobot  |  24th Nov 16, 9:15pm 1479975331
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by  Stephen Hulme  |  24th Nov 16, 9:23am 1479932595

The American dollar and Wall Street have been energised by today's data release of the American durable goods orders report for October. This shows strong gains, up +4.8%.

Hmmmm...

The seasonally-adjusted estimate for September was $228.4 billion, jumping to $239.4 billion in the latest update. Civilian aircraft orders, notoriously volatile, were up almost 140% while military aircraft orders grew by a third. Commentary has been, as you would expect, extremely positive.

Underneath, however, we find the same economy dragging on in place since the aircraft surge in July 2014. Durable goods new orders ex transportation were flat again year-over-year (-0.07%) in October for the second straight month. Likewise durable goods shipments were also practically unchanged (-0.24%). Capital goods, on the other hand, continue to contract. New orders for cap goods minus aircraft and defense orders were down 4% for the second straight month; shipments fell more than 6% in October after declining more than 5% in September. Read more

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by  Stephen Hulme  |  24th Nov 16, 9:30am 1479933000

New house sales levels also impressed, up +17.8% in October from the same month a year ago..

Preaching to the choir?

Bloomberg says:

Purchases of new U.S. homes declined in October to a four-month low, showing the residential real estate market began to soften a month prior to a jump in borrowing costs.

Sales decreased 1.9 percent to a 563,000 annualized pace, Commerce Department data showed Wednesday. The median forecast in a Bloomberg called for a 590,000 rate. Read more

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by  Roelof  |  24th Nov 16, 9:39am 1479933581

Preaching to the choir?

Maybe .... maybe not...
I'm guessing there is a seasonal trend ..... ( there is in existing homes sales... so why not in new home sales..?? )

http://www.housingwire.com/blogs/1-rewired/post/36855-heres-why-seasona…

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by  Stephen Hulme  |  24th Nov 16, 10:00am 1479934845

Seasonal for sure - a presidential election and the associated incumbent government spending surge were in play to make October '16 as good as possible.

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