US growth revised up; US household incomes rise in fairer way; China's C/A surplus holds, EU confidence upbeat; NZ improves competitiveness; UST 10yr yield at 2.31%; oil unchanged, gold drops; NZ$1 = 72.3 US¢, TWI-5 = 74.9

Here's my summary of the key events overnight that affect New Zealand, with news that is generally positive around the world.

The American economy expanded a bit faster than previously estimated in the second quarter, rising a revised +3.1% and the fastest pace since 2014, but most analysts think the momentum has likely slowed in the third quarter due to the impact of recent hurricanes. Those hurricane impacts has seen their jobless claims rise.

The US trade deficit in goods was -1.4% lower in August than July as exports rose and imports fell. It was -1% lower than the same month a year ago.

American median household income rose +10% to US$52,700 in 2016 from 2013 according to an update of a Fed survey that is done every three years. Previous surveys found that wealth and incomes stagnated for all but the wealthiest households. But this update found the reverse - minority households and families with less education had larger proportional gains in income than others between 2013 and 2016, suggesting the fruits of their recovery are now being spread wider. This review was for incomes before taxes but after adjusting for inflation.

China announced that it had a current account surplus of US$69.3 bln in the first half of 2017, about +1.2% of GDP.

In August, the Chinese currency was used in just 1.94% of all international transactions and that is down from 2% in July. There is no sign yet that the US dollar is being threatened from its dominant place in the international payments system.

In Europe, businesses and households were more upbeat about their prospects in September than at any time over the past ten years, and undaunted by the prospect of reduced stimulus from the ECB next year.

Because most countries are doing very well economically at present, the relative positioning is important again. The latest World Competitiveness Report has New Zealand in 13th position, unchanged from last year, although our score is up and we have been trending better in the past decade. We are 4th in the Asia/Pacific region. And we are well ahead of Australia at 21st overall and who are 6th in the region.

In New York, the UST 10yr yield is holding its higher level at 2.31%

The price of crude oil is slightly lower today to be just over US$51.50 a barrel, while the Brent benchmark is just over US$57.50.

The price of gold is sharply lower, down -US$9 to US$1,286/oz, consistent with the risk-on mood today.

But the Kiwi dollar is unchanged against the greenback at 72.3 US. On the cross rates we a tad higher at 92.1 AU¢, and 61.3 euro cents. And the TWI-5 index is now at 74.9.

If you want to catch up with all the 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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3 Comments

DC, can I suggest a temporary daily article simply entitled 'Entrails du Jour - the Daily Echo Chamber'. To run until the election results are in, and the coalition results known.

Then, all of the blather, shilling, puffery and political common taterating can be confined to one spot which the rest of us gnarled, cynical types can bypass at will. Call it Free Choice.....

Previous surveys found that wealth and incomes stagnated for all but the wealthiest households.

For the majority the outcome remains the same. Which part of this chart depicts otherwise? Read more

A record number of high net worth individuals, 16.5 million, control an unprecedented $63.5 trillion of wealth, says a new report from investment consultancy firm Capgemini. The number of Russian millionaires grew by 20 percent in 2016, more than any other country.

High net worth individuals (HNWI) are those who have at least $1 million, apart from their own home and personal possessions, and more than 1.15 million people acquired that status last year, an additional 7.5 percent. Read more