Here's my summary of the key events over the weekend that affect New Zealand with news of a messy US jobs report.
US non-farm payrolls fell by -33,000 in September from August, the first month-on-month decline in seven years. Hurricanes have been touted as the reason, but of course there have been hurricanes many times in those seven years. Prior month data has also been revised lower. But hourly pay rates rose +2.9% year-on-year, the fastest rise in at least five years. While the employment data is somewhat messy, the wage data is very important. And Fed observers expected then to ignore the headline jobs levels and see the pay rate rise as a reason to raise rates again at least once this year.
In Germany, an odd situation is brewing between a major bank and its largest shareholder. The CEO of Deutsche Bank has been going out of his way to snub HNA Group who have built up a 10% shareholding in the bank. The odour seems to be too much for him. But his is a bank in need of bolstered capital, so the bargain made is very uncomfortable for the institution.
In Australia, according to a joint study by analyst Cross Border Management (CBM) and BIS Oxford Economics, Chinese buyers accounted for less than 2% of all Australian real estate transactions in 2016, and contributed less than 1% ($122 out of $12,800) to the average quarterly housing price increase.
And in China, today marks the end of their Golden Week holiday period. It also marks the start of the run-up to the Party Congress in Beijing. Even stricter travel and internet controls are being put in place to ensure the coronation of President Xi as absolute ruler goes without a hitch.
And Europe is facing up to a new crisis in Spain where tensions with independence-minded Catalonia are intensifying. The consequences may push Brexit issues into the background. The financial consequences of a unilateral declaration of independence may be severe, not only on the region, but on Spain as well.
Finally, NAFTA re-negotiations are getting crude. US trade decisions are up-ending finely balanced trade deals. History's lessons are being ignored in Washington in preference for partisan points-scoring. One consequence is likely to be a fairly quick shift, to the US being noncompetitive on world markets and that may have significant implications for many countries. A new world, without the US at the centre, is being created - by the US.
In New York, the UST 10yr yield is up +2 bps at 2.36%.
The price of crude oil is sharply lower and now under US$49.50 a barrel which is almost a -US$2 drop, while the Brent benchmark is down to US$55.50. OPEC is saying 'extraordinary measures' may be requires to keep the oil; price in a range thay can live with.
The price of gold is basically unchanged today, still at US$1,272/oz.
And the Kiwi dollar will start the week lower at 70.9 US¢, a four month low. On the cross rates we are pretty much unchanged at 91.4 AU¢, and 60.4 euro cents. Our TWI-5 index is now at 73.9 and the first time it has been under 74 since May.
If you want to catch up with all the 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 ».
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10 Comments
While the employment data is somewhat messy, the wage data is very important. And Fed observers expected then to ignore the headline jobs levels and see the pay rate rise as a reason to raise rates again at least once this year.
I doubt it.
If the Fed admits it doesn’t know a thing about inflation, then they are essentially admitting the same thing about money. If they now go looking for the one, they will have to go looking in the other, too. They will be amazed at what they will find, maybe enough given time to make a real difference. If we have that much time. Read more
The question arises for me out of the Eurodollar university is that it was in place before the US took us off the gold standard.
Keep the Snider links coming, he is a great analyst IMO. I am still distributing this one. http://www.realclearmarkets.com/articles/2017/09/22/central_banks_have_… Particularly this passage from it:
For one of their meetings they had invited the head or chief economist from one of the big wirehouse firms (I won’t say which) to make the trip upstate from NYC.
Given a chance to speak briefly with him, I asked about these repurchase agreements and securities lending deals (didn’t get into dollar rolls because I remember thinking that was too far beyond my limited capabilities at the time to even make it worth asking and hoping for an answer I was sure to misunderstand). As I was describing my findings, I could tell by his demeanor that he didn’t have any idea what I was talking about. The more I questioned him, which wasn’t all that much, the more he inched and nudged himself away from me toward someone else in the room; anyone else in the room.
Finally, to be done with me, he blurted out some variation of, “that’s Alan Greenspan’s concern.”
The really sad part is that I actually believed him.
China: wake wake: banks lend based on liquidity. Who raised it hugely since 2008?
High prices are bolstered by? Those who do not need to borrower who leverage up. This is what increases money supply as land is converted to money in numbers on a screen. land itself is what is increasing money supply. Banks leverage based on loan which they class as an asset. Look at who buys land, especially in China.
Poor old Duncan Garner ... It seems like just suggesting our immigration settings be lowered, really brings out the haters.
https://www.stuff.co.nz/entertainment/tv-radio/97675530/duncan-garner-q…
This is the same Duncan Garner who for the last 5 years has been calling the racist and xenophobe card against all and sundry who were calling for a curb on immigration
then he produces this very good clarion call U-turn
https://www.stuff.co.nz/national/politics/opinion/97625919/duncan-garne…
But has yet to say he was wrong for condoning and encouraging the very thing he now rails against
https://medium.com/insurge-intelligence/chinas-economic-boom-is-about-t…
But electric cars will save them right?
There haven't been many hurricanes in those past seven years. In fact the opposite of the learned predictions/projections from the climate change trough... "Hurricane Harvey roared ashore near Corpus Christie as Category 4 storm late Friday night, breaking a record 4,323-day (142-month, 12-year) major hurricane drought. The last major hurricane to make landfall in the continental United States was Wilma, which struck Florida as a Category 3 on Oct. 24, 2005, 4,323 days ago. The last Category 4 storm to make landfall in the United States was Charley (Florida) in August 2004. And the last Category 4 hurricane to devastate Texas was Carla in 1961, according to data compiled by NOAA.
Prior to the recent 142-month hurricane drought, the longest period on record without a major hurricane making landfall in the continental United States was the 96 months between September 1860 and August 1869."
Bit of an edge for EV owners. “Ovo, the UK electricity supplier, is to offer a ‘vehicle-to-grid’ service to buyers of the Nissan Leaf from next year, allowing electric car owners' to drive for free by letting energy firms use their vehicle’s batteries.
Savings from the scheme will cover the £350-£400 annual cost of charging.
Ovo will then automatically trade electricity from the battery, topping it up during off-peak periods when power costs about 4p per kilowatt hour (kWh), and selling it at peak times for about four times as much.”
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