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Podcast: Economy Watch
Episode:

What will Jay say?
Category: Business
Duration: 00:03:51
Publish Date: 2021-08-25 19:35:16
Description:

Kia ora, 

Welcome to Thursday's Economy Watch where we follow the economic events and trends that affect New Zealand.

I'm David Chaston and this is the International edition from Interest.co.nz.

Today we lead with news we are in to the final ten days before the US Labor Day holiday and most northern hemisphere participants are taking vacations ahead of what could be an active and volatile economic period through to the end of year holiday season.

Yesterday, wholesale interest rates started to rise again in New Zealand. That was just a pre-cursor for the international bond market overnight where the benchmark UST 10yr yield jumped back to 1.35% despite some weak economic data.

Part of the reason for the turn up is the US Fed's focus on the Jackson Hole meeting and the signals Fed boss Powell will be giving. Markets suspect he will acknowledge that the current inflation impulse is likely to be less transitory and have longer term implications.

In the US, new orders for manufactured durable goods in July decreased slightly although the fall was less than expected. But non-defence capital goods orders fell quite sharply although that was from an unusually strong June. Aircraft orders were especially weak. From the same 2019 month these capital goods orders were -8% lower, so that is a poor result. It is not clear however how much the logistics supply chain constraints are having on these results.

US mortgage applications rose last week but not in a significant way, continuing its yoyoing trend around zero for the past year. US mortgage interest rates didn't move significantly either.

However, the yield on the overnight US Treasury 5yr bond auction rose to 0.78% pa from 0.66% at the prior equivalent event. Today's tender was as well supported as the prior one.

In China, their central bank has been telling their commercial banks to lend more, especially to SMEs. And to lower interest rates. They are clearly worried about the slowing momentum in the Chinese economy.

Aluminium prices are expected to jump from already high levels as China's refiners are ordered to cut back, and a fire at a very large Jamaican refinery will also crimp global supply, especially to the US.

In the US, health insurance plans are adding premiums for members who remain unvaccinated. And employers are generally adopting a no-jab, no-job stance.

The UST 10yr yield is up +6 bps today at 1.35% and extending its strong recovery. 

The price of gold is lower today, down -US$17/oz from this time yesterday, and now at US$1789/oz.

Oil prices have risen again, this time by another +50 USc, so in the US they are now just over US$68/bbl, while the international Brent price is just over US$71/bbl.

The Kiwi dollar opens today firmer again, back up to 69.6 USc. Against the Australian dollar we are slightly firmer at 95.9 AUc. Against the euro we are also firmer at 59.2 euro cents. That means our TWI-5 starts today at just over 72.9 and back in the 72-74 range of the past ten months.

The bitcoin price has risen +1.9% from this time yesterday to US$48,945. Volatility in the past 24 hours has been moderate at just over +/- 2.0%.

You can find links to the articles mentioned today in our show notes.

And get more news affecting the economy in New Zealand from interest.co.nz.

Kia ora. I'm David Chaston and we’ll do this again tomorrow.
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