Volatility stalk markets - and economies
Economy Watch · 4 minutes ·

Volatility stalk markets - and economies

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 volatility continues to stalk markets - and economies.

American mortgage applications rose +3% last week, reversing the prior weakness.

Retail sales in the US took a surprising retreat last week, down -1% when a good rise was expected. They are now lower than for the same period in 2019. It's a minor fall on that basis but a more important turnaround from last week's positive year-on-year position.

The increase in the number of job postings, a real-time measure of labour-market activity, has slowed dramatically since late July, and last week stood about -20% below 2019 levels. That is updated data on the official JOLTS data for July which recorded a good rise from depressed June levels.

The Bank of Canada has held its policy rate unchanged at +0.25% although it did more to tweak its QE program a little to make it a bit more accommodative.

Japanese machine tool orders in August came in better than the prior month. Even though they were down -23% year-on-year, that pulls back some earlier month declines with only a small -2.3% month-on-month dip and export orders now show virtually no decline.

China's consumer price inflation eased a little in August, mainly because food prices grew at a slower pace. But beef and lamb prices are still rising faster than most.

China's industrial price deflation is also easing, with three consecutive months of month-on-month rises.

China's overland train trade with Europe is booming with a +62% year-on-year rise to 1,247 trains, a record high for the second straight month.

In Australia, much is being made of consumer confidence “roaring back”. But actually, that is only in the perspective of the last six disastrous months. In fact, consumer sentiment remains very negative across the ditch according to the Westpac MI survey.

And in an attempt to shore up their declining credit card business, NAB has introduced a no-interest Visa credit card although it does have a fixed fee of between AU$10 and AU$30 per month depending on the credit limit you choose.

Wall Street is roaring back today, making up yesterday's losses. 

The latest global compilation of COVID-19 data is here. The global tally is +247,000 higher in a day taking the global total to 27,648,000.

Just under a quarter of all reported cases globally are in the US, which is up +31,000 to 6,528,000 and a relentless rise. 

In Australia, there have now been 26,465 COVID-19 cases reported, and that is +91 more cases overnight and clearly the Victorian emergency easing. But there were +9 in NSW yesterday and +8 in Queensland. 

The UST 10yr yield is up +3 bps and now at 0.71%. 

And we should note that New Zealand wholesale rates turned negative yesterday and ended the day at zero.

The price of gold is up another +US$7 and now at US$1,946/oz.

Oil prices are lower today, down to just over US$38/bbl in the US while the international price is down to just over US$41/bbl.

The Kiwi dollar is firmer today and now at 66.7 USc and recovering nearly +½c overnight. Against the Australian dollar we are firmer too at 91.8 AUc. Against the euro we are up at 56.6 euro cents. And we had some good gains against the yen and British pound. That means our TWI-5 has risen +40 bps to 69.8.

The bitcoin price is a little firmer today, up by +1.1% to US$10,280.

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. We will do this again, tomorrow. 

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