Bitcoin and Turkish lira both sink

Kia ora,

Welcome to Friday’s Economy Watch where we follow the economic events and trends that affect Aotearoa/New Zealand.

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

Today we lead with news both Turkey and bitcoin have taken a sharp re-rating lower today.

But first in the US, new jobless claims fell to 239,000 and the number of people on these claims is now 1,754,000 and back to pre-pandemic levels. These new levels are about what was expected.

The Philly Fed manufacturing survey reported buoyant conditions and continuing fast-rising cost and price rises. New order levels were strong.

The Kansas City Fed factory survey wasn't so upbeat, still growing but at a slower pace. However they too reported strong new orders, high cost and price increases and a very tight labour market.

All this American data is consistent with the Conference Board's leading index which rose sharply in October suggesting the current economic expansion will continue into 2022 and may even gain some momentum in the final months of this year.

The Canadian ADP payrolls report for October was stronger, and an improvement from September. But not every sector shared in the bounce-back.

In Vancouver, panic buying has emptied stores in a city now cut off by debris on major highways and rail lines. The province's death toll of one is expected to climb. The military is due in the area soon to assist rescue efforts.

In China, infrastructure investment is very weak now, growing just +1% year on year in the first ten months of 2021. And it could slip further. And separate data confirms their birth rate is very low, and falling.

In Turkey, their central bank slashed its one-week repo auction rate by -100 bps to 15% during its November meeting, following a -200 bps cut in October and a -100 bps cut in September. The move was expected after Turkish President Erdogan, who backs an unconventional theory that high rates cause inflation, vowed to fight for lower rates as his country grapples with inflation at near 20%, well above the mid-point target of 5%. The Turkish currency is down almost -11% in November and may well fall further, adding to their inflation – and educating their President.

Shipping freight rates out of China are staying very high, according to this week's assessments. Some thought it might be reverting lower by now, but that hasn't happened yet. But the Baltic Dry index is one cost that is reverting lower.

The price of lithium just keeps on rising however.

The UST 10yr yield opens today at 1.58% and -2 bps softer than this time yesterday. 

The price of gold will start today down -US$6 to US$1861/oz.

And oil prices are also a little softer at just under US$78/bbl in the US, while the international Brent price is now just on US$80/bbl.

But the Kiwi dollar opens today firmer at just on 70.3 USc. Against the Australian dollar we are another +½c firmer at 96.7 AUc, so up +1c in two days. Against the euro we are little-changed at 61.9 euro cents. That means our TWI-5 starts today at 74.8 and up +40 bps since this time yesterday.

The bitcoin price has fallen again since this time yesterday, down -4.8% to US$57,466. In NZ dollars that is a drop of more than -NZ$10,000 in a week. Volatility over the past 24 hours has been high at just over +/-3.2%.

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 on Monday.