The long-Covid economic problem

Kia ora,

Welcome to Friday'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 that perhaps there is a 'long covid' problem for economies too.

But first, in the US jobless claims fell more than expected last week to +258,900 (actual) and a weekly drop of more than -40,000. That takes the total number of people on these programs to under 2.4 mln, the lowest since the start of the pandemic, and back closer to the 'normal' level before the coronavirus crisis.

There was a small uptick in layoffs in September from August, but the quarter end totals were actually the lowest quarter since 1997.

All eyes are now on tomorrow's US non-farm payrolls report. Analysts see a rise of +500,000, taking the total employed level to 147.4 mln and a gain of +7 mln in a year, but still -2.3 mln fewer than just before the onset of the current crisis.

In Congress, a deal to kick the can along to December relieves their debt ceiling problems for a few more weeks. This involves a US$480 bln increase to the limit.

China's FX reserves were pretty stable in September at just on US$3.2 tln even though that was fractionally lower than expected.

But Asia’s junk-bond market suffered through another wave of selling, which pushed prices of many Chinese developers’ bonds further into distressed territory.

A new study of long Covid found even people who were never sick enough to need hospitalisation are in danger of developing heart failure and deadly blood clots a year later.

And now economists are wondering whether there will be a long Covid effect in what they will see as nations struggle to regain what they lost. That is particularly the view from China.

For the first time since April, the cost of container shipping freight has fallen, but it is still double what it was back then. Prices from China are now about ten times the rate than prices to China. For bulk cargoes, the Baltic Dry Index continues to rise however and is now at a 13 year high.

The UST 10yr yield opens today at just over 1.57% and up +4 bps from this time yesterday. 

The price of gold will start today little-changed again, down -US$4 at US$1758/oz.

And oil prices are firmish today, up +US$1 to just under US$78/bbl in the US, while the international Brent price is just over US$81.50/bbl.

The Kiwi dollar opens today firmer at just on 69.3 USc. Against the Australian dollar we are down another -40 bps to 94.8 AUc. Against the euro we firm at 60 euro cents. That means our TWI-5 starts today down just on 73, and right in the middle of the 72-74 range of the past eleven months.

The bitcoin price is marginally lower than this time yesterday, down -1.1% to be now at US$54,162. Volatility in the past 24 hours has been moderate at just over +/-2.2%.

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.