US data all positive

Kia ora,

Welcome to Wednesday’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 the US economy seems to be settling in for a longish positive run.

But first, the overnight dairy auction brought higher prices, up +1.9% in US dollar terms. This is the sixth consecutive rise since September during which period the index has risen +14%. Perhaps butter was the standout, rising +3.5% from the prior event, but WMP rose the average +1.9% and SMP was up +1.4%. Volumes sold at this auction exceeded 30,000 tonnes, the highest of the year. In NZ dollars, today's prices are up +3.5%, taking them to their highest since 2007. So this event will underpin current farmgate pay-out price forecasts, perhaps give them some upside.

US retail sales data for October came in quite positive, up +1.7% with both prior months being revised higher too. These were the largest rises in seven months. The rises were broad-based and better than analysts were expecting. At the same time, business inventories remain unusually low.

October industrial production bounced back stronger than was expected too, with a healthy rise in October. This was broad-based as well, with capacity utilisation rising even if it remains well below where it should be.

Housing data was better than expected in the US too.

Meanwhile, the heat has gone out of US reverse repo volume growth even if it does remain high.

And the US debt ceiling can will need kicking again soon, along with its usual partisan brinkmanship, with the temporary measure due to expire in early December.

Canadian housing starts disappointed again in October, extending a lowering track since March.

In Vancouver, a big mudslide has effectively closed their port operations, removing an alternative to the large backlog of ships on the US West Coast

In China, the opening of the Beijing stock exchange has been greeted enthusiastically - even frenetically. The day before it opened, 45,000 accounts were established to trade there. On the day (Monday) 180,000 accounts were opened to trade there.

In Australia, their central bank governor doesn't think inflation is coming there any time soon. In fact, he has signalled that there will be no rate hikes there in 2022. In fact, the latest RBA minutes say they are "prepared to be patient" until their inflation and jobs targets are met - which means no change of settings until "inflation [is] between 2 and 3 per cent on a sustainable basis, the labour market will need to be tight enough to generate materially higher wages growth than at the time of the meeting."

The UST 10yr yield opens today at 1.63% and +1 bp firmer than this time yesterday. 

The price of gold will start today down -US$7 to US$1856/oz.

And oil prices are firmer by about +US$1 at just on US$80/bbl in the US, while the international Brent price is now just under US$82/bbl.

The Kiwi dollar opens today a -½c weaker at just under 70 USc. Against the Australian dollar we are soft at 95.7 AUc. Against the euro we are softish at 61.7 euro cents. That means our TWI-5 starts today at 74.4 and almost -40 bps lower than this time yesterday.

The bitcoin price has fallen away since this time yesterday, down -5.5% to US$60,605. At one point it got down to US$58,674. Volatility over the past 24 hours has been very high at just over +/-4.9%.

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.