Kia ora,
Welcome to Tuesday’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.
And today we lead with news Super Typhoon Ragasa aims for a direct hit on southern China.
But first up, we can report that the US National Activity Index as collated by the Chicago Fed, was less negative in August, extending the negative trend to five consecutive months. But the July data was revised lower.
There were Fed speakers out overnight. Miran made the lone case in favour of Trump's big slash, whereas Hammack, Barkin, Williams, Musalem, and earlier Daly, all made the case for eyeing inflation risks as well as jobs risks.
In Canada, their producer prices rose faster, now up +4.0% from a year ago, largely on the impacts of the US tariff-taxes where Canadian substituted other components than American ones. But beef prices are a notable riser in this latest data.
The People’s Bank of China kept its key lending rates unchanged at record lows for the fourth straight month yesterday, as expected. The 1-year loan prime rate remained at 3.0%, while the 5-year benchmark stayed at 3.5%.
In China, they said they will limit the steel industry's growth to 4% over the next two years to deal with their severe over-capacity problem and force companies to invest in quality rather than volume gains.
And the fast growing rail land-bridge from China to Europe is closing, essentially because the Poland-Belarus border is being sealed to guard against Russian infiltration. It is hard to see Beijing being happy about that.
Hong Kong authorities are bracing for “serious threats” posed by the looming Super Typhoon Ragasa, which is expected to bring hurricane-force winds with speeds of up to 220 km/h over the next few days, potentially breaking a record set during Saola in 2023. Their airport is likely to close, along with much else including their stock market. And mass evacuations have started in neighbouring Shenzhen.
This is what the Hong Kong official met service warned late last night. "Under the influence of significant storm surge, there will be a rise in water level of about 2 metres over coastal areas of Hong Kong in the morning of Wednesday. The maximum water level can generally reach around 3.5 to 4 metres above chart datum, and the water level at Tolo Harbour may even reach 4 to 5 metres above chart datum. Members of the public should take appropriate precautions." A 5 metre storm surge seems pretty significant.
In Europe, and despite political and tariff uncertainties, consumer sentiment 'rose' (that is, got less bad) in September, probably because both inflation and borrowing costs eased in the past month.
The UST 10yr yield is now at 4.14%, unchanged from yesterday at this time.
The price of gold will start today at US$3736/oz, up +US$52 from yesterday and a new ATH. Silver had another +US$1 spurt overnight, now up over US$44/oz to a 14 year high.
American oil prices are little-changed at just under US$62.50/bbl, with the international Brent price still just over US$66.50/bbl.
The Kiwi dollar is at just under 58.7 USc and up +10 bps from yesterday. Against the Aussie we are still just under 88.9 AUc. Against the euro we are down -10 bps at 49.8 euro cents. That all means our TWI-5 starts today at just under 65.9, uo +10 bps.
The bitcoin price starts today at US$112,448 and down -2.7% from this time yesterday. Volatility over the past 24 hours has been modest at just over +/- 1.4%.
You can get more news affecting the economy in New Zealand from interest.co.nz.
Kia ora. I'm David Chaston. And we will do this again tomorrow.