Information breakfast; A climate of consolidation is setting in on the markets

Here is our summary of the key overnight economic events affecting New Zealand, with news of growing evidence that inflation could peak.

But first, the United States mortgage applications have plummeted -1.2% last week, a fifth straight decline as the base mortgage rate hit 6% for the first time since 2008. It has now been nine weeks in the last twelve that they have fallen, suggesting that their real estate markets are in downturn mode. But that doesn’t come with too much stress, it seems. Crime rates remain very low on mortgages. We are witnessing declines, yes, but without stress.

American producer prices fall by -0.1% in August from July and it was as expected. Year-over-year they are up +8.7%, which was less than expected and lower than the +9.8% rise in July and was the least it has risen in a year. months during the past year. There are clear signs here that the impact of the price increases is waning. Maybe yesterday’s CPI data wasn’t the warning sign it seemed.

But concerns are growing over potential upward pressure on prices if a huge rail strike hinders supply chains and harms economic activity.

In China, a new popular movement is on the move. After triggering a mortgage strike over undelivered homes, others are now rush to pay off their mortgage. As the real estate market crashes, the leverage once sought after has turned into a burden. Today, an increasing number of borrowers are cashing in their “wealth management products” (essentially money market funds) to pay off the home loan. The reader is helped because these funds are now yielding very meager results. A divestment push like this will not help reinvigorate their economy. And that could be deflationary.

Japan machine orders declared for July, and they were up sharply (as were the machine tool orders we picked up yesterday for August). It was a rebound that was not expected, showing that the company’s boards are still investing. These orders were up +5.3% from June and +12.8% from year-ago levels.

In India, their much watched wholesale price inflation increased by 12.4% in August. But that was less than July’s 13.9% rise and less than the expected 13% rise. Food prices also increased by 12.4% in this survey.

The directory UK inflation rate unexpectedly, it fell slightly to 9.9% in August, from 10.1% in July, which was the highest figure since 1982. Analysts had expected it to reach a rate of 10 .2%. It’s milk and cheese that are driving up their costs. They need less restrictive tariff protection policies for their farmers. But of course they won’t and suffer their own purpose while blaming others. Their food prices increased by more than +13% in August.

In Sweden, the ruling centre-left coalition was beaten by a center-right grouping in a very thin result. The centre-right won, however, only thanks to renewed support from a far-right anti-immigrant party that will be part of the new government. The new government may not be very stable. The inability to deal with rising gang violence has undone centre-left parties.

And by remaining in Europe, their Luxembourg Court has confirmed fined Google NZ$8.5 billion for the way it used its Android operating system to promote Google Search.

In Australia, new home sales are still down. They were down -13% in July. Now, new data shows that they were down another -1.6% in August. They have fallen all year since the peak in December 2021 and have been down -28% since then

The 10-year UST yield starts today at 3.41% and is little changed from the same time yesterday. The UST 2-10 yield curve is more inverted at -37 bps. Their 1-5 curve is also more inverted at -36 bps. But their 30-day-10-year curve held steady at +94 basis points. Australia’s 10-year bond is down -4 basis points at 3.66%. The 10-year Chinese government bond is unchanged at 2.67%. But the New Zealand 10-year government will start today at 4.03%, up +11 basis points overnight.

Wall Street in its Wednesday session was down -0.2% on the S&P500 at the end of the session after being up for most of the session. The Nasdaq is up. Overnight, European markets were all down, ranging from -0.3% in Paris to -1.5% in London. Yesterday, Tokyo ended down -2.5%. Hong Kong was down -0.8% and Shanghai was closed down -1.3%. The ASX200 ended its Wednesday session down -2.6% and the NZX50 ended down -0.9%.

The price of gold will open today at US$1,697 an ounce and will fall a further -US$7 from the same time yesterday. But most of the other precious metals made some sort of overnight rally.

And oil prices today start rising by +US$1.50 to just under US$89/bbl in the US, while the international price of Brent is now just below $94.50 US/bbl.

The Kiwi Dollar will open today at just 60.2 USc and little change from this time yesterday. Against the Australian dollar, we are firmer than yesterday at 89.1 AUc. Against the euro, we remained lower at 60.2 euro cents. All of this means that our TWI-5 today starts at 69.8 and still at its two-year low.

Bitcoin price is now at US$20,116 and another decline of -3.0% from this time yesterday. Volatility over the past 24 hours has been moderate at just over +/- 2.3%.

The easiest place to keep up to date with the risks of events today is to follow our economic calendar here.”

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