Breakfast briefing: Are you on the other side of the inflation bubble

Here’s a summary of the key economic events that occurred over the weekend in New Zealand. It is reported that central banks are keeping inflation under check, despite increasing evidence that inflationary pressures are decreasing. (It kinda mirrors the war against Ukraine.

This weekend, China is on vacation (Mid-Autumn Festival), a muted affair with travel discouraged. Authorities have Warnings issuedLearn more about unneeded travel Pandemic cases continue to growThis service is offered by many provinces.

August saw a greater increase in new yuan loans than July.However, the July level was very low and the August recovery’ was lower than expected. It was driven by stronger corporate demand, including forced financing of Beijing’s orders. Household demand was very poor. Their money supply is increasing (+12.2%pa), at three times the rate of economic activity. Perhaps even more in recent weeks.

It is easy for Chinese to stay after the exuberant claims made by official start-ups. The carbon market trading has come to a grinding halt. It seems that being more carbon-efficient is not a top concern.

The inflation impulse has almost been completely lost in China. The annualised CPI rateDespite the fact that they report annual CPI inflation at 2.5% to august, which is down from 2.7% to Juli, the change in the last four months has been only +0.6%. These gains were greatest in the first six months of the year. Food prices are stable at the moment. Despite falling lamb prices over the past 12 month, they rose in August. Beef prices are not on the decline.

China has experienced a drop in producer price inflationInflation has been replaced with Deflation. It has been a sharp retreat and prices are falling at a rate greater than -14% per year now. They are up +2.3% over the year to august, which is lower than the annual +9.5% August 2021. The current rates are at an 18.-month low. This data helps explain the falling yuan rate.

Americans are finally feeling better after months of doom, gloom, and despair. Feeling better about the economy However, people are becoming more resigned to inflation. Although petrol prices have dropped rapidly, overall inflation remains high. The August numbers will come out on Wednesday (NZT), and they are expected to decrease from 8.5% – 8.1%. The year-on-year changes are not the reason for the rapid rise in sentiment. It is due in part to the month-on-month changes of household budgets. The relief is widespread.

US Wholesale inventories increased slightly during JulyThey have been steadily increasing since June. They are up by a disturbing +25% annually. This is more than inflation could explain. This is partly due pressure in the supply chain. Wholesale sales declined in July compared to June. So, the inventory-to–sales ratio increased and, although it is not back to prepandemic levels, companies are likely to notice the pressure now and the possibility of a prolonged de-stocking period – which is always a corrosive signal.

Only 9.4% will be achieved in the United States to increase online sales by US$1 Tln. This is the first year that the growth rate has fallen below single digits. Given inflation’s rise, it is an unusually modest increase. Bloomberg is ReportingAmazon sellers anticipate a weak holiday season. They are also worried that they may have to heavily discount their inventory to shift it. This will also lower inflation.

China is particularly sensitive to the effects of lower order level. China is now experiencing a peak season for export shipments, rather than what they had hoped. Looks like an off-season period. Another reason containerized products are so in demand is because of this. Shipping costs are high. The number of container vessels waiting offshore of Port of Los Angeles Long Beach has declined from more than 100 in Jan, when it was at its highest, to less then ten now. This is more pressure relief, which will lower inflation.

This does not stop the US Fed focusing on fighting inflation, regardless how it affects demand. Another member of that board called for a significant hike in September. A speechWeekend

Canada’s jobs report was surprisingly disappointingAugust. August saw a dramatic drop in the number of full-time job opportunities. This was unexpected. It was expected to see a slight increase. It was a significant move that saw the country’s unemployment rate rise sharply to 5.4%, from 4.9% in August. This was due to a sharp decline in public sector jobs, rather than an effect on interest rates on private sector employment, which was stable.

Sweden has an election underwayThe center-left is expected beat the recent surge by the antiimmigration Sweden Democrats’ party. The failure to address gang violence in recent times has helped the far-right party gain support.

New Zealand is well-known for its heavy grocery food weight. ReportingInfometrics reported that suppliers increased their prices by 8.7% in the past year. Nearly 7,500 product lines experienced price increases. Fruits and veggies were the main culprits. Overall, the pace is improving. August’s cost rises are at a +12% rate compared to July.

Today’s UST 10yr yield is 3.32%. This is unchanged from Saturday. The UST 2-10 rate curve has remained unchanged at -25 bps. Their 1-5 curve has not changed much at +23bps. Their 30-day-10yr curve now stands at +78bps. The Australian ten year bond is at 3.57%. The China Govt ten year bond is unchanged at 2.66%. The New Zealand Govt Ten Year Bond, unchanged from last week, will start today at 3.95%.

The gold priceToday’s opening will be at US$1717/oz. Saturday opening will be at +US$1.

Oil prices are starting at US$1.50 lower today, just below US$85/bbl in US. Brent international price is currently under US$92/bbl.

Today’s opening rate for the Kiwi dollar will be 61 USc. It will remain the same throughout the weekend. We are currently at 89.2 AUc versus the Australian dollar. We are at 60.8 euro cents against the Euro. Our TWI-5 starts today at 70.5 and is down 20 bps for the week.

The current Bitcoin price is US$21650. This is 2.3% higher than Saturday. The volatility in the last 24 hours was moderate at just over +/- 1.3%

The easiest place to stay up with event risk today is by following our Economic Calendar here ».

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Source: Breakfast briefing: Are you on the other side of the inflation bubble

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