Here are the key things you need to know before you leave work today (or if you already work from home, before you shutdown your laptop).
MORTGAGE/LOAN RATE CHANGES
The Bank of China cut a range of fixed home loan rates.
TERM DEPOSIT/SAVINGS RATE CHANGES
At the same time, the Bank of China raised many TD rates, but not for 6 month offers.
CHANGE OF TUNE - NO APRIL HIKE
ANZ’s chief economist Sharon Zollner no longer expects the Reserve Bank to increase the Official Cash Rate above its current 5.50%. Although she is late to this change, ANZ's position is very influential. Money markets have priced that scenario for a few weeks now, in fact suggesting the OCR will next be cut in July 2024.
WORKER SHARE OF GDP
Today, Stats NZ updated some background GDP data. Even though it is only to March 2022, it helps us update a key economic relationship - the proportion of employee compensation to GDP. And it tells a partisan story. When Labour is in power, the share of GDP that accrues to workers rises. And it falls when National is the government. Over the past 20 years, the record is quite clear. Over the past 50 years it is broadly the same, although the Muldoon Government holds the distinction of when we had the largest fall. Click on the links to see the relationships charted. The data is from here. For reference, in the US it was 60%.
PRODUCER COSTS UP FASTER THAN COSTS IN SEPTEMBER QUARTER
Stats NZ also reported that output prices from producers rose +2.1% in the year to September, up +0.8% in the last quarter, while input costs rose +1.5% from Q3-2022 and up +1.2% from the June 2023 quarter.
MASSIVE SURPRISE
In August the US TIC flows were positive into the US by +US$62 bln. Expectations were that September's inflows would top that at +US$89 bln. But in the event there was a surprise outflow in September. The net foreign acquisitions of long-term securities, short-term U.S. securities, and banking flows was a net TIC outflow of -$67 bln. Of this, net foreign private outflows were -$62 bln, and net foreign official outflows were -$5.3 bln. That is a massive US$156 bln surprise in just one month.
SWAPS LOWER
Wholesale swap rates have probably retreated today. The real reaction will come at the close. Our chart will record the final positions. The 90 day bank bill rate is up +1 bp at 5.63% and now just +13 bps above the OCR. The Australian 10 year bond yield is down -11 bps from yesterday to 4.47%. The China 10 year bond rate is unchanged at 2.68%. And the NZ Government 10 year bond rate is down -15 bps from yesterday at 4.96%, and the earlier RBNZ fixing was at 5.18% which was also up +1 bp today. The UST 10 year yield is now at 4.44% and a -8 bps fall from this time yesterday. The UST 2yr is now at 4.84% so that key curve inversion is a little more at -40 bps.
EQUITIES SEARCH FOR WEEKLY GAINS
The NZX50 is down -0.6% in late trade today and heading for a very modest +0.2% weekly gain. The ASX200 is down -0.2% in afternoon trade and if that holds they will book a +1.0% weekly rise. Tokyo has opened up +0.3% heading for a +2.1% weekly gain. Hong Kong has opened -1.7% lower which would limit its weekly gain to +1.6%, and Shanghai has opened down -0.4% and will struggle to get even the current -0.1% weekly change to hold. Singapore has also opened another -0.7% lower. The S&P500 ended up +0.1% in Thursday trade on the S&P500, essentially hold the gains from earlier in the week and so far this week it is up +2.1%.
GOLD UP SHARPLY
In early Asian trade, gold is now at US$1983/oz and up +US$26 from where we were this time yesterday. Earlier in New York it was at US$1981/oz and earlier still in London at US$1980/oz.
NZD DROOPS
The Kiwi dollar is down -40 bps to 59.6 USc. Against the Aussie we are -20 bps lower at 92.2 AUc. Against the euro we are -½c lower at 54.9 euro cents. That means the TWI-5 is down -40 bps at 69.1.
BITCOIN RETREATS
The bitcoin price has pulled back today, now at US$36,432 and down -3.2% from where we were this time yesterday. Volatility over the past 24 hours has been moderate-to-high at just over +/- 2.9%.
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52 Comments
Unless my mind was playing tricks on me, I thought I saw a headline yesterday (maybe day before) saying that the negotiations had just surpassed the length of time for 2017. I don't recall seeing all sorts of screeching and squealing from the media about how long negotiations were taking back then.
I'm not massively enthused about this incoming government (although I did vote for the party I suspect is causing the hold up here) but ultimately negotiations take time. ~2 weeks following final results to be getting close there - by the sounds of things - doesn't seem unreasonable at all to me.
From a 'strong and stable government' perspective I think it's better they argue out the differences now, rather than slap some deal up that none of them are really happy with.
The tiddlywinks-by-comparison negotiations I find myself in for work that involve often just two parties and a far narrower scope often take hours of back and forth discussion and communication ... it's not a big deal (yet)
I think the bigger story here is that the media is so bereft of news because the oxygen is currently snuffed out of the political sphere, that they are having to make this seem like more of an issue than it really is just to get some headlines going. Also journalists can't stand not being the center of attention and being locked out of things.
In 2017 it was a 2 party negotiation, this time its a 3 party negotiation. People are dreaming if they think that is easier to do. Plus Winston admitted that in 2017 Jacinda was so desperate to get into power that she basically gave Winston whatever he wanted in order to stitch up a deal. He's not so lucky this time. And Luxon is not so desperate.
"Jacinda was ready to sell her grandmother - and she did’
https://www.nzherald.co.nz/nz/politics/insiders-speak-what-drives-winst…
Yeah I fail to see how a 3 party negotiation could be less complex than a 2 party, and therefore it's going to take longer.
I don't know about Jacinda and desperation (I feel like it was if anything more about Winston hating on the National party) but the multi-party nature of the negotiations is another factor in why I don't think it's an unreasonable timeframe yet.
Correct, my recollection of the experiment was fuzzy.
I dont buy the 2 weeks nonsense, Luxon has been humiliated by Peters to the point he has lost all momentum. Instead of representing us at APEC and making important contacts, he is at home being ignored by the ego. We only have a 3 year election cycle, every day matters.
You mention a sad reality which is our 3 year term, really 2 years of silly stuff and 1 year of silly electioneering...MMP is not the issue, perhaps a 4 or 5 year term would help to bring a few of weeks of negotiation in to perspective and actually come to a better outcome for the country...now however it seems it is all about what's best for "me", status and power...it all seems pretty juvenile to me.
Starting to have more conversations with businesses where they are making it clear that the cash is slowing down coming in and the tanker is running dry, so to speak.
In fact I lost a decent retainer client today who called me up and said "we've been happy with what you've done, but we just do not have the cashflow at the moment and we are cutting everything non critical to day-to-day operation".
I don't do a great deal of business with retailers, but the ones I do know all seem to be pinning their hopes on a strong EOY shopping season or else it's looking grim.
So do your bit and go out there and buy crap you don't need for the next month, or else I may have more time on my hands to make idiotic comments on this website.
Just sayin....
by dumbthoughts | 14th Aug 23, 4:23pm
I've lost two relatively longstanding retainer clients in the last week (who I'm on good enough terms with for them to be straight up and say 'hey, we haven't got the work/cashflow to keep paying you any more). Also commented the other day that I'm really noticing it taking longer to get paid by some clients. My clients are typically reporting to me a challenging environment too.
I'm not exactly sure what you are saying I'm "just sayin'" but yeah the trend is continuing.
I have picked up some other work to balance out some of the losses (that work being almost all around finding ways to save the client $$$ and effectively they are making a cash saving return on my service fee).
I'm definitely not making anything up if that's what's implied? Ultimately it's better for me to have the Rockstar (tm) Economy going on as I'd rather have the leads and sales walk themselves through the door.
Friday Funnies. For something completely off topic but hilariously Kiwi As. Check out the tiktok link.
https://i.stuff.co.nz/taranaki-daily-news/133300302/frankie-campbell-an…
Good to know that the kids are alright.
Whoa look at the big drop in wages share of GDP early to mid 80's, and it's never recovered.
Where are the articles covering the "green shoots" in this recovery? Could it be better for all if this share of GDP was higher again? Without the wage slaves working and spending, the upper level have nothing. It seems to highlight how inequality has widened so much?
From a purely mathematical perspective, human foibles aside, why is GDP per capita not distributed as evenly as income to the nation's people?
Would appear that neither blue or red have made any real difference. Either they're both inept or there's forces they are just not willing to face or regulate. Too captured maybe?
Worker share of GDP figures. Bit of context. Total annual wages per year are about $150bn, about $120bn private sector. Private sector profits are about $100bn. So every $1 of private sector wages generates around $0.83 of profit. Most of that profit basically becomes income for rich people.
Just think about those numbers for a bit. Is it any wonder we live in one of the most unequal countries in the world?
Those producer price stats make interesting reading. Farm expenses (input prices) would have seen negative growth (deflationary) for the last three quarters if interest payments had not gone up so much.
You see the cure for inflation is to make things more expensive. Anyone who says otherwise doesn't understand reckonomics.
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