Here's our summary of key economic events overnight that affect New Zealand, with news expectations for US Fed rate cuts in 2024 were scaled back by financial markets overnight on Fed-speak commenting. Benchmark bond yields rose.
But first, the overnight dairy auction was a 'good' one with prices up +2.25% in USD terms, and boosted by a falling NZD to be +4.1% higher on the local basis. Most products got better prices, especially butter which was up +5.8% from the prior event two weeks ago. The key WMP was to +1.7%, but that was enough to take it back to a level that we had not seen in more than a year. SMP was up +1.2%. Today's event helps underpin the better farmgate payout levels analysts had expected late in 2023.
In the US, the New York Fed's Empire State factory survey delivered a fierce blow, diving sharply. New orders and shipments also posted sharp declines. The headline general business conditions index fell twenty-nine points, its lowest reading since May 2020. Perhaps oddly however, their expectations of future activity rose just as sharply and while still subdued, clearly firms don't expect the current drop-off to continue into 2024.
Meanwhile a national household survey, also released by the New York Fed, showed a continuation of the recent declining trend in monthly household spending growth, even though spending growth remains well above pre-pandemic levels.
In Canada, December inflation rose to 3.4% from 3.1% in the previous month, a rise that was expected - but probably not welcomed by their central bank all the same.
They would have been pleased by the very good rise in housing starts in December, however.
In China, Bloomberg is reporting that China is considering ¥1 trillion (NZ$225 bln) of new debt issuance under a so-called special sovereign bond plan, only the fourth such sale in the past 26 years, as authorities seek more money to finance intensifying efforts to shore up the world’s second-largest economy.
Meanwhile in Davos, a senior Chinese official said the 2023 GDP economic expansion would come in at 5.2% for his country. Apparently there are no inhibitions there for officials releasing market sensitive data early.
The ECB survey of inflation expectations shows it trending in the desired direction there. Median consumer expectations for inflation over the next 12 months dipped to 3.2% in November, marking the lowest rate since February 2022 and down from the previous month's 4.0%.
Also better than expected, the German ZEW sentiment survey rose again for a fifth consecutive time to its highest level since February 2023.
In Australia, the Westpac-Melbourne Institute Consumer Sentiment index fell -1.3% in January from December, remaining in negative territory now for nearly two years. A surge in the cost of living and high interest rates continued to dominate sentiment. The index has been below the 100 mark since February 2022, the longest streak since the early 1990s recession.
The UST 10yr yield starts today at 4.08% and up +10 bps from this time yesterday. The key 2-10 yield curve is unchanged, still inverted by -016 bps. Their 1-5 curve inversion is flatter, now by -80 bps. And their 3 mth-10yr curve inversion is also less inverted, now by -133 bps. The Australian 10 year bond yield is now at 4.20% and up +9 bps. The China 10 year bond rate is now at 2.54%, unchanged. The NZ Government 10 year bond rate is +5 bps higher at 4.69%.
Wall Street has opened on Tuesday after its holiday with the S&P500 down -0.5% so far. Overnight European markets closed down about -0.2%. Yesterday, Tokyo slipped off its perch, down -0.8%. Hong Kong was down a sharp -2.2% but Shanghai rose +0.3%. Singapore fell -0.5%. The ASX ended its Tuesday session down -1.1% while the NZX50 ended essentially unchanged.
The price of gold will start today down -US$28/oz from yesterday at just on US$2027/oz.
Oil prices are marginally softer at just under US$72/bbl in the US and down by -50 USc. The international Brent price is still at just under US$77.50/bbl.
The Kiwi dollar starts today at 61.4 USc and down another -½c from this time yesterday. Against the Aussie we are holding at 93.2 AUc. Against the euro we are almost unchanged at 56.5 euro cents. That all means our TWI-5 starts today just under 70.4 and -10 bps lower.
The bitcoin price starts today having turned up, now at US$43,116 and up +1.5% from yesterday. Volatility over the past 24 hours however has remained modest at +/-1.6%.
The easiest place to stay up with event risk is by following our Economic Calendar here ».
99 Comments
I'm just here to shine a light on the situation of the young Green MP, who was under such pressure being out of government that she decided to steal some very expensive clothes to feel better.
Mental health is a hidden scourge in Tamaki Makaurau Aotearoa New Zealand and I wish her well in her future career. Perhaps... retail?
Possibly at a "Fair Trade" shop ?
I can imagine it was very satisfying to type that out. Maybe even a pat on your back as you hit 'save'. Here's hoping the news cycle moves on quickly.
Yes, move that news cycle on quickly - like don't mention the [record smashing] Trump Iowa victory. Vivek demonstrated how to cope with the stress of losing a vote.
Your being a bit childish here. She did the right thing probably after exhausting all the alternatives.
For all you EV owners who voted for a thousand dollars of RUC charges each year.
https://norightturn.blogspot.com/2023/12/climate-change-stupid-move.html
I have heard that EVS are really heavy and cause more damage to roads than the equivalent ICE vehicle.
And I saw one review of an EV and the guy said that when driving over these savage new speed bumps it shuddered terribly.
Imagine if each EV had a 26000kg truck following it on the roads so it could fill up again...this happening across the country ..cue outrage!
Whereas there are currently just the same number of 26,000kg trucks following EVs (carrying windfarm/ transmission/ transformers etc parts) so that they can fill up again.
Never seen one yet..do they drive in the dead of the night?
Ok, I have a sudden urge to run some maths.
There are 581 wind turbines currently operating or under construction in NZ with 3 blades each so 1743 blades.
These blades last 20 years so for replacement that's 87 trucks per year on average to maintain them. There is consent for a further 275 to be built over the next 10 years. Again 3 blades each adds another 825 or 83 per year. So 190 trucks per year total.
NZ uses 23 million litres of oil per day and the average size tanker truck holds 13,000 litres. So 1769 trucks per day to move that around or 645,769 per year. Those windmill blades use 0.03% as many trucks as oil delivery.
Depends on the range. Most around 1500kg.
We are still in the early days of battery development. Remember when a 288MB disk drive was the size of a washing machine and cost over 100k.
what ev is coming in at 1500kg? the common std mid-sized are >1700kg (MG 4, BYD Atto 3, Tesla 3), unless you are referring to Leafs
My Leaf (the most popular EV in NZ) is 1640kg with 2 people in according to the weighbridge at the EcoDrop. That's lighter than ICE SUVs and Utes.
When every townie and his missus drives a 2,300kg ute or SUV does it really matter if there's 2,100kg EVs on the roads as well?
It does when the 2300kg Ute or SUV pays for the impact via RUCs if Diesel or fuel taxes if Petrol, yet the 2100kg EV up until now doesn't.
And that's being addressed as of 1 April, so we're all happy now, yeah?
We would be happy if the EV RUCs were backdated to the date of purchase.
Come on - NACT know that backdating rules is completely unacceptable unless it's giving money to landlords.
I am waiting for the heavy truck RUC's to match the damage they do to the roads.
Indeed, You could drive a 1500kg EV up and down the same piece of road until the battery dies of old age and zero impact on the surface. Try doing the same with an 18 wheeler. Meanwhile oil burners subsidise Vlads war effort and climate collapse.
Won't happen with this govt. Heavily in the road transports pocket.
Based on the RUCs paid, you would need to do 9.44l/100km in a petrol vehicle to pay more via the Fuel Excise Duty than the EV does. So EVs are paying more than most ICE vehicles.
Road damage increases exponentially with weight. For anything under 3000kg the damage is negligible
Damage increases by the fourth power so a doubling in weight per axle causes 16 times more damage. Fourth power law - Wikipedia
Look at the RUCs paid by trucks then tell me they are paying their fair share.
So many excuses.
There has been nothing that I have seen in this story about the cost of shoplifting to NZ businesses.
There are walk-outs everyday - our local supermarket is getting smashed.
Yet every article by our msm is written as if this offender is the victim and excusing her behavior.
Yip, the old mental health card was a foregone conclusion long before they announced it. Like she didn't know it was wrong. And every MP gets abuse these days, that is a terrible situation but it goes with the job unfortunately.
Kind of insulting to those in society battling with their own mental health issues that do not feel the need to commit crime against others.
Mind you, for people to commit crime there's generally something wrong in their head, that's a given, so not sure why it should be used as an excuse. It would be like a murderer trying to use the fact that they had this insatiable urge to kill people as a reason for leniency in sentencing.
I don't know, if your mental health problems cause you to be publicly humiliated and end your career I think that's a fairly serious issue.
Not an excuse, and not a reason to avoid punishment, but clearly a reason for the behavior.
Perhaps there's some semantic confusion going on. One person's mental health problem is another's shitty behavior. Whatever you call it, there's clearly an issue, she's been punished for it and perhaps criminal punishment still to come, and she has to deal with her compulsion.
if your mental health problems cause you to be publicly humiliated and end your career - I just don't buy the cop out that mental health caused her to steal 15k of clothing.
Yes, playing the mental health card will only work if other questions are answered first. After all she is an intelligent woman:
When did she first start thieving, and how much has she stolen? Was she doing it before becoming an MP? Is she going to fess up and repay those victims, or keep quiet?
What has happened to the things she has stolen...has she sold any of them for cash?
She took steps to hide her theft so why didn't she take steps to sort herself out before being caught? Did anyone else know and do nothing?
How do those Greens justify wearing such high end fashion ...a lot of hypocrisy there. Where is the statement thanking Scotties for finally putting a stop to her behavior despite the publicity they knew they would receive doing so.
The current lot are a long way away from Jeanette Fitzsimons.
she got caught stealing $15k
Some data suggests -
stores catch shoplifters 2% of the time
Average shoplifter caught one in every 100 incidents, another estimate is once every 48.
So $15k for 3 offences.
If the cops haven't done a search warrant on her home they are failing - she could have $100's of k in the wardrobe.
You prefer the explanation that a highly paid, easily recognisable individual that decides to steal high-end clothing is in a healthy mental state?
Even MSM was running diversion articles and opinion pieces. (one of her mates).
The clincher was of the video of the offence. Can not deny any further.
An interesting article on BBC the other day, US firms are dropping self serve registers. The cost savings of fewer employees is being offset by the increased cost of theft.
She didn't steal 3 times, she got caught 3 times. and according to that Marama Davidson, she steals because she was under pressure, and such a victim being MP, oh, and the Greens "has lost a colleague."
The Greens are indeed fortunate this blew up post rather than pre election. Surely by now they must realise that their perpetual harping on about being “holier than thou” is by now quite laughable. The higher you build your own pedestal, then the greater the fall.
Never trust people with such a "holier than you" attitude. They are usually the worst when it comes to their own behavior. And the Greens are a clear example of that - their hypocrisy is only matched by their incompetence.
The most pathetic of them all is Marama Davidson, who tried to justify Golriz Ghahraman by her usual tiresome identity politics and associated victim mentality, stating that one the major factors was the mental stress caused by being a "woman of colour" in a public role.
At least Golriz Ghahraman had the decency and personal dignity not to play the gender or race cards (contrarily to Marama, who does not even have the beginning of understanding of what the concept of personal accountability is all about).
I have been scathing of the Green Party here, I really detest them. Faux environmentalists far more focused on repressive left wing economic policy.
If you challenge them you are labelled a "hater" or sexist etc.
I really detest them..sounds like a hater to me?
Yes, and what is wrong with that? They actually inspire disgust.
The MP is now a former MP and that is the right thing.
The real shocker was the extended overlong interview with Shaw and Davidson which was all about poor Golriz, and the tragedy for her and how marvellous she had been.
Apparently the only victim was her.
The right thing for them to have done was say Golriz was wrong, she has gone. And it's out of their hands. One minute.
The other shocker being no comment/crickets about the other person in the 'lifting video who looks very much like another Green MP.
There's debate about that, missing a distinctive tattoo
Thanks.
there are plenty of small business owners under mental stress, someone stealing from them only adds to it. Sure she has MS don't deny it, but stop putting all the blame on that and try to divert the attention away from a crime.
Yes, but they don't experience the everyday hate of the sort gloating commenters here are recreating in a mild fashion!
Do the hard right haters experience the same I wonder?
I would think that they do!
We are all vulnerable victims!
I don't remember this degree of gloating over Falloons dick pic saga. Very quickly forgotten. Must be the demographic here?
DP
Generally gloomy data, but yet rates rise.. who would say...
Were folks talking about a Feb cut?
Hey, there's an article on property this morning, and you missed being the first one to comment on it! Is it because prices went up in December ?
No, I leave that to amateurs like you who would gloat at a 1%rise, when in fact that is just the remnants of the hype..
Hope you got your dose of opium
Parker flagged the introduction of Ruc's and National's Brown has confirmed the pricing. As a PHEV buyer I am outraged that Prius are not included.
Our Transport policy\taxing thinking needs to be re-examined. I'd like to know if National has thought out their thinking?\s
Phev's because of how they are engined, excluding the BMW i3 Rex engine, are heavier on Fuel usage. So a MG will pay the same $53 dollars as a BMWi3 because they are both plug=in's. Crazy.
I recall when small diesel cars were charged RUC's at the same level as RV's. The Govt priced out small deisel cars out of the market.
Is that their intention here. To price out PREV's?
I think you are saying that hybrids that are not plug in ones will not pay this Ruc tax. Which makes sense to me because they only use petrol. No power system electricity. They are economical. Similar to my Suzuki Alto which uses 4.8 l/100ks.
Yes that is what I am saying.
I am also leaving unsaid, the query why aren't the policy makers looking at a tax which taxes miles or K'd travelled.
"...a tax which taxes miles or K'd travelled."
= RUCs
I thought the Nats had mentioned a universal RUC system as part of their electioneering, so petrol prices would (theoretically) drop due to some taxes and levies being replaced by a RUC for petrol too. It's gone very quiet since then.
They still want that, but it can't be done overnight. We would need a much better system than the current RUC system.
With a petrol car you could put your rego on hold, not get any more wofs and run around Rucless....
Bit of a risk I suppose.....
PS. I am not advocating that people do this. Just saying that it could be done by some unscupulous people.
On RNZ today that is exactly what they are saying - taxing people on the amount of travel they are doing (RUCs). They indicated they indend to transition all vehicles over to it. Didn't say squat about dropping the taxes on petrol though, but politicians being what they are, expect those to stay the same while they just look for a way to impose another tax.
What they are also avoiding saying is taxing vehicles on the basis of the damage they cause to the roads. Under the Clark Government it was admitted that heavy trucks cause 90% of the damage to roads, but their road users charges do not recognise that. And since then the weight limits on those trucks has been increased! So trucks are effectively subsidised by everyone else.
I think it is obvious that moving to RUCs would result in the removal of fuel excise.
You'd think so Jimbo, but looking at the pollies history I tend to think there's less than a 50% chance of that happening if at all. I apologise if my cynicism is dripping out too much. But there was the call before the election about the government needing more tax income.
I would suggest that the PM needs to get his head around deficit funding for economically sustainable policies such as funding infrastructure.
RUC on my 1300kg 1.6l TD is the same as a 2500kg ute thanks to Key.
If we were being absolutely fair RUC charges should be linear and based on weight, footprint, emissions and economy. Could add source of energy.
RUCs should be for weight by km travelled only as they are used to fund the National Land Transport Fund. Emissions are best dealt with by an emissions tax (currently priced by the ETS) on the fuel used. Note this same tax applies for petrol and electricity just the electricity ETS component is so small due to our 90% renewable grid.
Sorry, what has John Key go to do with all light diesels being in the same RUC band, didn't that predate John Key by quite a way?
They should not be linear, they should very much be non-linear to account for the damage increases exponentially as weight increases. Perhaps they should increase exponentially for weight to match the damage they do.
And no, RUCs should not be tied to emissions, if your vehicle emits nasty shit, it doesn't stop emitting when it goes off the public road, or if its not road registered. Should the diesel powered equipment on a construction site get a free run for its emissions?
If you chuck a diesel generator on the back of your BEV, does that make it a PHEV and eligible for cheaper RUCs?
Obviously this is a stop gap measure, and I think it is fairly reasonable. There are some winners and some losers. Hopefully the move to be fully RUCs doesn't take too long.
Brilliant! How long will it be until we see and instance of that actually happening? LOVE it!
Well in the power industry there are concerns that the reliability of power in NZ will get way worse before it (possibly) gets better.
Williams Corp are selling their yacht (if Trademe is to be believed). Who's keen on an Interest.co.nz timeshare?
$6M / 365 = $16438 for 1 day a year each
You can probably double that to allow for upkeep and depreciation.
Considering GDT, what affect is the attempted targeted maritime blockade by ansar allah in defiance of the Gaza genocide, having on global commerce and trade? BDS genocidal maniacs.
US Army General Sims is no kidder when he declares: “we are not going to be messed with here”. https://johnhelmer.net/the-us-israel-
Absolutely insane warmongering clip by the UK defence secretary: "All around us our enemies are preparing... The era of the peace dividend is over... Britain can lead the world in fighting for freedom..." He seems giddily excited as he announces WW3 is upon us. These people truly scare the living hell out me... Also the "era of the peace dividend" is a particularly cynical thing to say when you're Britain and you're just out of 20 years of disastrous military campaigns that killed millions in the Middle East and Afghanistan... The lesson isn't some 19th century battlecry of "more war so we can lead the world to freedom" but rather how do we move to an era of diplomacy, multipolarity and peace. Link
The tone is interesting but is interesting that the critics fail to recognise the biggest obstacles. "The lesson isn't some 19th century battlecry of "more war so we can lead the world to freedom" but rather how do we move to an era of diplomacy, multipolarity and peace." When those creating the current problems do so under a banner with the war cry "Death to the Infidels" and when you look at the societies they create, then we are literally defending freedom.
Diplomacy was tried for decades around Israel, undercut by local politics admittedly, but when diplomacy de-clawed the PLO then splinter militant Islamic organisations appeared.
But today the 'peace dividend' is well and truly dead, and national leaders do need to be taking a serous look at their defensive capabilities and national resilience. The Middle East, Europe (Russia) and China are all areas of concern to be considered. Passive defence forces like ours no longer cut the mustard.
Well said Murray. Whatever the rights or wrongs of the past, when push comes to shove human nature is that you pick a side that protects you way of life and culture.
Such ignorance from many in the West supporting the groups that would slaughter them given half a chance - as they did on 7 Oct.
"These people truly scare the living hell out me..."
Personally, I'm more scared of the people that initiated the invasions.
Looks like the RBNZ stepped in over Christmas to save a plummeting NZD - $44bn of trading over about 10 days. Was this covered anywhere? Would like to understand the reasons a bit more.
Re: RBNZ FX swaps
RBNZ lends NZD (borrows USD) when short-term interest rates move higher RBNZ borrows NZD (lends USD) when short-term interest rates move lower Page 7 of 15 PDF
Almost certain these are not pure fx transactions and simply funding swaps - so no spot implication.
- The Fed targets PCE - The Fed historically focuses on core inflation - The Fed explicitly mentions 3m and 6m annualized trends: they won't wait for YoY, but look at recent inflation trends - The 6m annualized trend of core PCE is 1.9% FinTwit: ''the Fed won't cut'' Link
In Canada, December inflation rose to 3.4% from 3.1% in the previous month...
Rate cut later this year though, right boys? #TeamTransitory
I am starting to agree there may not be a rate cut this year. Even if inflation is within target, that doesn't mean the RBNZ will cut rates. They should only cut rates if inflation is heading below 2%, and that seems unlikely any time soon. They no longer have a full employment mandate.
You’re onto it Jimmy. There never were going to be any interest rate reductions this year. 95% of those saying there will be, don’t really believe it, and are simply playing their own little manipulation games. Embarrassing. If I’m wrong (which hardly ever happens, if ever at all. Can’t think of a time it has occurred) [ can you have 2 sentences in one set of brackets? ]. Anyway, if I’m wrong, we’ll just go back into the same messy up and down cycle of ecstasy followed by doom. What’s the actual issue with leaving rates at a very reasonable 5-6ish % for ever?
"If I’m wrong (which hardly ever happens, if ever at all. Can’t think of a time it has occurred) [ can you have 2 sentences in one set of brackets? ]."
You will be wrong for the first time ever then, lol, there will be OCR cuts in 2024 !
I tell my wife that I am never wrong too!
There is around an 18mth lag between an OCR change and the effect being felt. So you think we should wait until inflation is heading below 2% to make a change that won't be felt for a year and a half?
Meanwhile in Davos, a senior Chinese official said the 2023 GDP economic expansion would come in at 5.2% for his country.
This probably is the biggest economic story of the 21st century: The transformation ("Sino-forming") of the Global South by China. Billions of people are being absorbed into China's economic sphere. Presently they are poor, so the aggregate impact is slow to register. But they will be less poor soon and the macro effect will be gigantic. https://americanaffairsjournal.org/2023/11/broadband-business-formation-and-economic-growth-in-the-global-south-assessing-chinas-impact/ @GordonGChang @MikeforWI @oren_cass
: We are standing in front of a tsunami. Why don't we have a plan to compete with China for economic influence in the Global South? Link
https://www.cbsnews.com/news/real-estate-owners-saddled-with-half-empty…
Real estate owners saddled with half-empty office buildings as hybrid work trend continues
"Looking for signs the U.S. economy can continue to stave off a recession? Avert your gaze from commercial real estate. City office buildings are in trouble. For a century, the towers have been propped up by two pillars. One, workers filling the buildings all week. Two, money flowing freely in the form of loans to borrow, buy, and build. Those days are over. As hybrid work hardens from trend to new normal, office occupancy rates have hit all-time lows. Meanwhile interest rates have spiked to historic highs… and now the mortgage comes due: $1.5 trillion in commercial real estate loans expire in the next two years. It's enough to make you rethink the future of cities. We criss-crossed Manhattan, talking to players big and small, about a sector rocked to its foundations."
Covered by Maverick of Wall Street quite well too. One of a few things to watch play out this year.
The Upcoming Collapse Of Real Estate
Worth mentioning that the NZ-based REITs I follow are still reporting occupancy in the high 90%s - I don't think we share the same dynamics as the US (at least, not yet). For example, Argosy last reported 98.4% occupancy, Goodman 99.6%, Stride 96%.
Worth mentioning that the NZ-based REITs I follow are still reporting occupancy in the high 90%s - I don't think we share the same dynamics as the US (at least, not yet). For example, Argosy last reported 98.4% occupancy, Goodman 99.6%, Stride 96%.
The risks are in the banking sector and the associated fallout. And remember what they say at the water cooler about you can't go wrong with bricks and mortar.
National Bureau of Economic Research suggests that 14% of the $2.7 trillion commercial real estate loan market in the US— and 44% of office loans — currently carry outstanding loan balances higher than property values and are at risk of immediate default.
https://commercialobserver.com/2023/12/report-44-office-loans-14-of-all…
Some epic charts. No wonder the kids are turning socialist. Wake up National!
"The social and political ramifications of unaffordable housing"
http://houstonstrategies.blogspot.com/2024/01/the-social-and-political-…
http://pc.blogspot.com/2024/01/housing-its-just-complete-cultural.html
You seriously believe National will make any changes to help younger people into their first home..dreaming mate!
You're right. I have zero faith in them. Lessons from history. I struggle to find anyone to vote for so I guess will have to keep dreaming!
Could we get back to climate denial? I becoming uncomfortable agreeing with you. ;-)
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