Here's my summary of the key news over the weekend in 90 seconds at 9 am, including news about the rise in the importance of the Chinese currency even as its exchange rate falls.
The recent sharp decline in the value of the Chinese yuan is worrying its trading partners.
American officials and politicians along with some in other Asian nations think China is intentionally keeping its currency below its true market value to give its exporters an edge over competitors. When the words 'currency manipulation' start to be be used again by its rivals - especially the US - we can expect to hear more about 'trade wars' again.
Maybe one reason China's rivals are worried is that its currency could quickly become a key reserve currency.
In an astonishing conclusion in an ANZ report to be released today, ANZ is predicting the liberalisation of China's financial system will unleash a flood of capital into global bond and equity markets and Asia's financial system will be larger than the US and Europe combined by 2030. It will be "a tectonic shift", they say.
Later today we get the closely watched flash PMI data for China for March.
At the end of last week, markets closed slightly down. Gold and oil rose marginally and benchmark UST 10 year yields were up to 2.74%. Yellen's signal that the Fed is starting to think about rate rises next year kicks off more bond prices reassessments. Bonds may be in for a hard time.
Our swap rates took a breather on Friday, but their future direction now depends a lot on the size of the 'rush to fix' mortgages ahead of the expected regular hikes in the OCR.
Ahead this week, there is little on the data front, but Fonterra releases its interim results on Wednesday and with it an update of the expected payout.
The NZ Dollar had an uneventful weekend and starts the week at 85.3 USc, at 94.0 AUc and the TWI starts at 79.9.
If you want to catch up with all the changes yesterday, we have an update here.
The easiest place to stay up with today's event risk is by following our Economic Calendar here »
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10 Comments
Hope the ANZ is right, for all our sakes
http://www.businessinsider.com.au/jpmorgan-warns-anz-on-its-asia-invest…
AndrewJ.... yeah..I totally agree...
For an outsider, I think China is unknowable... AND.. based on their Money Supply growth and Ponzi style investment.... it seems a very dangerous place for an Australasian Bank to be... I hope the ANZ is only dipping its toe in the water..!!
B for Bubble.
and this about ANZ
The return on equity from the bank’s Asia business was 10 per cent in the first half of the 2013 financial year compared to 22 per cent rate for its domestic business, JP Morgan found.
seems to be shown here
http://www.stuff.co.nz/business/money/9859472/Kiwis-pay-extra-high-mort…
Kiwi home buyers pay more for their mortgages than most of the rest of the world.
as seen from AJ link, the bank earnings are good in OZ/NZ compared, and that margin layer (choke point/system constraint) it would appear makes its expensive here.
second example: NAB and its woeful British sub's.
market renovation:
Australia's banks appear to have lobbied for the watering down of Labor's financial advice reforms in secret.
Freedom of information inquiries by Fairfax Media reveal that 57 individuals and organisations took the opportunity to comment on the Coalition's plans to amend Labor's legislation. Seven asked for their submissions to be kept secret.
Not one of the big four banks or AMP is included in the list of 50 entities happy to have their submissions published.
The big four and AMP are the biggest beneficiaries of the changes authored by then assistant treasurer Arthur Sinodinos, operating vertically integrated businesses in which advisers and sales staff are in a position to push their own firm's products. The changes would allow the banks and AMP to reintroduce commissions and volume bonuses for advisers and sales staff so long as the advisers made it clear they were providing general rather than personal advice.
Labor's legislation abolished commissions, volume bonuses and soft rewards such as overseas travel for ''training''.
Read more: http://www.smh.com.au/business/banks-stay-out-of-limelight-in-push-for-advice-changes-20140323-35box.html#ixzz2wp5zb3eT google he: Arthur Sinodinos
Oh. There is a lot more to it
Sinodinos was a Director and Chairman of a company Australian Water Holdings that, during his tenure had 10 employees while at the same time employing the services of 5 lobbyists
Finance Minister Greg Pearce complained he was being "over lobbied" by Sinodinos, Di Girolamo and Photios. (the mediterraneans)
http://www.afr.com/p/national/arthur_sinodinos_and_the_surreal_yq8DpCTr…
Here Michael West is on fire
about how the Powerful continue to triumph over the powerless
http://www.smh.com.au/business/powerful-continue-to-triumph-over-the-po…
So the ANZ has reached a point where they have taken the NZ and OZ market to such dizzying heights of debt, they need to move on to China? I do hope they have Blackadder and Steptoe in their employ, they will need a weasels cunning plan and shiftiness beyond compare to beat the chinese at their game at this stage of the 'play'
I read an interesting piece re the OCR
Graeme Wheelers action is itself inflationary, as the increase in the cost of money feeds immediately into prices/ costs of everything.
He has , according to the piece , set off a chain of events , that he can only stop by doing more of the same .
The author explained how increasing the OCR or cash rate is a pre-cursor to inflation .
He postulates that money is like any other commodity , expect that unlike a can of beans or a barrel of oil , there is no free market in money.
Instead the price of money is fixed by the Central Bank .
Increasing the price of money (OCR) rapidly or immediately increases costs for everyone from manufacturers , to landlords , to food growers / producers , who increase their prices to maintain their margins ( or survive) and then as a direct consequence their response feeds into the general level of prices.
The world has gone crazy,
Australian OTC Derivatives Markets: Insights from the BIS Semiannual Survey
http://www.rba.gov.au/publications/bulletin/2012/dec/5.html
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