Here's my summary of the key events over night that affect New Zealand, with news of clearer signs of interest rate changes on the way.
In the US, clear signals from Fed deputy Fischer, and voting member Lockhart both indicated that they will start a long and slow program of raising their policy rate at their next September meeting.
In China, a major shake-up of its vast State-owned enterprises is apparently underway in an attempt to modernise them and get them to operate in a way that meets their operating costs. The new ability to 'hire and fire' based on the enterprises' needs may cause some social unrest.
The slowdown of economic activity in China has meant that they are no longer accumulating reserves. In fact, they now seem to be using them to support their 'transition'. The back-story is that the bond markets have taken this in its stride.
In fact, interest rate rise pressure is not only coming from the US Fed, Chinese corporates are now paying a premium to borrow.
In Russia, their GDP shrank -4.6% in the second quarter from a year earlier after a -2.2% fall in the first quarter, the Federal Statistics Service in Moscow said overnight. This was a bigger fall than analysts were expecting.
In New York, the UST 10yr yield benchmark has risen in late trading today and is now at 2.22%.
The oil price has risen marginally and in the US, is now currently just below US$45/barrel, but Brent crude is now just back above US$50/barrel. But the move is mainly due to a major outage at the huge and sometimes troubled BP refinery at Whiting, Indiana. And Japan is getting ready to wean itself back off fossil fuel with a restart of its nuclear power generating capability.
And the gold price has jumped US$10/oz, now at US$1,103/oz.
The New Zealand dollar starts today basically unchanged at 66.2 US¢, at 89.3 AU¢, and at 60 euro cents. The TWI-5 is now at 70.8.
If you want to catch up with all the local changes yesterday, we have an update here.
The easiest place to stay up with event risk today is by following our Economic Calendar here »
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3 Comments
http://www.bloomberg.com/news/videos/2015-08-10/alan-greenspan-sees-pen…-
Alan greenspan talks about interest rates and the US economy. And asks what is the optimum interest rate?
Great Keith Woodford article re Fonterra and its corporate myopia, in Granny Herald: http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=114…
For all the blather about winding back dairy, it's more about using the production resources we have, more wisely. And for the 12-month milk supply that KW points out will be needed (year-round, no milk curve) there's a ready answer: barns and robots.
Barns and robots would also solve the nitrate leaching issues and make the farms electricity generators if you throw in a biogas system. Of course with robots no need for migrant workers - NZ would become a utopia! With no nitrate leaching and no immigrants what would people whinge about all day? Even the weather couldn't be whinged about!
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