Here's my summary of the key events overnight that affect New Zealand, with news the IMF has branded China the main risk to global financial stability.
But first, in the US new orders for durable goods fell in February, and business spending on capital goods was much weaker than initially thought. Those durable goods orders fell -1.7% as demand fell broadly, reversing January’s downwardly revised +1.2% increase. Orders have declined in 14 of the last 19 months. The report added to weak consumer spending and trade data and indicated American economic growth slowed further from the +1.4% pace in Q4-2015. Estimates for first-quarter 2016 GDP growth are currently below a +1% rate.
Yesterday's exposure of details of how some rich and famous avoid paying taxes and launder money gathered steam with startling revelations about Vladimir Putin. Also exposed in the leak include the prime ministers of Iceland and Pakistan, an alleged bagman for Syrian President Bashar Assad, a close friend of the Mexican President and companies linked to the family of Chinese President Xi. Add to those the monarchs of Saudi Arabia and Morocco; Middle Eastern royalty; leaders of FIFA, and 29 of the 500 billionaires included in Forbes Magazine's rich list. Add to that 61 relatives and associates of current country leaders, and 128 current or former politicians and public officials. No revelations of New Zealanders - yet.
China is the principal risk to global financial stability, according to the IMF, which says any shock to China's reported growth will have a big impact on world equity prices. In its latest Global Financial Stability Report they say the risks of financial contagion from China are still relatively low, but its economic news will have a growing influence on global equities.
And yesterday's leak of IMF-German tensions over Greece has forced the head of the IMF to brand the possibility 'nonsense', leaving the IMF trapped at the table. And the Greeks are now confident this latest review will be wrapped up in about 2 weeks.
In New York the benchmark UST 10yr yield is unchanged from Friday at 1.77% but is falling after a brief rally. At home, wholesale swap rates have sunk to new historic lows while at the same time risk premiums continued their slide. The combination opens up more of a chance mortgage rates will keep dropping - and savers will feel even more interest rate pressure.
And not only are CDS spreads for local investment grade corporate debt falling, they are for our sovereign debt as well. Markets actually rate New Zealand Government debt with less of a risk premium than for Australia, a benefit that has been in place since mid 2014.
The oil price is sliding too and is now well under US$36/barrel in the US, while Brent is well under US$38/barrel.
The gold price is down too, now at US$1,219/oz.
And the NZ dollar will start today lower at 68.4 US¢, at 89.8 AU¢, and at 60 euro cents. The TWI-5 index is at 71.5 and still within this remarkably tight range we have seen all year.
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 ».
Daily exchange rates
Select chart tabs
15 Comments
Putting it all together, the world is entering another day of utter madness.
The US Fed does not manage to print jobs, politics is at its most corrupt since the Roman empire, China is going down the drain after failing to print jobs, Greece is playing one arrogant idiot against another, and John Key's latest skilled immigration import are imams from Egypt (no, not reported here) while he is continuing his wet dreams of Switzerland of the South cordoned from Muslim terrorism.
Has the world gone completely mad? And why is this dummy of a man our PM? Helen Clarke is like Lorde, ok, that is encouraging. Maybe she can then sing of a "humanitarian catastrophe" and call "all sides to show restraint".
'And why is this dummy of a man our PM?'
Because elections in NZ are rigged to ensure only candidates and parties with the 'correct outlook' get exposure and the mainstream media ensure none of the crucial issues are ever discussed. Also, most New Zealanders are too ignorant, complacent and lazy to do research themselves and thereby become informed about what is actually happening.
Fair summation. I've never heard an factual debate on third party polices, there is only ever derogatory remarks and bullying. The irrational hatred of the greens for simply wanting to see a planet existing into the next generation is current. Social credits willingness to not see the current monetary system as rational was previous.
Well this woman from Utah started a facebook page and is really hurting Monsanto.
Saved by the GFC, who would have thought?
Mortgage debt has doubled since the Australian Prudential Regulation Authority (APRA) carried out the confidential search in 2007, and experts fear the risks identified in the secret report are now far worse.
APRA's report, which was never published, examined the impact of lower lending standards adopted by the banks on credit growth and the ability of borrowers to service home loans, based on examination of tens of thousands of loans made in 2006.
http://mobile.abc.net.au/news/2016-04-04/apra-report-warned-lax-lending…
Sounds like the Oz regulator is tearing their hair out in trying to "communicate" with the banks, hence this release.
The collective national income fails to meet the demands of supporting the next rising asset bubble.
It produces the Catch-22 of current cycle “stimulus” – policy expects that increased borrowing will result from low interest rates alone, and that will lead to more jobs and thus more borrowing and then more jobs again; households are instead waiting for the jobs and actual income gains first before borrowing and then leading to more jobs. Without the borrowing at the front as policy expects, there just aren’t any jobs (at the margins), so it isn’t surprising to find so little actual borrowing and repeated failure in “stimulus.” Read more
Is this the blowback - a stampede into non-OBR cash equivalents? New Zealand 10 year government bond yields have fallen twice as much as US T10s since the March 23, 3.105% yield high.
That's a whopping annualised 65.89% dirty price return over 12 days- some are despearate to secure the 4.5% coupon that the much poorer tax payer is stuck paying the owner of these IOUs.
>> Putting it all together, the world is entering another day of utter madness.
Been in that state for years... highly probably losses of 25Tn from doing the same thing and expecting different results.
http://www.theguardian.com/environment/2016/apr/04/climate-change-will-…
From the article:
'Scientists have shown that most of the coal, oil and gas reserves such companies own will have stay in the ground if the global rise in temperature is to be kept under 2C.'
Since the globalised economic-financial system cannot function without the consumption of fossil fuels at the present rate (many would argue that ever higher rates of consumption are necessary in order to achieve growth), no action to curb emissions will be taken and the accelerating meltdown will continue, rendering the 2oc target unachievable within a few years (if not already unachievable)..
Accelerating meltdown is already underway; 145,000 km2 of ice cover was lost in the first three days of April, continuing the late-March trend.
It is still too early to say whether the Arctic will have no sea ice in September 2016 but that looks increasingly likely.
http://nsidc.org/arcticseaicenews/charctic-interactive-sea-ice-graph/
How far above high tide is Auckland International Airport?.
.
Really? And what 'different story' is that? (bearing in mind there is currently less ice in the Arctic than any of the years you mentioned and it is melting at an unprecedented rate)
Day millionkm2.. Losskm2
24th 14.523
25th 14.521.......... 2,000
26th 14.482.........39,000
27th 14.446.........36,000
28th 14.413.........33,000
29th 14.375.........38,000
30th 14.320.........55,000
31st 14.280.........40,000
1st 14.241.......... 39,000
2nd 14.193..........48,000
3rd 14.138.......... 55,000
Could it be that the Parliamentary Commissioner for the Environment was basically on the right track but had underestimated the rate of change?
http://www.interest.co.nz/news/80848/parliamentary-commissioner-environ…
Here is another graph and commentary for you to attempt misinterpret if you feel inclined..
'What can I say? This year's trend line is not only way outside of the percentile zones, it's falling off the chart.'
Sadly no one is considering what is happening...
Abrupt Climate Change.
Even the Scientists are not keen to talk about it; as its very very very hard to say when it happens (apart from retrospectively)... People in the field even dumb down the "rate" is is so f****ing frightening.
BUT we know it does.
We welcome your comments below. If you are not already registered, please register to comment.
Remember we welcome robust, respectful and insightful debate. We don't welcome abusive or defamatory comments and will de-register those repeatedly making such comments. Our current comment policy is here.