Here's my summary of the key events overnight that affect New Zealand, with news of some major Chinese data today.
But first, Wall Street is rising. The Dow index is at 18,000, the first time at that level since July 2015.
The New York Fed boss commented overnight that American economic conditions are "mostly favorable", although he confirmed their policy would remain cautious because of threats to the global economy.
China has agreed to scrap export subsidies on a range of products in a step to reduce frictions in bilateral trade. Facing a WTO challenge, China agreed to end a program which provides export subsidies to Chinese companies in seven economic sectors, including textiles, light industry, specialty chemicals, medical products, hardware, .advanced materials and metals, as well as for agriculture. This u-turn comes as the country makes increasing efforts to reduce surplus manufacturing capacity.
Staying in China, prices for new homes in the country’s biggest cities are rising sharply, led by the southern boomtown of Shenzhen, where prices jumped a staggering +60% in March, compared with the same month a year ago. The real estate resurgence comes as growth across the rest of the economy is slowing, providing a welcome and significant boost, and real estate is now the fastest growing sector in their economy.
That data is for March. In April the giant boom in China’s US$3 tln corporate bond market is starting to unravel. Bloomberg is reporting a fresh wave of defaults at state-owned enterprises which is spooking investors in China’s yuan-denominated company notes who have driven up yields for nine of the past 10 days and triggered the biggest selloff in onshore junk debt since 2014. Local issuers have canceled more than US$9 bln of bond sales in April alone, while Standard & Poor’s is cutting its assessment of Chinese firms at a pace unseen since 2003.
In New York the benchmark UST 10yr yield is a little higher today at 1.78%.
The oil price is now just under US$40/barrel in the US, while Brent is now just under US$43/barrel. It fell sharply following the failure of the OPEC talks but has grained as markets focus on a Kuwaiti oil workers strike.
The gold price is unchanged at US$1,233/oz.
And finally today, the NZ dollar opens at 69.4 US¢ and its highest level against the greenback since June 2015, at 89.7 AU¢, and at 61.4 euro cents. The TWI-5 index is now at 72.2.
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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What happens if global sanctions against China?
http://www.telegraph.co.uk/news/2016/04/18/is-war-with-china-inevitable/
The New York Fed boss commented overnight that American economic conditions are "mostly favorable", although he confirmed their policy would remain cautious because of threats to the global economy.
On the regulatory side, there is considerable good news. In particular, substantial progress has been made in strengthening the global banking system. Capital and liquidity standards for internationally active banks have been raised significantly. This should reduce the risk of failure for these banks. Also, the financial system is being made more resilient and robust. For example, the global set of principles for financial market infrastructures has been updated and strengthened.
There is little doubt as to Wall Street (and London) shrinking but nobody seems to be able to come up with an explanation for it. Typically willful blindness is the reason, as investment banks no longer want the duties but that just isn’t consistent with what is supposed to be a roaring economy. If anyone were to make out under such a situation, it would be investment banks especially those with heavy FICC infrastructure already in place (“global franchises”). The contradiction, then, is how investment banks are purposefully avoiding Janet Yellen’s once-in-a-generation invitation. Read more
How can this be so?
Real estate spruiker John McGrath has blamed an unforeseen low volume of listings and sales in the first half of April, particularly in the north and north-western suburbs of Sydney, which has led to an earnings downgrade for the 2016 year.
McGrath, which only listed in December, has seen its share price fall by as much as 31 per cent when it came out of a trading halt. The share closed down 40¢ to 90¢. They last traded on Thursday at $1.30.
As part of going public, McGrath bought the Smollen Group, which focuses on Baulkham Hills, Castle Hill, Eastwood, Epping and Kellyville. Since December, the number of listing in those areas have declined by as much as 25 to 30 per cent, reflecting the skittish nature of the underlying housing market.
http://m.smh.com.au/business/property/mcgrath-shares-crash-after-resumi…
NZ Herald ran a story on Auckland's medium to long term transport plans, that I first saw on my smartphone.
http://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=11624656
There was a stylised map included, that looked very interesting, but impossible to read in detail on a smartphone.
Now on a laptop, and on the Auckland Transport website, the map seems to have disappeared.
It is pleasing that there is apparently a plan, and it would be good to understand it in some detail.
Either there has now been a technical glitch, or I suspect, someone with initiative had seen comments on here and elsewhere, and helpfully released the story. This hypothesis then has a bureaucrat stepping in to eliminate any actual useful communication with the public, and no doubt ticked off the person with initiative, as that shouldn't be encouraged.
I wonder which scenario has played out.
There's a copy of what seems to be the same map here : http://transportblog.co.nz/wp-content/uploads/2015/05/AT-Rapid-Transit-… (based on my fuzzy memory of spotting the map on the Herald web site this morning it looks basically the same).
It would seem however that there's not so much a plan, as a discussion about having a meeting in order to propose some consultation about coming up with a plan...
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