sign up log in
Want to go ad-free? Find out how, here.

US jobs growth disappoints, wages higher; China trade sags; massive Saudi reform; Aussie election July 2; UST 10yr yield 1.78%; oil unchanged, gold up; NZ$1 = 68.4 US¢, TWI-5 = 71.6

US jobs growth disappoints, wages higher; China trade sags; massive Saudi reform; Aussie election July 2; UST 10yr yield 1.78%; oil unchanged, gold up; NZ$1 = 68.4 US¢, TWI-5 = 71.6

Here's my summary of the key events over the weekend that affect New Zealand, with news that brisk hiring in the US slowed, but wage gains picked up.

US non-farm payroll data disappointed markets with its headline results. They added 160,000 jobs in April - undershooting expectations and well below the 208,000 created in March. Data for the prior two months were revised marginally lower as well. The jobless rate remained at 5% but average hourly earnings rose +2.5% and that was higher than markets were expecting. It is this healthy rise in pay that will catch the Fed's attention and indicates strong rises in real incomes, and likely to underpin spending growth. It will give the Fed cover to push ahead with another rate rise.

China’s exports unexpectedly fell by almost -2% in US dollars in April as weak demand continued to weigh on the world’s second-largest economy, though the results were an improvement over the first quarter (they were up +4% in yuan). April imports dropped -11% in US dollars from a year earlier (but down only -6% in yuan), falling for the 18th consecutive month. That suggests their domestic demand remains weak despite a pickup in infrastructure spending and record credit growth in the first quarter.

In a series of sweeping royal decrees over the weekend, Saudi Arabia restructured most of its government bodies in the first moves of an ambitious plan to chart a new direction for the country. The decrees were among the first concrete steps in the plan, which was announced late last month. The plan, known as Saudi Vision 2030, is intended as a guide for the country’s development. It aims in part to reduce Saudi Arabia’s heavy dependence on oil, diversify its economy and improve the quality of life for Saudi citizens. The plan has a remarkable similarity to a major McKinsey report on the transformation the country needs.

Today's release of more Panama Papers reveals that ANZ appears in more than 7,500 of them reflecting the bank's extensive network in New Zealand, the Cook Islands, Samoa and Jersey. It has also revealed that a former board member of the Reserve Bank of Australia shielded his income from the Australian tax authorities. So far, no evidence any of this relates to New Zealanders.

And there is to be an Australian general election on July 2, with the Turnbull government seeking a fresh mandate after the leadership change nearly eight months ago. It comes as their economy faces voter uncertainty after the end of their long resources boom.

In New York the benchmark UST 10yr yield is slightly higher at 1.78%. The sharp falls we saw at the start of Friday's local wholesale interest rate swap market built to leave almost all terms with all-time record low rates, so they start today lower and flatter than at any time in the past 15 months.

The oil price is unchanged at just over US$44/barrel in the US, while Brent is now just over US$45/barrel.

The gold price is up US$17 to US$1,290/oz.

And finally today, the NZ dollar is not much changed, still at 68.4 US¢, at 92.8 AU¢, and at 60 euro cents. The TWI-5 index is now at 71.6. Yes, its still in the range it has been over the past eight months.

If you want to catch up with all the local changes on Friday, 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

Daily benchmark rate
Source: RBNZ
Daily benchmark rate
Source: RBNZ
Daily benchmark rate
Source: RBNZ
Daily benchmark rate
Source: RBNZ
Daily benchmark rate
Source: RBNZ
Daily benchmark rate
Source: RBNZ
Daily benchmark rate
Source: RBNZ
End of day UTC
Source: CoinDesk

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.

7 Comments

“The kingdom can live in 2020 without any dependence on oil … The Saudi addiction to oil has disturbed development of many sectors in past years,” the deputy crown prince said to Al Arabiya'

Sure. And can live without water or food.

Up
0

It is this healthy rise in pay that will catch the Fed's attention and indicates strong rises in real incomes, and likely to underpin spending growth. It will give the Fed cover to push ahead with another rate rise.

A marginalised and increasingly desperate Janet Yellen might see it that way, but not me and those ~+45 million SNAP (Supplemental Nutrition Assistance Program) participants.

This week, the BLS updated the index (total hours worked) to include March 2016 (while making minor revisions to last quarter). With another quarter in the books, the index rose to 111.767. That means the total gain in total hours since the second quarter of 2000 is now 2.31%, adding upon the 1.94% growth through Q4 2015. Despite a 19% increase in the total potential labor pool (civilian non-institutional population), actual labor utilization has barely budged above a level first reached just about sixteen years ago! Thus, the Fed declares almost "full employment" today even though there are still more than 45 million Americans receiving SNAP assistance compared to the 17 million that did at "full employment" in 2000. They may occupy the same academic planet, but these are very different worlds. Read more

Moreover, Apple shareholders don't see your real incomes rise claim turning into sales any time soon. Read more

Up
0

Or there is this ...

Up
0

Canada's problems get worse as time goes by:

'Alberta wildfires expected to burn for months, threaten oil sands mines '

https://www.rt.com/news/342257-alberta-wildfires-months-oil/

Recent CO2 data should be sending shivers down everyone's spine.

April average CO2 :April 2016: 407.57 ppm versus April 2015: 403.45 ppm. Up 4.12 ppm.

Also, recent Arctic ice cover data should also be generating extreme concern: 11,912,579 km2(May 7, 2016)

https://ads.nipr.ac.jp/vishop/vishop-extent.html

But for some strange reason most people make no connections and seem completely incapable of grasping what this all portends..

Up
0

Trusting. Who. Using words we can understand.

“It’s like the Star Wars scene: you have the tax dodgers in one corner, the arms dealers in another, the kleptocrats over here. There’s also those using tax havens for money laundering, or fraud.”

Henry, a former chief economist at consultancy McKinsey, told the Guardian his research underlined the fact that tax-dodging was not the only motivation for using tax havens – criminals and kleptocrats also made prolific use of their services to keep their wealth secret and their money safe.

He said the list of users of offshore jurisdictions was like the cantina scene in Star Wars, where a motley group of unsavoury intergalactic characters is assembled. Henry said

https://www.theguardian.com/business/2016/may/08/offshore-finance-emerg…

Up
0

Here is a current example of how off shore structures within a large corporate get to influence the outcome.

Think thru' large OS groups that have bought up large (infrastructure, operations and land). As mentioned years ago, try taking your overdue invoice, claim for employee entitlements or superannuation invested bond redemption cert. to any where on Main Street, Waterfront Drive or Nibbs Street in Road Town (18°25′53″N 64°37′23″W).

"Peabody's official position is that its creditors have no direct security interests in the Australian assets. This is akin to Peabody saying it does not hold direct interests in its Australian mines."
Technically this is true. Peabody's opaque offshore dealings in low tax jurisdictions means, from a legal point of view, the parent company indirectly owns its Australian operations.

Securing the 2013 $US2.85 billion facility with the Australian first-tier equity was made possible by two Gibraltar subsidiaries that hold and control Australian assets. The first Gibraltar subsidiary signed a pledge to Citibank for the shares of the second. The second Gibraltar subsidiary is referred to in Peabody's SEC filings as 'a holding company' for the Australian assets.

The first Gibraltar subsidiary is named as a debtor in the US bankruptcy motion alongside the US parent company Peabody Energy Corporation. That Gibraltar subsidiary seeks protection from Gibraltar bankruptcy laws, presumably in the hope that favourable US bankruptcy procedures will apply to it.

There is a third Gibraltar-based subsidiary involved. Documents from the Australian securities regulator tell us the third Gibraltar entity holds the first-tier equity of the Australian holding company.
The remaining second-tier equity in the Australian holding company is held by yet another Peabody subsidiary domiciled in the Netherlands.

With this devilishly complicated structure, who could possibly tell which creditors may seek to push their security home and exert a claim over Peabody's Australian assets?

What we do know is that Chapter 11 is about restructuring, not necessarily winding up. And in a restructuring process, creditors are often asked to take a hair-cut so the beleaguered group can trade out of its troubles. Mine rehab obligations will be part of this negotiation. This is why it is so vital that the full financial position of Peabody's operations here and its precise exposure to bankruptcy is made known and understood by government. Thousands of jobs depend on it.

Read more: http://www.smh.com.au/business/comment-and-analysis/coal-woes-push-peab…
Follow us: @smh on Twitter | sydneymorningherald on Facebook

Up
0