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

Eyes on US labour data; China's cities tackle housing frenzy; Canada doubts new taxes moved BC's market; Aussies cheat on mortgage applications; UST 10yr yield climbs to 1.74%; oil up, gold down again; NZ$1 = 71.5 US¢, TWI-5 = 75.2

Eyes on US labour data; China's cities tackle housing frenzy; Canada doubts new taxes moved BC's market; Aussies cheat on mortgage applications; UST 10yr yield climbs to 1.74%; oil up, gold down again; NZ$1 = 71.5 US¢, TWI-5 = 75.2

Here's my summary of the key events overnight that affect New Zealand, with news many mortgage appliers stretch the truth on their loan applications.

But first, the number of Americans filing for unemployment benefits unexpectedly fell last week, again near a 43-year low. And the number of job layoffs is running -25% below the same level a year ago, even though they rose from the prior month in line with seasonal changes. Their labour market data seems likely to support a Fed rate hike, but actually, tomorrow's non-farm payrolls data will be the more important data-set than today's indicators. Markets expect a +170,000 rise.

The US presidential campaign has hardened attitudes about global trade and immigration issues - especially as we read about them in the media. But what do actual Americans think about these ideas- are they as polarised as reported, or are they even buying the 'fear' campaigns? It seems not. An interesting survey is out on these issues, and it is worth a read. Most Americans are still relaxed about immigration, it seems, and still think an integrated world is a good thing. Bluster and bullying may be the subject of reporting, but reason seems to be intact among most American voters.

The UN's food agency the FAO says that wheat and rice prices are set to stay low as harvests and yields hit new all-time records.

In China, they are moving to quell their housing market froth, city by city. Last week we reported on Beijing's actions. Now, a total of 19 large Chinese cities have rolled out specific policies including higher mortgage downpayments and home purchase restrictions to curb speculative housing purchases in the past week.

In Europe, we have had a "no comment" from the German Finance minister - but not a rejection - as to whether the German government would step in to rescue Duetsche Bank. This is a significant change from Angela Merkel's earlier outright rejection of the idea. The IMF's tough warning on systemically important global banks may be focusing minds in Berlin.

In Canada, their housing agency is casting doubt on whether the new taxes and restrictions have 'caused' the Vancouver market to retreat. They say the trend started well before these latest regulatory actions came into play, and that the turn-down is just part of a normal market reaction.

In Australia, a survey out yesterday shows that more than one in four people who apply for a home loan "stretch the truth" on their application forms and documentation. The number is higher in NSW and Victoria, and the number is higher when the application goes through a mortgage broker. We may accuse politicians of 'stretching the truth' but it seems the flaw is deeply embedded in their constituents as well.

In New York, the UST 10yr yield has risen again today and is now at 1.74%.

The US benchmark oil price is a little higher too, now just under US$50.50 a barrel, while the Brent benchmark is now just under US$52.50 a barrel. Two new oil fields have been discovered in Texas and Alaska, and experts say this is just the beginning of identifying such reserves.

The gold price is down even further today, and now at US$1,255/oz.

The New Zealand dollar is lower again against the US dollar, but that is more to do with greenback strength. It is now at 71.5 US¢, and on the cross rates it is holding at 94.3 AU¢, and 64.1 euro cents. The NZ TWI-5 index is now at 75.2.

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 ».

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.

21 Comments

But first, the number of Americans filing for unemployment benefits unexpectedly fell last week, again near a 43-year low.

Does this help:
http://www.mcoscillator.com/learning_center/weekly_chart/bond_market_kn…

Interest rates go up when people can find opportunities. They go down when they cannot. Simple enough you would think. Money flows away from places with poor prospects and to places with better prospects.

Up
0

Exactly.

The one constant throughout Japan's experiment with an "independent" central bank has been how private consumption is always "temporarily" weak despite so much attention (and yen) paid to "aggregate demand"; the one constant with all these central banks following these policies is that problems are only "overseas" but somehow though constantly abating are sufficient to prevent any central banker from validating his policy by acting with true resolve. From this review of Japan's experiences with rate hikes and especially how eerily similar they are to the FOMC's fumbling over them today, it is entirely reasonable to suggest that these economist policymakers have very little grasp of how an economy, any economy, actually works. Read more

Up
0

I'm sure you would have Milton Friedman on your side Roger.

Up
0

Stretching the truth on mortgage application forms is as much an issue with credit control officers as with applicants for credit.. Even though omitting to ascertain the truth in an application form is accounting control fraud (a criminal offence), incentives within banks can be very powerful to approve new loans. Wells Fargo is another recent example that gives testament that society cannot trust banks to self-regulate.

Up
0

It is Friday...Funny that.

Was not the turning of a blind eye the very issue that caused the over leveraged sub-prime fiasco. (Not so funny, when you really think about it).

Are some Countries, not in danger of repeating that scenario. Is this deny-ability.

(Is this a Key factor, I ask myself).

Or is all debt, just money now, so we might as well ALL retire...Happy.

Never repay a cent. Just keep on, keeping on, re-financing the Ponzi.

I can lie as well as the next man.

( I would make a great PM, if only I could wake up.....in the AM, but like most keep on dreaming).

So what if we all take that stance. Or have we.??

Cos if you believe me, you will believe anything, which is unbelievable.

If you believe a Bank, when giving you a Free TV, or Harvey Norman, when all that Interest free stuff is given away ...by the washing machine load, have I got a deal for you.

Please form a queue, I will take your deposit and fly in the Man -in-the-moon for Christmas and Santa will bring you a free ride in his sleigh, with Rudolph up to his nose in the Red dear.

We will be at your house, Christmas Eve, It is a turn-key operation, no locks, just a belief in Fairies.

PS...there will be no GST, as it is a one off event and the Tax Man will never cotton on, if you pay me in cash. A laundry sized basket, for your cash deposit, will do. All deposits left behind, will receive a large Capital Gain, if fact...piles of it.

PPS..It will be a Flight-of-Fancy. I can assure you. There is a Disabled Toilet aboard the sleigh and you can have your hearts desire, a freebie from the Blacksmith who used to shoe poor Rudolph, then you can be in his shoes, as he kept all the old ones, but I am afraid there is just a few colour.s left...and for some it will be a white wash...but others, a murky fifty shades of grey..

Signed Santa. Claus

PPPS...there is another Clause...Never believe an Altered Ego....on Fridays, totally unbelievable.

Up
0

I wouldn't worry about the Canadians most of them are delighted that their Vancouver property market is crashing. The young Canadian's can't wait to afford a home in Vancouver and start new business. ;)

Up
0

Re the poll on American attitudes, it fully missed the resentment towards the monied elite and their appalling finance sector - wall street, big corporates and big banks. The rise of Mr Trump; a very interesting perspective from Liberty Blizkrieg.
She told me that every week, it seemed there was another default letter, another foreclosure, another bank demanding more blood from her dry veins. To her, that pile of default notices and demands for payment looked suspiciously similar to Hillary Clinton’s top donor list.

She lost everything she worked so hard for. Obama swore he was going to help. The Wall Street bailout did seem to help Wall Street. But it did absolutely nothing for her. She turns on the news and sees how the Dow Jones is doing better than ever. But that didn’t bring her house and livelihood back. Liberals insist that Obama’s made her life better. But, now she’s driving a car that falls apart randomly while having to pay those same banks for a car she doesn’t own and never will. It’s difficult to convince someone whose life is objectively worse that their life is better. And it’s disingenuous to try. You can break down the specifics, sure. But when someone’s hungry, and you’re busy silencing their complaints by telling them how well world hunger is improving, you’re just going to upset them.

http://libertyblitzkrieg.com/2016/10/05/must-read-of-the-day-i-listened…

Up
0

And the rich and powerful struggle to understand Brexit and Trump??? It is obvious when you're not asleep. The problem is that when they wake up, they may try to remove the ordinary peoples means to push back. I can imagine the monied elites arguing that ordinary people cannot be trusted with a vote. Just like the UN where the powerful have a veto vote to keep the rest from getting too stroppy.

Up
0

You don't have to imagine it, there are plenty who think just that about voting, you can understand that by seeing how the word "populism" is regarded, then check the dictionary meaning of the word.

Up
0

Its not the "moneyed people" like you suggest. It is not those who earn a living by selling something others freely choose to buy. The problem is those who prey on others by deception, either knowingly or through self deception. Beware the experts who think they know best, that there is only one thing to do; that like to tell others what to do and who will enforce their will if disobeyed.

Up
0

Newsletter Jerks

Newsletter guys have a reputation for being bearish all the time and saying that collapse is just around the corner. I hope I haven’t earned that reputation. My views are a little more nuanced.

But in the last few weeks, I’ve been getting more and more pessimistic, and I’ve talked about some of those things in The 10th Man, like the stupid low-vol/high-dividend trade, which just a few weeks ago I said was in danger territory.

So a few points:

I don’t think that economic collapse is imminent. What I do think is:
Housing markets across the world (Canada, Australia, Sweden, and others) are massively overvalued, and a downturn in those housing markets could cause a coordinated recession in the developed world.
I think the low-vol trade is over, and that’s probably bad for the market.
If there is a risk-off trade globally, US markets will probably do best.
I think we’re going to get to crazy levels in USD—far beyond what people are imagining right now.
I think it’s bad for gold and silver, but not catastrophic.
It’s probably not great for EM.
It’s probably not great for credit, but credit will be a decent place to hide out.
It’s bullish on volatility for sure, but there are a ton of problems being long volatility (as an asset class), so I have no interest in that.
I think that a 20-30% drawdown in the SPX is very likely, and given that it’s been over eight years since we’ve had a drawdown of that magnitude, it’s going to be very painful for people and has the potential to be worse.
If Trump wins, the Fed will hike. They might hike anyway.
If rates back up significantly (like we discussed here), that is only going to add to the chaos.
If we do get a recession, it is probably going to be the end of capitalism as we know it in the US.
Yep.

That Last Point

“If we do get a recession, that is probably going to be the end of capitalism as we know it in the US.”

What do I mean by that?

Let me ask you a question: If the stock market goes down 20% or 30% like I think it might—someone will get blamed.

Who do you think will get blamed?

Exactly.

Who do you think should get blamed?

Exactly.

A bear market certainly won’t be blamed on the Federal Reserve and their quantitative easing and ultra-loose monetary policy, and their inability to raise rates even with unemployment in the 4 handle. It won’t be blamed on providing so much liquidity for so long that even the slightest withdrawal of it causes a global recession.

It will be blamed on:

Banks
Brokers
Wall Street fat cats
Hedge funds
Speculators
Quants
HFTs
CEOs
I’ve seen this movie before, and I know how it ends. It ends with even more regulation, and perhaps even a financial transactions tax (which is something that Hillary Clinton’s party wants), the biggest economy-killer known to man.

So there is a lot at stake here. We really, really do not want a bear market. But we’re going to get one. That’s capitalism, or at least what’s left of it.
Jared Dillian
Editor, The 10th Man

Up
0

Most Americans are still relaxed about immigration, it seems, and still think an integrated world is a good thing. Bluster and bullying may be the subject of reporting, but reason seems to be intact among most American voters.

Have NZ TPPA apologists negotiated a better deal with greater monetary motivation closer to the near horizon than that currently forecast?

The TPPA could add an extra $2.7 billion to GDP by 2030 (that's a rise of 0.9%). Read more

The americans are joking - right? Ideology doesn't feed the children.

Up
0

The IMF's tough warning on systemically important global banks may be focusing minds in Berlin.

I Doubt that.

Could the IMF take a new direction and be a true force for stability and economic rigour? Perhaps. But at the very least it needs to be put under new management.

After her dishonest and arrogant interference in the British EU referendum, Christine Lagarde has no credibility. She should resign. Read more

Up
0

In the 2012 edition of Occupy Money released last week, Professor Margrit Kennedy writes that a stunning 35% to 40% of everything we buy goes to interest. This interest goes to bankers, financiers, and bondholders, who take a 35% to 40% cut of our GDP. That helps explain how wealth is systematically transferred from Main Street to Wall Street. The rich get progressively richer at the expense of the poor, not just because of “Wall Street greed” but because of the inexorable mathematics of our private banking system.

http://www.globalresearch.ca/its-the-interest-stupid-why-bankers-rule-t…

Up
0

Mortgage Fraud by Aussies ! It's in their genes. It's not as though their ancestors came to Australia voluntarily. (friday funny)
But seriously - this is happening, and driven by the house price fiasco that has us paying so much interest. What money is left for a life? Both in Australia and in New Zealand it's hard to run any business, because the locals have no money left in their pockets.

Up
0

It's in the genetics

Careful accusing the original white settlers as fraudsters and criminals who have passed their genes on.

Far too much crime is done by new-Australians - particularly those with Mediterranean suntans who are disproportionately represented in the system - rapidly being caught up by those wearing tea-towels for head-wear

Up
0

Invasion Day

Just for balance, Australia Day is a nationwide holiday celebrating settlement by the British

The Indigenous Peoples call it Invasion Day

https://www.creativespirits.info/aboriginalculture/history/australia-da…

Up
0

Massive plunge in the British pound this morning .Currency markets becoming a little unhinged

Up
0

Thats not going to help our Lamb exports much.

Up
0

The mornings plunge occurred at time of release of Hollandes remarks. GBP/NZD went from 1.76 to 1.65/6 in a minute. Who says everyone wants a weaker currency. London homes becoming cheaper by the day

Up
0