Here's my summary of the key events overnight that affect New Zealand, with news economic growth in the US has braked sharply in the first quarter to its slowest pace in two years. GDP increased at an annual rate of 0.5% according to the US Commerce Department's advance estimate, down from 1.4% in the fourth quarter of last year.
Consumer spending softened and a strong dollar continued to undercut exports. Growth was also held back by businesses stepping up efforts to reduce unwanted merchandise clogging up warehouses. Looking at the broader picture, GDP was up 2%, when considering the change from the year to March last year, to the year to March this year.
Staying in the US, the home ownership rate has nearly fallen to a 48-year low. It inched down to 63.5% in the first quarter, from 63.8% in the fourth quarter of last year (not seasonally adjusted). Twice as many new renter households, compared to new owner households, were formed at the start of the year, compared to the same time last year. With the US home ownership rate pretty much identical to the rate here, it seems those in the US are also struggling to crack into the housing market.
The Bank of Japan has dashed investors' hopes for a boost in its stimulus efforts, sending stocks plunging. It's left interest rates unchanged and held back from expanding its big asset purchasing programme, despite it falling back into deflation. The bank's move saw the yen surge more than 3% against the US dollar - its biggest one-day gain in six years.
In other news, the Chinese government has upped the ante, controlling the influence foreigners have on Chinese society. It's passed a new law obliging foreign NGOs to have official Chinese sponsors and register with the police. Around 7000 organisations will be affected by this law, which may see those promoting workers' rights, ethnic equality and religious freedom, have a hard time getting approval.
In New York the benchmark UST 10yr yield has continued to slide today, down to 1.86%.
A weaker US dollar has seen the US crude oil price rise to US$46/bbl. Brent is up to US$48/barrel.
The gold price has picked up to US$1,266/oz.
The New Zealand dollar is peaking, off the back of the drop in US GDP growth, the Federal Reserve holding off a rates rise, and the RBNZ holding back on a rate cut. It's up over a cent compared to this time yesterday, to 69.7 US¢, 91.3 AU¢ and 61.4 euro cents. The TWI-5 index has jumped to 72.5.
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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12 Comments
More speculative bubbles!!!
http://www.bloomberg.com/news/articles/2016-04-27/china-trades-enough-c…
It appears that in China people are speculating on everything - shares , housing , commodities , futures - going from one speculative type to another - which ever is giving the best returns on any given day so to speak. It scares me - sounds like get rich quick schemes - could well end in tears.
The Bank of Japan has dashed investors' hopes for a boost in its stimulus efforts, sending stocks plunging. It's left interest rates unchanged and held back from expanding its big asset purchasing programme, despite it falling back into deflation.
The situation demands more than jawboning inflation higher.
BOJ Governor Haruhiko Kuroda left the door open for more stimulus, stressing there were no limits to what monetary policy can do to address strong risks to the outlook.
"There's absolutely no change to our stance of aiming to achieve 2 percent inflation at the earliest date possible, and to do whatever it takes to achieve this," Kuroda told a news conference. "If needed, we can deepen negative rates much more." Read more
Next citizens will be called upon to not pay their utility bills in full to match what corporations do when they short change negative interest rate bond par redemption payments to investors. Gotta laugh.
No problems Stephen, they've got Krugman on the job:
"Somebody must have reinstated Paul Krugman’s passport. He was recently back in Japan to meet with the world’s leading economy-wrecking triumvirate —-Prime Minister Abe, BOJ Governor Kuroda and Finance Minister Taro Aso—–to dispense some desperately needed advice.
Japan is on the verge of a second recession during Abe’s tenure despite his plunge into full frontal Keynesian stimulus. But since March 2013 when Kuroda cranked up the BOJ’s printing press to white heat, two main things have happened. The BOJ’s already bloated balance sheet has exploded by 2X and the flat-lining Japanese economy has continued undulating to nowhere".
http://davidstockmanscontracorner.com/what-comes-next-krugmans-fiscal-e…
Yes, indeed Kiwidave, but such nonsense is not confined to Japan.
The Washington Post got it's self irrationally entangled trying to pass off conditions in the US as not too bad.
The U.S. economy grew at its weakest quarterly pace in two years between the months of January and March, government data showed Thursday morning, as consumers and businesses alike showed new caution with their spending.
The nation’s gross domestic product expanded just 0.5 percent on an annualized pace. Businesses cut back on investments with a severity not seen since the financial crisis.
The relatively tepid growth indicates that the economy is still being held back by apprehension and caution — even as global chaos diminishes, employers continue hiring and the stock market recovers from early-year turmoil. Read more
It's possible for people to have a life it's just getting stuck in dense traffic that reminds me of travelling around a Chinese city in the north with a population of 13 million people. The transport problems really need to be sorted out on a larger scale.
Plenty of entertainment in Auckland and it's affordable if you don't live there.
The Yen is a special currency. Investment money is held there until a new investment is going to be made, then the money moves and loans are made for very low interest rates to invest outside of Japan.
NZD doesn't have that special status but 90% of our currency trades on the market have nothing to do with our economy. There are clearly benefits from holding our currency they differ from Japan.
If we hold the OCR for long enough we'll probably return to $0.90 USD. Then I could do some more cost effective consumerism. There are a lot of strange emergent effects from the flood of money being spread around the world, and you can be sure that there are some high end players in the financial markets that are up to something (as they always are).
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