Here's our summary of key economic events overnight with news benchmark interest rates are rising despite the political tensions.
Somewhat surprisingly, American inflation expectations eased a bit in January, falling from 6.0% to 5.8% as the expected inflation over the next year in the large New York Fed national survey. This is the first decline in short-term inflation expectations since October 2020. Similarly, median three-year ahead inflation expectations decreased by 0.5 percentage point to 3.5%. The decline in medium-term inflation expectations was broad-based across age, education, and income groups and is the largest one month decline in the measure since the inception of the survey in 2013.
The yield on the benchmark US 10-year Treasury note rose again to above 2% on Monday and the 2-year/10-year yield curve fell to the flattest since July 2020, as bets for a +50 bps rate hike from the Fed increased again. St. Louis Federal Reserve President Bullard has reiterated his call for +100 bps of hikes by the end of June during the interview on CNBC.
Meanwhile, another Fed official, Esther George from the Kansas City Fed, said the central bank should consider selling bonds from its US$9 tln asset portfolio to address high inflation and guard against harmful effects that can result from raising short-term rates above long-term rates.
Cross-border traffic between Detroit and the Canadian city of Windsor is returning to normal after a bridge crossing the Detroit River reopened following a week of demonstrations.
In India, their inflation rate rose to 6.0% in January, and up from 5.7% in December. Its a seven month high, and food inflation is rising within it.
India has started a rolling series of elections which will be held progressively until the Presidential election in July. It is likely to be a time of heightened tensions in India, with the extremist BJP Party stoking Hindu nationalist sentiments as it tries to hold on to power, and that currently seems likely. India is becoming a significantly less tolerant society under the BJP and will be a more difficult place to do business. And a difficult and unreliable ally if the BJP retains power.
In the UK, a regulator there has told a set of 'buy now pay later' firms to issue refunds of excessive late-payment fees and rewrite their contracts so the terms are clearer. This ruling affects Afterpay, Openpay, Laybuy and Klarna - three Aussie firms and a Swedish one (in which CBA has a minor stake).
In NSW, there has been a fall to 6,184 new community cases reported yesterday, now with 56,194 active locally-acquired cases, and another 14 daily deaths. There are now 1,649 in hospital there, off their high. In Victoria they reported 7,104 more new infections yesterday. There are now 53,707 active cases in that state - and there were 2 deaths there, and unusually low. Queensland is reporting 3,750 new cases and also 6 deaths. In South Australia, new cases have slipped to 1127 yesterday and 3 more deaths. The ACT has 375 new cases and no deaths, and Tasmania 408 new cases and no deaths. Overall in Australia, there were 19,680 new cases reported and 25 daily deaths.
The UST 10yr yield opens today at 2.00% and +8 bps higher than this time yesterday. The UST 2-10 rate curve starts today flatter at +40 bps. But their 1-5 curve is m21%. The China Govt ten year bond is +1 bp firmer at 2.81%. But the New Zealand Govt ten year is lower by -3 bps at 2.78%.
On Wall Street, the S&P500 is down a minor -0.1% in their Monday afternoon trade. Overnight, European markets all closed sharply lower, mostly by -2.0% or more. Yesterday, Tokyo ended down -2.2%, Hong Kong was down -1.4% and Shanghai was down -1.0%. The ASX200 ended its Monday session up +0.4% but the NZX50 fell a very sharp -1.8%.
The price of gold starts today at US$1862/oz and up another +US$3 from this time yesterday. Given the political tensions you might have thought the gold price would be rising faster.
And oil prices are holding high at just over US$92/bbl in the US, while the international Brent price is marginally softer at US$93.50/bbl.
The Kiwi dollar will open today at 66.1 USc as the greenback firms. Against the Australian dollar however we have slipped to 92.8 AUc. Against the euro we are holding at 58.5 euro cents. That means our TWI-5 starts today lower at just on 70.8 but that is where it was a week ago.
The bitcoin price is up a minor +0.9% since this time yesterday and now at US$42,679. Volatility over the past 24 hours has stayed modest at +/- 1.5%. Interestingly, a huge surge in crypto ads during the American Superbowl seems to have had virtually no influence in demand or prices - unless it stopped them falling.
The easiest place to stay up with event risk today is by following our Economic Calendar here ».
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Meanwhile, another Fed official, Esther George from the Kansas City Fed, said the central bank should consider selling bonds from its US$9 tln asset portfolio to address high inflation and guard against harmful effects that can result from raising short-term rates above long-term rates.
Indeed:
Probably needless to say, the only way that the Fed will be able to raise interest rates above zero, for the foreseeable future, will be to explicitly pay interest to banks. At the point that rate goes above the yield to maturity at which the Fed purchased these bonds, the Fed will have crossed into fiscal policy – creating base money without a corresponding asset. Link
The only reason inflation expectations are set to ease is because the Fed has indicated it will be raising rates to tackle the issue.
A lot of the inflation was never going to be transitory but let run to inflate away the debt, it is what they always do... until it becomes too much of an issue.
If the Biden administration were not under attack for inflation the Fed would still be happily ignoring it.
Just the inflation expectation trending down, not the actual number. Plot the two lines (expectation and actual) on the same chart and you will see very little convergence over the past decade.
The people surveyed in the US can't be expected to make accurate predictions on where prices are heading when Ivy-educated economists get that wrong all the time.
Expectations - indeed any surveys - aren't worth a damn if the folk being surveyed are cogitating in ignorance.
Inflation of the price of essentials, will continue. Simple rules of inelastic and increasing demand, vs inelastic and declining supply.
What happens in terms of interest-rates versus wrung-out debt-spending vs inessential buying, though, is not so clear. I expect deflation there.
And without growth, the debt-pumped ponzi has no option but to pop. Whether it takes the whole shebang down with it, is an interesting knock-on.
debt spending. nice euphemism. pre covid successive governments & related bureaucracy lamented ceaselessly the poor savings record of the majority of New Zealanders. Come covid, interest rates slashed, the intent being that New Zealanders should now borrow and spend, to bolster the economy. Actually amongst that, credit card interest did not move down that much though. There has been too a longstanding tendency, especially since the arrival of credit cards in the 80s, for many to be unable to distinguish, when spending it, the difference between money earned and money borrowed. 2022 unfortunately appears to be offering a lot of roosting spots doesn’t it.
This morning on ZB Ruth Stokes, Queenstown Chamber of Commerce CEO, spoke frankly and convincingly about the shambles inflicted on Queenstown by dint of having a lock down when there isn’t a lock down. This is a clarion clear illustration of the enormous gulf between the government and its bureaucracy and actual reality, which can only be due to total ignorance of what actually happens at the coalface and it is now quite obvious, that they think it beneath their dignity, to even think about it.
Yes, we are in an effective lockdown. Workers WFH to avoid going into the office so they don’t catch a mild virus which will force them to WFH. Hospitality doing it harder than the previous official lockdown periods.
Now the complex tracing etc once you get dozens of cases inside your organisation is going to be laughable. Everyone trying to avoid isolation bans rather than worrying about the actual sickness.
As our RSM bellowed at us - don’t put it out if you can’t take in. Likewise with Clark the “diddums” addressed to John Key in parliament, not long after, bawling her eyes out at Waitangi, to where she did not return. It’s a bit like bullies, they are very mighty until they meet a bigger bully.
US Embassy In Kiev Shutters Operations, Relocates & Initiates Rapid Removal Of Documents
Hmmm... Another US Kabul style evacuation?
The Real Lesson of the Crisis: The West is Abandoning Ukraine
Putin's real game play ?
www.foxnews.com/world/russia-ukraine-troop-buildup-intentions-reporters…
Meanwhile a UK/China rapprochement is mooted under cover of UK faux aggression towards China's ally.
A Russian guy called Tom Nash did an interesting Youtube yesterday - said he thinks Putin is still smarting from NATO reneging on assurances they would not encroach on former soviet republics after the collapse of the soviet union. He wants those buffer states to keep the Motherland safe.
Nash said he doubts the claims it's primarily about boosting oil prices and his popularity.
While I agree that it is unlikely that Russia will invade Ukraine - the cost would be too high. In reality Putin / Russia can't project it's power much beyond it's own borders ( unlike the United States) Russia has I believe one air craft carrier against the US's 10 (or is it 11). China faces a similar problem. Putin is a victim of his own paranoia. This I believe goes back to the Russian Revolution in 1917 where Lenin and the Bolsheviks didn't have the support they thought had from the population. This encouraged paranoia which consumed Russia for the next 70 odd years. While the Russia was invaded by the French in 1812 and Germany in 1941 this I don't believe is the basis for Russia's security fears (France was invaded three times by Germany in 70 odd years - the French have a right to be paranoid).
Putin I think is more concerned about his own position of power (or lack of power) than fears of being invaded by Europe. If anybody is going to invade Russia my guess would be China (for Russia's natural resources).
So John key and son, teaming up with the (ex?) brothel owners to build houses.
First it was Graeme Hart buying up land for houses, now JK and co doing this.
I guess it is good if we get more houses, but I feel there is some sort of message here. Just haven't quite figured out what it is.
Edit: Thoughts so far..
"John Key, who is also the chairman of ANZ, said he had known the Chow family for a long time and respected their business acumen and work ethic." ok we all know how seedy these guys were right? Fits is with John Key persona (can't believe the chairman of a huge bank is saying this).
"He had always had a passion for real estate investment and viewed it as a sound asset class in a growing country like New Zealand, which had long-term migration needs, he said." Ok so here we have the chairman saying house prices are not going down and when his boyfriend Luxon is PM one day, the migration tap will be turned fully back on. I assume Labour will be doing this too post covid. So we are mega f***ed looking forward.
When they arn't running brothels they are illegally tearing down character buildings.
https://www.stuff.co.nz/dominion-post/5146280/Chow-brothers-escape-pros…
He isn't going to help. The Romans executed him as a political agitator, then took his philosophy, rewrote it, adding bits of other mythology, to achieve their own ends of power and control and created a religion around it as their own and started the Roman Catholic Church! Then that got morphed somewhat into Islam too.
So in the end he's just dead and cannot help!
"John Key, who is also the chairman of ANZ, said he had known the Chow family for a long time and respected their business acumen and work ethic."
So Luxons dream husband thinks the brothers that purposely ruined the Historic Palace hotel so much it collapsed, have good ethics. They seem like a match made in heaven. Definitely befitting of someone who is a 'Sir'...
https://www.stuff.co.nz/dominion-post/5146280/Chow-brothers-escape-pros…
Still irks me the council didn't make them rebuild it to how it was.
That's the issue for me as well housey, every time I think how much Labour piss me off I go back to how smarmy Sir John was after the power went to his head. Luxon already has that and he's barely warmed a seat.
So even though it'll feel like a wasted vote I'll be going TOP again.
Hopefully every non house owner in the country does the same.
Hopefully every house owner does as well...
According to TOPs web page, your single dwelling owner would probably be better off with UBI and land tax arrangement
Unless you want the same shit we've always had (or worse in the case of ACT), there's literally no other credible party except for TOP.
We all know there's zero chance of them being a government, it's all about getting some different ideas into parliament. Then maybe some things will start to change.
Hi Everybody
I have been a subscriber for about 12 months and read these comments.
I thought that maybe the quality of comment may be higher behind a pay wall.
Alas, this is seemly not the case.
If I believed all I read here, I would be jumping off a bridge.
I wander why some of you even bother getting out bed in the morning.
Since Covid, many people have been doing it tough.
I lost my business but I managed to get into a motel with a bit of help from government money and have turned it around from 30% occupancy to 80% occupancy occupancy.
I am glad that I ignored all the comment on this site.
A motel, though, like most things, is not 'a generator of wealth'. It is parasitic on the energy flow (from high quality to low, otherwise described as from low entropy to high entropy).
And that may have a second parasitic stage - depending on what the visitors 'do' themselves. Much like landlords parasiting on tenant incomes, which in turn may be parasitic.
Some of us study the flow - and the resource stocks - upon which all that parasitism depends. Knowing that one parasitic venture is 'doing well' for about five seconds in the human trajectory, is somewhat irrelevant.
"Somewhat surprisingly, American inflation expectations eased a bit in January..."
NZ's inflation will shortly follow even without any changes to the OCR.
People just need to learn some patience!
Black gold remains the king of commodities.
The median age of death in Oz has has just ticked up another year to 83 - the only pandemic where the median of death is higher than average life expectancy.
https://www.health.gov.au/resources/publications/coronavirus-covid-19-a…
Don't worry sounds like they are basically opening up now..below just released. Again does not really make sense, person from Oseas can stay at home with people who can continue go about normal day to day business...but happy days for those loved ones.
This would include self-isolating for seven full days. They would be able to form a bubble with family or friends, who could continue to go to work or school, but must minimise contact with others as much as possible.
Norway scraps almost all remaining Covid-19 restrictions
Norway has scrapped almost all remaining Covid-19 restrictions, doing away with its face mask and self-isolation requirements, ending the one-metre rule, and limiting testing to those with symptoms.
https://www.thelocal.no/20220212/norway-scraps-almost-all-remaining-cov…
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