Here's our summary of key economic events overnight that affect New Zealand with news Russia and Germany are in a standoff over energy supplies and financial markets are reassessing their recent optimism.
But first, there was another fall in American mortgage applications last week, again coinciding with sharpish rises in mortgage interest rates. The industry association reports they hit 4.8%, although the metric we watch has them up to 4.4% which is a three year high.
We also get the US labour market reports for March on Saturday (NZT) and analysts expect another good rise of +490,000 in March. Today the pre-cursor ADP Employment Report came in with a +475,000 rise, almost exactly as expected. It's a labour market that is expanding with a very low jobless rate, and very tight for employers. The expansion is very broad-based.
The final reading for the Q4-2021 American economic activity (GDP) came in with a +6.9% expansion, a slight dip from earlier estimates but similar to the original advance estimate. It was another strong result, making it three of the four 2021 quarters with outsized expansions. This one was driven by a recovering services sector. Of course, all eyes are turning to the likely Q1-2022 result and estimates range from +0.9% to +2.7%, much lower because the base is more normal. But with a forecast range like that, there is little consensus.
In Ontario Canada, they are increasing their foreign buyer tax on real estate purchases, and broadening the definition of how it applies. The tax, already 15%, is rising to 20%.
In Japan, retail sales slipped in February, the first year-on-year decline in five months and the third over the past year.
EU business sentiment slipped in March but not by as much as you might has assumed, and certainly nothing like the sharp fall in consumer sentiment.
And German inflation rose to 7.3% in March, a full percentage point higher than expected. It was up +2.5% from February, so it is accelerating. On an EU harmonised basis it was up to 7.6%. For them, it is all about the cost of fossil fuels from Russia and the insecurity of relying on that source. They will come out of this crisis far less reliant on Russian energy. In the meantime, both Germany and Austria are getting ready for gas rationing, rather than buy from Russia.
In Australia, assessments of the assumptions their Government used for it budget forecasts are increasingly unfriendly, although main bank analysts are generally supportive.
The UST 10yr yield opens today at 2.35% and down a further -4 bps from this time yesterday. The UST 2-10 rate curve starts today flat at just +3 bps and still avoiding inversion. Their 1-5 curve is however a little flatter at +79 bps. Their 30 day-10yr curve is unchanged at +221 bps. The Australian ten year bond is down -3 bps at 2.82%. The China Govt ten year bond is unchanged again at 2.82%. And the New Zealand Govt ten year is down by -5 bps at just on 3.30%.
On Wall Street, the S&P500 has opened down -0.4% in Wednesday afternoon trade. In Europe, their equity markets were sharply lower, led by Frankfurt's -1.5% reset after yesterday's spectacular rise. London, which didn't catch any of yesterday's huge run up, rose +0.5%. Yesterday Tokyo ended down -0.8% which Hong Kong was up another +1.4% and Shanghai rose almost +2.0%. The ASX200 ended its Wednesday session up another +0.7% but the NZX50 managed a chunky if unusual gain of +1.5%.
The price of gold starts today at US$1932/oz and up +US$17/oz from this time yesterday.
And oil prices are up +US$ to just on US$106/bbl in the US. And the international Brent price is now up at US$110/bbl.
The Kiwi dollar will open +½c firmer from this time yesterday at 69.8 USc and a four month high. Against the Australian dollar we are up the same at 92.9 AUc. Against the euro we are just a little firmer at 62.5 euro cents. That all means our TWI-5 starts today at just under 74.8.
The bitcoin price is essentially unchanged from this time yesterday at US$47,457 - or the day before. Volatility over the past 24 hours has been modest at +/- 1.4%.
The easiest place to stay up with event risk today is by following our Economic Calendar here ».
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48 Comments
The Sun rose above the horizon and we have confirmed already 10% crash in house prices.
https://i.stuff.co.nz/life-style/homed/housing-affordability/128196832/…
.........and this is just the begining.
Real effect is yet to come........
Stocks started to fall and are now in crash territory. Will not be surprised if housing market that has started to fall will too follow stock and soon be in crash territory.
Long term interest rate have doubled in just over few months and any further increase from here will be disaster, which seems inevitable.
Stocks started to fall and are now in crash territory.
Really? Ah you're talking about the Russian stock market! I checked my NZ portfolio yesterday and everything was ticking up.
Where would you put your money with raging inflation despite rising interest rates? Term deposits just make you lose money a bit slower than inside a matress.
Housing is probably something where a bargain can be made, compared to 3-6 months ago but I doubt we'll see the super crash everyone seems to be waiting for.
Borders are opening up, CCFA changes will be rolled back and NZ is still one of the best & safest places on Earth to be.
Central government already making it clear how they intend to improve water quality under Three Waters; by increasing the acceptable limits of chemicals like nitrates in drinking water.
Now why couldn't local government have just come up with that themselves?
This is unconscionable behavior but hardly surprising given our craven surrender to the agricultural chemical companies who apparently rule nz . It makes a total mockery of the stated reasons for going down the three waters path of improving drinking water safety for the population, what a sell out .
And German inflation rose to 7.3% in March, a full percentage point higher than expected . For them, it is all about the cost of fossil fuels from Russia and the insecurity of relying on that source. They will come out of this crisis far less reliant on Russian energy. In the meantime, both Germany and Austria are getting ready for gas rationing, rather than buy from Russia.
Putin & Scholz agreed in phone conversation on experts of two countries discussing transition to payment for gas supplies in rubles. Significant shift from Scholz' earlier flat refusal to countenance such idea. Realism dawns as any disruption in gas will wreck German economy. Link
Former President Donald Trump, who has a long history of denigrating the North Atlantic Treaty Organization (NATO) and who, as president, discussed removing the U.S. from the alliance, has now claimed credit for its existence. He’s also patting himself on the back for supplying Ukraine with weapons, despite once threatening to withhold security assistance from the country unless it helped smear Joe Biden ahead of the 2020 election.
https://www.rollingstone.com/politics/politics-news/trump-nato-ukraine-…
...despite once threatening to withhold security assistance from the country unless it helped smear Joe Biden ahead of the 2020 election.
Dear old Joe did the same thing, threatening to withhold 1 billion dollars in aid to Ukraine unless they removed the state investigator into the energy company that Hunter Biden was a board member of. AND he boasted about it!
https://www.wsj.com/video/opinion-joe-biden-forced-ukraine-to-fire-pros…
Trump warned Germany they would be held to ransom over Russian oil and gas-..
The whole West has been captured by a more insidious class of actors than Russia and its gas.
Neoliberalism impoverishes. Neoliberalism is a class war against labour by finance, primarily, and a class war against industry. A class war against governments. It’s the financial class really against the whole rest of society seeking to use debt leverage to control companies, countries, families and individuals by debt. And the question is, are they really going to be able to convince people that the way to get rich is to go into debt? Or are other countries going to say, this is a blind alley. And it’s been a blind alley really since Rome that bequeathed all the pro creditor debt laws to western civilization that were utterly different from those of the near east, where civilization took off. Link
As far as I can recall the original six EEC members. De Gaulle, Adenauer etc, intended it to move on , from the Marshall plan more or less, to arrive at self reliance in terms of primary production, energy, industry, manufacturing & defence sort of. And here it is now a bloated out body of 28 Nations, reliant on Russian energy, Chinese manufacturing & USA powering NATO. Just a monstrous self defeating monolith of bureaucratic infighting futility.
The underlying philosophy of the original EEC was to facilitate integration of the economies such that it was in no-one's interest to get into another war with each other. That benefit has also now flowed through to the augmented EU. The history of Europe has been of particularly warlike nations fighting over territory, and so far the EU structures do seem to have kept them from fighting each other.
KeithW
Not fighting each other but their childlike energy polices are now funding a war on their doorstep. "Europe can either remain financially complicit in Russia’s iniquitous assault on Ukraine. Or it can bear the hardship of doing without Russian energy. No fancy tax scheme can spare Europeans from that moral choice."
https://www.ft.com/content/a4512ca5-23af-467d-8740-b752cd2e24ba
The big thing is if you look at 'Socialism' and 'Communism' is that neither of those labels correctly identify the ideologies behind them when they are used. Usually they are just used as another way to grab power and control, and then those who have done it just act like any other fascists anywhere else.
Communism denies human psychology and to that extent I would suggest that it would never work particularly well for the majority in any society. Socialism really is supposed to be a means to ensure that everyone benefits in a society, but in reality tends to be watered down communism. But neoliberalism as is being identified now is just another twist on capitalism where the control is still taken by a small group of elites with an intent to rule and control. So more of the same really just the path to it is different, as is the clothing that it is dressed up with.
Our real concern as voters is how do we get Governments to pick the best and discard the worst of these ideologies?
Certainly both sides of our Governments seem to prefer that people have lots of debt. And today with the changed banking scene depositors get stuff all for the money they loan to the banks. so in the wash up Audaxes link looks very correct. And the usual question abounds; what can we, the people, do about it, especially when Governments are complicit?
Housing market was artfically pumped up by government and central bank by throwing cheap and easy money as if distribution of free money was not enough, they went all out to throw everything to promote ponzi like removing LVR, providing mortage holiday ........
Only if economy could be manipulated forever, their would never be any downturn or recession in the world, ever but like cycle of life, economy has its own cycle of up and down, which up to a certain limit can be manipulated but cannot be avoided.
https://www.ft.com/content/fb242201-dcd5-4009-8fbe-1e998a67112a
Now what...Mr Orr's and Jacinda of the world
it is fundamental that is at play, if left to central bank or government, they would still be happy to print and distribute money to one and all for their short term vested biased greed.
They have tied themselves in a knot and the more they try to untangle, more will they.........
A trip back to 2014.........
U.S. and European regulators are considering further restricting Russia's access to the global financial network through the SWIFT interbank payment system and other programs, Dubowitz said.
Obama team unveils new Russia sanctions (usatoday.com)
I understand but could not find the link that Obama disagreed with the use of Swift as suggested - for the reasons many are voicing today (i.e hasten the demise of the US$)
Unfortunately MSM now insist we only get one side of any story, be it covid or Putin. The removal of RT from our tv channels being a prime example.
Japanese car imports are getting cheaper, even though we cannot afford the fuel.
Yen At Risk Of "Explosive" Downward Spiral With Kuroda Trapped... And Why China May Soon Devalue
Can someone more knowledgeable than me tell me why yesterday's Air NZ shareholder email has so many warnings re confidentiality?
STRICTLY CONFIDENTIAL – PLEASE DO NOT FORWARD - NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES
- in the title. Seems a bit silly, considering that anyone who has shares in Air NZ will receive this.
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