Here's our summary of key economic events overnight that affect New Zealand with news the expected reactions are bedding in now with equity prices sliding as bond yields rise sharply again.
But first, American inflation expectations are rising, in the short term at least. Median one-year-ahead inflation expectations increased to a new series high of 6.6% in March from 6.0% in February, while three-year ahead inflation expectations actually slipped to 3.7% from 3.8%. The increase in short-term expectations is broad-based across age, education, and income groups. Tomorrow we get the official March CPI data and 6.6% is what is expected for core inflation. But including food and energy, analysts are expecting total CPI inflation to be up at 8.4%, and well above the 7.9% recorded in February.
The US Treasury auctioned US$46 bln of 3 year Notes earlier today. They got bids worth US$114 bln, but for the accepted bids they had to pay 2.68% - a three year high - which is up sharply from the 1.70% they paid just a month ago in an equally popular auction.
Canada is girding itself for a +50 bps rate rise by their central bank this week.
China is apparently getting a bit more inflation now. Their official data says overall prices were up +1.5% in the year to March, but because there was no change from February what we are seeing are base effects moving the annual number up. Food prices are rising as part of that (+2.0% year-on-year), but prices for beef (0.0%) and lamb (-4.6%) are not part of that. Milk prices are rising slightly (+0.4%). The easing of high producer price inflation did happen in March, but not be as much as was expected. It is now running at +8.3% year-on-year.
And despite their economic slowdown, Chinese banks are lending at a fast rate, with new loans up more than +10% in March. Bank debt is rising at more than twice the economic growth rate, an extended distortion.
The Shanghai government announced yesterday that it will lift pandemic lockdown restrictions in just over 40% of its neighbourhoods, though the city as a whole has continued to log record daily infections. Spreading distress for locked-down residents is behind the move. And that distress has been noticed in Guangzhou (the metropolis near Hong Kong) where there has been a severe run on supermarkets and household supplies in case authorities there impose a similar tough lockdown.
The French first round election result has gone as we noted yesterday, so the incumbent president and his far-right rival are now expected to be in a tight race in two weeks for the second round and deciding vote. What will swing this result is how the third-place 'left' voters react. Will they turn out for Macron? If so he will win comfortably. If not it will be very close. (For the record, the traditional French conservatives polled only 5% in the first round.)
Zinc prices have skyrocketed to above US$4,400/tonne in April, just shy of its record peak hit in November 2006. Demand remains strong, but Russia is a key supplier and supply disruptions are spreading. High energy prices aren't helping. As a consequences inventories are very low with them virtually zero in Europe and falling in the US. Zinc isn't the only metal under pressure, but it is emblematic.
There has been another heady rise in benchmark bond yields overnight with the UST 10yr yield rising +8 bps to 2.78% taking it back to a level we last saw in November 2018. (Over the past 50 years, this rate has averaged 5%.) The UST 2-10 rate curve starts today noticeably steeper at +29 bps. Their 1-5 curve is steeper at 100 bps. Their 30 day-10yr curve is also steeper at +256 bps. The Australian ten year bond is now at 3.02% and a new eight year high. The China Govt ten year bond is up +2 bps at 2.82%. And the New Zealand Govt ten year starts today at just on 3.53%, up +6 bps and a new seven year high.
Wall Street is much lower to start its week, with the S&P500 down -1.2% in late Monday trade. Overnight, European markets were mixed with Paris up and Frankfurt and London down -0.6%. Yesterday Tokyo closed down -0.6%. But Kong Kong took fright and closed down more than -3.0% and Shanghai was down -2.6% on the day. The ASX200 ended its Monday session up +0.1%, but the NZX50 was on a negative slide all day, ending down -1.1%.
The price of gold starts today at US$1947/oz and essentially unchanged from this time yesterday.
And oil prices are down -US$3.50 at just under US$94/bbl in the US while the international Brent price is down -US$4 and now just on US$98/bbl.
The Kiwi dollar will open today lower by -20 bps at 68.3 USc. Against the Australian dollar we are marginally firmer at 92 AUc. Against the euro we are at 62.7 euro cents an slightly softer. That all means our TWI-5 starts today still just under 74.2 and little-changed from this time yesterday.
The bitcoin price is down a sharp -6.4% from this time yesterday at US$40,327. Volatility over the past 24 hours has been high at +/- 3.9%.
The easiest place to stay up with event risk today is by following our Economic Calendar here ».
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96 Comments
Noted on the news last night that the population of Shanghai is getting a little restive. While it might be alright for some to tout the benefits of authoritarian governments, they only work with compliant populations. Get too heavy handed and push back begins......
murray86
Yes, we don't know how lucky we are living in a democracy....perhaps the best democracy in the world because we do have the shortest term of only 3 years.
Which authoritarian-ruled country would our whingers and whiners prefer? China? Russia? North Korea? Brazil? Hungary? India?.....the latter three being only nominally democratic.
They have to change away from their zero COVID policy, it simply won't work in the long run. I am frankly amazed they haven't done it already. It has to happen eventually... sure you are going to end up with a lot of dead people, but the risk of losing control of people because of lock down non compliance must be getting weighed up at the highest levels. Nomatter when they open, it's going to be a lot of dead people as all countries are seeing.
There's so many places getting locked down now in heaps of other places around China, it's spreading like wildfire. My family in a small city over there are locked down now (well, like our L3) as are other cities.
When we let covid rip in NZ, there were some disruptions to our food supply chains, but we made it through OK. Lots of Kiwis eat lots of pre-packaged, frozen, and long life food products.
Just going on information in recent tweets made by Chinese nationals, I'm wondering whether China simply can't let covid rip, because they rely a lot more on fresh and short-life food products. Maybe China just can't afford to have all their food supply workers off sick at the same time.
Perhaps its not about COVID....perhaps they are shutting down Shanghai as long as possible to cause as much damage as they can to western supply chains.
Part of the economic war against the west.
Putin causing energy prices to spike.....Xi causing imported goods prices to spike.
Collectively they can cause western governments pain by increasing imported inflation - the last thing that central bankers can deal with given their crazy loose monetary policy post GFC. If it keeps up, its certainly damaging the economies of most western nations....sure its damaging to Russia and China as well...but who has the most to lose?
(just a theory I was reading on twitter...it makes sense and the COVID cover story works perfectly).
As an importer, we are loooking elsewhere to source as much as we can. China cant be relied upon, pricing is out of control (70 - 80% increase on some product), their ports are a mess. If you can side step sending goods through South east asia at the moment its a good idea.
Admittedly I don't know much about french politics, but I can't seem to figure out how LePen is "far-right" as every news outlet seems to name her. I looked at her policies, she is anti-privatisation of public utilities and pro-abortion so surely she is left of a good number of politicians here in NZ that we don't call far right.
The term "far-right" has lost all meaning now, a bit like "socialist". They both just mean "bad". When someone uses either of those terms to describe someone or something, then it's only to signal that you're supposed to dislike them. Makes life easy when you're not sure how you're meant to feel about something.
yes that made me laugh, there was clearly a hippie element to the protest, with hari krishnas, yoga tents and rasta flags. Labeling them far right was a joke although Im sure there was a sprinkling within the crowd.
The sheeple lap it up though... propaganda is more prevalent now than ever before IMO
If I remember correctly, Green and Labour voters were the largest segment at that protest. Many, many anti vaxers are greenies.
The previous comment about far right/socialist being meaningless terms today was spot on. Many working class people have a reactionary mindset, while many middle class people are very liberal. My view of politics today is that it comes down to how much state control of your life you are prepared to accept, or are in need of.
"If I remember correctly, Green and Labour voters were the largest segment at that protest" ...really and just how did your memory come up with that piece of misinformation.
My overview was that they were anti all government and more anarchist supporters or Trump supporters.
No, much of it's from direct video of people there and from those folks' own posts on social media. Plenty of coverage and plenty of self-promotion from both the hippies and the raving right-wing folks. Wanting it to be all lefties in retrospect is akin to the same desire being played out with wombles in the USA painting the January 6 capitol shenanigans as "it was all Antifa!!!"
Feelings over facts, trying to pretend now it was all greenies and lefties. There was certainly a mixture, but it's nonsense to pretend recent protests and social media action haven't had a strong lunatic right-wing element. Let's just pretend Action Zealandia and the National Front were there, as were the right-leaning Density crowd, while significant numbers had clearly been imbibing QAnon content. Along with the ranting about communist takeover, illuminati etc.
The Curia poll is obviously very interesting:
a disproportionate number of protesters voted in the 2020 general election for parties that had pushed misinformation about the pandemic. Advance New Zealand was overrepresented by a factor of 7.6, the Outdoors Party by 7.1 and the New Conservatives by 5.9. Many of the leading figures in these parties subsequently played a key role in the “anti-mandate” protests. Yet they cumulatively represented fewer than 20% of those surveyed. The Māori, Green and Act Parties were likewise overrepresented (by factors of 3, 2 and 1.6 respectively), while National and Labour were underrepresented.
Feelings over facts, trying to pretend now it was all greenies and lefties.
Not at all, you're putting words in my mouth. It was certainly a mix. All I'm saying is that you wouldn't get that impression reading RNZ or Stuff.
I have to say though, yesterday I saw a rare display of lucidity from Stuff; one which was conspicuously absent from our public interest broadcaster RNZ's reporting on the same topic. Namely, New Zealand hitting its "500 Covid death" milestone:
So, what do we know about those whose deaths have been linked to the virus? To start, Ministry of Health data shows that to date, 51 of the 500 publicly reported deaths have been officially coded as due to Covid-19.
Emphasis theirs. That's just under 90% of all reported "Covid deaths" who didn't actually die from it.
You don't have to have a very long memory to recall a time when anyone pointing out this fact was labeled an anti-vaxxer - probably "far-right" or something to boot - hell-bent on downplaying the severity of the virus in order to further some unknown agenda. Well while we're on the subject of political parties pushing misinformation, how about the current government, who has been using these inflated hospitalisation and death statistics to mislead everyone about the threat posed to them by COVID-19 since the very start of the pandemic?
I'm sure they'll tell you they weren't actually lying, and in some perverse kind of political way I suppose they weren't. We did hit 500 deaths - according to their special definition of "death", which is completely different to the way in which we define deaths from anything else. You'd think this sort of behaviour would cause people to become angry, perhaps even to the point where they want to go outside and show it.
Or, you know. They're all just racist, Trump-supporting conspiracy theorists.
Fair cop - my apologies if I miscast you in with others like the ones trying to rewrite Jan 6 as Antifa.
Funnily enough, I had someone here in NZ - a wealthy person from one of Auckland's priciest suburb's, mind - try to assure me just a few weeks ago that Antifa was behind both Jan 6 and the Parliamentary grounds protest. He's absolutely imbibed QAnon and his Facebook posts about Ardern are rather concerning, the sheer poisonous vitriol and language.
I listen to RNZ on occasion - no ads is a boon - and I've never heard them downplay the fact deaths are reported with at first, and from later. I recall earlier in the pandemic when people were posting the retrospective flu/pneumonia graph animation (with is ongoing correction of attribution) as proof of conspiracy and misreporting, funnily enough. It seems like people have really found something scandalous to latch onto with that.
There's little point in downplaying the severity of the virus these days. People have witnessed the virus and its effects first and third hand worldwide and understand it was never just a sniffle or regular flu. Yes, death tolls will be revised over time with full reporting and analysis - and of course that will encompass analysis of under-reporting and excess mortality too.
This thing will be studied to a massive extent (obviously, we'll need to be prepared for the effects of ongoing anti-expert, anti-science rhetoric here too). I recall one person on Facebook, one who went down a rabbit hole early on...seeing him liking and reposting comments such as "all scientists are corrupt!" Rough times, and the effects on people have been severe.
Kiwis in particular mistake nationalistic/conservative views as far-right ideology because we ourselves are absolutely clueless about our values and identity.
Parties on both sides of the spectrum in liberal democracies such as Switzerland, Denmark and Norway are firm about assimilating migrants into their local cultures and have unanimously dismissed the broken 'melting pot' narrative.
At the other end of the world, INZ hands out PR visas to drug smugglers and people serving community sentences for domestic violence!
she inherited a far right movement from her father -- but a better description would be France First --- she is strongly anti - immigration -- anti muslim and bascially look after french citizens first second and third -- foreigners should have no access to stuff, benifits housing healthcare until after French nationals -
Some of her policies are quite left in their nature -- supports for poor and working class people -- as well as some traditional right leaning tough on crime more police - less immigration - think Brexit in the UK -- where it was traditional working class white people who used it as a chance to voice their pent up anti immigration feelings -- and France is right there --
French politics is like that Macron picks left and right stuff as well -- their traditional left and right parties have been destroyed in the last 15 years -
their system of run offs will beat her though -- as she can only probably get to 40% tops in teh second round -- and the anyone but Le Pen brigade will rally around Macron 0 even though they think he has been very poor
Also remember the Nazi party stands for National Socialism, so a mix of conservative right and communist left…the idea being grouping both extreme sides.
Macron’s game has been to develop the Center to break down traditional left -socialist/labour- and right parties (pretending to be a Radical when more of a liberal really, which in France has a long running history since the revolution of being king makers and bringing social advance like womens right to vote, mandatory children education and end death penalty to pick a few).
https://en.m.wikipedia.org/wiki/Liberalism_and_radicalism_in_France
Le Pen is not strongly anti-immigration these days. Lately the refugees have been white, so being anti-refugee isn't looked on so kindly.
she has since welcomed Ukrainian refugees and downplayed her long-standing call for a referendum on immigration, as well as her earlier demand for sanctions against Russia to be lifted
https://www.washingtonpost.com/world/2022/04/05/france-election-macron-…
She’s now the wolf in sheep clothes…
Her party has along history of collaboration with nazis, xenophobia and anti-European values.
Her party in the European Parliament sides with the far right.
maybe do some reading, I’d suggest you start with good ol’ wiki: https://en.m.wikipedia.org/wiki/National_Rally
Will history repeats :
https://moneyweek.com/economy/global-economy/601363/a-warning-from-hist…
If it does repeat, is not because of pandemic or economy fundamental but for central bank and government.
From $1 trillion to $9 trillion since GFC, FED balance sheet could indicate how much been printed....
https://www.federalreserve.gov/monetarypolicy/bst_recenttrends.htm
Around $3.8045 trillion (reserve balances) is available to conduct QT operations from SOMA
Enjoyed this quote from the article:
“In the later inflation, on the other hand, the effects are all bad. The government may steadily increase the money inflation in order to stave off the later effects, but the later effects patiently wait.
“In the terminal inflation, there is faltering prosperity, tightness of money, falling stockmarkets, rising taxes, still larger government deficits, and still roaring money expansion, now accompanied by soaring prices and ineffectiveness of all traditional remedies.
“Everyone pays and no one benefits. That is the full cycle of every inflation.”
https://www.wealthplaybook.ca/post/hard-to-soft-money-the-hyperinflatio…
Sure does rhyme, check out the chart of inverted silver quantity in roman coins during the debasement, and the current FED money printer go Brrrrr chart.
Great short article.
"About 40% of Germany’s gas comes from Russia, for which it pays nearly $1B per week.
About 35% of Germany’s gas is used to generate electricity.
Turning all the German nuclear reactors back on could approximately stop gas imports from Russia."
https://unchartedterritories.tomaspueyo.com/p/why-germany-wont-keep-its…
ditto. on reflection when in 80/90s I used to do a bit of work in the UK & The Continent I got the feeling that the Germans still couldn’t work out how they lost the war & reading that, explains that. Mind you, on the same basis, when I got over to the UK I couldn’t work out either, how they had won it.
Funny thing about people - you don't really learn what they are capable of until the crap hits the fan. Good or bad
Thinking back about some of the people I've known over the years and there were a small number who spent a lot of time looking good, they were really quite popular and well liked, but when things in their life went out of control more than a few turn very nasty, and a much lesser number refused to be nasty.
So to your experience in Europe, current generations will not be able to understand the whys and hows of events 2 - 3 generations earlier unless they've experienced it.
I think quite a bit of that was on display here in ChCh during the EQs. Some were able to adapt their households to function without usual services, others weren’t. It also brought some ugly social manners to the surface which quite shocked me. For example the pernicious & persecutory attitude & actions displayed by some EQC & insurer assessors and on the other side the concocted & false claims and some middlemen who were nothing but opportunists & scavengers. Yes any upheaval brings much to the surface that is previously hidden underneath.
Natural gas is the second most important primary energy source in Germany’s energy mix, after petroleum. In 2016, its share of primary energy consumption (i.e. the total amount of energy used in a country each year) amounted to 22.6%.
In private households, natural gas is the most important energy source on the heat market, accounting for approximately 44%. Here, more than 90% of natural gas is used as a source of heating.
So, no nuclear will not help, this is a problem to do with keeping people warm in winter.
https://www.bmwi.de/Redaktion/EN/Artikel/Energy/gas-natural-gas-supply-…
Perhaps head back to bed?
Population of Germany - 83.24 million (2020)
44% of the population use Gas to heat their homes.
The energy use of converting to electric home heating would double this draw on the network, even if we could find 30 million heaters by next winter...
Russia’s Export Windfall Catapults Key Trade Barometer to Record
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Current-account surplus is biggest in decades thanks to export
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Imports plunge as sanctions and ruble weakness cripple demand
I fully agree Germany and others should ramp up nuclear power, but I think the argument that it could replace gas is a little simplified here. They talk about how gas is used during peak demand as a last resort and nuclear is more of baseline supply but then argue that one could simply replace the other as the total power production is roughly equivalent - ignoring the different generation profiles.
I suspect some gas would still be needed for peaking and filling in the renewable energy troughs, but I'm sure it is still fair to say that stepping up nuclear generation will mean giving less money to Russia for gas.
I'm very much a Greenie, and find the opposition to nuclear from my side of the debate quite frustrating (although the New Zealand debate is quite different until there are viable and proven small scale nuclear plants).
Bayleys Napier held an Auction on 08/04. Three properties, all passed in with no bids. I wonder if anyone even turned up.
Bayleys Havelock North the same day, one property sold out of one, for a decent price, but it's a large section close to the village so subdivision potential.
Interesting following the Registered Nurse pay equity business.
Putting aside the government's duplicity re back pay, there is a glaring and unfair flaw in the whole process. The registered Nurses were compared to Police, corrections officers and I think probation officers.
Police training requires a 16 week paid employer provided training course
Corrections officers a 2 week course
Probation officer training details seem rather obscure ..NCA level 3....less than a year training...on the job presumably?
Lets look at Nursing
A nurse aid (not covered by this process) -a course of less than a handful of weeks
An enrolled nurse (not covered by this process) an 18 month polytech course. Self funded
A registered Nurse an intensive 3 year degree at a university or polytech. Self funded
In terms of qualifications and knowledge therefore the vocations chosen for comparison sit at or about a a nurse aid and certainly below an enrolled nurse.
Unfortunately the NZNO are not objecting to this and are purely focused on the less important back pay issue. Once again they will sell their nurse member down the drain.
All this adds strength to my belief that the government is doing every thing it can to diminish the nursing profession to something more like the enrolled nurse or a trades type vocation. The next step to look out for is that they will change nursing education to a trades like on the job training and take it out of the learning institutions.
Again I repeat, if you are a nurse there is no future for you in NZ and if you know anybody contemplating a nursing career, do everything that you can to talk them out of it if you have any care for their future well being and happiness.
If I were the NZNO, I would try to seek a judicial review of the whole process.
If you have a cheerful but not very bright kid, tell them to wait, their time is coming.
Spot on. The fire service also gets thrown in the mix as a comparison. Another joke - their work and pay conditions are on a another level compared to a nurse - with zilch entry qualifications.
If ever there was an example of a need for pay parity for women the nurse situation is it.
And yet, NZ was locked down because, & throughout this pandemic we have been repeatedly told, NZ’s health services could not cope. As well NZ was 39th on WHO’s list of pandemic preparedness, Surely it is the foremost duty of any government to give priority to protecting the people. The pandemic has revealed glaring undeniable weakness right here. There is hardly a guarantee that another pandemic will not strike. Instead of $ billions being earmarked for new airports in the middle of nowhere, airport railways, bicycle bridges, arts & farts and on and on, why isn’t such funding being directed under urgency towards NZ’s health services and the provision of qualified clinicians to man them. For heaven’s sake even the pathologists had to threaten strike action after being undermanned, underfunded and overworked for two years solid.
You may be right but sure as hell NZ was hardly over prepared. PPE gear outmoded, insufficient supply, unreliable and not fit for purpose. As things turned out, 39th looks way too high on their list. Recall in the first month or so, the race by some in private industry (Tindall, Morgan & Fyfe, read Rob Stock in Stuff 09/04/2020) to secure and freight in plane loads of suitable gear. Then again you are probably right, the government & MoH took no notice of WHO in the first place as they knew (so did President Trump) they had no credibility, resultantly ignored them, and thus had done nothing because they just thought everything was dinky dory & ship shape and she’ll be right.
You're wrong about corrections officers. Their training is a lot longer. Their training takes a full year. On top of that corrections Officers manage NZs most violent people who have been sent to prison, on a daily basis. They face and often experience threats and actual violence daily, sometimes several times daily depending on where they work. It takes skill, and fortitude to do the job. The risks are high and the rewards poor.
You've just described a night in an A&E for a nurse. But missed out the bit about the 3 years degree, ongoing professional development (well above basic ncea level) the lingering student loan and the fact that life and death decisions are made on a daily basis.
No comparison.
I know plenty of nurses, and am married to one, plus I have worked in a DHB. I also know more than a few nurses who have worked in prisons. they all prefer to work in the DHB. I agree EDs look bad, but prisons are worse by quite a measure. Even cops I know don't want to work in prisons.
https://careers.corrections.govt.nz/home/corrections-officer/
Looks like one weeks induction and 10 weeks on the job to me.
The whole first years work nursing is considered in work education and thereafter they are required to keep up with a prescribed amount of educational development. - Doesn't even begin to compare.
Consider yourself on your death bed and we shall send you back to treatment as it was "back in the day" How do you think you would fare? Which would you rather have?
Consider this also. That is exactly where this government is sending health care. In fact treatment back then will look better by the time they are finished.
White House warns of "extraordinarily elevated" inflation data.
I wonder if we’ll see a double digit print tomorrow.
https://twitter.com/disclosetv/status/1513574076383645699?s=21&t=uVuk4y…
'Putin's price hike'.....gosh I thought the republican party in the states had completely lost it.....I think the democrats are just as guilty.
Such a shame to see the political decay in the world at present...the leadership of the world has become extremely weak.
We need a new generation of leaders who will take responsibility for their actions...as opposed to blaming everything on other people.
Biden passes sanctions on Russia..combined with massive fiscal spending...then has the audacity to blame Putin on the extremely high inflation..what a joke!
Totally agree on the weak global leadership thing, especially inside the western cultures. Watching Germany underwrite Putin's Ukraine war is a bloody hard watch. Poor leadership going back decades has caught them with their pants down. Merkel was a media queen but not much else. Sound familiar?
Biden is an embarrassment. Just imagine if he had to put up with what they did to Trump? Media corruption on an epic scale sadly. Macon has his nose in front of Le Pen in France, which has totally changed everything politically over the last 10 years. The old so-called left & right policies are now outdated descriptions with both candidates having a combination of both policies. Once again, with another media slight-of-hand to favour who they want. France is interesting case to follow in that it is often a bell-weather country for the west in general. Their republic-democracy is (and has been) truly tested from all angles and as one of the world's oldest liberal nations, is always worth keeping an eye on.
Closer to home we have our neighbours heading to the polls next month. Once again the various media have backed their horse & will fight tooth & nail (read print anything & everything) to persuade the voters. last time round Labour over promised & fell over late while the Coalition snuck home by a whisker with their high-tech approach. Meanwhile, back at the ranch, Ardern has taken a different tack. Now she's opening up & telling us how hard it was to lock us down & that she had to it for our own benefit, but she didn't really want to, & how much sleep she lost & on it will go for the next 18 months. Oh, pa-lease, give me strength. She loved every second of it but now the polls have turned, she's had to change tack. God they're a gutless lot.
Well at least you can understand our PM. I can’t anymore than I can stand anyone who waffles for the sake of waffling. For instance this little pointless sentence concerning the departure of MP Wall. “Ultimately as you can see by the facts, there was a different candidate selected in Louisa’s seat.” If I had uttered or written such utter claptrap in school, I would have been laughed out of the classroom.
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