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US sentiment terrible despite positive data; global GDP reports generally positive; China focuses on stabilising; UST 10yr 2.66%; gold and oil up; NZ$1 = 62.8 USc; TWI-5 = 71.1

Business / news
US sentiment terrible despite positive data; global GDP reports generally positive; China focuses on stabilising; UST 10yr 2.66%; gold and oil up; NZ$1 = 62.8 USc; TWI-5 = 71.1
Mountain snow

Here's our summary of key economic events overnight that affect New Zealand, with news strong corporate earnings, rising wages, and tight labour markets aren't overcoming fears on "imminent recession".

The the US, the widely watched PCE inflation gauge rose +1.0% in June from May, more than expected and up +6.8% in a year. But these levels are far lower than the US CPI measure of inflation.

For a fourth consecutive week, American petrol prices have fallen.

Perhaps more importantly, the same data set shows both incomes and spending growing faster than expected. Personal incomes are up +7.2% in a year, a rate that has been stable for many months. Personal spending growth was up more, but this is a more volatile series and is up at the rate of +7.6%. These shifts show on average most households are not quite keeping up with inflation. The slippage however is being assumed as more than it really is, which is why sentiment surveys are quite negative.

All of these indicators keep pressure on the Fed.

The widely watched University of Michigan sentiment survey bounced off its lows in July, but remains deeply pessimistic. In fact it is still basically at its all-time low in a record that does back 44 years, six recessions and some of those were long and deep. Yet, the US has record low unemployment and is not in recession presently, and yet these types of sentiment surveys record lowest-ever mood depths. But company earnings remain very strong. It is not easy to reconcile. They may be talking themselves into a recession.

Expanding at a moderate pace, even if less so, is the heartland Chicago PMI. Of note in this survey is the sharpish shrinkage of new orders.

On the heals of the advance US Q2 GDP release yesterday, there were a slew of of countries releasing Q2 economic activity reports overnight. Canada's was flat from May but up +1.1% in the year. Taiwan's was +3.1%. Mexico says it was up +2.1% for them. And the overall EU rate was +4.0% and a better than expected result. It was down from +5.4% in Q1, but well above the expected +3.4%. These come after a set of national releases that included France who said it grew +4.2% over the past year. Germany reported a +1.1% expansion rate. New Zealand won't report its Q2 GDP result until September 15.

China said it had an inflow of foreign investment in June of +US24.5 bln in the month. This was their best monthly result in more than a year.

But this comes after Beijing meetings on their economic slowdown and how they are responding. Missing are any mention of the 5½% 2022 growth target. Replaced are calls for measures to expand demand, work on preventing decline and stabilising the current situation.

And it is getting harder for non-national companies to operate in China. The car-making giant Stellantis (Chrysler, Jeep, Fiat, Citroen, Opel, etc) has pulled out altogether, citing the fast-growing political interference in its business there, and the risk of being caught up in geo-political struggles and sanctions. Political stability is 'a thing' in investment decisions.

The easing Chinese lockdowns, as tentative and uncertain as they have been, supercharged Japanese industrial production in June. After taking a heavy hit in May, this June rebound more than made up for the earlier shortfall and was way better than expected. It was the first rise in industrial output since March and the steepest pace on record. But Japanese retail sales growth slowed in June.

In Australia, producer prices rose +5.6% over the past year to June, slightly faster than in the year to March, but lower than their CPI rise of 6.1%. The equivalent New Zealand data for the June quarter isn't due out until August 17, 2022.

Staying in Australia, the latest APRA data shows moderating growth in loans to owner-occupiers as rate hikes and the rising cost of living taps the brakes for household borrowing, but loans to investors are picking up sharply - in anticipation of more migration. Overall, private sector lending was up more than +9% year-on-year.

The IMF has been reviewing how Asian economies are handling China's slowdown. They see Australia's expansion fairly hard-hit over the next two or three years. But some others won't miss a beat. Their analysis didn't bother with New Zealand - we don't count for the IMF in this region, it seems (but Nepal and Laos do).

The UST 10yr yield starts today at 2.66% and down -2 bps from this time yesterday. A week ago it was at 2.75% so a net -9 bps retreat. The UST 2-10 rate curve is more inverted today, now at -26 bps and their 1-5 curve is also more inverted, at -28 bps. Their 30 day-10yr curve is now at +45 bps and flatter than this time yesterday. The Australian ten year bond is down -2 bps at 3.08%. The China Govt ten year bond is down -3 bps at 2.77%. And the New Zealand Govt ten year will start today lower by -12 bps at 3.40%. A week ago it was at 3.72% so it has been a substantial weekly retreat.

Wall Street has closed its Friday session up another +1.4% and heading for a weekly gain of +4.2%. Investors brushed off the poor Facebook result, and took heart from Apple, Amazon and Google's earnings especially - not to mention Chevron and ExxonMobil's blockbuster carbon-fueled results. Overnight, European markets all closed up more than +1.5%. Yesterday Tokyo ended its Friday session flat, Hong Kong fell -2.2% and Shanghai fell -0.9%. The ASX200 ended up +0.8% while the NZX50 was up even more, up +1.5% at the end. For the week, the ASX200 gained +2.3% while the NZX50 gained +2.0%.

The price of gold opens today at US$1765/oz in New York which is up +US$12 from this time yesterday. But it up a more impressive +US$41/oz from this time last week (+2.4%).

And oil prices are up +US$2 today at just on US$98/bbl in the US, while the international Brent price is now at US$104/bbl. That is about a +US$4/bbl rise for the week.

The Kiwi dollar opened today unchanged from this time yesterday at 62.8 USc. Against the Australian dollar we are marginally softer at 89.9 AUc. Against the euro we are softer too at 61.6 euro cents. That all means our TWI-5 starts today at 71.1. A week ago it was at exactly the same level..

The bitcoin price has moved sideways from this time yesterday, down a mere -0.3% to US$23,932. But that is a net +4.0% gain from this time last week. Volatility over the past 24 hours has been moderate at just over +/-2.0%.

The easiest place to stay up with event risk today is by following our Economic Calendar here ».

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44 Comments

For a fourth consecutive week, American petrol prices have fallen.

Biden Nemesis Exxon Reports Record Earnings As Company Prints $20 Billion In Cash

“So, where are we at today? Russia sells the least amount of gas and oil, but its revenues have increased. Moscow transfers its production and energy sales to China at prices lower than the prices of international markets. US energy companies’ revenues, such as Exxon Mobil, have doubled and Chevron quadrupled, while Europe is paying three times the price of its energy and is facing the spectre of recession. Link

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3

Actual price is likely less important than volume. Russia thus has cash flow to put it simplistically. Wonder though about the Iranian view of this particular budget deal, as it stands, relative to their own exports to China?

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Gazprom signs $40 billion deal to develop Iranian oil and natural gas production capabilities - India and Pakistan are expected to be significant buyers.

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"New Zealand won't report its Q2 GDP result until September 15"

That's shocking, by then the GDP figures will be outdated. Speed things up!

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18

So almost an entire quarter old. Almost pointless really 

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8

That's normal. 15th or 16th of September.

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Oz is only slightly quicker 

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The price of gold opens today at US$1765/oz in New York which is up +US$12 from this time yesterday. But it up a more impressive +US$41/oz from this time last week (+2.4%).

UK pillaging other nation's gold damages its reputation.

UK rules on Venezuela’s gold

Britain's top court turned away President Nicolas Maduro's bid to repatriate his country's own gold

Hence - Bullion exchange opening in India is good news for Russia — diplomat

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3

Yes, the UK seems to leading to charge into the Abyss, doing what the US dimwits tell them. London is destroying itself, seizing the assets of Russian citizens means no one can trust them with their money. Next comes the collapse of the Euro banks, currently trading at a fraction of their book value and the US banks refusing to accept their Euro denominated bonds as collateral. Banking requires trust in the solvency and liquidity of the lender.

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How can you even trust a privatized entity that has the ability to create as much money as they like and give it to ever they desire?  Time for the big reset of the Western world central banking system that the productive part of society have become debt slaves to.

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Germany repatriated its gold from the US in the last few years. Even Texas didn't trust the fed and "repatriated" its gold to Texas also in the last few years. Seems Putin was  caught napping.

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Fed's Favorite Inflation Indicator Jumps To New 40-Year High, Savings Rate Plunges

Real personal spending managed a measly increase of 0.1% MoM in June, which leaves  real spending up just 1.6% YoY...

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Why Does the Fed Spend So Little Time On the Past?

Once more, Mr. Simmons: “…government securities acquired under repurchase agreement attracted little attention in discussions of central bank policy.”

After this week’s 75-bps rate hike, the current FOMC put their own reverse repo rate (RRP rate) – which is not repo – at 2.30%. And yet, yesterday the first day of trading with it, 4-week T-bills – the absolute best of on-the-run - were auctioned by Treasury to a high yield of 2.14%. At the same time, 8-week instruments fetched a high yield of 2.21%.

Low yields at 1.99% and 2.00%, respectively.

Massive liquidity premiums being paid across a wide swath of the actual center of the monetary universe.

Consider how the US economy just suffered a “technical recession”, the BEA’s data this week confirming at the very least real GDP declined across the entire first half of this year – just as previous markets from last year had been expecting even if hardly anyone else outside of them had. A far cry from the red-hot economy foretold as recently as January and February, whether or not these results meet any definition of recession is beside the point.

Bond markets and curves right now are positioned for worse still to come, more than a contraction already having achieved the same downside GDP proportions as 2001’s dot-com recession. Forward-looking markets are looking forward as if “it” still hasn’t hit yet, while the media and politicians like Mr. Powell try to litigate various interpretations of the just-concluded past.

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A Young Nat appears to be behind the creation of fake mayoral contender websites that all link back to Leo Molloy.

 

Only from National.

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9

If so part of a fast growing concern about the integrity & calibre of young aspiring members of NZ’s political parties. Labour had a mess on its hands over behaviour at a camp thingy and in Christchurch highly nasty vitriol posted about a ChCh city councillor from a source too close for comfort,  to a young Nat.

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.. it seems to me that the prankster is tech savvy , is capable of thinking outside the square , and has got an excellent sense of humour ....

Fast track that person into the hierarchy of their political party  !  ... 

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Nothing tech savy  about registering a domain and writing a few lines of html.

<html>
<head>
<meta http-equiv="content-type" content="text/html; charset=iso-8859-1">
<script language="javascript"><!--
location.replace("https://www.leomolloy.co.nz/")
//-->
</script>
</head>
</html>

 

The guy is a shop assistant. If you want his home address and phone number us whois.

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The current prime minister of our great land ( girt-by-sea) was a fushnchup shop assistant  ... 

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Still, convenor of NZ’s most open & transparent government ever, is yet to explain why the recording & publishing of covid mortalities in NZ has recently been realigned. That being beforehand if you were run over by a bus and once deceased, discovered to harbour the covid virus, statistically you were immediately a covid victim. But now a light bulb moment! Let’s no longer count ‘em like that. Simply because. Plan A, introduce & nurture fear and control by amplifying covid fatalities. Plan B, reduce recordings of fatalities to project onto the international screen that NZ’s fatalities are low, by any such comparison. Quite honestly, in terms of honesty, this government sucks and my opinion this PM is the greatest charlatan NZ has ever witnessed.

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To be fair, there were still 67 deaths this week on this new (more accurate I’ll admit) measure. Look overseas for the drastic impact on the excess deaths (which imo we should be using) and our efforts have not gone without reward on the last two years. 

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Over 600 deaths in NZ for the week.  If 10 % of the population have Covid-19, then 67 is the roughly the normal.  Are you sure the excess deaths compiled by the CDC (conflict of interest) were not caused by the experimental mRNA gene therapy?  NZ efforts to try to stop a mild cold virus, with forced experimental 'vaccinations' (it is not a vaccine), never stopped transmission or infection of the virus, never stopped deaths and indebted our country much to Pfizer's delight and  our government's newly created control powers.  Your liberties have been trashed.

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Yes. 

Charlatan is a polite description.

I fear our once great nation is entering the next phase of democracy,  aka Banana Republic!

Sadly many kind hearted folk continue to believe that if the data comes from our beaurecratic institutions  that it is factually correct!  

Let's hope for great harvest, yet prepare for drought!  

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The USA used the CARES act to incite fear and control.  Financially stressed hospitals got paid $13,000 for a Covid-19 admission and if put on a ventilator they got $39,000.  Deaths only had to be suspected or likely attributed to Covid-19 to count.  Co-morbidities didn't matter, you died of Covid.  Perhaps now governments (corporate controlled) want to change death numbers to show mRNA gene therapy actually worked.

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It's shameful behaviour from senior brass, so I don't doubt that it's true. 

Controlling the message is now priority number one, with political and economic agendas taking priority. 

We, the sheeple, will likely never be privy to the depth of data manipulation from The State.

But rest assured, highly paid PR teams will deliver the "outstanding  Kiwi covid success" to international parties.  The clowns at Labour et al will soon enough be ✈ for political posts abroad. 

BTW.  When I sold my business in 2021 certain parties said I was mad, NZ is the world's Goliath ,  blah blah blah!.  The same people are now looking to exit but without interested buyers.  Health sector. Hate to say it but incompetent management always ends with carnage. Slap dash PR expertise and radical ideology, then it's a s:"/@storm! 

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Our current Prime Minister, love her or hate her, is clearly more able than our average MPs.  Her having worked in a fish & chip shop is a significant positive whereas having worked for Tony Blair is a serious worry.  If she had been an owner manager of a fish & chip shop then I would really be impressed. 

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True, and taking it for granted, on that work experience, she can tell a moki from a hoki undoubtedly she is more able than the average MP. And regrettably in saying that, I don’t limit that opinion to just her own particular party.

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I think it's hilarious that both Collins and Lord were too slow to think of registering their domains.

They were asking for some young prankster to stitch them up.

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He should have registered all of these as well

efesocollins..nz

efesocollins..kiwi

 efesocollins..co.nz

efesocollins..net.nz

efesocollins..org.nz

efesocollins..gen.nz

efesocollins..ac.nz

efesocollins..maori.nz

efesocollins..geek.nz

efesocollins..school.nz

efesocollins..kiwi.nz

efesocollins..com

efesocollins..co

efesocollins..net

efesocollins..org

efesocollins..info

efesocollins..me

etc etc etc

 

 

 

 

 

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I love the spin out of the USA at present and jokes aside all you really need to do is just watch the actual response by the FED.

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The number of NZ businesses for sale on TradeMe has passed 4,500 for the first time in the years I've been looking.

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It's hard to read much into that when you have large amounts of retiring boomers cashing out of their businesses.

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Retiring boomers should be replaced with retiring boomers offspring, but they have little hope of borrowing money, directly associated with central banks policies.

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I just took a look at what is actually for sale, strip  out the franchises, the motel leases, cafes, not much left. Perhaps we need two categories, profitable, after paying someone to do the work, and unprofitable, I think you will find not many in the first category.

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Maybe a 3rd category: "Current owner keeping building but selling business". I.e. How'd you like to pay for a job to cover your rent.

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On the heals of the advance US Q2 GDP release yesterday'

Hope they fully recover

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Has there been any insight / discussion around the price action of NZ Carbon, particularly after Wednesday?

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I guess it depends on what National do if they get in next year. Apart from that, up, up and away I'd say.

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Saudi’s investing 6 billion into El Salvador’s five largest projects. Seems their bitcoin strategy is coming along nicely. 

https://twitter.com/milenamayorga/status/1553019632029679618?s=21&t=aNW…

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I'M sure the US are working on a plan to des stablise El Salvador as we speak and perhaps Juan Guaidó can be made president there as well? At least the UK cannot steal their BTC.

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"Weekend Briefing; Fear Trumps Evidence."

Another climate change article?

 

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I thought it was another anti Donald Trump spiel  ... 

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Have the Conservatives in the US realised that DJ Trump is 76 years old, and perhaps too old to run again in 2024. Fox aired Ron DeSantis and Mike Pence but not Trump.

9/11 victims protested LIV Golf at Trump National Golf Club. "Saudi blood money" don't quite know what it means.

Jan 6 Committee was brushed off as a political witch (wizard) hunt. Today, WH officials like Steven Mnuchin attended an interview recently. Cassidy Hutchinson's testimony was explosive, a revelation of the inner working of Trump's mind.

And in a recent most Republicans do not want Trump to run again. 

A similar scene in the Democratic camp, in a poll, most don not want J Biden to run for a second term.

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The LIV tour is in direct competition with the PGA and the PGA hates competition, as any big business in the USA.  DeSantis is the better choice, seems to be one candidate willing to stand up to corporations as displayed by his correct Covid-19 response.

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Yet, the US has record low unemployment and is not in recession presently, and yet these types of sentiment surveys record lowest-ever mood depths. But company earnings remain very strong. It is not easy to reconcile. They may be talking themselves into a recession.

My theory?  Social cohesion has collapsed.  

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