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US labour markets stable, awaits non-farm payrolls report; US trade deficit narrows, Canada's trade surplus up, Australia's zooms higher; container shipping costs fall; UST 10yr 2.67%; gold up and oil down; NZ$1 = 63.1 USc; TWI-5 = 71.3

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US labour markets stable, awaits non-farm payrolls report; US trade deficit narrows, Canada's trade surplus up, Australia's zooms higher; container shipping costs fall; UST 10yr 2.67%; gold up and oil down; NZ$1 = 63.1 USc; TWI-5 = 71.3

Here's our summary of key economic events overnight that affect New Zealand, with news global trade may still be happening, but it seems to be happening at a slower pace.

But first, last week new US jobless claims were 206,000 which was a small decrease from the prior week and now 1.45 mln people are on these benefits, a small rise but still near a record low. Tomorrow we get the July non-farm payrolls report and that is expected to report a gain in employment of +250,000.

Job layoff activity was lower in July than June and still at a much lower level than pre-pandemic.

The trade deficit in the US narrowed by -US$5.3 bln to a six-month low of US$79.6 bln in June. Total exports were up +1.7% from the prior month to an all-time high of US$261 bln and up +23% in a year. Meanwhile, imports went down -0.3% to $340 bln in June from May to be up +20% from the same month a year ago. Their trade deficit with China seems stable at about -US$27 bln/mth.

Part of the reason imports are staying high is to guard against future shortages. Retailers and logistics operators are struggling to find space to store the flood of goods that have swamped warehouses and weighed on their balance sheets. Warehouse owners say more retailers are looking to add storage capacity, both for goods now reaching their networks of stores and distribution centers and as they prepare to keep more inventory on hand long-term to guard against stock-outs.

The American 30-year fixed-rate mortgage rate is 4.99% this week. Rates have fallen swiftly from their 13-year high of 5.81% in June.

Canada's trade surplus widened to +C$5.0 bln in June from a downwardly revised C$4.8 bln in May. This was their largest monthly trade surplus since August 2008.

And staying in Canada, house prices are retreating sharply in both Toronto and Vancouver.

The Bank of England raised its policy rate by +50 bps to 1.75% during its overnight meeting, the sixth consecutive rate hike, and pushing borrowing costs to the highest level since 2009. It was a unanimous decision and the rise was as markets expected even if it was their biggest rate increase since 1995. They have inflation running at 9.4% pa. and it will peak above 13%. They say the country is about to enter a recession in 2022.

The star of the trade data reported overnight was Australia who recorded an all-time record high trade surplus in June of +AU$17.7 bln for both goods and services. That takes its annual surplus to +AU$136.4 bln and a rather remarkable +6.3% of GDP. Exports rose almost +38% in a year, with the June activity up a stunning +5.1% from May alone.

In China and hard on the heels of a regional banking scandal that saw customers take to the streets in protest, the same province is now investigating a massive fraud involving "missing" copper.

The cost of shipping containers by sea continues to fall, down again last week to be almost -30% lower than a year ago. Bulk cargo rates slumped as well.

But there are signs of a strong recovery in global passenger travel. That said, it is still miles below pre-pandemic levels.

The UST 10yr yield starts today at 2.67% and down -6 bps from this time yesterday. The UST 2-10 rate curve is little-changed today, now at -36 bps but their 1-5 curve is more negative at -32 bps. Their 30 day-10yr curve is now at +58 bps and slightly flatter than this time yesterday. The Australian ten year bond is down unchanged at 3.13%. The China Govt ten year bond is also unchanged at 2.74% and still near its low for the year. And the New Zealand Govt ten year will start today up a sharpish +7 bps at 3.39%.

Wall Street is in its Thursday session with the S&P500 trading very little changed. Overnight, European markets closed up about +0.5% although London managed no gain. Yesterday Tokyo ended with a +0.7% gain, Hong Kong with a +2.1% rise. And Shanghai ended with an +0.8% rise. The ASX200 ended flat while the NZX50 was up +0.3% in Thursday trade.

The price of gold opens today at US$1792/oz in New York which is up +US$29 /oz from this time yesterday.

And oil prices start down another -US$3 at just over US$88/bbl in the US, while the international Brent price is now just under US$94/bbl.

The Kiwi dollar opened today up +½c from this time yesterday to 63.1 USc. Against the Australian dollar we are marginally firmer at 90.4 AUc. Against the euro we are unchanged at 61.6 euro cents. That all means our TWI-5 starts today at just under 71.3.

The bitcoin price has moved lower from this time yesterday, down -3.6% to US$22,633. Volatility over the past 24 hours has been moderate at just over +/-2.2%.

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

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116 Comments

The American 30-year fixed-rate mortgage rate is 4.99% this week. Rates have fallen swiftly from their 13-year high of 5.81% in June.

Maybe if they're nice Santa will bring them a 7 for Xmas.

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3

This tantrum that China is throwing feels very much like what a spoilt only-child would do.

On the positive side it will give the Taiwanese military planners good intel on what China may do at some future date.

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9

Actually I'm a little disappointed that Taiwan did not take down the missiles Chine fired across it. When North Korea did that to Japan it was denounced as a major provocation, so despite all that China is saying they are doing all the poking. Taiwan though is probably trying to keep its true capability secret as tracking would have been able to tell them the flight path, trajectory and likely destination of the missile. But what that tracking data would not tell them is whether those missiles would separate into separate warheads with independent targeting around apogee, making them harder if not impossible to defend against.

Some debate is beginning to appear to suggest that the US may not help defend Taiwan. But this ignores the fact that any invasion of Taiwan by China would be seen as a major act of aggression and a threat to Japan, South Korea and the Philippines. All of these countries would be pressuring the US to act and would very likely be part of a coalition to help. It also ignores the fact that the US is currently maintaining some strategic assets in Aussie.

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2

About the only thing they can do is disrupt shipping. 

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0

Who is "They"? China or the US? 

Any conflict would be highly disruptive to shipping and aviation, but also expect China to double down in the South China Sea too and that will bring in Indonesia and Viet Nam, and would guarantee Philippines, if the held back initially. But the Philippines capability is worse than ours, so they would not really be able to contribute much other than providing basing rights.   

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0

China. Their navy is generally configured for a range of not more than 1000ks. They don't really have a substantial amphibious capability. So by design their forces are designed around harrasment.

That's short to medium term anyway. 

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3

Military plane, with Pelosi and congressman, had to divert and fly a longer route. Live firing drills off the coast of Taiwan, can be seen as a blockade of sorts. And how will  China punish Taiwan.

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1

You mean this shipping? It would be a disaster much worse than Ukraine

https://www.marinetraffic.com/en/ais/home/centerx:131.3/centery:22.7/zoom:3 

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Many people in #Taiwan are very worried. Former Taiwan ambassador to New Zealand lashes out at the #Pelosi provocation. Via @Dragondescendan

Link

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2

Well yeah, they are literally a nation of only children, I've long felt that explains a lot of their policies.

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7

Yes, but it was probably their greatest achievement in helping the environment.

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3

It is a disrespectful provocation to the Chinese. Military power to do what exactly? What did the US achieve by heightening tensions and attempting to polarize Taiwan such that it isn't diplomatically annexed by China, which is likely on the cards within the next 10 years. The KMT party, which is the main opposition, is looking at reunification on favourable terms to Taiwan in the near future.

The United States is engaging all its foreign rivals at once, it is overstretched, deindustrialized (because it sold out its own people to industrialise China) and losing on the economic stage, so it is driving the remilitarization of its Rivals.

The Administrations since Bush Senior have systematically squandered the American Empire, and we should be concerned by it since our prosperity is tied to their enforcement of freedom of navigation, economic cooperation and linguistic/metric/financial standardization.

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4

Favourable terms to Taiwan? Don't make me laugh. 😂

Authoritarian man-children running the place is not favourable to democracy.

Taiwan is its own country and a wonderful one at that.

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8

Why is he an authoritarian man-children? This retarded, infantile dialogue is hubris. The Chinese have a competent, meritocratic bureaucracy which makes the "dictatorship" possible. The Chinese have gone from an agrarian backwater to a World Power in ~40 years.

Why does "Democracy" matter? What difference does it make whether we get to tick a box every three years when the candidates and policies we have, which almost everyone is deeply unhappy with, struggle to do anything to resolve the issues at hand, from the public service crisis, health crisis, housing crisis, debt slavery/parasitism etc. Our democracy seems far more like plutocracy than anything else.

It is not a matter of a system of government. It is a matter of power and what these powers respectively set as objectives to work towards.

Your narrative is infantile and unbelievably arrogant.

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4

Let's see... the CCP...

Authoritarian ✅
Behave like man-children ✅

China has 1.3 billion people, of course they are a "world power".  Imagine how much more they could have been without the CCP holding them back.

Correct.  Democracy is far from perfect, but it's better than every other system of government that has been tried.

If you think liberty and freedom are infantile I suggest you make start making plans to immigrate to Mainland China.  You will be in for a rude awakening when you find it is far from the utopia you imagine.

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7

That is unbelievably arrogant. Have you considered they have a completely different political system because it suits them as a people, given how the chinese dynastic systems with the confucian bureaucracy has worked for the past 3000 years?

Liberty and Freedom are not even necessarily part of democracy. Liberty, in the ancient sense, meant the sovereignity of a people to act politically independently. In the modern sense, it usually means the ability to pursue any pleasure one wants without imposed restrictions by others.

And what do you even mean by freedom? Power always determines what you are and are not allowed to critique.

In China, you know what you are and are not allowed to critique. You aren't allowed to critique the CCP. It is very clear to everyone.

What are you not allowed to critique or attack in the West? LGBT matters, any racial issues other than anti-white ones, a certain ethnic group who have extremely disproportionate influence/power, the promotion of every vice on all media, the collapse of morality, the economic enslavement to debt slavery through banking/finance power, the cultural revolution erasing all of western history before 1970. Or the endless lying about the state of the economy, the way our economy is held up by importing people rather than any economic innovation/improvement. Who is winning the war in Ukraine, what happened in afghanistan, why social media is unbelievably censored now. These rules are constantly changing depending on the narrative of the day coming from who we are ruled by.

Take your cold war warrior logic back to 1953.

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So while you're advocating for China you said " Liberty, in the ancient sense, meant the sovereignity of a people to act politically independently." [sic] So you're arguing that you think it is okay for China to deprive Taiwan of it's political independence?

Also "Power always determines what you are and are not allowed to critique" Within a democracy it is actually encouraged to criticise Government because it is the power of the people that counts not that of the Government. It is that ability to challenge the Government that makes countries and Governments stronger. In China criticising the Government is a crime with quite serious consequences. China calls itself the "Peoples Republic of China", but in truth it is not the "Peoples...." anything. It is all about the CCP. China, but nature of its type of Government has to put a lot of effort and resources into maintaining control of it's population.

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Love how people in the West think they have "Freedom", the system is designed to make you "Feel" you have freedom. There is no freedom in the USA, try going onto one of their forums and try to start discussing politics its a total no go zone, however I do love it how you can post pictures of your AR15 collection and enough small arms to start a war on what is supposed to be an automotive forum.

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4

So Carlos...  How much of your life have you actually spent in the USA?

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4

True, no such thing is freedom, we are all being controlled. We even get told how to live our lives…..

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3

I make a habit of critiquing batshit crazy woke nonsense all the time. Thankfully we still live in a free society so government goons haven't turned up at the door to harvest my organs... yet.

Not interested in playing whataboutism, the West is far from perfect, but it's better than living in a genocidal authoritarian ethno-state.

The people of Taiwan are a sovereign democracy that have the right to self determination. It is supreme arrogance to suggest that they should be forced to live under ghastly CCP rule against their will.

Take your CCP fanboyism back behind the great firewall.

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13

Well put.

Amazing how many CCP fan boys hang out here or write for the website.

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3

There is unfortunately little point in arguing with people who believe their desired way is the only way possible (despite showing them evidence that contradicts this) and who believe things are black and white, evil and good, baddies and goodies (which of course, they are always the "goodies").  Child like, narrow, ignorant mindsets cannot be challenged into thinking openly, in doing so you are written off as a collaborator for their latest "enemy".  Their enemy will change by the day, depending on what their minds are fed. 

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5

The world isn’t black and white, and no system is perfect, but some systems are much better than others.

How would you like being an Uyghur in China???

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1

The Uyghurs are fine, the CCP let them run their own affairs in the "autonomous" region of Xinjang/East Turkestan.  It could be a model for Taiwain to follow, reintegrated but still autonomous?

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I assume you are being sarcastic?

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Much better to be behind the great firewall right?  Then our mind can be fed a strict diet of party approved material.

🙄

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3

Von M,

Why does "Democracy" matter? Well, perhaps because, however flawed, I won't get a midnight knock on my door if i call the PM useless or parade with anti vacc placards, or block the motorway like that cretin Tamaki. That's worth something.

I can help remove one set of not very good politicians and replace them with another bunch every 3 years unlike some countries with "leaders for life". That's worth something.

"Your narrative is infantile and unbelievably arrogant."  A good description of you.

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0

What did the US achieve by heightening tensions 

The US didn't heighten tensions,  the US isn't conducting live-firing exercises.  Lets remember what happened here, a politician visited a country. What does Taiwan think about it?  Did they want this person to visit?

attempting to polarize Taiwan

Taiwan is not polarized these days.  China has done a very good job unifiing the country against unification.

"About 90 per cent rejected Beijing's continued claims that Taiwan was part of China and their efforts to limit the smaller country's international space and threaten it with military force"

https://www.business-standard.com/article/international/poll-confirms-p…

Some good food for thought here: https://www.brookings.edu/blog/order-from-chaos/2022/02/07/why-is-unifi…

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3

Oil down, commodities down, house prices down, cheaper shipping, expected recession, trouble in China...  All this doesn't sound very inflationary...

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19

Trouble in China could be super inflationary.

But yes, maybe those transitory guys were right.

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2

No they weren’t. The term “Transitory” was used to claim the inflation was not the result of ultra loose monetary policy, and was all due supply chain issues, and central banks could keep policy settings unchanged and inflation would just dissipate.

Now a year later central banks have had to raise rates with unprecedented speed, to well above pre-covid levels, likely causing a recession, to have any hope of getting inflation back within the target band.

The people who claimed inflation was transitory were completely wrong

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15

The people that were claiming it was all one thing, or the other were wrong.

It should be obvious to anyone close to logistics, manufacturing, travel, agriculture or other elements of the physical economy that the onflow costs of the pandemic were and are still fairly high in many areas. It's a situation that could take a fair while yet to work through, in the meantime you are going to get wildly varying fortunes across many different industries. The central bankers know this also, so it's a much more precarious situation than just "raise the rates because money printer went brrrrr".

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5

yes sure other factors were at play, but lets not forget that the US alone printed $4T in covid response, that is $500USD for every man, woman and child on the planet!!!

Im pretty sure the money printing is far and away the main cause of inflation...

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7

Dead right, and our leaders are doing a great job brainwashing us into thinking it is supply side.

Biden's "Putins inflation", when the charts clearly show ibflation soaring well before the war. Adern making similar statements. Both are embarrasing themselves.

https://youtu.be/6LfUyML5QVY

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8

The big lie technique is alive and well.

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4

Jacinda doesn’t lie, remember

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2

That was a lie too.

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7

Dead right it was always a demand issue.  Borrow (printing) money, give it to the people, have them stay at home without any productivity and spend they did.

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0

And NZ government spent (printed) how much.  Were we any better?

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1

It is not a question of right or wrong, it is a question of expectations and usefulness...everything is 'transitory'.

The important point is over what timeframe?.... and the inflation is both higher and more prolonged than expected.

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1

I remember in that first week or so of the lockdown, I knew people buying AirNZ shares in the dip. They couldn't comprehend that air travel would not recover for years. Demand is coming back now, albeit fairly slowly, but due to lingering covid infections, fuel increases, and having to recommission mothballed aircraft and staff, the recovery is going to be fairly problematic, and costly.

That's potentially the most extreme example, but any business I interact with that's reliant of needing to move things around is experiencing some level of additional interruption and cost pressure they didn't have in 2019. When's that going to go away? You'd only be guessing. 

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3

Interesting point. This appears to be a subset of the broader issue on just how much "net export" earnings is international tourism generating and will continue to do so in this import-inflation environment.

Most of the capital & intermediary goods and a decent portion of the service input have to be imported by the sector, currently at a double-whammy of high price and unfavourable exchange rate.

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3

You'd have to anticipate tourism export earnings to lag significantly for at least another couple of years. Even if everyone else bounces back, China is still under house arrest. 

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1

Pa1nter, I like many of your posts, could you please share what you do for a living and if you're employed, self employed or an employer?  Thanks

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1

Well said LmbF

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0

"Miguel: The term “Transitory” was used to claim the inflation was not the result of ultra loose monetary policy"

Not sure about that, the definition of transitory is simply "not permanent", I think it simply meant Inflation is not here to stay for multiple years, as it historically has been.

Also "The people who claimed inflation was transitory were completely wrong".

I think it's too early to tell, if inflation is still at today's level or higher at the end of 2023, you are right, but you cannot expect inflation to dissipate within 12 months

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0

We have been over the PTA window since the Jun 21 quarter. 

It's been over 12 months.

Long before Vlad rolled over the border. Don't buy into the bullshit sleight of hand from people who are allergic to scrutiny.

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7

But the point was that central banks used the term 'transitory' meaning that it was inflation that they did not need to respond to and could happily ignore - that was the framing in which they decided to use the word. Nobody else created that framing - the central bankers did that to themselves. 

And based upon that framing, they were completely wrong. Or they are wrong now in responding to it! (who would want to be a central banker huh?)

Perhaps central bankers would have been wiser to say something along the lines of: 'we can see inflation is rising and we are preparing to take the steps necessary to address it if necessary'. But instead they decided they were going to try and gaslight society into thinking that there was nothing to see here - and central bankers did that (in my opinion) because they didn't want to expose how much of a mess they (and governments) had made by completely overreacting/over doing the 2020 covid response. 

 

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6

The increase in tradables inflation is expected to ease later in 2021, with global supply-chain disruptions expected to have a transitory impact on inflation.
 

This is how the RBNZ was using the term “transitory” to justify not responding to rising inflation. At the same time they saw the emergency OCR settings remaining until early/mid 2022 and then slowing rising to 1.75 by 2024. Does that sound like they correctly predicted the “transitory” nature of inflation and the required policy response?

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5

No it doesn't, the central banks were certainly very slow to react to rising inflation, no argument there.

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1

Everything is transitory... depending on your timeframe

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1

Good point, to my knowledge there was never a timeframe associated with the term "transitory"?  This would have been very useful, if inflation reduces significantly in 2023, I would accept that inflation was transitory because I don't believe inflation can come and go within two years if it's permanent, but others might disagree.  

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0

The context of how the term “transitory“ was used in 2021 was explain why inflation would dissipate without the need for central banks to adjust their monetary policy direction.

Its not about how long inflation lasts, it’s was always about what policy response was required to address inflation. 
 

the ideas behind central banks describing post covid inflation as transitory have been proven false, and even central bankers admitted as much and stopping using the term and did a complete 180 on policy response to inflation

When the RBNZ was still treating inflation as transitory they had the ocr slowing raising over 4 years and staying below 2%. 

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'Transitory' was used to mean it would be so short lived that they wouldn't need to adjust policy settings because of it.

In that respect, they were completely wrong. 

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3

The inversion in the swaps curves says it all.  Cheaper to borrow for 10 than for 2. 

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Good point!

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It also means there could be a very deep recession coming up where people lose jobs and default on debt obligations (but you already know that..)

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4

The Inflationary part happens over the last X number of years, as % rates were slashed and QE was pumped into The System?

Now, as that liquidity is drained from the system - which it currently is, % rates will rise, as those who depend on debt compete for it to get what is available, short term, (which is why the curve inverts) and those who can't access it sell whatever they can to play the bills.  ie: % rates rise and asset prices fall.

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Very interesting point bw! although I don't think QT (liquidity being drained) has really started yet

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0

And there is not enough liquidity to pay back all that debt, because the interest that is to be paid was never created in the first place.  A great sleight of hand from our beloved banking system.  

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2

Yes, fiat-issuance is one of the two great rorts.

The other was by us, perpetrated on future generations. We took all the fossil energy, and left them with an overheated planet, the dregs of the remaining mineral resources, and an ecology on its knees.

Oh, and because debt is a demand on future energy, we left them an unrepayable pile of it. In other words, we left them a system which must crash.

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unrepayable debt is usually inflated away isn't it?  Like Britain after WWII

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0

I had a chat on the weekend with a chap walking past my house who had recently retired from the oil industry. He said that there is no shortage of fuels around the world, that there was 20 years of fuels at current usage rate in storage across the world. That the current problems were just the major oil companies profiting and ripping everyone off. To be blunt I doubt his view as I'm also told fuels can only be stored for a limited amount of time, but don't know the details. Plus 20 years at current consumption rates -that's an awful lot of bulk fuel farms? But then the head of the UN took a swipe at the major oil companies in the last couple of days.

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0

Refined fuels can be stored for a lot less time than crude (which is flibbertygillion years old).  

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It's like monetary policy still works. There's still a retreat from globalisation with Russia and China being managed by despots, concerned solely with their own power. 

Pandemic hasn't disappeared - it's just nicely settled in now. Climate change is irrefutable to all but the sociopaths and vested interests. 

This just doesn't feel like an age of growth from the perspective of all boats rising. Demographics are creating these high employment numbers with the younger generation rejecting the deal that they need to work till they drop just for food and shelter.

Productivity is faltering, technological growth reducing. Here in NZ $2 million houses on 300sqm of land are staying unsold. 

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The pandemic never happened, a few unhealthy people with weakened immunities died of a mild cold as they have for eons.  This sociopath thinks climates change around the world constantly but is unsure what causes it.  Perhaps it is sunspots, earth axis tilts, water vapor, termites emitting CO2, or maybe cows burping (that's a goody) that make climate change irrefutable!

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1

And power prices down too.  Wholesale spot electricity has been like 0.00003 kWh for most of the week.  Even now in the morning peak it's only 2.2 cents / kWh.  Hydro storage above 90th percentile.  Should pause the relentless rise in retail power prices.
https://app.em6.co.nz/

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3

Switch providers in the interim. I'm paying 10c/kWhr for half my electricity consumption with scope for that proportion to increase. Overall average 20.5c.

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1

who is offering 10c/kWh ?

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0

Electric Kiwi has an Hour of Power in which all your power is free. On average, I've shifted 25% of my power consumption to that single hour. Another 25% of my power is in the night-time off peak, which is charged at 20.5c. It's a slightly disingenuous way of characterising it- you could equally say I'm charged 13c/ kWh for 50% of my power as well.

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0

Joke of the century...real estate lobbyist crying foul that buyers are to trying exploit poor vendors.......

https://www.oneroof.co.nz/news/buyers-using-negative-headlines-as-a-wea…

What happened to their theory that market is the best judge to determine price...or was it when houses with asking of million were selling for 1.4 million and now when the ponzi has busted and are worried about the fall that one is witnessing now may be just the start, have started their lobbying.

Another one in Australia, when interest rates were dropped overnight, it was market requirement and today when the OCR have just started to move up

https://www.macrobusiness.com.au/2022/08/data-screams-at-lunatic-rba-to…

So when one drops rates to zero or near zero is sensible and now......

Does it not exposes the hypocrisy of so called experts, economist, media and agencies.

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28

There is a house I know about  in Grey Lynn which was sold recently. It sold at way below its current RV to facilitate a sale in a period of uncertainty. (Interest rate rises). It was bought by an investor who obviously hopes to make a killing. Put on the market again within days of purchase.

On the homesconz website it puts that sale as being in 2021. Whereas the actual sale took place in 2022. I won't provide a link. This is more a general discussion.

I wonder if this is a deliberate attempt to fool potential buyers by hiding the fact that it sold recently for a very low price.

Another thing which surprises me is that the homesconz "valuation" still has it at about a mill above its last sale price. Is there really such a lag in value drops? Or is their software just downright wrong? Or was this genuinely an outlier bargain of the century?

I see that the place has already had a price reduction and has been on the market for about months already. I am picking that the investor owners are starting to get worried.

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3

If nothing else this current downturn has exposed the property speculation industry for what it is, a truely disgusting, greedy and self centred affair. The desperation of some involved to maintain the gravy train is truly unbelievable. A friend recently placed a offer on a property below the asking price (as you would in the current environment) and the RE agent basically lost the plot at him, saying that the offer was offensive!

And if you want to hear some real desperation, just listen to NC on Propeller advert, basically saying don't listen to anything negative anyone says about the property market, oh but take every word I say as 100% fact.  

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16

"disgusting, greedy and self centred" those are pretty accurate words to describe most landlords and investors in New Zealand unfortunately. Most landlords I know they are in for themselves, it's either they gain lots of money or less money, but they can't lose money, if they lose money, they will blame others and try to make it someone else's problem. I used to have some sympathy towards them during this economy setting but not anymore. 

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This happened to me last week. The RE said "go away and come back when you are serious" via email.
Forwarded it to to the licence holder at the agency and received a groveling reply soon after, asking if the offer is still valid.
I reduced my offer.

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12

If at the recent auction it had been the other way & the property got sold way ABOVE RV, then  the website may not have shown the lag in value. Would have updated the valuation with perhaps superspeed efficiency. The housing ponzii is well-orchestrated with several parties projecting to be "independent". But in reality are in cahoots with each other to fool guillible buyers

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Housing is consumption so is not investing, it is speculating.

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HAHAHAHAHAHAHAHA.  Wow.  When we sold our place by Deadline in December to a FHB, we were very happy with their offer, but our selling agent still insisted on ringing them up to screw every last dollar they could out of them.  Despite me categorically saying no, we're happy with the offer. 

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How did a FHB afford to buy your house Nzdan? Agent looks like he will be coming into hard times now, I guess what you sow you reap.

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Entry level house, mid-$500's.

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How about in 2021 when the headlines were screaming house prices would continue to rocket. Granny Herald & One Roof were chuckling with glee splashing on front page the mind-boggling prices defying wildest expectations achieved at auction! Not a whimper from real estate crowd crying foul that Vendors are to trying exploit poor Buyers!

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Debt trap banks and government watched as people paid way to much for houses  now a huge amount of people will lose deposit and be in negative equity for years and the ones who don’t go bankrupt will be trapped paying most of income to banks for the duration of mortgage.

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The implications of the Australian trade surpluses versus the NZ deficits are well worth pondering. Something has to change
KeithW

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We start open cast mining?

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Sounds like a good idea.

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It's hard not to succumb to paranoia, but it does indeed seem like the world is going to be undergoing a fair period of disruption and alteration to traditional trade. There's likely going to need to be a case made to both secure supply of basic commodities, and also the economic benefit of resuming export of these commodities. 

There should be a sovereign fund created off the back of it to assist paying for society. 

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So more government spending, to boost inflation, good idea!

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Once they've trashed civil rights enough so as protest can be suppressed. We're a good way toward that, well & truly conditioned. 

That & the narrative control makes any protest the enemy of a good society, good practice run going on there too.

Mass psychosis has its uses. 

 

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Sounds like you have succumbed 

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Yeah? It isn't me looking like a dickhead with a nappy on my face when I go out. 

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Haha. Damn right.

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Most innane comment of the week (?year)

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The Pox in strong in that one

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The word civilisation has it's origin in the term "citizen". A citizen was a free person of the city or state, as opposed to a slave. Freedom, or civil rights, is a pre-requisite for a civilised society. So we've lost it, it is a downhill run from here. The inane talk on this site about housing is what is so droll when the future is in doubt about individual property rights. Even Three Waters and co-governance is ultimately an attack on that. It is coming from multiple directions and we are not having the right conversations. The result of the infiltration of mediocre minds. 

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Go for a walk scarfie and yell at all the nappie wearing medicore minds you see - I am sure people will appreciate you for it.

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Not mediocre Scarfie, they are indoctrinated.  The mask is just a compliance tool.  Correct our civil liberties have been trashed, the government puppets must stop the assault on our freedoms.  Which makes me wonder, who does Ardern actually work for?

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There is something appropriate about the Bank of England practicing medieval medicine on the economy. Mind you, when you only have a wrecking ball, everything looks like a condemned house.

The big question now is whether RBNZ will follow through on their commitment to hike rates by 50 pts. They shouldn't obviously - higher prices, mortgage payments, and the end of the wealth effect are already sucking demand and jobs out of the economy. My guess is that they will go for 50 pts to 'look tough' but that will be the end of the increases - a last kick in the guts for households that will lock in the recession and push tens of thousands of people out of work.

Obviously prices will come down at the back end of 2023 as a result of global factors (oil prices particularly). RBNZ will then claim victory.  

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haha, English inflation at 9% and they only push rates up by 0.5%, that my friend is pushing shit up hill with a garden rake!

We are in a better position but will still need to raise by at least 0.5% this month, however I think once the OCR gets to 3.5% we should really slow things down to allow the effects of the tightening to show through. Providing the govt doesnt keep throwing cash around & muddying the waters...

 

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You are presuming that interest rate hikes will have any impact at all on the cost of living / CPI. The OCR lever is not connected to prices - so why bother pulling it? 

Also worth noting that Govt fiscal stimulus has been negative so far this year - a net $3bn disinvestment in the economy.

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of course they will have an effect, just like the "emergency rates" had the opposite effect and caused most of the problem.

 

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An effect on house 'prices', yes, of course.

But, petrol? Food? Property maintenance? Mortgage costs? Rent? Anything that is actually driving the cost of living up?

 

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Exactly, limited effect although I guess some effect on fuel prices via exchange rate impact.

will have more effect on discretionary spending and therefore prices of discretionary services and things, through demand destruction.

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If someone lends you a million at 5% per year and inflation is 9% they are losing 4% and taking the risk that you are going to pay them back, that’s mental Rates should be a lot higher. The big problem is FED printing trillions just pushing up prices and in NZ a large amount of that has just pumped up house prices to a place where most of the population would not have enough income to purchase the house they are in. This is why a crash will happen in housing market over here, this is just the start of downturn.

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"The big problem is FED printing trillions just pushing up prices" I would suggest it is not all about the Fed printing trillions. The biggest part of the problem is how they structured that to be spent, and that is the same problem in NZ. Most if not all ultimately just goes to line the fat cats pockets and does not produce any substantial economic benefit. 

If the Fed had printed that money and then structured it to pay workers to rebuild their national highway system with decent wages, or to provide tax relief to companies trying to bring manufacturing back home, or funding frontline health worker wages, Corrections staff, Emergency Response staff. Basically activities designed to build and support economic activity, what would that have done to inflation?

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Printing so much money just created inflation so what if you get a 6% pay rise when inflation is at 9% they paid people more to stay at home then working gave money to friends at 0% to buy back shares in their own company. Large businesses started buying real estate whole areas across America, just pushing up prices. Could be a good chance USD will lose status as reserve currency this is why they are raising rates to put some backbone into USD it the FED thought they could get away with it they would just inflate debt away. None of this is going to help NZ, people borrowing a million dollars for 3 bedroom house in some run down area in Auckland is crazy and these people will be stuck with high mortgages on low wages.

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Holding cash at below inflation rate is just fine when asset bubbles are bursting.  The mill dollar home to become $600k...who cares about a few % interest points.

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Correct the only way to stop inflation (governments and asset holders need it) is what Paul Volcher did.  Interest rates must be higher than the inflation rate.  That is why the CPI is a constant lie from the government.

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The piper always gets paid, eventually. It's just a matter of 'who pays'.

The Bank of England has warned that households will suffer the biggest income squeeze on record. This is a bigger drop in living standards than during the financial crisis, the slump of the early 1990s or the stagflationary turmoil of the 1970s. It is predicting the largest hit to real household incomes since records began in 1963.

I doubt we will be immune from what will be a global event.

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Funny how it is always the 'have nots' that have to pay.  

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Indeed.

As is written elsewhere today, "What Central Banks are making crystal clear is, rates will rise and economic conditions will deteriorate simultaneously, for some time to come. When it’s a choice between saving the banks (and capitalism by extension), or mortgage-holders. Guess who’ll win?"

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Keith - in my eyes long term NZ is on a hiding to nothing compared to Aussie given its current governance. How do you see NZ catching up to Aussie given the huge number of constraints the govt has applied to our main foreign exchange earners?   

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Can you list some of these constraints Grumpy?

What are the main export earners for NZ?

New Zealand's Top 10 Exports

  • Dairy, eggs, honey: US$12.4 billion (28.5% of total exports)
  • Meat: $6.2 billion (14.2%)
  • Wood: $3.9 billion (9%)
  • Fruits, nuts: $2.8 billion (6.4%)
  • Beverages, spirits, vinegar: $1.6 billion (3.7%)
  • Cereal/milk preparations: $1.4 billion (3.3%)
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Where’s tourism?

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What tourism?

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Anyone else watching the US 2/10 yield inversion? 
 

If you are still bullish and carrying a lot of financial risk - and assume the next 10 years will be the same as the last 10 years...you can't complain that you haven't been warned about what might follow. 

10-Year Treasury Constant Maturity Minus 2-Year Treasury Constant Maturity (T10Y2Y) | FRED | St. Louis Fed (stlouisfed.org)

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