Here's our summary of key economic events overnight that affect New Zealand, with news some policymakers are doubling down on their goals, while others are wavering.
But first in the US, the Dallas Fed factory survey fell as new orders retreated. Price growth eased while wage growth remained elevated. But their negative sentiment eased somewhat and future production indicators improved a lot.
But despite these clear signs American economic expansion has topped out, Fed officials are not easing up on their inflation-fighting rhetoric. Influential New York Fed President Williams said policymakers have more work to do to curb inflation, which remains “far too high” despite some recent improvement in supply chain challenges. “Further tightening of monetary policy should help restore balance between demand and supply and bring inflation back to 2% over the next few years,” he noted. His predecessor is also calling for holding the policy line. Both of them seem to suspect Powell may be vulnerable to pressure to ease present policy.
In China, officials there are also toughening it out; police were out in force to discourage protest gatherings in Beijing, Shanghai and Hong Kong. This comes as state-media doubled down on Beijing’s zero-tolerance approach to the pandemic, even as their own public health experts urge a rethink.
Hong Kong exports retreated again to be more than -10% lower than year-ago levels. That is six consecutive months of retreat.
In Taiwan, consumer sentiment dropped to a 13 year low in November as lower global trade and the geopolitical squeeze bites into family finances there. It is telling that sentiment is well below pandemic levels.
In Australia, retail sales unexpectedly dipped by -0.2% in October from September when a +0.5% rise was expected on top of a +0.6% gain in September. This was the first drop in retail trade since December 2021, and comes amid cost of living pressures and rising interest rates. Department stores had the largest fall, down -2.4% in a month. Overall, year-on-year the rise eased to +12.5%. In November, some major retailers are reporting strong trading conditions.
And tomorrow, Australia will release its October CPI data and that is expected to rise to +7.5%, keeping pressure on the RBA which is showing signs of wavering commitments to fighting inflation.
And we should note that the price of rice is rising, now back approaching a two-year high which was an all-time record high. Demand is rising, supply is falling especially from the US, and some key countries (like India) are restricting exports. Stocks in some large consumer countries are falling. The recent pullback of high global food prices may have only been temporary.
The UST 10yr yield starts today at 3.71% and up +2 bps. The UST 2-10 rate curve is little-changed at -76 bps. And their 1-5 curve has stayed inverted at -88 bps and their 30 day-10yr curve is still inverted and unchanged at -34 bps. The Australian ten year bond is down -2 bps at 3.58%. The China Govt ten year bond is up +3 bps at 2.88% and a five month high. And the New Zealand Govt ten year will start today down -9 bps at 4.07%.
Wall Street has opened lower its week lower, with the S&P500 down -1.1% in Monday trade. Overnight European markets all closed lower too, but in a range of -0.1% in London to -1.1% in Frankfurt. Yesterday, Tokyo ended down -0.4%. Hong Kong fell a sharpish -1.6% and Shanghai was down -0.8%. The ASX200 ended its Monday session down -0.4%, and the NZX50 ended down -0.7%.
The price of gold will open today down -US$10 at US$1745/oz.
And oil prices start today up +50 USc from this time yesterday at just on US$77/bbl in the US while the international Brent price is just over US$84/bbl. But these levels are a recovery from a intra-day dip.
The Kiwi dollar will open today at 62 USc, and down -½c from this time yesterday. Against the Australian dollar we are little-changed at 92.7 AUc. Against the euro we are soft at 59.8 euro cents. That all means our TWI-5 starts today at 70.9 and down -40 bps from this time yesterday.
The bitcoin price is now at US$16,177 and down -2.2% from this time yesterday. Another large crypto platform has filed for bankruptcy protection. Volatility over the past 24 hours has modest at just +/- 1.8%.
The easiest place to stay up with event risk today is by following our Economic Calendar here ».
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63 Comments
The bitcoin price is now at US$16,177 and down -2.2% from this time yesterday. Another large crypto platform has filed for bankruptcy protection.
Just so ironic that the supposed mechanism to combat central banks' control of your money, falls apart once central banks stop printing money.
The "early adopters". Do they think Central Banks will one day wake up and realize that Bitcoin and only Bitcoin is the way forward and overnight it'll become the world's reserve currency?
Good luck when all the Crypto Bros "HODL" and nobody can actually get their hands on it to trade with.
Hmm...how much research have you done Chebbo?
In bankrupt Lebanon, locals mine bitcoin and buy groceries with tether, as $1 is now worth 15 cents
Today, half of Gebrael’s income is from freelance work, 90% of which is paid in bitcoin. The other half comes from a U.S. dollar-denominated salary paid by his new architecture firm. Beyond being a convenient way to earn a living, bitcoin has also become his bank.
It was never supposed to do what you just said. It was supposed to enrich it's initial investors. Which it has done in spades. Now that it needs a bit of the money they extracted from it, they shut it down. Normal practice if financial regulators and the law let one do it.
Perhaps China is just too big. Mind you that’s a good question about the USA too, on a different plane though. But here we have the CCP battling covid by attempting to banish it. NZ managed that for a while, as a remote island nation of small population. Taiwan too, but not that remote and under populated. The virus had its origin in China about which there is much conjecture and dispute. It returned months later as Omicron and siblings for which the Chinese vaccines of their own, seem even more ineffectual against, than the first strain. The entire world has accepted the point that covid is now part of life, and death, but not the CCP. Quite some mindset isn’t it. No wonder there’s trouble at t’mills.
We're lucky the government doesn't hold such a tight rein over our media here (though not for lack of trying, Kris "Whanau Whanau" Faafoi). The best they could do is portray anyone opposed to lockdowns as far-right conspiracy theorists, but they couldn't shut them up.
"the RBA which is showing signs of wavering commitments to fighting inflation."
And how is that possibility being greeted by the Aussie press this morning?
Rate pause to trigger 9pc rise in Sydney house prices (AFR)
The same will happen here if Orr's foot even hints at easing off the accelerator.
How to beat Inflation in NZ? Keep raising the OCR, and when CPI reacts and falls back down, keep raising the OCR, until such times as it's above the CPI print. Then, and only then, the OCR can follow the CPI back down. Chasing it up, as we have been doing, just draws the whole process out. And if there's one thing we need, it's a quick resolution to this problem.
"Nord Pool’s day-ahead auction for Monday’s 17:00-18:00 time slot cleared at GBP 1,000 on Sunday.
“We were due a spike but this is rather excessive,” said Latif Faiyaz, head of energy trading at Northern Gas and Power.
Low wind power generation was the main driver, he said. “Wind has generally fallen off a cliff compared to where it has been over recent weeks.”
https://www.montelnews.com/news/1371765/low-wind-holds-hourly-uk-spot-p…
https://www.mirror.co.uk/news/uk-news/life-uk-suburb-cost-living-285953…
Indeed, the sooner they invest more appropriately in power generation that makes sense the better.
https://www.theguardian.com/environment/2022/nov/23/tidal-stream-energy…
Continued reliance on fossil fuel makes managing their cost of living precarious.
The economy will fold by its own and everyone has to try to Hold.
What is happening today reflects the failure of central bank as they work and move in herd mentality not realizing that each country is different.
RBNZ has been copying Fed not realizing that America is Big and has diversify economy unlike NZ, which is a tiny country and economy is depended only on housing sector, thanks to politician of all parties. When the bubble burst, like it is now other countries may come out better as having other sectors to fall on unlike NZ.
Well this will not be inflationary at all will it.....
Motor industry predicts used car prices will rise up to 25% under Clean Car Standard
https://www.rnz.co.nz/news/national/479631/motor-industry-predicts-used…
"We don't know for sure because unfortunately the government process has been set out but it doesn't seem to be working properly," Dumper said.
The industry and officials have been trying for weeks to get the fee-credit payment system to work, but will not meet the 1 January deadline.
That forced Transport Minister Michael Wood to rush through a law change last week.
You could hear the beep beep beep of the 5 Waters bus backing up over the 60% retrenchment ammedments from Silverdale..........
I am not sure that Nanaia Mahuta, will be able to recover from this one, you do not blindside the main
Labour Cabinet and get away with it. Now they will have to spend serious political capital (and time in the house) trying to unpass the change, at every point the opposition will rub salt into the self-inflicted wound.
Ouchy OUCH
Sure there are problems with this scheme and the roll-out could have been better managed. However, dealing with one of oldest, dirtiest vehicle fleet in the OECD was never going to be an easy task.
What makes it worse is Nat-ACT tiring down NZers with the 'ute tax' criticism that it promises to repeal it without proposing alternative solutions; much like every other policy position they have on environment, tax, competition & consumer affairs, immigration, etc.
We are quick to criticise government inaction, but quicker and harsher on those that try and fail.
Yet they have come up with absolutely zero that would entice me back as a voter.
Criticise the Govt for sure is their role - but what are they offering instead? Removing landlords' tax, ute tax and whatever.
I still think they are hopeless and no alternative at all. They had their 9 years or cranage and don't seem to have changed one dot.
I'm no labour fan - but the Nat tribe need a kick up the rear.
Criticise the Govt for sure is their role - but what are they offering instead? Removing landlords' tax, ute tax and whatever.
There is over a year between now and the last possible date the next election could take place.
Not one main opposition party has ever had a full suite of policy offerings this far out from the election in the MMP era.
I stopped voting National after 2008 and instead vote ACT. National are more aligned with my political leaning but man they have been woefully lacking for a while. Watched Luxon's interview with Tame last night and cringed. Basically Key 2.0, flopping around on the deck like a fish. Starting every sentence with "Look, National....." like it's a pre-requisite for every National leader to mimic Key's mannerisms (Bridges was the same).
ACT's members are predominately well experienced in the portfolios they speak for, so that gives me confidence in delivery.
That might not be so bad an outcome if ACT return to government next year with status quite a bit more than just a top up coalition partner. Certainly should curb that tried, tested true blue front that became so conceited, complacent and careless last time. Agree with him or not Seymour definitely has a knack to get a lot said with few words and that might make up for the majority of National who are the opposite.
They don't need a fully worked and costed policy platform a year out from the election
Nobody denies that the current lot running the show are a train wreck, but many are still unsure if Luxon is a better alternative.
Let me remind you that Collins ran on a campaign of "repeal and do nothing" on many key issues Kiwis want action on at the 2020 election and Luxon looks to be repeating the same mistakes.
There's 'holding them to a higher standard' and then there's 'having completely unprecedented expectations of a political party a year out from a general election'.
You don't need to have a political preference to know that's unreasonable - just like I don't expect Labour to have a full suite of policies yet either - although as a sitting government with outright majority, you could reasonably ask why those policies just don't get enacted as things stand.
And frankly, given the coming economic environment and looming challenges, I'd distrust any party who insists they have the solutions now and stands firmly resolute on them when NZ could be a very different place in six to twelve months time. I'd rather political parties had more information about what we're facing before they decide what the best way they propose we deal with it.
Incumbent governments have form in stealing the opposition's policies before an election. My expectation is there'll be a suite of policies awaiting release come March or so, once the Budget has been more or less locked in but before it's announced. Then the incumbents can't steal the policies without majorly disrupting their own work, and the opposition can blame the incumbents for making them more difficult because 'we didn't know how much money would be left in the kitty come the election'
2009:
- March: Transport Minister Steven Joyce says previous government had not set aside $400 million for the project, expects decision on whether to build it to be made by end of year
https://www.rnz.co.nz/news/national/464297/timeline-transmission-gully-…
Hilarious interview on Heather du Plessis-Allen show : Chris Hipkins blamed the Gnats for the lack of fog cannons in dairies ... ummm , Chris , who's been the government for the last 5 years ...
... following that up was the manager of a fog cannon production factory who blew Jacinda Ardern out after her comments that there was no supply available ... the manager said she's just spinning lies again , there's no shortage ... it's just that Ardern hasn't ordered them ! ... Covid19 vaccines all over again : you must place an order !
Yes. Recently I've seen comments from a dairy owner about how a $15k excess was applying for a $20k insurance policy.
If fog cannons cost $5k to the owner that seems as good as, if not better than insurance. IF we can believe the PM, the incidence of attacks on a dairy goes through the floor once a fog cannon has been installed, so will be cheaper than insurance.
rastus - I would argue that successive governments softly softly approach to crime is the root cause of this issue. Why should private business have to pay for the impacts of an idealogical mindset that refuses to put criminals in jail - we think we can cuddle criminals out of their addiction to a lack of work ethic and respect for others property.
I'm happy for my tax dollars to protect innocent victims of crime....Three Waters/Five Waters, TVNZ/RNZ merger, flights over to COP talkfest etc. not so much.
If locking people up will solve it then we would have seen it work elsewhere and we'd be doing it.
All sorts of issues going on. This guy was form Aus, the mosque guy form Aus. Kiwi's priced out of their own country, wealth disparity expanding year on year, inflation, breeding encouragement programs, a pandering to the victim mentality, govt owes you a living, ... and on it goes.
NZ has multiple issues all merging at once.
Let's fly the police commissioner and a few government officials to Japan, Singapore, China & UAE - and they can pick out all the best bits of their criminal law and justice systems. I can only hazard a guess at how many ram raids there have been in Japan in the last twelve months - and that number would be much closer to zero than it is here is little old Aotearoa. We are all about the "feels" in this place, and it isn't working.
Something to do with social cohesion? How many ram raids were needed for it to become a major front page political issue? Would it have been fewer if the public, the perpetrators and the victims all belonged to the same ethnic group? Or is it something to do with the accepted norms of behaviour that are unique to each culture? There were some looters after the Christchurch Earthquake but none after the far more devastating Kobe earthquake.
And once they reduce the number of outlets that sell cigarettes under the new legislation coming into effect next year, dairies will no longer be targeted. And the reason that didn't come into effect immediately was, if I recall correctly, because of the backlash from dairy owners.
In hindsight, the anti-smoking taxation increases campaign has had unintended consequences writ large.
German families are leaving Germany and emigrate to Hungary, even Russia. They see no future for their children in Germany. 77 years of no sovereignty, continued foreign occupation & anti-German policies have come to a head; even dullards realise that Germany is being ruined. Link
What are the indicators people should be watching for which direction interest rates will be heading over the next 2-5 years? Are swap rates the best or should I be looking at something else?
Over the last couple of days/weeks I have noticed that there are very much two schools of thought. Either rates are peaking now and will come down due to global recession or they are on their way up and that is where they will stay.
US off the boil but Fed voices call for staying the course
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