Here are the key things you need to know before you leave work today (or if you already work from home, before you shutdown your laptop).
MORTGAGE RATE CHANGES
Kāinga Ora / HNZ announced some small rate increases today, and that included their floating rate.
TERM DEPOSIT RATE CHANGES
ICBC raised their key savings and some term deposit rates today. Their new 6 month rate is now 4.95% and their one year rate is now 5.65%. Christian Savings also increased their savings account rate.
RECORD QSBO WEAKNESS
Latest NZIER Quarterly Survey of Business Opinion recorded that a net 73% of businesses expect deteriorating conditions in coming months - the weakest reading in the survey's history dating back to 1961.
MISLEADING LEADS TO BIG FINE
The Wellington High Court has ordered Cigna Life Insurance New Zealand to pay a final pecuniary penalty of $3,575,000 for making false and/or misleading representations relating to inflation benefits in certain life insurance policies provided by the company.
TRAVELLER
Trade and Agriculture Minister Damien O’Connor is off to Davos, and to the Global Forum for Food and Agriculture in Berlin.
CARBON PRICE RETREATS
We should also note that the carbon price is retreating. It is now at NZ$73.50/NZU spot, at the same point it first reached this level back at the end of 2021. In bdetween it has hit a high of $88/NZU, so this is a retreat of -16.5% since.
FALLING AWAY
Singaporean exports fell sharply in December, down more than -20% from the same month in 2021. That is much tougher than the -14.7% pace they reported for November.
MORE FROM LESS
Australia said that even though it has -5% less land in agricultural production in 2022, it generally produced a lot more from what was in production. Wheat production was up +14%, canola production was up +43%, sheep production was up +3%, and beef production was up +1%.
SURPRISE GROWTH
China said its economy expanded +2.9% in Q4-2022 from the same quarter a year ago. This was nearly double what was expected. For the full year, it claims +3.0% real. At the same time it said industrial production rose just +1.3% in Q4. Retail sales fell, down -1.8% (an -8% fall was expected. And electricity production was up +3.0% they said. All this key data is far more positive than almost any analysts was expecting. One reason was that their rural sector brought in record harvests.
OLDER & FEWER
China also said its population shrank -850,000 to 1.41 bln people by the end of 2022. They recorded 9.4 mln births and 10.6 mln deaths in 2022. Now 20% of their population is over 60 years.
SWAP RATES HOLD
Wholesale swap rates were likely little-changed today. The real action comes near the close however. Our chart will record the final positions. The 90 day bank bill rate is unchanged at 4.82%. The Australian 10 year bond yield is now at 3.60% and down a minor -1 bp from this time yesterday. The China 10 year bond rate is at 2.97% and up +2 bps. The NZ Government 10 year bond rate is now at 4.10% and down -2 bps, and well above the earlier RBNZ fix for the NZGB 10 year which was down -2 bps to 4.07%. The UST 10 year is up +3 bps at 3.53%.
EQUITIES HANG ABOUT
The S&P500 futures suggest Wall Street will open for the week tonight marginally firmer. The NZX50 is up +0.5% in late trade today. The ASX200 is flat in early afternoon trade. Tokyo has opened its Tuesday trade up a strong +1.4%. Hong Kong is down -0.2%. And Shanghai is unchanged at its Tuesday open.
GOLD STABLE
In early Asian trade, gold is just on US$1918/oz and down -US$1 from this time yesterday.
NZD LITTLE-CHANGED
The Kiwi dollar is little-changed from this time yesterday, still at 64 USc. Against the AUD we are firm at 91.8 AUc. Against the euro we are still at 59 euro cents. That all means our TWI-5 is now at 71 and marginally firmer than yesterday.
BITCOIN HOLDS
The bitcoin price is up marginally from this time yesterday at US$21,147 (+0.2%). Volatility over the past 24 hours has been modest at +/- 1.9%.
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53 Comments
I'm struggling to keep up with the different scenarios. The consensus is that JPY should be collapsing but why isn't that happening?
F'more, Kuroda is on his way out and one of the new candidates is threatening to "normalize" monetary policy.
And what happens if they start dumping US debt?
Intriguing. Seems to me that what happens in Japan this year could be significant.
If capital is repatriated to Japan, could be brutal for foreign asset mkts and send the yen soaring. My view is quite simplistic and other commentators have a better handle on it. Also, the GFC is ancient history (or never really ended) but we saw what happened then in relation to JPY.
From five shot Japan something doesn't seem to be working like it said on the tin.
"The number of people who died after contracting the coronavirus in Japan is rising at a faster pace in the country's eighth wave of the pandemic.
...This means that almost one in five victims died in the past month and a half."
Think cross currency basis swaps?
BoJ has YCC issues because Japanese financials can more cheaply borrow in Euro$s to get the hell out of JGBs. Less collateral problems which is why JPY has rebounded. Again the most distinct and solid yet confusing correlation in all finance. Link
Sale of New Zealand Government Securities to NZDM
Description Details Details
Sale date 16 Jan 2023 16 Jan 2023
Settlement date 18 Jan 2023 18 Jan 2023
NZGBs sold Sep-40 Apr-37
Amount sold ($m)190 225
>Sale of New Zealand Government Securities to RBNZ
To RBNZ? or by RBNZ to the market?
Edit, Sold by the RBNZ to the NZDMO (Treasury)
I hadn't checked the swap rate graphs for a while, quite the plummet at the long end since the start of the year. 10yr from 4.85 to 4.28% in a fortnight, even the 1 yr is dribbling downwards. The market has no faith in the RBNZ interest rate projections, not even in the short term.
Australia said that even though it has -5% less land in agricultural production in 2022, it generally produced a lot more from what was in production. Wheat production was up +14%, canola production was up +43%, sheep production was up +3%, and beef production was up +1%.
Without looking into it at all I imagine Australian agricultural output correlates with rainfall. Australia has plenty of land but not enough water.
It might even be 100 million less than previously thought.
India might have caught up by now.
https://www.reuters.com/world/china/researcher-questions-chinas-populat…
It's happened everywhere as people move from rural to city and battle for expensive space - way fewer (expensive) kids. One Child just pushed it along, but it's been gone for years and the cost of living issue continues to kill the birth rate.
For a DGM like me, Peter Zeihan, is a nice depressing listen. An interesting point he makes is that once the demographic slump runs long enough so you have the bulk of your population over 40, it's too late to recover.
Next stop, robot doctors, nurses and care home staff to farewell the last big population bulge.
Agree, gloomy predictions can be attractive, but often don't play out.
Zeihan worked for Stratfor for 12 years, and his work reminds me of George Friedman, who ran Stratfor and famously authored "The Coming War with Japan".
Spoiler alert, that US-Japan war didn't happen. Sold a lot of books though.
For a DGM like me, Peter Zeihan, is a nice depressing listen. An interesting point he makes is that once the demographic slump runs long enough so you have the bulk of your population over 40, it's too late to recover.
I find the idea of a stronger United States more appealing than the alternatives.
It truly is a fantastic idea. China is the first country to tackle population. It leads the way in the concept of balancing people and resources. 150 years ago when NZ settlers had families with a dozen children there were a dozen opportunities for them and they could all end up with a better quality of life than their parents. Now try the same idea with a moderately poor family in an over-crowded 3rd world city - and end up with a dozen desperate slum dwellers.
The Malthusian trap inevitably will snap shut; it has been delayed by technological advances for the last 200 years but only delayed. China seems to be the only nation on earth that thinks long term.
Comparing GDP per capita then China is about five times higher than India but in 1948 it was way behind.
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