Here's our summary of key economic events overnight that affect New Zealand, with news its New Year's eve for 1.4 bln people, about 20% of the global population
However, first, American resales of existing homes fell in December, continuing housing's current funk. The fact that they came in slightly better than expected isn't much of a positive when you realise this level is their lowest since 2010. In fact, sales in 2022 ended down by -18% from the prior year and down by a third in December on that same basis. The industry is expecting the sales rate to bounce off its bottom because mortgage interest rates are falling now.
Canada retail sales rose in December after falling in November, but the shifts are pretty modest. Year on year sales rose in nominal prices (+5.1%) less than their inflation rate (6.3%), they they are seeing volume declines.
Japanese inflation hit a 41-year high in December, up +4% and above their central bank 2% target for a ninth straight month. It is up from +3.7% in November, the sharpest rise since 1981. Prices of electricity increased +21%, while grains rose +9.6%. Last year the overall level was up +2.3%, so a rising pace. "Core inflation" which excludes food, was also up +4.0%. The rise from November to December was at an annualised +3.5% rate, so perhaps there is some moderation coming.
The Chinese central bank reviewed its loan benchmarks yesterday and left them unchanged. This wasn't a surprise and is the fifth straight month they have been untouched. The one-year loan prime rate (LPR), which is used for corporate and household loans, was held at 3.65%; while the five-year rate, a reference for mortgages, was held at 4.30%. Lower mortgage rates are not inducing more house sales in their struggling housing markets, so a change would make no difference.
The gigantic Chinese New Year (Year of the Rabbit) travel event is starting, which will see more than 900 mln people move around internally and externally, probably extending Covid to every corner of their country. Some 2.1 bln trips are expected to take place during the 40-day Spring Festival period, double the number of treks from last year.
China's financial markets and government departments will be closed for all of next week, returning on Monday, January 30, 2023.
But when they return, there is some optimism that the restart to their economy will be stronger than we have seen it for a while, and that should drive a counterbalance to an expected slowdown in the US economic engine. (Optimism about China's prospects is not universal however, even in China.) It's been a long-talked-about American slowdown, but there are few real signs of it yet. However, it will be no surprise if one comes. Most analysts expect it to be a mild retreat, and if inflation also retreats and stays down, then a more sustained rise may follow.
The key to watch is the American labour market. Their tech industry retrenchment is gathering steam, with Google the latest to announce very large job cuts. But so far, the wipeout by the tech titans has had little overall impact on overall employment.
German producer prices fell again in December from November at about a -5% annualised rate. But this fall was less than the month-on-month fall in November and still leaves their PPI +22% higher than a year ago, which wasn't as much of a pullback as markets were expecting.
In Australia, a record-breaking year for wheat production has brought down international prices driven up by poor weather and the war in Ukraine, drawing attention from China and other Asian buyers. The USDA says Australia will produce a record 37 million tonnes of wheat in the current season. High wheat prices were a driver of 2022's excessive inflation in many countries, prompting warnings of a global food crisis. Now, market pressures are easing in part to this strong Aussie harvest.
Followers of the NZ carbon price will have noted further falls and it is now down to NZ$72.50/NZU. But in Australia, the opposite track is unfolding.as demand surges. But it is off a much lower base and their price is still only up to NZ$42/tonne (ACCU) even if it is rising fast. Markets expect it to hit NZ$65/ACCU soon and the current scramble to get hold of credit is because there are expected to be building shortages later this year and through 2025. Prices exceeding New Zealand levels are highly likely as their official 'ceiling' level is NZ$80.
Despite China being on holiday, it will be a busy data week ahead. It will end with the US releasing its first estimate of 2022-Q4 GDP growth, on Friday and a +2.6% rate is expected. At the same time a +2.5% rise durable goods orders is expected. Before all that flash PMI data for January for the US, Japan, Europe and Australia will be released. We will also be following the Canadian policy rate decision on Thursday (+25 bps expected to 4.50%). The big data for us of course will be our December CPI release on Wednesday, quickly followed by the same data from Australia. Both have the potential to be market-moving. Markets expect the NZ CPI rate to come in at 7.1% and little changed from the September 7.2%, and for Australia at 7.5% and up from the prior 7.3%.
And of course, markets will be jostling ahead of the next US Fed meeting on February 2, 2023 (NZT).
The UST 10yr yield starts today at 3.48%, and up +6 bps from yesterday and back nearer last week's 3.51% level. The UST 2-10 rate curve is still inverted at -70 bps and little-changed from a week ago. And their 1-5 curve is less inverted at -113 bps. Their 30 day-10yr curve is more inverted at -108 bps. The Australian ten year bond is unchanged at 3.43%. The China Govt ten year bond is up +1 bp at 2.96%. And the New Zealand Govt ten year is starting today at 4.05% and up +6 bps. This time last week it was at 4.09%.
Wall Street has started its Friday session with the S&P500 up +1.4% from yesterday's close in late trade and heading for a -0.2% weekly slip. Overnight, European markets were all up about +0.6%. Yesterday Tokyo closed up +0.6% for a strong +2.8% weekly rise. Hong Kong ended up +1.8% so they managed a +1.0% weekly rise based on that. And Shanghai closed up +0.8% yesterday to lock in a +2.1% pre-holiday weekly gain. The ASX200 ended its Friday session up +0.2% for a modest +0.7% weekly gain, and the NZX50 ended higher too, up +0.7% on the day for a good weekly rise of +1.9%.
On the NZX50, the key mover was F&P Healthcare (FPH, #1) which was up +11% for the week. Good gains were recorded by Restaurant Brands (RBD, #49) up +9.4% and Auckland Airport (AIA, #2) up +3.6%. Going the other way both Pacific Edge (PEB, #41) was down -9.3% for the week and Serko (SKO, #48) fell -7.6%).
The price of gold will open today at US$1927/oz and up +US$6. A week ago it was at US$1917/oz.
And oil prices start today little-changed, up +50 USc at just over US$81.50/bbl in the US while the international Brent price is just over US$87.50/bbl. These levels are about +US$1 higher than a week ago.
The Kiwi dollar has firmed overnight, now at 64.6 USc and back up +½c. Against the Australian dollar we are also up almost +½c, now at 92.9 AUc. Against the euro we are up +½c at 59.6 euro cents. That all means our TWI-5 starts today at 71.7, and up +70 bps since this time yesterday and to its highest of the year so far. A week ago it was 100 bps lower.
The bitcoin price is up, now at US$21,359 and a rise of +2.0% from this time yesterday. Volatility over the past 24 hours has been modest however at +/- 1.3%.
The easiest place to stay up with event risk today is by following our Economic Calendar here ».
Daily exchange rates
Select chart tabs
78 Comments
The industry is expecting the sales rate to bounce off its bottom because mortgage interest rates are falling now.
15 year mortgages are only 5.4% there at the moment.
Wonder how many people here would take that.
Not many, if any... Remember when 5 years fixed was something like 2.99% - how many people jumped on that?
A few of us..
Anyone that didn't when rates got under about 3.5 needs an uppercut.
Yet half of all mortgages are rolling over this year.
Yet fixed at 2.99% they're now laughing.
On Friday, January 20, 2023, the current average 30-year fixed-mortgage rate was 6.37%, increasing 6 basis points over the last week.
To lean on Yogi, it feels like de ja vu all over again. That being the last of the 80s, rogernomics, just about every month a notice from the bank, your mortgage is up another 1%. Think ours got to 20%, maybe slightly over. Of course in those days they didn’t run fixed rates for fixed terms either.
Main stream media commenting on the Ponzi
https://www.stuff.co.nz/business/property/130595725/were-not-the-only-c…
https://www.stuff.co.nz/business/property/131017798/williams-corporatio…
its so funny listening to Labour supporters tell us this will just turn into a property freezy under national, Nats where last in 2017.... wait a minute.
That Williams Corp stuff is pretty grim.
can’t be huge demand to stay in Air b’n’b in Taita???
https://www.oneroof.co.nz/news/42932
CoreLogic chief property economist Kelvin Davidson said if Ardern’s resignation is taken as another sign that National could win the election and reverse some of the tax deductibility rules hampering landlords, then investors could start buying houses “before everybody else wakes up to it”.
I guess he must be a labour supporter?
hard to say ... but one thing is sure - he doesn't know the difference between investment and speculation
What's the difference in your opinion, Zen?
Good question so I asked ChatGPT
Investment and speculation are both ways to put money into assets with the expectation of earning a return, but they involve different levels of risk and have different goals.
Investment refers to the use of money in the hope of making a profit by buying assets that are expected to increase in value over time, such as stocks, bonds, real estate, or a business. Investments are typically made with the goal of generating income, preserving capital or both. They are usually made after careful research and analysis, and the return on investment is usually expected to be relatively stable over time.
Speculation, on the other hand, refers to the use of money in the hope of making a profit by buying assets that are expected to increase in value over a short period of time. Speculators often rely on their intuition or market rumors, and they take on higher levels of risk in the hopes of earning a higher return. Speculation is typically done with the goal of making a quick profit, and the return on speculation is often very volatile and uncertain.
In short, Investment is about making a profit by buying assets that are expected to increase in value over the long term, while speculation is about making a profit by buying assets that are expected to increase in value over the short term.
Thanks ITG, you will notice me asking Zen "in your opinion". I did that because he's making fun of someone else not knowing the difference, and I would have liked to hear Zen's own version, which I think would have been full of judgemental, preconceived ideas.
I hear you, if you wrap money management and risk control around short term it moves more towards investment. Some high frequency electronic market makers only lose 1 or 2 days a year, yet hold for micro to milli seconds..... its very opinion based. I saw close a partner flip 30 houses in 1 year in Manurewa, average hold time 5-10 weeks, they considered it investment as it was at the time virtually risk free. Was not a simple flick, they did lots of reno in 10 weeks, it was a business not a hobby.
Re the first article - I have written about government leasehold programmes as a way to solve the housing issue. The article rightly points to Singapore’s success. I wrote to Megan Woods once and she poo-poo’ed the idea, instead giving me a whole lot of propaganda about what her government were supposedly doing so well on housing.
Re the first article - I have written about government leasehold programmes as a way to solve the housing issue. The article rightly points to Singapore’s success. I wrote to Megan Woods once and she poo-poo’ed the idea, instead giving me a whole lot of propaganda about what her government were supposedly doing so well on housing.
S'pore and Japan have been working on ensuring housing since the 60s. In fact, many people don't know that during the Japanese asset bubble, you had people living in public housing by choice and not having to pay exorbitant rents or mortgage costs. When it all collapsed, these people were more or less protected from the crash.
I thought Williams Corp needed to sell those places to pay back the investors they'd already deferred repayment for?
Doesn't bode so well for those 10% returns... #Hanover2
Blame the pandemic! Blame subprime mortgages! Buy more snake oil!
What if it all really is just a con? What would you do upon finding out? Any rational actor would hedge the ever-loving crap out of everything, finally understanding the difference therefore danger(s). That’s just what the entire global marketplace has done because it does recognize the truth, and has known from the beginning.
The hedging today is, frankly, beyond 2007-ish.
It all goes back to the lie about the printing press. Money comes from banks, not bureaucrats. And the banks are exactly who has inverted these curves, just who it is who is hedged for oblivion. You want to know why the Powells and Bernankes (and Dudleys) of the world tell you to ignore them?
Curves expose the fraud(s). And the oncoming cliff. Link
More hubris:
Notice how there is no representation of the Global South and they intend talking about the global economy. They will find out soon enough why Global South is no longer interested in what they have to say because of their exclusion.
Quote Tweet Christine Lagarde
@Lagarde· I’ll be joining a debate on how to stabilise the global economy with @KGeorgieva, @BrunoLeMaire, @LHSummers and @HaruhikoKuroda in a #WEF23 panel moderated by @GeoffCutmore. Watch live from 11:00 CET https://weforum.org/events/world-e
Good grief. Does the following even make any sense? We have an asset whose value is determined by supply yet we can increase the supply at no cost.
“What has this got to do with monetary policy? Like gold, U.S. dollars have value only to the extent that they are strictly limited in supply. But the U.S. government has a technology, called a printing press (or, today, its electronic equivalent), that allows it to produce as many U.S. dollars as it wishes at essentially no cost.”
Ben Bernanke
Yes - the value of the dollar is not determined by how many of them there are, but their worth to the holder - in the form of cash to spend on things, or in the form of bonds where they provide the holder with a yield and prime govt-guaranteed collateral to use as leverage etc.
'Enabler' as opposed to a store of value.
Bens solution to QE was to devalue USD to gold... read his papers
Bens solution to QE was to devalue USD to gold... read his papers
What?
Like gold, U.S. dollars have value only to the extent that they are strictly limited in supply. But the U.S. government.....
Nice link OP, thanks.
That's fair. Worth noting though that dollars are also 'tax credits' - the only thing you can use to pay your taxes. In that sense, they have a value linked to taxes levied.
Chris Hipkins was the sole nominee to take over as PM from Jacinda Ardern ...
... I hope he " reads the room " and stops the unnecessary policies which are hacking us off , and directs the government to focus intently on a few things we actually need doing ...
Good luck , Hippy !
You mean three waters and tv/radio merger? Are they too far progressed to stop?
Just on the TVNZ/RNZ merger ... its gonna cost about $ 380 million up front ... and an extra $ 100 million annually ... who wants it ... who benefits from it ...
... or ... use that money for extra nurses , extra hospital beds , fix some potholes , replace the knackered Tinwald bridge on SH1 , reopen the Marsden Pt refinery ...
Kris "Whānau, Whānau" Faafoi managed to push the merger through in a big rush, before abruptly retiring from politics to - you guessed it - "spend more time with family".
Turns out he still had enough time left in the day to start up a PR and consulting firm, offering those prepared to pay enough for it access to his high-powered contacts in the Beehive.
At least he retired first, unlike Mahuta.
She doesn't need to retire to spend more time with family, she's already working with them in Government.
I believe he will have what's called a caretaker role.
almost spat my coffee on screen laughing......
. . I'm off to spread my legs ... as a nation , I think there'd be alot more happiness if we all took Hippy's advice to heart ...
almost vomited my coffee onto my screen
... caretaker if he's any good ... undertaker if he doesn't change their direction ...
Yes a good policy would be change to voting age...only those between 16 and 65 can vote.
Or make voting online only with a small font. Seriously though there should be an online option these days, voting should be as accessible as possible.
... that's a tadge undemocratic ... I'd make it everyone over 16 ... including people in gaol ...
I’d scale the votes by the number of years the voter probably has left to live. Young people have to live with the consequences of our short term thinking older voters who’s want to trash the planet and push up asset prices for their short term gain.
Citizens over 25 including the insane and those in gaol. 25 is when the male brain matures (if you're lucky) so I don't mind women over 21 and men over 25. If you go to 16 then it is under the age to buy alcohol, get married without permission, etc yet you trust them to vote and help decide if we get involved in WW3 or make all drugs legal.
Alternatively, citizens who have completed their education so early school leavers at 16 and PhDs about 27. Until you have earned money you shouldn't have input on how taxpayers money is spent. Note the way students get their first year's fees paid but children under 5 get very little from the govt at exactly the age when they would benefit from investment into their development.
by Baywatch | 21st Jan 23, 9:45am 1674247504
Yes a good policy would be change to voting age...only those between 16 and 65 can vote
Or a better voting policy could be …only those whose' name starts with "Bay" and ends in "tch", can vote?
There is old and dumb and old and wise but there is only young and dumb and young and not so dumb - never young and wise. You have to live to learn.
Old wine in new bottles. Nothing will change policy-wise, but Labour will be hoping that the "Jacinda effect" extends to Chris Hipkins as well.
To be fair, he is quite likeable. Hopefully the voting public have wisened up to personality politics though, and don't fall for platitudes and empty promises again this time around.
Or would you rather wish on a star....
If he’s smart he will make no promises like the opposition.
Agree.
I don’t think there’s any chance Labour can win the election, but if Hipkins does well and they come up with some novel, meaningful and IMPLEMENTABLE new policy then they *might* be able to avoid a landslide loss.
He'd gain alot of kudos if he stood up to Nanaia Mahuta & Willie Jackson ... perhaps even strip them of their portfolios ...
If National do get elected and they reinstate the tax advantages to property investment, I think I’ll join the vultures and buy some property to rent out and pick the remaining bones out of the economy. If 50% of NZers vote for that then why not join in.
The thing is, I don’t think that will be the main reason that most people will vote National.
Most people who vote for the Gnats will be tribal Gnats voters, or swing voters who are pissed off with the current government, and justifiably so in many respects.
Ps. I won’t be voting for the Gnats. It will probably be TOP.
Nats say they will do it but there is too much tax income for them to fully revert. They make some halfway house compromise and delay it.
The problem is that nobody will (or should) believe their campaign promises anymore, even if they mean it this time around.
Labour had some great policies in 2017, I was quite glad to see them get in. Unfortunately when it came to actually implementing them, they either didn't bother trying, tried but failed, or in some cases (e.g. immigration) actively went about doing the complete opposite of what they promised.
They have no credibility left as a party, and can't rely on policy to win the next election. It will be interesting to see what Hipkins comes up with.
Yes, fair point. Even some of the seemingly, readily implementable policies (like immigration) went off track.
So yes, very little credibility on the policy front, and why should we trust them now with new policies???
It does seem like National's election to lose, but with recent history I don't think you can rule that out
Old wine in new bottles. Nothing will change policy-wise, but Labour will be hoping that the "Jacinda effect" extends to Chris Hipkins as well.
How will that work? Speaking in circles; a furrowed brow of concern and occasional frown to show displeasure; animated hands flapping around like a seal to emphasize his point?
Hippy will gain traction if he steers away from Jacinda's mannerisms & ideology ... a little plain speaking will be a breath of fresh air ... and some simple policies based on things we actually need...
... I believe " Mr Fixit " will surprise us by doing a bang up job ...
Nah, people are sick of that one. He'll be the lovable "boy next door" type. A younger, less fundamentalist version of what Bill English tried to be - someone who can laugh at themselves along with everyone else when he makes a gaff about people spreading their legs.
Someone oddly relatable to those millenials who grew up reading Tintin.
Let it go JC..., She resigned enough with the personal insults.
Let it go JC..., She resigned enough with the personal insults.
Not an insult. It was a caricature that is reasonably accurate IMO.
If you say so , trust you a amazing public speaker that fills up town halls.
Oratorical skills are one thing. The substance of what is being orated, another.
I'm shocked.
I'm sure I read on here that the Maori caucus had total control over labour and we had to wait till they decided who we would get.
Still think the election is way more open than most seem to think, if only because it's nacts to lose, which they seem imminently culpable of doing.
... co-governance doesn't apply to Labour ... only to us water sucking plebs ...
Chris Trotter seems to have been right when he said that the Maori caucus were pushing on an open door with regard to co-governance and three waters. Jacinta, Robertson and Hipkins were the enablers for the Maori caucus. Now the chief enabler is gone and the spell is broken.
If Hipkins cannot get three waters gone because the Maori caucus won't let him, then Labour will be forever associated with co-governance and are unlikely to be anywhere near govt for the next 10 years.
People say 'it's the economy, stupid' but the effect of intruding on New Zealander's control of their personal space be it light bulbs, shower heads or access to water is actually greater for many. This is something Labour in the neo-liberal era have never understood.
I'll be voting for a Maori but not Winston.
DS ?
The key to watch is the American labour market. Their tech industry retrenchment is gathering steam, with Google the latest to announce very large job cuts. But so far, the wipeout by the tech titans has had little overall impact on overall employment.
Google job cuts not most important piece of news. Google calls in help from Larry Page & Sergey Brin for AI fight. Rival chatbot has shaken Google out of its routine, w/founders who left 3yrs ago re-engaging & >20 AI projects in works. https://nytimes.com/2023/01/20/technology/google-chatgpt-artificial-intelligence.html?smid=tw-share HT
Employment is a lagging indicator and yet it is currently the key support for "not in a recession now" .........hmmmm.
Bitcoin is now up 7% in past 24 hours. And 30+% since CNBC's money / finance guru Jim Cramer said it was a good time to get out just 11 days ago.
isn't there an ETF that does the opposite of what JC says - and its very profitable?
Yes. There is at least one short BTC strategy ETF launched in 2021. You can use it to speculate on the price falling or hedge existing exposure.
https://www.proshares.com/fund-highlights/short-bitcoin-etf-biti
There's always a pump before bad news gets released. Looks like this time it might be Binance going down.
Mark my words - it'll be Binance, then Tether, the big one. At which point BTC will crater and find its actual price floor - which I don't believe is zero, but which is an exponent lower than where it is now.
Mark my words - it'll be Binance, then Tether, the big one. At which point BTC will crater and find its actual price floor - which I don't believe is zero, but which is an exponent lower than where it is now.
Yes. Make sense. Even though BTC ultimately doesn't need Binance nor Tether. Regardless, anyone who thinks that this is the end of the bear market is just guessing.
Stateside, things are looking shaky with propadee. Bearish so to speak. Naturally, it's starting with the non-bank lenders.
The real estate market just can’t catch a break, with inventory of resale homes remaining low and rising interest rates making it harder for buyers to justify making the leap.
And now we can add mortgage lender financial troubles — and the rise (and fall) of “non-qualified mortgages” — to the factors aggravating an already uncertain market.
A report from ATTOM reveals that new mortgage originations were down 47% in the third quarter of 2022 compared to the year before. That's a 19% decrease from the previous quarter and represents the biggest annual drop in 21 years. And while the chill in the market affects all lenders, non-bank lenders — especially those who deal in NQM — are bearing the brunt of it.
https://finance.yahoo.com/news/mortgages-down-55-us-lenders-100000026.h…
We welcome your comments below. If you are not already registered, please register to comment.
Remember we welcome robust, respectful and insightful debate. We don't welcome abusive or defamatory comments and will de-register those repeatedly making such comments. Our current comment policy is here.