Here's our summary of key economic events over the weekend that affect New Zealand, with news American inflation is in the spotlight this week and will set the tone for markets worldwide.
But first up in China, we got an indication of just how serious Beijing is to restart their economy after the pandemic. China's banks extended +¥4.9 tln in new yuan loans in January, well above market expectations of +¥4.0 tln and the largest amount of new loans ever. It is a monumental amount of new lending for just one month, +NZ$1.15 tln and for perspective for all of 2022, the approved a record +¥21.3 tln. In just January 2023 alone it raised that by almost a quarter! They aren't doing things by halves here and won't die wondering.
China also reported January inflation at a +2.1% rate although the rise from December was at an annualised rate exceeding +9%. Still, this was very much as markets expected. The producer price deflation however seems to be staying minor.
That is not the case in Japan where January producer prices came in +9.5% higher than a year ago (as expected), although in the December to January period they vanished.
And staying in Japan, they are about to get a new, and somewhat unexpected Governor of their central bank. He is said to be "Japan's Ben Bernanke". The government's preferred candidate declined the promotion and the actual nominee has analysts searching for his likely policy preferences.
India released December industrial production data and that revealed a solid if 'modest' rise in the context of what they had in the rest of 2022.
In the US, the widely-watched University of Michigan consumer sentiment survey jumped to a thirteen-month high and beating market forecasts. It is just another brick in the evidence pile that a recession is some ways off yet.
On Wednesday, we get the January CPI data and it isn't expected to dip much. It was running at a +6.5% rate in December and is expected to dip to +6.2% in January. But maybe the December to January rate will have moved up at a slower pace, possibly less than a +5% annualised rate. Anyway, markets will be focused on this American CPI data for much of the week.
Across the border, the Canadian economy added +150,000 jobs in January, the most since February 2022 and much more than the market expectations of just a +15,000 increase. It is another impressive Canadian economic metric.
Meanwhile, the Canadian loan officer survey reported improved lending conditions. In fact their non-housing lending conditions turned positive for the first time since 2020 when monetary conditions were artificially loose.
And in Brazil, we should note that the incoming administration is chafing under a 2021 law that made its central bank independent, and its targeting of a 3% inflation target threatens to undermine President Lula's campaign promise of ordinary people being able to afford to "eat steak and drink beer". Whether this is a serious threat to the banks' new-found status or Lula just posturing to his base, is uncertain. Brazil certainly needs monetary policy stability away from partisan politics.
In Australia this week, they will release their labour market data on Thursday and it is expected to be positive (adding +20,000 new jobs). But this news will probably be overshadowed by the central bank's governor giving testimony at their Federal parliament to a largely unsympathetic audience who wants to know why he has turned suddenly hawkish. His seven year term is up in September 2023 and it is increasingly unlikely the new federal Labor Government will reappoint him.
The UST 10yr yield starts the week at 3.74% having risen +21 bps last week. The UST 2-10 rate curve is less inverted at -78 bps. And their 1-5 curve inversion is also less inverted at -96 bps. Their 30 day-10yr curve is less inverted at -86 bps. The Australian ten year bond is still up at 3.80%. The China Govt ten year bond is little-changed at 2.92%. The New Zealand Govt ten year is starting today at 4.22% and up +26 bps for the week in a relentless drive higher.
The price of gold will open today at US$1866/oz and up +US$3 from this time Saturday.
And oil prices start today unchanged at just under US$80/bbl in the US. The international Brent price is now just over US$86/bbl.
The Kiwi dollar is still just under 63.1 USc. Against the Australian dollar we are little-changed at 91.2 AUc. Against the euro we are also unchanged at 59.1 euro cents. That all means our TWI-5 starts today at 70.6 and actually very little-changed over the past week.
The bitcoin price is now at US$22,025 and up +1.5% from this time Saturday. Volatility over the past 24 hours has remained modest at +/- 1.1%.
We trust you remain safe during Cyclone Gabrielle's landfall.
The easiest place to stay up with event risk today is by following our Economic Calendar here ».
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34 Comments
China is ramping everything back up, US is all positive. We had a great outdoor opera concert yesterday afternoon in the sun. All is good in the 'hood.
No huge credit impulse coming from China, which is why there isn't anyone seriously betting on it in any serious markets. Check out freight rates, Baltic Dry. Even industrial commodities have stalled. Pandemic wasn't the problem. And Jan '23 looks more like last year than not. Link
What didn't happen in China in January? Household borrowing. All the unearned hype on corporate bank loans, HH loans another pittance in Jan. Reopening changed nothing as Chinese refuse to chase a narrative. W/out real estate consumer spending isn't coming back (much). Link
For all the hype about CNY and inflows, foreign currency loans aren't rebounding much, either. Potemkin reopening. Link
Pretty incredible to think the BoJ job is now viewed as a hospital pass by preferred candidates.
That seems like it would be such a huge deal for someone to turn that down, within that specific cultural context.
Richard Werner:
I met Kazuo Ueda for the first time 33 years ago. He was clearly a well looked-after protégé of the powers that be. Link
So far it seems the storm of the century is more of a storm in a teacup, in Auckland anyway. Other areas like Northland and the Coromandel may be more affected?
"so far" being the key words. Lets check back this time tomorrow and see who is posting from their phone while waiting for the power to come back on.
You would think such a comment could wait till the storm is actually over...???
Gabrielle is likely to squash local pressure to the lowest values ever observed in New Zealand – one of several indicators the incoming ex-tropical cyclone will be packing plenty of power as it rolls through.
Its wind-making potential - already being demonstrated with gusts higher than 140km/h at Cape Reinga - may also be worsened by the formation of a scorpion tail-like feature called a “sting jet”.
"the formation of a scorpion tail-like feature called a “sting jet”."
Amazing creative writing to say: "it's raining in Auckland", beautiful Baywatch! Are you a fiction novel writer or maybe a news Anchor, Baywatch?
Ha ..its a quote from the granny Herald Yvil.
Other than look up at the sky you don't have much knowledge on the weather, especially NZ weather do you Yvil?
Here some more updates for you
Gabrielle is just off the northeast NZ coast, creating waves over 11m high in the Bay of Islands. Widespread power outages are affecting households and businesses in Northland, Auckland and Coromandel. Over 29,000 households are still without power in Northland this morning
What if the predicted flooded sweage picks up Covid and spreads it all around? I'm sure you could write this more eloquently and more terrifyingly than me. Surely that would scare the sheeple more, then we can keep the schools, businesses, airport etc closed for months and we can all stay home! Hooray, no more work!
Meanwhile tens of thousands are dying in Turkey, Syria and Ukraine...
If silence be good for the wise, how much better for fools. —Talmud
sting jet
Christ the media try their hardest to sensationalise everything, don't they?
Like that latest deadly COVID variant we were all supposed to be deathly afraid of: "Kraken". It's almost like satire at this point. I'm half expecting the next one to be called "Hitler".
Looks the the media you bag so often are just doing their job....
A sting jet is a meteorological phenomenon which has been postulated to cause some of the most damaging winds in extratropical cyclones, developing according to the Shapiro-Keyser model (though perhaps not exclusively)[1] of oceanic cyclones.
Haven’t looked at the forecast Yves?
supposed to get significantly heavier from midday, and much heavier tonight.
This ‘calm’ before the storm feels a bit like the economy.
(btw I know a few people who have already experienced some property flooding in the past 24 hours, so even so far it hasn’t been without issue)
We already have standing water on Great South Road in Greelane. We are meant to get another 80mm or so between now and tomorrow morning.
What is standing water ?
Pretty obvious isn’t it?
water that’s stationary and has depth, rather than moving across the surface and draining.
Water that doesn't drain away.
What is standing water ?
Water that is not lying down flat, obviously
I wondered how long it would take for someone to answer the obvious. Beautiful! What a crack up!
Things still look hot in the US, swaps still rising. Strangely. a large NZ bank is supposed to be announcing a 4.99% 1 yr Home Loan rate today.
How many conditional sale chains are stalled because their isn't a greater fool | FHB to trigger them?
I presume retirement villages sell units on a conditional basis?
..they give you xx months to pay up to secure said unit. They grant extensions - which they can afford to do as its generally the vacating party that has to wait for payment (diff homes dif rules).
The neighbour got extension, eventually her family bridged her in. Her home sits unsold month later (that's three empty within a stone throw of each other in our street). Thus she has ended up paying the older higher market prices and is selling into a dead market. But at the age she was, I guess they decided they couldn't wait.
The retirement home business models will need a revamp if this carries on.
Thanks for the thoughts. I don’t think retirement village apartment prices are coming down much? They seem to be banking on the idea that old Nanna Smith will still sell, it might be for $1 mill rather than $1.3 mill, but she needs to move.
If she buys at 800k she still has 200k in hand, although a big difference to 500k in hand…
FHB = Foolish House Buyer?
= Friggin' Hopeless Buyer?
NZ's service sector kicks off the new year on an expansionary note. However, it is the lower North Island that is driving this optimism, while the other 3 regions are still surveying in a negative mood.
the Northern PSI was clearly softer than others in January at an unadjusted 40.1. It is tempting to pin this all on extreme weather that some of this region faced during the month.
But what's driving the mood into the ground in the SI despite tourists flocking back to NZ?
Power off 24 hours. Cell coverage went out 12 hours ago , running on genset , massive vector power outage map Real impact yet to hit
by Yvil | 13th Feb 23, 8:47am
So far it seems the storm of the century is more of a storm in a teacup, in Auckland anyway. Other areas like Northland and the Coromandel may be more affected?
It was yet another moronic comment from him.
> a recession is some ways off yet.
A recession always follows yield inversion, sometimes you just have to zoom out a bit to account for the lag.
It's the same with Summer Solstice , a recession always follows the Solstice, it's just that some years there is more lag than others.
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