Here's our summary of key economic events overnight that affect New Zealand, with news we are in that transition zone where 'gains' and 'losses' are offsetting each other.
First, American durable goods orders retreated in January from December. A fall was expected mainly because there was an outsized rise the prior month, but it was more than anticipated. However the retreat was mainly due to a drop in orders for commercial aircraft. Excluding that, there was a rise. And on the same basis, capital goods order rose as well, suggesting boardrooms are still in 'invest' mode. (It is likely that February orders will jump, based on some very large recent aircraft orders.) Year on year, durable orders are up +3.0% and non-aircraft capital goods orders are up +5.3%. (As an aside, it is notable how small defense orders are in the scheme of things. They represent less than 5% of total orders and are pretty stable. You might have thought the defense of Ukraine would have supersized these, but it hasn't been the case.)
In the US oil patch, the Dallas Fed's factory survey is weak in February. We have noted it declining for some time, but now it is lower than year-ago levels for the first time since May 2020. The nine-month run of declining new orders has caught up with them. This is a specialised region, so it is hard to draw national conclusions from it.
But nationally, in what their sector suspects is a turning point, the number of pending home sales in January rose more than expected from December, and by quite a bit more. A +1% rise was anticipated but the actual increase was +8.1%. This surprise gain comes on top of the stronger new home sales we noted last week.
Hong Kong reported a huge retreat in merchandise trade activity for January. Exports fell -37% from year-ago levels while imports retreated -30%. These were worse levels than for December. The export drop was their largest in 70 years. It is sad to watch the life being squeezed out of what has been a globally important city.
In the UK, they seem to have tidied up their deal with the EU on trade with Northern Ireland, a revised side deal called the Windsor Framework. Both sides claim 'victory' which is usual in these sorts of negotiations.
In Australia, their prudential regulator APRA has kept its pandemic extra's, the 1% capital buffer for risk weighted assets, a buffer in bank capital for stress, and a 3% serviceability buffer "to maintain prudent lending standards". That's +3% above the rate banks will lend at. Borrowers must meet lending standards at that extra higher level.
The UST 10yr yield starts today at 3.92% and down -3 bps. The UST 2-10 rate curve is unchanged at -87 bps. Their 1-5 curve inversion is a little more inverted at -86 bps. Their 30 day-10yr curve is a little more inverted at -70 bps. The Australian ten year bond is unchanged at 3.89%. The China Govt ten year bond is little-changed at 2.93%. And the New Zealand Govt ten year is starting today at 4.70% and up +3 bps from this time yesterday.
We should also note that the New Zealand two year swap rate hit its highest level yesterday since November 2008.
Wall Street has started its Monday session with the S&P500 up +0.4%. Overnight, European markets all rose about +1.4%, except London which gained +0.7%. Yesterday, Tokyo closed down -0.1%, while Hong Kong and Shanghai each dipped -0.3%. The ASX200 ended its Monday session down -1.1% and the NZX50 moved in sympathy, down -0.9%.
The price of gold will open today at US$1817/oz and up +US$6 since yesterday.
But oil prices start today soft at just under US$76/bbl in the US. The international Brent price is just over US$82/bbl. Both remain little-changed in a week.
The Kiwi dollar is still at 61.6 USc, and unchanged since yesterday even if it is still close to a three month low. Against the Aussie we are also little-changed at 91.6 AUc. Against the euro we are soft at 58.2 euro cents. That all takes the TWI-5 to 70 and down -20 bps.
Bitcoin has remained within its recent narrow range, now at US$23,387, up +0.9% from this time yesterday. And volatility over the past 24 yours has remained modest at +/-1.5%.
The easiest place to stay up with event risk today is by following our Economic Calendar here ».
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75 Comments
The data from "Home" Kong probably reflects what is going on in Mainland China.
Chinese will be Chinese. I always say it's largely about the wealth effect. Same same but different in Chyna, Eventually the NZ sheeple will understand that too, instead of relying on another hit of hopium.
The strength of China’s economic rebound this year largely hinges on one uncertainty: whether families and large companies are willing to draw down the pile of cash they built up since the start of Covid-19.
https://www.wsj.com/articles/covid-era-savings-are-crucial-to-chinas-ec…
Almost down on every Chinese New Year month. It went down a bit more this year as Jan 2022 was a history high. The way it presented here made it sounds like a great recession.
Again, data is data, just how you want to present it. :)
https://www.macromicro.me/charts/13821/hk-export-and-import-yoy
The data is vs year prior, not month prior
Hong Kong now in form, is just another Chinese city, it has been taken into the swamp so to speak. Should be able to sustain its port activity, but not much of anything else, in an international sense, that evolved and was present in the 160 or so years prior to 1997.
Stuff are running an article about a book by Joshua Kurlantzick called "Beijing’s Global Media Offensive: China’s Uneven Campaign to influence Asia and the World"
Essentially describes NZ as being a soft target. The likes of John Key and the National Party were bought and paid for. A Canadian studied cited NZ as an example for being captured by Beijing.
Indirectly gives a lot of weight to Anne Marie Brady.
Always remember in his short and ill fated leadership of the National Party Todd Muller in an interview exclaiming something like New Zealand had to as quickly as possible get back in with China and get things going again. Lost any chance of my vote right there.
Don't forget about Labour. Witness how David Parker became an instant belt and road disciple after a trip he made to China.
Born-again Sinophile. Seems to afflict many promiment NZ politicos--Key, Shipley, Tremain, Brash, Sabin off the top of my head. Wouldn't know the difference between Mandarin and Japanese script. But no worries.
"Mandarin script"? Last time I checked both Taiwan and the mainland speak mandarin but one uses traditional and the other simplified characters.
Parker is one of my least favourite MPs. In my view much of his work in the environment and RMA space has been really poor.
He the legend who's pushed the fair pay unionization-by-stealth law through?
A keen student of law. He “loves it” he spouted in an interview. Yet he passes a law, furtively on the eve of the year end break, that authorises the IRD to demand disclosure of private assets by selected NZ citizens. 800 years ago a foundation of our law was established when King John was forced to sign the Magna Carta. A primary purpose of that document is to prevent intrusion and intervention by the Crown into the legitimate ownership of property and assets of individual citizens. Yet that is of neither interest nor importance to law buff Parker it seems.
Borderline treasonous
A lot of large donations going to National and ACT lately. Bugger all to Labour.
https://elections.nz/democracy-in-nz/political-parties-in-new-zealand/d…
No real surprises there. Very rich individuals giving to National and Act so they pass legislation that protects their wealth. Interesting that the Greens are made up of lots of small donations, I guess their supporters are not part of the wealthy elite.
TEALs in aussie won some wealthy votes, maybe they are enviromentalists not social warriors
A big war chest being built. Not sure though that I am all that enthusiastic about witnessing it being spent. Few advertisements are enjoyable , for want of a better word, but political party electioneering advertisements are the pits.
One will be Labour - Soft on Crime
That statement confuses me. Isn’t it the courts that sentence crimes not the politicians?
Hows about 3 strikes. And that is just a starter....
Terrible policy. Appeases the ignorant but achieves very little in the way of outcomes, it is expensive and doesn't bring reoffending rates down. An easy option for people who are too simple or can't be bothered to study the structural forces driving crime.
I see Bayleys real estate has donated $60,000 and $104,600 to the National Party
Hong Kong now in form, is just another Chinese city....
Japan is just another vassal state of the US.
Recall US feared rise of Japan in 80s so implemented the Plaza Accords and took a wrecking ball to their semiconductor industry. Japan remains in a highly abusive relationship with US and have suffered huge damage to their economy for decades. Eventually they will break free. Link
Hong Kong & Macau were ripped off China after it was coerced into the opium wars in which they were hopelessly outclassed, illequipped to fight. In their great history that 160 years is but a mere dot. Considered in that regard Hong Kong is simply back home. Obviously Japan has never been part of the USA and if it’s a vassal then as the world’s third largest economy, it is a bloody big one then! Despite all his military blunders General Douglas MacArthur certainly was the major influencer in Japan post 1945. Ironic sort of twist of fate how quickly allies of WW2 became enemies and vice versa. Japan has now revised its constitution to dramatically increase its military capacity and take that as well beyond only defensive capability. Predictable just as with Australia some nuke powered subs coming there way.
Re HK exports...Chinese new year perhaps...?
Freudian slip?
Their exporters may be having hindrances put up against them by the mainland government, for products which compete for export markets with mainland exporters who have a bit of government influence.
Or it could all be part of a mainland strategy to help strangle HK inependent political thoughts.
Or their markests are just buying less.
Just read that the number of job ads is on the rise in nz again (re seek). Interesting to watch inflation and ocr.
If I remember correctly 2 percent more ads. And 19 percent more applicants.
Both are positives for the economy and controlling inflation
A large percentage of the 19 applicants are from offshore, spec and wont get a visa. Market still strong and hard to get experienced staff. Even in the USA market tight with exception high tech who are protecting profit margins. I think RBNZ kills economy before the Labour market.
The USA financial markets oscillated last week following higher than expected PCE and payroll reports. But importantly the US 10 year treasury did not break through 4 percent barrier. Now range trading. Latest US jobs report is coming out end of this week.
US market is fascinating to watch right now.
The rulebook for the FED is keep hiking until you get a soft landing or things break.
You are probably right - maybe we are moving into a world where we will always have a shortage of skilled workers and a surplus of unskilled.
Tech and other factors are probably continually making that worse.
The problem is that Orr presumably needs to see the unemployment rise in the skilled sector NOT the unskilled sector. As the unskilled workers wont have much discretionary spent to cut. Methinx he needs a better plan.
I read somewhere once that what underpins bankable and desirable economies, defined by people wanting to move there and do business from other strong economies, are enforced laws in opposition to corruption, open and transparent elections, an impartial and open banking system, and a strong transparent justice system.
People and groups can try to subvert them and always will, but independent checks and balances exist.
People in HK are being arrested by secret police for their opinions. The slide into the swamp has been swift and sad.
I remember as a kid in the 80s and 90s there was a wave of Hong Kong nationals as well as a fair few Taiwanese moving to NZ out of fears of CCP annexation/rule.
Looks a smart move in hindsight.
In Oz: To have a moving buffer of 3% doesn't seem very safe. Because it is in a rising interest rate environment. One assumes that people earn more in concert with the mortgage rate increases which mitigates this somewhat. But that does not help those who do not earn enough more, or who lose their jobs.
Good morning from Germany where deindustrialization continues. In Q4, private investment in machinery & equipment fell by 3.6%QoQ as many comps moved abroad. BASF re-evaluates its EU footprint, plans to cut 2600 jobs in GER & move to China, blaming EU overregulation&energy prices Link
There will come a time where German products are no better than other countries.
eg The Electric Mini is to be made in China. That has instantly taken it off my list of future purchasing options.
Good morning from #Germany, which must invest $1tn in expansion of renewable energy by 2030 in order to cover 80% of its electricity needs from renewable sources by then. Germany needs 43 soccer fields of solar power every day, boldest project since WWII. https://bloomberg.com/news/articles/
To be fair the Minis made in Europe are pretty poor.
Wage threshold increased to $29.66/hour for employing migrant workers. National plans on scrapping this and putting in an industry average threshold instead.
Up up and away
Easy way to get around that. Just collude as an industry not to pay more, then complain to the government about not enough local workers wanting to work here, so need more immigrants.
Exactly. The top sectors that employ migrant workers are retail, hospo, accommodation, aged care and education & training - all feature at the bottom-third of NZ's highest-paying sectors. We've turned into a Ponzi economy where more workers are hired to service workers who arrived before them.
Uhh, yeah. They either turn up in NZ, or make stuff for Kiwis overseas and send it to NZ. The supposed higher value of your job is partially dependent on there being people paid way less to support you.
Who do you think was going to be doing the hospo and aged care work, indigenous Masters grads?
Sounds like cartel conduct which is illegal here.
The UST 10yr yield starts today at 3.92% and down -3 bps. The UST 2-10 rate curve is unchanged at -87 bps. Their 1-5 curve inversion is a little more inverted at -86 bps
With interest rates rising and debt levels going up, debt servicing costs are rising. Using CBO data shows that interest payments on US government debt have doubled from $1bn per day before the pandemic to now $2bn Link
Government deficit spending increases the net worth of the private sector…without adding a liability to it! Think about it: when the US government sent checks to its citizens, American people literally saw the amount of their spendable money increase out of nowhere. Link
US public debt servicing costs double in 3 years. Pffft - in these wild times that's virtually flat.
They'll pay attention when it goes parabolic. Of course, by then it will be too late...
But oil prices start today soft at just under US$76/bbl in the US.
Don't get too excited as our cross rate has been weaker
In the UK, they seem to have tidied up their deal with the EU on trade with Northern Ireland, a revised side deal called the Windsor Framework. Both sides claim 'victory' which is usual in these sorts of negotiations
Britain back in the EU - goodbye Brexit.
Rental demand in Auckland far exceeds supply. Boom
Mortgage shock: $900/fortnight rise forecast for many Aucklanders - Westpac
House Prices far exceed ability to pay - BOOM
Mortgage shock: $900/fortnight rise forecast for many Aucklanders - Westpac - NZ Herald
One of these things is not like the other. Homeowners are paying more to keep a roof over the head but tenants are not paying more to rent. How can that be?
Whats good for the goose is good for the gander eh 🤙
Who celebrates a rental shortage? The man with more money than he know what to do with- boom.
can we please ban this bottom feeder? He is just on this forum to argue and posture. Waste of perfectly good oxygen
Ignore him, he picked the bottom of the NZ housing market every day last year, and continues most days this year BOOM.
Yep, don’t feed the troll. If we all ignore him he might lose interest. It’s often hard to resist the bait because he’s so objectionable.
I thought I was listening to the Venga Boys here
If you want to take it that way its up to you, if you want to stick your head in the sand or put your fingers in your ears I can't stop you. How would you react if interst.co stated what I did.
Raising and sharing facts with the community is making people aware and they can make their own decisions
🍻
that explains why the rent I pay in Eden Terrace has been reduced then /s
Source? Last I checked Auckland was losing tenants, with increasing rental supply coming on - which was reflected in rents in my local area dropping, no one looking at houses, and Auckland rents across the board being flat for the year.
Otherwise, this looks like misinformation.
"no one looking at houses"
Indeed, I was the only attendee at the last three open homes I went to.
The Auckland rental market is extremely buoyant. When all the numbers are added up and if this amounts to something then new published reports will come out for you to read
"and if this amounts to something"
so you admit this is a scenario that only exists inside your head?
There will continue to be a debate over the origins of COVID-19, but now there will be a debate.
For years, the media and government allied to treat anyone raising a lab theory as one of three possibilities: conspiracy theorist or racists or racist conspiracy theorists.
Its nice weather in NI for a change. Are we about to have an Indian summer. Boost to the economy, higher production, and suppression of wages
Yes the better the economy does here the more RBNZ have to do to engineer the recession they require..... are you not listening to the Nice Mr Orr. Re wages, a whole lot of fair pay arrangements are about to hit, suppression, your dreamin....
Trouble is Orr is too nice a chap. He keeps hinting that they will actually do something to drive the changes he wants. Then he does something small that affects the wrong minority and we all carry on partying...
Most people arent taking orr seriously any more. He is the boy that keeps crying wolf. He needs to drop a massive ocr hike and drop a warning what he will do if he doesnt see X happen by Y date. And then follow through.
No guts , no glory ! ... you're right , Adrian needs to grow a pair , and get heavy with the banks ...
... a good starting point would be to advise the government to remove the taxpayer backstop : they are not " too big to fail " ... no one is ...
You'd like to think I'm dreaming. Its the age old problem of kiwis not wanting to do certain jobs and just too many hangers on. Immigrants come in attracted by the wage levels.
Now that borders are opening the situation has turned around 180 degrees from late last year. Will keep improving
When is the recession starting IT GUY
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