Here's our summary of key economic events overnight that affect New Zealand, with news the world seems to be settling in to a low-growth high-inflation period, not quite stagflation but disarmingly close.
In the US, retail sales last week on a same store basis were up +5.3% from year-ago levels, unchanged in a week, and hardly accounting for inflation.
American inventories were little-changed in January from December. But that can't hide the fact that retail stocks of goods are +12% from year-ago levels and wholesale stocks are up +16% on the same basis. Still, it is probably good that that expansion seems to have stopped, and that some of it is "just inflation".
Meanwhile, American exports slipped in January from December to be up less than +12% in a year. But imports rose marginally on the same basis but are only up +2% year-on-year. That means their merchandise trade deficit rose to almost -US$89.3 bln in the month from December, but is actually -US$11 bln less than the same month in 2022.
The Chicago industrial heartland isn't in its best shape, with declining activity, according to the ISM Chicago PMI for February. It is contracting at a pace that is uncomfortable for them but at least there is light ahead - New Orders, Order Backlogs, and Supplier Deliveries increased.
The situation is similar in the Richmond Fed district's factory survey in the mid-Atlantic states region. New order levels are quite weak here, but those firms surveyed expected them to pick up soon.
Consumers are less optimistic than expected. The Conference Board consumer sentiment survey was expected to improve from a modest net positive. But it actually slipped back in February - still positive, but less so than expected. It was their view of business conditions that lagged. Their view of the American labour market was more positive.
The Canadian economy was unchanged in Q4-2022 from the prior quarter, putting an end to five consecutive quarters of growth and following a +2.3% pa expansion in Q3. That was a disappointment. Markets had expected a modest +1.5% Q4 boost.
India said they ended 2022 with less of a tailwind. Their Q4-2022 GDP data shows their economy expanded +4.4% from year-ago levels, well below the +6.3% in the three months to September. Analysts expected +4.6%. Private spending which accounts for almost two thirds of their GDP slowed sharply. Still, India's expansion is outpacing China at present.
In Japan, their retail sales came in very strong in January, up +6.3% when a +4% rise was expected, and compared with a +3.8% rise in December. But things were not so great for their industrial production, which fell a sharpish -4.6% in January.
Both Spain and France reported February inflation levels overnight and both came in higher than in January. Bond markets noticed.
In Australia, it is becoming clearer that their immigration surge is turning the housing market prospects around from 'negative' to 'balanced', according to Westpac. They report a material tightening in rental markets. Continued net inflows and subdued levels of new building mean a sustained further tightening across the wider market is likely in coming years. These forces are likely to push the current focus on inflation and interest rates into the background there.
Even though retailer Harvey Norman said its sales were down -10% in January, national Australian retail sales surprised on the upside, coming in up +1.9% from December and up +7.5% from a year ago. These rises are not inflation adjusted however. But they do follow a sharp retreat in December. Yesterday the share market was not kind to the Harvey Norman share price which was down -12.5%.
Staying in Australia, regulator ASIC has launched its first court action against alleged greenwashing conduct, commencing civil penalty proceedings in the Federal Court against Mercer Superannuation for allegedly making misleading statements about the sustainable nature and characteristics of some of its superannuation investment options. ASIC alleged Mercer, which oversees A$27.5 billion in assets, misled members of its Sustainable Plus fund by claiming it excluded companies that were involved in carbon intensive fossil fuels but then heavily invested in 15 stocks from the sector including AGL Energy, BHP, Glencore and Whitehaven Coal.
The UST 10yr yield starts today at 3.93% and up +1 bp. The UST 2-10 rate curve is little-changed at -86 bps. Their 1-5 curve inversion is also little-changed at -85 bps. Their 30 day-10yr curve is a little less inverted at -66 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 4.62% and down -8 bps from this time yesterday.
Wall Street is in its Tuesday session with the S&P500 up +0.3% in late trade. Overnight, European markets all fell about -0.2%, except London which retreated -0.7%. Yesterday, Tokyo closed little-changed, while Hong Kong fell -0.8% and Shanghai rose +0.7%. The ASX200 ended its Tuesday session up +0.5% while the NZX50 moved a bit more, up +0.9%.
The price of gold will open today at US$1828/oz and up +US$11 since yesterday.
And oil prices start today up +US$1.50 at just on US$77.50/bbl in the US. The international Brent price is just over US$83.50/bbl.
The Kiwi dollar is up almost +½c at just under 62 USc. Against the Aussie we are firmer at 91.8 AUc. Against the euro we are firmish at 58.4 euro cents. That all takes the TWI-5 to 70.3 and up +30 bps.
The bitcoin price is still within its recent narrow range, now at US$23,450, up +0.3% from this time yesterday. And volatility over the past 24 yours has remained quite modest at +/-1.0%.
The easiest place to stay up with event risk today is by following our Economic Calendar here ».
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15 Comments
In Australia, it is becoming clearer that their immigration surge is turning the housing market prospects around from 'negative' to 'balanced', according to Westpac. They report a material tightening in rental markets. Continued net inflows and subdued levels of new building mean a sustained further tightening across the wider market is likely in coming years. These forces are likely to push the current focus on inflation and interest rates into the background there.
Quite the juxtaposition as a potential safe haven to flee to from NZ. On one hand, they've a mineral fueled higher GDP per capita to benefit from. And on the other, they've got all the issues people hate about NZ, but on crack.
Fat cheque or principles?
I've punched in the AUD equivalent of what I've just paid in NZD for a house in Auckland. It looks like I could live like some sort of pharaoh in a country with much higher wages with which to pay down a mortgage, and 12% super as a starting point.
Admittedly there are some downsides: Country burns itself down when it gets bored, snakes in swimming pools, dingos getting into your esky, too many Australians.
That depends where you live doesn't it? Sydney isn't cheap if you want a standalone house nearish the city for example.
Sydney also has an actual public transport and motorway system, so living farther out doesn't leave you with as punishing a commute as it does here.
Moving to anything with more than about 15 mins and you have rocks in your head.
You can get cheaper houses in Aussie in less desirable places, but if you want something with a harbour view or close commute in somewhere like Sydney or Melbourne it's the same sort of hedonic treadmill as Auckland.
its very quiet on this comment stream, I guess everyone is over on the other stream poking spruikers
I initially thought maybe I had to refresh my browser, sometimes I'll open an article and it'll fester for a few hours while work takes over.
But nope!
Ill brighten things up.
Hearing about a well known Ham building company (sub branch of nation wide) in trouble. 15 staff laid off, unpaid contractors - one $200k. Many smaller tradies not getitng paid.
That's interesting. I hope the tradies relocate to New Plymouth. On a cycle round a day or two ago stopped at a new house build and chatted with the painter owner who has 4 employees and only does work for builders, two franchise and the other non- franchise. My first question is I hope you are getting paid. He is. Next question is how far ahead is the work he has on the books. Until the end of the year.
Whether that bears out is another question but he seemed fairly confident.
I don't think the work is the issue...its the getting paid bit.
Yep - Stories of Spruikers being mauled by the collapse of the house of cards have always attracted more Romans
The Canadian economy was unchanged in Q4-2022
The massive decline in business and housing investments were offset by a net growth in household consumption, which was only half of its net population increase.
For reference, the mass influx of migrants into Canada in the last decade peaked at 0.75% of their population. Ha, rookie numbers - our annual net migration peaked at twice that rate.
The German bunds are starting to both price in the ECB 4% and the large borrowing that germany is undertaking to subsidise consumers,and industry from the self inflicted energy shock ( 250b e in subsidies) and has just announced a trillion euro program for "renewables" by 2030.
The German 2 year yield growth has exceeded the NZ 2 yr in the last 12 months,due to it being in negative territory moving from -0.68 to 3.14.With the additional constraints for fertilizer,both limited availability,and regulatory constraint Europe now gets higher double digit food price inflation,a positive feedback loop with little change going forward.
"With the additional constraints for fertilizer" This is news to me. I was very much under the impression Russian fertiliser is exempt, except in NZ, for any form of sanction whether its outright no trade or a heavy import duty tariff as in NZ. Otherwise this is a self imposed sanction by Germany or the EU or Russia refusing to sell fertiliser to Germany or any EU country.
In breaking news, Bishop Tamaki has finally worked out what caused Cyclone Gabrielle. Apparently it was online porn this time. God (literally) knows what caused all those natural disasters before gay marriage and computers.
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