Here's our summary of key economic events overnight that affect New Zealand, with news China seems to be emerging from its doldrums.
But first up today, and to the surprise of many, the local Fed's factory survey for New York State reported a sharp improvement - and it was across the board. New order inflows were at a one year high, and activity perked right up. But cost pressures remain unchanged. However, firms expect business conditions to improve over the next six months, with measures of capital expenditures and employment also rising. This survey hasn't been very positive for a few months now, so this is a 'welcome' improvement locally.
Also improving is American home builder sentiment. It rose for a fourth month in April, a fresh high since September and came in better than expected.
And the Wall Street earnings reports for Q1 are off to surprisingly good start. Of the 30 S&P 500 companies comprising 10% of the index that have reported results so far, 90% have easily beat earnings-per-share estimates while three quarters of them have topped sales forecasts.
For some regional banks reporting, it is exposing the size of deposit flight. Regulators will be nervous.
Despite all this, the US Congress's debt ceiling game of chicken is nearing a flash point with Republicans pushing to gut most social programs - except Medicare, Medicaid and Obamacare. It is a brinkmanship game that is raising US bond yields, mainly because the negotiators are taking extreme positions.
Also potentially inflationary, there is a rising threat of strike action at US West Coast ports in coming weeks.
Separately, IMF data shows that China will be the top source of economic growth in the next five years, followed by India and the US. More than 20% of that growth will come from China's expansion, with more than 10% from each of the other two. Indonesia is the next largest, followed by Germany, Turkey and Japan.
Singaporean exports rose in March from February and by much more than expected. A small rise was anticipated after a weak February. But in fact the rise was substantial, paring back a long series of declines so that year-on-year their non-oil exports are down 'only' -8.3%, half the drop in February.
Meanwhile, its ruling party said the City-State will push through increases to GST (from 7% to 9%), but it has no plans to go down the path of welfarism - it is ruling out becoming like a Nordic state.
In Australia, banks both large and small are 'slashing' their fixed rate home loan offers. CBA today cut its advertised 3 year fixed rate by -40 bps to 5.59%. (Their new 'comparison rate' which loads in the myriad costs Aussie banks also charge - which NZ banks don't - takes that rate to 7.20%. For perspective, ASB, CBA's New Zealand subsidiary offers a 3 year fixed rate at 6.59%).
The UST 10yr yield starts today at 3.59%, and up +7 bps from this time yesterday. The UST 2-10 rate curve is little-changed at -61 bps. Their 1-5 curve inversion is now at -115 bps and marginally less inverted. And their 30 day-10yr curve is now inverted at -43 bps and inverted substantially less. The Australian ten year bond is up +5 bps at 3.46%. The China Govt ten year bond is still at 2.86%. And the New Zealand Govt ten year remains little-changed at 4.14%.
On Wall Street, the S&P5400 has opened its Monday trade up a minor +0.1% after being lower earlier. Overnight, European markets closed mixed between London's +0.1% rise and Paris' -0.3% dip. Yesterday Tokyo ended up a very minor +0.1%. Hong Kong ended its Monday session up +1.7% with a strong afternoon trade. Shanghai rose all day to be up +1.4% at its close. The ASX200 ended its Monday session up +0.3% while the NZX50 had a closing spurt to end up +0.5%.
The price of gold is at US$1995/oz and down -US$9 from this time yesterday.
And oil prices are at down -US$1.50 and just under US$81/bbl in the US. The international Brent price is just under US$84.50/bbl.
The Kiwi dollar has moved down further against the USD and now at 61.7 USc and a -½c fall. Against the Aussie we are have fallen -40 bps to 92.2 AUc. Against the euro we are unchanged at 56.5 euro cents. That means the TWI-5 is at 69.5, down -30 bps and still its lowest in almost six months.
The bitcoin price is lower today, now at US$29,502 and down -2.7% from this time yesterday. Volatility over the past 24 hours has been moderate at +/- 2.2%.
The easiest place to stay up with event risk today is by following our Economic Calendar here ».
Daily exchange rates
Select chart tabs
63 Comments
ASB are a bit DGM today https://www.nzherald.co.nz/nz/nz-economy-recession-tipped-to-be-twice-a…
and to top it off
The Front Page: Tremors under Lake Taupō trigger rise in supervolcano alert level for first time in history
Well Chippy is going to stay chipper by being off overseas, Australia, the Coronation then NATO. All understandable and necessary but a question mark perhaps re the behaviour & squabble of the crew, while the skippers away?
Well Chippy is going to stay chipper by being off overseas, Australia, the Coronation then NATO.
NATO = North Atlantic Treaty Organisation.
He would be better off preparing to negotiate terms with this lot before AUKUS gets up and running.
better off preparing to negotiate terms with this lot
Unless those terms include setting up a nice artificial reef somewhere to dive at, I don't think that lot have a lot of negotiating power.
Wow! Wonder though how the equivalent Black Sea fleet investigation & briefing read just on a year ago? You know, when the mighty Maskva had hit the bottom. Wager that that report won’t ever be likewise publicised, what’s the odds?
Like this
'God help us' - Waikato hospital short 40 nurses for one shift | Stuff.co.nz
https://i.stuff.co.nz/national/300855134/god-help-us--waikato-hospital-…
This winter is going to really show up how bad the NZ Health system is in both Hospitals and also lack of nurses in the rest home industry. The country will be a real mess by the time the election campaign gets underway proper and National / Act will really stick the knife into Chippy.
Sure but headquarters in Wellington, you know where all the shiney arses hang out, has had $’s by the tonnes spent on it hasn’t it so how can there be a problem if it’s somewhere else. As Dr Reti accurately depicted, same team, different jerseys.
Same team, same jerseys, different numbers.
Swap the jerseys with the other team, and you won’t really get much difference. A few stylistic and tactical differences, but the same old flawed game plan under the surface.
The game plan is called ‘The populist, centrist, short-termist neoliberal plan’
It is not the health care system that is the problem. It is the health of the people. We are a country of obese, diabetics addicted to pharmaceuticals that have more adverse effects than cures. Today's doctors are indoctrinated into a drug culture, with little education on true health.
It's both
I'll be interested to see how National / ACT propose to fix this 'not a crisis'.
If only those economists could agree, as I heard that Nick Tuffly has a different more upbeat view
Upbeat? That sounds fact-based (sarc).
That IMF report: 'Over the medium term, the prospects for growth now seem dimmer than in decades.'
and:
Futures markets suggest that crude oil prices will slide by 24.1 percent, to average $73.1 a barrel, in 2023 (from $96.4 in 2022) and continue to fall in the coming years, to $65.4 in 2026 (Figure 1.SF.1, panel 2). Uncertainty around this price outlook is elevated........
You don't say!
Both (your and their) comments highlight the ignorance of economics, the energy and resource blindness of it. Same with food prices - up 12%, while inflation is ostensibly running at? Inputs are physical (real) and the demands for them are sequential (energy production needs to access the energy first, mining needs to access it second, processing third, etc etc. Yet the demand for the mining falls over if the energy is curtained to links further down the chain, via lack payment-ability driving lack of demand.
Economics can post-hoc-measure, then project, but If you don't measure real inputs you're flying blind, and if inputs are falling off an exponentially-shaped cliff, like this one? https://euanmearns.com/eroei-for-beginners/ (first graphic down)?
Despite the hype ( growth engines, ffs) we are coming up against hard limits, and (growth being exponential) are coming up against them fast.
I guess the price of an oil barrel could be $65 in 2026, but do these projections include estimates of how much the global economy would have to shrink to achieve this?
Cheaper oil will be great for our economy and all those old cars we will still have
Meantime Germany closes nuclear power stations -doesnt sound like sensible policy to me in a time of a global energy shortage
Edit: Stephen topliss from bnz
PS: PDK regarding your "fact based" comment. Are you the one who pushes climate theories? Fact based indeed
+1=2 points
No, Profile does that. I go with the science (it works for me, I've got 4 greenhouses).
https://www.interest.co.nz/public-policy/120142/murray-grimwood-argues-… (first graphic down) - if you don't count the two arrows coming into the left-hand-side of the box, then to make your incorrect narrative 'fit', you're going to have to deny the two arrows going out of the box, right-hand-side. Stands to - fatally flawed - reason. Thus I can tell a lot about those who deny (having any negative impact, really, but CC is a classic) and usually the extrapolation holds firm. Usually, they've bet on future growth, thus they require...
Good luck with that
Understanding of physics not a strong point huh HW?
Its all a theory and PDK took issue about not sharing actual facts. Did that go over your head palmtree08
The assumptions that underly the possible climate effects are often worst case
Meanwhile the big polluters won't sign up to the accord. Nor will aust stop shipping coal. Maybe you can confirm if aust has increased shipments. Facts only please.
This might help HW2. Its just over 22min long, so easily digestible.
Nate Hagens: Human Predicament Short Course #2: The Fossils that Power the Global Economy
HW2 - Not logical. Or correct.
The warming impacts are running ahead of forecasts - not behind. Folk I know who study ice - floes and flows - are genuinely worried. But they do what scientists do; report their findings. How that compares to your comments, says a lot about information/the media/polarised narratives).
The problems are simple;
* Without carbon energy, we will be doing orders-of-magnitude less. But we have burnt the best half, and have the dregs ahead.
* The carbon has been below ground, all the time our species evolved - in the above-ground habitat.
* We are burning most of the 100 million barrels (and coal equiv) that we dig up every day. The rest adds pollution of its own; nitrogen fertiliser runoff, etc).
* That can't possibly not change our habitat. And low-grade resultant heat alone would be a worry, if extrapolated.
* And I can deduce by your Aust reference, that your message is ' not I, said the Little Red Hen'. How will your offspring - or theirs - judge that?
It's truly remarkable how some individuals with no research experience or expertise in these subjects feel that their opinions hold equal weight to those who have dedicated their lives to studying and researching these fields.
Well we are already at +1.1degC and the resultant weather events downside. If big polluters want to march themselves, their families and the rest of us off the cliff we are powerless to prevent them. Doesn't mean we have to cheer them on. Although as anger builds about the destruction these psychopaths are causing, the path to the cliff will hopefully become increasingly uncomfortable.
I want to replace my coastal home
The council errs on side of caution and makes a standard of 1.4m minimum floor level. BUT you must see a consultant and get a report. The consultant cant handle the potential liability so he raises the finished floor level to 2.4m minimum. The consultant uses worst worst case rainfall totals for the nearby streams (which btw we have just had) and worst case sea level rise predictions to come up with meaningless answers
it certainly reduces the proposed living space though
I figured it was personal/vested interest.
They are right to consider worst-case scenarios; time and statistics say that's the only valid way.
And if you track your beef back far enough, it's about overpopulation. Too many people having taken too many of the best sites, already already.
Not at all. Personal observation.
It wouldn't have happened if you didn't insist on facts based conversation.
Oh how ironical and inconvenient
+1 = 3 points
You might want to drop a line to Mr. Kerry, Ms & Mr Obama and Ms & Mr Gates as they have purchased multiple beach front properties in the last few years. As the expression goes, judge them by what they do, not what they say...
Stuff are running a similar article this morning, but frame Tuffley's statement slightly differently (and in my opinion, more accurately):
He said the driver of the downturn was the “kitchen sink” stimulus given to the economy during the pandemic.
So it turns out an overcooked COVID-19 response, completely disproportionate to the level of risk involved, may actually have given us a cure worse than the disease. I'm sure somebody will be along shortly to remind us all that a mild recession is better than the alternative of certain death, but that narrative is aging like a bucket of prawns in the sun. Once the drums of fear stop beating and people start to think rationally once again, it becomes clear just how "world-leading" our pandemic response has actually been.
Finance Minister Robertson must feel some chagrin then that the logical explanation of “this is the recession that we had to have” was used up long ago by Paul Keating?
He might get away with "this is the recession that we needed to have 10 years ago".
Is this shameless marketing or just sincere empathy for a pet. Whatever it is, its working well
Shameless marketing, but Boris is cute.
Then lucky its an alpaca, not a horse
He is. My dog out thought Boris was a long-necked labradoodle and wanted to play.
🤣 Any argy bargy between them
Despite all this, the US Congress's debt ceiling game of chicken is nearing a flash point with Republicans pushing to gut most social programs - except Medicare, Medicaid and Obamacare.
Bloomberg reports that the estimated annual costs to service US government debt rose to $800 billion in March, roughly double the last 15 years average While this seems scary, it's good to remember the other side of the coin: this means investors are paid to own safe Treasuries Link
Dollar milkshake playing out slowly but surely. All it will take is for a test of their military might once again and there'll be not a penny in the bucket to fund it, resulting in the USA having to rely on the rest of the world to back them or they'll be choosing war over the wellbeing of their own people. This choice is something that will tear at the americans pride and potentially cause their undoing as a world leader and a reserve currency. Scary to think regardless
It's all about energy; war is just throwing more projectiles further/faster; it's how the US became the current Empire. But fracking has shot its best bolt, the Middle East takes effort to control (an energy input, at the end of the day), and western oil companies have been trying to get at Russian oil for a long time now (but Putin threw the spanner in that).
So the US is on a countdown - the more so because the military infrastructure, like all their civic stuff, is decaying (entropy, usually a cascading-failure sequence) and they need to 'go now'. It seem likely to be a near-run thing between going to (a major) war, economic collapse or social disintegration through narrative ditto.
Interesting to watch...
I finished reading “Confessions of an Economic Hitman” by John Perkins the other day and was left more disillusioned with the States than before. A great insight into the driver of so much of their “foreign policy” I guess.
Fascinating author, and a great book. The Shock Doctrine by Naomi Klein is almost cliche by now, but if you haven't read it and want a decent primer on US foreign policy, it's still as relevant today as when it was published 15 years ago.
Yes an excellent/depressing read that one. Quite few you tube interviews with Perkins which provide he short version (I guess they are still there).
I'm just chomping through Krugmans dated-but-interesting 'The Great Unravelling'.
But one of the best recent is: A Banquet of Consequences reloaded - by Satyajit Das
The 'reloaded' bit (2021 vs original 2015) is spot-on.
..
Has is ever really been sustainable?
Sums it up nicely
Reinz data out boys!
Palmy prices going up again from Feb to March.
Wellington and Auckland still main drag on the national numbers.
Finally some proper reporting on the current account deficit (paywalled):
https://www.nzherald.co.nz/business/nzs-trade-deficit-forecast-to-be-th…
If you can't get past the paywall, the article was triggered by this blog post:
It also means that NZ has become dependent on foreign debt to finance our investments.
This is a huge problem, because we all know what happens when foreign debt can't be serviced through revenue streams; fire-sale on public utilities.
Like healthcare systems, water infrastructure, roading and transportation, etc.
"Imports hugely outweigh exports"
Yes, stop buying new cars!!!! Cut all the roading subsidies so we're not all incentivise to drive so much. Invest in sustainable (financially sustainable) transport modes.
Get the roading lobby out of parliament and MPs ears
Policies that resulted in an extra 1 million people the decade before Covid don't look so economically astute now.
It caused a massive increase in demand for imports meantime our exports primarily depend on a fixed stock of natural resources and are about at capacity.
James Shaw: is the guillotine ready yet? We now have two wahine we need to exorcise
Racial AND sexual humour - you're in REAL trouble
:)
👍 no one named and no one shamed
I suggest you dont use it in any green party chat rooms
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.