Here's our summary of key economic events overnight that affect New Zealand, with news rumours are flowing that China is about to restart some serious stimulus to bolster its stuttering economy. Local stock markets rose sharply on the 'news'.
But first up in the US, the latest factory survey in New York makes grim reading. Activity fell very sharply in May after an unexpectedly strong April survey. It has been an unusually volatile indicator over the past year.
And total American consumer debt rose by +US$148 bln in Q1-2023 to a new record of US$17.0 tln. While this total rise was modest, contrary to the usual pattern of balance decreases in the first quarters, credit card balances reached a record high of US$986 bln, a rise that wasn't expected. Mortgage debt rose on higher mortgage rates accounting for 70% of their total consumer debt. But, new mortgages added were their lowest level since the Q2-2014, and -62% below the same period a year ago.
Delinquency rates across all types of consumer debt remain low by historic benchmarks, but they are rising quickly now.
Meanwhile in Canada, housing start data was unexpectedly strong in April and back to levels they had in 2022.
Producer prices in Japan rose 5.8% in April from a year ago, a slower pace of increase that the 7.4% rate in March. The March to April rate ran at just a 2.0% pa rate. In fact there has hardly been any rise (or fall) since December.
Japanese machine tool orders fell almost -13% in April although that was a slower rate of decline than in March. Foreign orders held up better than local orders.
Yesterday we noted weakness in Indian industrial production in March. Today that is confirmed by deflating manufacturing wholesale prices. In fact, they haven't had them deflate this sharply since 2015 which was the the worst on record. So the current retreat is their second worst since these records started in 2006.
On the trade front, we should note that Brunei has ratified the CPTPP, the last of the original 11 signatories of the trade and investment deal to do so. They took a while; the deal was originally signed in 2018.
And we should note that China seems to have scrapped its embargo on Australian coal with trade surging again - and both countries contributing to a massive increase in CO2 emissions. China is also reported to be ready to scrap its barley tariffs on Australia. It looks like China is caving on all their 'red lines'. Canada, which has similar problems with aggressive Chinese political behaviour, will have noticed.
And in Australia, their Senate inquiry into PwC's tax breach will probably start on June 7. But it has come to light that the firm targeted 23 US tech firms including Apple, Google and Microsoft with a tax avoidance workaround hours after Treasurer Joe Hockey announced a new law in 2015. Fourteen of those firms took up the plan although it is unlikely any knew the advice was based on illegally-sourced information. ASIC is probing PwC's behaviour too. The firm has its own investigation underway, but there are calls for the involvement of the National Anti-Corruption Commission.
The UST 10yr yield starts today at 3.50%, and up +4 bps from this time yesterday. Their key 2-10 yield curve is a bit less inverted at -50 bps. Their 1-5 curve is also a little less inverted at -132 bps. And their 3 mth-10yr curve is slightly less inverted at -210 bps. The Australian 10 year bond yield is now at 3.46% and up +7 bps. The China 10 year bond rate is little-changed at 2.74%. And the NZ Government 10 year bond rate is at 4.11% up +5 bps from yesterday.
Wall Street has opened its Monday session with a modest +0.3% rise on the S&P500. Overnight European markets were also little-changed. Yesterday Tokyo closed up +0.8%. Hong Kong was up a strong +1.8% and Shanghai was up +1.2% both after rumours that new Chinese stimulus was on the way. The ASX200 closed its Monday session up +0.1% and the NZX50 was also almost unchanged.
The price of gold will start today at US$2018/oz, and up +US$7 in a day.
And oil prices are up +US$1 from yesterday to be just on US$71/bbl in the US. The international Brent price is just on US$75/bbl.
The Kiwi dollar is +½c firmer against the USD from yesterday and now just under 62.4 USc. Against the Aussie we are softer at 93.1 AUc. Against the euro we are a tad firmer at 57.3 euro cents. That means the TWI-5 is now at 70.4 and up +30 bps from this time yesterday.
The bitcoin price is firmer again today, now at US$27,467 and up +1.9% from this time yesterday. Volatility over the past 24 hours has remained modest at just over +/- 1.7%.
The easiest place to stay up with event risk today is by following our Economic Calendar here ».
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78 Comments
I've been away on holidays for 3 weeks, and I decided not to check in on any economic news, to ignore the daily "noise" of small variations, in the hope of seeing more clearly, real changes over this 3 week period.
Well, not much has changed, the economic world has not collapsed (like some YouTube forecasters claimed), share markets, bonds/ treasuries, the NZD-USD, interest rates, bitcoin, the price of gold are broadly the same, house prices are still falling steadily, there's no significant change In the Ukraine war.
Crude oil is cheaper and that's about the only significant change I can see.
Inflation is dropping overseas and increasing here, people are strangely ambivalent about it.
Politicians, mostly on the left, are maneuvering ahead of the election.
The collapse of our building sector is not quite yet visible. But there are more failures popping up in the news.
The rental crunch is visible but the media is still focusing on values. I guess their subscribers own and don't rent. This will be an election issue. Investors aren't buying or building, but lots more people showing up to do the jobs Kiwis get paid to stay at home and not do.
Chinas property decline from supply and population heading in starkly opposite directions, is flowing through to the rest of their economy.
In short, the great deleveraging has begun.
Hope you had a nice holiday.
Like to think I am realistic more than aligned to a particular political ideology. Telling kids the world is coming to an end, all the issues are a result of their colonisation and that they (at 5) can be a boy or girl and have hormone blockers to help them is downright evil.
Sounds like the David Seymour interview -
Brennan has strong and forthright views on this issue.In a previous interview with a friendly guest, he suggested that drag queens were making a concerted effort to sexualise children, and there was something “ritualistic” about gender-affirming surgery.
Brennan tries to imply what he’s talking about, hoping Seymour will run with it.
Seymour does not.
“Well, let’s work on the evidence, Seymour responds. “What’s an example that concerns you?”
(needles to say he had no examples to cite)
Hat's off to Seymour on this one, clever stuff.
16. Old enough to do many things and well enough past puberty to know what they are.
Go meet with people who actually deal with their bodies tearing their minds apart instead of subscribing to the anti-everything ideas for just one day. They're not deciding between an operation or a chicken wrap for lunch. They're suicidal.
Well said NKTokyo. My eldest (17) is a trans guy, just started taking testosterone this year. I can tell you the process of getting a referral to the endocrinology dept is a long and thorough one; I would guess we have been working through the system for about 3 years now. We have found the NZ Health/Mental Health system risk averse and very conservative, but supportive throughout. Certainly nothing like the hysterical "hormone blockers at 5yrs old" twaddle that HSL suggests.
Its awesome now to see my kid happy and growing in confidence and getting on with their life after some very dark years..
I have looked through the Ministry's "Whats Changing" document available on their site
They are currently 2 years into a 6 year program, with Health and Physical Education in development for release in 2025. Nothing about gender diversity is mentioned.
Again, in the Social Science section, no mention of gender diversity for either Primary or Secondary aged children. Where have you seen that they are pushing gender reassignment and hormone blockers to any children, let alone Primary School aged? Link please...
Why do you lump them together?
See my op/ed piece about growth - it mentions narratives, and why the trend to non-reproductive identification in an overpopulated species. The problem is that the knockers (bad pun) of the rainbow trend are in denial about the 'why'? And usually, about all other 'why's - sort of across the board denial of personal impact.
If you come out of Oncology with bad news, do you think avoidance is a valid response? Perhaps we can buy our way out it? (Kerry Packer's comments come to mind). Perhaps we can get a second opinion. Meantime, don't scare.....
Nonsense. The kids know they're being handed a stuffed, overpopulated planet. Let's move on.
I think the kids can make up their on mind about the reality dealt them by industrialist growthists and their deity worshipping brethren. After decades of turning Earth into a toxic, depleted mess, the number of people forgoing reproduction is rising rapidly, along with those not wanting to play the exponential growth hamster wheel game.
Didn't hurt us (or maybe it did)? I remember in Primary being marched off to see "The Day After"
Before Putin and the war in Ukraine, 1980s movies terrorized us with nuclear war
For those that missed it PDK's comment yesterday is worth repeating -
So the math here is simple: to achieve net-zero carbon dioxide emissions by 2050, the world would need to deploy 3 Turkey Point nuclear plants worth of carbon-free energy every two days, starting tomorrow and continuing to 2050.
Lie down and put the headphones on.
Hate headphones, but you made me smile.
But I have a question for you and PDK and anyone else; is 'net zero' really the goal? What does it actually mean? And if we could achieve it, does that mean our presence wouldn't be felt. Is a more pragmatic goal a reduction to manageable levels that the environment can cope with? And then what are those levels and so on?
The Climate-only folk - mostly GND types - see it as net zero carbon emissions, problem solved. Read the links on my op/ed piece yesterday (the growth/green growth/degrowth one), in particular the textbook (free download) link. Bother to read it, Murray.
The real goal, is to operate at a level where we don not draw-down/lose via dispersal the NNRs. Where we do not reduce renewable capabilities. And where we do not reduce the capability of 'sinks', to mitigate our wastes. That is true sustainability.
Climate is merely one facet of the Polycrisis
No, see my comment above re Oncology.
Physics, chemistry and biology are what affect your life; who you choose as contacts merely reinforces your psyche (some of us don't need to flaunt, btw).
An happiness should be based on your own thoughts - not those of others; that's just self-reinforcement; rabbit-hole stuff.
Those who can understand the science, raise issues and bang on about it are not all depressed.
They stick their neck out, often get ridiculed - and some even immortalized in history. Galileo being a pretty good example of that, on a NZ enviro level, try Sir Ron Fenwick.
So yeah, careful who yuo listen to - the flock is usually wrong, following the herd is easy. Going against the current not so.
You can "feel" the contempt from the Economist class. How dare consumers think about recession when they don't see it in the data. Regular people are ssssoooooo much better at economics (small "e") than Economists (statisticians). https://youtu.be/WFhb7vSMREY Link
Watched this yesterday morning - there does seem to be a lot of "yes yes, everything is fine here. House prices will be back in a minute" while there's a fair amount of pain going on both sides of the checkout out there. Going from "can't find staff we can afford" to "can't find buyers who can afford it". All anecdotal evidence (aside from these surveys) as there's no conclusive data of suffering until the SMEs fall. I guess this video covers this off a little where he mentions "we don't it's a recession until we're in it.". Who knows, just looks at some data, talk to some people, move your equity.
More overhead.
Staggering statistic in a very major financial centre, and yet my guess is it would be no different in little old NZ where both the RBNZ regulatory & FMA staff numbers seem much larger than previously,for limited obvious benefit to anyone other than the regulators & their bosses. Link
From a response to that piece.
So many New Zealanders, and I get it every day, they tell me, they think our best days are behind us - that New Zealand is in decline. New Zealand is on a "long, slow slip" from being a "first-world nation in an island paradise" to "something more like a kind of big Fiji".
https://www.1news.co.nz/2023/05/15/act-nz-sliding-from-first-world-to-a…
Reducing the public service headcount and getting rid of those numerous public funds should help RBNZ meet its targets for higher unemployment.
The likes of comms and DEI "experts" can put their shiny degrees to its real use in making lattes and serving fries, as they did before 2017.
Win-win for NZ!
New Zealand is on a "long, slow slip" from being a "first-world nation in an island paradise" to "something more like a kind of big Fiji"
Elsewhere:
Chinese scientists have broken world record for single-mode multi-core optical fibre transmission capacity, achieving 4.1 Pbit/s combined transmission over 19-core fibre Link
In 2010, it was reported that NZ was producing only ~2.5k engineers each year (including international students), which was just half the OECD average of number of engineers as a % of tertiary grads (less than 1/3rd of the pack leader - Austria).
The OECD average is a lousy benchmark anyways, given it lags well-behind newly industrialised nations and high-income Asian countries such as Japan, SK, Taiwan and Singapore.
Then in 2017, we produced only 1.8k engineering grads and during Covid the number of enrolments plummeted to new lows.
I guess as an economy we're doomed to exporting milk powder and serving lattes to rich foreigners.
I have a B Eng - Electronics from Canterbury, My daughter wants to do cival but prob offshore. Labour is taking away streaming in schools, its hard to get your maths up to Eng level without accelleration early on. Try doing near field radiation calculations on an Antenna with normal high school math.
What is there rationale in removing streaming.... not enough maori and pasifica in the streamed class.
STEM is like atheletics, super rugby etc, not everyone is suited.... my daughter will never play netball for the silver ferns, but why stop her acheiving in STEM... Luckily she made it into the last streamed class at her school. (Last until National get in....)
RBNZ has 27 directors on its payroll. One for comms, one for Diversity & inclusion, another for sustainability, two separate directors for risk and governance, and 2 separate for "people". There's a member on the MPC who did her PhD on Māori language revitalisation.
This is happening across the board in the public sector. You have all kinds of non-experts from comms and HR background taking high places at Transpower, Health NZ, ACC, CAA, EA, Maritime, etc.
Our leadership team - Reserve Bank of New Zealand - Te Pūtea Matua (rbnz.govt.nz)
Indeed advisor. Posted this before,and it identifies some of the cause.
They're only reflecting us. We are telling ourselves BS, denying what we do to others, evilising them, blaming them.
And we are at the nutty end of the assumption that we're superior - to everything. Thus we can goodwill, gender-diversify, indigenize, and we will somehow dig ourselves out of the hole without needing a spade
Not sure that I agree PDK. The 'Us' you refer to is likely a minority. the majority will be silent, and then too afraid to challenge what they are told in fear of offending some one. But then politicians are notorious for surrounding themselves with their own fans and not liking challenging views. So they likely think they are providing what is wanted.
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