Here's our summary of key economic events overnight that affect New Zealand, with news of some truly huge industrial orders being announced in Paris.
But first we should note that the US is on a Federal holiday today and most financial markets are closed there.
However there was some interesting data out overnight. Their home builder confidence index rose to its highest reading since July last year, and easily beating what was expected. Although the improvement was off a low base, it was due to solid demand, a lack of existing inventory and improving supply chain conditions. And the improvement came even though credit conditions are tightening and construction loans became more difficult to get.
In Canada producer prices are sliding faster now and overall cost deflation is accelerating for firms. Prices dropped a full -1.0% in May from April to be a massive -6.3% lower than a year ago. The reason is almost all to do with falling energy prices which were down -33% in a year, so apart from that industry, no-one is particularly worried about that. Their producer prices have now retreated to where they were in January 2022.
Perhaps we should note that international natural gas prices are now quite low, back to where they were in 2014. They were first at this level in 1995. Coal prices have dived as well, back to levels first reached in 2011. In fact, shipments of coal from the key Australian port of Newcastle have hit a five year low.
However, the global economy is about to get a boost from some more very large aircraft orders. The Paris Air Show has opened and eye-popping orders are being announced. You will recall that earlier in the year Boeing and Airbus shared a 470 plane order from Air India. Well Airbus has now confirmed a 500 plane order from another Indian carrier, IndiGo. This level of ordering is placing extreme pressure on manufacturers, and recall that China has indicated it will be needing more than 1000 new aircraft in coming years. And it is not as though the homegrown Chinese aircraft industry can supply that; they have delivered just one aircraft so far. No doubt they will ramp up deliveries impressively soon, but that is unlikely to put a dent in international order backlogs. Look out for more eye-popping orders to hit the headlines from Middle-East carriers, as well as Chinese ones too at Paris. Of course, all of this demand is on top of enhanced military demand. It is a manufacturing sector that has the ability to drive global economic fortunes. But has been such a sudden burst, it also has the look of a dangerous bubble.
In China, there was an unexpected surprise change of tune in Beijing; President Xi met with US Secretary of State Binken. Blinken is there trying to lower the temperature of diplomatic rivalry and especially the prospect of a Chinese adventure to retake Taiwan by force. Just the fact that this meeting took place is a good sign even if neither party changed their positions.
China needs a break from the negative economic sentiment that has been building there.
Separately, the IMF says it is working on a platform for central bank digital currencies (CDBCs) to enable transactions between countries. "CBDCs should not be fragmented national propositions... To have more efficient and fairer transactions we need systems that connect countries: we need interoperability," they said.
The UST 10yr yield will start today at 3.82% and up +5 bps from this time yesterday. Their key 2-10 yield curve is little-changed at -93 bps. Their 1-5 curve is still inverted at -125 bps. And their 3 mth-10yr curve is less inverted at -130 bps. The Australian 10 year bond yield is now at 4.06% and up +3 bps. The China 10 year bond rate up +2 bps at 2.73%. But the NZ Government 10 year bond rate is down another -6 bps at 4.48%.
Wall Street is on holiday today, so no trade there. Overnight, European markets closed lower across the board by about -0.8%. Yesterday, Tokyo ended its Monday session down -1.0%. Hong Kong fell -0.6% and Shanghai ended down -0.5%. The ASX200 ended its Monday session up +0.6%, but the NZX50 fell -0.4%.
The price of gold will start today down -US$9 at US$1949/oz.
Oil prices are slightly softish from yesterday to now be just under US$71.50/bbl in the US. The international Brent price is now still at just on US$76/bbl.
The Kiwi dollar starts today at 62 USc and down -40 bps from yesterday. Against the Aussie we are softish at 90.6 AUc. Against the euro we are also a tad softer at 56.8 euro cents. That means the TWI-5 is just on 69.7 and down -30 bps from this time yesterday.
The bitcoin price is unchanged from this time yesterday at US$26,631. Volatility over the past 24 hours has remained low at just under +/- 0.8%.
The easiest place to stay up with event risk today is by following our Economic Calendar here ».
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Separately, the IMF says it is working on a platform for central bank digital currencies (CDBCs) to enable transactions between countries. "CBDCs should not be fragmented national propositions... To have more efficient and fairer transactions we need systems that connect countries: we need interoperability,"
Hang on.
If governments are going to give out crypto for free
And it can be transferred easily, globally
What did we need buttcoin for again?
You will own nothing and be happy...
Yes " comrade" Jacìnda
For those that want to avoid taxable oversight. Just like suitcases of cash are popular in many places. Imagine the collapse of money laundromat called NZ property. Every cent tracable to source, all the time.
Strange how an open ledger could avoid taxable oversight?
Well it's open, but not like you need a passport and copy of your latest power bill to get yourself a crypto wallet.
I have bought and sold a few properties in my time. When I did it as a developer investor, I kept a record of my expenses and paid tax on the profit. When I didn't I didn't. Not a big deal.
How about a bit of larger thinking: surely the only real answer in the long term is the entire planet accepting just one currency which is managed by a central representative organisation, similar to the UN (but no one has a veto)? This would eliminate the need for DCs?
Politics would get in the road but what the hell, why not try?
...because giving unelected bureaucrats appointed by many undemocratic Govts control of every nations economy is a great idea...not.
However as my original comment below having a legitimate global currency outside individual Govt control might be a worthwhile option to have.
OK. My suggestion was for a global currency outside individual government control, and a 'representative body' is an elected body (likely appointed by elected governments) essentially.
Like you I have concerns about our governments becoming increasingly undemocratic, and bureaucrats losing sight of who they really work for, but surely a pirate currency is not a viable solution? It would only really leave the masses more vulnerable to be shafted by non-government players?
Sounds like the back story for the next Bond movie.
Yawn Pa1nter, your understanding of Bitcoins value is showing.
How much does an asset need to appreciate and gain adoption before you might admit you're in the wrong?
Tick tock, each block, block halving is in 10 months. Bitcoins inflation will halve as it's programmed to do, less new supply, more demand, every growing money printing pushing those to find answers.
Let's touch base when Bitcoin becomes the global reserve asset :), I wish you the best of luck if you think countries will be shipping each other gold to trade
Adoption? Apart from Mag'n'Turbo I haven't seen anywhere advertise that they take bitcoin. Let alone seen any good reason to actually use it.
Let's touch base when Bitcoin becomes the global reserve asset :)
So.. never?
I would have thought that the whole point of a successful crypto currency is secure global acceptance at a market value unable to be set, manipulated or taxed by individual Govt agencies.
Digitising any particular countries nominated currency doesn't seem to significantly change the status quo.
Boeing and airbus not able to keep up with demand. Surely there is an opportunity for NZ based manufacturing to jump on this. It would take a bit of investment... and there is the problem. Unless it's the property market... it's business for other countries.
Do they still make Fletcher topdressing planes? Maybe a long wheelbase, widebody version.
Yup, all we need to do is import engineers (industrial, aerospace, electrical, design, mechatronics, etc.), production managers, IP, financial capital, software, equipment, management systems and production technicians to produce aircrafts in NZ.
No shortage of land here though, as long as all those skilled workers coming into NZ with their families to make arrangements for their own houses, schools, hospitals, roads, etc. If we're lucky, some of their partners could be nurses, teachers and doctors.
Looking forward to CBDCs - 100% fungible and anonymously stored on payments cards (or phone wallets) with no fees to pay on transactions for customers or businesses (or buskers, street vendors etc). Now add 30-year fixed-rate State mortgages and insurance, and we can end the parasitic profiteering of the banks.
Looking forward to CBDCs - 100% fungible and anonymously stored on payments cards (or phone wallets) with no fees to pay on transactions for customers or businesses (or buskers, street vendors etc). Now add 30-year fixed-rate State mortgages and insurance, and we can end the parasitic profiteering of the banks.
Who said anything about anonymous Jfoe? CBDCs will be attached to an identifier so we know it's you. It's like The Truman Show with Klaus and Princess Xindy as Christof.
Nah, they will be a cash replacement (anon), a bank fees disruptor, and a way of Govt handing out cash in emergencies (without creating interest-bearing liabilities in the settlement bank system). The US is pushing hard on the anonymity point - I think they even had a Bill on it.
For CBDCs to work you need a centralized platform under control by unelected bureaucrats. The IMF has stated how the ledger will be controlled by a "platform operator" - a single ledger would ensure no double spending. The IMF's blueprint isn't new. It's the same model as that proposed by the BIS - the same multi-CBDC system where global bureaucrats become the network operators in power & control.
Dream on IMF!
I look forward to an announcement that my gas prices will be coming down
/sarc
Buy an EV :)
Wow Teslas even provide domestic hot water now?
Oh, I thought he meant flatulence, Telsas have fart mode :)
Perhaps the fact Xi met Blinken was a matter of Xi telling his subservient, "This is how it's going to be! Now. Get back and tell Biden that". Blinken had already met his Chinese equivalent, and I doubt Xi had anything more to add.
In my personal opinion, the likeliest outcome from all of this will be that America will soon become the world’s third-most-powerful country, and the entire pre-Truman (i.e., FDR) plan for what the post-WW-II world-order will become, will be finally placed onto the table, for serious international consideration Link
So says a Russia shrill? Not much cred there.
FWIW.
How did I get on a list of "Russian Propaganda" when I never wrote about Russia or anything related to Russia?
There are two plausible possibilities. One is "guilt by association." I've been interviewed by Max Keiser since 2011, and Max and his partner Stacy Herbert posted their videos on RT (Russia Today) and an Iranian media outlet. Needless to say, these sources were flagged, as was anyone associated with them. So perhaps merely having a link to an interview I did with Max and Stacy was enough to get me shadow-banned.
Believe there’s now a vacancy at RNZ for a qualified propagandist of this mode?
As well as the fuel subsidy going, half price public transport finishes on 30 June doesn’t it?
Transport component of the CPI inflating…
Round 2; Fight!
Fuel subsidy expiry 30 June? Government has shown willingness to backtrack if political expediency becomes necessary. Could be interesting.
Yeah I don't see how this doesn't come back in one form or another (especially as it will provide a nice distraction from issues like the 'health equity' system)
Making health equitable requires low waiting times and no need for vetting the patients, which requires more doctor's.
Not! Changjng the rules to accomodate the useless and lazy.
That's Iike education lowering the standards to get a higher pass rates... oh wait a minute...
Yeah… but they usually announce the backtrack much earlier than now.
ICE car sales peaked 6 years ago
The big business of converting gas-powered cars to electric vehicles (cnbc.com)
Interesting USA video, could be informing the next generation of Boy/Girl racers..
In China, there was an unexpected surprise change of tune in Beijing; President Xi met with US Secretary of State Binken.
it means only one thing, US has made promises on Taiwan issue to which the Chinese are content with. So the war in Taiwan is less likely in short term.
Fantastic the two sides are holding high level talks again instead of talking about each other belligerently.
Good Morning from #Germany where Chinese Premier Li Qiang arrived for an official visit. Li said Beijing is ready to work w/Berlin to push for new developments in bilateral ties. #China is Germany's most important trading partner, even though Germany runs such a large trade deficit w/no other country. Link
I won't be too optimistic with Germany-China relationships under the current German government. The current German government seems confused what's their best interests are, and what they are planning to do with China. their foreign minister visit to Beijing a few months ago was a disaster, and so far nothing has changed since then.
Insane. In 2008 the EU's economy was 10% bigger than the US's. 14 years later the economy of the EU + the UK combined is 21% smaller than US's. This is probably one of the biggest economic stories of the past decade. European weakness, US aggressivity, or most probably, both. Link
There’s no way that America can become an industrial power again. There is no way that it can restore its industry unless it writes down the enormous amount of debt and housing prices and medical insurance that the American wage earner asked to make. Just imagine this. If you were to give wage earners everything they buy at the stores for nothing, give them all the food, all the clothing, all of the transportation, everything they need. They still couldn’t compete with foreign workers because they have to pay so much money on debt service, on housing, which takes between 30 and 40% of their income. They have to have medical care. That’s 18% of America’s GDP, higher than any other country. So the money that is paid to the financial, insurance and real estate sector in America is so large that there’s no way that America can be competitive with other countries. So, what the Biden administration is trying to do is saying, “Well, okay, I understand that we can’t compete on prices. I understand that our labor cannot compete with foreign labor anywhere near it, but if we can militarily tell everybody not to go China, Russia, India, Asia and other countries what they need to make wafers, chips, and information technology, then they’ll have to buy everything here from high cost. We can charge monopoly prices and our prices will be so high that we can basically impoverish the rest of the world by controlling everything that they really need to work. We can control their energy, we can control their oil, we can control their computers by sanctions against China, Russia, Iran, Venezuela, any country that does not agree to let us control their economy and buy control of it.” Any country that doesn’t agree to let America produce all of the monopoly goods that are most profitable, will be treated like we’ve treated Ukraine.” Link
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