Here's our summary of key economic events overnight that affect New Zealand, with news bond markets are coming around to believing the US Fed signals, reversing their view that their call for high rates was 'just talk'.
But first, US jobless claims stayed up at 250,000 last week at about the level expected. There are 1.67 mln people still on these benefits unchanged as well and also staying up. Although both are now higher than year-ago levels, they remain historically low and don't alter the underlying tightness of their labour market. But you do get a sense the next movement will be an unwinding of their benign labour market conditions.
The Chicago Fed's National Activity Index turned marginally negative in May after a positive showing in April.
The Kansas City Fed's regional factory survey turned more negative in June as well, as did the Conference Board's index of leading indicators. Both were as expected.
Meanwhile American existing home sales edged marginally higher and by more than expected in May, an improvement on the April retreat.
China is on vacation for its Dragon Boat Festival, a three day break. They are expecting more than 100 mln tourist trips this year which is actually higher than pre-pandemic levels.
Although still deeply negative and below its long term average, EU consumer sentiment rose in June to keep the improvement that started in November going. And it is worth noting that this is now one of the steepest continuous rise in sentiment since this survey began in 2007 and the pace of improvement shows no sign of slowing down.
Overnight both Norway and England raised rates by more than expected. In Norway's case they rose +50 bps to 3.75%. In the UK case they also rose +50 bps to 5.0%. In both cases markets had expected a +25 bps rise. Norway has inflation running at 6.7% and the UK has it running at +8.7%, so both central bank policy makers clearly realised they aren't leaning against these price pressures hard enough. And the more important regional benchmark is the ECB policy rate which is 4.0% which was raised by +25 bps last week with inflation at 6.1%. With the ECB positions as backdrop the English and Norwegian rate increases make regional sense.
Separately, the central bank of Turkey raised its policy rate from 8.5% to 15% in the expected reversal of the prior unorthodox approach that brought raging inflation. You will recall that post-election the President changed out both his Finance minister and the head of their central bank in a clear signal things would change. Actually the +650 bps hike was less than markets had expected. Markets were expecting a bigger increase to 21%. The Turkish lira sank on a decision seen as timid.
In the widely-watched rankings of 'liveable cities', Vienna, Copenhagen, Sydney and Melbourne took out the top four spots in 2023. Auckland rose sharply to #10 and Wellington to #23. In conjunction with open borders, this is driving Sydney house prices higher.
And staying in Australia, regulator ASIC said 5.6 mln policy holders are on track to receive AU$815 mln in compensation after they uncovered pricing failures by 11 general insurers that led to clients being overcharged for their insurance. 6.5 mln policies were involved between January 2018 and October 2021.
The cost of shipping containers continues to fall, down -3.5% again last week. It is saying something about the state of global trade and it is not positive. The bulk cargo shipping costs are however rising again and at about at a long-run average level.
The UST 10yr yield will start today rising at 3.79% and up +7 bps. Their key 2-10 yield curve inversion is slightly wider at -100 bps. Their 1-5 curve is less inverted at -126 bps. And their 3 mth-10yr curve is also less inverted at -129 bps. The Australian 10 year bond yield is now at 4.01% and up +7 bps. The China 10 year bond rate unchanged at 2.72%. But the NZ Government 10 year bond rate is up another +3 bps at 4.57%.
Wall Street is slightly higher today with the S&P500 trading in its Thursday session up +0.2%. Overnight, European markets closed lower across the board again by about -0.6%. Yesterday, Tokyo ended its Thursday session down -0.9%. Hong Kong and Shanghai were closed for a public holiday. The ASX200 ended its Thursday session down a sharp -1.6%, and the NZX50 dipped a more minor -0.3%.
The price of gold will start today down another -US$19 at US$1916/oz and it hasn't been this low since early March.
And oil prices are down a sharp -US$3.50 from yesterday to now be just over US$69/bbl in the US. The international Brent price is now just on US$74/bbl.
The Kiwi dollar starts today at 61.8 USc and down -¼c from yesterday. Against the Aussie we are marginally firmer at 91.5 AUc. Against the euro we are little-changed at 56.4 euro cents. That means the TWI-5 is now just on 69.8 and also little-changed.
The bitcoin price has firmed slightly from this time yesterday and now at US$30,132 with minor rise of +0.3%. Volatility over the past 24 hours has been modest at just over +/- 1.6% in sharp contrast to the past few days.
The easiest place to stay up with event risk today is by following our Economic Calendar here ».
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76 Comments
Finance Minister Robertson and others have never failed to claim NZ’s inflation woes etc are largely imported. From the look of it therefore the sources of that import are still battling high inflation hence the series of 0.50% interest rate raise recently in more than a few nations, starting with the USA. How then is it that the RBNZ can signal increases to the equivalent, our OCR, are done and dusted, or has the border simply been closed again? Quite honestly personally, by our household budget reckonings, the imminent restoration of the fuel surcharge, power increases, certain insurance premium increases, and on and on, inflation here in NZ is not done and dusted.
Agree. Council Rates increases of at least 6-7% also seem the norm. Also don’t forget that half price public transport is gone next month too. Automatically public transport increases by 100% (apart from gold carders etc)
edit - a number of big public organisations are on the verge of reaching big wage increases too.
Oh to live in a place with only 7% increases. https://www.stuff.co.nz/taranaki-daily-news/news/132276744/new-plymouth…
At least we have a shiny new airport that is hardly used, and a shiny mirrored art gallery that is used even less. But hey, no Glass collection for the last fortnight, and rubbish and/or recycling are usually a day or two late, if at all.
Yep and that’s why I said ‘at least’ 6-7%. I am aware of a number of councils, such as NP, where it’s much higher.
Central government gets 91% of total tax revenue in NZ and councils get the remaining 9%. Meanwhile local councils are expected to provide 40% of our public infrastructure.
The recent report into local government confirms for the hundredth time that rates are blunt funding instruments that provide no incentive for councils to support investments into their local economies and communities.
"Central government gets 91% of total tax revenue in NZ and councils get the remaining 9%. Meanwhile local councils are expected to provide 40% of our public infrastructure."
Do these figures account for the central government contributions to things like transport fare subsidies, transport system maintenance, etc...
Contributions don't incentivise councils to increase investments in targeted areas such as critical public infrastructure. What you get under the current system of funding from rates and parking charges are either chronic under investments or white elephant projects.
Localism done well works a lot better than over-centralisation. We don't need to reinvent the wheel here, let's simply adopt a model with some Kiwi flavour that works well overseas (Swiss, etc.).
Not disagreeing necessarily although I would note giving council's more power over raising money and how it is spent is not always a great thing. They can focus on local pet projects over nationally significant issues and local council elections have a very low turnout and are largely recognized as being over presented by certain demographics.
I was just wondering where those figures came from and how they were arrived at as I've not seen them before.
Ah yes, the long term plan to fix up our water infrastructure and build the community sports hub. 12.5% y1, then 9% pa for the next 9 years.
Already we're at 12.4% average for y2. The sports hub is back to the drawing board and I've no idea what's actually happened so far in terms of water infrastructure apart from rolling out water meters.
And for some there's a rude shock just around the corner.
https://www.stuff.co.nz/taranaki-daily-news/news/132276744/new-plymouth…
Overall, 39% of property owners face an increase of between 15%and 30%, 1754 property owners face a hike of between 30% and 50%, while 435 property owners are looking at an increase of between 50% and 100%.
I believe the water meters are running significantly over budget.
We also have the parking meter/sensor debacle, and the likely overruns on the sole parking building in town. Then there was the issue we aren't allowed to talk about with the (now ex) CEO.
I don't mind rate increases if it is to fund competently delivered services for ratepayers. I am getting sick of funding white elephants and poorly thought out vanity projects.
"Overnight both Norway and England raised rates by more than expected. In Norway's case they rose +50 bps to 3.75%. In the UK case they also rose +50 bps to 5.0%"
How does this fit in with Jarred Kerr the Kiwibank Economist ???
"Kiwibank chief economist Jarred Kerr says interest rates have peaked around the world "
https://www.stuff.co.nz/business/money/300800893/another-bank-cuts-rate…
Are Bank Economists just Glorified Mortgage Brokers ? Should the government Probe deep into these people to find out if they are really just Spruikers destroying young families ?
Or should the public spend more time reading through the Scrolls ?
From the first Scroll dated 7th of October 2022.
"Interest Rates will continue to go Up from here and Stay Up for a Long Time."
"Banks will sell Mortgages at 10% +. ( Double Digits ). The OCR Forecast Peak Goalposts will continually be Moved Higher and Higher ! 10% Interest Rates Next Year, Guaranteed !"
"Overnight both Norway and England raised rates by more than expected. In Norway's case they rose +50 bps to 3.75%. In the UK case they also rose +50 bps to 5.0%"
How does this fit in with Jarred Kerr the Kiwibank Economist ???
"Kiwibank chief economist Jarred Kerr says interest rates have peaked around the world "
https://www.stuff.co.nz/business/money/300800893/another-bank-cuts-rate…
Are Bank Economists just Glorified Mortgage Brokers ? Should the government Probe deep into these people to find out if they are really just Spruikers destroying young families ?
Or should the public spend more time reading through the Scrolls ?
From the first Scroll dated 7th of October 2022.
"Interest Rates will continue to go Up from here and Stay Up for a Long Time."
"Banks will sell Mortgages at 10% +. ( Double Digits ). The OCR Forecast Peak Goalposts will continually be Moved Higher and Higher ! 10% Interest Rates Next Year, Guaranteed !"
Bernanke found it wasn't wages and tight labor. It sure wasn't QE. So where did the "inflation" come from? It was the most obvious explanation here confirmed unnecessarily by econometrics. SUPPLY SHOCK. Shocking. https://buff.ly/3CEKlPB Link
Bernanke/Blanchard: What Caused the U.S. Pandemic-Era Inflation? https://www.brookings.edu/wp-content/...
I've been arguing this scenario since day one. But what the central banks do is look at it as excessive demand and less as a drop in supply because they only have the tools to kill demand rather than restore supply.
There's been far greater evidence that a supply shock was the main contributor to global inflation than excessive consumption.
Ask mr Robertson and Ms Ardern about the $640 million PGF money given to NzF, as part of the now infamous post 2017 "unmandated" election bribe, and where the money went, who vetted it, who audited it, and who got what.
Labour want to tax you more to pay out huge sums of money, unchallenged and poorly recorded, to idiots to distribute to whoever they want.
And some here, want to vote for these devious liars.
https://www.scoop.co.nz/stories/PO2306/S00088/auditor-generals-review-o…
https://www.scoop.co.nz/stories/PA2306/S00058/report-into-pgf-reset-sho…
https://www.nzherald.co.nz/northland-age/news/sting-in-the-tail-sees-pg…
Election run-up, and we get this kind of spin. Can you can it please?
What the Key Government did to Canterbury democracy, FAR OUTWEIGHS what this lot are doing.
Let's keep this in context, eh?
Whatever...
The total cost to taxpayers of bailing out collapsed finance companies isn't likely to be more than about $400 million, Prime Minister John Key says.
The Government last week paid out $1.6 billion to South Canterbury Finance's (SCF) 35,000 depositors after the company went into receivership, which raised questions about the extent of taxpayer liability.
Josie Pagani in an opinion piece on Stuff , has this in a caption beneath a picture of Big Norm; "The last time New Zealand earned more from overseas than we spent, Norm Kirk was prime minister."
https://www.stuff.co.nz/opinion/300911558/the-economy-is-on-a-precipice…
That one statement speaks volumes about the economic calibre of every politician and prime minister since. Frankly none of them know what they are doing.
Oh, yes, they do.
They're promising more than can be delivered, to get elected.
The bill comes due after they've left the arena.
Same with society at large; stealing from the future and virtue-signalling to paper-over the gap between truth and myth.
And there's not much national silverware left to use as collateral, or sell off. Will it be this election that the incoming Minister of Finance finds a Liam Byrne'esque letter on his shiny new desk? It read, "I’m afraid there is no money."
That's what Michael Cullen told the incoming Key government after years of reporting gross surpluss's. He told them they'd spent it all. Criminal!
Not criminal, just politics as usual.
We know, they are all the same, and sadly, they is nothing we can do about it. If we had one shot at Change, it was John Key and his pre-election policies. (and why I voted for him; just the once) But as we now know, once he got 'in' those fell by the wayside. Did he have unexpected challenges? Yes. But those should have strengthened his policy resolve. Instead, they became an excuse to ignore them. All in the name of 'getting re-elected next time'
Yup, I fell for it too.
But I do think politicians should be held to account for their actions. The cold light of history should be the judge of whether they're worthy of the honours some are quick to award.
Yes criminal -Prime Minister John Key believes the Government could free up as much as $10 billion from the partial sale of key assets including state owned power companies and a stake in Air New Zealand.
Cullen did hand Key next to zero debt and a functioning NZ Super fund .
Key didn't value either.
Key was a Banker. Zero debt is an anathema to a Banker. They go into palpitations when they hear that. The banks lose control when that happens. It simply can't be allowed. But then Key squandered the opportunity too.
The hope among contesting parties will be to import more consumers and kick the can further down the road. You can count on them being dumb or indifferent to the fact that propping up aggregate demand will only widen our trade deficit further.
Spot on comment. And of course next election will be absolutely identical. The talking heads are all competing with each other about how wealthy voters will be if only they are allowed to warm parliments seats. Sickening to listen to. Something has to give. This system is really broken. There must be someone with enough wisdom and honestly out there?
Partisan politics by the RBNZ. They state that they don't want to raise rates to influence the upcoming election. However, the decision to keep rates on hold influences the election in favour of the incumbent.
Auckland 10th? I thought Osaka was 10th?
If you look at the actual EIU report, Auckland is 10th= with Osaka. Some overseas media summaries don't mention Auckland. The full report is here.
Ok thanks. Yes international stories I saw didn’t mention Auckland.
It’s a flawed study anyway. Or at least how it is interpreted is flawed :)
Fascinating - and unbelievable - that Auckland scores so highly on healthcare. As good as Copenhagen!
’Availability’ of healthcare is a key measure. I bet that doesn’t take in to account waiting times. Or does it?
The survey is based on the perspective of well off employees of multi-nationals, who probably all get private medical insurance as part of their packages.
Exactly. But the media seldom point this out.
It certainly isn’t about liveability for the average local Joe
The big economies are raising rates and a small nation at the bum end of the world says that we can control inflation by pausing and our economists saying that rates will soon be reduced.
What kind of media spin is going around really?
We have borrowed heavily as a nation during the covid times and now when it's time to pay it back, rates are going up and up. So taxes will be raised to pay this money back and we can't really hold the ones who put us in this mess accountable as they have parliamentary privileges and are protected by law. What a farce.
If it's any consolation, many of our brothers and sisters who didn't live in such privileged places just took on private debt to survive during covid, and still aren't earning what they did in 2019 to pay it back.
It's all the same no matter how you skin it.
In its relatively short history NZ has relied heavily on earning its way by the well accepted export of primary produce. At times it can be argued, this has been the saviour. Yet this government seemed hell bent not only on reducing that life blood, but gives the impression that it would not be unhappy for farming and other primary industries to simply disappear? Seems to me given our present plight, our nation is going to need primary produce trading to our rescue more than ever before.
That's a long piece of string you are pulling? Nothing wrong with primary exports..but if we have to give up clean water and pay $20 for a block of cheese..what's the point?
Agree Baywatch, we've already sacrificed nearly all our native forests. We live in an ecosystem and we can't keep destroying it to make a buck and spend it on cheap and worthless consumer shit.
Even my kids can understand the moral of the Lorax.
Exactly. Climate change is irrelevant. Humans are far more efficient and effective at destroying things directly.
Climate change is not irrelevant but it is only one of the many ways we are fucking the planet for our kids and grandkids in a way that is irrecoverable
Ecosystem destruction - we're in a human made mass extinction event
Natural resource depletion - fossil fuels, sand, rare minerals
Plastic pollution etc....
In energy-accounting, farming is a net import. It imports fossil energy (and other materials; palm kernel, phosphate) and exports food energy. Calories in: say 20, but I''d argue more. Calories out: 1. The question in that equation, is how many local solar calories can be claimed (grass-to-food, usually via animal)? That is our only valid contribution.
https://www.ecoliteracy.org/article/fossil-food-consuming-our-future
https://michaelpollan.com/articles-archive/how-to-feed-the-world/
http://chembook.org/page-nonav.php?chnum=9§=6
The questions are: What does primary production look like ex fossil energy? And: Will we still have a surplus (to export) at that point?
What you're talking about is the industrialised farming model. They are adding inputs to extract more outputs. I heard a discussion with a paleoanthropologist years ago who indicated that centuries ago the middle east used to have a highly industrialised farming model and technology and the long term effect was that they poisoned the land to the degree that centuries later the land has still not recovered to the degree to provide a good basis for basic farming.
what farmers, and the government, should be looking to is an efficient model that does not require external inputs. Develop a sustainable farming model. Importing things like palm kernel makes us complicit in destroying tropical forests in Asia too.
Media spin....yes and queue the chorus of msm spin of the last day or two re interest rates have bottomed as have house prices. They have no shame.
Pity all those who believed the spruikers that interest rates are starting to fall...
When are people going to liken spruikers to criminals..
When the idiots that listen to them admit they're little children with tiny brains who should let someone else handle their finances.
Everyone's entitled to an opinion mate, if you cannot separate the spin from reality, that's your problem.
Don't be so narrow minded DGM, people having different opinions to yours, doesn't make them criminals !
A fun fact: we haven't had a current account surplus for 50 years. That's longer than I've been alive.
Good column from Josie Pagani about it:
https://www.stuff.co.nz/opinion/300911558/the-economy-is-on-a-precipice…
What happens when we keep spending more than we earn is that our national debt keeps growing. We can pay off this debt by earning more, which takes time, or by cutting our living standard so that we buy less from overseas, we could sell assets, or we could borrow anew and effectively use the overdraft to pay down the Visa.
"We have mainly been doing the last two. This is why our runways are maintained for private jets bringing in buyers to pick off choice land, profitable companies – and airports."
This will only increase if National and The Lux gets in...
Compound interest an debt is why we haven't:
https://consciousnessofsheep.co.uk/2023/06/21/bitter-fruit/
'It is the same reason why Leviticus 25 orders a Jubilee after 49 years. In two words, compound interest. When currency is created as debt, there is never enough currency to repay both the loan and the interest. This can be masked to a great extent by the “velocity” of the currency – the speed at which it circulates around the economy. In the days before electronic banking, for example, the same £1 note could pass from a worker to a shopkeeper, from the shopkeeper to a taxi driver, from the taxi driver to a florist, from the florist to a newsagent… and so on. Nevertheless, and especially in electronic banking systems where the velocity trends to zero, because of compounding, with each passing year, the amount owed but technically unrepayable, grows exponentially so that we – collectively – must borrow more with each passing year to avoid a crash.
The trouble is that nobody borrows currency just so they can keep it in a bank. Nor do banks – and investors more generally – lend on this basis. People borrow to buy things, while banks calculate that those people’s incomes will grow sufficiently over time that they will be able to repay the debt with interest. And so, this is where the two economies – “financial” and “real” – meet. Because financial growth necessitates material growth. That is, businesses creating ever more goods and services, which households must consume in ever greater volumes. But those goods and services require the raw resources and energy of our finite planet, which, because our need is for exponential growth, have reached their limit.'
Bullshit!. How is Nationals policies, to reverse the laboiur waste, going to be worse than what labour is doing.
Give examples.
A vote for labour is a vote for more pain, debt, crime, racial divide, poor education, poor health, Green waste, co governance, 5 waters, minority " idiot" funding, wokeness, lawlessness, poor roading . . .
" expecting improvement from the same worn out 1970s Russian Lada engine is the definition of madness.
Vote labour - vote moral , ethical, and fiscal ruin!
Are you able to write a post without swearing ?
What swear words.
Last time i looked feck was not a swear word. And bull shit is a descriptive word for male cow dung.. which many post around here.
It must be in your head bro.
And if you make a dumb comment expect a hearty reply.
Now feck off ... dude with the evil name!
"The most familiar modern use of feck is as a euphemistic substitute for f*ck, as in the phrases Feck!, Feck off!"
Swearing in another dialect is still swearing - your intent was understood, so don't play dumb.
I'll vote Labour if the alternative is someone that gets your support Hemi.
You're a very angry man Hemi and anger rarely solves complex issues.
Hulk smash is not a policy platform that is going to get us anywhere.
Hulk smash is not a policy platform that is going to get us anywhere.
TBF the talky talky approach has done little to date. Maybe it is time to try a new method.
Now that the totalitarian Dutch government learned they can effectively crack down on our farmers’ property rights, they’re coming after ordinary citizens next: An insane new Housing Act will allow municipalities to force homeowners to sell their homes ONLY to people with a lower to middle income. In other words, the government decides who you can sell your own home to and would force you to accept a lower price than the market value, because a “marginalised group” would be making an offer. How can we even still say we have property rights, when this is our reality? We’re not “losing our rights” we’re straight up already living in a neo-feudal system. Wake the hell up, people. Link
"Loss of freedom?" That's what happens when persuing a weird ideology called exponential economic growthism. Voters keep being sucked in by waffling promoters as their world shrinks. Concepts like infinite resources, mining asteroids and human ingenuity breathlessly fill any moment available for thinking, when concepts like enough and finite planet are ultimately where freedom lies.
Exactly what my US masters told me when I worked at the London branch of their US bank
Varlay also boasted about his employer’s control of the political system. “It’s not who the president is, it’s who’s controlling the wallet of the president,” he declared, clarifying that it was “the hedge funds, BlackRock, the banks” who “run the world.”
“All these financial institutions, they buy politicians. You can take this big f***ton of money and then you can start to buy people,” he said, explaining that senators were “f***ing cheap, you got 10 grand you can buy a senator.” The US government also needs BlackRock to run its financial simulations, he said. Link
We still have the complete and utter Pied pipers, pseudo economists, toerags on WONWOLF, telling everyone that the rates have peaked - BUY NOW!!
Again and again, they have been 100% wrong. Shameless to the extream!!
The have led thousands into financial oblivion over their nefarious, near FMA illegal?? spruikings over the last 18 months!!
Its criminal - AND THEY HAVE DONE THE SAME THIS MONTH!!!
Buyers today will pay higher rates tomorrow. GLOBAL Interest rates are only set to increase, NZ much more so!! Its a lock.
Nothing wrong with Oneroof, really like the current estimate on my place just a fraction below the RV based on sales in the area. Seriously how do you expect to get a better estimated valuation ? Looks better than homes to me, that site is really rigged.
Covid induced RV or pre covid RV?
There is only one RV you are interested in, the latest one so July 2021. A decent house in a place you actually want to live is still a million bucks in New Zealand.
How come we are still seeing rates rising!
ANZ raised thiers yesterday . TsB the day before.
One roof are just advertising for REINZ.
The fact that they make predictions after " one swallow"" shows they think its still summrer
And oil prices are down a sharp -US$3.50 from yesterday to now be just over US$69/bbl in the US. The international Brent price is now just on US$74/bbl.
How lovely. We needed some good economic news, the price of oil sets many other prices (at least, it would if RBNZ would just set appropriate rates.)
No! Taxes set the price of of fuel in NZ.
In AussieIt is 1.70 per L. 91
Another indicator of the brown stuff about to hit the windy thing.
https://www.stuff.co.nz/business/132383509/employers-holding-on-to-1-bi…
The blocks are slowly falling in to place. I suspect consumer spending will be the very last domino. Once that collapses it will be too late.
I was surprised they didn't mention businesses behind on the $10k Small Business Loan from Covid.
one domino per day is enough. Save that one for tomorrow ;)
It could be more than $10k - one small business i work with got $22k, repayments not starting until 2024 so I think next year there will be a lot of pressure on the IRD to start collecting these.
While I am not quite as important to pay as the IRD, I'm noticing that my debtor days are pushing out further and further with some clients (to the point where I'm having to withhold deliverables or get a bit testy over the phone and/or email to get paid).
The rise in employer debt was partly a result of the department having been less assiduous in chasing indebted businesses during the Covid recovery period
Ironically, this party - going easy on businesses and beneficiaries, while tough on wage earners - insists on calling itself the "Labour" party. The Labour-squeeze party would be a more appropriate title.
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