Here's our summary of key economic events overnight that affect New Zealand, with news the screws are tightening for big property investors.
But first, Canadian retail sales stalled in June following a small rise in May. Things would have been worse it it wasn't for strong new car buying.
In China, their economic weakness is spreading and now coming out in corporate earnings. Listed companies, especially in industrial sectors, have issued profit warnings for the first half of the year, raising questions about the government's optimistic depiction of the economy. Analysts say almost a third of mainland-listed companies have released first half earnings previews, with less than half making positive announcements. Basically there is no 'recovery', or if there is one, it is weak. Beijing is clearly rattled.
In Japan, inflation continues to run above their central bank's 2% target. It edged up to 3.3% in June from 3.2% in May but less than market forecasts of 3.5%. Core inflation also ticked higher to 3.3% in June from 3.2% in May. It has been higher than 2% for 15 straight months now. Note that Japan's 3.3% CPI rate is higher than the US's 3.0%. That is a generational rarity.
The Russian central bank raised its key interest rate by +100 bps to 8.5% in its overnight meeting. This was double the market expectations of a +50 bps hike. And they signaled more rate increases in incoming decisions. It was their first rate hike since September. They warned that upside risks to inflation have increased significantly recently, underscoring the need to weigh on demand and balance it with the limited supply of goods and services in the Russian economy as the military mobilisation and military-aged diaspora triggered a fresh labour crisis in Russia.
In other media, a lot has been made about the potential 'surging' wheat price after the Russian abandonment of the grain deal with Ukraine and the subsequent missile strikes on port facilities. But it seems like the wheat market is ignoring the chatter, focusing on the rising wheat output in many other countries. Yes the price rose but the recent rises were modest in perspective of the past year.
In the US, their cattle herd shrank more than expected to the lowest seasonal levels since 2014. That will underpin good prices for beef for the next few years. The decline was -2.7% in this latest survey, more than the -2.3% expected. In an industry are large as that, this is a significant shortfall.
Also shrinking rather fast are asset values for icon office buildings. Bloomberg has a scary story for Korean investors who bet big a while ago in London, Paris and New York. They are facing a disastrous outcome now. And big banks are raising their provisioning for loans for commercial real estate, expecting a wave of defaults.
And in Australia, Jardens are noting that investors are increasingly selling properties to reduce leverage and improve cashflow, as the fastest interest rate tightening cycle in a generation makes it increasingly difficult for them to service multiple loans. The trend is strong enough for analysts to worry that it could reverse the recent rises in prices there.
The UST 10yr yield will start today at 3.84% and down -1 bp from this time yesterday which is exactly where it was a week ago. Their key 2-10 yield curve inversion is essentially unchanged at -100 bps. Their 1-5 curve is less inverted at -126 bps. And their 3 mth-10yr curve is more inverted at -150 bps. The Australian 10 year bond yield is now at 4.00% and down -1 bp from yesterday. The China 10 year bond rate little-changed at 2.66%. The NZ Government 10 year bond rate is up +10 bps from yesterday to 4.69%. A week ago it was 4.62%.
Wall Street has ended its Friday trading with the S&P500 unchanged for a weekly +0.6% rise. The Fear & Greed index is still hard over on the 'greed' side. Overnight European markets were mixed with Paris up +0.7% and Frankfurt down -0.2% to bookend their Friday results. Yesterday Tokyo ended its Friday session down -0.6% to end the week down -0.9%. Hong Kong up +0.8% for a net weekly fall of -1.3%. Shanghai ended unchanged yesterday for a weekly fall, down -1.6%. The ASX200 ended Friday down -0.2% but up +0.2% for the week. The NZX50 ended testerday up +0.1$ on the day but fell -0.6% for the week.
The price of gold will start today at US$1962/oz and down another -US$8 from yesterday. That brings it back close to last week's level of US$1959/oz.
And oil prices are up almost +US$1.50 from this time yesterday at just under US$77/bbl in the US. The international Brent price is still just under US$81/bbl. And the weekly move is the same. We should also note that the North American rig count is atrophying fast. In the last twelve weeks it has fallen -11%.
The Kiwi dollar starts today down another -½c from yesterday at just under 61.7 USc. But a week ago it was 63.8 USc so the cumulative fall is more than -2c or a -3.4% devaluation. Against the Aussie we are slightly lower at 91.7 AUc. Against the euro we are -½c lower at 55.5 euro cents. That all means the TWI-5 has fallen -40 bps from yesterday to 69.5 and is down -150 bps from a week ago.
The bitcoin price is still in in its recent yoyo pattern and now is at US$30,023 and back up +0.9% from this time yesterday. A week ago it was at US$30,316 so a -% slip from then. Volatility over the past 24 hours has been low at just over +/- 0.6%.
The easiest place to stay up with event risk today is by following our Economic Calendar here ».
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