Here's our summary of key economic events overnight that affect New Zealand, with news the Fitch downgrade has cast a pall over financial markets today, trumping any data. Equity markets are grumpy, bond yields are rising and the US dollar is rising.
But first in the US, we get their July labour market details on Saturday NZT and today the precursor ADP Employment Report is out. That says private businesses hired +324,000 extra workers in July, following a downwardly revised +455,000 increase in June and surpassing market expectations of a +189,000 rise. Consensus analyst forecasts are for the US non-farm payrolls to rise +200,000 in July, so there seems to be upside there.
Also rising were American total vehicle sales in July, up to an annualised rate of 15.7 mln. That is up from a 14 mln annual rate in July 2022. Of course, the American vehicle markets is far smaller than the Chinese one that ran at a 26.1 mln annual rate in June.
But falling, and for a second successive week, were American mortgage applications, and it was a moderate -3% fall. The benchmark mortgage interest rate rose and back near its highest since November 2022. Rates near 7% really hurt the perception of house-buying affordability. The US home ownership rate was little-changed in Q2-2023 at about 66% although that is up from 63% in 2016 after for than a decade of previous falls.
However the big news was that credit rating agency Fitch cut the US Federal Government one notch from AAA to AA+, echoing a move made more than a decade ago by S&P. Moody's still rates the US Aaa. Tax cuts and new spending initiatives coupled with multiple economic shocks have swelled budget deficits, Fitch said, while medium-term challenges related to rising entitlement costs remain largely unaddressed. The White House isn't happy. Nor the US Treasury.
In China it is summer holidays and the senior leadership has decamped Beijing to the nearly beach resort area of Beidaihe. They probably won't reemerge for two weeks or so, baring emergencies. Before they left, as we noted previously, they rattled off a list of support measures for their economy, a list that underwhelmed.
Now they have followed that up with the National Development and Reform Commission saying they will boost loan access for private companies and extend other funding measures to small firms. Also, the central bank and others pledged to increase financial support to smaller firms in key supply chains. Then both the central bank and the State Administration of Foreign Exchange said that banks will be "guided" to adjust existing mortgage rates lower to support the real estate market.
It is a good time to leave this year because we should note that the Beijing flooding has turned out to be pretty severe, involving loss of life. Of course, the problems are wider than just the capital city.
The UST 10yr yield will start today at 4.07% and up +2 bps from this time yesterday and a ten month high. Their key 2-10 yield curve inversion is lower at -82 bps. Their 1-5 curve is lesser at -115 bps. And their 3 mth-10yr curve is also less inverted at -130 bps. The Australian 10 year bond yield is now at 4.03% and down -2 bps from yesterday. The China 10 year bond rate little-changed at 2.71%. The NZ Government 10 year bond rate is up +1 bp from yesterday to 4.79%.
Wall Street is grumpy today in its Wednesday session with the S&P500 down -1.3%. Overnight European markets closed down -1.4% across the board. Yesterday Tokyo ended its Wednesday session down -2.3%. Hong Kong fell -2.5%. And Shanghai ended down -0.9%. The ASX200 ended its Wednesday session down -1.3% but the NZX50 ended down only -0.2% so by far the 'least-worst' of all the markets we follow.
The price of gold will start today at US$1937/oz and down -US$8 from yesterday.
And oil prices are down -US$2 at just over US$79/bbl in the US. The international Brent price is now just over US$83/bbl.
The Kiwi dollar starts today down nearly -½c to just on 60.9 USc. Against the Aussie however we are firmer at 93 AUc. Against the euro we are -¼c lower at 55.6 euro cents. That all means the TWI-5 has fallen another -30 bps to 69.5.
The bitcoin price is higher today since this time yesterday and is now at US$29,131 and up +0.7%. Volatility over the past 24 hours has remained modest at just under +/- 1.9%.
The easiest place to stay up with event risk today is by following our Economic Calendar here ».
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73 Comments
Na mate.. Why would anyone listen to you.
Kiwis love buying from each other at over inflated prices and drowning in debt. Every one wants to be rich on others misery in this country rather than working hard and creating something good for the society in the process.
But hey who am I to preach.
We will soon reap what we sow.
God save NZ
Not surprising at all. I was working with on a consultancy assignment with a major public agency recently. Hardly anyone in their policy team had the technical background or data/research skills to do their job well. They wanted us to do all the heavy lifting on the work obviously.
What troubled me even more was the lack of objectivity the team brought to the table and were implicitly asking us to manipulate data to suit their ideological conclusion.
I believe that's how key decisions are being made in Wellington lately and a potential Act caucus will have to move mountains to clean this mess up.
"......What troubled me even more was the lack of objectivity the team brought to the table and were implicitly asking us to manipulate data to suit their ideological conclusion......"
Classic words. I worked in Health. Magical thinking was rife. And remember the real managers there are the doctors and nurses.
And remember the real managers there are the doctors and nurses. I have to assume that you are not a health care worker. Just logically - if doctors and nurses are also managers - when they go on strike for better work conditions they are striking against themselves. Also I have a further suggestion - if you ever have to go to the hospital for any reason and they tell you that the doctors and nurses are busy - just them tell that you want to see the manager instead since they are the same person. Hint : people in health care who are managers may (or usually may not) have had training in 'field jobs' previously.
Haha. Very wrong Occam. I was a health care worker actually.
The doctors and nurses control the thing for sure, and have a few administrators to do the routine work.
It's been a clever move to hold out 'managers' to take the flak. - and those really making the decisions stand back smiling.
Sadly Occam, you have been fooled.
Wow thanks for the heads up, I had to search for it, appears to be not widely reported...
https://www.scoop.co.nz/stories/PA2308/S00021/act-will-put-an-end-to-ra…
Pressie Cards are a fairly standard from of "enticing" people to make decisions.
In the 3 waters game for example, it's not uncommon for a supplier to drop a box of Pressie Cards on the desk of a contractor who has been awarded a local government contract, to remind them they are the best supplier for the job. It's tax free too.
From ram raiding dairies, to engaging in violent gang crime, to getting pissed and crashing your taxpayer supplied vehicle despite being entitled to free taxi transport, to refusing to do the census unless you're given free Warriors tickets, to not even bothering to show up for basic healthcare without a bribe ... all just the consequences of divorcing individuals from any element of personal responsibility and duty to society, particularly if they have the "right" background.
It doesn't help that there is an ever-expanding industry of influential academics, lawyers and politicians making bank off the back of being professional excuse-makers (think of the cultural reports rort, for example).
There is no doubt that having a less privileged, lower-in-opportunities background makes it more likely you will go on to commit crime, for example, but at some point (unless you are completely mentally deficient) you are choosing to jack that Toyota Aqua and drive it through the front of the vape shop, or you are choosing not to show up for a health check unless you are given a prezzy card to do so.
Both my partner and I have been called hard and callous as parents. Many parents aim to please their children. We aim to raise critical thinking adults who take responsibility for their actions. We also show our love. Our children are loving, kind and receive great reports from school. Because they care and they think. But yes... We are hard on our kids... Go figure
Just when you think this Government cant get worse.... The dangerous narrative that is being reinforced is ' You are excused from having adult responsibilities or consequences for your actions if something really bad happened to you 30 years back' . Does not matter what race it is, or what position you hold - this is a dangerous narrative because it diminishes autonomy and ownership (which is important for mature adults) and normalises recklessness and dependency.
"' You are excused from having adult responsibilities or consequences for your actions if something really bad happened to you 30 years back'" It's worse than that; the period isn't 30 years, it's 160!
Some years ago I literally got told by a Maori chap that I had stolen his land from him. I asked what he was talking about. He told me that I had stolen his land from him in the 1800's. I politely suggested I wasn't born then so it couldn't have been me. He started to lose it then. Couldn't talk to him at all.
Really Murray ?? I dont blame him for losing it with you
In 1839 Māori landowners around Nelson sold 151,000 acres of land to the New Zealand Company on the condition that 10 percent of their land would be reserved for Māori in perpetuity.
That agreement was never upheld. Rather than setting aside 15,100 acres, the Crown reserved less than 3000 acres.
The landowners, now represented by the Wakatū Incorporation, have been battling to have that land returned.
No need to. Moderner history provides plenty of examples such as the British Isles. Not long after recorded time began there were in place, the Celts, displaced by the Britons, in turn by the Saxons done over by the Normans who even published the domesday book to record their land and property seizures off, for want of a better word, the indigenous. That strain, if you like, has been in situ for over a thousand years unchallenged more or less although Adolf perhaps wanted to return it to Saxon if he could.
Don't get it do you Baywatch? I get that colonial practices shafted Maori big time. But do you really want to open the door to hold people to account for the sins of their fathers? How will your tupuna look under that magnifying glass? I personally never had help in anything. 20 years in the military working along side, under and over Maori taught me that they are no different from anyone else, and perhaps a little better in some areas. I certainly had some very good role models who were Maori, and who would struggle to accept some of the tripe being dished out today. But human psyche being what it is if you give people an excuse for not helping themselves and they will invariably use it. Hence having to pay pregnant Maori girls $50 to go get a health check. Go back far enough and you will find ravages of colonial practices in every ethnic group. Ask yourself why in the 1800s so many were so desperate to leave the land and society they knew to go so far away? Maori are not unique with the possible exception that they have a treaty to use as a political tool to give some of them excuses to not look forward and persist in hanging on to the past.
Arguably though it is possible, even likely that they operated with at least tacit agreement from the crown. Problematic. But even today Governments get alerted in new risks appearing but don't do anything about until it becomes a real problem. Clue - climate change. In the meantime people, individuals get trashed with no comeback.
They had a Royal Charter. One would have to prove the Crown instructed the company to not uphold the agreement in Baywatch's comment. Otherwise, it's a private matter.
What is a Royal Charter?
A Royal Charter is an instrument of incorporation, granted by The King, which confers independent legal personality on an organisation and defines its objectives, constitution and powers to govern its own affairs. The terms of each Charter are therefore somewhat different, depending on the individual requirements of the type of organisation that is being incorporated.
https://privycouncil.independent.gov.uk/royal-charters/#:~:text=A%20Roy….
All it did back then is give the company permission to trade under a certain set of rules, I find it hard to believe that when the Royal Charter was signed the crown knew the company intended on defrauding Maori.
No different to the NZ Companies Office today dishing out business numbers I would have thought. Do we then start making the Companies Office and Taxpayer today liable for company fraud?
Really? you think Murray should be groveling and throw his ancestors under the bus. It's so cringe when people are so willing to do this. They were living in an absolutely different times and just trying to survive.You know darn well that most NZ have loved ones with Maori decent and Maori have non-Maori relatives, including the father, mother, grandfather, grandmother, children etc. It absolutely hypocrisy in moral outrage. I suggest you read the life and times of Te Rauparaha written by his son in Te Reo. It was no utopian society. As for the Nelson land claim, this is against the crowns stuff up. It has nothing to do with non-Maori alive now.
In many of the GP practices around the area I live, Maori, Pacific and Asian women between 25 and 69 can get free cervical screens. Also, at some of these GP practices, Maori and Pacific women who are overdue or due a cervical screen will get a $20 Countdown voucher for going for their (already free) screen till the end of the year.
Nice. Also, if that is not racism, I don't know what is.
In many of the organisations I have worked at white native English speakers get hired and promoted over other nationalities and races because the person hiring is a white English speaker and they find it more comfortable to work with someone who looks and sounds the same as they do.
If that isn't racism I'm not sure what is. Are you up in arms about that too or just the $20 voucher?
Ooh, I like your question and I'll raise you.. Because maybe I'd be up in arms about your scenario. And maybe I won't. It would depend on many factors.
I have worked at various organisations (some of them in other countries) where non-white staff hired and promoted employees of their own ethnicity because they find it more comfortable to work with someone who looks and sounds the same as they do.
Are you only up in arms when white English-speaking staff tend to hire other white English-speaking staff?
You'll find the same issue when you look at, for example, Maori, Pacific or Asian business owners. And what about an Italian chef who can't speak English and therefore prefers to employ Italians?
Another question for you: Is it racist if the staff demographics of an organisation that employs, let's say 100 employees (for simplicity's sake), do not reflect the population demography? So, if you use the 2018 NZ census data it would be something like 70 NZ 'Europeans', 8 Pacifika employees, 15 Asians, 16 Maoris, ..? (Yes, these won't add up to 100, unless you can find a cool way to determine the fractions of ethnicities many/most of us have in our genes.)
Your question implies that you find it racist if an organisation's employees do not reflect the demography of their country, or at least their city or town?
My answer to answer your question: When "white native English speakers get hired and promoted over other nationalities and races because the person hiring is a white English speaker and they find it more comfortable to work with someone who looks and sounds the same as they do" - it might be racism. But, frankly, it might not be.
As a taxpayer I'm good with a $20 Countdown voucher being given to those women if it means cancer would be detected earlier as it's cheaper and less stress on the hospital system to treat earlier than later. The obvious benefits of early detection on the individual and their families is a plus too.
I too would happily support a system that provides free cervical screening and/or financial incentives (such as $20 vouchers) based on socioeconomic factors.
Do you think women who are at similar risk to the average Maori/Pacific woman, if not at higher risk if you consider their background, income, family history, previous screening history, sexual history, etc. should be left out of such initiatives?
Are you OK with their cancer only being detected later, with the obvious disadvantages to the health system and their families?
My problem is that the voucher looks solely at ethnicity (reported, alleged, more-or-less ethnicity). Nothing else.
Ideally I'd like all health care to be free for everyone but unfortunately it's not.
Ministry of Health data says:
"For cervical cancer, Māori females had a registration rate twice that of non-Māori females (RR 2.06, CI 1.64–2.58), and the mortality rate for Māori females was about 2.5 times that of non-Māori females (RR 2.57, CI 1.70–3.90)" so I guess this is in large part why the financial incentives are targeted by ethnicity.
Eligibility for free screening is broadening from 12 September this year though, it's not free for all but it's a move in the right direction:
"Those who will be eligible for free cervical screening include women and people with a cervix who are unscreened (have never had a screening test), under screened (haven’t had a test in the past 5 years), at higher risk requiring surveillance/follow up, Māori, Pacific, and anyone who is a community service card holder. This includes those populations that are at a higher risk of cervical cancer.
The free screening will be available from 12 September, when the new HPV test will roll out."
:
“Don’t give up the ship.” Famous words from US Navy Captain Lawrence shorty before his death. First mate Robertson though appears to have given in and gone below. This government has long looked like a crew of green gilled landlubbers aback and awash on a boat in a sloppy sea without a clue as to what’s a stay and what’s a halyard. Can they stay afloat, off the rocks, for another ten weeks?
Another strangly hard to find story. Published late yesterday:
https://www.nzherald.co.nz/nz/politics/public-service-bosses-called-in-…
Its Ok Robbo is papering over it right now
I expect the issues to be very large when revealed closer to or just after election. The books are not going to balance as to many at the trough now and tax take will be falling -or at least not rising as fast as costs (after inflation)
And of course a lot of costs are now baked in with wages increases locked in and infrastructure programmes signed for so it will need to get messy in Wellington to right the ship
So with U.S debt at record high, the Interest paid on U.S debt has reached a record $1 trillion annually. Stunning.
And U.S. credit card debt is at record highs with an average credit card interest rate at a record 20.69%.
https://www.cnbc.com/2023/06/20/credit-card-rates-stand-at-a-record-20p…
Its not going to end well. Anyone here going to predict a date where it all finally goes pear shaped in the USA ? My guess is the 2024 US election next year, that's the obvious time to light the fuse.
Well the US election turns out to be on the 5th November 2024, only the Americans would be stupid enough to choose Guy Fawkes Day.
My reckon is they print for another couple of years and the first major wheels to fall off are states (Texas being the obvious) that don't want to be lumbered with the debt making serious moves to pull away from the Federal Mother Ship. God knows what happens then. The Washington tribe then have bad choices to make between rioting peasants wanting more food stamps and powerful states threatening to cede from the union and wanting concessions.
It may not be that far away Zwifter - actually it might be happening right now.
The US has just experienced the largest drop in income tax revenues ever recorded, while at the same time their interest expense on debt is going through the roof.
Have a look at the chart in this tweet:
https://twitter.com/TaviCosta/status/1686587577510547457?s=20
Might not be what you are asking, but the Pre-election fiscal update is due on 12 Sept:
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