Here's our summary of key economic events overnight that affect New Zealand, with news the pressure remains on the Chinese economy and Beijing seems committed to tough it out without its usual debt-inducing stimulus strategies.
But mainland China equities as well as those in Hong Kong jumped more than +1% yesterday after Beijing announced new measures to boost its capital markets, including halving the stamp duty on stock trading, and they were effective immediately. But they opened up +5.5% and it was downward from there, so questions are being asked if this can last much more than a day or two.
Yesterday we noted that factories are under pressure in China because export order flows are drying up. Today we can note that this is heaping pressure on factory owners and their workers. Strikes, accidents and staff seeking help with their employment situation are rising now.
In the US, the Dallas Fed factory survey posted negative indications although these were less than in July, and in fact the least negative in five months. Employment growth slowed, but at least it is growth. New order levels aren't back positive yet, so it is no surprise that in this region, one dominated by the oil patch, the future general business activity index is negative too.
In Europe, the tight policies of the ECB designed to quell inflation are having a tough impact on new lending, especially new lending to companies. Yes, lending grew in July, but at its slowest pace since 2015.
In Australia, retail sales rose by +0.5% in July from June, topping market estimates of a +0.3% gain and reversing from a -0.8% fall in the previous month. But this may not be sustainable. The largest gainers were cafés and restaurants, up because of additional spending linked to the 2023 FIFA Women’s World Cup and school holidays. But when you account for population growth, retail sales are effectively flat on a per capita basis; and incorporating the effect of price increases, the result is even weaker on a real per capita basis, running lower between -3% and -3½% per year.
Perhaps we should also note that the international price of wheat has continued to fall and is now back to where it was almost three years ago. And India's tightened ban on rice exports isn't materially affecting the international rice price, yet, anyway.
Locally, the IMF released its latest review of the New Zealand economy, pointing out that government spending needs to be reined in. More here.
The UST 10yr yield will start today at 4.22%, down -2 bps from this time yesterday. Their key 2-10 yield curve inversion is little-changed at -83 bps. Their 1-5 curve inversion is a little deeper at -105 bps. Their 3 mth-10yr curve inversion is also little-changed at -119 bps. The Australian 10 year bond yield is now at 4.14% and unchanged from yesterday. The China 10 year bond rate is up +2 bps at 2.60%. And the NZ Government 10 year bond rate is still at 5.09%.
Wall Street has opened its week up +0.4%. Overnight, European markets were mixed. London ended unchanged after a late sell-off. Frankfurt rose +1.0%. And Paris rose +1.3%. Yesterday, Tokyo ended up +1.7%. Hong Kong rose a full +1.0%, and Shanghai was up +1.1%, both ending the day with leaking gains. The ASX200 ended its Monday session up +0.6% while the NZX50 only managed a +0.1% gain.
The price of gold will start today at US$1920/oz and up +US$5 from yesterday.
And oil prices are -50 USc softer at just under US$79.50/bbl in the US. The international Brent price is -US$1 lower at US$83.50/bbl.
The Kiwi dollar starts today a marginal +10 bps firmer than yesterday at just on 59.1 USc. Against the Aussie we are down -¼c at just under 92.2 AUc. Against the euro we are unchanged at 54.7 euro cents. That all means the TWI-5 is now at 68.3 and down -10 bps.
The bitcoin price is little-changed again today and now at US$26,090 and up +0.3% from yesterday. Volatility over the past 24 hours has been low at just under +/- 0.7%.
The easiest place to stay up with event risk today is by following our Economic Calendar here ».
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22 Comments
Does anyone in the government read the comments on this site, it feels like the current government is advised by a bunch of bureaucrats more worried about their investment properties in wellington than the rest of the country's pain,
We started with deficit problem, we have had a change of prime minister, the deficit problem has gotten worse, is it the party, the person or the advisors. I'm starting to think the latter.
How about this. The Minister is of insufficient experience or acumen to know what is or isn’t a viable proposition or solution. So advice from the relative bureaucratic hierarchy is understandably sought who in turn engage consultants so that they can remain unaccountable, should it go pear shaped. The outcome arrives back on the Minister’s desk but said identity is still out of his or her depth and so too likely, the rest of cabinet. Works out well, the Minister can say they followed advice, the bureaucrats can blame the consultants who can walk away as they have a built in disclaimer absolving them of any liability. A good example of this deficiency was in the disarming and candid admission of Kris Faafoi when he resigned from cabinet, having been the Justice Minister, that it would have been helpful to have had a law degree. Historically that has been of NZ’s most eminent and vital portfolios filled by great legal minds, Hana, Finlay, Palmer to name a few. Not so today though.
Pretty much agree with the sentiment, but qualifications doesn't make you skilled in an area, nor lack of them - unskilled. Mostly it is about total acumen, and humility. Being smart enough to know you don't know and humble enough to ask questions (and stubborn enough to keep asking until you do understand, even at the risk of having others think you an idiot). Understanding the law requires being able to read the legislation, and case law to see how the laws are applied. But even judges and lawyers screw it up from time to time. Mostly it is about being able to park the ego to achieve real value. Too many of our politicians cannot park their egos. That, I would suggest would be what lies behind most if not all the bullying charges in the beehive.
You could say that about every Minister in cabinet. I don't think you'll find a more inept bunch anywhere. Case in point - Andrew Little, a trade unionist and career politician, as Health Minister he initiated a multi-$billion multi-year health system restructure, whilst having no background in health whatsoever. Our health system is now in total disarray.
Having created this cluster f*#k, he's now moved to MoD, a domain he probably has less knowledge than health. Let's see how much more he can stuff this up in the next 2 months.
I disagree about Andrew Little. Wasn't he a career trade union official longer than he has been an elected MP? OK I'll accept he has made mistakes but he shines among a very dim bunch. He had the nous and the humility to step aside for Jacinda - resulting in a big electoral win. And now after only two months in charge of Immigration we get searches for low paid exploited immigrants: https://www.nzherald.co.nz/nz/immigration-nz-carries-out-six-inspection…?
Maybe he actually cares about low paid and unemployed Kiwis. If he proposes a serious multi-party approved and transparent population plan and the mass sacking of all INZ staff responsible for bureaucratic delays then Labour will get my vote despite its generally appalling track record.
Boom. Florida, that hotbed of climate change denialism, is about to be given another lesson in physics.........https://www.nhc.noaa.gov/refresh/graphics_at5+shtml/175343.shtml?cone#contents
The hurricane will be sucking up energy from the overheated Gulf of Mexico - subject to a marine heatwave (just look at these global sea water temperatures.........https://climatereanalyzer.org/clim/sst_daily/
This will no doubt be yet another billion dollar climate event in the US. They've been racking them up this year: https://www.usnews.com/news/national-news/articles/2023-08-17/u-s-racks-up-billion-dollar-disasters-during-summer-of-extremes
What's going to happen to the Florida real estate market once insurance has disappeared? https://www.newsweek.com/florida-california-insurance-uninsurable-climate-change-1817260
I can't shed any tears for climate related disasters in the US. They created 25% of this climate destabilisation and feel self entitled enough to keep right on polluting. On top of that they've been a primary exporter of of climate denial BS around the planet. There are far more seriously impacted areas around the planet than the US. Suck it up US. Use some of the wealth you extracted from the rest of the planet to pay for it!
All of the Wellington bureaucracy don't listen to anyone else only to themselves, as they all live, work, socialise together. They are the great swamp. So if they all think and talk the same nonsense than of course they will not have any comprehension of what is required by the average kiwi. They have very little comprehension of how a successful business operates for the good of all the stakeholders, so how can they run a country. Waste waste waste.
If they didn't live in wellington they would be unemployable, we not only have the ones the government pays directly, but also all the lobby groups, national associations, of anything you can think of where the CEO or manager, or whatever switch from one to another, and spend half their time collecting the receipts for the drink they had at a meeting with XYZ
Restore Passenger Rail protesters block road in Kilbirnie
https://www.nzherald.co.nz/nz/restore-passenger-rail-protesters-block-r…
Cut the hand off. Solves recidivism
Last year there were a bunch of articles bemoaning the high profits of the Gentailers, ignoring the one-off factors that actually caused them (gain on sale of Tilt, gain on sale of Meridian's Australian assets, Genesis derivatives in profit).
When can we expect the articles praising the lower profits this year? Meridian profits down 14%, Mercury down 78%, Genesis down 12%, Contact down 30%. All doing their bit for the cost of living crisis, I guess.
I guess Euro$ market isn't too enthusiastic about China's tiny "stimulus", or maybe the implications of #Evergrande. Link
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