Here's our summary of key economic events over the weekend that affect New Zealand, with news all eyes are on China to see if they pull the trigger on their old stimulus playbook again.
But first this week, the focal point in the United States will revolve around the PCE price indexes, and data on personal income and spending. Other key data include durable goods orders, their final Q4 GDP growth reading, a key consumer confidence survey, and housing market indicators such as new and pending home sales.
It will be a busy week in Japan with BoJ minutes, and data on their unemployment rate, industrial production, retail sales, and housing starts. It will be a quieter week for Chinese economic releases but it will include data on industrial profits. And markets will pay close attention to potential stimulus announcements and how authorities will let the yuan’s price shift. In Australia, February’s inflation rate is expected on Wednesday and a rise is expected, inflation expectation survey data may come in before that, while markets also await the Westpac consumer confidence survey results.
And staying in Australia, there is plenty of evidence their housing market is back on a roll with an active auction market this past weekend and sales volumes high. Prices seem to be rising. Behind it all is a shortage of housing as their inward migration levels rise fast.
Meanwhile the Australian central bank released its half-yearly Financial Stability Report on Friday and it concluded that while conditions will remain challenging for many households and businesses there this year, "strong conditions in the labour market, the large savings buffers accumulated by many borrowers during the pandemic and rising housing prices are helping households to adapt." The Australian financial system has a high level of resilience and is well positioned to continue to support the economy, they say.
In China, incoming foreign direct investment fell more than -19% in February from a year ago, the largest fall since the GFC and far more than in the early stages of the pandemic. Recent 'legal' changes and the rise of the MSS in the Middle Kingdom is making it too tough to operate there. The trade disengagement underway isn't ending. Only US$14.3 bln arrived as investment in February about half the stunted levels on one and two years ago.
Meanwhile, China is making a concerted effort to qualify for the CPTPP trade group with a new 'negative list for cross-border trade in services' management. "We have proactively aligned our policies and legislation with the CPTPP rules in relevant areas and are well-prepared for market access offers in goods trade, trade in services and investment," a spokesperson said over the weekend.
The recent visits by Chinese foreign minister Wang Yi to both New Zealand and Australia in an unusual 'charm offensive' by the usually prickly Wolf Warrior needs to be seen in the light of this CPTPP push.
In Japan, inflation is finally embedding there. It's been a long slog to get out of deflation. Their inflation rate climbed to 2.8% in February from 2.2% in the prior month, the highest figure since last November. It has been over 2% since March 2022.
Across the Pacific, although they eased in January Canadian retail sales rose in February according to an early estimate. But both shifts are minor. Hesitating car sales are behind the lackluster results.
Across the Atlantic, German companies are gaining confidence, and rather quicker now. Sentiment for Europe's largest economy reached its highest point since June 2023, fueled by anticipations of potential interest rate cuts by the European Central Bank and a gradual easing of inflationary pressures. But German consumer sentiment remains stick at low levels, generally unchanged since May 2022.
The UST 10yr yield will today at 4.20% and down -2 bps from this time Saturday, and -11 bps from a week ago. The key 2-10 yield curve inversion is little-changed at -39 bps. And their 1-5 curve inversion is also little-changed at -79 bps. Their 3 mth-10yr curve inversion is still at -118 bps. The Australian 10 year bond yield is now at 4.03% and unchanged from Saturday. The China 10 year bond rate is holding at 2.32%. The NZ Government 10 year bond rate is now at 4.64% and up +2 bps from Saturday and down -11 bps in a week.
The price of gold will start today firmer by +US$6 from Saturday at US$2165/oz. But that is little different to week-ago levels.
Oil prices have stayed at US$80.50/bbl in the US while the international Brent price is still at US$85/bbl. These levels are also unchanged in a week.
The Kiwi dollar starts today at just under 59.9 USc and marginally lower that this time Saturday. A week ago it was at 60.9 USc so a -1c fall since then. And it is the first time in four months since we have been below 60 USc. Against the Aussie we are marginally firmer at just over at 92.1 AUc. Against the euro we are still just on 55.5 euro cents. That all means our TWI-5 starts today at 69.3 and down -60 bps in a week.
The bitcoin price starts today at US$65,430 and up +2.9% from this time Saturday. A week ago this price was US$68,378 so a -4.3% fall since then, Volatility over the past 24 hours has been modest at just on +/- 1.7%.
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55 Comments
Did something I don't normally do over the weekend (as I like to spend my spare time on more productive matters such as writing ill-informed comments on obscure NZ financial/political websites) and went to a few open homes.
What was interesting was the 'duality' of the open homes I attended.
Anything in good school zones (bearing in mind I'm in Chch where your answer to the ubiquitous question 'where did you go to school' is about the only thing that matters for your future success) was rammed with interest, including a couple of fully-priced, tiny little properties that would buy you access to all of the best public schools in town.
On the other hand, I viewed some very nice - and I'd say fairly priced by today's standards - family homes in good areas but with less desirable schooling and they were all ghost towns (some of these properties having been listed for months at this point). I'm talking desperate-looking agent chasing me down the driveway asking me if I'll be bidding, or calling me not long after I left the property to ask what I thought.
Empty nest, big house. Want to choose the last home we will likely own very carefully, to do so I wanted to be cashed up. No on wants a conditional on sale buyer at the moment. Got a country cottage lined up which will do nicely while we look.
Market collapsing... dunno. Let's just say I'm pleased to be a bystander for 6 months or so,
The actual order. REA works for themself first, then the vendor, then the buyer.
I create a blacklist of REAs when as a potential buyer I feel I do not get complete answers to my queries which are well within the REAs scope. There's only about two so far on the blacklist. Its a toss up whether to blacklist just the REA person or the franchise.
I would also go for a REA who is hungry for business to sell, not necessarily the top agent in the franchise.
I have sold properties both privately and through agents; it all depends on the nature of the property as well as other factors. For example; if one is selling an upmarket property your potential buyers are unlikely to be following Trade Me.
So, yes I’m neutral as to agents.
However, let’s not kid ourselves. An agent works to complete a sale so will endeavour to get vendor and purchaser to a price acceptable to both. In this sense they are definitely working in their self interest - and ultimately not favouring either the vendor or purchaser.
The comments on this site slagging-off agents are counter productive to potential FHB. The reality is that very experienced investors I know - as well as successful FHB - will have good relationships with agents to get the agents working for them to find the ideal deal for them. In getting a deal, an agent will be giving notice at the earliest that a likely property is coming on the market. They need potential purchasers as much as vendors - it’s not rocket science.
I laugh at those on this site who claim they attend open homes and give the agent a hard time. They are naive, and are achieving nothing but simply appeasing their own sad little egos. If they were seriously in the market they should be cultivating the agent to work for them. Many properties are negotiated before being widely advertised.
So get over it, agents work to complete a deal and will work equally with both vendor and purchaser to get that.
. . . and don’t bother responding with a post that I’m an agent - or who has family that are - to show your naivety, inexperience and ignorance.
and ultimately not favouring either the vendor or purchaser.
I'm pretty comfortable agent favoured us. Back and forth several times to lift price. We were close/closing. It was agent who reckoned they wound have another $5k left in them. She was right. There were no other offers around and things weren't' looking too flash.
In the anything sells market, Id agree that agent may not be so necessary, but as things tighten I suspect they have value.
You are 100% correct about Christchurch, I saw the same thing last week where the heathcote river separated Cashmere high from Linwood high zones and the properties on the cashmere side have a queue outside at the first open home and sold the next day. the other side of the river, nothing happening, in spite of some very nice houses for sale over there.
the same demand equation applies if you are looking for tenants , thank goodness all our houses are on the right side of the river. we never need to advertise, word of mouth gets us a new tenant before the last tenant moves out.
Demonstrates division in society is developing, if not being nurtured, in these critical adolescent years. This is now spilling out to violence outside of school obviously. Kids from one school being assaulted at bus stops, shopping centres by kids from other schools and while it of course involves racism it has a fair measure of the lower having a go at the upper.
Reminds me of a book I read when I was 10. Enlightening for me. Never knew such divides existed.
The recent visits by Chinese foreign minister Wang Yi to both New Zealand and Australia in an unusual 'charm offensive' by the usually prickly Wolf Warrior needs to be seen in the light of this CPTPP push.
Happy to have engaged in a provocative yet always civil dialogue with the famous China expert Orville Schell at the Asia Society in New York on Thursday, 21st March. Hope you will enjoy it too. Link
SailGP has chosen to hold its event in a marine mammal sanctuary that was established for the protection of Hector’s dolphins. This decision to hold the event there was made in the full knowledge that protection of the dolphins from the impact of boats will be paramount.
In the 60’s surfing at Sumner the dolphins (we called the porpoises) were often to be seen and also amongst us looking for fun. Lovely little beings. Scarcely ever see them now out at the bay. Love yachting myself but between the two, would as priority unfailingly favour the side of the dolphin.
House prices surged more than 20 per cent across hundreds of mostly affordable suburbs in Perth, Brisbane, Sydney and Adelaide over the past 12 months, defying three interest rate increases, worsening affordability and soaring costs of living, data from CoreLogic shows.
How is that possible? Sure, there is more demand than supply, but people still have to be able to financially bid up these prices.
Interest rates, schminstrest rates
More than one in four residential properties purchased in New South Wales, Victoria and Queensland last year were paid for entirely with cash by older Australians, making them immune to interest rate hikes and propping up the housing market.
Was that 650k into Oz all illegal immigrants?
If you use your Oz to USA ratio then USA's 2.5m illegal immigrants in 2023 would equate to 180k illegals into Oz for that year. My search indicates that the total overstayers in Oz is only 70k and most of these are on the wrong visas. Comparing Oz immigration with USA's illegal immigration problem is apples and oranges stuff.
West Sydney, $7.55m ($8m with duty), 800 sq/m, virtually unlivable, not a developer purchase.
https://www.nine.com.au/property/homes/strathfield-knockdown-sold-for-7…
Slightly above average and completely livable .... By NZ's standards.
(Closer to $9k/sqm ... 9.3 to be more exact. Not too bad for Strathfield, New South Wales. Bit like Grey Lynn or parts of Remmers in Auckland.)
Shows who has the money these days .... Oldies.
Also shows why the OCR is a less-than-perfect tool for controlling inflation. From the article:
"Despite the higher cost of living for households, Ms Toth said the increase in the number of cash buyers suggests there is a growing number of people who are immune to the effects of rate increases by the Reserve Bank."
More than one in four residential properties purchased in New South Wales, Victoria and Queensland last year were paid for entirely with cash by older Australians, making them immune to interest rate hikes and propping up the housing market.
Suitcases of cash? Or bank transfer? If Dad is high up the chain in the Comancheros, cash purchase might be best.
According to the article, the median cash purchase was $770K. Bank data suggests that the proportion of Aussies with this much moolah in cash is low. Couple of points here:
1. You won't get much in Sydney for $770K.
2. The irony is that this is in some way bad for banks as they're losing "capital".
I'm currently visiting family in Oz (SE Queensland). At my last visit 8 months ago it was clear that rentals were getting hard to find & rents shooting up. I predicted that this would then increase property capital values - my relatives house value has increased nearly 50% in a year.
Inflation in Japan will be interesting as their population is dropping by the population of greater Wellington every single year.
The number of foreign nationals residing in Japan hit a record high of over 3.4 million in 2023, with employment-related visas seeing significant growth amid efforts to address the country's acute labor shortage.
https://english.kyodonews.net/news/2024/03/d72c3226dfb0-record-34-milli…
Consumer confidence still low but improving.
https://www.anz.co.nz/content/dam/anzconz/documents/economics-and-marke…
T.A.'s Onewoof column quotes the "Survive until '25" mantra. Unusually for him the column isn't as positive as usual. Obviously reality is hitting him right between the eyes?
Perhaps we should remind him that NZ Inc. is like an oil tanker that stops and starts and turns very slowly and '25 may not feel much better to most?
Nah. He's my little ray of sunshine and always fun to read. ;-)
Finally a senior mainstream politician has the guts to open a conversation about the lopsided nature of out current taxation system in NZ. Where the burden is falling heaviest. Also placing the subject firmly in the middle of their policy agenda for discussion and development of actual policy. As long as the rich pay their fair share in a timely manner I and many others that I know will be happy with that. Go Chippy! Showing some intestinal fortitude even though it comes with a hefty dose of political survival for himself and his party.
Agreed. Though it only serves to highlight how inept the last government was, and the current government, is.
Any political party campaigning on tax system changes would do well to run up lots of Dynamic HMTLs web pages (using only javascript and HTML/CSS) so that tax payers can calculate the effects of the changes proposed. (Anyone remember the National Party's god-awful one that calculated jack-sh$t at the last election? Talk about misleading b.s.!)
Either use cookies to capture and retain inputs as things (rates, policy, etc.) change.
Or use about 10-20 hypothetical examples like 'single income, single renter', 'double income, renter', 'single income OO family with x kids', 'double income OO family with x kids', 'retirees x 2 renters', retirees x 2 OOs', etc. Anyone outside those basic 10-20 probably already has an accountant to answer their questions - if you get my drift. ;-)
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