Here's our summary of key economic events overnight that affect New Zealand, with news the Fed governors are clearly worried about the inflation threat from the new tariff taxes.
The US Fed has kept rates unchanged in their decision earlier today, holding their core policy rate at 4.25%. The projection dot plot suggested that they have two more -25 bps rate cuts pencilled in for 2025 and one more for 2026. They also downgraded their expectations on growth in the US economy, dropping the 2025 estimate from +1.7% to +1.4%, and trimming their forecast for 2026 to +1.6%. Fed boss Powell said these growth downgrades will come as higher tariffs hinder the US economy and put upward pressure on US inflation.
Meanwhile US initial jobless claims eased lower to 236,000 but the reduction is all accounted for by seasonal effects. There are now 1.82 mln people on these benefits, almost +100,000 more than this time last year.
US mortgage applications fell last week despite the benchmark mortgage interest rate easing lower at the same time.
Also falling and rather sharply, were new housing starts in May. They fell almost -10% from April to be -1% lower than the same month a year ago.
Across the Pacific, Japanese machinery orders fell more than -9% in April, a sharp reversal from March’s +13% surge. This was the weakest reading since April 2020, but about what was expected. Still, they remain +6.6% higher than year-ago levels. Meanwhile Japanese exports fell in May after seven consecutive months of expansion. A retreat was expected and what they got wasn't a sharp as those expectations. However, imports slumped -7.7% from a year ago and more than expected.
Meanwhile, Japanese car exports to the US fell in volume terms by almost -4% in May, but in value terms they were down almost -25%, suggesting that at the moment, Japanese carmakers are absorbing some of the new US tariffs to maintain their market share.
The iron ore price is under pressure, unable to get out of its new lower range, and confirming the overall slowdown in the global economy.
Meanwhile, the silver price has pushed up to a new all-time high.
The UST 10yr yield is now at 4.40%, and up +1 bp from yesterday, clawing back earlier falls after the Fed commentary. The key 2-10 yield curve is now at +43 bps. Their 1-5 curve is now inverted by -14 bps. And their 3 mth-10yr curve still positive at +18 bps. The Australian 10 year bond yield starts today at 4.23% and down -1 bp from yesterday. The China 10 year bond rate is unchanged at 1.64%. The NZ Government 10 year bond rate starts today at 4.60% and down -1 bp from yesterday.
Wall Street is easing back today after the Fed with the S&P500 unchanged after being higher earlier. Overnight, European markets were mostly lower by about -0.3%, except London which was little-changed. Yesterday, Tokyo closed up +0.9%, Hong Kong was down -1.1% and Shanghai was unchanged again. Singapore ended down -0.3% however. The ASX200 ended its Wednesday trade down -0.1% while the NZX50 also booked a -0.1% retreat.
The price of gold will start today at US$3,386/oz, and down -US$3 from yesterday.
American oil prices are still in the higher zone, unchanged from yesterday at just on US$74.50/bbl while the international Brent price is now just over US$76/bbl.
The Kiwi dollar is now just over 60.2 USc, unchanged from yesterday. The USD firmed slightly after the Fed decision. Against the Aussie we are down -30 bps at 92.7 AUc. Against the euro we are up +10 bps at 52.5 euro cents. That all means our TWI-5 starts today at on 68.2 and unchanged from yesterday.
The bitcoin price starts today at US$104,247 and up +0.3% from yesterday. Volatility over the past 24 hours has been low at just under +/-0.9%.
Tomorrow is a public holiday in New Zealand, Matariki, and this briefing will take a break. And remember, it is a holiday in the US tomorrow, Juneteenth. But we will be back for the Weekend Briefing on Saturday.
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17 Comments
Happy Matariki David. Two New Year's in a year! Is that a chance to take another run at a resolution to live better?
I also note June 21 is the Winter solstice so the count down to summer begins. While we are busy complaining how cold it is, it won't be long and we'll be complaining how hot it is!
Better by what yardstick?
That's a personal choice and measure PDK. How's your health?
No, it isn't. That is the narrative we've been coerced into, but it isn't the only one, nor has it been the longest-running. nor is it maintainable in the medium/long term. It could, for instance, be 'better for future generations'. Or 'better for just me, just now'.
I look after it - but well aware entropy is winning! @70, I still swim 80 lengths of the pool most days, walk a mountain once a week and maintain a forest.
Yesterday you made a comment about Iran not being innocent. Why do you think they're in the position they're in? Sykes/Picot, Balfour, Churchill/Fisher, back to D'Arcy even - their whole narrative has been the West wanting the oil under them. Same as Venezuela. The West buys-off those it thinks it has to buy off; resentment mounts, compounded by base-line culture differences (as you put it, better is a personal/cultural choice). The West embargoes the nationalised output, bankrupting the country, the locals demand change, the West organises a coup - or invades or props up another tyrant (Shah, Hussein) and re-accesses the oil. Intruders are usually the guilty party; colonialism is enclosure by any other name (it's happening now via this Govt here - Bishop is going to force ratepayers across the board, to enrich a small cohort - relative divestment of the poor is still an enclosure, still a form of colonialism).
Have a good day
We have a close friend who is Iranian, living here, and he's recently married a iranian lady and brought her to NZ. She has told us that they were better off under the Shah than the current mob, despite his treatment of his political enemies. but that's the point, it's all politics. Worse - it's politics mixed with religion. The current Iranian regime are, despite what they are saying working to develop nuclear weapons. They've hired Chinese and Pakistani scientists to help train their own people, and they've funded and equipped the Houthis in Yemen, Hamas in Gaza, Hezbollah in Lebanon, supported Abbas in Syria and so on. They're not innocent by any measure.
We can talk about history forever, but the reality is NOW. What is your solution, because no one, literally NO ONE in power or influence is listening to the message you peddle?
NO ONE in power or influence is listening to the message you peddle?
I'd think they never will murray, as they are the elite, benefitting from keeping their relative populace dulled and voting for the status quo while selling the dream that one day they could be in the rich kids club. They have sufficient resources to plunder the rest while the world burns, and maintain their standard of living at the cost of others (in many ways we all do but not to the extreme). Turkeys don't vote for christmas, and power is seldom relinquished if more is able to be obtained vie already attained power and influence.
Shortest day is the best day. It's the one at the bottom of the curve. The trend has turned.
My son was explainng to me that it was his best day. I thought, the DNA is shining through.
House prices to be '20% lower in 2030s than 2021' - forecast
https://www.rnz.co.nz/news/business/564547/house-prices-to-be-20-percen…
Good to see some progress in the cost of living crisis.
AKL and WGTN are already down 20% from the peak so i guess he is forecasting flat from here ...
Still lots of stock to clear in AKL
Rejoice! And bring on land tax, capital gains tax, gift tax, and inheritance tax.
Make houses homes again.
"The trouble with socialists is that they eventually run out of other peoples money"
Somewhat agree, however you only need one of these - an asset tax on all assets. And conditional agreement subject to a nil increase in tax revenues as a consequence. i.e a spread of the burden, not a tax increase.
Asset taxes rely on valuations. Valuations are disputable, ask any insurance claimant. Values are estimates and fluctuate. Is there then to be a claw back if realisation is below the value assessed for tax. The enforcement would require the IRD to compile, maintain and audit a dossier of all assets, property targeted. That would require a massive bureaucracy in itself a spawn an industry of accountants, lawyers and valuers all of its own and all of which adds a whole burden of costs on every household. Worryingly too, it would also require a profound change to one of our foundation stone laws. Ever since the Magna Carta the Crown has been precluded from intervening in the legitimately owned property of its citizens. Such an introduction would revert to the like of the Doomsday Book of William the first.
As anyone with more than $50k in non-Australasian shares will tell you, we already have an asset tax. But so far we have decided to limit it to a subset of productive investments, while leaving non-productive investments untaxed.
Admittedly it's much easier to value a share portfolio than a property portfolio, let alone an art collection or boat, but regardless. Asset taxing is something that we already do.
Make houses homes again
https://nz.news.yahoo.com/tourism-protests-europe-explained-180602675.h…
Great slogan applicable much of the Western world over.
Another form of rentierism, where houses and apartments are purely for profit vs housing the local people. Good on them. For anyone who'se been to overcrowded locations such as Venice, Amsterdam etc it can be suffocating and ruins the experience of such wonderful places.
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