Here's our summary of key events overnight that affect New Zealand, with news monetary policy officials are bracing to do more to counteract growing slowdown signals.
In the US, the number of Americans filing applications for unemployment benefits unexpectedly rose last week, which adds to concerns that their labour market is losing steam after job growth slowed sharply in May.
Trade flows are now slowing markedly. Imports at the two large Southern California ports fell sharply in May, with inbound container handling down -6.3%. Exports fell -7.4%. This comes at a time when they are usually building up for the Summer peak.
Most economists in the US now say that the US Fed will cut rates soon, and reverse their normalisation plans. They see a worsening economic outlook brought on by the trade mess.
And across the Pacific, China's officials are pushing ahead with slowdown responses too. China's official press is suggesting that they are readying looser credit conditions, including relaxing bank capital reserve requirements, as they hunker down for a long trade war.
Foreign investment levels into China grew strongly in May according to official data, up +8.5% from May 2018. But this level of growth belies sharp changes, with American enthusiasm, previously a big investor, suddenly waning.
And staying in China, there is mounting evidence that underground factories are producing increasing amounts of atmosphere-damaging CFCs, so much so that they are having a global impact. Chinese regulators seem unwilling to address the issue.
In Hong Kong, demonstrators there used the encrypted services of a messaging app to communicate. Now China has attacked that service and taken it down, frustrated that it could not eavesdrop of of the crowd opposing its push to establish a rendition law in the Territory.
The Australian jobless rate has come in as expected at 5.1%. But their participation rate is being talked up as its highest ever - at 65.9%. By Kiwi standards that is low as ours is 70.4%. The number of new jobs created in May was an impressive +42,300 - until you realise the number of new permanent new jobs was only +2,400 with the rest being part time positions.
Meanwhile, the iron ore price has surged to over US$100/tonne. That is its highest level since April 2014 and represents a surge of more than +50% so far this year.
The UST 10yr yield is sharply lower and now just on 2.10%. Their 2-10 curve is now at +26 bps and their negative 1-5 curve is now at -18 bps. The Aussie Govt 10yr is at 1.41% and down -2 bps. The China Govt 10yr is down -1 bp to 3.29%, while the NZ Govt 10 yr is down -3 bps, now at 1.71%.
And we should note that late yesterday local swap rates sank, down across the curve by -2 or -3 bps. The two year swap rate actually ended up below 1.4% taking it down -8 bps since the beginning of June, and now down -27 bps since the beginning of May. Breaching 1.4% on the way down in of itself of itself doesn't signal anything, but it does highlight just how far this relentless rate drop has gone. And of course it is a record low.
Gold is up +US$9 today, now just on US$1,342/oz.
US oil prices have jumped sharply today, up about -US$1.50/bbl. They are now just under US$52.50/bbl. The Brent benchmark is under US$61.50/bbl. A tanker attack in the Persian Gulf - just as the Japanese prime minister was on an official visit to Iran - is the trigger. Both sides are accusing the other of responsibility.
The Kiwi dollar is a tad softer this morning and is now at 65.7 USc. On the cross rates we are a little firmer at 95 AUc. Against the euro we are at 58.3 euro cents. That leaves the TWI-5 little-changed at 70.6.
Bitcoin is a little firmer today, now at US$8,205, up less than +1% since this time yesterday. The bitcoin rate is charted in the exchange rate set below.
The easiest place to stay up with event risk today is by following our Economic Calendar here ».
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12 Comments
The two year swap rate actually ended up below 1.4% taking it down -8 bps since the beginning of June, and now down -27 bps since the beginning of May.
Milton Friedman claimed already in the 1960s:
“As an empirical matter, low interest rates are a sign that monetary policy has been tight – in the sense that the quantity of money has grown slowly; high interest rates are a sign that monetary policy has been easy-in the sense that the quantity of money has grown rapidly. The broadest facts of experience run in precisely the opposite direction from that which the financial community and academic economists have all generally taken for granted”
It's good to sing and dance! but what I'd really like is data for the rest of NZ as that's where my investments are, the majority of NZ does NOT live in Auckland, you seem to have early data, good on you, I'm interested in the rest of NZ, can you please tell me the HPI for the rest of NZ? Thanks
They were in Wellington.
Bought in 2009 after the GFC.
Sold them in November/December.
More importantly, since selling I've been invested in high quality Investment Grade Bonds (know what they are?) which have done far better than property.
I read and understand economic news, rather than take my advice from property seminars and real estate mags.
Does this help?
http://gdplive.net/Dashboard
The regional tab is brilliant. Hat tip to David Chaston.
https://www.resilience.org/stories/2019-05-30/the-future-of-food-gettin…
bit more important than 'house prices', methinks.....
Scary, China is stuffing up the ozone layer it seems:
Since the Montreal Protocol, global CFC-11 emissions had shown a steady downward curve from a peak in 1993. The United Nations Environment Programme (UNEP) had estimated that the ozone layer would return to normal by the middle of this century.
The 2018 paper thus drew international attention. Joseph DiGangi, a senior adviser at the International Persistent Organic Pollutants Elimination Network (IPEN), told Caixin at the time, “This study is very important. The production of CFC-11 is a violation of international law, and the Montreal Protocol has been described as one of the most successful international environmental conventions.”
Montzka estimates the acceleration in use could seriously undermine the protocol and set ozone repair back by nearly a decade.
Durwood Zaelke, founder and President of the Institute for Governance & Sustainable Development and an expert on the Montreal Protocol, said after the publication of the 2018 paper: “Somebody’s cheating. These are not accidental emissions, CFC-11 production is being carried out in secret.”
https://www.outline.com/RptMpu
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