Here's our summary of key events overnight that affect New Zealand, with news the Reserve Bank of Australia has cut its official rate again.
But first, today's dairy auction has been a generally tame affair with the overall price fall less than expected. Prices this time are down -0.5% in US dollars with WMP unchanged and SMP up +3.2%. Other products didn't far as well however. And this time the currency has gone against us, meaning the small US dollar price drop is magnified in New Zealand dollars, down -2.7%. There is however little in this auction to change farmgate milk payout forecasts, even if it is the fourth decline in a row, but don't forget that since early May the cumulative retreat is now more than -8%.
Equity markets have been lacklustre over the past 24 hours, wobbling between a gain and a loss. On Wall Street the S&P500 is virtually unchanged, in no mood to 'celebrate' the record 121 growth run the US economy which started with the election of President Obama in the depths of the GFC. In that time the S&P500 has risen about +300%. The rise from just prior to the GFP is about +200%. But some are now saying the next US recession will start in 2020.
Not helping have been downbeat comments from the UK central bank chief.
At the EU, after some fraught negotiations, it has been agreed that the current IMF boss Christine Lagarde will replace the retiring Mario Draghi has the head of the European Central Bank. At the same time, it was announced that Jean-Claude Juncker will hand over the EU Presidency to the current German defense minister, Ursula Von der Leyen, and Angela Merkel protege.
In China, analysts are watching official numbers think there is a concerted and major effort to push-back on a growing wave of capital flight, one that is being masked in that official data.
The iron ore price is rising sharply yet again. An official Australian report is forecasting rather a steep drop in iron ore export volumes in the next year (see page 26), and along with Brazilian mine woes, and expanding demand in China, this price may go even higher yet. China's supply of steel to India, which is struggling with its own domestic capacity, is a big part of the demand story.
In Australia, their Reserve Bank went ahead with another -25 bps rate cut yesterday, as markets expected. That takes their official rate down to just 1%. Now the flow-through will be watched closely. Savers beware. House prices are likely to get a new burst if banks can get the lending out the door under the new constraints. Most analysts think that this is the last cut by them in the current cycle even though the RBA boss said they would go lower if needed. But the RBA bosses are renewing their call on the Federal government to do more - actually do something - to assist monetary policy support of their economy.
Most Aussie banks are passing on all or most of the cut. Some are also offering a term deposit 'special' - of 2%.
The UST 10yr yield is falling and now at 1.98%, down -5 bps from the same time yesterday. Their 2-10 curve is now at +22 bps and their negative 1-5 curve is at -18 bps. The Aussie Govt 10yr is at 1.33% and down -2 bps overnight. The China Govt 10yr is down -3 bps to 3.23%, while the NZ Govt 10 yr is down -2 bps, now at 1.59%.
Gold has jumped back, recovering much of yesterday's drop, up +US$19 overnight to US$1,405/oz.
US oil prices are sharply lower today as demand fears grow. They are now under US$57/bbl The Brent benchmark is down too at under US$63/bbl.
The Kiwi dollar is unchanged against the US dollar and now at 66.8 USc. On the cross rates we are marginally softer at 95.6 AUc. Against the euro we are also unchanged at 59.1 euro cents. That leaves the TWI-5 at 71.5.
Bitcoin is firmer today, up almost +8% from this time yesterday to US$10,820. The bitcoin rate is charted in the exchange rate set below.
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28 Comments
30th Anniversary of the UN's ten years to act on climate change. You have to admire their ability to set up a sustainable gravy train. "A senior U.N. environmental official says entire nations could be wiped off the face of the Earth by rising sea levels if the global warming trend is not reversed by the year 2000."
https://apnews.com/bd45c372caf118ec99964ea547880cd0
"Earth's surface gained 115,000 km2 of water and 173,000 km2 of land over the past 30 years, including 20,135 km2 of water and 33,700 km2 of land in coastal areas."
Can we have our carbon tax back now?
https://www.nature.com/articles/nclimate3111
Battinz, here some articles for you:
'Sinking' Pacific nation is getting bigger: study
https://phys.org/news/2018-02-pacific-nation-bigger.html
New Science: 89% Of The Globe’s Islands – And 100% Of Large Islands – Have Stable Or Growing Coasts
https://notrickszone.com/2019/01/17/new-science-89-of-the-globes-island…
Sea Level Study: Most ‘Vulnerable’ Pacific Islands GROWING
https://principia-scientific.org/sea-level-study-most-vulnerable-pacifi…
Battinz you changed the subject, profile was talking about rising sea-levels, not about CO2.
CO2 has nothing to do with sea-levels, a V8 even less.
Anyway if you are worried acidification, since you believe in AGW, warmer water can hold less CO2 in solution, therefore it lessens the problem.
However I don't believe in the AGW theory, and so I am worried about acidification.
Yeah, thanks Sci-hub - other than a few 10's of km2 created in Dubai and Singapore, it is amazing the scale of increase in coastal land globally in just 30 years.
The UN claim in 1989 is real doozy "The most conservative scientific estimate that the Earth’s temperature will rise 1 to 7 degrees in the next 30 years, said Brown." Even the bottom "most conservative" estimate was triple that observed. That hypothesis has been busted.
Not just communism, government intervention in general. Their job is to right the rules to keep the game fair, not to be umpire and field their own team. Government intervention leads to oligarchy (eg communism is a form of oligarchy). Republics seem to be destined for oligarchy, constitutional monarchies somewhat less so, absolute monarchies are oligarchies.
The UN has to watch it isn't make redundant. "You can train an AI to fake UN speeches in just 13 hours ...They used a readily available language model that had been trained on text from Wikipedia and fine-tuned it on all the speeches given by political leaders at the UN General Assembly from 1970 to 2015. Thirteen hours and $7.80 later (spent on cloud computing resources), their model was spitting out realistic speeches on a wide variety of sensitive and high-stakes topics from nuclear disarmament to refugees."
https://www.technologyreview.com/f/613645/ai-fake-news-deepfakes-misinf…
Also on Nature.com, steeper reductions of greenhouse gases required to slow warming, temperature analysis suggests:
we are going Japanese, but without the productivity.
Japanese bank stocks have gotten crushed: the TOPIX Bank Index has dropped 41% from July 2015. The broader Japanese stock market – despite the BOJ’s purchases of equity ETFs – has gone nowhere over this period, with The Nikkei 225 Index up just 5% from July 2015, and still down 44% from its peak in 1989.
https://wolfstreet.com/2019/07/02/qe-party-update-bank-of-japan-stealth…
FRANKFURT—Subzero interest rates in Europe and Japan are “net positives” for the global economy, International Monetary Fund chief Christine Lagarde said Tuesday, though she warned that the side effects of unorthodox central-bank policies should be closely monitored.
I don't think we need to go Japanese as long as we produce essential stuff that cannot be made in any factory anywhere. Our main danger is political, that we take on board daft ideas from overseas. You know, things like foreign capital is wonderful; bringing in 70,000 new people every year leads to prosperity; mining is bad; farming is bad; taxes are good; cars are bad. That sort of thing. Sigh.
Hi David - sorry to hijack this - but how come it doesn’t seem possible to make comments on the Opinion piece on GDP that appeared today?
https://www.interest.co.nz/opinion/100497/new-zealand’s-focus-wellbeing-rather-gdp-may-have-best-intentions-if-gdp-does-not
GDP omits measurement of the real world. In that sense, it lies, in the same way that counting your poker winnings in the dining-car doesn't help when the bridge ahead of your train has been washed out. Choosing to believe in it as the Holy Grail, is what has brought humanity to the global impasse we now face.
Good investigative journalism could disprove the Lomborg piece - just a thought.......
At the EU, after some fraught negotiations, it has been agreed that the current IMF boss Christine Lagarde will replace the retiring Mario Draghi has the head of the European Central Bank.
Hmmmm....
Who better to be ECB President than a convicted criminal? https://t.co/MNa390OUoW
— Rudy Havenstein, Smiling Politely (@RudyHavenstein) July 2, 2019
When is someone going to point out the bloody obvious , the world economy is suffering from delfation ?
The Financial Times hinted at it on 18 June
The Asia Times called it , the same day
The UK Telegraph has run articles since the beginning of the year , but has had to pieces one on 6 June and again a few days ago on 30 June
https://www.interest.co.nz/news/58938/economist-nicole-foss-talks-amand…
don't say you weren't warned
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