Here's our summary of key events overnight that affect New Zealand, with news there is a spreading of trade disputes, reopening old feuds.
In the US, job openings fell in May, pulled down by declines in the construction and transportation industries, potentially flagging a slowdown in employment growth in the months ahead. Job openings are a measure of labour demand and they fell by -49,000 to 7.3 million in May. Their hiring rate fell by -266,000.
North of the border, Canadian housing starts surged to the highest level in more than a year in June, led by construction of multiple-family dwellings such as apartments and townhouses. Builders started work on an annualized 245,657 units last month, a jump of +25% from May. But from the same month a year ago, the rise was minor, emphasising just how big the dip has been in 2019. One of the interesting regional aspects is that Vancouver housing starts are surging even more, up +72% year-on-year even as the volume of resales of existing houses stays in the doldrums.
In a new analysis, it is being revealed that the world’s debt to China grew tenfold between 2000 and 2017, from US$500 bln to US$5 tln, with 80% of emerging nations receiving Chinese funding as debt. And half of all Chinese overseas funding is outside data captured by World Bank and IMF, raising concerns over transparency.
On the sidelines of the China-US trade war, another one is breaking out and it is taking a pretty nasty turn. Japan and South Korea are finding it easy to kindle past enmities, and these are being expressed most easily in trade and tariff retaliations. Samsung is Japan's target of choice. Now that the US has lost its credibility as a peacemaker, it is perhaps not surprising that this cultural animus is resurfacing.
Talks are about to restart on the US-China dispute. But it is hard to see any likely progress; China is demanding the US withdraw support for Taiwan; the US is demanding China buy their farm products before talks start.
In Australia, the closely-watched NAB business sentiment survey shows the post election bounce of confidence was short-lived. The survey results for June suggest that the business sector has lost significant momentum over the past year or so. Business confidence largely unwound the bounce in May and while business conditions rose in the month, they remain below average. The recent run of results also suggest that the economy was unlikely to record a significant pickup in growth in Q2.
Standard & Poors has today changed its ratings outlook on the four pillar banks from 'negative' to 'stable' as a result of the easing of APRA's capital-raising requirements. There has been no change in the core credit ratings at this time.
Aussie banks will be turning their backs on central Melbourne apartments. CoreLogic is reporting that up to a third of dwellings there are being resold at a loss and the loss-rate is rising.
The UST 10yr yield is now at 2.06%. Their 2-10 curve is still at +16 bps and their negative 1-5 curve iat -16 bps. The Aussie Govt 10yr is unchanged at 1.33%. The China Govt 10yr is down a marginal -1 bp to 3.19%, while the NZ Govt 10 yr is down -1 bp and now at 1.56%.
Gold is little-changed overnight, up just +US$2 to US$1,398/oz.
US oil prices are little-changed again today. They are now just on US$57.50/bbl. The Brent benchmark is also little-changed at US$64.
The Kiwi dollar is softer at just above 66 USc. On the cross rates we are marginally firmer at 95.4 AUc. Against the euro we have dipped to 58.9 euro cents. That leaves the TWI-5 little-changed at just on 71.1.
Bitcoin is back up today and now at US$12,537, another +5.5% gain from this time yesterday. That means this price is now at just on NZ$19,000 and you have to go back to January 2018 for when it was last at this level. Volatility in the past 24 hours has been +/- 4%. The bitcoin rate is charted in the exchange rate set below.
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16 Comments
Thanks David
Heavy leverage does seem to be forcing a number of sales in Oz as the switch from interest only to repayment mortgages forces the hands of sellers. But in NZ Ashley Church is allowed to encourage buyers to take on interest only loans on Prime Time TV on none other than the ASB sponsored 7 Sharp show.
https://www.abc.net.au/news/2019-07-08/corelogic-property-pain-and-gain…
No doubt that thoughts and prayers will be offered in compensation.
I didn't realise until yesterday that those selling at a loss had climbed to around 32% in Melbourne with a lot being sold after 2-3 years. When I've been searching Auckland mortgagee sales there are quite a few sold at a loss.
The ones not sold at a loss are even more unusual (where data is available) and those have been bought many years ago at a reasonable price. One outlier that was interesting was a house bought about 18-20 years ago for $75,000. I would struggle to see how someone could not afford to pay the mortgage on that one, but they have, mostly likely, been wiped out by consumer debt.
Maybe they were made aware of the banks "mortgage top-up service". Basically, your mortgage should always sit around 80% of the market value of the property as an Owner Occupier, or 40% for an investor. To achieve this, as house prices go up you recycle the additional equity into cash and spend it on a car, renovations or use it as a deposit for another property. That's why we have LTV ratios.
Vancouver - New Home Sales Drop 90% in May
https://betterdwelling.com/city/vancouver/greater-vancouver-new-home-sa…
Greater Vancouver sales hit 19 year low. Inventory 25% higher. Sounds like a great time to have a building boom.
https://betterdwelling.com/city/vancouver/greater-vancouver-real-estate…
And half of all Chinese overseas funding is outside data captured by World Bank and IMF, raising concerns over transparency.
The function of the IMF and World Bank was essentially to make other countries borrow in dollars, not in their own currencies, and to make sure that if they could not pay their dollar-denominated debts, they had to impose austerity on the domestic economy – while subsidizing their import and export sectors and protecting foreign investors, creditors and client oligarchies from loss. Link
Standard & Poors has today changed its ratings outlook on the four pillar banks from 'negative' to 'stable' as a result of the easing of APRA's capital-raising requirements.
Can anyone explain how bank regulation easing total capital by fewer percentage points of risk weighted assets is "stable" than not?
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