Canada house sales flat; China growth slows even as retail rises; India trade shrinks; Wall Street holds; Aussies worries about NZ regulation; UST 10yr yield at 2.09%; oil and gold down; NZ$1 = 67.2 USc; TWI-5 = 72

Canada house sales flat; China growth slows even as retail rises; India trade shrinks; Wall Street holds; Aussies worries about NZ regulation; UST 10yr yield at 2.09%; oil and gold down; NZ$1 = 67.2 USc; TWI-5 = 72

Here's our summary of key events overnight ;that affect New Zealand, with news of a fall in growth in the Chinese economy.

But first in the US, the latest regional factory survey, this time from New York, has interrupted the negative trend we have seen recently. They report an uptick in June, but that was from a very low May result. The overall downtrend is still in place it seems.

Canadian home sale volumes were flat in June interrupting a string of gains in the previous four months. Prices were flat too. Some have called this market 'boring', a major change from a year ago. But there are still wide regional variations with the East generally rising, and the West declining.

China’s economy officially grew 6.2% year-on-year in the second quarter this year, exactly as analysts forecast, down from 6.4% growth in the first quarter. While that rate may be the envy of the West, that is a 27 year low for them. Within that however, they claim retail sales growth rates were higher at +9.8% year-on-year and that industrial production growth picked up too in June, to +6.3%.

New home prices in China rose at their fastest pace in five months in May, complicating government efforts to keep frothy housing markets under control as it rolls out more stimulus for the slowing economy.

China's pig population is being devastated by teh ASF vurus. New official data show it well by a quarter in the past year, a huge reduction in the world's largest herd.

In India, there is a significant credit crunch underway and that is affecting their mortgage and home building industry in a major fashion.

And India is showing signs of trade stress too. Exports fell almost -10% in June from a year ago, imports were down -9%

Today, Wall Street is holding on at its record high position reached on Friday, but unmoved from these lofty heights today. Overnight European markets opened the week firmer, generally up about +0.3%. They followed Asian markets which gained a similar amount. But it was all lower yesterday in Australia (-0.7%) and New Zealand (-0.3%).

In Australia, their businesses and regulators are whining about New Zealand regulation of Australian businesses operating here, suggesting we are now "anti-Australian". They conveniently forget the outsized influence their markets and regulators have on us. First it was the RBNZ suggestion that Aussie bank shareholders should back their NZ banks with more capital. Now it is the RBNZ refusing to rubber-stamp a bad deal to sell off the NZ arm of AMP Life which in turn jeopardises the whole AMP Life sale. The Aussies still don't really understand we are a sovereign country, not a de facto Australian state.

The UST 10yr yield will open today at 2.09% and -3 bps lower than this time yesterday. Their 2-10 curve is holding on to its steeper shape, now at +26 bps, and their negative 1-5 curve is at -11 bps. The Aussie Govt 10yr is unchanged at 1.44%. The China Govt 10yr is also unchanged at 3.19%, while the NZ Govt 10 yr is now at 1.68%, a +3 bps gain.

Gold is down -US$4 overnight to US$1,412/oz.

US oil prices are falling today as the impact of the US Gulf production recovers after its storm, and the weak Chinese GDP suggests demand may be tailing off. They are now down to US$59.50/bbl. But the Brent benchmark is little changed at US$66.50.

The Kiwi dollar is stronger yet again against all the majors and now just on 67.2 USc. On the cross rates we are also firmer at 95.5 AUc. Against the euro we are up at 59.7 euro cents. That all pushes the TWI-5 up to just on 72 and a three month high.

Bitcoin is volatile again today even if it is little-changed from this time yesterday at US$10,482. In the meantime, at one point it slipped below US$10,000. The 24 hr volatility has been +/- 4.4%. 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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Seems like the Trade War is having no effect! China still growing at an excellent rate and Wall Street hitting record highs.....

Is there something fishy going on here somewhere.....

This mornings CPI data starts off a round of global inflation data. Undoubtedly any deviation to the upside from the 0.6 Q/Q consensus will be quickly dismissed by all our banks economists given their stance on where the RBNZ should be headed in the coming months. Any downside print will provide fuel for their recent surveys and force the RBNZ hand .However , as is often the case when all the economists are all in continued agreeance , an outlier number often occurs .

Hmmmmm...

The problem here is that, as of Friday July 12, our estimate of likely 12-year total returns for a conventional portfolio mix invested 60% in the S&P 500, 30% in Treasury bonds, and 10% in Treasury bills, has dropped to just 0.5%. A passive investment strategy is now closer to “all risk and no reward” than at any moment in history outside of the three weeks surrounding the 1929 market peak.

Data please.

What is the value of the S&P and t-bill yield in 2031?

Did you not note the word "estimate"? - email the author and complain if you remain unsatisfied.

"estimate" is about as good as "anecdotally"

And yet:

.... the iron law of investing is that a security is nothing but a claim on a future stream of cash flows. Valuation is a crucial determinant of long-term returns. The higher the price an investor pays for those cash flows today, the lower the long-term rate of return earned on the investment..

The corollary is also true. The lower the long-term rate of return demanded by investors, the higher the price moves today. So clearly, changes in investors' attitudes toward risk will strongly affect short-term returns. If investors become more willing to take market risk, it is equivalent to saying that they are demanding a smaller risk premium on stocks (that is, a lower long-term rate of return). Prices rise as a result. Now, the fact that current stock prices are higher also implies that future long-term returns will be lower, but that's part of the deal. Link

Would you buy benchmark NZ Government 10 yr notes yielding 1.625 % when annual inflation is currently 1.7%?

Or is it that we don't really understand we are in fact an Australian (banking) colony?
The Aussies still don't really understand we are a sovereign country, not a de facto Australian state.

The Chinese are printing yuan like there's no tomorrow. Perhaps there isn't?

Buy yuan, get yuan free.

Outstanding.