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Here's our summary of key events overnight that affect New Zealand, with news of markets unimpressed by the latest data.
But first today, the latest dairy auction has delivered something of a positive surprise. Prices are up +2.7% in US dollar terms, slightly less in New Zealand dollar terms. There have been good gains for Wholemilk Powers and Skimmilk Powders. The derivative markets weren't expecting this. And these gains have come despite a strengthening of the Kiwi dollar. Since the recent high point in May, dairy prices had dropped back by almost -9%. But today's rise has pegged that fall back to just -6%. In of itself this improvement won't change any farmgate milk payout price, but it is the first rise in the last five auctions and will be a welcome respite. To mean anything however, it needs to be sustained - for another five auctions or so.
In the US, the June retail sales results came in officially up +3.4% year-on-year and at a similar pace as the previous month. But 'seasonal adjustment' seemed to help it; on an actual basis the June-19-on-June-18 increase was only +1.8% and barely above their inflation rate. This is not a result that has impressed analysts.
Meanwhile, American industrial production rose only +1.3% in June from the same quarter a year ago. Manufacturing was only up +0.4% on the same basis. Both were outcomes lower than expected.
At the World Trade Organisation, the US has lost a case involving trade restrictions on products sold by Chinese State Owned Enterprises.
In China, the collapse of a large private bond trader is causing waves in their financial system.
In Germany, sentiment fell further in their latest, influential ZEW survey.
In Britain, all their leading accounting firms have failed to hit quality targets set by their regulator for auditing company books - and for the second year in a row, with Grant Thornton and PwC singled out to join KPMG under tougher supervision.
In Australia, their Government has released a report into banking regulator APRA - and that shows it has similar culture and conduct issues as the banks it regulates. Few in banking who deal with APRA will be surprised by this finding. But the main impact will be on how it now engages with the Aussie superannuation industry, with whom it had a cosy, hands off approach and that is now likely to change.
The UST 10yr yield will open today at 2.12% and +3 bps higher than this time yesterday. Their 2-10 curve is holding on to its steeper shape, unchanged at +26 bps, and their negative 1-5 curve is unchanged at -11 bps. The Aussie Govt 10yr is down -2 bps at 1.42%. The China Govt 10yr is also unchanged again at 3.19%, while the NZ Govt 10 yr is now at 1.63%, a -5 bps retreat.
Gold is down -US$6 overnight to US$1,407/oz.
US oil prices are falling sharply today as the weak US retail sales suggests demand may have peaked. They are now down more than -US$2 to US$57.50/bbl. But the Brent benchmark is down a similar amount at US$64.50.
The Kiwi dollar is still strong but has slipped back just a bit to just on 67 USc. On the cross rates we are also holding high at 95.5 AUc. Against the euro we are up at 59.8 euro cents. That leaves the TWI-5 up at just on 72 and unchanged from yesterday.
Bitcoin has fallen sharply from this time yesterday, now at US$9,680, and -US$800 net drop or -7.7% in 24 hours. The 24 hr volatility has been +/- 8.3%. 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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22 Comments
Coming to a cafe near you. "So much coffee is now being produced in the world that global prices are crashing, according to new data.
A record seasonal surplus of beans being produced pushed down coffee futures to their lowest levels in more than a decade during April, with a rise in demand for caffeinated drinks failing to stem the plummeting prices.
In Brazil, the world’s largest producer of coffee, a surge in production of arabica and robusta beans, as well as a weak currency, has led to a dramatic oversupply of the commodity within the world market, putting a downward pressure on prices. "
https://www.cityam.com/grounded-oversupply-of-coffee-beans-sends-global…
Believe it or not , the milk in your cafe coffee is the major expense , the locally produced milk .... the coffee itself , imported all the way from far flung parts of the globe adds little ... and yet they charge almost as much for an Americano as for a milky white Latte .
https://kunstler.com/clusterfuck-nation/what-looms-behind/
Kinda puts our bleating farmers in perspective.
Woohoo - cheaper coffee!
I won't be holding my breath though - the rise from $3-$5+ per cup was driven on a whole bunch of so called coffee shortages - I can't imagine that prices will drop (at all) based on a seeming oversupply.
Perhaps it's just the cynic in me.
Lets start a poll as to which of the likely excuses will flow - higher milk prices? higher minimum wage? cost of electricity? water? global warming?
https://www.youtube.com/watch?v=0akBdQa55b4. Be advised coarse language.
Clinton really started the disarray. He certainly stymied Gore’s chances. The world would be quite different if he hadn’t, according to our PM Clark, and you have to agree with that. Before Clinton, Carter was seen to be ineffectual. After him while Obama was a great orator and principled it would appear, he never quite got the big tick from the all important great white marshmallows of the electorate. Then there was candidate Clinton conceited , complacent and careless (alliteration day today.) It is interesting though how the GOP gets ascendency. Bush junior with a highly suspect service record was able to easily belittle and discredit the highly decorated Kerry, on that very subject. Strangely Trump did the same to McCain, but both Republicans. Seems to me though, overall that the fuses, for the implosion of the donkeys, were set by the Clintons.
Had the misfortune to phone INZ yesterday about a very minor matter. They have perfected a trick of promising to call you back and then two hours later you get a call but have to listen to all manner of random points for maybe five minutes until they repeat - if you are lucky eventually someone actually talks to you. In my case I received advice that was contradicted on the very form they recommended.
There is no excuse for INZ to be bureaucratic since they can set their prices without parliaments approval so staffing ought to be simple. Surely NZ businesses are losing potential immigrants with talents that are wanted in other countries and we are being left with the unskilled desperate who are willing to out wait NZ's worst bureaucracy.
The Democrats are one of the most undemocratic political parties on the planet. Just because they're trendy lefties they think they can get away with saying & doing anything they want. Well, the Big Bad Don won't stand for it, I tell you. American politics is well known as a blood sport. It's physically worse in South America than it is North America but you get my point. I wouldn't be surprised if it come to blows next year. Perhaps even with firearms.
Re immigrants, this is the ''disaster of our age'' but you wouldn't know that by watching televsion. From the 1,000+ people a day arriving at the American border, to the 3-4 million Eastern Europeans migrating to western Europe, to the Indo-China waters where it is again in the millions per year (but we never hear about) to the northern flight of hundreds of thousands of Africans across the Mediterranean & into southern Europe, illegal (forced) migration, usually into civilised countries like the west, catching out & over-whelming just about every system imaginable inside the recipient nations (Greece & Italy to name just two) is I believe, today's biggest issue on planet Earth. Not that you'd get that reading the newspapers or listening to the radio. Yes the price off coffee is important, as is the price of chocolate, but seriously guys & gals, forced migration is up there.
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