US wholesale trade slips; China's trade rises along with surplus with the US; Wall Street cheers; airtravel growth rises; iron ore price enters bear market; UST 10yr yield at 1.73%; oil and gold up; NZ$1 = 64.9 USc; TWI-5 = 70

US wholesale trade slips; China's trade rises along with surplus with the US; Wall Street cheers; airtravel growth rises; iron ore price enters bear market; UST 10yr yield at 1.73%; oil and gold up; NZ$1 = 64.9 USc; TWI-5 = 70

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Here's our summary of key events overnight that affect New Zealand, with news China is proving quite a bit more resilient than its American foe anticipated, and Wall Street seems relieved.

Firstly in the US, data for their wholesale trade was marginally lower in June from the same month a year ago. This undershot analysts expectations of a small gain. At least wholesale inventories aren't growing either.

But even as the trade war with the US rages on, the Chinese trade balance for July rose unexpectedly to surplus of +US$45.1 bln. Surprisingly, their exports rose +3.3% compared with July 2018 while imports were down more than -5% on the same basis. They are reporting their sensitive merchandise trade surplus with the US at +US$28 bln in July alone. That was only down from just under +US$30 bln in June. In their trade with New Zealand, they are reporting they are in a rising deficit of -US$615 mln, up from -$607 mln in June.

The Chinese trade data has calmed financial markets. Yesterday, Shanghai was up +0.9%, Hong Kong up +0.5% and Tokyo up +0.4%. China's economy seems to be more of a global demand engine than assumed by many, and Wall Street seems to see that as a good thing, now up +1.6% in trading so far today. European markets were up similarly.

Yesterday we reported a sharpish falloff in airfreight volumes. But today we can update the international passenger traffic data and that shows rising growth. In the year to June, passenger travel rose +5.4% from the same month in 2018, although the data for the Asia/Pacific region was only +4.0%. The region with the weakest growth is North America.

In commodities trade, the price of iron ore has suddenly entered a bear market, down now -20% from its high just four weeks ago.

The UST 10yr yield is firmer today and now at 1.73%. Their 2-10 curve is just over +11 bps while their negative 1-5 curve is now at -25 bps. The Aussie Govt 10yr has recovered +4 bps to be at 0.98%. The China Govt 10yr is lower by -2 bps at 3.05%, as is the NZ Govt 10 yr which is down another -6 bps at 1.13%.

Gold is up another +US$4 today to US$1,506.

US oil prices are firmer today on the Chinese trade data. They are up +US$1 and now just on US$52.50/bbl. The Brent benchmark is now on US$57.50.

The Kiwi dollar starts today firmer at 64.9 USc. On the cross rates we are down slightly at 95.2 AUc. Against the euro we are firmer at 57.9 euro cents. That sets the TWI-5 at just on 70.

Bitcoin is now at US$11,593 and a small -1.2 slip from 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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14 Comments

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Looks like everything is fine again.. except that gold keeps continues to rise

Seems the world stocks can climb on some reasonable data from China shows the sentiment based foundations of these stock markets.

The slow melt up of the everything bubble continues.

China's economy seems to be more of a global demand engine than assumed by many, and Wall Street seems to see that as a good thing, now up +1.6% in trading so far today. European markets were up similarly.

Hmmmm..not much GDP expansion.
It's Not The Yuan Stability, It's A "Dramatic" Surge In Activity On Goldman's Buyback Desk

Companies Use Borrowed Billions to Buy Back Stock, Not to Invest

The NZ worker is going to have to buckle in. "And it’s eye-wateringly expensive to cut net emissions to zero. Although many politicians casually promise this should be the goal, few dare ask how much it will cost. A report commissioned by the New Zealand government found that reaching net zero by 2050 would cost that country more than its entire current annual national budget every year — and that’s a best-case scenario, with costs more realistically doubling to 32% of GDP."
https://nypost.com/2019/08/02/pseudo-scientific-hysteria-is-the-wrong-an...

You're a real one trick pony, never seen you post about anything other than trying to suggest that reducing fossil fuel usage is an evil conspiracy. Certainly supports the idea you are nothing more than a paid shill.

A quote from the article "" We can (and should) invest a lot more. It would be far cheaper than current policies and more likely to succeed. "" that doesn't sound like an evil conspiracy.
The same point about sending more on research was made by Jim Fynn's 'No hiding Place' and he is certainly not a climate warming denier.

Would you rather I post about house prices? I could care less about oil use Praggers. More concerning is a minority of climate zealots who want to send our economy/climate back to the little ice age - and post GFC politicians, desperate to remain relevant/caring, jumping on the bandwagon. As Lapun highlights the best strategy is more R & D today - for all sorts of reasons, not just inter glacial warming.

"“The interesting thing about the Green New Deal,” he said, “is it wasn’t originally a climate thing at all.” Ricketts greeted this startling notion with an attentive poker face. “Do you guys think of it as a climate thing?” Chakrabarti continued. “Because we really think of it as a how-do-you-change-the-entire-economy thing.”
https://www.washingtonpost.com/news/magazine/wp/2019/07/10/feature/how-s...

Praggers - here's an anti fossil post from the other day to lay your conspiracy theories to rest. It is plain sad that you think that people who have a different world view to you are somehow part of a conspiracy.

" by profile | 8th Jun 19, 4:57pm
What problem? The answer is in the first paragraph - "In today’s energy mix, hydroelectric power ± nuclear power have values > 50."
http://euanmearns.com/eroei-for-beginners/
Or in your second link: "When France decided to go big on nuclear, they built 56 reactors in 15 years."

" -Had Germany spent $580 billion on nuclear instead of renewables, and the fossil plant upgrades and grid expansions they require, it would have had enough energy to both replace all fossil fuels and biomass in its electricity sector and replace all of the petroleum it uses for cars and light trucks.

-Had California spent an estimated $100 billion on nuclear instead of on wind and solar, it would have had enough energy to replace all fossil fuels in its in-state electricity mix."
https://www.forbes.com/sites/michaelshellenberger/2018/09/11/had-they-be...

Hopeless attitude.

I found it hard to disagree with anything he said. Main points being alarmism is self-defeating - we should be spending far more on research and not be making promises that either cannot or will not be met.

China is proving quite a bit more resilient than its American foe anticipated...

Indeed!!!!
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US oil prices are firmer today on the Chinese trade data. They are up +US$1 and now just on US$52.50/bbl. The Brent benchmark is now on US$57.50.

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NZ Govt 10 yr which is down another -6 bps at 1.13%.

Will NZ Government issue century bonds so speculators can borrow more from the future to realise capital gains today? - Graphic evidence
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David, how reliable are is the trade data from China? Is it potentially being "massaged" by the CCP or can we rely on it?