Here's our summary of key events overnight that affect New Zealand, with news China's economy may be slowing but foreign direct investment there is rising.
But first in the US, their President and the head of the Federal Reserve had a sit-down meeting that has been described as cordial. But nothing untoward seems to have come out of the meeting.
China has signaled that it is unlikely to agree on the 'phase one' trade deal unless the Americans roll back tariffs. Expectations of a deal are now slimming.
Direct foreign investment in China rose +7.4% in October, and that comes after a +4.9% rise in September and a much larger rise in the June quarter. Foreign firms are investing in China and at a faster rate. And the data for China's firms investing offshore has turned positive again, after six of the eight previous quarters to March 2019 were declines.
And staying in China, their central bank unexpectedly trimmed a key interbank lending rate yesterday, the first cut of the rate in more than four years and a signal that Beijing is ready to act to shore up confidence following a string of weaker economic data. Markets now expect a prime loan rate cut of -5 bps soon to 4.2%.
They also said it will “increase counter-cyclical adjustment” to weight against downward pressure on their economy, and noted that inflation expectations are rising.
The WTO says that global flows of goods across borders are on course to grow at the weakest pace since the GFC as fallout from the US-China trade war and rising tariffs continue to crimp both exports and imports.
The UST 10yr yield is down -3 bps today and now at 1.81%. Their 2-10 curve is positive at +22 bps. Their 1-5 curve is weaker for the week at +11 bps. Their 3m-10yr curve is also less positive +24 bps. The Aussie Govt 10yr is unchanged at 1.16%. The China Govt 10yr is now at 3.23% and a -4 bps overnight retreat. The NZ Govt 10 yr is now at 1.41%, unchanged.
Gold is up +US$5 to US$1,473/oz.
US oil prices are lower today to just under US$57/bbl. The Brent benchmark is just over US$62/bbl. Both represent falls of more than -US$1/bbl.
The Kiwi dollar is holding at 64.1 USc. On the cross rates we are now just under 94 AUc. Against the euro we are at 57.8 euro cents. That leaves the TWI-5 at just on 69.2.
Bitcoin is softer this morning at US$8,405 and an overnight dip of -1.6%. 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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16 Comments
The New Zealand... population is about to hit 5 million people 30-years earlier than projected in 2004 (when) It forecast the population to hit 5.05 million people by 2050
As Australia has realised, we need to import more people to keep the working-age population younger to support our economy. ( Now let me think that through....)
https://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=12…
The Aussies have comparatively higher vetting standards on their permanent migration programme.
For example, international students need to commit themselves to longer degree programmes to qualify for post-study visas, maximum cap on intake by migrant occupation, migrants in medical professions need to practice in regional Australia for a few years before applying for permanent residency, 5k fast-tracked permanent intake slots reserved for high-earning migrants (those earning upwards of 149k a year), etc.
We need to come to terms with the fact that no party in NZ has the political will to either improve the skill-mix of incoming migrants or stem the inflow out of the fear of choking out our low-value economy.
Except TOP which state this as one of their key priorities... https://www.top.org.nz/smarter_immigration_policy
No, there is absolutely no benefit to people for having money in the bank. Plus the GFC taught them that fundamentally the banks simply cannot be trusted, and nor can the Government when it comes to banking problems, so they are putting their money elsewhere. Perhaps a little blind to the risks, as they are not fully aware of the true state of the economy apparently. But never the less what do you do with savings when you can't trust the institutions built to hold them?
I wonder when debt got out of control? Perhaps when the banking system was deregulated in the late 70's/early 80's across the Western World - NZ included?
https://tinyurl.com/w4wptsw
Before 1980 – banks lent into the right places that resulted in GDP growth (business and industry, creating new products and services in the economy) After 1980 – banks lent into the wrong places that don’t result in GDP growth (real estate and financial speculation).
https://www.telegraph.co.uk/business/2019/11/18/next-crash-will-hit-eur…
That comment fits in with David's comment at the weekend re $2 worth of debt now required to produce $1 worth of Growth.
"What happened in 1979?" Milton Friedman and the 'Free Market' economy and Governments deregulating. Actually Friedman spanned a couple of decades at least, but fundamentally the "experts" managed to snow the Pollies into believing that they and their colleagues were unimpeachable as to ethics and morals, whiter than snow and had everybody's interests at heart. so the leashes were removed and they promptly started running amok! Greed is much more rewarding than integrity and ethics. The whole deregulation think about banks was part of a bigger program I think.
How nuanced a view do we have of China.
These guys saying China numbers are pretty much all made up, and most china business sits atop a property play.
https://youtu.be/Qc3ZFuUHXsU
Ozzie from before
https://youtu.be/_AvNT3vyzr0
Question for the group.
List the 3 NZ businesses that have fortuned selling retail products to China market.
I'm calling infant powder rigged, doesn't count.
Maybe honey, but got issues of fakery.
Ozzie now.
Here is the Channel9 effort from last night.
https://youtu.be/BzCqQKnF9Oo
Why not look it up for yourself? https://www.stuff.co.nz/business/industries/110754264/china-trade-by-th…
Infant powder is rigged?? What planet are you living on?
When I was living in China I saw NZ milk powder, "fresh" NZ milk (usually from NZ milk powder) and NZ infant formula being sold all over the place. Certainly not fake...
Rigged by the blocking of many brands. Run by the CCP. Reducing the number of brands able to be sold through legit channels reduced to few.
Agreed much of the volume came off the supermarket shelf in Australia. The milk powder can needs be accompanied by the Australia supermarket docket.
Re the trigger, the fakery is about the honey.
Although there is a market for used international brand powder cans.
Who had control of the powdered milk that there was then sold as fluid.
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