Here's our summary of key economic events overnight that affect New Zealand, with news China's fury with an independent Australia is a worrying development for New Zealand.
But first, American jobless claims came in at just over +1.3 mln in data for last week, a little less than was expected. That takes the total number of unemployed American on these benefits to just over 18 mln. A majority only have one month or so left with this support so markets are turning their attention to the impending social cliff. It's going to be tough.
Also facing a tough immediate outlook are investors. The Wall Street earnings season unofficially begins next week (Wednesday) with results from some of the biggest American banks. Analysts expect S&P500 companies overall to report a -40% drop in year-over-year earnings for the second quarter, when the coronavirus likely took its biggest toll on companies. Earnings fell -13% in the first quarter. The resurgence of the virus and the growing re-imposition of lockdowns and stay-at-home orders will have investors worried the trend will be extended and the expected and priced-in rebound won't actually come in 2020.
Not every sector is in stress however. Prices for forestry logs for products like sawn timber and plywood have soared because of booming demand from home builders making up for lost time, a DIY explosion sparked by stay-at-home orders, and a surge by restaurants and bars to install outdoor seating areas. Prices are back near their pre-lockdown highs and are taking competitive pressure of our logs to China.
The situation extends to Canada as well as housing starts are running faster than expected.
China's consumer inflation rate is rising again and ending a four month set of consecutively lower levels. It was up +2.5% in June from a year ago. In the food category, beef prices were up +18% in a year, lamb prices up +11%. This was a slower rate of increase for beef from May, but a faster one for lamb. For most other categories of consumer prices there was an easing.
And there are growing signs of excessive investment in China that is not matched by real demand. The office vacancy rate in Beijing climbed above 15% in the second quarter of the year, the highest in a decade as new construction far outpaced what could be leased. This is emblematic of China's "investment-driven" stimulus approach.
And we should note there is an election in Singapore today. It will no doubt be the usual 'fixed' affair with the ruling party stifling dissent for another easy win.
In Australia, May data shows that new loan commitments for housing fell sharply, down almost -12%. This was the largest fall in the history of the series, driven by strong falls in the value of loan commitments for housing in New South Wales and Victoria. The value of new loan commitments for owner occupier housing fell -10%, while investor housing fell more than -15%. The number of owner occupier first home buyer loan commitments fell -9.3%.
And Australia has announced that its citizens should avoid being in Hong Kong, over the fear of arbitrary detention and State hostage taking. At the same time, Australia is offering a welcome mat with skilled and graduate visas to be extended for people from Hong Kong. Australia has cancelled its extradition treaty with the once autonomous city. Beijing is reacting with fury. (We may need Jian Yang and Haymond Ho to earn their keep - and explain to Beijing that New Zealand is independent and won't be cowed either. They do represent New Zealand, right? What chance?)
Equity markets are lower in a general risk-off tone that pervades today. In New York, the S&P500 is down -0.2% in mid-afternoon trade. They follow Europe that was generally down a bit more, averaging -1% although London closed down -1.8%. Yesterday, Shanghai rose yet again, up another +1.4% and so far this week it is up a startling +9.4% on top of last week's +5.8%. Beijing came back from their Dragon Boat Festival with firm instructions to the 'home team' to juice up this market - and they have delivered. There is something of a 'rebound frenzy' underway in China now. Hong Kong was up a much more restrained +0.3% yesterday, and Tokyo was up +0.4%. The ASX200 chimed in with its own +0.6% rise, but definitely bring up the rear was the NZX50 Capital Index which was down -2.3% as the energy companies took a pounding on the Tiwai Point closure news.
The latest compilation of COVID-19 data is here. The global tally is 12,118,700 and that is up +226,000 since this time yesterday. Global deaths reported now exceed 551,000 (+6000). And there is a new virus to worry about.
A quarter of all reported cases globally are in the US, which is up +67,500 overnight to 3,188,000. US deaths now exceed 135,300. The number of active infections in the US is now up +32,300 to 1,645,400. Both infections and deaths are on the upswing again.
In Australia, there have been 9056 cases reported, another +173 since this time yesterday, and still concentrated in Melbourne which is now in lockdown. Their death count is unchanged at 106 and 10 people are now in ICU (+2). Their recovery rate has slipped back further to under 84%. There are now 1378 active cases in Australia (up +85 in a day).
The UST 10yr yield is a lot softer today, now just on 0.61% and falling. That is a -5 bps retreat on the market risk-off shift. Their 2-10 curve is down to +45 bps. Their 1-5 curve is also soft at +12 bps, and their 3m-10yr curve even softer at just under +50 bps. The Aussie Govt 10yr yield is down -2 bps at 0.87%. The China Govt 10yr is up again, up another +6 bps at 3.18%. And the NZ Govt 10 yr yield is also up, up by +4 bps to 1.02%.
The gold price has slipped by -US$10 today to US$1,801/oz.
Oil prices are also lower today, down by a bit more than -US$1. They are now just over US$39.50/bbl in the US and the international price is just over US$42/bbl.
But the Kiwi dollar is little-changed at just on 65.7 USc. On the cross rates we are firmer however at 94.4 AUc. Against the euro we are still hanging in at 58.1 euro cents. That means our TWI-5 is still at 70.3.
The bitcoin price softened overnight, down -2.1% to US$9,220. 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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132 Comments
Better the Royal family than an appointment from the Government of the day. Just look at the US Supreme Court to see how that might go depending on who is in power at the expiry of someone's term.
Think about having John Key (or Swarbrick/Genter) as the titular Head of State, with Jacinda as PM? Monarchy any day ahead of a political horse and pony show like that.
It’s blatant China is becoming extremely aggressive compared to pre-COVID. This is now a different country trying to “save face” (avoid humiliation, rally the troops, solidify patriotism). The world has to respond differently. But of course “New Zealand is just a small country, let’s keep our mouth shut, we have an economy to save, China is our saviour, we must never utter a word about China‘s transgressions”. Yeah sure, let’s see how being China’s puppet works out for us! Good plan.
Like every country we have our percentage of selfish fools. Assume they have fled home because they can & NZ is a lot safer than where they were. They are told the rules that apply to that. But nonetheless, they just want to go out and endanger other NZrs. Go figure
The point is that Labour has managed this badly, the country has a loss of faith in their ability to manage. Hence more than a few Kiwi's feel they need to monitor them instead of just blind faith that they have it under control.
You may choose to believe that Labour can manage effectively but their history shows there is more than a litttle reason to be concerned.
Labour hasn't managed this badly, though - and the country in general does not believe they have managed this badly. Have they managed it absolutely perfectly every step of the way? No. But that would be nigh on impossible to do. And comparatively speaking, it's hard to find a country who has managed things better.
"We are prepared" "I will continue to hug people" Jacinda.. A week later they are forced to LD because they totally underestimated the situation. Dont be fooled by the PR machine spin.
If people had faith in Labour management they wouldn't feel the need to comment about it.
I agree that they underestimated the situation. As I said, they did not do everything perfectly. But pretty much every country underestimated the situation. It's easy to look back in hindsight and say this, that and the other thing should have been done earlier or differently. In general though - and definitely comparatively speaking - the government has managed things well.
"If people had faith in Labour management they wouldn't feel the need to comment about it." - So you're making claims about whether 'people' (in general, I assume) have faith in Labour management based on what anonymous strangers do and do not comment on in the comments section of a niche website? That seems a very unusual method.
Yes, I do read the comments on here - you seem to have missed the point. The comments on a niche website are not a reliable guide to what the general population thinks about the performance of a particular government. We do actually have opinion polls about that. With regards to how the government managed things at the beginning, 84% of New Zealanders approved of how the government managed the response. Of course a lot has happened since that poll was taken, but support for the government - and for Ardern as preferred prime minister - is still pretty high. I've included links below.
https://thespinoff.co.nz/politics/08-04-2020/almost-90-of-new-zealander…
https://en.wikipedia.org/wiki/Opinion_polling_for_the_2020_New_Zealand_…
Why? In this context they are just reporting poll numbers from Colmar Brunton, UMR etc. You can check the original polls by clicking on the links provided. I'm sure you can find other sources reporting the exact same polls if you try. Regardless of your political leanings, I don't see any reason to doubt the poll numbers.
They need to keep spinning the Covid-19 outcome because they have nothing else to electioneer on. But that's politics and expected. What I find less understandable is how gullible the supporters are here, on a finance site of all places. Mind you, I see a lot of new members so I suspect this site has been identified as a cost free channel for leftist party activists to spin their propoganda. Be smart out there people.
Fair enough I agree with a lot of your posts.
What I do not see is a central Govt that can manage, left or right. I am against putting everything in Wellington run by a few people. Labour is close to being in bed with China as much as National, centralizing could exert more control from the likes of them.
Can't really disagree, Kezza. My view of modern politics, and this has been demonstrated in spades in the last few days, is that it is more about power and privilege than serving the people. They will say and do anything to get into power and then say and do anything to stay there. This is why mavericks are so important.
I think people notice comments from people they disagree with more than those they agree with. I've noticed a bunch of new posters from both sides, and it is becoming more political as we get closer to the election.
Brace yourself, 2 and a bit months to go, its only going to get worse.
To allow that was brain dead. Labour continually screws up the simple stuff. It undermines the public's perception of their ability to manage the big stuff. Some will say it is the feet on the ground that screwed it up but not to hold people to account is the leadership style that allows that in the first place.
Day by day is a bit overkill, 4 groups would be enough. Just arrived (Not yet tested), Rest of first week, Start of 2nd week, Passed 2nd test and about to be released. With particular attention to keeping the about to be released lot away from everybody else, which could be encouraged by telling them that if they mix with the other groups they get to join that group.. ie, they don't get released and have to get another test and more time locked up.
Well, they are able to stop people moving around, but the appropriate people ie police are the only ones who can enforce such restrictions. Unfortunately, having such people at the various quarantine facilities means fewer on the street. We have to be careful to operate according to the law or the whole thing could become completely chaotic.
Damned if you do, damned if you bloody don't
Yes it is. But silence, at least as much as it can be maintained, may work in our favour and help us to remain neutral. But there will come a time when there is the need for some some push back on China. As to DCs call for Raymond Huo and Jian Yang to explain our independence to China - what are the chances? I would like to think Mr Huo would do that as he has seen the excesses of the revolutionary fervour, and its damaging impacts first hand, But Mr Yang? I think he would more likely tell the CCP that NZ remains vulnerable. However i would hope that he also tells them that if pushed, we will jump towards our cultural past and not towards a new Asian future.
They are nothing more than lobbyists for the CP
I would like questions asked in the upcoming debates about each parties views on Hong Kong, investigations into the coronavirus otbreak, human rights abuses of Uighurs, the independance of Taiwan and whether Jiang and Ho share their views.
Of course you would never get an answer because Adern and Muller are to weak and always looking to pander to China
One must remember that China is not only trying to dictate Australia but also Canada, UK, US, Europe besides its 14 neighbours, so the only way for NZ to stay neutral is by accepting China as tgeir master and follow their dictat which national party and its supporters will be too happy to do for money = Rock Star Economy and who cares about siding with a rouge state run by dictator.
MortgageBelt
Re: "Getting more difficult for NZ to stay ‘neutral’ on China issues."
I hope that we can keep an open and balanced mind on the growing tensions and geopolitical issues with China.
I have posted on Chinese expansion of influence (such as in Kiribati and the Pacific) and I am fully aware of human rights issues in China.
However, lets not forget that this is simply not one-sided as your comment suggests.
Last month we had reports of show of force by US carriers in the South China Sea - I wonder how US would react to Chinese navy conducting a show of force off Venice Beach.
I also read comments that we can't trust Xi Jinping - well, I find it very difficult to trust the lying, manipulating and idiotic disinfectant Trump.
As there are human rights issues in China - equally all is not rosy in the US as recent events have shown.
Those that live in glasshouses . . . .
Rick
Same US that tried invading Cuba . . . Same CIA that has been heavily involved in propping up dictators and corruption . . . Same US that cold shouldered us because we wouldn’t accept nuclear armed or powered warships . . . Same US that lied and invaded Iraq . . . Same US . . .
Rick
Never said I thought that China's behaviour is appropriate and never have thought that USA actions especially in SE Asia (especially Laos and Cambodia) and Middle East have been appropriate.
Just need to ensure one doesn't become very much one-eyed which seems to be the case.
Maybe China is currently feeling constrained by unfair restricted limitations of spheres of influence being place on it by US and the West - just like Japan in the late thirties.
Maybe rather than being one-eye and accusing, we need to look at the issue in a balanced way and maybe recognise that China may have some validity in some of its concerns.
However, clearly all of China's behaviours - especially related to human rights are not appropriate - but they are not alone in that.
Two eyes are indeed always necessary, and historical examples of imperialism, race-based nationalism and mistreatment of other undesirables abound. The USA has rightly received abundant criticism for its own imperialism.
How do you think the West is unfairly restricting spheres of influence? The International Court ruling against China's made up claims re the Spratley Islands? Suggesting that ethnic cleansing is not a great idea?
The examples you posted of a past empire misbehaving don't really go in to unfair treatment of China, and seem to imply excusing them doing the same.
Horrific US unemployment claims
https://wolfstreet.com/2020/07/09/unemployment-claims-hit-new-record-32…
That's not the correct way to look at it. NZ isn't set up like the States. Mayors / Governors etc in the States had a part to play and failed. The Democrat Mayor of NY is a shining example of how both parties failed.
The US spouts off that China did not control this but it beyond reasonable doubt that the US knew exactally what was coming from it's extensive spy and satellite systems. It was clear from the start that it was bad and they all failed, not one person.
Too late, cannot be stopped. You cannot control all the people in all of this country. Once it was in and domestic travel continued inter state, it was up,up and away. Remember, as someone posted here ages ago, all the protesters, encouraged by Trump, we have a god given right to go out and get infected.
Or the vastly greater number of BLM protesters encouraged by the Dem's and the inactivity of Democratic mayors as well but somehow that somehow is swept under the carpet.
The US is fragmented and neither side is effectual or willing to work with the other. They have made their own bed collectively.
Lyndon B. Johnson, Rupert Murdoch and the like seem to embody a common exploitation of weaponised information and sowing of division for political gain:
“I’ll tell you what’s at the bottom of it,” he said. “If you can convince the lowest white man he’s better than the best colored man, he won’t notice you’re picking his pocket. Hell, give him somebody to look down on, and he’ll empty his pockets for you.”
I wholeheartedly applaud Australia for being outspoken about China. They are exposing the blackmailing, bullying and highly untrustworthy communists that they really are.
New Zealand should be very carefully questioning where we want to go with this relationship. If we want to protect our sovereignty and feel free to stand up for our values and speak our mind we simply can’t get cosier with China. That has become blatantly apparent in this disgusting Aussie-China scrap.
Just think of how many of us Kiwis and Aussies flew through Hong Kong en-route to Europe (as I did) last year. Now Aussies run the risk of being detained on that journey, just like those poor Canadians were, for no good reason other than to “send a message”. Truly frightening!
Pity those of us expressing concern at the machinations of the CCP all those years ago were not listened to. I will grant that under previous leadership and even the early days of the present one, China did appear to be opening up, but many of us held a great deal of concern at the involvement of their government in likely all of the companies and possibly individuals buying up companies and real estate around the world.
Trade was fine, infiltration into every aspect of business and advancing vertical integration was concerning, even when the Crafar Farms were sold. It was as plain as the nose on your face that was a "foot in the door" exercise, given the OTT money that was shelled out for them.
Can't say there is any real pleasure in saying "We told you so".
Just another opinion, of course.
Round about late March, we entered a Financial FantasyLand in which all the sins and excesses of rampant financialization were going to be painlessly washed away. The Fed would simply "print" as many trillions as needed to make everyone whole. Since it doesn't cost the Fed anything to digitally print endless trillions, this solution is completely, totally free.
But with the advent of Reporting Season, you are now leaving FantasyLand. The losses will be taken by somebody, and that somebody will be you.
(CH Smith)
Is this cherry picking of region/ house to spin a news of booming Housing market as psychologically it creates FOMO for FHB in other parts of NZ, also where it may not be the case.
https://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=12…
We celebrate effectively having Co-vid under control and being community free.
However, to maintain this state necessitates closed borders, quarantine costs and considerable economic impacts and this status is very fragile and at very high risk.
Given the ongoing events in Australia, the chaos in the US, the booming infection rates in other countries such as India, Co-vid is not going away anytime soon so these controls and expenses are going to be with us for very much the long term.
The hope for Australian bubble is now pushed out and now even possibly uncertain. Borders being open globally are seemingly indefinitely or until there is a vaccine widely available or the virus life cycle passes.
This is the new norm well, well beyond this year and possibly next.
I agree that travel bubbles are looking unlikely and the timetable on borders opening up seems to get pushed further and further out. I said to my ageing parents a couple of days ago that they may as well use the money they had set aside for overseas travel on other things to make themselves happy. I really cannot see them and others like them of that age (late 70s) being able to travel any time soon - a combination of the virus situation and exacerbated by their age.
I saw a bunch of data job advertisements posted by Brisbane-based employers. Strangely, they included NZ permanent residents in the non-temporary cohort of potential applicants.
A bit of online searching and I found that Aussie immigration is willing to fast-track work visas for those on NZ PR as long as they fall under certain skill shortage criteria. Usually, genuinely skilled migrants would wait 5 years after becoming NZ residents before they crossed the ditch.
This should be a wake up call for NZ employers to try and retain more skilled workers or risk losing them permanently in the absence of migration.
Australia is famously known as the US's 炮灰 in China.
炮灰 means ashes from firing a cannon literally.
You may understand it as the AUS (as well as others five eyes) is willingly to be used to defame and destabilise China. The outcome for the AUS will be an escalation in tension and cut off in trade with China.
But, the ultimate come is that much of reduced export from the AUS to China will eventually be substituted by the US once it suddenly turn favourably with China.
So, 炮灰 is really the sucker get nothing but damage from things that are not even its business.
LoL...
This guy lives here because he thinks the West is better than his old country. No doubt he actually hates his old country but to save face pretends he loves it. His old country now has to try and stop Hong Kong people leaving of their own accord. They effectively have to build a big wall to keep the masses in, just like the CCCP which also failed miserably. North Korea also has to keep people in by force. These communist states are that great that the government has to keep the walls shut or the masses would leave in droves. This bully state wants to expand its territory so even more people come under its control. Not for me thanks. The west should cut ties with this evil regime immediately. Lets see how great these tough little bully boys in the CCP are then.
Glitzy. Or hilarious satire from a clever troll. Xing is a humorous daily treat on int.co. And nostalgia inducing - his or her writing style takes me back decades to when we were regularly treated in the media to comedically crude Soviet and Chinese propaganda statements on world events. This bourgeois capitalist roading reactionary can still recite a few party lines from those days.
@David Chaston
You’re sort of breaking the fourth wall re the two Chinese MPs. No place for such speculative bias in news stories/commentaries.
How can you possibly know what they relate back to China, if anything?
Sorry for the criticism, I admire interest.co.nz and contribute via press patron.
That’s not my point. I’m simply saying that news/commentary should not contain speculative bias. Opinion is fine, but it should be based on fact or a high level of probability. There Is no proof, or demonstratable probability, that the two MPs put Chinese interests ahead of New Zealand’s.
https://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=12347051
Jian's retiring from politics. Will be interesting to see what he does next.
Pietro, as a fellow press patron I technically agree with you on one hand but on the other I rather enjoy Davids pithy asides. He fires them at all sides of the political spectrum and I think his iconic from the heart writing style and periodic acerbic throwaway lines are two of the features that help to make this site one of the best around. If I were to be nitpicking it'd be the boringly predicable sledging of the odious moron Trump, he's just too obviously an easy target.
Short memory syndrome. It was Woodhouse who blew the whistle on the bungling coalition management of quarantine facilities after two infected women were allowed out, forcing the govt to clean up its mess. If not for his intervention more travelling super spreaders would have been let loose and we'd now be dealing with disaster.
That would have come out in the wash regardless of Woodhouse. The guy has lost any integrity he had by making up the homeless guy story and now not being forthcoming with the private information he was leaked. Muller has been found telling porkies too, stating today "I could have made myself more clearer" when asked to comment if anyone else in his party had been leaked patient details.
Seems you have the short memory.
The government already knew about the breach.
Woodhouse withheld the information that they had met up with 'good samaritans' when they got lost (actually the people who loaned them the car) from the MoH and the government to use it for maximum political gain by dropping it during question time. He deliberately withheld important information about carriers of an infectious disease.
His 'intervention' didn't help anything, he deliberately hindered, and it could in fact have been his specific actions that resulted in community spread of the virus.
Ambrose Evans-Pritchard
Britain should not quake before Xi Jinping: China has already peaked and faces economic stagnation
https://www.telegraph.co.uk/business/2020/07/09/britain-should-not-quak…
Bye Bye Jian Yang
https://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=12347051
You won't be missed
Reading the posts here, I see a great deal of righteous indignation over China's ever tightening grip on HK.
Of course, I too am sorry to see what is happening, but some context is appropriate. HK's status prior to 1997 only came about following China's defeat in the Opium Wars. I am not going to give anyone a history lesson, but this was one of the more shameful episodes of the British Empire. Under normal circumstances, HK would have remained an integral part of China.
How should we react now? Are we prepared to put our principles ahead of our economy particularly right now in the middle of an economic crisis? That's a big call for the government to make.
Link. You are correct, having abolished slavery Britain continued a profoundly evil opium enslavement of china that triggered a 200 year decline which still influences chinese attitudes today. But it is ancient history. HK has been an independent territory since 1842 not an integral part of china. The same historical association argument could be made about numerous sovereign countries.
I think Aussie should rather have dealt with the Chinese more behind the scenes instead of having a public spat.
Its going to affect us too .......... the Chinese will retaliate and possibly not buy aluminium or bauxite from Rio Tinto (Aus) , thus further impacting on Tiwhai
Its too late now , China has threatened to retaliate , and it will do so .
Its going to get awfully messy , and Australia is way too dependent on sales of Iron ore , bauxite and coal to China , not to mention beef . mutton , cotton, wheat and barley .
This will deepen any recession in Aussie , forcing commodity prices south
And China can buy it commodities from elsewhere or simply use its stockpiles or do without .
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