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US sentiment high and rising; Japanese retail sales hold; EU confidence at 21 year high; Aussie pandemic outbreak stabilises; UST 10yr at 1.48%; gold soft and oil unchanged; NZ$1 = 69.9 USc; TWI-5 = 72.5

US sentiment high and rising; Japanese retail sales hold; EU confidence at 21 year high; Aussie pandemic outbreak stabilises; UST 10yr at 1.48%; gold soft and oil unchanged; NZ$1 = 69.9 USc; TWI-5 = 72.5
30th Jun 21, 7:19am by David Chaston

Here's our summary of key economic events overnight that affect New Zealand with news consumer confidence is high in the US, the EU and even China, underpinning good levels of economic activity.

American consumer sentiment as measured by the US Conference Board rose impressively in their June survey. It is now at its highest level since the start of the pandemic and back to 2018 levels. The proportion of consumers planning to purchase houses, cars, and major appliances all rose, a sign that consumer spending will continue to support economic growth in the short-term. Vacation intentions also rose, reflecting a continued increase in spending on services.

The Case-Shiller National Home Price Index jumped almost 15% in the year that ended in April. Intense competition for a limited number of homes in their market pushed home-price growth to the highest annual rate since this index began 34 years ago.

American manufacturing is about to get a good boost with major airline United ordering 200 Boeing 737 Max jets and 70 Airbus A321neo planes, a deal valued at about US$15 bln.

Japanese retail sales data for May was released yesterday and it came in better than expected - which means it did not fall.

In Hong Kong, the courts and judiciary are about to be folded into the Chinese system where they are expected to be CPC agents.

In the EU, overall sentiment between both the consumer and business sectors reached a 21 year high in June, at levels far above their long term averages. The gains were widespread, notably in their services sector, and notably for employment. Germany led the way, but of the six largest EU economies, only Spain was a laggard.

The German consumer inflation rate came in at a modest +2.3% for June, similar to May, and not yet reflecting the much sharper +4.2% input price increases its producers were facing in Q1.

In Australia, it appears that the NSW Delta pandemic outbreak isn't expanding significantly and that promises relief from the near-nationwide partial lockdown in the foreseeable future. One thing it has done however is unite the states against the Federal Government's handling of their vaccine rollout.

Wall Street has opened higher but has given up most of that rise and is now only +0.1% up on the S&P500. Overnight European markets closed up about +0.3% on average although Frankfurt was up a strong +0.9%. Yesterday both Tokyo closed down a sharp -0.8%. Hong Kong and Shanghai both closed down -0.9%. The ASX200 closed down a minor -0.1% but the NZX50 Capital Index was up +0.3% in the end.

The UST 10yr yield starts today at 1.48% and unchanged. The US 2-10 rate curve is little-changed at +1.23 bps. Their 1-5 curve is also unchanged at +82 bps, while their 3m-10 year curve is still at +144 bps. The Australian Govt ten year benchmark rate starts today at 1.49% and a -7 bps fall. The China Govt ten year bond is unchanged at 3.11%. And the New Zealand Govt ten year is now at 1.79% and down -3 bps.

The price of gold starts at US$1762/oz which is down -US$18/oz from this time yesterday. Silver has fallen relatively more, down -1.3%.

Oil prices are holding today. In the US they are still at just over US$72.50/bbl, while the international Brent price is still just over US$74/bbl. OPEC is meeting but can't agree on what their future policies should be.

The Kiwi dollar opens today a full -½c weaker and back at 69.9 USc. Against the Australian dollar we are unchanged at 93.1 AUc. Against the euro we are soft too at 58.8 euro cents. That means our TWI-5 starts today softer at 72.5 and back where we were a week ago.

The bitcoin price is now at US$36,326 and up a strong +6.3% from this time yesterday. Volatility in the past 24 hours has remained high at +/- 3.9%.

The easiest place to stay up with event risk today is by following our Economic Calendar here ».

Daily exchange rates

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Source: RBNZ
Source: RBNZ
Source: RBNZ
Source: RBNZ
Source: RBNZ
Source: RBNZ
Source: RBNZ
Source: CoinDesk

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59 Comments

by  Ezy  |  30th Jun 21, 7:28am 1624994918

What a day. A sea of green across the market cap 7 day and Michael J Burry who predicted Bitcoin to crash further after a big head and shoulders pattern has deleted his Twitter account. https://coin360.com/?period=7d

Bitcoin is the Wreckit Ralph of reckons.

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by  Ezy  |  30th Jun 21, 7:46am 1624995996

And for the record, I include myself in this. BTC could dump again tomorrow. Regardless I'll HODL on. The point I've learned is, technical analysis on btc charts is worthless. But the long term fundamentals are inevitable. We are living through history.

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by  J.C.  |  30th Jun 21, 9:47am 1625003222

There you go Ezy. Nothing like a bit of positive price action to trigger your ultra orthodox. Emotional sentiment is all part of the game.

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by  Ezy  |  30th Jun 21, 10:18am 1625005087

Sorry to disappoint you JC but bull or bear market, ultra-orthodox is my only gear. Aside from all the reckons, my BTC purchase history tells that exact story. Bitcoin is inevitable, and I've never said anything different. I'll continue stacking whether the price is $3 or $3M, because blockchain is in the process of disintermediating every single market and financial instrument we've ever known. To do that, requires a new global reserve standard based on an immutable set of rules though. That's the utility BTC provides, and that won't change unless suddenly there is more than 21M BTC in existence secured by anything other than proof of work.

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by  realterms  |  30th Jun 21, 10:43am 1625006619

> ultra-orthodox is my only gear

We've noticed. Noisier on the ups though.

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by  Mrs The Point  |  30th Jun 21, 11:48am 1625010496

Crows like a rooster at dawn, then disappears like one that's had its head detached when there is a selloff.

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by  Galloleous  |  30th Jun 21, 11:58am 1625011080

Well thats a load of shit, we are always here to counter misinformation and try and educate anyone who actually would like to do a bit of research :)

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by  Wuhan ER  |  30th Jun 21, 12:02pm 1625011349

Inshallah

Allahu Akbar

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by  Ezy  |  30th Jun 21, 12:20pm 1625012446

by Mrs The Point | 20th May 21, 11:26am

Oh right, did you wake up now that BTC is down 40%? So your idea to avoid extinction is to endlessly add processing power and hence energy consumption to verifying the blockchain?

https://www.interest.co.nz/news/110482/markets-go-risk-bitcoin-and-comm…

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by  Mrs The Point  |  30th Jun 21, 2:31pm 1625020307

by Ezy | 20th May 21, 3:33pm

Let's resume this conversation on the 20th of June when BTC is heading for a new ATH. Bookmark it. Only one of us will be right by then.

Hahahahaha, that didn't age well.

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by  rastus1  |  30th Jun 21, 3:38pm 1625024320

Why is BTC inevitable? It is one of 10,000 cryptos I believe? Easily duplicated..and of course easily attacked via regulation and so forth.
But perhaps you are talking inevitable as in it will continue on being traded amongst a small group and used for the odd bit of dark web activity?

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by  Galloleous  |  30th Jun 21, 4:15pm 1625026543

Do you actually want an educated answer with references? Or are you trolling?
Your second line clearly shows you have not done any research for yourself at any time in the last 4 years...so i'm not sure a lengthly reply would be a worth while investment on my part.

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by  Mrs The Point  |  30th Jun 21, 4:20pm 1625026830

Good for you. Keep your superiority complex to yourself.

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by  Ezy  |  30th Jun 21, 5:10pm 1625029824

Bitcoin has allowed me to send all my offspring to one of the most expensive schools in NZ, liberating them from the woeful state of the public education system. If that amounts to a superiority complex, then don't mind if I do.

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by  Mrs The Point  |  30th Jun 21, 8:20pm 1625041248

Shhh, no one cares. Keep it to yourself. Big-noting is so Bourgeoisie.

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by  northman46  |  30th Jun 21, 7:47am 1624996050

Michael J Burry is constantly deleting his Twitter, to be fair

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by  Hardly  |  30th Jun 21, 7:54am 1624996446

I don’t think Burry should be predicting Bitcoin movements as it’s value has nothing to do with fundamentals. You can’t expect something to correct based on fundamentals when it never had any in the first place.

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by  Ezy  |  30th Jun 21, 8:16am 1624997790

For someone with a background in financial markets looking through that lens at fundamentals it certainly seems that way. But from a purely technical perspective where utility is concerned the fundamentals are the strongest in history. If data is the new oil, blockchain is a flux capacitor.

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by  ham n eggs  |  30th Jun 21, 8:23am 1624998211

Data is the new oil...
This is as ignorant as you can be

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by  frazz  |  30th Jun 21, 8:27am 1624998437

Good morning Ham - coffee brewing I hope?

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by  Rosenstein  |  30th Jun 21, 8:52am 1624999977
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by  Ezy  |  30th Jun 21, 10:11am 1625004668

I can understand where Ham is coming from Rosenstein. Often the most aggressive homophobes act that way towards homosexuals, because they are deathly scared that they themselves are in fact gay.

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by  powerdownkiwi  |  30th Jun 21, 10:28am 1625005722

No you don't.

Oil is energy, betting on keystroke-issued anything, is betting keystroke anything.

To not understand the difference, is to be ignorant.

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by  Ezy  |  30th Jun 21, 11:49am 1625010551

Everything is energy pdk, I thought you of all people would realise that. Keys don't move themselves. Oil doesn't mine itself. And Bitcoin doesn't secure itself. You don't seem to understand entropy.

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by  Mrs The Point  |  30th Jun 21, 11:50am 1625010617

Hahaha, bringing entropy into the argument. What closed system?

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by  JustAnOpinion  |  30th Jun 21, 11:50am 1625010646

"Shots fired"

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by  Squishy  |  30th Jun 21, 9:09am 1625000940

So is Tether a huge scam? I've seen commentary to that effect because they won't allow an audit of their holdings.

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by  frazz  |  30th Jun 21, 9:12am 1625001129

The Fed wont allow a audit as well..are they are scam?

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by  Wuhan ER  |  30th Jun 21, 9:14am 1625001268

Whataboutism.

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by  realterms  |  30th Jun 21, 9:17am 1625001453

Whataboutism is the stronghold of the crypto bro.

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by  frazz  |  30th Jun 21, 9:24am 1625001870

The term is seeing a bit of a renaissance in our current political climate. Philip Bump writes in The Washington Post that President Donald Trump has utilized whataboutism frequently as a way of deflecting criticism for his actions, such as his pardon of former Arizona sheriff Joe Arpaio.

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by  Mrs The Point  |  30th Jun 21, 11:51am 1625010707

Oh, if the Don does it, it must be ok. 'Cause he knows words.

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by  brisket  |  30th Jun 21, 9:29am 1625002157

Yes. And not just because they won't allow an audit -- they things they *have* admitted to make it clear it's a scam.
Their whole premise was, 'we have a $US for every Tether!" That was their whole USP.
Now it's, 'well, we have 3c for every Tether! And 97c worth of equity... in our company!" It's not exactly the same premise. And when you realise that billions of Tether have been generated, and used to buy other cryptos, and all on the assumption that those cryptos will be fungible for $US via Tether...

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by  Squishy  |  30th Jun 21, 9:40am 1625002841

So how do they maintain the price, if people redeem the tokens would they just issue more and make it and devalue the tokens? It'll be interesting to see what happens.

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by  brisket  |  30th Jun 21, 12:09pm 1625011787

Ironically, it's similar to fractional reserve banking (at a particularly irresponsible bank). They can stay afloat as long as the demand for withdrawals doesn't spike too much.
There will be a big problem if there's a rush for the exits.
It's also a problem insofar as it's an enormous fraud, but no one seems to care about that anymore.
I don't know why anyone would hold or rely on Tether at this point, but hey crypto is 99% religion so whatevs.

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by  Ezy  |  30th Jun 21, 10:04am 1625004270

Conway's law looks increasingly applicable to financial markets as well as technology. USDT is operating the same way the FED does, where the USDT to crypto spend cycle seems to be solely based on aggregate demand rather than the proposed fundamentals (hints of Keynes anyone?). There's literally dozens of USD stable coins now so the risk USDT poses to the crypto space is small IMO. Blockchain is anti-fragile by design so the likely scenario if USDT fails for any reason is that one of the others seamlessly fills the gap. USDT/BTC past value is locked not dependent, although it's highly likely failure would create a FUD event causing BTC to take a dive before hitting a new ATH.

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by  Galloleous  |  30th Jun 21, 12:05pm 1625011531

Bitcoin wont care either way in the long term, but I do think Tether is going to collapse at some point and this will cause massive volatility in the market. And Bitcoin wont be immune to that drop, but it will recover. I think it would be a "Mt Gox" sort of situation where it kills the markets for a good few years.
Only the FED is allowed to operate an uncollateralised system, so they will crack down on any non government sanctioned entity that tries to do the same, and being a crypto stable coin that will be competing against their CBDC, they will come hard.

Tether is more than 50% larger than all the other stable coins combined https://www.coingecko.com/en/stablecoins so it will seriously stuff up the markets. It will unpeg and the BTC/USDT price will skyrocket. will be a crazy time to do some risky arbitrage.

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by  powerdownkiwi  |  30th Jun 21, 7:57am 1624996632

"a sign that consumer spending will continue to support economic growth in the short-term."

Does your definition of economic growth include resource draw-down or debt increase, David?

I suggest the former is going down exponentially, the latter up ditto. Perhaps an interesting ongoing graph, would be debt/GDP both NZ and global? How say others?

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by  JustAnOpinion  |  30th Jun 21, 11:54am 1625010880

I think you would find them highly correlated and matched globally. As I mentioned elsewhere I think GDP is more a measure of consumption (Debt) than production despite the acronym.

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by  Audaxes  |  30th Jun 21, 8:21am 1624998070

The German consumer inflation rate came in at a modest +2.3% for June, similar to May

For each of the past two months, while even the normal core PCE Deflator was the highest in almost thirty years, the trimmed mean version wasn’t even close to something like that. For the latest data in May 2021, at 1.85% year-over-year it was the highest since…last September.

That’s a huge discrepancy all because the PCE Deflator, like the CPI, is being more highly influenced by a narrow set of high-flying exceptions rather than a wide set of all or nearly all price components.

For example, the 6.3% monthly increase (annualized rate) in “other purchased meals” prices gets dropped out of the trimmed mean, which is significant because of its 4.76% weight in the overall basket. At the same time, paramedical services and net health insurance prices (combined 4.36% weighting) get left in with each rising at only a 2% rate.

Meanwhile, prescription drugs and even gasoline prices got trimmed but from the other side of the ledger; both sets of prices fell rather sharply in May from April. Thus, the trimmed mean looks at outliers from either extreme and unfortunately for the inflation case they showed up on both sides.

In other words, lots of prices doing lots of different things. And that’s not inflation, either. If it was, there’d have been lots of prices doing mostly the same things. This also applies in comparing current price deviations with other jurisdictions, too (especially Europe).

As it is, removing the highs and lows puts the trimmed mean core basically in the same shape as any recent month (or like Europe). There are a small number of prices that are screaming and howling (related to used cars, especially), and those few are more heavily skewing the overall and even core indexes in a way that isn’t meaningfully appropriate.

The same can be said of the economic data, in a way. If Uncle Sam’s helicopter is that marginal macro influence, then its biggest impacts show up the most in a very narrow slice, too. The government continues to pay Americans and those payments have seriously skewed goods spending, particularly for durable goods. Link

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by  Audaxes  |  30th Jun 21, 8:25am 1624998351

Good morning from #Germany, which has the most expensive electricity prices in the world. A kilowatt hour costs 36 US cents, including taxes and levies, more than twice as much as in the US or 50% more than in Spain. Link

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by  Audaxes  |  30th Jun 21, 8:36am 1624998982
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by  murray86  |  30th Jun 21, 9:27am 1625002044

Without seeing the detail behind the position, my question is an obvious one. One of the things that support the value of any currency is the quality of government that sits behind it, the sovereign owner. In this case it is Russia, and Putin, and I would suggest the value of the ruble is very much based on the world's opinion of Putin and his Government.

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by  Audaxes  |  30th Jun 21, 10:09am 1625004589

I am thinking the West's bank dealing desks are trying to bankrupt Russia with expensive USD priced import costs. Unfortunately import substitution and the sales of oil based products in USD continues to deny them success, while Russia's low priced exports continue to boom.

Some examples

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by  murray86  |  30th Jun 21, 10:24am 1625005461

Risky play. During the cold war, the most popular scenario that was expected to drive the Soviet union outside it's borders was food. A significant grain harvest fail was seen to be the straw that would start WW 3. This so much so the the US was shipping huge amounts of grain, as aid, to them to prevent it. Trying to bankrupt them now by making imports unaffordable would have the same effect potentially. Putin makes it very clear he will not be bound by international law or conventions, while he holds others to those. So if he is backed against a wall, to think he won't come out fighting could be a very expensive mistake.

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by  Audaxes  |  30th Jun 21, 10:43am 1625006611

Putin de-dollarised the Russian economy with little economic impact. Hence he is hardly backed up against any wall. And in terms of military capability remains virtually unchallenged. Russian grain exports

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by  murray86  |  30th Jun 21, 11:16am 1625008617

In may respects you are reinforcing the perspective that I put up. Although I doubt that militarily he is unchallenged. That statement ignores the complexity that lies behind immediate capability.

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by  Audaxes  |  30th Jun 21, 10:49am 1625006943

Putin makes it very clear he will not be bound by international law or conventions, while he holds others to those.

I think otherwise.

Consider this

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by  murray86  |  30th Jun 21, 11:18am 1625008689

So the Russian anexation of Crimea was a completely legal and fully justified action? And let's not discuss Russian involvement in Syria.

I have never suggested the US is not guilty of similar excesses, but when was the last time they annexed a part of a country and then called it their own? And when has NATO (including the US) staged a military build-up on the borders of a country which could only be a clear threat to invade, and in support of anti-democratic rebels? Bush was utterly wrong to invade Iraq, and they did not understand Afghanistan well enough to be able to cleanse it of the Taliban.

Are you applying for a Russian passport Audaxes? This post seems a little slanted to me.

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by  Audaxes  |  30th Jun 21, 11:30am 1625009452

The rules-based order is the embodiment of double standards. The right to self-determination is recognised as an absolute “rule” whenever it can be used to an advantage. This applies to the Malvinas Islands, or the Falklands, some 12,000 kilometres from Great Britain, to the remote former colonial territories Paris and London retain despite multiple UN resolutions and rulings by the International Court of Justice, as well as Kosovo, which obtained its “independence” in violation of a UN Security Council resolution. However, if self-determination runs counter to the Western geopolitical interests, as it happened when the people of Crimea voted for reunification with Russia, this principle is cast aside, while condemning the free choice made by the people and punishing them with sanctions. Link

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by  murray86  |  30th Jun 21, 11:50am 1625010629

You are a fan of Sergey Lavrov aren't you? Tell me why the US, and the UK don't recognise the annexation as legit then? What the vote a legitimate one? What evidence was use to support their refusal to accept the outcome?

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by  JustAnOpinion  |  30th Jun 21, 11:30am 1625009400

Netherlands is a fair comparison Brussels and Luxembourg less so as they are simply EU vassals and produce mostly hot air.

GDP is a fun comparison and the US loves it as the USD privilege allows them comical level of GDP based on their debt based economy. It's not wrong but is primarily a measure of consumption not production. In reality it should be called GDC.

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by  mikekirk29  |  30th Jun 21, 8:42am 1624999350

Optimism and growth at crest of sugar high
Cycle resumption of 2010-19 growth rates not so exciting and inflation erosion of income is the real story

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by  Zachary Smith  |  30th Jun 21, 9:20am 1625001642

I wonder if being a Crab in the BitCoin world would make you more inclined to hold on come whatever. To have an entire BitCoin would be something of a status symbol? At least you are not at the bottom of the food chain.

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by  J.C.  |  30th Jun 21, 9:56am 1625003796

To have an entire BitCoin would be something of a status symbol?

Most people will never own a whole Bitcoin. 2/3 of ASB bank accounts don't even have $10k. So yes, it might be a status symbol; however, ostentatious expressions like Bitcoin-related bling is tacky. The idea is not to aim at buying a whole bitcoin. Buy what you can afford. If that's only $100, so be it.

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by  rastus1  |  30th Jun 21, 9:45am 1625003125

The readers might find this new RNZ podcast of interest - Red Line.

"Can we continue to walk the thin red line between what some see as an evil empire and others as our greatest economic opportunity? A four-part series investigating China's growing influence in New Zealand"

https://www.rnz.co.nz/programmes/red-line

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by  Henry_Tull  |  30th Jun 21, 11:10am 1625008244

Vaccine Strollout news.
Vaccine meets Biggles

Lets join the jolly Minister & all become Plane Spotters.
https://www.flightradar24.com
First to see the Sopwith Camel wins a double dose jab for them and four friends.

Next Tuesday we do expect to get a reasonably sizable delivery that will allow us to keep the momentum going. What it means is I'll be tracking that shipment from the moment it leaves until the moment it arrives in New Zealand - because if the plane gets delayed, that's a bit of a headache."
.... any delay, then that starts to get a bit hairy for us for a day or two."

https://www.newshub.co.nz/home/politics/2021/06/coronavirus-next-pfizer…

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by  JustAnOpinion  |  30th Jun 21, 11:35am 1625009748

What you need to remember Henry is the people from other countries (add host of fact-based differences that must never be discussed here) are more important.

It's goes to the very core of the values of this country (at the moment... values change over time) that we believe in equivalency of outcome regardless of effort.

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