Here's our summary of key economic events overnight that affect New Zealand with news inflation is embedding itself worldwide now.
The US Fed's monthly Beige Book describes an economy that "strengthened further from late May to early July, displaying moderate to robust growth". However it only reported modest employment gains. But it does report "broad based" pricing pressures where "the majority [of firms] expected further increases in input costs and selling prices in the coming months." The only relief was a pull-back in sky-high lumber prices
That evidence of inflation continued in the data as well with producer prices rising more than the high rise expected, now up +7.3% from a year ago at an accelerating pace.
They were up at an even faster pace in Canada, rising a startling +16% on the same basis in June - although there are signs this is tailing off there.
Overnight the Canadian central bank sort of copied the RBNZ with a similar policy shift - signaling a reduction in bond-buying, in preparation for normalising their policy interest rate. It also sees higher inflation ahead. However, the Canadians were not as gung-ho as the RBNZ.
China has reported a record grain harvest this season, with increases in both cropped areas and yields - but this domestic milestone isn't enough to improve their food security.
China's foreign direct investment inflow was also strong in the first half of 2021, up +29% from a year ago, and up +27% when compared to the same period in 2019.
Singapore said its economy contracted at a -2.0% annual rate in Q2-2021 after it rose +3.1% in Q1-2021. (Their year-on-year only looks 'good' because of the base effect.)
EU industrial production data for May was released overnight and it disappointed analysts, down -1% in the month and its year-on-year gain was trimmed to less than expected.
Inflation in the UK was reported higher than expected, too.
The EU and China announced "ambitious" plans to slash greenhouse-gas emissions that will increase costs for industry and consumers, but drew criticism from environmentalists as not going far enough to slow climate change. The agreement includes new duties on imports from high-emitting countries.
The renewed pandemic outbreak in the Australian east coast states is expected to cost substantial reductions in economic activity. There will undoubtedly be echoes in New Zealand.
There were 97 locally acquired cases in NSW yesterday and another 20 in ICU over a very wide age range. Their lockdown has been extended another two weeks until July 30. And sadly, there is a new outbreak in Melbourne now, spread at an MCG AFL game. You probably should assume another Melbourne lockdown will be announced soon. The Trans Tasman bubble is toast for some time now, you would think. An increasing number of Aussies now think 'normal' is more than a year away.
Wall Street is slightly higher with the S&P500 up a minor +0.2%. Overnight European markets all ended flat except London which was down -0.5%. Yesterday, the very large Tokyo market ended with a -0.4% loss, Hong Kong ended with a -0.6% loss and Shanghai ended with a -1.1% loss. The ASX200 booked a +0.3% gain. And the NZX50 Capital Index ended its Wednesday session down -0.5%.
The UST 10yr yield starts today at 1.36% and back down the 5 bps it rose yesterday. Bond markets seen to think the inflationary surge is temporary. The US 2-10 rate curve slightly flatter at +1.14 bps. Their 1-5 curve is also flatter at +73 bps, while their 3m-10 year curve is also flatter at +132 bps. The Australian Govt ten year benchmark rate starts today at 1.31% and down -7 bps from this time yesterday. The China Govt ten year bond is at 2.95% and unchanged. The New Zealand Govt ten year is now at 1.65% and up +9 bps from this time yesterday.
The price of gold is now just over US$1824/oz which is up +US$19/oz from this time yesterday.
Oil prices have fallen back -US$2/bbl today and in the US they are now just over US$72.50/bbl, while the international Brent price is now just under US$74.50/bbl.
The Kiwi dollar opens today just over 70.3 USc and a gain of more than +¾c from this time yesterday. Against the Australian dollar we are up a similar amount at 94 AUc. Against the euro we are up +½c at 59.4 euro cents. That means our TWI-5 starts today up +70 bps at 73.1 although that is only back to where it was a week ago.
The bitcoin price is now at US$32,863 and virtually unchanged from this time on yesterday. Volatility in the past 24 hours has been low at +/- 1.6%.
The easiest place to stay up with event risk today is by following our Economic Calendar here ».
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63 Comments
Your forgetting its the Delta variant that's now on the loose, which from what I have heard spreads twice as easily which means an even steeper exponential growth rate. Basically if this gets out it can now hit a threshold that cannot be contained very quickly. It will be interesting to see if Australia can reign it back in. If their lockdown attitude is slack then they will lose the battle.
5x the population means 5x more outbreaks, NSW alone is bigger than NZ. But they are also way too slow to lockdown. I think the Victorians have learnt their lesson (if so they will lockdown today), but the South Welshmen got away with it for a while and thought they could keep most business open while containing Covid.
It is a good time to have a left wing government that aren't going to sell all of their their soul to big business.
Our left wing government hasn't managed to vaccinate our border workers after 18 months, lied constantly about worker testing, lied about our position in the vaccination queue, refused to implement saliva testing because it wasn't as effective (but finally have now because its their idea), and hasn't even made the checking of pre-departure testing mandatory - just random.
Even now, Ardern wants to give jabs to others, when it is our only safety mechanism in the event of an outbreak. We are safer once vaccinated, and her job is to prioritise NZ, which she hasn't. Our contact tracing is marginal, both of the ignored Roche reports have been scathing of our responses to outbreaks, and yet we still haven't got anything done.
We've been lucky to date, but a single community case in Wellington in June and we'd be staying home now too.
I didn't realize the Government was responsible for actually ensuring the citizens are vaccinated, I thought this was handled by the Ministry of Health. If the Government has made an announcement, why aren't the respective departments toeing the line?
Same applies with Immigration, the Government said they'd reduce net migration numbers to 30k. Why did Immigration NZ not respond to the wishes of the Government? Understand the Government is elected to fulfil a duty and to be held accountable, but why are we ignoring those who have been tasked (and very well remunerated for) dealing with these issues?
Large numbers of people don't comply. Too selfish, too entitled, too arrogant, and too stupid. They don't get it that if they comply for a short period, the authorities can get a grip on the spread and stop it, and lift the restrictions earlier. Same problem in the UK and Europe, and certainly here for a few people. It has been mentioned before but one of our greatest weakness's is that we are essentially a social creature, but that need to socialise can be our demise too!
Shows how irrelevant the gains are with the initial pandemic response if your vaccination program is subpar.
We nailed the initial response, but in a precarious position with how slowly we're getting vaccines delivered and the pace of the rollout. It's pretty embarrassing compared with basically every other country except Australia. Leaves us hugely exposed.
Whats your point Frazz? Our vaccine rollout is too slow. We needed to have everyone vaccinated by November 2021 so we could open for the coming summer. The rate we are going we will be closed till late 2022 as you do not want to open the boarder in late March- June 2022 as then we get swamped by the Autumn seasonal virus's as well as dealing with COVID. Israel got 5 million people vaccinated in 3 months it can be done with proper planning & systems. Too much verbose from the current govt. Just get people vaccinated FFS.
My point is no matter what the governments attempts to roll out for a vast majority of older NZ its never good enough. Covid free, booming economy, and its the same gripes every day - what about me - me me me. I support some elderly boomers and the max vaccination is well underway, while also maintaining all the other health issues the country has - RSV for small babies as an example. What covid has shown us is that NZ has a huge proportion of the me generation who no matter how good life is they want more, now, yesterday and stuff the younger generation.
I don’t sit on any side of the fence. The Government does good things and bad things. Recognising their bad things and calling them out for it is a fundamental part of democracy. This doesn’t mean that they’re evil, the alternative is better, or that they haven’t done any good things. But in this case, specifically the procurement and deployment of vaccines the Government has continued its run of failing the public. This goes beyond COVID and includes influenza, meningococcal, and others. Heads should roll, but it won’t because too many, like you, have their heads in the sand.
I'm not a boomer, but the NZ population just expected the government to do what they told us they had (test, vaccinate, check, control) and also to vaccinate the population quickly. Not give away our vaccines, or delay saying we're OK. Media are slowly awakening from their COVID thrall, and realising that they are being blocked from key information, and being given misinformation.
I'll say one thing for Ardern, she is nice (as long as you don't challenge her like the poor Sth Auckland workers did), and she is lucky. Competent? Not so much.
Funny Frazz, the loudest voice I hear of "me, me, me" is the younger generation, not the Boomers, and you're one of the loudest. Your last comment is totally accurate when you exclude the last five words!
You mentioned RSV, but the briefest of searches would have told you that there is no vaccination for it. The dominant health issue that poses the biggest threat to our health system is COVID, and just in case you don't get it, we are trying to head it off to stop it swamping that system, so that all those other health issues can continue to be treated as best we can. Your hate speech is unworthy, inaccurate and you just sound like a severe case of FOMO!
This, I wish Kiwis could understands this, I've lived in both countries and New Zealand doesn't even come close to the sophistication and intelligence of Israel.
New Zealand is an ex industrial country, now slipped so far as to be reliant on tourism and agriculture, a bit like the other Pacific Islands.
The Palestinian's are just a bunch of terrorist's mate, let me know one useful thing coming out of that region that benefits the world, nothing comes out except missiles. Israel has had enough of the "Tall Poppy" shit from other countries over the years and they have finally got wise with their self defense.
It depends which DHB you reside in (some way more proactive than others and hey some things like cancer patients treatments comes first for staff)...but feel free to moan some more, some of us younger ones are not as lucky as you and still waiting for our first jab. Thats ok Boomers first as always..
You really think the people that do cancer treatments are also involved in the COVID vaccine programme?
I’m 32 and had 2 jabs. My grandmother is 80 and has had 0. Same DHB.
The vaccine rollout is a disaster so far and there is a real risk all the great results achieved last year could be for nought if vaccine deployment does not speed up fast enough.
What is your point? A single person has two jabs so it is a raging success?
We have had almost 18 months to sort out our healthcare and prep for vaccines. But yet again caught with our pants down and no plan. But hey, Govt released a nice "Graph" showing all is good, oh wait... face palm.
Yeah, we're just so organised that we are the worst in the OECD, and haven't got a system that can manage to get priority people done first. Australia are rubbish at their vaccinations so outbreaks spread fast, NZ has only got half the number of AU with a first jab.
Government are doing "mass vaccination" in July in the Manukau area for Group 4 people, I'm group 2 and finally got a call last week - only because I asked my doctor to intervene. My son is Group 2 according to the MoH website (health condition and Manukau DHB zone), but can't get jabbed yet either.
Face Palm
Luck. NZ has even more isolation on its side than Australia.
If a single community case had come from the Wellington visitor from Sydney, we would be facing the same restrictions as Australia - if not more - because our vaccination rate (total people with at least one jab) is half that of Australia, itself pretty miserable.
Isolation and lockdowns where always short-term management strategies until we could get the vaccine rolled out to mitigate risk. We only need our luck to hold out until November, after that the vaccination rate will be high enough to return to business-as-usual and not have to worry about any more lockdowns:
https://www.health.govt.nz/our-work/diseases-and-conditions/covid-19-no…
I think our government are being a bit too friendly with this Trans Tasman bubble. If we had cases in Auckland they would lock it down or at least prevent Aucklander's moving around the country, but when it is Melbourne they are still allowed to fly over here.
Why not a hard and fast rule - if there is a single case in any part of Aus the whole bubble is stopped (and returning people have to pay for MIQ). Why would we risk another lockdown just so a few people can go to Aus? The Labour party are risking a massive backlash if we end up in lockdown due to the bubble.
Have a read though this:
http://dimsums.blogspot.com/
I think andrew used to link the interesting posts on there.
Looks like they are loosening restrictions on corn imports.
Someone help me out here, am I missing out on public outrage over retail fuel prices? In October last year we were paying a little over $1/litre for diesel in Hawkes Bay. Last night it was $1.499 at the local pumps. Transitory due to supply chain issues, or people just resigned to burning money/too busy posting duckface selfies on social media?
Maybe I just need to look through the inflation...
You need to ask "Why the inflation?" - and ask someone other than an economist.
https://dash.harvard.edu/bitstream/handle/1/37364868/BRANDERHORST-DOCUM…
It's what happens during phases of inflation. Even if their underlying costs have not increased, they can get away with hiking prices because people simply expect prices to be rising at the moment. It's almost like looting behaviour - they can 'get away with it' because everyone else is doing the same thing. On top this, they're also likely trying to claw back the losses of last year during covid lock-downs. Someone has to pay for the petrol giants lost profits and you can bet it won't be them.
That's not the way to see it - neither as cyclical nor as profit.
Energy underwrites economics, 100%. (you can prove this easily; ask what would happen without it). Thus we need to be valuing things in the underwrite, not in some secondary, artificially-contrived, keystroke-issued token.
And given the finite nature of the majority of our energy; this is a one-way-to-depletion trip. So cyclical is invalid. Now we're running into a period of real scarcity (including of energy) and increasing demand. Don't blame the suppliers - their very source tells you they're temporary.....
Disagree PDK. Big picture you're not wrong. But in this case it looks like the Singapore refineries are rorting. They are profiteering of the crisis, and they are likely not the only ones. As most of our refined fuel is imported, the shipping lines will be making the most of this too. So only a couple of months ago when the price of crude was comparatively low, our pump prices were inexorably climbing. The price of crude is up at the moment, but it has been higher, with lower pump prices here. there is definitely some profiteering going on. And then Marsden Point is closing it's refinery.....
In Bitcoin news:
Another multi-trillion asset manager has entered the Bitcoin game: Capital International Investors, a division of Capital Group, which itself is an investment firm with over $2.3 trillion in assets under management, has purchased 953,242 shares in business intelligence firm MicroStrategy, the firm now holds a 12.2% stake in Michael Saylor's company.
https://www.btctimes.com/news/2-trillion-asset-manager-takes-stake-in-m…
Follows in the footsteps of other asset managers such as Stone Ridge asset Management, SkyBridge, and BlackRock.
Are you talking about gold?
You do realise that statement applies to literally everything known to human kind. If people see value in some thing (of which value is subjective) then they will choose to spend their money on it.
Digital scarcity is more scarce, portable and transferable than analogue scarcity which fluctuates depending on price and technological developments.
Hilarious statement, there are literally thousands of cryptos on the market that have just been "Made up" by people trying to get rich quick. The likes of Bitcoin has to advance to a threshold where its universally adopted and fast as time is running out for it. There are now thousands of other cryptos holding it back as people jump all over the place in a market that is pure speculation. Bitcoin is still a drop in the ocean total value wise compared to Fiat it still needs to suck in huge amounts of actual cash and even then its just a massive pump and dump opportunity. Don't get me wrong, Bitcoin is great technology but its unregulated and totally open to being abused.
The UST 10yr yield starts today at 1.36% and back down the 5 bps it rose yesterday. Bond markets seen to think the inflationary surge is temporary.
Third CPI In A Row, Yet All Eyes On That 30s Auction
Longer-run inflation expectations, particularly the 5-year/5-year forward rate, actually declined on the day (given the bigger increase in the 5s breakeven). At just 2.16%, that’s yet another daily calculation down in the post-2014 doldrums indicating that not much has actually changed in the past year though the CPI’s may have gone nuts.
The price of gold is now just over US$1824/oz which is up +US$19/oz from this time yesterday.
Surprise, Surprise - LBMA gets off the hook to continue trading fictitious paper gold, as Bank of England gives the bullion banks an exemption - #oldboysclub “Britain carves out exemption for gold clearing banks from Basel III rule” Link
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