Here's our summary of key economic events overnight that affect New Zealand with news some inflation expectations are being reset in markets today.
The American inflation rate as measured by the CPI came in as expected at +5.3% for August, unchanged from July. But their core inflation rate - without food or energy - came in lower than expected at 4.0% and that was not expected. There has been a noticed tailing off in August from July, and markets have reacted to this.
For a number of months now the American economic expansion has seemed to be building while the Chinese one falling away, which is a turn around in fortunes. But now, the situation has a sense it is turning again. Certainly the latest update to their live GDP trackers shows a rather fast moderation underway in the US. The OECD is also suggesting something similar is happening.
Both the US CPI and economic expansion cooling are suggesting to markets that US Fed tapering may be a ways off yet, and that corporate earnings may not continue strongly. That has seen equity markets fall, the benchmark UST 10yr rate slip - and the price of gold rise.
Meanwhile in China, property giant Evergrande is warning of the 'tremendous' financial pressure it is under. It's shares are sinking, taking others with it, and it has hired a restructuring team to guide it from here. Angry investors are besieging their headquarters because bond payments are overdue. Evergrande might be a Lehman Bros. for China, some fear.
And the worries about property are more widespread in China. Second-hand home transactions in Shanghai fell by a quarter in August amid stepped-up real estate restrictions. In the country's technology hub Shenzhen they fell more than -80% last month.
New Zealand has been ranked the third most free economy in the world, beaten only by Hong Kong and Singapore, but out-ranking the US (#6) and Australia (#9). Canada is #14. But the report is essentially for 2020 and it notes that Hong Kong's #1 position will likely fall when China's heavy hand in the territory is taken into account in its next report. China is #116 in this latest ranking. New Zealand has ranked #3 in this list for the past eight years.
In Australia, their central bank boss has challenged market expectations for interest rate hikes before 2024, and pushed back against suggestions hikes and tougher lending standards could be used to quell house prices, saying changes to tax, social security and planning regulations worked best.
Meanwhile, ANZ is also saying there’s a sharp disconnect between expectations for interest rate hikes by the RBA and RBNZ. They expect the RBNZ will increase the cash rate at its October 6 meeting, whereas they don’t expect the RBA to raise the cash rate until the first half of 2024. One reason for this is that even though both countries have seen "remarkable labour market recoveries" over the past year, only New Zealand has seen wage growth pick up significantly, alongside rising core inflation. They say this may be down to the stronger New Zealand labour market in the years prior to the pandemic, the larger increase in unemployment in Australia during 2020, and the sharper rebound in household inflation expectations in New Zealand.
The closely-watched NAB August Australian business confidence survey has it well into negative territory, even though respondents believe business conditions are still positive. But at least this August result wasn't worse than the July report. NSW and Victoria drive the overall negative sentiment there.
Australia reported yesterday that 70% of all their international visitors in July came from New Zealand.
There were another 1127 new community cases in NSW yesterday with another 1025 not assigned to known clusters, so not much material improvement there. They now have 14,436 locally acquired cases. Victoria is reporting another 445 new cases yesterday, so it is still tough there. Queensland is reporting four new cases. The ACT has 13 new cases. Overall in Australia, more than 43% of eligible Aussies are fully vaccinated, plus 25% have now had one shot so far.
The Tuesday session on Wall Street has traded underwater since its opening, with the S&P500 now down -0.3% slip in early afternoon trade. Overnight, European markets were mixed with London down -0.5% but Frankfurt up +0.1%. Yesterday the very large Tokyo market rose +0.7%. But Hong Kong dived another -1.2% and Shanghai sank -1.4%, both with building sell-offs. The ASX200 closed up +0.2% but the NZX50 Capital Index closed down -0.5%.
The UST 10yr yield opens today at just over 1.28%, so down a full -5 bps from this time yesterday. The US 2-10 rate curve is at +108 bps and much flatter. Their 1-5 curve is flatter too at +71 bps, while their 3m-10 year curve is flatter at +124 bps. The Australian Govt ten year benchmark rate starts today at 1.23% and down -2 bps. The China Govt ten year bond is at 2.91% and up +1 bp. The New Zealand Govt ten year is now at 1.87% and down -4 bps.
The price of gold has risen +US$15 today and now at US$1807/oz.
Oil prices have been pretty stable overnight so in the US they are now still just on US$70/bbl, while the international Brent price is still at US$73/bbl.
The Kiwi dollar opens today at just on 71 USc and marginally softer since this time yesterday. Against the Australian dollar however we are +40 bps higher at just under 96.9 AUc. Against the euro we are little-changed at 60.1 euro cents. That means our TWI-5 starts today at just on 74.1, and also little-changed. We are still right at the top of the 72-74 range of the past ten months.
The bitcoin price has risen today, now at US$46,596 and +4.8% higher than this time yesterday. Volatility in the past 24 hours has been moderate at just over +/- 2.9%.
The easiest place to stay up with event risk today is by following our Economic Calendar here ».
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84 Comments
New Zealand has been ranked the third most free economy in the world, beaten only by Hong Kong and Singapore, but out-ranking the US (#6) and Australia (#9). Canada is #14.
How do all those in the comments section who opine that we're living in some sort of over regulated communist state deal with this piece of information?
So many varying opinions, but I do enjoy learning the rationale behind them!
But that statement about being the #3 most free economy in the world begs so many questions. Try defining the word "free" for example? Free of Government regulation or free of manipulation, or free of both? I would suggest that if it is just the first, and personally think that is most likely, then the economy is then potentially very unbalanced, and this is borne out by the distortionate impacts of the housing market, and increasing homelessness, not to mention the increasing numbers of people having to put their hands out for food and benefit assistance.
Yes so "Free" means essentially the impact of Government regulation. Note I said "Impact", and having read that I find I am revising my opinion a little. While I do believe that Government regulation is required, what must be considered is the consequences of that regulation. Government regulation can be used to level a playing field and restrict manipulation while supporting trade and economic benefits, but it can also severely limit all of those too. A lack of regulation will still be as damaging as too much.
A lack of rules allowed one short generation to stuff the planet. We have see the high-water-mark of that effort (neoliberal economics, free-marketry - which was just 'don't curtail us'). Saul wrote that it was in 1995; I'd have said there was an inflection-point about 2008, and another with Covid. In neither case could 'the market' address the predicament. And one of those was brought on by? The market.
Laissez-faire took us to - and clearly beyond - the brink. So stupid was it, that it thought Climate Change might be a new trading opportunity. Whereas it was an existential threat. We need to put this stupid ideology well behind us. And those who are still steeped in the mantra.
And being the most-prostitutable nation is hardly something to crow about.
So mainstream economists should butt out?
And every time someone talks of 'investing' in NZ, how about we tell the truth? That hey are putting their foot in the door, so that they can extract more than they put in. The real difference (their extraction, sometimes called profit but usually a reduction in resources and certainly a reduction in options for locals) is usually a physical minus to NZ. Pity we don't count properly.
Yes, you can literally see in MSM pages, one headline saying how well we are doing, and another headline highlighting record homelessness/people needing food parcels/Govt. financial assistance - all without any comment about the contradiction in these two stories.
One thing we have in NZ is Cronyism. When National are in power it is more 'right' cronyism, and now for Labour, more 'left' cronyism. What is the correct thing to do is irrelevant to either side.
or joining blue radio getting two carparks so your ferrari does not get scratched and then no matter what the red government disagree with it even if you contradict yourself daily
Mike Hosking Debates Against Himself on COVID-19 Response - YouTube
Your comment yesterday about me was quite interesting Murray, the one about perhaps being genetically gifted or something like that. So when I'm next in my peak training week for a competition (before I taper) I'll keep in mind when I'm out there paddling 100km or more, and doing a total volume of 13 or so hours, that this work training is unnecessary as I could just sit back and rely on my genetic gifts.
One thing I've learnt from sports is that even when you succeed it doesn't stop the naysayers. The naysayers don't stop me either though, I keep winning and leave them to their excuses.
It wasn't a criticism Scarfie, just an acknowledgement. I know plenty who watch their food and exercise carefully and manage their lifestyle choices much along the lines you talk about, but some of them have got sick along the way. A couple had undiagnosed genetic conditions pop up that ultimately killed them. Some are very healthy and active, a few gave it up saying they'd lost the enjoyment in life (obviously they had got it out of balance). But in the end we are all quite varied in our make up. Like you I ws an engineer in the Airforce, and we ran for fitness (that's how it was tested), but no matter what i could do in my training, even with professional advice and support, I could not bust the 12 minute barrier during the testing, but i worked alongside people who could do virtually no training and still break that 12 minute barrier easily. One of them, in his 60's is still running marathons! The evidence is that genetics are important, and as i said yesterday if you're blessed with them that's great, but don't belittle others who try but can't achieve those targets. I'm still training at the gym, doing plenty of cardio, but i could never paddle 100 km or more in a canoe, or run a marathon, but I can press 130% of my own body weight, do 20 chin ups and so as a 64 year old. My wife and I eat a pretty good balanced diet that is not too much. And I still regularly catch colds, and occasionally the flu, so it doesn't work for everyone.
A few years ago I worked with a brilliant gentleman (PhD, high flyer, could analyse anything) who put a lot of effort into maintaining his health. He ran, he lifted, he ate right...and he died instantly at 50 when his aorta ruptured as he sat on his bed.
My grandmother grew up in a coal mining town in Cumbria before moving to NZ many years ago. She ate the typical regional offal-based diet, drank like a fish, and smoked like a train all her life. She died last year at 93.
What did I learn from this? Be happy I'm related to my grandmother, not my former colleague. Come ooon, genetics!
The same way we all do when we see conflicting information - ignore it, or misrepresent and discredit it. You can already see an example of the latter a couple of comments down.
Quite unusual for people to have their minds open enough to actually consider what it means for their preconceptions.
New Zealand has been ranked the third most free economy in the world, beaten only by Hong Kong and Singapore, but out-ranking the US (#6) and Australia (#9).
Where would we rank in the realm of state sponsored interest rate repression?
Extremely good point, Audaxes.
Financial markets in NZ are far, far from free: the current state sponsored interest rate repression, enforced by the muppets at the RBNZ, makes a complete mockery of any concept of freedom in NZ, at least as far as the economy is concerned.
Audaxes, i've just read the Honestly not Easy article and I have sort of a question;
The author discusses Quantitative Easing as in the injection of large sums of money into an economy and the flaws/lies around the concept and the publicity given to it. But I see the same problem that happened in the wake of the GFC in 2008 recurring here, and continuing today. All this money went to banks and financial institutions, but fundamentally in an economy it is the PEOPLE spending money who make the economy work, and when wages and salaries are being driven down, even when interest rates are dropping, their capacity to spend is still limited at best. While the QE in the wake to the GFC went to the institutions while many ordinary people went to the wall, the QE happening since then and today is not going to lift wages to enable people to spend, but at best is being used to capture them in more debt! So to me this seems very short sighted.
I love how people like you are oblivious to context. Alternative description:
Selfish / entitled rich kids (one having actually trained in law) knowingly flout the law to swan off to holiday house, risking infecting / shutting down the entire South Island. Meanwhile average folk are trapped in their homes in Auckland, some struggling to pay rent / bills...
Why should anyone be angry right?
Fines barely work unless super high (which would then be unreasonable for any poor person caught and again a media circus ensues). For the rich, fines are just another small bill to pay.
That's why inflation is a major concern (to me) - if the prices of necessities go up, we poor slobs supporting our families suffer, while a 20-30% increase for food, petrol, water, power, etc is a drop in the sea for the rich.
In this case it is the embarrassment factor - fifty years from now in their retirement village their peer group will still be pointing at them. I'd recommend changing their names and leaving the country. It is worse for Monica Lewinsky who broke no laws. Freedom needs anonymity.
Why not ruin their lives? Our whole elimination strategy is one based around Zero risk. We have literally shut down the country and are ruining many peoples lives so that this virus cannot spread and cause harm.
They have knowlingly and willingly disobeyed the instruction, intent, and point of the lockdown. If (and we didn't know at the time) these two were covid positive and it had spread, what then?
In simple terms, if it is fine for them to do what they want? why shouldn't we all?
As a further aside, why would you want that person as a Lawyer anyway. It is clear they have no respect for the law.
and that is the problem isn't it? There is a lot of frustration and anger out there on a lot of issues, virtually all being the consequences of governmental failure, but it seldom gets acknowledged or any real substantive action taken to address it. Sure, there's often some political rhetoric, but words don't fix anything, only action does and as we so often debate here, there is not enough, or the wrong kind of action that does get the outcomes needed.Politicians and the wealthy and privileged cannot dismiss, ignore or run rough shod over the people without consequence.
I'm not so sure. It's a truly extraordinary level of selfishness to risk *billions* of dollars, the livelihoods of whole communities, and the health of thousands just because you're a bit bored. Sure, you might know that the risk is minimal -- but that's true of *any* individual, and if everyone selfishly indulges that attitude, the whole thing falls apart.
If it weren't for the fear of public shaming, people wouldn't follow the rules, and the lockdown wouldn't work. I am very much *against* public shaming in general, but this is an unusual situation where the legal punishment can't remotely come close to the potential damage done.
Nah, they are adults, they are responsible for what they do. Public deserve to know their names. I don't agree on online bully and personal attacks towards this couple. I don't think they deserve to be attacked. But how they are irresponsible towards what they've been entrusted with, they should be sacked, no question, rich or not, no difference. I hope they learned their lessons.
And pay no tax - The Vocabulary of Neoliberal Diplomacy in Today’s New Cold War
FB - agreed. That is all it ever was, from Roger Douglas on. And its still going on; so-called foreign 'investment'. We're on the pathway to Nigeria, given time. You end up unwelcome homeless in your own country.
Oddly enough, the tidal-wave breaking over all of us, will probably spell the end of the trust-based system.
https://www.resilience.org/stories/2021-09-14/the-only-long-range-solut…
And at the end of the day, they can't take acres transocean - some flaw in the concept of fungibility, apparently.
Agree Squishy I interpret the economy as free due to lack of regulation allowing any body to buy property here The OIO rubber stamps applications monthly selling NZ off to anyone able to make a credible application, oversight of trusts is almost non existent here no records of involvement in trusts or any sort of register. A free place to launder money no questions asked. As for the Auckland couple I think they should be pilloried for their actions however how about the other approximately 27000 who left Auckland the evening before lockdown. Who scattered to beaches all over nz I saw one article about the number who went to b and he's don south only one of whom got robbed in by an accomodation owner but commented about lots of others doing the same .
Not intending to shit stir. I would rather have a high street of local businesses than be dominated by overseas supermarket chains and Amazon, perhaps I am idealistic. This is no reflection on those that work for these supermarket businesses as they are doing a fantastic job during a difficult time.
I agree with you. Although in my level 4 akl suburb, the butcher has been doing click and collect, greengrocer is open, I know of bakeries that are open also.
As small businesses I can hardly blame them, selling perishable goods, there is no pent up demand at the end of this for them. It is a total loss situation if they cant trade.
You in Remmers Sluggy?
"Police make Auckland butcher shut shop"
https://www.stuff.co.nz/business/126330367/police-make-auckland-butcher…
Someone poster this link yesterday ... click bait for covidiots
More than 99 per cent of Covid deaths in England this year were not fully vaccinated | Stuff.co.nz
Impressive stuff!
Lets dive into their data where "this year" runs basically until end of June
51,281 deaths ... less 38,964 unvaccinated less 7289 (1 dose) less 458 (2 dose under 21 days) less 59 DEATHS for 2 dose
= 4,511 missing ??
Oh ... i see ... we have to take out any underlying conditions out of the last group (to reach the 59) all for a population that was in the process of getting vaccinated ... hmmmm
Is this the misinformation they were warning us about?
You would probably be better received if you did not lead with calling people "covidiots" but yes anyone claiming >99% percent vaccine effectiveness at anything should be one of these "red flags" for misinformation.
https://coronavirus.data.gov.uk/details/deaths
I would say 90% of deaths would have been cases before anyone had had vax 2 from the UK winter spike. And then it cuts off on the 2nd July at the very early stages of the delta wave.
I wonder what the stuff editorial process was for approving the repost of this article, they changed the headline.
A bit more detail on why inflation fig in USA is not accurate rep of what real folk are paying
https://wolfstreet.com/2021/09/14/inflation-whac-a-mole-new-vehicle-pri…
I think the big picture is it's curtains: George Gammon interviewing Luke Gromen today: https://www.youtube.com/watch?v=2JpYiBFGLDQ
At 6:15 Gromen says (based on a study covering the last 200 years) 52 nations have had public debt rise to 130% of GDP (like the US now) and in all but one case (Japan, which had more options that the US has now) they defaulted, mostly via a period of high inflation.
I don't like the odds.
This time it's different!
Although digging beneath the surface veneer of that statement, just amplifies how much worse it is now: facing resource depletion, energy scarcity and climate change all at the same time.
Which actually are all repeats of what took down ancient civilizations, too.
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