Here's my summary of the key news overnight to keep you up-to-date over these holidays.
The number of Americans filing new claims for jobless benefits fell last week and job cuts declined sharply in December, suggesting their labour market is tightening. and employers seem to be holding on to seasonal hires.
Across the Atlantic, the euro has fallen to a fresh nine-year low against the US dollar, in part because of a surprise fall in German factory orders.
An American criminal investigation into how Swiss banks helped wealthy Americans hide their money has had an unexpected side effect: shaking out scores of tax cheats among the Swiss themselves. China has a massive tax-cheating problem too.
In England, their central bank has held its policy rate unchanged at 0.5% and maintained its £375 bln stimulus program in an overnight decision.
In eastern Europe the Belarus central bank has hiked its benchmark interest rate for the first time since 2011 - raising it to an eye-popping 25% - and adopted other emergency measures to stabilise their financial system as the country is rocked by the crisis in its neighbour and 'friend', Russia.
In Argentina, police and tax agents have raided HSBC headquarters in Buenos Aires following an investigation of than 4,000 non-declared accounts that Argentineans allegedly own in Switzerland.
In China, Panasonic Corp has said it plans to transfer most of its domestic appliance production in China back to Japan starting in the March, a response to the weaker yen and a jump in labour costs in China. It is one of several Japan-based companies making such a move.
In Australia, building consents are continuing at a high level with almost 19,000 being approved in November and close to the highest level in almost twelve years. We get our own local building consent data for November in a Stats NZ release later this morning.
Low oil prices extended their run overnight with the benchmark US price is now just under US$49/barrel and the Brent benchmark is just under US$51/barrel. There is one part of the oil industry benefiting from low prices - the explorers.The cost of drilling rigs is expected to drop by about 40% as the market adjusts to lower spending on projects. We might see many more rigs around New Zealand given their sudden availability.
Gold is unchanged overnight, now at US$1,214/oz.
UST benchmark 10yr bond yields have remained low in trading on Wall Street today and are currently at 2.01%. Today the New Zealand 1-5 swap curve is now just 21 bps and the 2-10 is just 18 bps.
The NZ dollar has kept on rising and is now at 78.3 USc, against the Aussie it is now at 96.3 AUc, and the TWI is currently 80.3. The modern high for our TWI is 81.9 which it reached in July last year.
The easiest place to stay up with event risk over the holiday period is by following our Economic Calendar here » Have a fun, safe New Year celebration.
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19 Comments
Hence btw while I like core inflation, petrol isnt included, and hence its ups and downs dont produce pointless panic and hand wringing.
In any event 3? 4? readings of inflation being below mid target band and maybe lower, the Q is when do we finally see a drop in the OCR to "correct" this, its already looking late.
When is the next OCR review due?
That was yesterday's news. Had it in yesterday's Briefing. Probably best you check the link to the original data. Core euro inflation (sans energy) actually rose. BBC is (as usual) superficial.
ketle calling pot black maybe. Lets look at data, a good start...but lets consider the future where some states have +1% maybe whil others ive.
So the EU isnt one country, ergo if we look at core for spain it isnt pretty.
http://krugman.blogs.nytimes.com/2015/01/10/deflation-as-betrayal/?modu…
"The market clearly thinks the cause is almost lost. German 5-year bonds are yielding zero; index bonds of the same maturity are yielding -0.2. That’s an implied forecast of just 0.2 percent inflation over the next five years, which means intense deflationary pressure in the south. Really not good."
Carnage gets worse and worse in US shale oil industry.
Cuts on top of more cuts:
http://www.reuters.com/article/2015/01/08/halconresources-capex-idUSL3N…
''Oil and gas producer Halcon Resources Corp said it would further cut its drilling and completion budget for 2015, responding to the continuing fall in oil prices.
Halcon said on Thursday it now expected to spend between $375 million to $425 million, down from its earlier forecast of $750 million to $800 million''.
Existing contracts being slashed:
http://www.bloomberg.com/news/2015-01-08/shale-producers-in-u-s-cutting…
''U.S. oil producers are bailing out of long-term contracts for drilling rigs as crude prices sink below $50, another signal that the nation’s shale boom is slowing.
Yesterday, Helmerich & Payne Inc. (HP), the biggest rig operator in the U.S., said it had received early termination notices for four contracts. Today, a second contract driller, Pioneer Energy Services Corp. (PES), said four rigs had been canceled early. Producers may cut short another 50 to 60 agreements, according to Bloomberg Intelligence analyst Andrew Cosgrove.''
Strange. It just seem like yesterday a ton of US industry analysts were proclaiming the US shale oil industry could cope with prices down here.
Oh no they can't.
Indeed seems a daring claim,
"Analysis points to US production peaking in late April.
- Oil rig reduction is accelerating.
- Current two week decline in EIA estimates not too unusual.
- Canadian rig count down 66% year over year.
- Current oil rig count 1482. Estimated production breakeven rigs required: 1267."
http://seekingalpha.com/article/2804405-oil-turnaround-timing-the-us-pr…
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