Here's my summary of the key issues that affect New Zealand over the long weekend with news there has been some strong labour market data out of the US.
Job growth rose solidly in January and wages rebounded, a show of economic strength that put a mid-year interest rate increase from the Federal Reserve back on the table.
The American participation rate rose and the sharply higher revisions to the previous two months underscored how strong the data is. There were 2.9 mln more people employed at the end of 2014 than at the beginning, plus another 257,000 rise in January 2015. This data was well above market expectations.
(Interestingly, employment only fell by 1,900 people in the oil exploration sector in January from December.)
More than that, hours worked rose very fast in the December quarter of 2014, up the fastest since 1998. And hourly compensation rose +2.8% pa. This is the sort of data that will have the Fed dusting off its inflation-watch manuals, and is why markets are betting the Fed may raise rates mid-year or even sooner.
In New York, benchmark UST 10 year bond yields keep have pushed higher on the labour market news and are now up to 1.96%. These rises will be reflected in local New Zealand swap rates at some point.
Greece's decision to 'reject austerity' is playing out as a dangerous gamble and the country could be out of cash before the end of the month. A request by them to raise an extra US$5 billion in short-term debt was immediately rejected by the European Central Bank. Although most people seem to be rooting for the 'little guy', its chances of winning the game of chicken they started seem slim. The new government doesn't like the 'gross indignity' of having to reform to pay back their excessive borrowing and it seems odd they want to borrow even more 'without strings'.
Data out over the weekend showed that China's trade performance slumped in January, with exports falling more than -3% from year-ago levels while imports tumbled almost -20%, far worse than analysts had expected and highlighting deepening weakness in their domestic economy.
But it did push its trade surplus to a record high.
In Brazil, the state-owned oil company is in a corruption and integrity crisis - so the government there has appointed a banker to sort it out. Seems an odd choice.
The oil price rose over the weekend on the American jobs data, and is now up to US$52/barrel with Brent crude at US$58/barrel.
On the other hand gold has fallen sharply and now at US$1,233/oz. China, for one, has sharply cut its buying.
We start this week with the New Zealand dollar about a cent higher than where it started last week. It is up to 73.5 USc, at 94.4 AUc, and the TWI is now at 76.9.
If you want to catch up with all the changes on Thursday before the long weekend we have an update here.
The easiest place to stay up with event risk is by following our Economic Calendar here »
Daily exchange rates
Select chart tabs
27 Comments
The new Greek government has been elected on the promise that they will do what is best for the Greek people. Any government that will do that, especially in the face of external pressure, gets my support. Obviously they are smart enough to realise that selling their assets, making people unemployed cutting wages and removing social welfare does the population no good. It doesn't even help pay back the loans. They are more in debt now then when they started the Austerity program, despite the short term boost of asset sales.
I wouldn't have lent money to Greece in the first place, and those that did, deserve to loose thier shirts.
I wouldn't have lent money to Greece in the first place, and those that did, deserve to loose thier shirts.
It's easy to lose money as DC confirms without the knowledge of doing so until the statement of pension P&L balances arrive in the mail.
In New York, benchmark UST 10 year bond yields keep have pushed higher on the labour market news and are now up to 1.96%. These rises will be reflected in local New Zealand swap rates at some point.
....just reported that in the latest week, EPFR data showed inflows to all fixed income funds of $16.04 billion – the highest on record going back to at least 2008. On the "other side of the spectrum were stocks that had $5.52bn of outflows Read more
Dear Germans, opps I mean pouggey,
Please accept this loan application of behalf of the Greek people. We need to borrow twenty billion euro asap. If you don't give (did I say 'give'? I meant 'lend') us this money we will be unable to repay you the money we already borrowed from you last time. In the past we have gone bankrupt and tax evasion is our number one sport, so there really is no security behind the loan so let's just call it 'a donation'.
The Greek people thank you for your kind donations.You are our favorite Germans ever! We are all in this together. Please forward your donation to the Greek tax office.
Until next time then,
Your fellow Europeans.
What Pisses Me Off About Greece's Debt Crisis
https://www.youtube.com/watch?v=xH7GCOYjj5E
It's the bankers that are winning !!
Great link btw,
https://www.youtube.com/watch?v=iVxaTC7Qp44
Thanks, this guy is fascinating.
As an aside, blows out "we want to go back to the gold std well"
Let the hair cuts begin. Out of date link but you get the idea. http://demonocracy.info/infographics/eu/debt_greek/debt_greek.html
and
Yep Greek debt is EU euro 360, 000, 000. 000 , and there are only 11,0 million people in this poor and relatively unproductive country ............
About 1 in every 4 persons is unemployed
About 1 in 2 are underemployed , meaning they are working part-time hours
Many of the rest work for the bloated government as civil (notoriously & moslty uncivil & rude ) public servants .
And civil servants , as we all know, produce absolutely nothing at all , they are just an expense
This year 2015 , they need to find 20 Billion Euros for interest and matruing debt .
It makes you wonder how this could ever have happened ,
and
Why the Northern Eurpoean Banks lent money so recklessly to Greek banks in the first place
"There are more Porsche Cayennes registered in Greece than taxpayers declaring an income of 50,000 euros (£43,800) or more, according to research by Professor Herakles Polemarchakis, former head of the Greek prime minister’s economic department."
Germans only have themselves to blame really.
US industrial production is a record highs so you could assume the jobs are real.
http://static.cdn-seekingalpha.com/uploads/2015/1/19/saupload_Global_2B…
Sorry , I am with the Greeks on this one . Much ( not all ) of the debt the Greek taxpayer is expected to pay back is Greek Bank Debt .
The Greek banks ran a massive casino on cheap German , Dutch and Nordic money.
And then the EU bailed those banks out , and passed the debt onto the Greek government , in other words ....... its citizens
Ordinary Greeks never benefitted from the reckless borrowoing and lending by Greek banks
The greek banks borrowed from Germans and lent it to property developers building hotels and resorts, shopping centres and all manner of useless stuff , that was not needed or viable at normal intrerest rates .
It was a property speculators paradise using other peoples money
These developers borrowed and spent like drunken sailors , and all drove around Athens in new Porsche Cayennes and other exepnsive luxury German cars .
In some respects Athens ( a poor city by Western Standards) looked like Monte Carlo , a wealthy millionaires paradise.
Tourists in the streets of the old city could be forgiven for thinking Greece was wealthy when you saw the flashy show of wealth by its denizens ........ all of it on borowed money.
Now ordinary ( and poor) Greeks are expected to pay for this mess .
They should simply default , and then leave the Euro ......... and give the Germans the finger
The bailouts were the method of keeping the patient alive while the organs are removed. It allowed the sale of assets at firesale prices, in a deflationary environment and took the debt from private banks and made the Troika into the 'bad bank.' Now taxpayers and Greeks are 100% on the hook for the loses, while non Greek banks should have zero exposure.
Don't forget the "money showers" that Keynesian Infrastructures received for their grand work, while taxpayers and ordinary Jo's went without. An inequality not seen since the palatial kings in marble and gold, and their peasants in their ancient huts and buildings.
Although I think it is the Italians with the weird legal loophole that puts fees and charges on building work when "it is finished" so they always have a half finished wall somewhere.
Look at Iceland now .......the Greeks should simply do what Iceland did , tell the bankers to take it on the chin .
The Icelandic Govt .would not make its citizens pay for bank debt , and Iceland defaulted , and has now fully recovered .
Its almost forgotten now , but the never ending Greek tragedy continues .............
The UK's Guardian (in collaboration with other outlets) is just breaking news of epic skulduggery by HSBC bank:
http://www.theguardian.com/business/2015/feb/08/hsbc-files-expose-swiss…
''HSBC’s Swiss banking arm helped wealthy customers dodge taxes and conceal millions of dollars of assets, doling out bundles of untraceable cash and advising clients on how to circumvent domestic tax authorities, according to a huge cache of leaked secret bank account files.'''
We should never let ourselves become immune to these revelations......
From 2012, the more things change..........................
http://www.interest.co.nz/opinion/58068/default-would-bring-great-miser…
We welcome your comments below. If you are not already registered, please register to comment.
Remember we welcome robust, respectful and insightful debate. We don't welcome abusive or defamatory comments and will de-register those repeatedly making such comments. Our current comment policy is here.