Here's my summary of the key issues from over the weekend that affect New Zealand, with news on the Greek-EU negotiations.
Greek Prime Minister Tsipras has "declared victory" after agreeing a conditional financial rescue deal with Europe and despite making big concessions to avert a banking collapse within days.
His celebration may be short-lived however. He has agreed to show how Greece will adjust to meet its debt obligations. He's got till tonight to present his plan. His foreign supporters think he has caved in and doubt he can deliver what he has claimed. It will not be long before similar sentiment is expressed in Athens. Winning his election with illusions of "money for the people" was the easy part. Dealing with the Northern European creditors is something very much harder.
Separately, a whole set of advance manufacturing and other purchasing manager indexes were out over the weekend and they told a reasonably upbeat story.
Strong US manufacturing output is being "sustained in February" with an expansion that has been going on since late 2009.
Eurozone growth hit a seven-month high and job creation was at its fastest level since 2011. True, that is not a high bar and is driven by Germany, but you may be surprised to learn that France is now contributing to growth - not from its factory sector but from its services sector.
Japan also put in another solid growth performance in February.
China is still on their Spring Festival holiday shutdown so there is very little economic news from the world's second largest economy. The completeness of their shutdown is impressive; actual output usually drops more than 50% in the first quarter because of it.
We should also note that Lee Kwan Yew, the founding father of modern Singapore, is in intensive care with severe pneumonia. He has produced a giant legacy.
The UST 10yr yield rose further to 2.12% in New York on Friday, recovering the up trend after that temporary adjustment from the FOMC minutes. It is likely that wholesale rates will track the same way in today's local markets. We start today with our swap rates for terms 3 - 10 years at their highest levels in more than a month.
The crude oil price, however, starts the week lower at US$50/barrel with Brent crude up a tick at US$60/barrel.
The gold price starts at US$1,199oz. Russia is reported to have stopped buying.
The New Zealand dollar has pretty much flat-lined since Tuesday, and should open at 75.2 USc, at 95.9 AUc, and the TWI is at 78.4.
If you want to catch up with all the changes on Friday, we have an update here.
The easiest place to stay up with event risk is by following our Economic Calendar here »
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5 Comments
Do you believe New Zealand is in a better space beyond the fact that the citizens have "yet" to inherit the liability of the government liquifying the inevitable failure of the indebted to do so? Check out the bank claims against fewer than 4 million working New Zealanders and tell me without choking with laughter or despair they are good for NZD 371.610 billion @ an average cost of 6.00% PA when a sub 5.00% PA handle might just be around the corner.
ergo how can anyone expect the NZ Govn to step in and guarantee the debt.
In a way we are similar to Iceland, a lot more than iceland is simialr to greece as baotman likes to try and claim.
The only logical action is to trigger the OBR.
So back of fag packet calcs, 370billion, NZ GDP, 185billion.
Even if you said we would pay that back at 5% per year,
That is 40 years, and sucking out 5% of GDP for 40 years would leave us a shell of an economy/country.
How much do depositors have on term deposit?
Though I assume that 370billion is total debt, by this I mean that if houses dropped 50% the lost capital would be 370/2 = 185billion.
Putting that debt aside as I assume all debt will be defaulted on, yes I think NZ is in far better place than most oher countries.
Yes we all agree on that I think.., but the Euro Masters wont allow it...
"But the impact on Greece itself could be chaotic, and a bad precedent for the euro. The impact on the European project of pushing out a country as historically and spiritually important to Europe as Greece would be dire. It would look like abandonment. It would look like victimisation. And it would look like bad management. The most benign outcome would be that the Syriza government starts delivering the reforms that the country would need whatever its circumstances, reforms that earlier governments often ducked, and then, later, gets the easing of debt that it also needs."
http://www.theguardian.com/commentisfree/2015/feb/22/guardian-view-gree…
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