sign up log in
Want to go ad-free? Find out how, here.

US growth and jobs pick up; but OECD downgrades forecasts; AU bank behaviour frustrates ASIC; UST 10yr yields jump again; oil and gold lower NZ$1 = 71.4 US¢, TWI-5 = 75.4

US growth and jobs pick up; but OECD downgrades forecasts; AU bank behaviour frustrates ASIC; UST 10yr yields jump again; oil and gold lower NZ$1 = 71.4 US¢, TWI-5 = 75.4

Here's my summary of the key issues from overnight that affect New Zealand, with news of serious accusations against the culture at the big Australian banks.

But first, the US Federal Reserve said overnight that economic activity expanded from early April to late May and growth was expected to continue at a "modest" to "moderate" pace against the backdrop of declining oil and gas investment. It was a fairly rosy assessment.

American data out overnight also impressed. Their trade deficit shrank on higher exports and lower imports, mainly of oil. And the ADP Employment Report, the precursor to their Non Farms Payroll report, showed rising jobs growth.

That contrasted somewhat with the OECD who downgraded their forecast of American economic growth. Rather than 3.1% growth this year, they now see the giant US economy growing at just 2%.

In the same assessment, the OECD noted that jobs growth will pick up in New Zealand as our economy stabilises at a healthy level. But they called for more housing supply in Auckland and for "taxation of trading gains on property extended and more strongly enforced".

Europe reported slightly lower jobless levels overnight continuing a trend, but they are still at the crazy level of 11.1% on average. The range is 4.7% in Germany to 25.4% in Greece.

In Australia, ANZ has been named as one of the big banks frustrating an official ASIC investigation into the fixing of key market interest rates, in behaviour the corporate regulator has reportedly called 'absolutely appalling'.

And yesterday's Q1 GDP data showed that Australia’s economy grew at the fastest pace in a year as they shipped more minerals abroad, built more homes and bought more consumer goods. It was an upbeat surprise that sent the Aussie dollar higher. But observers doubted the Q1 result can be repeated.

In New York, the UST 10yr benchmark yield jumped even further in trading today. It is now up another +9 bps at 2.36%. This is a very dramatic rise in benchmark interest rates and is being reflected in the long end of the New Zealand swap curve and that will undoubtedly get even steeper in local trading today. Internationally, bond markets see inflation looming. There may be 'brutal' consequences for bond market investors however.

The US oil markets are lower today with the US benchmark price now back under US$60/barrel again, and Brent crude is under US$64/barrel. OPEC signaled overnight that it is set to carry on pumping oil nearly flat-out for months more, content that last year's shock market therapy has revived demand and knocked back growing competition.

The gold price is down as well, by $10 to US$1,184/oz.

The New Zealand dollar is also lower this morning, currently at 71.4 US¢, at 91.9 AU¢, and at 63.5 euro cents. The TWI-5 is at 75.4.

If you want to catch up with all the local changes yesterday, we have an update here.

The easiest place to stay up with event risk today is by following our Economic Calendar here »

Daily exchange rates

Select chart tabs

Daily benchmark rate
Source: RBNZ
Daily benchmark rate
Source: RBNZ
Daily benchmark rate
Source: RBNZ
Daily benchmark rate
Source: RBNZ
Daily benchmark rate
Source: RBNZ
Daily benchmark rate
Source: RBNZ
Daily benchmark rate
Source: RBNZ
End of day UTC
Source: CoinDesk

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.

17 Comments

In Australia, ANZ has been named as one of the big banks frustrating an official ASIC investigation into the fixing of key market interest rates, in behaviour the corporate regulator has reportedly called 'absolutely appalling'.

Any arrests? Nope. Words are cheap, as are fines, other than to shareholder finances.

Outrageous bank behaviour is the norm since they insist on maintaining excessive rent seeking returns from both borrowers and savers. Read more

Up
0

Words are indeed cheap! That the Chairman of the organisation making this comment re ANZ is 'appalled', smacks of 'pot calling the kettle black'. You, as I do, may know him from the present or the past. Time may heal all, but it doesn't erase facts.....

Up
0

You, as I do, may know him from the present or the past

hmmm - bigger the fall, bigger the safety net. Captured?

Up
0

I wrote a longer reply, and have decided that I have to be careful with what I say, but nothing in that article surprises me.

Up
0

There has been a tendency to see the big Australian banks as being free of the worst excesses of their sisters in the US and Europe - the sort of malfeasance that HSBC has indulged in.

I very much doubt that is true. I simply think they have so far avoided being caught and/or have not yet been investigated deeply enough. Why would our banks behave any differently from any of the other big banks?

Up
0

Banks are just a place to store money temporarily until a rational place to invest can be identified. The alternative is under the mattress but er indoors might find it and spend it. Its expensive storage though.

Up
0

There may be 'brutal' consequences for bond market investors however.

More than most ever anticipated as they seek to ditch safe havens without exits.

ICAP PLC is studying the possibility of temporarily halting Treasurys trading following large price moves, according to people familiar with the matter. Read more

But hey, the carnival barkers for lower interest rates never had skin in the game, hence no exit strategy was anticipated - good luck to all those about to endure a pension valuation haircut more consistent with that experienced under the guillotine.

Up
0

Uh...no skin in the game? what the heck do you think keeping businesses going so they dont make ppl un-employed is? How many ppl in NZ are employed in real businesses V financial parasites who pray on them? Use the system to "win" both ways as you seem to be determined to achieve?

Sure pension valuations are going to take haircuts and massive ones at that, 60~75% as assets, bonds, shares etc collapse in value or default. I lost what looks like 2/5th of one pension in 2008, 90% of another lumpsum investment due to naively trusting such ppl as the CEO of Northern Rock were honest chaps looking out for their customers/clients, yeah right. Since then I've awakened to the incompetent and parasitic behaviour of the financial industry running a ponzi scheme.

"guillotine" LOL, as Kunstler says the ones to be worried are the financial parasites who are likely to end their days swinging from lamp posts or taken for a drag behind their limo after the pensioners loose everything. Meanwhile of course they are looking for safe havens to hide like in NZ. I really wonder how they think NZers will react to them "lording it" over them from their lifestyle blocks, not to well I think.

Up
0

Uh...no skin in the game? what the heck do you think keeping businesses going so they dont make ppl un-employed is?

Provide some evidence that you and not me and my cohort secure business with working capital etc funding via bank intermediation processes.

Up
0

As usual, mums and dads are set up to be toasted. The US regulators have tidied up the banks and shifted the risk to mutual fund holders.

http://www.bloomberg.com/news/articles/2015-06-03/wall-street-sounds-bo…

Up
0

Mum and Dad are indeed toast candidates. From the OECD, and replace "Australia" with NZ, and 'commodity' with dairy and see what we get:

"The OECD said offshore risks “remain prominent” for Australia. “If current commodity prices persist, or head down further, then revenue impacts will deepen and cutbacks in production could become substantial,” it said. “Domestically, the continuing property market momentum adds to the risk of a sharp correction and there are sizeable upside and downside uncertainties in the strength of household spending growth.”

Up
0

Banks in the spotlight over interest rates on credit cards which have not fallen at all

Senator Jacqui Lambie said huge mark-up on credit card rates made "payday lenders look like charities".

Comment stream
ASIC barking is like government saying they go after corporations avoiding tax.
All talk, little action, just to placate the plebs.

http://www.businessspectator.com.au/news/2015/6/3/financial-services/as…

Up
0

Muddy Waters Warns on Chinese Stocks: “Largest Pump-and-Dump in History”

http://wolfstreet.com/2015/06/01/muddy-waters-warns-on-chinese-stocks-l…

Up
0

Who would have picked it. ;)

Just as well Fonterra borrowed all that money to buy stocks in Chinese Bearing Mate since the Chinese will pay far too high prices for infant formula.

Perhaps their whole economy really has growth 77% in 6 months. maybe it's not just bubble munny rushing around in circles inflating itself

Up
0

I note James Shaw's (new Greens Co-leader) comment re economies and ours in particular that "profits are privatised, but risks socialised" Is this and example of this - that is the regulatory authorities reluctant to hold large corporations and banks accountable for predatory behaviour?

Up
0