Here's my summary of the key issues over the weekend that affect New Zealand, with news of a new surge in property investment from China by their frightened wealthy.
But first, Federal Reserve chairwoman Janet Yellen has repeated her view that the central bank is likely to start raising interest rates this year. Recent weak economic data and a call from the IMF to delay a rise until 2016 had dampened expectations of a 2015 increase. She is ignoring them and in a speech over the weekend said that it would be appropriate to start "normalising" monetary policy this year. Bond markets may be headed for a fall this week.
Across the Atlantic, and oddly, the Greek government asked for and got harsh concessions from its parliament - all the EU was looking for and more - to try and stay in the eurozone. They are offering that to get a €54 bln bailout.
But European finance ministers did not agree on a bailout, which would have made it their third since 2010. Following their impasse, the heads of EU governments met and concurred, saying no more money until the Greeks enact key reforms. Meetings are on-going. Basically, no one trusts the Greeks to do what they claim, even when they pass laws saying they agree to bailout terms. They used up all their credibility in the pre-negotiations. Grexit seems even more likely now.
In Asia, and despite two days of stock market gains, the numbers in China make the Greek crisis look like chicken-feed. More than $4 tln in value has been lost, more than $250 bln in margin loans are outstanding. And this is affecting more than 90 mln retail investors. Chinese equity markets are all about retail investors unlike Western markets which are dominated by professional fund managers and pension funds.
The stock market turmoil in Shanghai is having echoes here. Real estate agents the world over are bracing for a surge of new interest in their already hot property markets, with early signs that wealthy Chinese investors are seeking a safe haven from the turmoil in China's equity markets.
In New York the UST 10yr yield benchmark jumped at the close last week on the assumption the Greek crisis would be resolved, rising to 2.40%. Yields may get a further push higher today on the Yellen comments.
Oil markets held their lower levels on Friday. The US benchmark price is now just under US$53/barrel, and Brent crude is just under US$59/barrel.
The gold price is also holding its recent low, now at US$1,160/oz.
And the Kiwi dollar opens the week essentially unchanged from where it ended on Friday at 67.2 US¢, at 90.5 AU¢, and at 60.3 euro cents. The TWI-5 is still at 71.5.
If you want to catch up with all the local changes on Friday, we have an update here.
The easiest place to stay up with event risk today is by following our Economic Calendar here »
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14 Comments
NZ CPI data out on Thursday. - predicted .3%?
Which will show the RBNZ has missed the 1-3% inflation target again.
However, now that they have given up on trying to use interest rates to contain the Auckland housing market (handed it back to the Govt) they are now free to get inflation lifting to target levels.
and consequence of the lower dollar is that (for example US $) one million dollars from overseas will now buy a 1.5 million (NZ) house here - an increase of $370,000 in just a few months.
Great buying for the wealthy mentioned in above article looking for a safe haven for their money - in a place without any meaningful restrictions on overseas buyers.
National's complete failure regarding climate change:
http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=114…
Short termism applied to every single problem they face.....
For example, their approach to:
a) Housing and ownership of Kiwi assets
b) The Superannuation issue and the age of retirement
c) Capital gains tax and the re-orientation of our tax system
etc etc....
But then what does this say about the average Kiwi voter who has given them a mandate 3 times on the trot?
Dream on - the groups like the unemployed, students,ethnics, minorities and so on that would normally be considered natural labor voters are just too lazy to vote so National will be a shoe in again.
This is why National resist the calls to make voting compulsory like it is in Oz.
Or the media convinces them that the Nats are a shoe in and their vote won't mean anything. Or naysayers convince them that everyone is just as corrupt as the Nats, so why take time away from putting bread on the table by voting (e.g., "Dirty Politics": they all do that...NOT SO)..
It says that those voters them selves are selfish short-termists. This national, or any incumbent government is only in power because the alternative is not acceptable to the majority of the population. They have had 3 terms because Labour are not seen as capable of providing an improvement in that time. The very notion that voters would once again vote out a government just to be rid of them and in disregard of the likelihood of a poor replacement shows the poor level of attention that all voters should commit to who leads them and how best to select them.
I feel many people are just incapable of casting an educated vote and are simply cajoled into a selection by savvy campaigners dishing up what they want to hear.
i dont think labour are the danger i think it will be NZF that will take away national voters, if they take enough national can not govern with out NZF help and WP will not Forgive JK so big problem there.
the talk is shane jones will reappear and stand in northland for NZF if so then they have a real problem as he is a true sucessor to WP and can carry on NZF
It says that these voters are no different from the Greeks, they vote for the best party available at the time, (and one must win!) so from a mix of parties buying short term votes chaos and eventual demise arise. All our pollies, irrespective of colour (red, green, blue) are demonstrably corrupt to some degree (take a look at their personal remuneration packages, and tell of any other job that has it so good). So the next election may see a choange of colour in Government but bugger all change in outcomes
Cabbages, the commodity to be in :-);
In fact, cabbage is now more expensive than steel in China. Despite a water content of more than 90 per cent, cabbages were pricier by the tonne than the most popular type of steel, known as hot-rolled coil steel, according to commodity price index publisher Platts.
http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=114…
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