Here's my summary of the key events over the weekend that affect New Zealand, with news all eyes are on key data this week as economic concerns rise.
The coming week will provide clues on whether the global economy is escaping from its lackluster growth rut, amid growing angst of another downturn - which central banks have few tools left to fight.
We will be getting key Chinese data on trade and inflation and no-one is expecting strong results. In fact, we may also get more announcements from China of economic support measures. A bright spot there are property sales however, and recent retail data has been encouraging. And overnight, data on new September lending came in very strong.
China is considering aggressive new curbs on coal consumption as it accelerates efforts to transform its economy and tackle climate change. The swiftness of the moves it is making in this area are certainly unsettling countries like Australia.
The Europeans are reported to be readying for more QE as their next rate assessment is due on October 23.
And the US will publish data on retail sales, inflation and consumer confidence that will be closely watched this week. Over the weekend, Fed vice chairman Fischer said that a rate hike in 2015 is an 'expectation and not a commitment'.
One way countries could bolster their tax base is to tax multinational corporations more effectively. The OECD has said that could raise up to US$250 bln a year. The companies however seem to have much more agility than governments, so it is hard to get too excited by the prospect.
In New York, the UST 10yr yield benchmark inched higher again on Friday and not reflecting the debt ceiling issue yet; is currently at 2.09%.
The local financial press has been making a lot recently of the rise in the cost CDS spreads - the cost of 'insuring' against credit risk. They had been rising sharply until about the end of September, but since then they have fallen more quickly than they rose. They are down more than -15% since the peak, now back to level we last saw at the end of August. Still, they have another -15% to fall to get back to the long run average for 2015. High CDS spreads makes retail deposits more attractive for bankers than wholesale funding.
The US benchmark oil price is unchanged at just over US$49.50/barrel, but Brent is marginally lower at just on US$52.50/barrel.
The gold price jumped higher at the end of trading in London and New York, now at US$1,157/oz.
The New Zealand dollar starts quite a bit higher this week. It will open at 67 US¢, at 91.3 AU¢, and 59 euro cents. The TWI-5 is at 71 and its highest since July.
Later this morning we will get the September data for house prices from the REINZ. And on Wednesday, the Government will report its audited financial result to the year ended June. On Friday, local CPI data is released.
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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7 Comments
The same trite nonsense that we are meant to accept from Bernanke.
And we’ve got what I used to call ‘the global savings glut.’ There’s a lot of savings looking for return. There’s not that much in terms of really high return investments available. I think that’s not Fed policy. I think that’s just where the world is right now.” Read more
Reuters calculates that central banks in those four countries alone have spent around $7 trillion in bond purchases.
The flow of easy money has inflated asset prices like stocks and housing in many countries even as they failed to stimulate economic growth. With growth estimates trending lower and easy money increasing company leverage, the specter of a debt trap is now haunting advanced economies, the Group of Thirty said.
According to an IMF report issued this week, there is "excessive" lending of $3 trillion in emerging market economies, an average of 15 percent of gross domestic product, which runs the risk of unwinding should economic conditions worsen.
"Capital losses would affect many investors, including banks, and the process of extend and pretend for poor loans would have to come to a stop," the G30 report said. Read more
It's past time to be rid of the ex-tenured academic zero cost money fabricators and face down the cost of the extraordinary debt they fostered.
And lest we forget - "Rather than banks receiving deposits when households save and then lending them out, bank lending creates deposits" - Bank of England
And yet some feel there is more to be done.
http://m.smh.com.au/business/banking-and-finance/anz-plans-homeloan-hom…
Don't worry, we are heading to mars where conditions for growth are infinitely moar difficult, so once we have failed miserably to fix the relatively minor problems on earth, we will fail so much more dramatically to even come close to resolving any of the issues which currently make mars inhospitable, yet so alluring. At least that seems to be the plan, for all that we can call it 'a plan.'
I'm just chillin out, on the farm, trying really hard to gaf.
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