US durable goods fall; South Africa hikes rates; HSBC blocks lending to some Chinese; China makes second huge liquidity injection; UST 10yr 2.02%; oil up, gold down; NZ$1 = 64.8 US¢, TWI-5 = 70.1

US durable goods fall; South Africa hikes rates; HSBC blocks lending to some Chinese; China makes second huge liquidity injection; UST 10yr 2.02%; oil up, gold down; NZ$1 = 64.8 US¢, TWI-5 = 70.1

Here's my summary of the key events overnight that affect New Zealand, with news of a rise in the oil price, and talk of output restraint.

But first, in the US, in December, the level of new orders, shipments and stocks for durable goods all fell from November, although the data was mixed year-on-year.

And the American home ownership rate also fell, ending the year at 63.8%. That is down from 65% twenty years ago, although in the intervening period it did get up to 69%. One eye-catching piece of data in this release is the sudden jump in rents to US$850/month. Still, that is only about NZ$300/week. (In New Zealand, the home ownership rate is 63.5% as at December 2015, and house rents average NZ$385/week.)

Overnight, South Africa’s central bank ramped up its policy tightening by raising their benchmark rate by +0.5% to 6.75% on increasing concerns of imported inflation as their currency weakens sharply. Inflation is now over +5% pa following a -15% fall in their currency.

Europe's biggest lender HSBC said will no longer provide mortgages to some Chinese nationals who buy real estate in the United States, a policy change that comes as Beijing is battling to stem a swelling crowd of citizens trying to get money out of China. No word of any similar policy applying here.

China's central bank has made a second big injection of funds into the financial system this week to ease a short-term liquidity strain before the Chinese New Year holiday. Today it is another NZ$80 bln on top of the earlier NZ$100 bln earlier in the week and far more than what they did prior to last years holiday.

The rapid rise in Chinese visitors and migrants will have a direct impact on our retail industry - from supermarkets all the way to roadside farm-gate stalls. An organised system of local shoppers - the daigou - have a very profitable business buying here and shipping back to 'family and friends'. Infant formula is just the tip of this iceberg. Amazingly, they are buying retail.

Thirty one countries of the OECD have agreed new standards and protocols to help stamp out tax avoidance by multi-nationals. Australia was one of them as were most of Europe. They were not joined by either the US, Canada or New Zealand. Not sure why yet.

In New York, the benchmark UST 10yr yield has risen marginally today and is now at 2.02%.

The oil price is higher as well and in now straddling US$34/barrel on both benchmarks. A Russian official said that Saudi Arabia has proposed that oil-producing countries cut output by up to -5% each in response to low prices. At the sovereign level, there is increasing worry over oil-led defaults due to the very low prices.

The gold price is down marginally, now at US$1,115/oz.

The Kiwi dollar starts today at 64.8 US¢, at 91.3 AU¢, and at 59.1 euro cents. The TWI-5 starts today at 70.1 which puts it back to levels it was before yesterday's RBNZ review. The dip on the Wheeler comments was temporary.

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 ».

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15 Comments

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Which month in 2016 is the GFC2 tipped to really emerge definitively?
Will the ensuing liquidity crisis that ensues effectively halt borrowing?

Funny you should mention possible credit shortages - it has highlighted the value of gold as a collateral source for liquidity. Note how easily BIS officials entered into an unauthorised rehypothecation collateral chain with banks on behalf of their unallocated gold creditors.

Read more and more

And some more:

Greenspan's Stunning Admission: "Gold Is Currency; No Fiat Currency, Including the Dollar, Can Match It"

https://www.youtube.com/watch?v=DBf8fof6TRY

"Thirty one countries of the OECD have agreed new standards and protocols to help stamp out tax avoidance by multi-nationals. Australia was one of them as were most of Europe. They were not joined by either the US, Canada or New Zealand." Is this another instance of JK sucking up to money? He is a banker after all.

Another point on another matter, the media furore over the TPPA and Littles expressing that Labour will not support it seems to have forgotten that there is an entire document of the TPPA that remains completely secret. One must ask why?

I thought the full text had been released on the 26th?

https://tpp.mfat.govt.nz/text

Sorry my mistake. you are correct. I misread an earlier report.

They were not joined by either the US, Canada or New Zealand." Is this another instance of JK sucking up to money? He is a banker after all.

Hmmmm.

How The Rothschilds Made America Into Their Private Tax Fraud Backyard

But Australia signed up, and their prime minister used to run Goldman Sachs in Australia. I doubt your point is relevant, just random coincidence.

The fact New Zealand didn't sign up is significant - I was just too lazy to parse the relevant reference comment for it's political content.

Yup. Money talks. Our governments are just as guilty and need to be held to account much more. How does gullible Joe public get educated though?

is it no surprise NZ has fallen down the corruption ladder with the leader we have, plenty of backroom deals happening and not to sutle

There's a minimum of 195 countries in the world and a maximum of 300 plus,depending on your definition of a country.I think we are ranked 4th on the least corruption scale,so i won't be losing any sleep over it.

Fonterra is set to sack more staff and lay off contractors that work closely with the dairy giant.

The company has demanded a fresh 10 percent 'across-the-board' saving from thousands of suppliers and contractors.
http://www.3news.co.nz/nznews/fonterra-to-cut-further-jobs-2016012913?

deja-vu

This is reminiscent of Coles Supermarkets in AU just last year - 2015
They squeezed all their "suppliers" for price cuts
Then it blew up in their face
They were charged with abuse of dominant market power
ACCC appointed Professor Alan Fels a past chairman of ACCC to adjudicate
Many, most, if not all suppliers were reimbursed

Now watch what happens in NZ in this case

Any bets? Ho-hum- It'll be yesterdays news tomorrow