Here's my summary of the key events overnight that affect New Zealand.
The pre-cursor report to US job and wage growth data to be released this weekend, shows employment levels in the States are surprisingly on the upside. The ADP jobs report out today shows private US employers added 214,000 jobs in February, with the rise largely coming from the services sector.
Chinese government officials are calling for calm. In an echo of China's stock buying frenzy last June, leveraged property speculators are snapping up homes in the country's top-tier cities, in the hope prices will keep surging. Property prices in the business hub of Shenzhen have already risen by more than 50% over the past year - the fastest pace since at least 2011.
Bloomberg reports, "The boom, fueled by monetary stimulus and a loosening of property curbs in February, shows how government efforts to revive the world’s second-largest economy risk fueling asset bubbles instead."
Staying in China, Moody's has lowered its outlook on China's credit rating from stable to negative. It cites a weakening of fiscal metrics and a continuing fall in foreign exchange reserves. The rating agency also notes uncertainty over authorities' abilities to implement the reforms needed to address imbalances in the world's second-largest economy.
Locally, swap rates responded to the shift to higher yields and are likely to continue to push higher today.
Oil prices have remained stable overnight, despite the US's weekly EIA report showing crude inventories have risen to their highest levels since 1930. The US crude price sits at US$34/barrel, while Brent is just below US$37/barrel.
The gold price is slightly higher at US$1,240/oz.
The NZ dollar remains relatively unchanged from this time yesterday at 66.3 US¢ and 61.1 euro cents. The Aussie dollar is riding out its high, following yesterday's announcement the Australian economy grew a remarkable 3% year-on-year in the December quarter. It's up nearly a cent against the NZD compared to 24 hours ago, at 91.2 AU¢. The TWI-5 is at 71.3.
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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7 Comments
American companies have decided that their best option is to borrow at low interest rates, and use the money to buy back, their own shares. It's bigger than you think. In fact nearly all borrowings for the last few years have gone toward share buybacks, as opposed to investing in new capital. All of these companies CEO/COO/CFO's etc have stock linked remuneration. Share buybacks raise the share price, boosting their bonus. It's basically robbery, but noone gets punished. The companies will soon be crushed because they have'nt made the investments that will pay off the debt, instead they have sucked capital out of the company.
People with Chinese sounding names couldn't possibly be involved in a credit driven property bubble
there is a big difference between gambling , speculating and investing. and sky city is not full of those with a investing bias
Well...here comes the tidal wave of Chinese money into Auckland housing. Avg will be min 1.25 by end of the year. Cheap compared to Vancouver tho.
Yet still completely irrational
In New York the benchmark UST 10yr yield has jumped in mid-session trading today. It is now up to 1.87% following a strong move up that started in late trading yesterday. So far, this has added +12 bps to benchmark yields....Markets are clearly accepting the US Fed will continue with its hike plans, based on continuing good signals from the US economy and its labour market.
May be not? - Courtesy of Stone McCarthy and Credit Agricole, both of whom point out our favorite repo market "stress" indicator, the "specialness" level of the 10Y, we now have the answer: as of this morning, there has been an unprecedented spike in new shorts manifesting itself in a plunge in the repo rate on the 10Y alone even as all other points on the curve remain largely unchanged. Read more
You have to remember the Mainland Chinese have never experienced a proper downturn in property....yet.
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