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

US inflation rising; US car loan defaults up; Moody's thinks China can't win; Eurozone factories buzzing; credit card benefits fade, UST 10yr yield 1.96%; oil down, gold down; NZ$1 = 66.8 US¢, TWI-5 = 70.7

US inflation rising; US car loan defaults up; Moody's thinks China can't win; Eurozone factories buzzing; credit card benefits fade, UST 10yr yield 1.96%; oil down, gold down; NZ$1 = 66.8 US¢, TWI-5 = 70.7

Here's my summary of the key events overnight that affect New Zealand, with news of a surprise jump in factory output in Europe.

But first, a regular survey of consumer expectations done by the New York Fed in February points to rising inflation, and growth in home prices, earnings, income and spending. Janet Yellen reviews their policy settings later this week and data like this will undoubtedly influence her. No hike is expected this month but expect signals that 'gradual' rate hikes are on track for 2016.

They may also be considering this: delinquencies on bottom-end American car loans have climbed to their highest level in almost 20 years. The level of “subprime” car loans overdue by more than 60 days rose to above 5% in February according to ratings agency Fitch. This is higher than the GFC peak and was the highest since October 1996 when it was 5.96%.

And another ratings agency is calling out China's strategy. China is bound to fail in at least one of its three conflicting aims to achieve growth, institute reform and maintain stability, says Moody’s as it engages in a war of words with Beijing over the country’s economic prospects. China’s three policy objectives formed an “impossible trinity”, the ratings agency said in a research report recently. Beijing could at best achieve only two of those objectives at one time, it said.

In Europe, industrial production grew at its highest rate in more than six years during January, driven by a sharp increase in output from Ireland. Production rose by +2.8% compared with the same month a year ago, reversing negative readings in December and November. Month-on-month it rose +2.1% and is the highest monthly rise since September 2009, when monthly output climbed +2.3%. Irish production jumped a remarkable +12.7% month-on-month.

One of the more under-reported aspects of the falls in our OCR and the parallel dive in our 90 day bank bill rate is that credit card rates have not moved, and certainly not given back any hikes that banks claimed they needed when the OCR was rising. Now credit card users are about to be stiffed again. In Australia, ANZ is withdrawing some of the benefits of their card reward programs, and they are not the first to do it over there. It is a trend that may well surface here.

In New York the benchmark UST 10yr yield is slightly lower in mid-day trade at 1.96%.

The oil price is also lower by $1 at US$37/barrel in the US while Brent is at US$39/barrel. American crude stockpiles continue to mount and Iran maintains little interest in a global production freeze.

The gold price is falling as well and is now at US$1,244/oz.

The NZ dollar is following all these commodity trends down too. The NZD starts today at 66.8 US¢, at 88.9 AU¢, and at 60.1 euro cents. The TWI-5 index is back down to 70.7.

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.

22 Comments

Indeed, Irish production in November, at 346.7m litres, up 46% year on year, albeit in a relatively weak period of the output cycle.

For the April-to-November period, Irish milk output was 15.8% higher at 5.46bn litres, according to European Commission data.

Kerry Group has expanded from its dairy commodity roots to higher value ingredients and foods, through both organic growth and acquisitions, which reached E900m last year, and which Mr McCarthy signalled would continue, with the company having an active pipeline of potential acquisitions.
http://www.agrimoney.com/news/milk-is-the-new-oil---boding-ill-for-pric…

Up
0

Fonterra launched infant formula for NZ children,, Anmum in NZ on Monday. Are we going to see wholesale buy up by tourists?
http://www.fonterra.com/nz/en/hub+sites/news+and+media/media+releases/f…

Up
0

It doesn't look good for either milk or China.

Up
0
Up
0

Actually this is a really important article. As the economic situation begins to bite in China, the population control problems will become huge for Chinese authorities. they already have aspirations into the South China Sea, Antarctic and Pacific. It has long been a traditional diversionary tactic of Governments to distract populations from internal issues by starting, or causing a war to be started. The Chinese Government has demonstrated its ambitions, as well as resistance to be restricted by other global powers (when looking at America, who can blame them?). How soon before the war starts?

Up
0

chinese insurance company has gone from 60 million to 253 billion in 12 years, now buying up hotel groups in the USA has a lot of people scratching there heads

http://www.cnbc.com/2016/03/14/who-is-the-chinese-firm-behind-13b-starw…

Up
0

Over the last several years, companies have been spending on buybacks instead of investing in productive capacity. 1900 of the S&P companies spent more on buybacks and dividends than they were earning, thus creating more debt.

There's Only One Buyer Keeping S&P 500's Bull Market Alive

Up
0

The 2017 milk futures contracts saw double-digit losses for several days last week.
http://www.agweb.com/article/bleak-outlook-for-milk-futures-naa-anna-li…?

Up
0

"Subprime car loans" to quote Bob Dylan; When will they ever learn? I bought a new ranger last May. When negotiating a deal I learned that cash is no longer king! What they wanted was to hook me into a finance package at 9%. Bugger that, paid cash instead. Not gonna play that game at all! Wish a lot more people were smart enough to figure that too.

Up
0

It is the actual business plan. Customer pays cash, margin only is gained. Customer uses onsite credit for purchase, there is the opportunity to upsell to a higher priced model and a commission as well as margin. You may note that there is a lot of stock in a particular price range with repayments around $80-$100 per week over 3-5 years, $3000 minimum trade in. That is the sweet spot for most, the trade in is factored as worth nothing and dumped to auction but satisfies the finance companies 25% deposit, finance $9000 of a $12000 car that cost the dealer $6000. Margin $3000, commission $1000, Auction $800 ish.....

Up
0

Did someone say Russia

http://www.bloomberg.com/news/articles/2016-03-13/putin-s-50-billion-oi…
Russian banks are sitting on the most cash in five years, allowing them to lend to each other at a lower rate than they borrow from the central bank.

https://m.youtube.com/watch?v=JlSQAZEp3PA

Up
0

LOL is funny seeing Richard Barker of Auckland Airport Company trying to put a positive spin on Taxi fare reductions in the face of technology based competition from Uber .

Thank God for technology

Up
0

classic case of capitalism not working properly, you would think with more and more taxis on the road it would force prices down but it does the reverse as they all have to up their minimum charges to make a living

Up
0

Not just Taxis..

Shame its is the same for Ladies Dresses, products, etc...

Just followed a lady through a Supermarket checkout...Said husband would be mortified by the Bill...$275 for a heap of tat...to try and rejuvenate her youth...

(No chance, if beauty is in eye of beholder...me)'

Husband will .probably will have a heart attack!!??.

I have a favourite saying...

Q.."Why do men usually die before ladies?.

A.. Ladies drove em to it....anyway they can.

Up
0

Easy to ridicule women being obsessed with how they look.
.
Takes a bit more thought to understand that women focus on their looks because they have grown up in a society which teaches them - from a very young age - that this is the only thing of value they possess (youth and/or beauty)
.
Husband may have a heart attack, but he could have chosen a wife not based on looks, but based on ability.
.
Maybe if everybody started to appreciate women fior who and what they are, rather than solely what they look like, we might get a generation of women not obsessed by appearances and shopping?
.
Just a tought.

Up
0

I have known a significant number of women who had long since realized that it was not "society" to blame, but their own perceptions which led them to attempt to compete with other women to keep up appearances. As with all religions in the face of demonstrable truth and logic, dated female perceptions of acceptable body image and behaviour are slowly melting, but will cling to imaginary and fabricated ideals for a while to come. As has been said, "Women and cats will do as they please, men and dogs may only accept that it is so."

Up
0

In no way does western society influence women to appear youthful and beautiful. I certainly can't recall ever seeing an advertisement on television or in a magazine that encourages youth and beauty... Can you?

Up
0

Spinach - you mustn't get out very much, if this is really what you think.....

Up
0

Going to be close. "However, when likelihood to vote is taken into account, the Leave campaign would win on 52 per cent of the vote, with remain trailing on 45 per cent."
http://www.telegraph.co.uk/news/newstopics/eureferendum/12193963/EU-ref…

Up
0
Up
0

More than one in five small to medium businesses are directly feeling the impact of falling dairy prices, according to a survey by accounting software firm MYOB.

That implies about 100,000 businesses employing upward of a million New Zealanders are taking a hit.
http://www.nbr.co.nz/article/myob-says-21-small-businesses-hurt-dairy-d…

Up
0
Up
0