Here's my summary of the key events overnight that affect New Zealand, with news we will get key April migration data today.
But first, the number of Americans filing for unemployment benefits fell from a 14-month high last week, the latest sign the economy was picking up speed in the second quarter and likely would be healthy enough for the US Fed to raise interest rates in June. Reinforcing the message, the chief of the NY Fed came out supporting a June hike. The US dollar rose following his comments. The stock markets fell with their usual mini-tantrum.
In Europe, they have slipped back into deflation in April.
In South East Asia, we should note that both the Malaysian and Indonesian central banks have been reviewing their policy interest rates and both decided not to cut.
The next country to taking interest rate action will probably be Mexico. And they seem likely to hike rates, probably by +50 bps. That would be on top of their similar hike in February.
And the giant Chinese dairy brand Yili, which owns the Oceania dairy factory in South Canterbury, has been named the top Chinese brand.
Locally, keep an eye out for our tourism and migration data that will be out at 10:45am today. Migration is a key influence on our economy and this data is followed more closely these days. Tourism numbers are also now a key economic factor.
In New York the benchmark UST 10yr yield rose again today to 1.85% on the NY Fed remarks.
The oil price is still basically unchanged with the US benchmark just over $48/barrel and the Brent benchmark just under US$49/barrel.
The gold price fell for a second day in a row and again by more than US$10 and is now at US$1,255/oz.
And finally today, the NZ dollar is holding its own against the greenback and will start at 67.5 US¢, at 93.4 AU¢, and at 60.3 euro cents. The TWI-5 index is now at 71.5.
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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25 Comments
Too much debt, any increase in interest rates makes servicing the debt more difficult which will likely cause economy to go back into recession.
Entertaining look at the issue of debt in Europe https://www.youtube.com/watch?v=I5QwKEwo4Bc
Well down on the farm we know all about deflation
http://finviz.com/futures_charts.ashx?t=ZW&p=m1
http://finviz.com/futures_charts.ashx?t=ZL&p=m1
just as long as it doesn't happen to the beef market
http://finviz.com/futures_charts.ashx?t=FC&p=m1
However my local council has had no problems justifying a %10 rate increase. In California cattle are selling for $1.20 a lb back from $2.49 two years ago and the lowest prices for 10 years, thank god China has stepped into the breach and is taking so much of our beef. A China is rock solid,right?
http://davidstockmanscontracorner.com/red-ponzi-update-gambling-like-ne…
The Red Ponzi, Classic! David Stockman called this one years ago. Here's AEP chiming in:
"China's debt is approaching $30 trillion. The fresh credit alone created since 2007 is greater than the outstanding liabilities of the US, Japanese, German, and Indian commercial banking systems combined."
"To put matters in context, leverage rose by roughly 50 percentage points of GDP in Japan before the Nikkei bubble burst in 1990, or in Korea before the East Asia crisis in 1998, or in the US before the subprime debacle. This gauge is an almost mechanical indicator of a future credit crisis.
As we all know, China is in a class of its own. Debt has risen by 120 to 140 percentage points. The scale of excess industrial capacity - and China's power and life and death over commodity markets - mean that any serious policy pivot by the Communist Party would set off an international earthquake. "
http://www.telegraph.co.uk/business/2016/05/18/chinas-communist-party-g…
the US unleashed what is nothing short of a nuclear bomb in its rapidly escalating trade war with China, and recently imposed duties of 522% on cold-rolled steel used in automobiles and other manufacturing,
http://www.zerohedge.com/news/2016-05-19/china-furious-after-us-launche…
Same story about the steel duties is reported all over MSM as well;
http://www.cnbc.com/2016/05/18/financial-times-us-raises-duties-on-chin…
http://money.cnn.com/2016/05/18/news/us-steel-china-trade/
http://www.bbc.com/news/business-36319141
http://www.reuters.com/article/us-usa-china-steel-idUSKCN0Y82ER
http://www.forbes.com/sites/kenrapoza/2016/04/30/steel-wars-china-threa…
the MSM is shooting it's own feet off.
Why I have resigned from the Telegraph
PETER OBORNE
https://www.opendemocracy.net/ourkingdom/peter-oborne/why-i-have-resign…
I useit more as a news aggregation site. Either way, Zero hedge has a huge traffic numbers not up with Drudge but huge compared to conventional MSM sites.
The story is here
http://www.reuters.com/article/us-usa-china-steel-idUSKCN0Y82ER
and here
http://www.wsj.com/articles/u-s-imposes-266-duty-on-some-chinese-steel-…
Drudge is getting up over 100 million hits a month
https://www.similarweb.com/website/drudgereport.com#overview
Zerohedge around 17 million.
Study Says Drudge Report Drives More Traffic Than Facebook & Twitter Combined
http://mashable.com/2011/08/10/news-traffic-referral-study/#1Va_N0nsWiqh
China and it debt issues are here, and on the Telegraph.
http://www.economist.com/news/leaders/21625785-its-debt-will-not-drag-d…
Like everything you read, everything has to be taken with a pinch of salt, sometimes noting an extreme bias and a vested interest point of view. Especially when advertising ones wares and ones target demographic.
When being sold an idea, an obvious bent on various subjects, you cannot beat a beat up from a marketing point of view.
Like Facebook, like here, like the people here and regularly the likes of me, we all have our likes and dislikes, especially when it comes to flagging interest.
Because some like interest to be dropping like a stone, some like the landlords deem it their right. And so do the banks and leveraged contenders. Banks hate fixed interest, they actually benefit from the drop, because they can multiply like mad, when totaling up the odds.
But the odds are against some, reading into it, I fear, because, some prefer a NIRP and some like America deserve a Twerp. And some need a slap and a tickle.
And that you can read into it what ever you want.
Words are irrelevant, fact is what I look for and the fact is, money talks, Nations fret about debt, steel themselves for a fall, steal from others by pumping and dumping and projecting a healthy economic discourse, of course.
Plus arming themselves to the hilt. But we would not want to ignore the facts, would we.
Let us stick to housing, though the reality truly escapes me. Are we in a bubble or just a tale spin.??...cos others report other wise.
Sorry David but its just not reasonable to be so dismissive of other commentators. David Stockman is a great read - strong opinions sure but no question a wealth of experience to back them up.
Right wing nut-job? Please! Anti war, anti big corporate, big pharma etc and pro freedom and sound money. If that's what it takes to be a R W N J well count me in.
Save it in your favourites: http://davidstockmanscontracorner.com/category/stockmans-corner/
and Greg Pytel too.
http://gregpytel.blogspot.co.nz/2009/04/largest-heist-in-history.html
Well some people will believe anything their Masters tell them....at 50cents a pop.
So how can we believe anything we are told.....that comes via these whispers.
http://www.theguardian.com/world/2016/may/20/chinese-officials-create-4…
Reinforcing the message, the chief of the NY Fed came out supporting a June hike. The US dollar rose following his comments. The stock markets fell with their usual mini-tantrum.
Nonetheless,
On December 16, the day the FOMC voted for a “rate hike”, the CMT yield for the 2-year treasury note was 1.06%; for the benchmark 10-year it was 2.30%. As of today, including the bond market selloff of the past few days, the yield on the 2-year is 0.89% and just 1.85% for the 10s. Even taking into account one “rate hike” in between rates are across-the-board less now, and significantly so, than before it. I could go on in eurodollar futures and swap rates (and spreads). Read more
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