US on holiday; EU claims IMF agrees Greek solution; EU & Japan close on trade deal; China uses trains not ships to Europe; RBA looks at housing differently; UST 10yr yield at 2.42%; oil and gold unchanged; NZ$1 = 71.9 US¢, TWI-5 = 77.3

US on holiday; EU claims IMF agrees Greek solution; EU & Japan close on trade deal; China uses trains not ships to Europe; RBA looks at housing differently; UST 10yr yield at 2.42%; oil and gold unchanged; NZ$1 = 71.9 US¢, TWI-5 = 77.3

Here's my summary of the key events overnight that affect New Zealand, with news an Aussie official has a different take on housing affordability.

But first, there is no news relevant to New Zealand out of the US because of their public holiday.

In Europe, there are claims the EU and the IMF now have a common position on the on-going Greek debt issue, and that an agreement is close with the beleaguered nation.

And while the TPPA and TTIP may be sidelined by a sudden refusal of the US to negotiate, other deals are proceeding - without the US. The EU and Japan are in serious negotiations which they expect to be concluded this year.

In China, a press release there may help explain why the shipping industry is no longer a good indicator of world trade. One city in southern China, Chengdu, is preparing to send more than 1000 train shipments to Europe in 2017, more than doubling the overland volume. Repeated by many other cities, that will make a serious dent in sea freight volumes.

In Australia, the Reserve Bank there is calling on the public to calm down on housing affordability. They say that much of the perceived stress in the younger demographic is misplaced and based on 1990's standards. They say because couples now partner up much later and are in a generally stronger financial position, this explains the rise in renting levels. And those older households are far more resilient financially and able to handle modern realities of home ownership. Same people, just a bit older.

Because of the American public holiday, the UST 10yr yield is unchanged at 2.42%. However the bear steepening we saw locally yesterday means that the 2-10 rate curve is now its steepest in three years. The 1-5 curve is at a similar mark.

Oil prices are marginally higher today, now just over US$53.50 for the US benchmark, while the Brent benchmark is just over US$56 a barrel. Meanwhile, it has been revealed that hedge funds now hold over 1 mln barrels of oil betting prices will rise. Its a big call, and we should remember the mistake some hedge funds made betting gold would rise significantly. Those hedge fund bets turned out bad for investors.

The gold price is unchanged today at US$1,237/oz.

And the New Zealand dollar will start today essentially unchanged as well at 71.9 USc. On the cross rates we are at 93.5 AU¢, and against the euro at 67.7 euro cents. The NZ TWI-5 index is still at 77.3.

If you want to catch up with all the 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

trains from Europe to china, was started by the germans, the French and Russians both now compete.
it is an interesting exercise as the rails are different in certain countries, and a bit like our old trucking where companies handed off to each other at points along the route
http://www.dbschenker.com.cn/log-cn-en/products_services/start/db_schenk...

"In China, a press release there may help explain why the shipping industry is no longer a good indicator of world trade.."

Or this is a nice case of alternative facts.
Very logical to build all the shipping capability then switch to rail instead. Unless its a case of building a whole lot of unneeded infrastructure to keep the ship from sinking...

Or it could just be the customer's demand for speed to market. Sailing from China to Europe takes more than twice as long ... 

.

perhaps all is well

http://www.tradingeconomics.com/china/exports

Or does that look like a decrease in official exports ...

Who saw Phil Goff on AM Live this morning ?

Even he seemed astounded that Auckland City Council has 800 VEHICLES ........... thats right folks ...... .. EIGHT HUNDRED VEHICLES .

Where do they even park 800 VEHICLES ?

I have no idea if these are leased or owned , but just imagine the monthly parking cost , not to mention the fuel account , the costs of RUC's , WOFS and repairs, maintainence , Insurance, finance costs and capital outlay .

Thats 800 VEHICLES for a relatively small city of under 2,0 million people .

It gets worse when you consider they dont own a single passenger Bus or Waste refuse vehicle (thats all outsourced )

This has got to be the biggest fleet of vehicles being run by any organisation in NZ . .

How have we lost control of Auckland councils spending to the extent its now burdened with massive debt and a bloated workforce of over 10,000 ( it was 7,000 when we merged into a single city )

Given that Phil served in the same Government as Roger Douglas , I wonder if he has the guts to tackle this issue with similar vigor as Roger Douglas had ?

AC Rates are already a burden for working families , and we need to address this issue too .

DC, you may care to read through Nicholas Eberstadt's rather devastating view of the employment/little-people situation in the USA - here: www.commentarymagazine.com/articles/our-miserable-21st-century/

Sobering to say the least and well referenced.