US jobless claims fall; China's rich dominate parliament; Canada GDP impresses; EU inflation hits 2%; Westpac in court; OECD sees major AU housing risk; UST 10yr yield at 2.50%; oil & gold lower; NZ$1 = 70.6 US¢, TWI-5 = 76.5

US jobless claims fall; China's rich dominate parliament; Canada GDP impresses; EU inflation hits 2%; Westpac in court; OECD sees major AU housing risk; UST 10yr yield at 2.50%; oil & gold lower; NZ$1 = 70.6 US¢, TWI-5 = 76.5

Here's my summary of the key events overnight that affect New Zealand, with news the OECD has highlighted how vulnerable the Aussie economy is to its housing sector.

But first, the number of Americans filing for unemployment benefits fell to a level last seen in March 1973. Their labour market are tightening even as economic growth appears to be moderate in the March 2017 quarter. Markets now expect a US Federal Reserve benchmark rate hike this month.

In China, despite the President's anti-corruption campaign, the combined wealth of the top 100 members of the Chinese parliament has been calculated and it is 'impressive' (and not necessarily in a good way). It actually makes the Trump cabinet look like paupers!

Just like Australia earlier in the week, Canada has reported +2.6% economic growth in Q4-2016, one that exceeded expectations by a healthy margin. It was on the strength of consumer demand for cars and financial services, and a rebound in real-estate investment. We have to wait until March 16 to see if ours is similarly impressive - although we did report a strong +3.0% result for Q3-2016, so our bar is higher.

In Europe, we are starting to see the effect of low-priced oil shift out as an inflation-depressing factor. Eurozone inflation has risen to 2% and above the ECB's target rate for the first time in four years. This is the highest level since January 2013. However, analysts don't expect the ECB to alter its current €60 bln/mth stimulus program.

In Britain, they are making a real meal of their Brexit processes.

In Australia, regulator ASIC has taken Westpac to court alleging the bank made home loans in breach of their 'responsible lending criteria' rules. The allegations relate to activity before March 2015 and center around the bank using a formula for assessing affordability rather than the client's actual circumstance.

And the OCED has reported on the prospects for the Australian economy and is generally positive. However, their vulnerability to a house price collapse triggering their first recession in 26 years has sharpened, they say. (see page 18.)

In New York, the UST 10yr yield is up again today to 2.50%.

Oil prices are down again today and now just under US$53 for the US benchmark, while the Brent benchmark is just over US$55 a barrel. Demand for petrol in the United States, which accounts for 10% of global oil consumption, is expected to peak in 2018 as engines become more efficient.

The gold price is also a lower again, down another -US$14 at US$1,232/oz.

And the New Zealand dollar is lower again too as the stronger greenback rises further. The Kiwi dollar is now at 70.6 USc, its lowest in 8 weeks. On the cross rates we are at 93.3 AU¢t, and against the euro at 67.2 euro cents. The NZ TWI-5 index is down to 76.5.

If you want to catch up with all the 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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4 Comments

has the RBNZ looked into Westpac NZ to see if they are using the same formula

And in NAB BNZ news.

ASIC takes aim at the banks: NAB defended its handling of unethical behaviour despite failing to discipline a senior executive who presided over a million-dollar scandal.

NAB chief executive Andrew Thorburn began his appearance by stating that more than 1000 employees were found not to have acting in line with code of ethics, with many being disciplined.

"The message here to all our people is that we are in a position of trust, we have high standards, they are expected to be met and if they are not, there are consequences," he said.

But committee chairman David Coleman pressed him on the consequences for one executive, head of wealth, Andrew Hagger, who it was revealed had not been disciplined and received his 120 per cent bonus despite presiding over a million dollar scandal.

How many is more than 1,000?.
They must have touched some NZ customers?

http://www.smh.com.au/business/banking-and-finance/nab-chief-defends-sen...

But first, the number of Americans filing for unemployment benefits fell to a level last seen in March 1973. Their labour market are tightening even as economic growth appears to be moderate in the March 2017 quarter.

The president disagrees.

#1 “Ninety-four million Americans are out of the labor force”

#2 “Over 43 million people are now living in poverty”

#3 “More than one in five people in their prime working years are not working” Read more

Moreover,

Real Disposable Income Per Capita rose just 1.32% in January, the lowest gain since the start of 2014 (when tax changes in 2012 created the monstrous base effects you see above). That is about the same rate as August 2010, as well as August 2012, both periods of considerable economic strain and uncertainty. The difference then as opposed to now is nominal income growth that since the end of 2014 (coincidentally the time of the “best jobs market in decades” as well as the first approach and then completion of “full employment”) has been more subdued than has become usual for this lost decade

Without nominal growth in income there is no meaningful rise in nominal spending estimates, suggesting that these price changes leave consumers to cut back in discretionary spending as to the proportion of non-discretionary items like gasoline that take up that much more of an unchanging budget (either work or fixed income). Read more