IMF sees expanded growth, broadly based; US Congress has budget deal; NAFTA talks at key point; KPMG charged with conspiracy; Sydney housing imbalances; UST 10yr 2.66%; oil and gold unchanged; NZ$1 = 73.1 USc; TWI-5 = 74.4

IMF sees expanded growth, broadly based; US Congress has budget deal; NAFTA talks at key point; KPMG charged with conspiracy; Sydney housing imbalances; UST 10yr 2.66%; oil and gold unchanged; NZ$1 = 73.1 USc; TWI-5 = 74.4

Here's our summary of key events overnight that affect New Zealand, with news the world's economy is expanding more quickly.

The IMF has released an optimistic review of the world economy. (Someone should give a copy to Winston Peters.) They are forecasting global growth will expand by +3.9% in 2018 and 2019, up from +3.7% in 2017. And the benefits are widespread; the report says 120 economies accounting for three-quarters of global economic activity saw a pick-up last year. Both developed and emerging economies were affected. China is now expected to grow by +6.6% this year, a rise in their forecast. That extends the world growth run to nine years and it seems to be picking up speed. (But, of course, just like every other IMF forecast, they "warn" that it won't last.)

In Washington, Congressional leaders have reached a deal to pass their Budget and re-open the Federal Government. But it is only a short-term patch-up, lasting until February 8. Nothing really has been resolved on the key contentious issues. Votes in the Senate, and then the House must confirm the deal.

And key NAFTA talks are about to begin today. The United States, Canada and Mexico are trying to settle major differences over revamping a pact that the US President has threatened to abandon. Most observers expect the Treaty to survive with few changes but the talks (and tweets) have the negotiators in Montreal starting out in a negative mood.

In New York, prosecutors have charged six people with conspiring to defraud regulators by using confidential information from the Public Accounting Oversight Board to avoid negative findings against accounting firm KPMG.

In China, Beijing saw its population drop for the first time in seventeen years. The number of permanent residents in the Chinese capital, including migrants who had lived in Beijing for at least six months, fell by -22,000 to 21.7 mln, according to the city's statistics bureau.

In Australia, a new report by EY says existing under-utilised supply of housing stock could meet the forecast demand for new homes for the next five years. They say there are 600,000 'unused' bedrooms, equivalent to almost 200,000 unused dwellings. They recommend removing stamp duty as one way to allow less expensive transitions for people in property. The claim is that stamp duty works as a disincentive for people to downsize when they should.

The UST 10yr yield is still at 2.66%, still near its four year high. It may get buffeted around by the Congressional votes today. The equivalent 10yr China sovereign bond is up another +1 bp to 4.07%. The equivalent NZ 10yr sovereign bond is holding at 3.00%.

Oil prices are little changed at just over US$63 a barrel, while the Brent benchmark is now over US$68.50.

Gold is also unchanged at US$1,332/oz.

But the Kiwi dollar is firmer, now at 73.1 USc. On the cross rates it is at 91 AUc, and against the euro at 59.7 euro cents. That puts the TWI-5 at 74.4. We should also note that the Chinese yuan is at a 2 year high against the greenbback, but against the NZ dollar it is nothing special, a level we have been generally at for almost ten years.

Bitcoin is down today, now at US$10,650 and that is the lowest level since the end of November. That is a loss of -US$690 over the past 24 hours, or -6.1%.

The easiest place to stay up with event risk today is by following our Economic Calendar here ».

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12 Comments

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Highlight new comments in the last hr(s).

"In Washington, Congressional leaders have reached a deal to pass their Budget and re-open the Federal Government. But it is only a short-term patch-up, lasting until February 8. Nothing really has been resolved on the key contentious issues. Votes in the Senate, and then the House must confirm the deal."

This nonsense needs a long term solution. Every time the debt ceiling or budget approval approaches we get a bunch of children in Congress having trivial arguments. Not very productive.

It'll _NEVER_ happen. Their constitution is held in higher regards than the bible they swear in on. The problem with the American political situation is they have serious partisanship. The way to resolve this is to remove the two bulls charging in opposite directions for a proportional government.

I feel that even mentioning that on a NZ site will get back to an American and I'll have a heavy debate on why the American political scene based on the constitution is better than any worldly governmental situation.

For those interested have a look at this TED talk on the different political system in China and it's effectiveness.

https://www.ted.com/talks/eric_x_li_a_tale_of_two_political_systems

The IMF has released an optimistic review of the world economy. (Someone should give a copy to Winston Peters.)

What makes you think the IMF brains trust has any ability to forecast the future with accuracy that ends up reflecting reality? View graphic evidence which points to the most recent catastrophic estimation error.

For the GFC, yes. (Like just about everyone.) But in the IMF January 2015 review, they estimated 2017 at +3.7%. In their January 2016 review, their estimate was +3.6%. In the end 2017 actually came in at +3.7%. So recent 'accuracy' (guessing) is reasonable I would say. And certainly better than many (and many armchair forecasters who predicted we would be in recession by now).

In broad terms, nothing has really changed except these intermittent periods where in the media all the experts are convinced that something has. Behind it all, in the background of the shadows, the system remains the same, stuck largely in the same shape as back when just about ten years ago Bear Stearns shocked the world by failing under a falling dollar. Read more

They say there are 600,000 'unused' bedrooms in AU. I have always wondered how many bedrooms are vacant in Auckland. The same city that has a well reported "affordable" accommodation shortage...

Freedom camping - a moan and a suggestion for the government.

This is just out of control - everywhere;
https://www.stuff.co.nz/business/100771514/poo-and-loo-paper-littering-a...

Why doesn't the government pass a law that any tourist caught doing this will be subject to immediate cancellation of their visa and deportation. Get all incoming flights to NZ to publicise this new law; get all the rental hire companies to put a sticker in the window of all rentals stating such; and get warning signs posted everywhere where these folks park up.

It's got to be stopped or NZers are going to all start abusing tourists and hating tourism.

Would you be offended if the freedom campers carried shovels, dug a hole in discrete places, used the toilet; then filled the hole again?

Really. This sounds like the epitome a first-world problem lifted from Facebook or a gripe from the blue rinse brigade / mortgage warriors.

You would think if they were going to do that they would be already. There was even one little sleeper car hirer a few years back who actually told their customers to buy a spade at a $2 shop. Thought they were real smart, would hire out the likes of older Nissan Pulsar hatches with a bit of camping gear, bed in back, but with no sign writing, never ever thought that anyone would notice that every single one of them had the same blue and white checked curtains in them, ha ha. Don't even know if they still exist tbh. Truth of the matter is, these people do not give a toss, would not have the energy to dig a hole, unless it was at the beach somewhere, all nice till the wind blows and exposes everything. Sorry, the their likes we don't really need.

Were any reasons given for the drop of population in Beijing?

( Not that 22,000 less in 21.7million are going to be really noticeable:) )

The oil price has got me stumped............

A barrel of crude went to US$100 in 2007 and the price at the pump reached NZ$ 2.00 a litre in 2008 (or 2009)

Now crude is $63 per barrel

And its again over NZ$ 2 / litre at the pump .

And the NZ$ is stronger

What on earth is going on here ?

One cannot come to any other conclusion other than there is some price fixing going on between the oil companies .

Just putting it out there