US slaps trade duties on selected imports; TPP-11 gets final agreement; EU confidence rises; Modi sees three threats; WU fraud claim deadline close; UST 10yr 2.64%; oil and gold up; NZ$1 = 73.4 USc; TWI-5 = 74.7

US slaps trade duties on selected imports; TPP-11 gets final agreement; EU confidence rises; Modi sees three threats; WU fraud claim deadline close; UST 10yr 2.64%; oil and gold up; NZ$1 = 73.4 USc; TWI-5 = 74.7

Here's our summary of key events overhight that affect New Zealand, with news of some big trade actions.

First, today the US Administration apparently started a trade war, formally. It slapped steep tariffs on imports of solar panels and washing machines, part of the promised “America First” trade policy. (Fisher & Paykel's washing machine exports from Thailand are caught, but from New Zealand probably not as they don't exceed the 3% WTO GSP threshold.) And they said it will be the first of a series of trade-enforcement actions in the coming months. China, Korea and Mexico are the main exporters targeted. But analysts say the move will have limited impact, with the detail far less damaging than first appears. Punches have been pulled here. And more of the same (rhetoric-but-no-real-impact) is expected in the NAFTA renegotiation and at the WTO. The Americans are playing to their echo-chambered political base here who are being 'sold'. Professional eyes are on future actions which may or may not have a real impact.

In Japan, the eleven TPP members including New Zealand say they have reached a final agreement - and that includes a now-enthusiastic Canada - and will sign their huge free trade deal in Chile in March, US excluded.

Across the Atlantic, Eurozone consumer confidence rose more than expected and pushing further into positive territory (that is, more optimists than pessimists). They are now at the highest reading in 17 years. Driving this is rising confidence in Germany.

And in Davos, Switzerland, Indian prime minister Modi warned of three major threats; climate change, terrorism, and protectionism. Protectionist-in-chief Trump is also due in Davos.

And an update for customers of Western Union money transfer services (which are available in New Zealand through Kiwibank). The company was convicted of wire fraud by US authorities and agreed to pay its customer-victims US$586 mln. You have until February 18 to file a claim to share in the settlement. Thousands have joined the claims process in Australia.

The UST 10yr yield is down -2 bps to 2.64%. The equivalent 10yr China sovereign bond has dropped -10 bps today to 3.97%. The equivalent NZ 10yr sovereign bond is holding just under 3.00%.

Oil prices are up strongly by almost +US$1.50 to be just under US$64.50 a barrel, while the Brent benchmark is now under US$70.

Gold is up marginally, +US$6 to US$1,338/oz.

And the Kiwi dollar is firmer as well, now at 73.4 USc. On the cross rates it is at 92 AUc and that is almost a +1c gain from this time yesterday, and against the euro at 59.8 euro cents. That puts the TWI-5 at 74.7. And despite the UT trade action, the Chinese yuan strengthened further against the greenback today. That tell you a lot about how markets see the US 'action'.

Bitcoin briefly fell below US$10,000 about eight hours ago but is now at US$11,261 and up +5.7% from this time yesterday. So it is now back to where it was on Monday.

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

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19 Comments

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Ahh bitcoin. How many sold some or all at the peak and how many held with the glimmer of richness in the eyes.
When a friend who does not invest in anything as he does not understand it brought in all glowing. I just thought classic bubble

Classic bubble is now heading back up sharetrader...hope he held onto his coins.

Eh? Bitcoin is still trending down. It had a brief rally but is now back to what it was 7 days ago, which is under what it was 30days ago.

Depends were you place your start line..for me its trending up from Aug last year

How about we start at the start. Click on "All" at https://www.coindesk.com/price/

Very clearly trending down.

Even worse, its a scam! and entirely worthless in real terms.

If I was to hide some beer bottle caps and put a mark on them calling them beer coins and if you find them you can trade them with other people who will pay you "real" money for them, then you have exactly the same thing.

There is no end to the stupidity of humans

Keep an eye out, coming your way "BEERCOINS" !

Even worse, its a scam! and entirely worthless in real terms.
Whos the perpetrator then...who is benefiting from bitcoin? Definition of scam
: a fraudulent or deceptive act or operation
"If I was to hide some beer bottle caps and put a mark on them calling them beer coins and if you find them you can trade them with other people who will pay you "real" money for them, then you have exactly the same thing."
I would drink the beer and make my own and sell them back to you ...

I would say less of a scam and more of a pyramid scheme (and black market). I doubt that was the intention of Bitcoin, but that is what it has become.
It is never going to be a proper usable currency due to its limited supply - if it did become a major currency that everyone wanted to use, the price would only ever go up, and no one would ever spend or circulate it.

There's a lack of coverage of what's actually going on in the crypto market. Tether is what you should be looking at.
https://twitter.com/tetherprinter

If you look at the link Tether has printed roughly $850m in the past 8 or 9 days. Tether claims their coins are backed by USD but also say they cannot be exchanged for USD. Tether is being printed to back a number of exchanges. A kind of QE to provide liquidity to exchanges so it makes you wonder what the liquidity is like with the commonly used exchanges right now, or if someone is siphoning money or cryptos into their own pockets.

Tether is being used to pump up the price of bitcoin as there's a huge trading volume each time they print more. In any other market people would love to know what's driving the price.

Prime Minister of India claims that the US protecting their own interests poses a threat to the world. I guess he would say that.

New Zealand comes in at #13 in list of Best Countries:

https://www.usnews.com/news/best-countries/new-zealand

Freedom House has NZ at #8 or is it 3rd equal? Pretty high up there anyway:

https://freedomhouse.org/report/freedom-world-2018-table-country-scores

I was forced to do a bit of background checking of Freedom House after reading their review of the world for 2018. They seem to think that the press cannot be criticized and that indeed any pointing out of "fake news" is denying people freedom. The press must be free to publish fake news. They have certainly gone down considerably in my estimation. I'd have them shut down if I was in charge. It's plain to see that they are partisans pushing an agenda.

Across the Atlantic, Eurozone consumer confidence rose more than expected and pushing further into positive territory (that is, more optimists than pessimists). They are now at the highest reading in 17 years. Driving this is rising confidence in Germany.

But not for the working majority?

The conference delegates also examined why growth in German wages remains so weak -- a key concern for the ECB as it tries to the generate the sustained inflation that will allow it to end its emergency stimulus measures for the region.

Weidmann said migration from other European Union member states is partially responsible for muted wage pressures, and that labor unions are playing a part by insisting on reduced working hours and more training instead of higher pay. But he also noted that low pay growth is a widespread phenomenon, affecting countries including the U.S., the U.K. and Japan.

“When it comes to modest wage growth in the face of tight labor-market conditions, Germany is by no means unique,” Weidmann said. “This suggests that the factors responsible for holding back wage growth are not only idiosyncratic, but at least partly international as well. Read more

You just can’t talk about growth forever. It’s nice to hear about a boom, but after a while there has to be a boom; a real one. Read more

This suggests that the factors responsible for holding back wage growth are not only idiosyncratic, but at least partly international ..

The working/middle classes of the Western world are basically funding the project to bring about global equality. Meanwhile the elites can take advantage of a global economy, which is a s big as it gets, and will be well positioned to reap fabulous rewards.
The Western World's working/middle classes should really strive to maintain their position of privilege imho. This explains the rise of the Right in Western politics. Recognise that you have privilege and defend it with everything you have.

What "privilege" are you talking about? The "working classes" and the "middle classes" (who are also "working class") can vote for leaders who prey on the fears of the sheeple, but it doesn't necessarily protect any imaginary privileges. Yes, there is the :advantage" of not being born in a developing country or North Korea, but you are deluded to think that you have "privilege."

What "privilege" are you talking about? The "working classes" and the "middle classes" (who are also "working class") can vote for leaders who prey on the fears of the sheeple, but it doesn't necessarily protect any imaginary privileges. Yes, there is the :advantage" of not being born in a developing country or North Korea, but you are deluded to think that you have "privilege."

Interesting article in Stuff this morning discussing how Wellington university students are shifting to Christchurch as the rents are so much cheaper there. It also mentions that Christchurch landlords are getting desperate to find tenants and are offering power and groceries as an inducement to rent their properties. Just more confirmation of how one would have been silly to buy investment properties down there.

Over Christmas I had a chance to catch up on what's going on in the rental market in Christchurch. There's a lot of competition for tenants, and for those with older rentals they are competing with a number of empty brand new rentals on the market. In general there's an outflow of people with post earthquake work ramping down.

It's possible to get a good yield if you have tenants.

Seems like the CPTPP is being rushed though. I'd be less worried about it if Jane Kelsey came out and said it's all okay now.