Here's our summary of key events overnight that affect New Zealand, with news of some chunky data surprises.
More American workers voluntarily quit their jobs in May, a sign of confidence in their labour market that analysts say will soon boost wage growth. In fact, that quit rate rose to a 17 year high to an annual rate of 3.6 mln (of the 155.6 mln employed) and a rise of 212,000, even as the number of new job openings eased down.
In surprise data, Canada's new housing starts rose sharply in June, boosted by a very large increase in multifamily units, and especially in Toronto (+65%) and Quebec (-50%). Vancouver recorded a -10% drop. Nationally, the number of single family homes started fell by -16%.
In China, factory inflation hit a six-month high of +4.7% in June partly due to rising oil costs, while consumer prices remained stable.
In the EU, they reported their house prices rose at their fastest pace in 2017 in a decade, continuing a pattern of rising growth rates since 2013.
In Germany, their influential ZEW economic sentiment survey (similar to our NZIER QSBO survey) has come in sharply negative, diving well below low analysts expectations.
In Turkey, their strongman president put a family member in charge of his Finance ministry and sharply curbed the independence of Turkey's central bank. The country's currency fell sharply almost immediately, compounding earlier falls.
The 2018 edition of the Global Innovation Index has ranked New Zealand as #22 in their 126 country world. We were ranked #21 in 2017. Australia is now ranked #20 (#23 last year) while Switzerland came out on top again. Just about every country we benchmark ourselves against did better than us. China at #17 was the only non-high-income country in the top group. It is the first time China has been in the top 20.
The UST 10yr yield is now at 2.87%, a +1 bp rise overnight. And the US 2-10 rate curve has narrowed again, now at just +28 bps. The Chinese 10yr is at 3.56% (up +1 bp) while the New Zealand equivalent has risen sharply to 2.90%, up +5 bps.
Gold is back down by -US$4 to US$1,255/oz.
US oil prices are up today and now well over US$74/bbl. The Brent benchmark is now just under US$79/bbl.
The Kiwi dollar starts today unchanged at 68.4 USc. On the cross rates we are also unchanged at 91.6 AUc and at 58.2 euro cents. That leaves the TWI-5 at 71.6.
Bitcoin is now at US$6,368 which is almost -5% lower than this time yesterday.
This chart is animated here. For previous users, the animation process has been updated and works better now.
The easiest place to stay up with event risk today is by following our Economic Calendar here ».
Daily exchange rates
Select chart tabs
5 Comments
What is truly different this time is that past inversions have rotated around a ~5%-rate while this time we will rotate around a ~3%-rate.
"The signal that an iceberg is ahead is NOT that the FED is jamming the Yield Curve flatter, but rather that long-term interest rates have declined by 30bps through the most recent FED hike; and that this is occurring despite massively expanding supply thanks to Quantitative Tightening (QT) and the Tax Package.
Market pundits like to say: "They don't ring a bell at the top". My retort is that they do, you are just not listening."
https://www.zerohedge.com/news/2018-07-10/derivatives-trading-legend-si…
China’s central bank was struggling against a rising tide of “dollar” inflows, raising the level of bank reserves by simple accounting, and potentially flooding China was liquidity during a time of huge wastefulness (fiscal “stimulus”) and global misconception (China decoupling). What happened in July 2011 was no mystery; it just wasn’t Chinese in nature.
"The “dollar” inflows stopped because the eurodollar system underwent its second great crisis in close succession. The PBOC didn’t need to raise the RRR past June 2011 as bank reserve growth began to dry up as “dollar” inflows did. The PBOC’s money problem was solved for it (above), only too well.
For if China’s central bankers spent 2010 and 2011 trying to hold back consumer price inflation, they have spent all the years since attempting to restart it. "
http://www.alhambrapartners.com/2018/07/10/chinas-seven-years-disinflat…
Something linked on these pages a week or two back caught my eye, it would have been from Ham n Eggs or PDK. Here is the quote from the relevant wikipedia page:
According to a number of estimates, China, the world's largest coal consumer, reached peak coal in 2013, and the world may already passed peak coal.
China alone peaking in coal is a big event, there is a link to empires and energy. But if the world has peaked then some bigger questions need to be asked and a new dialogue opened.
Another day, another policy blunder (at least according to China). NZ is urged (required?) to:
correctly view the relevant issues, correct its wrong words and actions, and do more things that are beneficial to the mutual trust and cooperation between the two countries.
Plus the usual Party Line about buying influence in the South Pacific being viewed as Beneficent Neighbours.
It will be Interesting to see what the Acting PM (and the hand up his glove, the Real PM) do next..
We welcome your comments below. If you are not already registered, please register to comment.
Remember we welcome robust, respectful and insightful debate. We don't welcome abusive or defamatory comments and will de-register those repeatedly making such comments. Our current comment policy is here.