Here's our summary of key events over the weekend that affect New Zealand, with news that some trade results are at odds with trade policies.
But first, the latest survey of American consumer sentiment shows it slipping again, but from a relatively high level and still historically high.
June data out in the US shows their terms of trade improving. Import prices are up +4.3% year-on-year while export prices are up +5.3%.
Meanwhile, their trade deficit with China grew. The June Chinese data shows it at -US$29 bln for goods. And it may get even larger as US importers try to front-run their requirements ahead of the expanded tariffs the Americans have announced. In fact, that was probably the reason for the large June result between the two countries, related to the first tariff announcements.
But overall, China's goods trade surplus shrank because it shrank with nearly everyone else. And part of that was a moderating of import demand. Chinese exports rose +11.3% year-on-year in USD terms to reach US$216.7 bln in June, while imports increased +14.1%, down from +26% in May. (Data for New Zealand is here.) Part of that import drop is a -12% fall in iron ore imports, a direct consequence of Chinese clean air regulation.
One perhaps surprising consequence of the US tariff action is that a number of car companies are swiftly moving to set up expanded manufacturing - in China.
Another consequence is that the Chinese are slowing their financial market 'reform' in the face of the trade tiff risks. An example is the earlier-claimed policy move to slow the growth of corporate debt; instead they are letting it run as stimulus support. Bank lending was up almost +13% year-on-year to June. In June alone, Chinese banks extended ¥1.84 tln in new yuan loans, up from ¥1.15 tln in May and ¥1.18 tln in April. Now that is heady, recent growth.
China’s NZ$1.4 tln sovereign wealth fund is seeking the authority to invest in their domestic stock and bond markets for the first time. It wants to end restrictions on its mandate following government moves to open up financial markets.
All these Chinese actions may be cover for what is in fact slowing growth. That will become clearer in the coming week.
And there are rate rises around the world. First it was Canada who raised their official rate by +25 bps. Pakistan increased theirs by +100 bps to 7.50% on rising inflation. And Israel looks like it is next, also pressed by a rise in inflation. Israel currently has a zero percent policy rate (actually +0.1%).
The UST 10yr yield weakened at the New York market close at under 2.83% and down -2 bps. Their 2-10 curve keeps going down, now under +25 bps. At this rate, inversion could come quicker than markets expect, and when that realisation dawns it may be self-fulfilling. Bond markets seem to be signaling an early end to the program of US Fed rate hikes. The Chinese 10yr is at 3.52% (down -2 bps from Friday) while the New Zealand equivalent is now at 2.88%, down -1 bp.
Gold is weaker and now at just US$1,241/oz.
US oil prices are up today from yesterday and now just over US$71/bbl. The Brent benchmark is now just over US$75/bbl. Today's rise comes even after reports indicate that the US is considering dipping into its strategic reserve to get more supply into the marketplace. The relentless rise in volume of fracked US crude coming to market continues to surprise and is behind the discount for American supply. In fact, the Chinese have developed the technology even further and what has essentially been an American program will now get rolled out worldwide. The US rig count has risen a few this week, again.
The Kiwi dollar is starting the week at almost exactly where it was this time last week at 67.6. USc. On the cross rates however we are lower at 91 AUc and that is the lowest level in six months, and at 57.8 euro cents. That puts the TWI-5 at 71 and at its lowest in ten days.
Bitcoin is now at US$6,368 which is a rise of +3% over the weekend.
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Those nefarious Russians and their confounded meddling. "Labour officials ran a secret operation to deceive Jeremy Corbyn at last year’s general election, micro-targeting Facebook adverts at the leader and his closest aides to convince them the party was running the campaign they demanded.
Campaign chiefs at Labour HQ hoodwinked their own leader because they disapproved of some of Corbyn’s left-wing messages.
They convinced him they were following his campaign plans by spending just £5,000 on adverts solely designed to be seen by Corbyn, his aides and their favourite journalists, while pouring far more money into adverts with a different message for ordinary voters.
The ruse is revealed in a new book — Ctrl Alt Delete: How Politics and the Media Crashed Our Democracy — by Tom Baldwin, who served as Ed Miliband’s director of communications."
Name a country:
https://www.youtube.com/watch?time_continue=137&v=kRh1zXFKC_o
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