Wall Street grumpy; US home sales dive; new-NAFTA ratification uncertain; Canada data weak; Mastercard fined; China births slump; eyes on Hayne; UST 10yr at 2.73%; oil drops, gold up; NZ$1 = 67.2 USc; TWI-5 = 71.5

Wall Street grumpy; US home sales dive; new-NAFTA ratification uncertain; Canada data weak; Mastercard fined; China births slump; eyes on Hayne; UST 10yr at 2.73%; oil drops, gold up; NZ$1 = 67.2 USc; TWI-5 = 71.5

Here's our summary of key events overnight that affect New Zealand, with news American investors have suddenly taken fright.

In international economies there is a dearth of data so markets are reacting to the political.

Wall Street has returned from its long weekend in a grumpy mood. The S&P500 is down a sharp -1.6% and dropping. Corporate earnings reports aren't helping, and the mood has suddenly soured on the prospects for a successful US-China trade deal.

In the US, existing home sales have come in much weaker in December than expected. In fact, December 2018 sales are -10.4% lower than the same month a year ago, a miss far greater than the small decline analysts were counting on. That's a 3 year low. Median price gains are slowing, and are now up just +2.9% on this year-on-year basis, barely edging inflation - and in the Mid-West and West they couldn't even do that. Housing market confidence is leaking away fast in the US. And it doesn't help the overall mood that this is the only national data available. This list of shutdown-affected economic statistics has grown to eleven major releases.

But not everyone thinks a US housing market slowdown will affect them much.

On trade, the recently re-negotiated NAFTA deal is facing headwinds in being ratified in Congress.

In Canada, data releases for wholesale trade, and manufacturing activity were both for November and both much weaker than expected.

In the EU, their competition regulator has fined Mastercard almost NZ$1 bln (€570 mln) for preventing retailers from accessing lower fees.

China has reported that its birth rate is falling sharply. In fact, at just 15.2 mln births in 2018 that is the lowest birth rate in almost 60 years. The 2018 rate was marginally over 1%. This is just another sinking Chinese statistic. For reference, New Zealand's birth rate is 1.2%.

In Australia, the release of the Hayne Inquiry report is now very close. And the opposition Labor Party - which on current polling is likely to be the Government in 2019 - says it will carry out all the recommendations, saying it would need a "very, very, very good reason" not to adopt any finding. The Liberal coalition government hasn't made commitments yet.

The UST 10yr yield is lower today at 2.73% and a fall of -6 bps and sinking as fast as equities. Their 2-10 curve has dipped to under +16 bps. The Aussie Govt 10yr is at 2.30% and down -1 bp, the China Govt 10yr is up +2 bps at 3.13%, while the NZ Govt 10 yr is at 2.36% and up +1 bp.

Gold is up +US$3 to US$1,283/oz.

US oil prices are down sharply today at just on US$52/bbl while the Brent benchmark is just on US$61/bbl. These are both falls of almost -US$2/bbl.

The Kiwi dollar little-changed at 67.2 USc. On the cross rates, we little-changed against the Aussie at 94.3 AUc and holding at 59.2 euro cents. That leaves the TWI-5 at 71.5.

Bitcoin is at US$3,577 and up about +1% from this time yesterday. This rate is charted in the exchange rate set below.

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25 Comments

10
up

"Auckland house sales slump 20 per cent as the foreign buyer ban hits the market"
but JK told us it was only 3%,
so what has hindsight shown us never trust self interest politicians who make profit from policies
and that was the last two governments when it came to housing
https://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=121...

I think most people are have moved onto the Stone Cold Steve Austin "don't trust anyone" mantra.

The world really did turn pear shaped pretty quickly didn't it?

Sharetrader, you're comparing a National figure 3% with a local figure Auckland 20%, not very smart. Yes there's no doubt that foreigners where more active in Auckland that in the rest of the country

The JK figure was nationally - Not Auckland. Please do your homework !

13
up

I don’t remember there ever being an official figure on that. They never produced data because there is none kept. We’re about to find out.

Yea. Always a bit strange that, huh.

But. Of course it was exceptionally difficult data to collect.

14
up

One in five central Auckland homes went to overseas buyers. In all, 19% of Waitemata sales were to foreigners. It's no wonder sales are slumping, prices are falling and Agent Tothepoint has done a runner. https://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=120...

Hi RP

And sales of new properties in Australia are also falling off a cliff
https://wolfstreet.com/2019/01/21/sales-of-new-houses-in-australia-plung...

    Tim Jan 22, 2019 at 4:18 pm

Property in Sydney is in freefall. Where I live, In a block of 9 identical units, one sold 2015 for 1.53M, one in Sept 2018 for 1.44M and one in Jan 2019 1.28M. Just down the road, a unit that sold in Sept 2017 for 821k is for sale at 700k.

that would be "one in five" of registered sales....

Just goes to show how easily we are deceived - yes, JK spread the StatsNZ data collection over the national sales - very clever - most people knew that 98% of all foreign buyers were buying Auckland not New Zealand - so the auto assumption became a fallacy - now we get Auckland figures on the impact of the FBB

Less than 2 minutes. Worth your time to view it.

Can understand the sentiment but the problem surely is deeper than just those at the top of the finance tree? But yes claw back the money.
Of topic but .
Switzerland. Acting responsibly domestically. Perhaps they could act responsibly by emptying the accounts of various dictators, drug Lord's and other various low life's ill gotten gains. The latest if I'm not wrong being Viagogo.

100% agree, if there is no consequence for bad behaviour, the behaviour repeats itself, be it for a toddler or for a large company executive

China economy: Korean export data craters - Business Insider “20-day exports fell at annualized rate of 38.6% in the 3 months to January, seasonally adjusted, much sharper than the 19.2% fall in the 3 months to December” If this is headfake it’s a good one.Danielle DiMartino

https://www.businessinsider.com.au/china-economy-korean-export-data-crat...

Back in 2014, geographer Christopher Guilluy’s study of la France périphérique (peripheral France) caused a media sensation. It drew attention to the economic, cultural and political exclusion of the working classes, most of whom now live outside the major cities. It highlighted the conditions that would later give rise to the yellow-vest phenomenon. Guilluy has developed on these themes in his recent books, No Society and The Twilight of the Elite: Prosperity, the Periphery and the Future of France. spiked caught up with Guilluy to get his view on the causes and consequences of the yellow-vest movement.

Technically, our globalised economic model performs well. It produces a lot of wealth. But it doesn’t need the majority of the population to function. It has no real need for the manual workers, labourers and even small-business owners outside of the big cities. Paris creates enough wealth for the whole of France, and London does the same in Britain. But you cannot build a society around this. The gilets jaunes is a revolt of the working classes who live in these places
http://theduran.com/the-gilets-jaunes-are-unstoppable-now-the-elites-are...

whats the difference in China?

Imagine yourself as a rural Chinese farmer.

You try not to be bitter because this transformation will some day be your transformation, biding your time until your number is called. You put up with a lot along the way, from clear restrictions to your personal freedom and human rights to ungodly pollution, but through it all you keep reminding yourself that even if you don’t live long enough, for your one permitted child their future is assured.

And then one day the government says, “sorry, we are all full up over here in paradise.”

China isn’t quite there yet, but that day is coming maybe even rapidly approaching. What’s more, Chinese officials know it.
(Snider this morning)

This highlights a point I made a while back that many corporations, and wealthy seem to think that they are somehow above society, not a part of it, and therefore the rules should not apply to them. This chap seems to be making the point that there are really two societies, but i wonder. where would the wealthy be without the workers to exploit, to build their toys, and provide the basic materials fundamental to their life styles?

They may believe they don't need them, but it is a little like the humble bee. Einstein I think, predicted that with out the bee human kind would only last about 10 years. I think a rude awakening is coming for them!

In the first place was there ever hard data to support the 3 % figure for foreign buyers trotted out by National known for coddling up to China?

If the figure was a measly 3% then why was JK & gang all flustered up over the OIA amendment banning foreign buyers?

we are talking about the elite in China, not many Chinese can put their hand on 100k, let alone a million. The cap between the rich elite and the Chinese government is blurred.
This is our biggest trading partner, we supply them commodities that are available from many other sellers in the world, so we need to go that little bit further to be the preferred seller.

The elites today are no different to the elites of the past. Stalin took his luxury private train to the black sea Dacha, he had the windows blacked out so he didn't have to see the starving peasants in the Ukraine.
In the States they call it a meritocracy, nothing personal we are just better than you, it's the free market, as they fly their private jets and buy lake property and vineyards in NZ. In Europe the wheels ar starting to fall off and it's likely in China too, where many people work for $4 a day while others are the wealthiest people in the world, all the time espousing communism as the best and only way to a brighter future for the masses.

the 20% drop in sales no.s for Auckland being put down to the foreign buyer ban is a load of nonsense!
December is a quiet time for real estate sales and there are far bigger influences at play than the FBB!
Buyers are being hit with tighter lending controls from Banks, 5 year Brightline Test, potential ring fencing, potential capital gains tax etc. etc.
Stephens from Westpac normally spurts out stuff just for publicity for himself!
If Mr Stephens knew what he was talking about then he wouldn’t still be in paid employment, with the safety net of a salary!
If he knew what he was talking about then he should be at least semiretired by now from Investing!!

Go back to sleep. You sound demented. .

Except that 20% drop in sales is a YEAR ON YEAR drop, I.e. December 2017 vs December 2018, or in your words "quiet time for real estate sales vs quiet time for real estate sales".

the boy 1 ..... now you just pick up your dummy and pop it back into your wee mouth ....has that little man at the red bank upset you with some 'home' truths .....aaaawwww ....get mummy to pop you into the stroller and head out to your nearest real estate agent for a chat and to "hear what you want to hear" ....you will feel so much better :) ...and for you and all your little "one eyed" friends, Mr Stephens like many others may not want to derive all his income from purely the residential property market .....he's a smart lad .....best you listen ...you can get mummy to update your stroller :) .... better let you go....time for your bottle of "positive spin" :)