Here's our summary of key events overnight that affect New Zealand, with news China's population growth is slowing faster than most researchers thought.
But firstly, the US Fed has completed its monetary policy review, leaving the key rates unchanged. The decision was unanimous. And it is re-using the term 'patient' as it works through competing economic signals and pressures from the American economy with a backdrop of an impatient US Administration.
Elsewhere, the ADP employment report suggests this Saturday's official non-farm payrolls report will be a good one. Almost all sectors (eight of ten) show employment gains.
But the early reports from carmakers suggest sluggish sales and below analyst estimates for April. Fiat Chrysler US deliveries fell more than -6% (in Canada they fell -10%), Ford's fell almost -5%, and Toyota dipped -4.4%. GM doesn't report monthly sales anymore but is unlikely to buck the trend. Higher interest rates on car loans is said to be a factor with buyers now paying more than a 6% rate on average. We should get New Zealand car sales data later today.
US factory activity slowed to a 30 month low in April amid a sharp drop in new orders. And construction spending unexpectedly fell in March to a level below that for March 2018. Both sets of data suggest the Q1-2019 +3.2% growth rate was an anomaly.
In Canada, their government raised the level of emergency loans farmers can take out to weather the trade stoush with China over Hauwei, where China retaliated by stopping purchases of canola.
Yesterday was a public holiday in many parts of Europe and in China, so market data is slim there.
But a new report about China's demographics says China is almost now at peak population. They say the peak will come much earlier than their previous forecast and will occur in 2023, just four years from now, at 1.4 bln. China's falling birth rate may stabilise but their death rate and emigration rate is still rising. The changes are likely to decrease the number of children and infants and the consumer markets for them.
In Australia, banks are feeling the pinch from APRAs serviceability restrictions that say borrowers must be able to handle a 7.25% repayment interest rate. And they are campaigning for that to be relaxed. (It's crimping their earnings.)
The UST 10yr yield is now at 2.49% and down -1 bp from yesterday. Their 2-10 curve is still at +24 bps and their negative 1-5 curve is at -10 bps. The Aussie Govt 10yr is at 1.76% and down -4 bps, the China Govt 10yr is unchanged at 3.42% (because Shanghai was on holiday), while the NZ Govt 10 yr is down -5 bps at 1.88%. Local swap rates tumbled a similar amount yesterday as well.
Gold is up another +US$6 from yesterday and now at US$1,286/oz.
US oil prices are little changed today, now just under US$63.50/bbl while the Brent benchmark is just on US$72/bbl.
The Kiwi dollar will open today softer at 66.2 USc after the US Fed policy statement. On the cross rates we are now at 94.4 AUc, a small dip. Against the euro we are softer at 59.1 euro cents. That decreases the TWI-5 to 71.1.
Bitcoin is at US$5,312 and that is +1.2% higher than this time yesterday. This rate is charted in the exchange rate set below.
The easiest place to stay up with event risk today is by following our Economic Calendar here ».
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17 Comments
Cars sales in decline. It's also in part about waiting for electric (eg Tesla and Maxwell batteries rumored + 20% range = 400 mile +).
“The Osborne effect is a social phenomenon of customers canceling or deferring orders for the current soon-to-be-obsolete product as an unexpected drawback of a company’s announcing a future product prematurely.”
Having had a good dose of probiotics, my gut tells me that the upcoming Barfoots monthly April volumes will be very poor, possibly only bettered by 2008. At some point the changing psychology of the Auckland housing market, irrespective of all the rantings of vested interests will overwhelm those unwilling to take a lower price.
I like the connection. So good (gut) health not only strengthens the internal immune system, it also helps us reject the stupid thought viruses projected by those around us. A bit like the old saying of "Early to bed and early to rise makes a man healthy, wealthy and wise". Whatever happened to the old sayings? They were everywhere when I was growing up, now they are forgotten. Traditional culture lost?
There seems to be a cycle where a culture of thrift and productivity becomes one of gambling and excess. Our obsession with Auckland house prices (essentially gambling and excess) seems to have peaked. Do we now enter the next cycle of resentment and cultural destruction and live off our common inherited capital of a civilised society, while it lasts, like Argentina and Venezuala, or do we identify our follies and mend our ways?
The cry of those who inherited wealth and fritter it away on trivia and having fun. It is as if our society has become dominated by the third generation. Traditionally the first generation started the enterprise and through hard work and good judgement achieved modest success. The second generation saw the work and dedication and knowledge that had created the enterprise and, learning from the founder directly in their earlier adulthood, went on to build a great enterprise over their lifetime. The third generation saw only the success, not what created it. They feel entitled to wealth and prestige and take it for granted, frittering away their inheritance on gambling and excess, until the enterprise collapses under the weight of its overheads.
Are we not doing this as a society? The third generation think farming and mining are nasty dirty things which they don't need. (I include oil and gas as mining activity). Because they are city dwellers they are unaware that these activities are the productive base upon which the nation's wealth depends.
Or who get elected to shout down interest rates...some more...for their own...Benefit....economically, be blowed. Me First. Look at me...more likely.
Till the last paragraph it sounded like you were describing the third generation as some of the current older generations who've created the current situation, rather than the younger ones inheriting it. These folk who inherited the wealth the post-war generations built up through sustained effort.
Fair comment, I think the rot set in about 1971. Somehow a productive economy became a housing speculating one. I wasn't being specific about which current generation, rather the process seemed to be generally applicable to society as a whole, both here and the rest of the Western world.
Agree re 1971. It's as good a pick for 'peak opportunities' as any. The new right (the elite, call their dwindling numbers what you will) had to increasingly eye-off the commons, from there on. You know there aren't any 'doublings' to be had, when Shedule 4 land is aimed-for or when you survey the pivots-to-the-horizon that is Canterbury. So they take an increasing portion of a decreasing cake, as long as the system staggers on.
I agree with 1971 as well but for the reason that’s when we went off the gold standard and introduced funny money. In most 100 year graphs it’s a turning point for most trends, increasing inequality (it was decreasing up to that point), house prices rocketing up etc.
1971, well we lost a series to the Lions for a start. The Kirk government the year after introduced what they saw as socially beneficial policies. ACC, compulsory super -an, and tinkered with inflation, MRP’s remember them, and “The Property Speculation Tax” which if ever you wanted CGT, well there it was. Even Muldoon kept that running for most of his first term. His fix for inflation was to simply ban it. Wage and price freezes, but later $ billions was wasted on SMPs. I think that 12 years or so of government basically was trying to keep the lid on the barrel so to speak, trading bank lending was tightly restricted by the so called corset overseen by the RBNZ. The cat came out of the bag, well and truly, with the Lange Douglas lot. Remember we had a housing boom, interest rates got up over 15%. And people really started getting into credit cards personal/private debt just got strapped to a rocket because suddenly it was just so easy. Before that there was virtually nothing but HP & lay by.The Trading Banks realised they didn’t know what collateral meant, didn’t know how to lend in fact when they were allowed to. eg BNZ exit stage left. Everything was unshackled, everything changed rapidly. I think that time was NZ’s big watershed moment.
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