Here's our summary of key events over the weekend that affect New Zealand, with news that is important over a wide set of issues.
Firstly, both the US Federal Reserve, and the ECB have important meetings this week. The Thursday (NZT) Fed meeting is expected to bring another +25 bps rise to 2.00%. But it could also signal that it is done for a while now and that would be a shift in market expectations.
Meanwhile the ECB meeting the next day was originally expected to signal the start of a pullback in their ongoing money-printing. But weaker than expected recent growth data may see that postponed.
Emerging markets will be on tenterhooks for both outcomes. They are showing they can't hack the consequences of higher interest rates, so any pullback by either or both will be seen as a reprieve for them. Japan is also reviewing its monetary policy settings, but no change is expected there.
These moves will come as the world digests the impacts of the reinvigorated Trump isolationism, all based on 'facts' so alternative they rightly deserve the scorn they are receiving. As others have said, the G7 meeting was a Trump train-wreck.
In Canada, their May employment data showed a surprise loss of jobs. But wages there rose at an unexpectedly quick pace, up overall +3.9% year-on-year. Within that, female wages rose +4.1%. Wages for non-unionised employees were up +4.5%. These are impressive gains.
And Canadian housing starts surprisingly fell in May compared with the previous month as multi-unit urban starts declined, principally because multi-unit housing starts in Toronto slumped. Developers there are retreating after some public policy changes and a bad sign for price containment.
China’s trade surplus shrank sharply in May on strong imports. The overall monthly surplus was down to +US$24.9 bln and well below the +US$32.6 bln analysts were expecting. But the gap with the US widened, representing 98% of the total monthly surplus. Advance shipments to the US ahead of possible new arbitrary tariffs may be behind the unusual data.
In China, May inflation data was released showing their CPI held at +1.8%, China's PPI rose to +4.1%, confirming the recent downward trend is over.
Argentina and the IMF have agreed on a three year deal to lend it US$50 bln to help it deal with its currency and reform crisis. They say they will draw on the first tranche of the loan, but the rest is just for emergencies. Part of the deal requires the country to reduce its fiscal deficit to zero by 2020. This deal gives President Macri the cover to make some tough choices to rein in crippling inflation and bloated public spending.
And over the weekend Switzerland voted down its 'sovereign money' referendum. It was rejected by a surprisingly large margin - 76%, and far greater than recent polls suggested (55%). At the same time, the Swiss approved a ban on foreign online betting sites. The online gambling wave sweeping the world is not a positive thing according to another surprisingly large plurality of Swiss voters (73%).
The UST 10yr yield is at 2.95%, up +1 bp. The Chinese 10yr is at 3.69% (unchanged) while the New Zealand equivalent is now at 3.02% and that is up a very chunky +15 bps and resetting the relative positioning of NZGB pricing. Holders have taken huge losses here. If it holds at this level, some conseravtive KiwiSaver funds will be sweating it.
Oil prices are down today and the US price is now under US$66/bbl. The Brent benchmark is now under US$76.50/bbl.
Gold moved marginally higher over the weekend, up +US$2 to US$1,299/oz.
The Kiwi dollar will start today little-changed at 70.4 USc. On the cross rates we are higher however at 92.6 AUc, and 59.8 euro cents. That puts the TWI-5 at 73.1.
Bitcoin is now at US$6,725 which is -12.5% down from where we left it on Saturday. This is a substantial fall, taking the NZ$ price well below $10,000 and overall prices back to where they were in November 2017. A South Korean hack is behind the sudden drop.
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35 Comments
Did commented the other day that anti forign buyer lobby will up their ante along with media to try and stop and if cannot be stopped will try to influence government to dilute the ban
https://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=12068187
This is a real test for Labour as any attempt to backtrack will backfire on them as is one of their major promise that got them into power. No excuse and no justification to delay or dilute will be accepted by the people of NZ who voted for them.
On the otherside if they pass the bill without delay and the way it was suppose to be as promised will enhance their posistion and also of their allies as was in everyone's election manifesto to ban foreign buyer.
Defination of foreign buyer has been manipulated for the data purpose to suit vested interest.
Foreign buyer = Students, all short term permit/visa holder (Who are not citizen or PR holders) along with people who are not residents and citizen and based overseas.
For the data purpose only non resident and citizen based overseas are treated as Overseas buyer and does not take into account students and all other short term visa holder.
Any debate on it is treaded or diverted by vested interest and supported by media towards racism (No one is against Asian sounding name but by resident status and everyone knows which major country people are diverting money in billions to other country for being caught with unoffical money in their home country will be behind bars without trial as is not a a country with democratic value - Money laundering at best)
I'm not entirely sure why we can't just have the houses split by visa type? There'd be some crossover, such as myself (Citizen) and my wife (Permanent Resident), but would give some actual indication as to whats happening.
Citizen, Permanent Resident, Resident, Student visa, Working Holiday, No visa .. etc
The data collection is the first step.
I can’t see politically how they can back track. The data released the other day was pretty damaging. National haven’t got a leg to stand on, to claim the market will be significantly damaged by the ban merely reinforces the govts point. Judith Collins comments just show how unfit she is to lead the party and how national are a total busted flush on the housing bubble. They have zero cred.
Yep it's interesting to watch Mr Hosking at present, he reminds me of my three year old who has just been told that she needs to share the toys with everyone else at Kindy and can't keep them all to herself. Can anyone remember what his views were on negative gearing
In the Herald article Mr osking states ' Because it's three per cent, it started out at three per cent, has remained three per cent, and is still three per cent.' - So Mike how does that look in 2 years, 5 years, 10, years. How long does it take for all of New Zealand to be foreign owned??? In the case of Central Auckland with its current 20% purchasing rate.. yes Mike,.. Is there any way that someone can stop him having a public voice? It's so myiopic!
Well the drop in home ownership certainly was not due to it being less financially useful for retirement & family growth, and it certainly was not a culture shift making home ownership unfashionable. I am including the local investment drivers as well in this. Stoking the fire of demand does not make the QoL better for anyone but those doing the stoking.
Maybe the challenge to the G7 and their multilaterism & protectionism is not such a bad thing.
https://www.theaustralian.com.au/news/world/donald-trumps-call-for-russ…
Do we want a rules-based undemocratic EU to run the world?
Got it for over a year without asking and no matter how many times I called they would not stop. Used for pet litter liners... only good use our family had as the smoke from them was bad for asthma. I found the pets posted several comments on the quality of the rag.
Big storm due to hit north of Gisborne, going to get interesting, after the damage from the last one, my farming friends say they have damage worse then cyclone Bola.
https://www.stuff.co.nz/national/104486938/Tolaga-Bay-cleanup-could-cos…
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