Here's our summary of key economic events overnight that affect New Zealand with news financial markets have virtually dismissed Omicron threats now.
But first, US jobless claims spiked last week but in a seasonal pattern, and if you look past that they remain low, and lower than pre-pandemic. On that basis they are at a 50 year low. There are still less than 2 mln people on these benefits and the lower trend is still in place. Last week's levels were about what analysts were expecting.
The widely-watched USDA WASDE report is now suggesting that the world wheat harvest will be better than previously indicated - and wheat prices slipped. But despite upward revisions to global stocks this month, they are still at a 5-year low. The same report suggests the US will be importing more beef at higher prices, and that US dairy production is slipping and prices are rising.
The one part of consumer spending that has delivered lower prices consistently has been online shopping, which is one reason it has boomed recently. In the US now one dollar of every four is spent online. But for the first time since it has been tracked starting in 2014, online prices are rising fast, up +3.5% in the past year and extending the rises to 18 straight months. The supply-chain pressures are building inflation everywhere now.
Worse, the expected easing of container freight rates has stopped, with overall costs rising last week. Bulk cargo freight is back in a rising trend as well.
And it is not just a problem for urban consumers. Soaring energy prices make fertiliser more expensive and farmers globally are scrambling for organic manure, including biosolids. There's money in muck.
Meanwhile, in the financial world, the Fed is reporting that US household wealth rose to a record US$144.7 tln at the end of the third quarter, though the +$2.4 tln gain over the period was the smallest since the rebound from the pandemic began.
China's consumer prices rose in November by 2.3%, and up from 1.5% in October and its highest in a year. It was led by rising pork prices although beef, lamb and milk prices all remain well contained.
China's producer prices remained very high in November, up +12.9% in a year, but there was actually no rise from October. Still they are at record modern highs.
In China's financial markets, loan growth is slowing. Their new yuan loan growth was expected to bounce back in November from the unusually low October level, and they did. But the bounce back was far less than expected and embeds the declining trend evident in 2021. Beijing can 'force' banks to lend, but it can't 'force' businesses to borrow. The central bank also raised its foreign exchange reserve ratio overnight, trying to dampen the yuan's recent surge. The Chinese central bank has never been 'independent' but Beijing Party officials are exerting closer control these days.
And still in China, global ratings agency Fitch has declared that both Evergrande and Kaisa have defaulted on their bond obligations.
And staying in Australia, pandemic cases in Victoria jumped to 1230 reported yesterday. There are now 11,224 active cases in the state - and there were another 9 deaths yesterday. In NSW there were another 420 new community cases reported yesterday, another jump, with 3,372 active locally acquired cases, and no deaths. Queensland is reporting no new cases. The ACT has 4 new cases. Overall in Australia, just over 88% of eligible Aussies are fully vaccinated, plus a bit under 5% have now had one shot so far.
The UST 10yr yield opens today at 1.50% and retracing -2 bps overnight. The UST 2-10 rate curve starts today a little flatter at +81 bps. Their 1-5 curve is little-changed at +89 bps, while their 3m-10 year curve is flatter at +146 bps. The Australian Govt ten year benchmark rate has fallen -3 bps to 1.66%. The China Govt ten year bond is unchanged 2.88%. The New Zealand Govt ten year is firmer, up +6 bps at 2.45%.
On Wall Street, the S&P500 has started their Thursday session down -0.3%. Overnight, European markets all fell about -0.3% as well. Yesterday Tokyo ended -0.5% lower, but Hong Kong was up +1.1%, and Shanghai closed up +1.0%. The ASX200 closed down -0.3% while the NZX50 fell -0.8%.
We should also note that equity market reactions to the series of pandemic shocks are becoming shorter and less severe.
The price of gold will start today at US$1777/oz and down -US$5 overnight.
And oil prices are about -US$1.50 lower at just over US$71/bbl in the US, while the international Brent price is down to just over US$74.50/bbl.
The Kiwi dollar opens today weaker at 67.8 USc. Against the Australian dollar however we are down at 94.9 AUc. Against the euro we are unchanged at 60.1 euro cents. That our TWI-5 starts today lower at 72.3. We should also note that the Chinese yuan rose to another 3 year high against the USD as the Chinese central bank has stopped intervening in this market - for now at least.
The bitcoin price has slipped to US$48,671 and down another -3.4% from this time yesterday. Volatility over the past 24 hours has been moderate at just over +/- 2.9%.
The easiest place to stay up with event risk today is by following our Economic Calendar here ».
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88 Comments
President Biden conducts a virtual summit for democracy to which our PM Adern contributes , democracy “as being challenged across the globe.”Continues on to extol NZ’s virtuous state of democracy, and then boast of the inherent transparency in her government. Excuse me. Just for a start much legislation rushed almost clandestinely such as the IRD new unbridled powers of enquiry. Something of a Calidans mirror moment though perhaps. Simultaneously, coincidentally the extraordinarily undemocratic Three Waters legislation is postponed rather than being rammed through under urgency.
https://www.stuff.co.nz/auckland/127236531/bed-in-a-garage-auckland-property-listing-slammed-by-mp
Looks to me to be a new house - likely a first-buy homeowner who paid over-the-top and is finding the mortgage difficult.
Such a sad state of affairs.
Three Waters shelved? I missed that. Great news! But also the way they tried to push it through proves that democracy is not as vibrant here as she may like to claim.
And this is why I keep banging on why we need to fight changes like electoral terms and other things. They all are designed to undermine democracy and make the pollies less accountable.
Not shelved in the sense of 'off the table'. Just waiting for better polling, after yet another round of infantile propaganda, paid for by You Know Who, being finalized over the Xmas period, and unleashed upon a weary population during the long, ham-rich hazy days of the New Year....
Three Waters. I am opposed to race based systems. New Zealand long long ago left the situation of being two distinct groups of people.
As for the rest of it we just have had new legislation about domestic water supply. You simply have to meet the standard. Councils will have no choice but raise the money to do what they have to.
Not hard to extend that to the 'other two waters'. That's an alternative approach.
Those who believe in Race are stupid. Maybe NZ does have two populations - the one third that includes myself who were born overseas and the two thirds who have roots in NZ that go deeper than a lifetime. That's not saying one group is more attached to NZ than the other - note all immigrants other than a handful of refugees, actually chose to come to New Zealand and choose to remain.
"President Biden conducts a virtual summit for democracy to which our PM Adern contributes , democracy “as being challenged across the globe.”
democracy “as being challenged across the globe... this is just the beginning. Happy you realize Jacinda Arden, as Democratic Majority is turning into dictatorship and only shedding crocodile at the time of election.
Democracy = Vote Bank Policy has to be stopped. Will do anything to gain vote even if it mean creating a divide and social unrest in times to come.
Not only Democracy but also agencies like reserve bank are also been challenged for proving to more wrong than correct - worst lying and manipulating with vested biased hidden agenda and even after being exposed (Once damage is done like...inflation...money printing....supporting ponzi...) still arrogantly fail to admit and correct knowing that in current setup are protected.
The irony of jacinda contributing to a democracy talkfest as ex leader of international socialist youth is quite spectacular in its chutzpah. I hope the people get a choice about extending 3 years to 4 and it's not conveniently pushed through like 3 waters has been proposed to be . I didn't notice the consultation on iwi being given stop and demand powers either , surely those given the power to demand compliance with the rules have been vetted to ensure they have no criminal record.
Beijing can 'force' banks to lend, but it can't 'force' businesses to borrow.
.. the most important macroeconomic variable cannot be the price of money. Instead, it is its quantity. Is the quantity of money rationed by the demand or supply side? Asked differently, what is larger – the demand for money or its supply? Since money – and this includes bank money – is so useful, there is always some demand for it by someone. As a result, the short side is always the supply of money and credit. Banks ration credit even at the best of times in order to ensure that borrowers with sensible investment projects stay among the loan applicants – if rates are raised to equilibrate demand and supply, the resulting interest rate would be so high that only speculative projects would remain and banks’ loan portfolios would be too risky. https://professorwerner.org/blog/
I regret ever joking about the 4th booster, as now the memes are becoming reality:
https://www.cnbc.com/2021/12/08/omicron-pfizer-ceo-says-we-may-need-fou…
I got a free cafe voucher when I went for my 2nd jab.
At this rate, I'll never need to pay for my own coffee again!
Might just get a jab every day on the way to work, get a free coffee and scone, and then I'll be well on my way to having a house deposit in no time!
All backed by good science of course, and not contrary to the recommendation of the vaccine manufacturer, just like changing the wait period between the first two doses.
It has interested me how the New Zealand government has been able to have more knowledge about this stuff than the people who specialise in designing and making and testing these vaccines.
Omicron is not here yet so there is no urgency. Besides the efficacy indicates delaying the booster gets better outcomes, although I note the language around this is changing now. Israel's first boosters were done at 11 months with very good outcomes.
It'll come down to how much we've learned about and are able to manage our borders.
murray 86
Be careful what you wish for. Big media is keeping everyone in the dark. Earlier in the week my sister phoned a friend who lives in a Papatoetoe private hospital-cum-resthome. He said that they were all confined to their bedrooms because a S----- nurse had tested positive.
Then, yesterday my mother's resthome in a leafy inner suburb phoned me yesterday to say I couldn't visit her today, her 98th birthday, because a staff-member there had tested positive and all visits were suspended and all patients were confined to their bedrooms.
There's more going on out there with Covid than the public realise. Obviously, the word still isn't getting through to all the suspect ethnic community.
It's not about wishing. It's about interpreting the information we have available. My mother is also in a rest home which has closed its doors to visitors. it doesn't bother me as they are focused on keeping their residents safe. We already know people either don't care or don't believe it will happen to them, and they are the ones who will spread it. So not concerned about them being shut out.
uk doing boosters after 3months, will it be every 3 months after that
two was enough for her https://www.bitchute.com/video/01i4MTvvVxfR/
... or cardiovascular disease , which kills 18 million people worldwide annually ... 3 times the total covid19 death toll ...
Sugar passports for addicts ! ... only those deemed by their doctor to need it ought to be allowed to buy it ... under the counter , no branding ... pictures of fat bastards on the sugar packet ...
... why was no one outraged that our water will be flouridated ... and our bread dosed with folate ...
Nanny State is gonna mass medicate us , whether we like it or not , whether we need it or not , and regardless of the science which says there are downsides to these things as well as up ...
The property dominoes are starting to fall in China.... I'm predicting by March this will be a full blown crisis.
Interestingly I saw commentary from fonterra that milk prices wont decline this time around - as there wont be a flood of supply- but there could be a large exit of demand if the Chinese economy tanks.
But we know that Chinese developers and investors are deeply entrenched in our market and potentially our banks. Their losses might start from their Chinese developments / investments, but they will also need to liquidate their assets here if they become insolvent. I wouldn't underestimate the impact foreign developers/investors have had on our market, and what the impact would be of their withdrawal.
People with longer memories may recall me saying 1-2 years ago that a global financial crisis will hit in 2022/23, because there's a global financial event on average every 8-10 years, and it will be that which finally brings the NZ housing market back to earth.
Of course the global fallout of the China property debacle may still be relatively contained, so I could be wrong.
Just wow!
Growth in consultants and legal fees were driving consenting costs up by $500 million a year, according to the report for the New Zealand Infrastructure Commission/Te Waihanga. Those two areas accounted for 70 per cent of all consenting expenditure, commission chief executive Ross Copland said.
https://www.stuff.co.nz/business/industries/127237068/nz-an-expensive-p…
Forget joining the Commonwealth of Australia - we're better suited to become the 51st State of America.
This has been the way in New Zealand for quite a long time now, if you were to count in all the consultants and businesses whose entire business comes from government departments as being part of the public sector we would have one of the largest public sectors in the world!
Yes I worked in the banks and would regularly see council workers once established, leave the council, set up their own business and contract back to the council. They were doing the exact same stuff as before but for 3x the price. People would join the council with this idea as the basis for their employment. It is a well trodden path especially in planning and legal services.
"In New Zealand, a project worth less than $200,000 saw consenting average 16 per cent of the total cost."
At say $3000/m2 that's the cost of a 67m2 house. Seriously? I understand in Akl house building consent fees are how much the council can take you. (correction may be needed). Here in NP there's a set fee scale varying according to the construction value and extra for more inspections if deemed necessary and for a straight forward house the extra inspections unlikely to exceed 4 or 5 at about $250 a pop. IMO acceptable. This is not developer fees for subdivision which are different.
On the fertaliser front, Urea is also an incredibly important for the use in Diesel exhaust fluid (DEF) to reduce emissions, in a product called AdBlue in Australia. The shortage and increasing prices, coupled with regulations stating you cant operate your diesel engine with out AdBlue, Australia is facing a massive crisis.
Their trucking fleet, along with many service providers that use diesel vehicles, wont be able to drive without facing massive fines.
Very interesting read
https://www.news.com.au/finance/business/travel/urea-shortage-puts-supp…
The government decides on emmissions standards, it doesn't put in technical solutions. The manufacturers decide if exhaust fluid is the best way to get emssions down.
It is in NZ
https://www.aa.co.nz/cars/motoring-blog/what-is-diesel-exhaust-fluid/
All modern diesels have a diesel particulate filter.They can give issues, especially saloon ones; truck use is not problematic.they are expensive to replace in NZ
Most require Adblue to function, but my Mazda 6 and others use different technology.
You are not supposed to remove them
But the Govt seems to tolerate outfits like this https://www.dpfsolutions.co.nz/ and others.
Yeah what's the point in having emissions standards if there is no penatly in violating them. Like requiring new cars have tyres with tread, but not required them to be replaced when bald. I guess it's only 0.001% of drivers that are going to get the emissions equipement removed.
On the China front, the Credit Default Swap rate for China has been removed from the global list!!!!!
http://www.worldgovernmentbonds.com/sovereign-cds/
If that doesn't set the warning bells ringing.....Turkey is still on there even though its implied probability of defaulting is at 8.16%.
Im guessing the relative size and importance of the two economies is why they have hidden Chinas while it is going up.
The China 5 Years CDS value is 48.8795 (last update: 26 Nov 2021 2:45 GMT+0).
This value reveals a 0.81% implied probability of default, on a 40% recovery rate supposed.
CDS value changed +0.36% during last week, +7.16% during last month, +62.06% during last year.
I have to have a skite here - been recommending this to everyone and anyone in government for years...
New legislation means the legal smoking age will increase every year, to create a smoke-free generation of New Zealanders, associate health minister Dr Ayesha Verrall said on Thursday.
Now onto my weekly rent maximum hobby horse...
It's not fear and panic GBH it's wait and see. Very clearly the worlds experts have said wait and see what the evidence tells us. But so far as we know, yes Omicron hasn't killed anyone yet which gives hope. But let's not ignore the facts shall we. COVID has killed more than 790,000 people of all ages in the US alone, directly or indirectly. The idea should be how can we minimise this going ahead?
The man who shot two Auckland police officers, killing one, will spend at least 27 years behind bars.“I have determined while your offending could support a whole life sentence, it would be manifestly unjust.”Justice Venning said.
I remember the days when if you shot a police officer in the course of their duty, and they died, you were hung. No ifs, buts or manifestly unjusts about it.
Do we want respect for our Laws in this country or not?
The last person hung in NZ was hung for killing his wife through arsenic poisoning. A much later analysis has indicated that the arsenic, which by the way was also in his system at just a marginally lesser dose, most likely seeped into the ground water from the sheep dip. they were tapping an artesian bore for their water. So the last man we executed was likely innocent. Do we really want to continue that?
Creator of BTC revealed:
we need more boosters!
Yesterday there was a congressional hearing involving leaders from the crypto industry. You can watch the whole hearing here https://youtu.be/8l-ajalUP6Y but it’s 5 hours long so you might be better off seeking the highlights.
There are no decisions resulting from the hearing but the tone of congress was one of genuine curiosity about cryptocurrency; it was altogether, quite positive for the future of crypto in my opinion.
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