Here's our summary of key economic events overnight that affect New Zealand, with news there are some indications popping through that inflation pressures might be topping out.
But first, American jobless claims rose last week to a bit more than expected, at +241,000 new claims for the week, to put 1,327,000 on these programs and no longer at a record low level.
And their producer prices rose more than expected, like yesterday's CPI, but these costs are rising faster than the consumer set. They were up +11.3% in a year, nearly back at the March 2022 +11.6% level again. But just like the CPI, costs other than for energy are rising slower now, up +6.4% and an eight month low.
And there are indications the American petrol price pressure is past its peak. Average prices nationwide are down -8.2% over the past month in a consistent declining trend now. If this continues, it will show up in CPI and PPI data quite soon.
In China's cities, their economic slowdown is weighing on households. Middle-class consumers are feeling anxious and making painful cuts to their household budgets. Their savings rate is suddenly rising sharply as spending is curtailed. With tough lockdowns hanging over their heads, most Chinese households who can are choosing to save, and that is making life tough for policymakers trying to restart a very sluggish economy. Helicopter money in these situations is less of an option because such moves are less likely to be spent. For those who can't save they may help, but their prospects now look much tougher.
The mortgage boycott is a rising trend there too and with the regional bank run pressure, it is piling pressure on policymakers. Rumours are swirling now. The upcoming Party Congress will have these darkening shadows over it and they won't be appreciated.
On top of the property wreck, the consumer hesitancy is raising Chinese bond market stress which is now as bad as it has ever been. And as if this not enough, heatwaves and floods are as bad this year as they have ever been (although that is not just a Chinese problem - although as the world's largest emitter, they are a primary cause).
Singapore reported no growth in the June quarter from the March quarter, a weaker-than-expected result. That means their economy grew +4.8% over the last 12 months, far less than the expected +5.2%, so a big leakage in momentum there. (We can't help but notice them reporting their June quarter result in just two weeks. It takes Stats NZ eleven weeks to report our National Accounts after the quarter end. Stats NZ is starved of funding to come up with quicker results, so we fly blind for 2½ months. By then, they are hardly relevant for policy makers.)
And Singapore tightened its monetary policy yesterday, its fourth such move since October and an off-cycle move for them as they saw inflationary pressure rising on the back of Russia's invasion of Ukraine. Singapore targets its exchange rate to achieve price stability, rather than an interest rate.
The Australian employed workforce rose by +88,000 in June, a bit more than half full-time jobs, and a surprising number were part-time. That took their unemployment rate down from 3.9% to 3.5% (a record low for them) and involved a small uptick in their participation rate. This lower than expected jobless rate will put pressure on the RBA to act harder and sooner. (The last time NZ reported its jobless rate, it was 3.2% in March. We get our June data on Wednesday, August 3, 2022. They are unlikely to change much given the strong jobs market here.)
Globally, freight rates for shipping containers were marginally softer last week, continuing the easing trend. Bulk cargo rates eased too.
The UST 10yr yield starts today up at 2.96% and a +5 bps rise from yesterday. There is less talk today of a +100 bps Fed hike in July, now more like +75 bps. The UST 2-10 rate curve is less negative today, now at -16 bps. Their 1-5 curve is also less negative now at -10 bps. Their 30 day-10yr curve is marginally steeper at +130 bps. The Australian ten year bond is little-changed at 3.45%. The China Govt ten year bond is -2 bps lower at 2.81%. And the New Zealand Govt ten year will start today back up +7 bps at 3.70%.
Wall Street has opened its Thursday trade with the S&P500 down -0.8%. Overnight, European markets were all down by about -1.5%. Yesterday, Tokyo ended its Wednesday session up +0.6%. Hong Kong was down -0.2% and Shanghai was down -0.1%. The ASX200 ended up +0.4% and the NZX50 ended up +0.7%.
The price of gold will open today at US$1711/oz which is -US$29 lower than this time yesterday.
And oil prices are -US$1.50/bbl lower at just under US$93/bbl in the US, while the international Brent price is just on US$96.50/bbl.
The Kiwi dollar will open today -½c weaker from this time yesterday at 61.1 USc. Against the Australian dollar we are firmer at 90.8 AUc. Against the euro we are little-changed at 61.1 euro cents. That means our TWI-5 starts today at just on 70.6 and little net change.
The bitcoin price rose from this time yesterday by +3.4% to US$20,549. Volatility over the past 24 hours however has been moderate at +/-2.6%.
The easiest place to stay up with event risk today is by following our Economic Calendar here ».
Daily exchange rates
Select chart tabs
143 Comments
https://www.zerohedge.com/markets/china-verge-violent-debt-jubilee-thou… interesting times for president Xi
The article is supported by the continuous slide in Iron Ore - and spotmarket Steel prices. According to the Allan Laurie Forestry Newsletter the uptake of logs at China's Eastern Seaboard is also about 15000 - 20000 m3 a day down compared with normal consumption meaning construction activity is well down (New Zealand logs are predominantly used for boxing of concrete).
Their per capita emissions are lower because even though China as a whole is a large economy now, they're still super poor on a per capita basis. Assuming their living standards keep lifting they haven't finished in their emissions rises. Large electric vehicle uptake, but effectively they're now running vehicles off coal rather than petroleum.
Ditto India.
But yeah, the West is shifting a lot of their own burden offshore.
Doesn't stand up to scrutiny that the US, or the EU has offshored their "dirty manufacturing".
"I find that concerns about the effect of pollution offshoring were unfounded in the European Union, not because the effect was small like in the United States, but because the patterns of specialization of EU production and imports were actually exactly opposite to what pollution offshoring would predict."
https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2447679
US factories are polluting way less — but it's not because of offshoring
https://www.vox.com/2015/2/8/7999417/US-factory-pollution-offshoring
NZ has made the biggest contribution to global warming per capita over time - we are literally top of the league. However, this is mainly because the population was small when we chopped all the trees down. On current emissions NZ, is 13th in the world. Not good.
"Even more strikingly, if an individual herd’s methane emissions are falling by one third of one percent per year (that’s 7/2100, so the two terms cancel out) – which the farmers I met seemed confident could be achieved with a combination of good husbandry, feed additives and perhaps vaccines in the longer term – then that herd is no longer adding to global warming.
Traditional greenhouse gas accounting ignores the impact of changing methane emission rates, while grossly exaggerating the impact of steady methane emissions.
Academics can quibble (it’s what we do best) about the exact factors, but the fact that this formula is vastly more accurate than the traditional accounting rule is indisputable."
https://www.newsroom.co.nz/@ideasroom/2019/03/29/510792/a-climate-neutr…
Not necessarily. What about the albedo effect, where you increase the reflection of sunlight back to space when you cut down trees? Why did global temperatures drop from 1940 to 1980 if CO2 concentrations where accelerating. We need to increase our fossil fuel use, to make us safer, increase our life expectancy and clean up our naturally dirty environment, making the world a better place. Perhaps you want to go back to the wood and charcoal burning days, pre industrialization. Oh how fossil fuels have improved my quality of life.
That is one of the silliest comments I've ever read.
Advocating the continuance of dependence on a finite resource.
Which then requires sleight-of-intellect on multiple fronts; Climate, Limits to Growth..... as you try and fit a false narrative to overriding facts. And go down multiple rabbit-holes as you do so.
You have everything backwards. Must be quite hard to make sense of life, like that?
"Why did global temperatures drop from 1940 to 1980 if CO2 concentrations where accelerating." Heard of global dimming? Hopefully your next question won't be why are global temperatures rising now then? You answered that yourself. "CO2 concentrations accelerating". https://en.wikipedia.org/wiki/Global_dimming#:~:text=Global%20dimming%2….
"They have egg on their face from having been behind the curve, and there is a little bit of a sense of panic in the air,"
https://www.abc.net.au/news/2022-07-14/canada-raises-rates-1-percentage…
What a great day for Christchurch ratepayers!
All signed up for a mountain of debt on a bottomless money money pit - for a relic from days gone by.
Talk about ignorance to global trends and looming issues.
This will be a budget blow out disaster - never mind the so called fixed contract, it will push ratepayers to the edge..... and over.
We must have the same nitrates in our water down here in Invercargill (could use some global warming), with the Richardson Group inner city rebuild at the ratepayers expense. Generally you can double the cost estimate and add 10%, when there is a public-private partnership. Public pays expenses, private enterprise reaps profits.
Because not only are they underwriting their own white elephant (and I have no anti-sport bias; I part-take of many) but they see this one costing them even more (by competing).
Stadiums are often the final expression of the growth of a culture, prior to decline/collapse. Bread and circuses.
Is that why the need to clown, particularly on slow-traffic days?
Dunedin stadium cost $140million, already partly paid for. By the time Chch gets their billion dollar stadium, yes it will cost that, regardless of what is said, Dunedin will be defending a far smaller capital sum owing, and will just undercut Chch every time it suits them. Possibly not for Crusaders and Canterbury games, but for any function that only wants to be in only one South Island venue. Also, if one has to pick one of the two cities to visit, Dunedin wins hands down for the fun factor.
... I don't see it as stadiums competing against one another for events ... rather , that having more stadiums will attract more artists to come and utilise the string of available venues the length of the country , from Orc Land , down through Wellington , Chch & Dunners .... win/win ..
If we look at big acts that come, they usually do shows in the Nth and Sth Island (i.e. one location per island). Dunedin is currently getting 100% of the Sth Island shows, it's a stretch to think they wouldn't get less shows overall if CHCH was back in the running.
I wonder how many of the 77% of people who were all for the stadium will then proceed to whinge until kingdom come when their next rates bill comes through the letterbox?
I also wonder how many of the people who are vehemently pro-stadium are anti more widely beneficial public infrastructure that is also less expensive to build and has a far lower barrier to entry once built, e.g. cycleways or libraries (I went to a small business networking event the day after the submission data was made public, and the consensus viewpoint was that the stadium was an absolute necessity but cycleways were a total waste of money)
Zero chance this thing gets built for the "fixed" budget. Will get part way through, contractor will declare they need more money or else, and sunk cost fallacy means further bills for the ratepayer.
A good stadium would be nice, but this is insanity from a cost perspective, and it's just another instalment in the never-ending Kiwi series of "socialise the losses and privatise the profits".
How many of those in favour would be willing to pay a transparent ticket price that covered the actual cost of building the stadium? Or are your experiences only "priceless" ('you can't put a $ figure on time at the rugby with your kids!') when someone else is subsidising the cost?
Heard some good thoughts on this on the radio: a 10,000 facility would have been better because what bands would want to perform in a way under capacity rugby stadium with crap acoustics?
Scenario 1: The stadium won't operate at anywhere near to capacity most of the time and it will be like the Sydney Harbour Bridge - paid off in 50 years.
Scenario 2: The stadium won't operate at anywhere near to capacity most of the time and the stadium will be paid off in 30 years because the council has neglected other infrastructure while councillors campaign on a "keep rates low" platform.
. . we're getting a stadium ... .... we're getting a stadium ... OMG , how good is that ... finally , after a decade of differing & dickering , kicking the can down the road so often they wore it out & had to get a new can ...
We're getting a stadium : Guys , the Gummy Bears are on me , slurp ....
Some odd contradictions for sure. One councillor voted against the stadium citing climate change & other basic issues were of greater priority, yet the same identity was one of five or so who voted to construct a international wide bodied jet airport in Central Otago. Four hours drive away for any ChCh ratepayer, hardly a basic issue and certainly not a boon for climate change.
Heard Mayor Daziel talking vague on RNZ. Plans of how to pay for it seemed to center on "having a conversation".
Better would have secured the cash first. What would happen if each property owner was asked. "So many dollars X on your rates for 15 years." Yes or No. And those who said "No" would not have to pay.
Interesting result I think.
People think differently when it's not spending other peoples money, as versus their own.
And if ratepayers wouldn't pay on that basis, no stadium.
Worries me too. Not long ago the mayor wanted to impose a levy on ratepayer for acquisition & maintenance of heritage buildings. Oh it won’t be a rates increase because it will be charged separately. Now they are going to levy for the stadium by adding to the rates. Are there proper measures in place to collate those funds and ensure they are spent on the stadium, and not on things like statues in the Avon to catch the weeds.
For how long?
Here in Taranaki, they aren't putting up our rates anymore for 'our' stadium cost blowout.
But, we will be playing the additional targeted rate for longer now.
I get that each ratepayer will use some facilities more, and other facilities less than others. But I really do question in Christchurch what the payback period for the amenity that that stadium is going to be.
People don't understand construction projects and how they're priced. They look at a $400 million cost blow out on Transmission Gully, and think that's a bad thing. But in order to prevent that $400m blow out, we would have had to spend $800 million in site surveys and excavation etc.
Sometimes it's just not economically viable to avoid cost blowouts.
Yes, the payback of a library is better public access to education.
Comparing a library to a stadium is apples and oranges anyway.
There is a cost to build, maintain and run the library (albeit much lower than the stadium). But anybody can use the library at any time, at no more than a marginal cost for things like reserving books. I personally haven't set foot in a CCC library in 10+ years but don't mind my rates going towards them because I could - at any stage if I chose - go and use the library for no cost, whether that's for getting out a book or just having a warm place to sit.
With the stadium, it's a public facility in the loosest sense of the term. The barriers to entry are higher, because not only do you have to be interested in an event, you also have to have the financial means to pay for a ticket to said event.
With the library you have to have interest in books, but it costs you nothing extra to then access them.
With the stadium, hard-up ratepayers are being asked to subsidise entertainment for people that they might not be able to afford themselves.
Nobody is profiting from a library, whereas with the stadium there are interested parties e.g. rugby organisations, event promoters etc who get the costs subsidised but get to privatise the profits.
Same goes with cycleways. You might not use them, but you still benefit from reduced traffic. And anybody can use them for no additional cost (BYO bike).
All I will say to people who argue that "you can't put a price on entertainment" is that if your entertainment value is truly priceless, surely you should be happy to pay whatever is required - in which case would you be happy to use the stadium if each ticket was priced to properly account for the actual cost of building and maintaining the facility?
Agreed, you need a diversity of facilities. But there also needs to be some consideration to price/cost.
I wouldn't have an issue with the stadium if it was reasonably priced.
A stadium that will almost certainly wind up costing close to a billion dollars by the time it's finished (if you believe the "fixed price" BS I've got a bridge to sell you, speaking of infrastructure) and which benefits a narrower subset of the population should be at the bottom end of the priority list.
If you had to pay a fee/levy on each ticket you buy to attend rugby/concerts/whatever at the stadium that was an accurate reflection of the cost to build the stadium, would you be happy to do so?
Disagree with you on this one Gummy. If the CCC wants people (families) to come in from the Waimak and Selwyn, where is the nearby parking building for the stadium? I'm not talking all those horrible little parking lots around the CCC and the buildings where you pay for the pleasure of driving into the city. If you want to drive into the city for a football game, you want to be parking in a secure area, close to the arena and your ticket should include the price of parking. Please don't say hop on a bus or your bike.
That's always the issue with these types of projects. For example when people from Wanaka drive to Dunedin for an event, then the only Wanaka business that benefits are the petrol station that people fill up at before they leave.
But every other business in Wanaka loses out as all that discretionary income that would have been spent by those people in Wanaka that weekend gets spent in Dunedin.
It just has to be excepted that these projects make about as much economic sense as do most other recreational activities, ie they don't.
However, that is a different argument as to why they cost so much and are always over budget.
The suggestion went down like a lead balloon with our local management. Thank goodness!
I can see what's coming. The majority of Christchurch residents moved out of the city (to Waimakariri or Selwyn) to get away from the CCC's wasteful spending. I can see that the CCC will want to call themselves a Super City, incorporating both these districts in order to take in more rates.
Really? Will those restrainers have a strategy to counter the Hitler's and Putin's who seize power and then seek to rule the world? History teaches us that those types bring about some pretty egregious programs around culling 'undesirables' Is that something that should just be 'tolerated'?
The big hole in the article is to not ask why Trump got elected. It seems clear that many in the MSM avoid the question and issue, struggling to accept that the level of corruption in American politics is the biggest threat to America today, and the rest of the free world. Putin proves that diplomacy has no effect on the tyrants. The only diplomacy they recognise is a bigger club than the one they hold and a willingness to use it.
No? He wants to reinvigorate "Imperial Russia" and that nations attempts to conquer Europe were pretty far reaching for the technology of the time. He is proving himself to be a despot and a tyrant with genocidal tendencies. Are you trying to justify his actions? Perhaps you could emigrate to Russia and volunteer? I hear he is looking for bodies to throw into the meat grinder he has made of Ukraine.
Murray - ironically, you're sounding like Dick; ideology first, justification second.
We - the West, led by the US - have screwed everyone else out of every we could screw them out of. Paint that picture any way you want, but that's what we've done. The Western Woke brigade are busily virtue-signalling by doing all things in prior-culture manner (RNZ being the classic in NZ) but that won't compensate for, nor obfuscate effectively, the transgression.
Compared to what the US-led West has done to 'others' since 1945 - and we can include Russia in 'others' - their effort in Ukraine is chump-change. Read Fisk (I dare you - I'll loan you it). Putin's action is caused, not causal.
You steadfastly stick to that POV, much like DickM starts with one, then attempts to self-prove.
Interesting.
My long-held prediction is now being regularly articulated: Europe is in trouble, perhaps terminal trouble, this NH winter. They may well have to go to war, or die. Or both. The line between a resource-depleting 'civilisation' and collapse is indeed thin.
nonsense, you can't argue Putin was forced to war, it's a path he chose. Did building Nord Stream 2 with Germany cause him to go to war? No reason Russia couldn't have taken the path of closer integration with Europe that many ex-Soviet nations have choosen. He's a madman that wants to recreate the Russian Empire.
You are letting your dislike of Europe cloud your view of Putin.
Yep, Putin saw his empire building opportunity in the European energy crisis. Gave it a bit of a nudge by restricting gas supplies. Expected to walk into Ukraine with a slap on the wrist. As Vlad anticipated, the likes of Germany and France obliged with frantic bending over exercises. Vlad even had the fancy uniforms packed for the parade through central Kiev, as found in the burnt out vehicles of the 40km column. When Zelenski refused the flight out and the column got trashed, after only having food and fuel for three days in the middle of winter, Putin's carefully crafted hard man facade started to look a little, well, facade like. Good thing the only information in Russia is distributed by the Ministry of Truth, or the little Emperor may have been gone by lunch. Anyhow the opposition is doing hard time in the Gulags, Muscovites are comfy because it's the village boys from the far east frying in their obsolete tanks and news of the bombed out shopping centres and schools never reach Russian ears. Vlad is safe, for now. Unless the plane to Tehran should develop some MH17 trouble that is. Here's hoping!
1) It kinda is true.
2) China and Russia are exactly the same.
Russia is kind of a poor mans US. Has the same rah rah nationalism/patriotism weapons worship, but with a smaller budget and greater skimming by anyone with a title, or spanner, oh and much larger potholes.
I know right wingers around the world idolise Putin, but really? If Ukraine wants to look west, rather than let the Moscow mafia strip mine the country, surely that's Kievs choice? Ex Soviet states are all a paradise for grifters. Who in their right mind would want to live under these pricks?
Yes I was thinking the same. But we could of course do a repeat of the 1940's where there were rapid fluctuations between high inflation and threatening deflation.
https://th.bing.com/th/id/R.10e89e9fc26ee777fea7e48d19ddcdc1?rik=eBJ7O7…
Many countries now have war time debt levels, so some similarities in that respect.
Really?
I think food inflation will subside.
Fuel? It’s a bit volatile but prices down.
Labour? I don’t think unemployment will rise that much, but I think the demand for labour will shrink a lot as demand in the economy will be destroyed. As demand for labour shrinks, wage inflation pressures will fall.
Freight I don’t know.
You didn’t mention Rent inflation, which is likely to fall markedly.
Globally we have the world's #1 grain exporter going to war with #4, the latter of which will end up needing to be an importer in the short term. Reductions in fertiliser production means lower yields in other markets. That should be a story that'll take 18-24 months or more to play out.
50/50 call on fuel but a good chance Europe will be increasing demand for non-Russian fuel.
Labour won't improve that much until the government ramps immigration.
Rent hard to say as holding costs will also rise.
Tissues ! ... there'll be a massive shortage , the supermarket shelves will be emptied of tissue boxes after the 2023 election ... there'll be a wailing & a hollering of the diehard Labourites after Jacinda & her catastrophic government are wiped off the map , obliterated ...
... stock up now , corner the market ... go long on tissue futures ...
Everything we import is subjected to the continuous slide of our Dollar so we keep on importing inflation. Our homemade inflation will also not back off until we have done some serious rejigging of our electricity market, the famous supermarket duopoly, our building regulations and standards, the RMA and the way how we fund local councils.
We welcome your comments below. If you are not already registered, please register to comment.
Remember we welcome robust, respectful and insightful debate. We don't welcome abusive or defamatory comments and will de-register those repeatedly making such comments. Our current comment policy is here.