Here's our summary of key economic events overnight that affect New Zealand, with news this is a week where we get a fuller set of global inflation data, including from the UK, Japan, Canada, South Africa, Malaysia, and New Zealand on Thursday. We will also get Chinese GDP growth data for Q1-2023, industrial production and retail sales for March on Tuesday. And there is a dairy auction due on Wednesday.
But first up today, China's new home prices rose in March from February at the fastest pace in 21 months, official data showed on Saturday, suggesting the market is out of the doldrums amid a flurry of support policies, but there is uncertainty on the strength of the momentum. New home prices in March edged up +0.5% month-on-month after a +0.3% rise in February, marking the fastest pace since June 2021 and the third consecutive monthly rise. But they are still lower on a year-on-year basis although only by -0.8%.
Internationally, it is becoming clear that China's Belt & Road Initiative - a giant infrastructure system tying global facilities to China - is in deep trouble. Chinese lending to these projects has been slashed and it has become “a road and belt to nowhere.” Over 60 developing countries today face a debt crisis brought on by overborrowing for these Chinese-promoted projects during the heady 2010s. In 2022, 60% of Chinese overseas loans went to distressed borrowers, up from 5% in 2010. Many cannot repay.
Separately late Friday, Singapore surprised analysts with an unexpectedly weak Q1-2023 GDP result, down -0.7% from the prior quarter. Actually the Q4-2022 result showed virtually no growth, so they are knocking on the door of 'recession'. Their year-on-year +2.1% rise in 2022 crashed to just +0.1% in Q1-2023 from Q1-2022.
Meanwhile, the central bank of Singapore has been reported as asking financial institutions to keep quiet the flood of money coming in from wealthy Chinese.
But the biggest weekend news is that American retail sales fell in March from February to be just +2.9% higher than year ago levels and far less than inflation's bite. It was a result that surprised analysts who expected a -0.4% month-on-month fall when they got -1.0%.
However other American indicators weren't so negative. Industrial production rose +0.4% in March from February to be +0.5% higher than year ago levels. This data is 'real' without inflation.
And consumer sentiment, as measured in the widely-watched University of Michigan survey rose too. That shift wasn't expected, but it was in both views of current conditions and expected future conditions. However, Americans apparently think inflation will rise (contrary to most other data that shows it falling).
Meanwhile, the leakage from deposits at US bank accounts, which fell sharply from the start of March (-US$400 bln or -2.3%) are stabilising in the April updates. But that masks big shifts from smaller banks to the majors, who are now reporting bumper profits. And too, big funds like Blackrock. During this time the Federal Reserve stepped in with more market support, suspending its tightening. Although over this past week, it has resumed the drawdown. One consequence of the banking turmoil is that regional American banks are now offering much higher interest rates to attract back depositors.
In Canada, their real estate industry is talking 'green shoots' as they enter their Spring selling season. After declining for 12 consecutive months, their national home price index rose +0.2% to C$709,000 (NZ$855,000) from February to March. Their market suffers from an unusually low number of listings available. But their much higher interest rates will make it challenging to build any sort of meaningful recovery.
The OECD is pointing out that that global labour markets remain very tight in developed countries. In February, the unemployment rate remained at its record low in the OECD (4.8%) and this is despite the Euro area still much higher (6.6%). The unemployment rate was stable or decreased in more than 70% of OECD countries, but close to its lowest level in only seven countries, including Canada, France, Germany, Japan, Australia and New Zealand. It remained stable in Canada at 5.0% in March 2023 for the fifth consecutive month, while it fell slightly to 3.5% in the United States.
The UST 10yr yield starts today at 3.52%, and very little change. The UST 2-10 rate curve is unchanged at -58 bps. Their 1-5 curve inversion is now at -119 bps and marginally less inverted too. And their 30 day-10yr curve is now inverted at -72 bps and also marginally less. The Australian ten year bond is unchanged at 3.41%. The China Govt ten year bond is still at 2.85%. And the New Zealand Govt ten year remains at 4.15%.
This week and the following two will be interesting for watching earnings reports, especially from American consumer discretionary companies. They could give vital clues on how the US economy is faring amid high inflation and the much higher interest rates.
The price of gold is at US$2004/oz and down -US$1 from Saturday. A week ago it was at US$2008/oz, so actually very little net change.
And oil prices are at up +50 USc and just over US$82.50/bbl in the US. The international Brent price is just over US$86/bbl. But a week ago these prices were US$2 lower so the net move up since then has been +2.5%.
The Kiwi dollar has stayed down against the USD and still at 62.1 USc. Against the Aussie we are have remained to 92.6 AUc. Against the euro we are still at 56.5 euro cents. That means the TWI-5 is at 69.8, unchanged since Saturday and still its lowest in almost six months.
The bitcoin price is again little-changed, still at US$30,331 and that's six straight days at this level. But a week ago it was at US$27,924 so it has been a major +8.6% move up from then. Volatility over the past 24 hours has remained very low at +/- 0.4%.
The easiest place to stay up with event risk today is by following our Economic Calendar here ».
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57 Comments
Yeah green shoots and increasing interest rates are rarely a match. Most likely a bit of pent up demand i.e. a few people deciding they cant wait any longer to move house or whatever.
We need to move so will do so (sideways) even though the market is totally chaotic and moving downwards... maybe we could be a green shoot (two more sales than last month.. lol)
10 votes
On the weekend Yvil posted his doomsday scenario and then claimed that everyone was "in agreeance".
Imo when 95 pct thinks a certain way such as euphoric, or pessimistic, that's the time to act. As we know, at some point the euphoria wears off and the market runs out of steam and greater fools.
China’s belt & road investments appear to have ended up in a few blind canyons. Interesting dynamics for certain if some nations simply default as then the question is how much sovereignty can a creditor actually acquire if the resources of said nation(s) are insufficiently exploitable.
The thing all Belt and Roads projects had in common was that about 50% of the value of all the loans was syphoned off by corrupt governments for themselves and their cronies. It turns out that the taxpayers of all these countries, (see Sri Lanka for a good example) are up for 100% of the paying back. Of course China cannot get this money, so have been sending their own forces to supervise and look after their interests in all these countries. We all think the US was pretty bad for their influencing of these countries. China will be making them look like benevolent old uncles by comparison
Why is little ole NZ even worried about what the rest of the world are doing. Globalization is dying. Worry about NZ. An unsustainable account deficit, inflation rampant, a government spending like a rock star, a population and their businesses reliant on government handouts, no energy dependence, with people clearly living above their means, created by an inflated housing market. A country that produces more food than it consumes, yet we are going further into debt.
Time to take our country back from the globalists and the WEF agenda.
Lots in there! The account deficit and inflation are of course two sides of the same coin - prices have increased in NZ primarily because the price of imports have gone up so much - particularly fossil fuel related goods like petrol, fertiliser, plastics etc. With imports costing so much more, the current account deficit has blown out. Note that imported volumes have been on a downward trend since the post-lockdown surge whilst inflation has been running hot.
Govt net spending has been close to nothing for the last 9 months - spending has been offset by taxation. Our Govt is a really low spender compared to countries where people live well.
The population is not dependent on Govt handouts, they are reliant on Govt using the tax system to redistribute money to stop people starving. Remember that hundreds of thousands of people working fulltime in this very wealthy country cannot afford the basics, and we purposefully keep 100,000+ people unemployed in the belief that this will 'tame inflation'.
Complete agree on the need for self-sufficiency. We need a sustainable food and energy system - but we import two-thirds of the energy we use from despot countries and evil fossil fuel companies that are going to screw us over with high prices for as long as they can, and we are destroying our land, air, and water with intensive and ridiculously inefficient agriculture.
We are not living within our ecological means, but we could easily maintain our quality of life with the right forward strategy. But, to achieve this, the 5% to 10% of the population that consume 40% to 50% of our resources will need to stop being so greedy.
We are not living within our ecological means, but we could easily maintain our quality of life with the right forward strategy. But, to achieve this, the 5% to 10% of the population that consume 40% to 50% of our resources will need to stop being so greedy.
California Utilities Propose Charging Customers Based On How Rich They Are
On a positive note i under stand we reached a tipping point globally where power gen emmissions will now fall. And in future its actually cheaper to deploy clean energy power generation. And not far away from making financial sense to replace fossil power plants.
I suspect the switch to EVs wont be far behind (lots of countries are planning to ban sales anyway.. but financially the cost to run nationwide fleets will lower and as they automate the traffic benefits will be huge).
Of course the real beneficiaries of this will be the USA, and Uk and so on who invested in and matured the green tech to use and they now sell.. to us (those who complained and moaned and did nothing much to dev or test anything) it will be another import cost for goods and consultants from overseas to deploy their tech.... developing clean agri tech was a great opportunity for us that we will miss as we were too busy building and selling overpriced wooden sheds to each other.
The point is really the huge downside to our short term, insular housing driven old tech economy vs long term long term high tech diverse market thinking
China is going to benefit hugely from the push towards clean tech. The country was responsible for nearly 75% of solar PV panels and 80% of lithium-ion batteries produced in 2021. It is the largest producer of wind turbines in the world as well.
Germany, Spain and Denmark have positioned themselves very well in the green tech food chain as well.
China is going to benefit hugely from the push towards clean tech. The country was responsible for nearly 75% of solar PV panels and 80% of lithium-ion batteries produced in 2021. It is the largest producer of wind turbines in the world as well.
Yes. I had the opportunity to interview Ron Pernick, author of the Clean Tech Revolution back in 00s. (https://www.amazon.com/Clean-Tech-Revolution-Investment-Opportunity/dp/… I remember Sharp Corporation being an early leader in photovoltaics. No more. I've invested in early stage small cap clean tech stocks in the past that have all gone to zero. One was an Aussie solar company called GreatCell Solar (Dyesol). Fascinating tech that could never commercialise.
Agree with your sentiments, but there have been all sorts of Inovative NZ tech startups over the years. As soon as they reach critical mass, some cashed up overseas entity swoops in, makes an offer the principals can retire on and all that's left is economists whining about the need to innovate, politicians promising to improve productivity and diversify and the housing market. All working just as capitalism means it to.
The question is what we offer as a country to attract or retain innovative companies and global talent.
In a matter of 6 years, NZ went from #5 to #51 (or second to worst) on an Expat Survey for living and working abroad. We went from #16 to #31 on global competitiveness from 2016 to 2021. In both rankings, the Aussies managed to more-or-less hold their spots over the same period.
My doctor - originally from the UK - lamented recently that if he'd arrived a couple of years later, they'd have had no chance of buying a house where they did. A doctor, a pretty highly paid professional.
He's obviously a long-term migrant example, but speculation on property has created an absolute millstone around the neck of NZ society now.
On a positive note i under stand we reached a tipping point globally where power gen emmissions will now fall.
So Germany shut down nuclear plants and it now produces about 30% of its electricity through coal. Not a great look for a supposed champion of the New Green Economy. But don't miss the big picture. China and India produce 63% and 74% (!) of their electricity through coal. Link
@oldschool. To which I would add the idiocy of not owning our own stuff. While New Zealanders continue to not have ownership we will always be kept marginal.
As somebody who has a right wing stance I still agree with Marx. He sad that the ultimate benefit always flows to the owner.
Achieving Shelter is going to be a big challenge. Going back to older style policy of making housing affordable for the many - e.g. as was provided to today's older generations - would be devasting to those all in speculating on property. Folk have become entitled to free wealth from sitting on property.
Nice post FL?
Take back the country from
Green hypocricy
Woke idiocricy
Mouthy dumb young minority fockers likr Re Greta!
Minorities that want to identify as a cat, sheep.!... let take back just 2 genders!
UN control
Bleeding heart bludging pacific island leaders who " slut themselves" for money from China v USA v Aust v NZ v anyone? To save thier percieved issues.
Spin doctors who take the facts and smother them with nothingness.
An apparent ( in reality im just a average joe that annoys th phuck out of you for ruining your socialist dream) troĺl that gets more thumbs up than most of the woke lefty " save the trans green maori whales weather" brigade that have already ruined NZ while achieving what?
By the way the word troll is used by inept people who cannot debate the facts.
Warren Buffett didn't just make shocking comments on banking system, he's already acting on them.
This week was a wild one, including how during it legendary investor Warren Buffett said he was selling bank stocks because there were more failures still to come. While depositors won't see any losses, that doesn't mean there won't be any. Nor fallout from it, as the latest data from markets and macro shows.
This only works if there is a functioning international rules based system that countries buy into. If not there is nothing stopping these countries taking the Chinese funding infra and defaulting on their loans. To date this system has been US and Europe led.
Russia is doing it's best to undermine/explore it. This is where China is fucked.
China needs the system in place to benefit from it but they also know that the US and Europe benefit from it even more as it promotes western liberal democracy.
Isnt it how USA (and allies) have always worked. Use of finance and military support in return for favors.
No surprise. I suspect most countries that were foolish enough to become indebted to a dictatorship are the ones the USA wouldnt support for various reason (corruption and dictatorships and poor economic management etc) ... so good luck china
see pic, if this is correct, the labour govt has a lot to answer for, this is not actually doing anything , its just talking about it
https://www.facebook.com/photo/?fbid=619877376630110&set=pb.10005823558….
The OECD is pointing out that that global labour markets remain very tight in developed countries.
Wouldn't it be more surprising if there where spare workers in industrialising countries with aging populations? We built our economies and employment policies around accomodating expanding workforces, now workforces are in decline:
https://data.worldbank.org/share/widget?indicators=SP.POP.1564.TO.ZS&lo…
Yes.
And we are all fighting for the same workforce. Take nurses and doctors for instance. What do the UK doctors want? 35% isn't it - and they'll probably get it, one way or another - and so will ours. Because if not, then the dwindling workforce will move.
Inflation under control, you say?!
In retrospect, asking healthcare workers to work for bad salaries and view it as a vocation might've been a very bad idea. We've been funneling billions to speculators on land, while expecting scarce, valuable workers to accept bad wages and living conditions. Absurd...
Its going to highlight just how different the Aussie house market is to NZ,
Auction clearance rates have jumped, hitting 72 per cent in Sydney, as listings doubled nationwide, with buyers taking heart from a pause in rate increases and signs the market has bottomed in the biggest markets.
After the bottleneck of the Easter holiday long weekend, listings surged to 1704 nationally over the past week, up from 652 previously, with a nearly 70 per cent success rate. The clearance rate was up two percentage points on the previous week, on CoreLogic’s preliminary figures.
This Lane Cove home on Sydney’s lower north shore sold for $2.31 million, more than $200,000 above reserve.
Listings jumped in Sydney and Melbourne, the two biggest markets, with their clearance rates edging higher despite increased supply. In Melbourne, the success rate was 72.4 per cent, up 14.8 percentage points from the previous week
Following annual deficits from 2015 to 2020, Canada's merchandise trade balance posted a surplus for a second consecutive year in 2022. Canada's merchandise trade surplus widened from $4.6 billion in 2021 to $20.1 billion in 2022
From this source for Canada.
And for Australia. A 145 billion dollar surplus is pretty insane.
Australia posted another very large trade surplus in February for both goods and services. The surplus swelled by +AU$2.6 bln to AU$13.9 bln, the third largest surplus on record. A key reason was that imports retreated in the month, a shift which was expected, but the size of the fall was much larger than anticipated. The outsized February surplus takes their annual surplus to more than AU$145 bln, equivalent to +5.9% of their GDP.
Meanwhile, we are in a much worse position, our trade deficit is sitting at $33.8 billion. Very different economic realities.
Lol China home price shifts up.. there couldn’t be a bigger lie than this. The price in China is enter demolition mode. My parents apartment has been on sale for over 3 years and no one even want to look at it. The lakeside stand-alone Villas which had non for sale over the past decade suddenly have 10 on the market and not one is sold as owners still expect pre-COVID price - 4million NZD. Some rural area already 50% off. Only 15% of recent graduates found job. Most young people just lay flat and become full time child to live with their parents and no wish to get married or have kids. The only buyers in the market are those whom have kids and wanted to get into good public school zone. Mind you, in China you can’t get into local school zone if you are renting especially the good schools.
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