Here's our summary of key economic events overnight that affect New Zealand with news the IMF sees the global economy in a "sticky spot".
But first up today we can report that the overnight dairy auction defied recent trends and the futures market. Instead of another retreat, in fact it held, virtually unchanged (+0.4%). But the two key powders did decline, just not as much as expected. SMP was down -1.1% (less than the -2% expected) and WMP was down -1.6% (much less than the -6% expected). The event was rescued by the +6.2% rise in Cheddar cheese and to a lesser extent the +0.8% rise in the butter price. The small +0.4% gain in USD was enhanced to +0.8% in NZD.
Now all eyes will turn to the New Zealand consumers price index for the June quarter, which will be released at 10:45am today. Check back then because we will have full coverage of data that could well be market-moving.
Overnight, American retail sales rose +2.3% in June from a year ago, not quite enough for this to be a 'real' gain, but closer than recently. There was no change between May and June, because car sales took a breather.
So far in 2024, American car repossessions are up +23% compared with the same period last year, according to data from Cox Automotive. That comes after a long low period however, but they are up +14% from pre-pandemic levels.
And last week, retail sales as measured by the Redbook Index for physical stores rose much less than recently, although the year-on-year gain was still an impressive +4.8%. But is was the weakest gain since late March.
Slowing American retail sales growth its putting upward pressure in business inventories, although again, this is relatively minor in the grand scheme of things. In May they were +1.7% higher than a year ago, but related to current sales levels they are unchanged.
In Canada, CPI inflation for June was released overnight and it eased to 2.7% from 2.9% in the prior month. This wasn't expected because markets had assumed it would remain at the 2.9% mark. The Canadians have already started their easing cycle in their policy interest rate, even though they target a 2% midpoint in a 1-3% range.
Perhaps the 'early start' is needed because they had a rather sharp drop in new housing starts in June, down by more than -20,000 or -9% from May. Vancouver fell -13%, due to sharp falls in multi-unit starts; Toronto crashed -37% for the same reason.
The IMF expects the global economy to grow 3.2% in 2024, the same as in the April outlook but the 2025 growth forecast was revised higher by 0.1 percentage point to 3.3%. For 2024, they revised their forecasts for the US down to 2.6% (vs 2.7%), reflecting the slower-than-expected start to the year. In Europe, growth for the Euro Area is seen higher (0.9% vs 0.8%). In Asia, growth forecasts were also revised higher for both China (5% vs 4.6%) and India (7% vs 6.8%) while the Japanese GDP in seen expanding at a slower pace (0.7% vs 0.9%). For Australia, they marginally lowered their 2024 estimate -0.1% but left 2025 unchanged. New Zealand did not get a mention in this report. Meanwhile, they warned that services inflation is holding up progress on disinflation, which is complicating monetary policy normalisation.
The UST 10yr yield is now at 4.17% and down -5 bps from yesterday. The key 2-10 yield curve inversion is deeper at -28 bps. Their 1-5 curve is back deeper at -77 bps. But their 3 mth-10yr curve inversion is also deeper at -119 bps. The Australian 10 year bond yield starts today at 4.27% and down 0-8 bps. The China 10 year bond rate is little-changed at -2.27%. The NZ Government 10 year bond rate is now at 4.43%, and down another -6 bps.
Wall Street is up +0.3% on the S&P500 in Tuesday trade and just off Monday's record high. Overnight, European markets closed their Tuesday trade down about -0.5%. Yesterday Tokyo ended up +0.2%, Hong Kong ended down another -1.6% and Shanghai was little-changed. Singapore was down -0.3%. The ASX200 slipped -0.2% and the NZX50 ended Tuesday up a solid +0.5% and the best of the markets we follow.
The price of gold will start today up +US$42 from yesterday at US$2464/oz and that is an all-time record high.
Oil prices are down -US$1 at just on US$80.50/bbl in the US while the international Brent price is just over US$83.50/bbl.
The Kiwi dollar starts today sharply lower at 60.4 USc and down nearly another -½c. Against the Aussie we are down at 89.8 AUc. Against the euro we are down at 55.5 euro cents. That all means our TWI-5 starts today at 69.3 and down -30 bps from this time yesterday.
The bitcoin price starts today at US$64,426 and up +1.8% from this time yesterday. Volatility over the past 24 hours has been moderate at just on +/- 2.2%.
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48 Comments
"The price of gold will start today up +US$42 from yesterday at US$2464/oz and that is an all-time record high."
NZ$/AU = $4,078. Also ATH. Luckily, we have Inflation licked, so we can drop the OCR....
@David ASB app now showing 1yr at 6.72% down from 6.85% last week but interestingly no other rate changes (cheeky buggers)…
All others remain same as pre MPC:
6m 6.95% (this was 6.85% a few weeks ago but shifted up)
18m 6.62%
2yr 6.55%
3/4/5yr 6.39%
The spread between terms is remarkably small. Typical quick to raise slow to drop.
A hard reset of #NZ foreign policy is underway if the PM’s interview with @ft when in Washington DC is any guide. No mandate was sought for this in 2023 election campaign. See statement on this from Don Brash & me: concern about direction is cross-party: https://helenclarknz.com/my-diary/state Link
No mandate was sought for this
Let me count the ways...
Richard Prebble is a former Labour Party minister and Act Party leader. He currently holds several directorships.
Last week’s Taxpayer Union-Curia poll was disastrous for Labour. The party has fallen to 25.9%. and Chris Hipkins to 18.7%.
Instead of improving the lives of ordinary New Zealanders Labour in government instituted radical co-governance for which they had no mandate.
The (Fabian) window carries the logo: "Remould it nearer to the heart's desire", the last line from a quatrain by the medieval Iranian poet Omar Khayyam which reads:
"Dear love, couldst thou and I with fate conspire
To grasp this sorry scheme of things entire,
Would we not shatter it to bits, and then
Remould it nearer to the heart's desire!"
HC can't throw any stones. She destroyed our military by wiping out the strike wing without any mandate, just her selfish ideology.
She has been reported as criticising Luxon for what he is doing. I would suggest given a choice in the current environment Luxon would get more support than she would. She is no longer the PM and not popularly voted into power, so she has no right to try to set NZ's defence or foreign policy as she is trying to do. Is she being paid by China?
Nope. I was there, serving, doing my bit to defend our country when she kicked our legs out from underneath us.
With a 1960's vintage jet, albeit updated to almost F16C standard in avionics our strike wing regularly taught the Aussies and yanks more than a bit of humility. Bluntly the A4s, to trained fighter pilots flying more modern kit, should have been nothing more that targets. Those jets are still flying with Draken International in the US doing what they do best - teaching fighter pilots that if they get to the merge then they should not ever underestimate the capability of an old jet.
NZ's international respect is mostly derived from our military contribution to regional and global conflicts protecting freedom. On other aspects we are often seen as rebellious and outspoken, and perhaps less than welcome. A Massey study some years ago looked at the impacts of our nuclear free policy and essentially concluded that the biggest impact was to remove us from a lot of international negotiations. We are not Switzerland. Yes we have a rather large moat, but know what? Navies are designed to bridge big moats! Independence and respect are only ever derived from an ability to defend oneself, and contribute to a collective defense elsewhere. Things we are no longer really equipped to do.
The Skyhawks were withdrawn from service following the disbandment of the RNZAF's Air Combat Force in 2001. After a lengthy period in storage at Woodbourne, most of the surviving Skyhawk fleet was sold to Draken International in 2012, with several being reserved for museum collections in New Zealand and Australia.
In truth I think they needed to go. We got the very best out of them, but they were too limited. We needed something that would have allowed us to contribute to international commitments, as well as defend our own interests here. How that was achieved would be dictated by type. When the options were open, the top contender looked like the Northrop F20 Tigershark, which due to it's size (small) had a degree of stealth too. Very capable but US Airforce politics and 9Gs killing demo pilots meant it never went into production. Then the US offered the embargoed F16A's that had been built for Pakistan. The offer was at very much better than bargain basement prices that would be very unlikely to ever be matched again. Those aircraft are now flying as aggressors with the USN. This was the deal the HC stopped, when she killed the strike wing. It was for us, very strongly supported by the US Government who had gone the extra mile to make them affordable for us. Her left wing ideology again shafted the military.
Spruiker turned Game Keeper
https://www.oneroof.co.nz/news/tony-alexander-why-the-era-of-crazy-hous…
Now Mr Church just needs to see the light....
Yes,
perhaps some homes stack up vs others school zones etc etc, but $1mil for a 4 bdrm Manurewa ex State house on 800sq m, no way.
He has a point re renovating older boomers homes, but in most cases the numbers do not stack up as the houses are just not modern design, need opening up and often major roofing work etc,... Boom times are over rover. (That 1.3 mil in freemans bay was a good buy, expect a builder with no work but some cash bought it.
also important his comment that 1 year fix is not going sub 5% is very accurate, in fact imho 5% itself is a stimulatory setting, I expect Neutral to be 5.5% 1 year fix.
It's pretty clear that many landlords purchased and got away with bare minimal R&M and no budget at all for an cap improvements. Fair enough - they were making big cap gains regardless.
My observation is that we now have huge numbers of run down rentals and the time left to get any revenue from them is nearly over. Many were c##p built to start with. Their value is fast approaching that of a vacant section.
This is positive, will bring jobs to Silverdale, this is just north of where the surf park is going in and has been slowly changing to industrial on a site by site basis.
About the plan change
The private plan change aims to rezone approximately 107ha of land at Silverdale West from Future Urban Zone to Business - Light Industry Zone and to introduce a new precinct. The site is located south of the Silverdale motorway interchange between State Highway 1 to the east and Dairy Flat Highway to the west and extends to the south to approximately halfway to Wilks Road.
It also includes a proposed new precinct to align future subdivision and development with the provision of the necessary transport, wastewater and other infrastructure, as well as achieving specified landscape, stormwater management and ecological outcomes. The proposed new precinct includes staging provisions and triggers to align development with the provision of infrastructure.
Tony A. has changed his tune.
https://www.oneroof.co.nz/news/tony-alexander-why-the-era-of-crazy-hous…
One notes that just about all the major factors he notes were in place - or the writing was on the wall in large print - back when he was touting a return to 6-7% rises just a few years back.
Methinks he's been investigating what the wiser heads on interest.co.nz have to say about a return to the 'good old days'.
Yes. I had the audacity to mention the fact that the IMF forecasts a 3.2% growth rate and at that rate we would double the size of the human economy in about 22 years. I then added that we seem to be in a murder suicide pact with nature as growth is an objective of all governments. Highly offensive stuff.
That's not offensive - it's the truth.
Climate is just the most obvious sink-capacity we've overshot, but there are a dozen others.
Funny how people react... I think we'll see lot more of this - the narrative (that GROWTH could go forever on a finite planet) was a crock. But a lot of people hitched their stars to the wagon, and are too far down the mana-association track, to recant.
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