Here's our summary of key economic events overnight that affect New Zealand with news of more data dragging in the US, and more debt plans in China.
First up, American mortgage applications fell again last week, and this is despite their benchmark 30 year mortgage interest rate falling further below the 7% level. Lower home loan rates now are not motivating home buyers.
And that lack of motivation is really coming through in new home sales, which were down more than -10% in January from December to an annual rate that was -15% below year ago levels. For their new home building industry, this will be a real cause for concern.
There was another US Treasury bond auction earlier today, this one for the 7-year Note and it delivered a median yield of 4.15%, lower than the 4.41% at the equivalent auction a month ago. Demand for these issues is not flagging.
In China, they are adding capital to their big state-owned banks, maybe as much a ¥1 tln to the six of them. The funds will be raised by new sovereign bond issues. More debt for the state so that banks can lend more debt to clients.
And that could just be the start. Bloomberg is reporting that a key policy adviser said China needs to vastly step up its efforts to cleanse the balance sheets of their local governments, giving them the space needed to support consumer spending and strengthen the economy. He said central government should take on at least ¥20 tln worth of local sovereign debt. For reference ¥1 tln is about NZ$240 bln. ¥20 is NZ$4.8 tln. They are talking real money here.
Singapore's industrial production rose +9.1% in January from the same month a year ago in a solid turn up, although the gain was pretty much as analysts had expected.
Taiwan revised its Q4-2024 GDP growth rate up to +2.9%, and it was a sharp revision higher from the earlier estimate of +1.8%. That means their economic activity expanded by +4.6% in all of 2024.
Australia's monthly CPI inflation indicator rose 2.5% in January, unchanged from the prior month but below market expectations of 2.6%. Despite this, inflation remained at its highest since August. But this monthly update probably won't shake the RBA estimate of acceptable inflation in Q1-2025.
And staying in Australia, the latest data available, for Q3-2024 released yesterday, buyers from China were the largest group of foreign investment into Australian housing, recording more than AU$400 mln in approvals. This data was for the period ahead of the Australian ban on temporary residents acquiring established homes and Chinese buyers accounted for 30% of it. You have to say it isn't much of a surge - and since then foreign buyer demand has fallen away.
The UST 10yr yield is at 4.27%, down -4 bps from yesterday at this time. The key 2-10 yield curve is flatter at +18 bps. Their 1-5 curve is now inverted again, now by -2 bps and much flatter. And their 3 mth-10yr curve is now completely flat, facing inversion again. The Australian 10 year bond yield starts today at 4.40% and down -1 bp from yesterday. The China 10 year bond rate is now at 1.77% and unchanged. The NZ Government 10 year bond rate is now at 4.60%, also unchanged from yesterday.
Wall Street has opened its Wednesday session with the S&P500 up +0.2% in a retreating trend as the day progresses. Overnight, European markets were about +1.5% higher, except London which was up half that. Tokyo ended its Wednesday session down -0.2%, Hong Kong rose an outsized +3.3%, while Shanghai rose +1.0%. Singapore slipped again, down -0.2%. The ASX200 was down -0.1% in Wednesday trade. But the NZX50 recovered significant ground, up +1.2%.
The price of gold will start today at just under US$2910/oz and recovering +US$16 from yesterday.
Oil prices are marginally lower at under US$69/bbl in the US and the international Brent price is still under US$73/bbl.
The Kiwi dollar is now at 57.1 USc and down -10 bps from yesterday. Against the Aussie we are unchanged at 90.3 AUc. Against the euro we are down -10 bps at 54.3 euro cents. That all means our TWI-5 starts today just under 66.9, and little-changed from yesterday.
The bitcoin price starts today at US$86,928 and down a minor -0.4% from this time yesterday. Volatility over the past 24 hours has been moderate at +/- 2.2%.
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23 Comments
Well kids
It's potentially timely the end of open access to comments coincides with myself taking an expended spell retreating deep into the wilderness.
It's been an interesting few years conversing with you all. Thanks to all for the discourse.
Remember, in an illusory world full of human abstract concepts like money, our only real asset is our attention. So try to invest it wisely.
We don't deserve any of this
But should spend our entire lives trying to
Chuckle.
Yes, I have long smiled at the 'helping you to make financial decisions' heading here.
Really, it's about making life/strategic decisions - like society at large, some folk myopically fixate on money - keystroke-issued fit-levered debt, related to nothing tangible - as if it is the controlling 'thing'. It isn't; look at Trump grabbing Ukraine's minerals (as the US had done by coercion, stealth or invasion these last few decades; he's just more open about it).
We were always going to be staring into the abyss - the Limits to Growth on a finite planet were always going to curtail us - but I have the feeling that the moment seems to be now...
Trump is neither new nor unique in this sector. Messrs Carnegie, Morgan and Schwarz were plundering worldwide very openly building their steel empires and let’s not start in on the like of Standard Oil but Hammer of Occidental was lauding the Soviets in the 1980s for access to Ukraine. Then there were the European predecessors. Foremost the British Empire but Germany, France, Belgium - all the colonialists if you like. Guess though as you suggest the Trump of today avails broadcasting about it all, like no other.
https://truthsocial.com/@realDonaldTrump/posts/114068387897265338
What a bizarre world we live in.
Pa1nter we'll mis you. While not always in agreement you raised pertinent points and views that stimulated thought and discussion, all contributing to learning.
"Remember, in an illusory world full of human abstract concepts like money, our only real asset is our attention. So try to invest it wisely." I would add that as an old fart one thing I have learned is that life is for living, and what ever that means to you, get out and do it, and enjoy what it brings to you. But yes this is an illusory world where human abstracts distract us from reality.
"We don't deserve any of this" in part true, but as we age and interact we more and more do so because we mostly act to perpetuate them rather than dismantle them.
Good luck Pa1nter where every you find yourself i hope it is with joy and happiness. From a pilot - clear skies and smooth flying, or if you will smooth seas and a steady wind.
My 80's Sharp gf 800 boombox will comfort me while I read the free content ... 'Another one bites the dust' (Queen) , Be nice too each other. RE agents, I suspect will now have the run of the comments section... Looks like its the boombox forums for me .... Was nice while it lasted... Ciao
The Chinese Communits Party must keep the people happy at all costs. I wonder how their warship exercises in the Tasman sea and entry into Australias exclusiive economic zone is being portrayed in Chinese media? Sounds like a great way to divert attention from the financial and demographic cliff the country is facing.
Mid 19th century Commodore Perry sailed much of the then US navy into Tokyo bay with demands that Japan and the USA immediately commence buying things from one another. Never been quite sure what Japan had that the USA was so desperately short of. Unlikely precedent to the current Tasman Sea situation, but you never know.
Or have the Chinese people wised up and will not get laden with debt?
No, they love chasing their capital gains just as much as your NZ investor. I was surprised how much an apartment went for in Guangzhou while living there for the birth of my children. Prices were higher than Auckland but would yield maybe 1% or 2%, while interest rates were north of 5%. Building cost was reasonable and we helped build and 8 story apartment block on family (rural) land with middle levels rented out. The hope from the in-laws was that the government would come buy up the whole area for development and they wanted to build up before they were stopped from doing so - because they pay a lot more if you've built up already (so yeah, chasing capital gain).
Seymour should resign over this debacle. Nobody wanted this and it's causing teachers to have to deal with it instead of focussing on helping kids learn. He is an ideologically driven buffoon and his pretty meddling for his own personal gain is costing taxpayers millions. If Luxon wasn't such a piss poor leader, scared of firing people, he'd be gone.
https://www.stuff.co.nz/nz-news/360595750/principals-federation-says-ti…
Yes, I must admit one of the things I liked (if we're in the business of providing school lunches) about the previous model was it was local in many cases. I think it should have gone the other way and insisted on really high-quality food (less carbs), even prep being done as part of the school learning by students.
Yes it is a shame as he came across as educated and fluent in debate maybe 1yr pre-election until he sucked up to Luxon and it has been downhill since. Almost as if he was himself before, confident and articulate, and now he's bought into the back scratching culture in the beehive.
I see electricity transmission and distribution costs going up by $50/month from April. Thanks iwi, windmills and solar panels, smart meters.
"Payouts to DOC, Fish & Game, and Ngāi Tahu are part of a $180 million package Meridian (and therefore consumers of electricity) were obliged to pay. Ngāi Tahu’s take is thought to be over $100 million."
https://www.nzcpr.com/too-intimidated-to-speak-out/
Gang protecting their turf?
Police Association slams beefed-up citizen arrest powers
Police Association president Chris Cahill describes the reforms as risky and unnecessary.
"It's not worth getting hurt, or even killed, for a few dollars or some cigarettes," he said.
Um no, it's not just a few dollars or some cigarettes. It's that multiplied by every occurrence and that adds up to a lot. More importantly, the police haven't been able to do what they have been empowered to - protect the public (not a criticism). It makes sense to me that the public get more power, even though there are risks - each may decide for themselves if those few dollars are worth it or not.
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