Here's my summary of the key news overnight in 90 seconds at 9 am, including news of some surprise US data that has moved markets overnight.
Purchases of new houses in the US unexpectedly climbed in January to their highest level in more than five years, showing underlying strength in the American housing industry even in the midst of unusually harsh weather.
Data from the Commerce Dept showed sales of new single-family houses in January 2014 were at a annual rate of 468,000. This is 9.6% above the revised December 2013 number and 2.2% above the same month a year ago. Sales of new houses in the South and West - the South especially - are really impressive.
The median price of a new US house is now US$260,100 (NZ$313,400).
This data surprised and impressed markets. Equities rose again, as did the oil price. Gold fell sharply to US$1,325/oz. And the US dollar raced higher.
But bond yields fell. The benchmark US Treasury 10 yr bond is now at 2.69% this morning.
The Chinese currency slid for a seventh day yesterday, sparking speculation that their central bank aims to end the nearly decade-long trend of steady appreciation. More likely they are engineering the easing to lower expectations of 'certain' appreciation as they move to a more market-based rate. The transition could be rocky though.
In Britain, their central bank is proposing tougher rules for non-EU bank branches, especially those who want to take deposits. Locally incorporated subsidiaries won't be affected however.
Here at home today we get important data on the January trade balance and the level of migration, as well as an RBNZ update on how its LVR policy is working. There is also a Government bond tender, something that is becoming increasingly rare.
The NZ dollar fell to under 83 USc through all this and that will give the RBNZ some headroom to raise the OCR in two weeks if the lower US dollar level holds. We start today again at 82.9 USc, 92.5 AUc and the TWI is at 78.0.
If you want to catch up with all the changes yesterday, we have an update here.
The easiest place to stay up with today's event risk is by following our Economic Calendar here »
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10 Comments
Zz ..... I think there is element of personal fear of any interest rate rises in NZ, due to your exposure of debt to the NZ residential property market. We all know that higher interest rates will curtail the capital gains in the housing market and increase interest expenses.... which unfortunately won't be able to be passed onto your tenants, as many of them will just "walk" or squeeze more people in...... creating higher maintenance costs.
This conundrum between the banks and property investors is where your "good buddys" the banks, have it over the PI's.....as like the casinos, the bank will ultimately look after itself and always win......
ZZ where did you see the $120 Billion NZ savings figure , and is that in cash or near cash ? (ie Bonds or Govt stock)
I understand that the spread of the savings would folow a typical Bell Curve distribution , but the figure seems a really big number at around $30,000 per person.
It would imply that the average Kiwi family of 4 has about $120,000.00 in readily accessible cash.
Maybe I am out of touch , but I just cant see it .
As reasonably comfortable Baby boomers , my wife and I dont have 120 k lying around in cash although I have it in our paid up flexible accessible mortgage account .
Is that savings? .... I dont think so
The reserve bank house stuff is at:
http://www.rbnz.govt.nz/statistics/tables/c18/
as ZZ said cash deposits of 118 billion. However, the Reserve Bank also notes liabilities and gives a Household Net Financial Wealth of $47, 379, 000, 000 for all households. Now there are about 1.6 million households, so that gives an average Net financial welath per household of about $30000 per household. I think Boatman would find that a more realistic figure for most households.
According to the OECD New Zealand's household wealth is better than Australias and worse than Denmarks (but nowhere near as good as the United States). Using their own methodology the New Zealand Initiative place us much, much worse than Australia and a little worse than the United States.
Yes, lets lower our exchange rate, we'll all be so much richer when our savings are worth less.
And, 'supply response'??? You think we should take the chinese model where all the large companies are owned by the state and the government can direct them to expand / invest?
How believeing in Ayn Rand buggered an iconic brandname.
"Slowly but surely, Ayn Rand’s economic theories are being discarded because they simply don’t add up in the real world. Even Rand acolyte Paul Ryan (R-Wis) is now distancing himself, calling his well-documented enthusiasm an “urban legend.”
Lampert created a business model predicated on the notion that the invisible hand of the market would magically drive stellar results. With his belief in economic fairy tales, he managed to kill the goose that laid his own golden egg.
Looks like the invisible hand just waved goodbye to Eddie Lampert."
http://www.salon.com/2013/12/10/ayn_rand_loving_ceo_destroys_his_empire…
regards
Steven - have you ever read Rands Works? Because if you have you obviously do not understand it.
Eddie Lampert obviously doesn't understand her works either and so has got his just desserts in the free-market. There is a destinction between ethical egoism and psychological egoism.
You would also do well to study her early life and the events she endured and also study Objectivism etc.
As with everything in life it is down to how an individual interprets what they read. Lampert has obviously glossed over some important facts and has made his own bed.
In order to understand Individual Rights and have those Rights protected requires one to respect and uphold the Individual Rights for others.
You only have to see the rise of NIMBY's around the Western World to understand that Individual Rights are bollocks to these people and they practice psychological egoism.
Ayn Rand was not a mainstream economic theorist and her views were almost certainly a product of the communist revolution in Russsia in which her middle class Jewish family lost everything and were deported to Crimea (Ukraine) .
Any intelligent person would develop a thought process to rationalise these events , and Rands ideas were a product of what she experienced .
An Anti-communist , she openly advocated for free market capitalism as a counter to the totalitarianism required by Marxist ideology.
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