apra

Sue Lowry originally trained as an opera singer, but while living in London she fell in love with teaching children with special needs

Sue Lowry originally trained as an opera singer, but while living in London she fell in love with teaching children with special needs

Kia ora,

Welcome to Friday’s Economy Watch where we follow the economic events and trends that affect Aotearoa/New Zealand.

I'm David Chaston and this is the international edition from Interest.co.nz.

And today we lead with news inflation's force is on full display again, and long bond yields are back rising.

But first in the US, consumer inflation was steady at 3.7% in September, the same as August, against market expectations of a slight decrease to 3.6%. A smaller decline in energy prices offset slowing inflationary pressures in other categories. Energy costs fell by -0.5%, following a -3.6% decrease in August, primarily because petrol prices rose offsetting other energy like natural gas and electricity price retreats.

Core inflation, that is without food or energy, fell to a still-high 4.1%, but that is its lowest in two years.

Meanwhile, the actual number of Americans filing for jobless benefits last week was unchanged from the prior week at 197,000 which was below estimates of 210,000 and remaining close to the seven-month low. There are now 1.55 mln people on these benefits, also lower. No labour market stress signs here.

Between the two metrics - brisk inflation holding and extending labour market strength - the Fed seems still a long way off being able to declare victory. The higher for longer theme we saw in yesterday's Fed minutes for its September meeting is justified by this latest data.

In the background, US Social Security payments will rise by +3.2% from January 1, 2024, it was announced overnight. That will affect more than 70 mln recipients. But that is a lot less than the +8.7% rise for 2023. The 2024 increase will amount to about +US$59/month per person taking it to US$1907/month (NZ$3210/month or NZ$740/week.)

In India, retail price inflation dropped to 5.0% in September 2023, down from 6.8% in August and well below the expected 5.5%. A year ago it was running at 7.4%. This new level fell within their central bank's 2-6% target range for the first time in three months, primarily due to a significant slowdown in food inflation.

India also released August industrial production data and it was unusually strong. It climbed +10.3% from a year ago, the highest since June last year. That is up from a +5.7% rise in the previous month and above market expectations of a 9% gain.

In China, banks are pushing out more debt. They extended +¥1.36 tln in new yuan loans in August (+315 bln), marking a sharp increase from July's +¥0.35 tln (MZ$80 bln) and even above the market bounceback expectations of +¥1.20 tln (NZ$275 bln). This expansion fits their central bank goal of bolstering economic growth in the face of subdued demand both domestically and internationally.

In Australia, prudential regulator APRA said no bank breached capital and liquidity buffers in stress tests that assumed house prices fell by a third and unemployment spiked to 10%.

The global container freight rates fell yet again last week, to be -60% lower than a year ago and -4% lower than the ten year average, one that includes the huge pandemic surge. In contrast, freight rates for bulk cargoes are still rising, and rising fast. They are now back to year-ago levels which is 3.5 times higher than they were when they bottomed out in February.

The UST 10yr yield starts today up +10bps from yesterday at 4.71%. 

There was a UST 30yr bond tender overnight for US$20 bln, and it only drew US$47 bln in bids which was considered low. The median yield rose to 4.74%, which was more than expected.

The price of gold will start today at just on US$1869/oz and down -US$4 from this time yesterday.

Oil prices have slipped another -US$1.50 to just over US$81.50/bbl in the US. The international Brent price is now just on US$85/bbl.

The Kiwi dollar starts today at 59.4 USc and down -¾ bps from yesterday as commodity currencies fall out of favour. Against the Aussie we are slightly softer at 93.8 AUc. Against the euro we are down -½ to 56.3 euro cents. That all means our TWI-5 starts today at under 69.7 which is down -50 bps from yesterday.

The bitcoin price starts today at US$26,676 which is virtually unchanged (-US$3) from this time yesterday. Volatility over the past 24 hours has been low however at +/-0.7%.

You can find links to the articles mentioned today in our show notes.

You can get more news affecting the economy in New Zealand from interest.co.nz.

Kia ora. I'm David Chaston. And we will do this again on Monday.

Kia ora,

Welcome to Friday’s Economy Watch where we follow the economic events and trends that affect Aotearoa/New Zealand.

I'm David Chaston and this is the international edition from Interest.co.nz.

And today we lead with news Australia may be facing more rate hikes.

But first, the tight American labour market is still showing its resilience. The number of Americans filing for jobless benefits fell slightly last week to 258,000 when a seasonal rise was anticipated. However the number of people on these benefits rose to 1.89 mln as they are staying on longer now. But these overall levels are very low given their employed workforce is 161.6 mln.

The factory survey in the huge Pennsylvanian rust belt did not improve as expected in July. The Philadelphia Fed Manufacturing Index was little changed and continuing to point to an overall decline in manufacturing activity in the region. New order inflows remained negative.

Existing-home sales dropped -3.3% in June from May to an annual rate of 4.16 mln. Sales were down -18.9% from one year ago.. Sales declined in the South (-5.4% and the West (-5.1%), held steady in the Midwest and rose +2% in the Northeast.

So it will be surprise that a key leading indicator index fell in June. And it wasn't its first fall. The decline was driven by gloomier consumer expectations, weaker new orders, an increased number of initial claims for unemployment, and a reduction in housing construction. This index is pointing out a slowing economy and that it isn't about to pick up.

In China, their central bank left its Loan Prime Rates unchanged after cutting them in June, with the medium-term lending facility used for corporate and household loans still at 3.55%; while the five-year rate, a reference for mortgages still at 4.2%.

Japanese exports rose +1.5% in June, compared with market forecasts of a +2.2% rise after a +0.6% gain in May. This was the 28th straight month of growth in shipments.

Taiwanese export orders sank a whopping - 25% in June from a year ago, coming worse than market expectations of a -20% drop and a -17.6% fall in the previous month. It marked the tenth consecutive month of deteriorating orders as demand continued to decline for all product groups, particularly electronic products.

Although it is still deeply negative, European consumer sentiment continues to improve and did so again in July with a solid gain again.

Meanwhile, German producer prices were little-changed in June from both May and from a year ago. That signals that at the producer level at least, they are getting on top of inflation.

In Turkey, their new leadership of their central bank is moving to unwind the disastrous policies of recent years, raising their policy interest rate by +250 bps to 17.5%. But that was less than the 20% rate markets were expecting. The Turkish lira stabilised at its sharply devalued state in a wait-and-see attitude.

The Australian labour market added +32,600 jobs in June, double the +15,000 expected. +39,300 of those were full time positions, and part-time positions fell -6,700. Their jobless rates stayed unchanged at 3.5%. In NSW their jobless rate fell to a remarkably low 2.9%. (New Zealand releases its June quarter labour market data in two weeks on August 2, 2023. Our jobless rate in March was 3.4%.)

And staying in Australia, their prudential regulator has told it superannuation funds that they must reassess the value of their unlisted assets every quarter. That could be an earthquake for that funds industry as they have AU$650 bln in these illiquid unlisted asset classes, especially commercial property.

Unless inflation falls in Australia, the strong jobs market could well mean another RBA rate hike, and that will compound those super fund valuation miseries.

In global shipping we may be at the bottom for freight rates. Rates for containerised shipping rose slightly last week, a second week that has happened. But rates for bulk cargoes are slipping again although they remain near their long run average (which is actually very low because that average doesn't adjust for inflation).

The UST 10yr yield will start today at 3.85% and up +10 bps from this time yesterday. 

The price of gold will start today at US$1970/oz and down -US$8 from yesterday.

And oil prices are unchanged from this time yesterday at just under US$75.50/bbl in the US. The international Brent price is still just under US$79.50/bbl.

The Kiwi dollar starts today down slightly from yesterday at just under 62.3 USc. Against the Aussie we are lower at 91.9 AUc. Against the euro we are firmish at 56 euro cents. That all means the TWI-5 has slipped -10 bps from yesterday to 69.9.

The bitcoin price is still in in its recent yoyo pattern and now is at US$29,748 and down -1.0% from this time yesterday. Volatility over the past 24 hours has been modest at just over +/- 1.3%.

You can find links to the articles mentioned today in our show notes.

You can get more news affecting the economy in New Zealand from interest.co.nz.

Kia ora. I'm David Chaston. And we will do this on Monday.

Kia ora,

Welcome to Tuesday’s Economy Watch where we follow the economic events and trends that affect Aotearoa/New Zealand.

I'm David Chaston and this is the international edition from Interest.co.nz.

And today we lead with news those unlisted Aussie funds are going to get a hurry-up on proper valuations from their prudential regulator via their superannuation system.

But first, in the US, the New York State manufacturing survey dipped in July from June but the shift was in fact minor and much less than was expected. Activity held steady in July and minorly positive. New order levels are still positive.

Meanwhile, applications by consumers for 'credit' (debt) are falling and are now at their lowest level since October 2020. And that means that those who are applying are increasingly likely to get turned down. In fact the rejection rate jumped to almost 22% in the year to June 2023.

China's economy expanded by +6.3% in the second quarter from a year earlier, fueled by recoveries in retail sales and the service sector, and partly thanks to a low base effect. This was lower than the expected +7.3% but was higher than the +4.5% rise in Q1-2023. Between Q1 and Q2, up just +0.8% (annualised at +3.2%) and emphasising the size of their challenge to regain momentum.

Electricity production however only grew +2.8% from a year ago in June. Some use this metric as a more insightful indicator of actual economic activity in China. It rose +5.6% in May, and this June result is the lowest since February.

Retail sales were another weak point in today's data releases from China; there were up +3.2% from a year ago in June with the re-opening surge seemingly having passed through their economy now.

Separately, their central bank did not change its 1-year Medium-term Lending facility rate at 2.65%.

In Singapore, their graft scandal isn't the only issue rocking the ruling Peoples Action Party. Now two more senior MPs have had to resign over a secret affair, and one the Government has been trying to resolve in secret. One was being groomed for the PM role. Recently there have been accusations levels at their Foreign Affairs minister and their Home Affairs & Law minister, but the ruling party managed to deflect those.

The Russia/Ukraine grain deal that allowed exports though the Black Sea has collapsed with Russia refusing to renew it. Prices for wheat rose on the news, but good supply in the rest of the world has kept the rises relatively minor and nowhere near the levels even in June.

In Australia, prudential regulator APRA has been pushed into a crackdown on their superannuation funds, and how they value unlisted assets. The suspicion is that many of these assets are being carried a values that can't be achieved in a high yield market. And that is even after many funds wrote as much as 15% off their extensive unlisted office property investments in their end-of-financial-year valuations. There is more to come it seems, and it will hurt.

The UST 10yr yield will start today at 3.80% and down -3 bps from this time yesterday. 

The price of gold will start today at US$1955/oz and up just +US$1 from yesterday.

And oil prices are -US$1 from this time yesterday at just on US$74/bbl in the US. The international Brent price is now at just under US$78.50/bbl.

The Kiwi dollar starts today down -¼c from yesterday at just over 63.4 USc. Against the Aussie we are down similarly to 92.9 AUc. Against the euro we are down a bit more to 56.4 euro cents. That all means the TWI-5 is now down at 70.7 and -30 bps lower from yesterday.

The bitcoin price has fallen in its recent yoyo pattern and now is at US$30,050 and down -1.1% from this time yesterday. Volatility over the past 24 hours has stayed low at just on +/- 0.8%.

You can find links to the articles mentioned today in our show notes.

You can get more news affecting the economy in New Zealand from interest.co.nz.

Kia ora. I'm David Chaston. And we will do this again tomorrow.

Kia ora,

Welcome to Wednesday’s Economy Watch where we follow the economic events and trends that affect Aotearoa/New Zealand.

I'm David Chaston and this is the international edition from Interest.co.nz.

And today we lead with news that equity and bond markets are in more of a positive mood ahead of the US Fed's meeting tomorrow morning.

But first today, there was another dairy auction overnight and it was yet another weaker one, made worse by both a slumping cheddar cheese price, and the recent gains by the NZD. Overall prices were down -2.6% in USD terms and down -3.3% in NZD terms from the last auction. That puts them -36% lower than year ago levels. Every product fell, the least by the high-volume WMP (-1.5%), and the most by the cheese price (-10.2% from two weeks ago).

Of the 25 auctions in the past year, 19 have delivered lower prices. The price index is now back to a level we last had in December 2020. This continuing slide will probably have analysts reaching for the calculators to assess what the farmgate milk price will have to be reduced by.

US retail sales inched higher last week from year-ago level on a same store basis (+3.2%) but that isn't enough to account for retail inflation. Retail volumes continue their slow shrinkage.

However there was an unexpected surge in American existing home sales in February with them rising to an annual rate of 4.58 mln or more than +14% higher than year-ago levels. The apparent end of rising mortgage rates has emboldened buyers to commit - and sellers to respond. That was their largest rise since July 2020 and ends a year-long decline. But prices aren't responding to the additional demand yet; they remain -0.2% lower than year-ago levels. That was their first year-on-year fall in 11 years. The higher demand volume is coming from regions where home prices are decreasing and the local economies are adding jobs. It is their strong jobs market that is delivering these gains.

In the US banking scene, California's First Republic has seen its shares rally as confidence returns that it will survive. This comes after a Fed-prompted rescue undertaken by a set of much larger banks. US Treasury boss Janet Yellen commented that they will support deposits at other banks if that becomes necessary. But as we have seen elsewhere, management, shareholders and bondholders will always take the first losses.

Canada's CPI inflation rate slipped to 5.2% in February, a retreat from the January 5.9% rise. The change from the previous month is similar.

In China, they are starting a new surge in flu infections. The rate of people testing positive for influenza reported by hospitals across the country jumped to 53.2% last week, with H1N1, or swine flu, the dominant strain, forcing the suspension of some school classes in Beijing and Shanghai. By comparison, the rate for Covid was just 2.3%.

The German ZEW indicator of economic sentiment rose again in March, the third consecutive improvement, but the gain was far less than in February.

In Australia, APRA is apparently telling banks that it wants to know much more about their exposures to start-ups and crypto-focused ventures following the collapse of Silicon Valley Bank and volatility at global lenders.

Meanwhile, the minutes from the March 7 RBA meeting revealed they are likely to keep their cash rate unchanged at 3.6% on signs of economic softening. Their next review is on April 4, 2023.

More generally, markets are sensing today that contagion risks are fading, so risk appetites are rising.

The UST 10yr yield starts today at 3.59% and up another +10 bps from this time yesterday. 

The price of gold will open today at US$1941/oz and down another -US$35 from this time yesterday.

And oil prices start today up a strong +US$3.50 from yesterday at just under US$69.50/bbl in the US. The international Brent price is now just on US$75/bbl.

The Kiwi dollar is down -¾c against the USD and now at 61.7 USc. Against the Aussie we are -¼c lower at 92.8 AUc. Against the euro we are also -1c lower at 57.3 euro cents. That puts the TWI-5 at 69.9 with a solid -60 bps retreat.

The bitcoin price is much higher today, now at US$28,477 and up +3.0% from this time yesterday. And volatility over the past 24 hours has been modest however at +/-1.9%.

You can find links to the articles mentioned today in our show notes.

And get more news affecting the economy in New Zealand from interest.co.nz.

Kia ora. I'm David Chaston and we’ll do this again tomorrow.

Kia ora,

Welcome to Tuesday’s Economy Watch where we follow the economic events and trends that affect Aotearoa/New Zealand.

I'm David Chaston and this is the international edition from Interest.co.nz.

And today we lead with news we are in that transition zone where 'gains' and 'losses' are offsetting each other.

First, American durable goods orders retreated in January from December. A fall was expected mainly because there was an outsized rise the prior month, but it was more than anticipated. However the retreat was mainly due to a drop in orders for commercial aircraft. Excluding that, there was a rise. And on the same basis, capital goods order rose as well, suggesting boardrooms are still in 'invest' mode. (It is likely that February orders will jump, based on some very large recent aircraft orders.) Year on year, durable orders are up +3.0% and non-aircraft capital goods orders are up +5.3%. (As an aside, it is notable how small defence orders are in the scheme of things. They represent less than 5% of total orders and are pretty stable. You might have thought the defense of Ukraine would have supersized these, but it hasn't been the case.)

In the US oil patch, the Dallas Fed's factory survey is weak in February. We have noted it declining for some time, but now it is lower than year-ago levels for the first time since May 2020. The non-month run of declining new orders has caught up with them. This is a specialised region, so it is hard to draw national conclusions from it.

But nationally, in what their sector suspects is a turning point, the number of pending home sales in January rose more than expected from December, and by quite a bit more. A +1% rise was anticipated but the actual increase was +8.1%. This surprise gain comes on top of the stronger new home sales we noted last week.

Hong Kong reported a huge retreat in merchandise trade activity for January. Exports fell -37% from year-ago levels while imports retreated -30%. These were worse levels than for December. The export drop was their largest in 70 years. It is sad to watch the life being squeezed out of what has been a globally important city.

In the UK, they seem to have tidied up their deal with the EU on trade with Northern Ireland, a revised side deal called the Windsor Framework. Both sides claim 'victory' which is usual in these sorts of negotiations.

In Australia, their prudential regulator APRA has kept its pandemic extra's, the 1% capital buffer for risk weighted assets, a buffer in bank capital for stress, and a 3% serviceability buffer "to maintain prudent lending standards". That's +3% above the rate banks will lend at. Borrowers must meet lending standards at that extra higher level.

The UST 10yr yield starts today at 3.92% and down -3 bps. 

We should also note that the two year swap rate hit its highest level yesterday since November 2008.

The price of gold will open today at US$1817/oz and up +US$6 since yesterday.

But oil prices start today soft at just under US$76/bbl in the US. The international Brent price is just over US$82/bbl. Both remain little-changed in a week.

The Kiwi dollar is still at 61.6 USc, and unchanged since yesterday even if it is still close to a three month low. Against the Aussie we are also little-changed at 91.6 AUc. Against the euro we are soft at 58.2 euro cents. That all takes the TWI-5 to 70 and down -20 bps.

Bitcoin has within its recent narrow range, now at US$23,387, up +0.9% from this time yesterday. And volatility over the past 24 yours has remained modest at +/-1.5%.

You can find links to the articles mentioned today in our show notes.

And get more news affecting the economy in New Zealand from interest.co.nz.

Kia ora. I'm David Chaston and we’ll do this again tomorrow.

Welcome to ALTBAYS Show. (feat. Leo Magri, Te Paea Puha)

Meet Tipene, NZ Hip Hop artist

Not being great at school can teach you more than you think. Tipene was about to drop out when he find out that people wanted him to be the head boy in his last year of school. He was not even keen to go through that last year. His friends were sure that it was the thing for him to do though. Not all teachers agreed, but Tipene took that as an extra reason to keep on moving, believing in his dream, providing the ignorant wrong and turning his passion towards music into a successful career.

Tipene is a teacher, a voice, a learner and an inspiration to many who think that the Maori language and culture should be at the forefront. Why not, honestly? From playing with his idols Scribe, Dam Native and Che-fu to inspiring kids in the classroom,; the teacher Tipene has a lot to share.

Listen to these great stories from a man who takes everything he does very seriously, with his heart and soul. 

ALTBAYS Show invites awesome people from Aotearoa, New Zealand, to have an honest, laid-back conversation. Our platform focuses on bringing our community together to grow and thrive.

Sources :

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1/3 of Australian Shoppers prefer BNPL option.

APRA Media Release.

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Have you got a question or an idea of a topic for us to cover? Get in touch via our instagram @getwemoney . We love hearing from you!

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Disclaimer
We Talk Cents is not a financial advisor and the information provided is general in nature and was prepared for information purposes only. This podcast should not be considered to constitute financial advice. Accordingly, reliance should not be placed on the podcast as the basis for making an investment, financial or other decision. This information does not take into account your investment objectives, particular needs or financial situation.

Need Help?
If you are struggling with your finances, call the National Debt Helpline on 1800 007 007 for free financial counselling.

Mike Chunn needs no introduction.  He played in Split Enz and Citizen Band, he was the director for APRA NZ, he founded and still runs Play It Strange, he's been a loud voice for many important subjects including mental health and the need for music to be given a higher priority in New Zealand culture.  This was an exhilarating chat. There was laughter, there were tears and we even wrote a song.  Get on it!

Xav, Dan, Bevo & Chibbs deeply apologise for bringing this song back into your lives for 59 minutes. We have to live with deep regret of choosing this steaming pile of shit to review but hopefully, we come out stronger on the other side.

Bio:

"Good Lord" is a song by Australian alternative rock band Birds of Tokyo and is the second single from their sixth studio album, Human Design. It was released on 26 February 2019.

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