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.