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Podcast: Economy Watch
Episode:

Tensions between India and China rising
Category: Business
Duration: 00:03:35
Publish Date: 2021-06-28 19:36:23
Description:

Kia ora,

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

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

Today we lead with news of rising tensions between China and India.

But first in the US, the Dallas Fed manufacturing survey expanded at a faster pace in June, driven by strong production and new order levels. Price and wage pressures accelerated further, both to new record high levels.

As part of the 100 year celebration of the founding of the Chinese Communist Party, China is claiming its per capita GDP now exceeds US$10,000. It seems an odd boast given that most observers had it higher than that a few years ago.

In China, their giant Baihetan hydroelectric dam, the second largest in the country after the Three Gorges Dams, began generating electricity yesterday. It is a piece of infrastructure abhorred by India because of its control over water flows to the Indian subcontinent.

On the Indian-China border that has been subject to dispute for decades, both the Chinese and Indians have amassing substantially larger forces recently. The Chinese effort is quite secret, while there is more visibility on the Indian moves. It is not a good sign.

In Australia, their Federal tax authority has been concentrating on the top 500 privately owned business groups to ensure they pay their fair share. It is paying off with 320 of them paying +40% more tax in the three years to the 2018 tax year. The ATO is now widening those investigations to the top 1,000 corporate taxpayers which covers large public and multinational companies, focusing on the income tax affairs of taxpayers with turnover above AU$250 mln.

Internationally, the Baltic Dry Index rose +2.1% in a day to 3,324 yesterday, its highest since June 2010. Shipping demand is high. And we should also note there are questions rising about the sustainability of water level in the Panama Canal as drought grips the region. Commodity prices for iron ore and steelmaking coal are staying high, but prices for thermal coal are falling due to Chinese regulatory actions.

The UST 10yr yield starts today down -4 bps at 1.48%. 

The price of gold starts at US$1780/oz which is down -US$2/oz from this time yesterday.

Oil prices are sharply lower today, down -US$1.50/bbl. In the US they are now at just over US$72.50/bbl, while the international Brent price is just over US$74/bbl.

The Kiwi dollar opens today a little softer at 70.4 USc. Against the Australian dollar we are unchanged at 93.1 AUc. Against the euro we are virtually unchanged too at 59.1 euro cents. That means our TWI-5 starts today softer at 72.9.

The bitcoin price is now at US$34,169 and up another +3.4% from this time Saturday. Volatility in the past 24 hours has remained very high at +/- 4.4%.

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.
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