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Speaker 1: Shane solely harbor Asset Management is with us. Now, Hey Shane,

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Speaker 1: good evening here and well thank you. So what does

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Speaker 1: this credit rating downgrade mean for investment markets?

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Speaker 2: Yeah, so Moody's one of the credit agencies that talks

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Speaker 2: about how good a lender borrowers. Cut the US credit

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Speaker 2: rating from triple A to A one. That's on concerns

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Speaker 2: about ballooning US Ditton deficits. Now, they talked about successive governments,

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Speaker 2: not the current government, but pretty much the current government's

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Speaker 2: added to the fuel to the fire in terms of

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Speaker 2: trying to get extending tax cuts, and they've got to

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Speaker 2: fund those tax cuts with more funding. So we certainly

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Speaker 2: see that trigger a bit of an increase in long

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Speaker 2: term government bond yours. This is what governments pay to

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Speaker 2: borrow to fund their activity. So we've actually seen those

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Speaker 2: rates increase over last week or so in advance of

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Speaker 2: this funding extension for US tax cuts. Locally has had

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Speaker 2: a bit of an impact, a little bit of impact

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Speaker 2: on our market. We've seen our New Zlan government bond

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Speaker 2: youards go up to four point seven percent recent high.

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Speaker 2: Our sheher market was down one point two percent. Wouldn't

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Speaker 2: be surprised to see a bit more volatility tonight off

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Speaker 2: the back of the credit rating, but it was coming.

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Speaker 2: It was just a matter of time.

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Speaker 1: A little bit of mixed economic data here back back

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Speaker 1: here in New Zealand today, what's going to happen with

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Speaker 1: the Reserve Bank cutting the official rates.

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Speaker 2: Yeah, So we had a couple of data points today. Firstly,

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Speaker 2: the New Zealand Services Industry contracts. It talks about services

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Speaker 2: companies how they're feeling, and it was week for third

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Speaker 2: month in a row at forty eight point six, when

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Speaker 2: the index is below fifty eight, men's businesses are actually

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Speaker 2: moving backwards, so it's telling us there's still pretty tough

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Speaker 2: times the services set. On the other hand, we had

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Speaker 2: prices paid. This is what we had to put into

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Speaker 2: buying goods and services for businesses up two point nine

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Speaker 2: percent for the quarter. But prices we actually we were

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Speaker 2: able to put out. We're only up two point one

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Speaker 2: so the companies had to we weren't able to pass

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Speaker 2: through all the higher prices. Now, Reserve Bank, it's a

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Speaker 2: bit of a tough setup for them. The economic data

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Speaker 2: says we should be cutting rates, and indeed inflation data

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Speaker 2: suggests they're still in the band but maybe it's not

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Speaker 2: enough for them to really open the taps up on

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Speaker 2: the twenty out. That may they'll cut, but maybe not

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Speaker 2: as much as we'd all like.

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Speaker 1: All right, hey, and what we've got the budget coming

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Speaker 1: up on Thursday? Obviously, what are investors expecting.

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Speaker 2: Yeah, look, we expected to be prudent, you know despite

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Speaker 2: this week economic outlog, which means lower tax tape. It

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Speaker 2: means the government's going to have to work harder in

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Speaker 2: terms of making sure they get some spending cuts through.

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Speaker 2: Markets are going to be focused on the degree of

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Speaker 2: debt issuance. How much money does the government have to

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Speaker 2: to raise to keep the halls of government going. The

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Speaker 2: expectations are forty to forty two b and gross. That's

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Speaker 2: a gross number, doesn't include some netting off. And if

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Speaker 2: they can come in that range, that will actually be

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Speaker 2: a good thing. Markets might like that. They'll be able

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Speaker 2: to scrutiny around infrastructure, housing, and healthcare policy in terms

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Speaker 2: are laying up for the future, and maybe a little

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Speaker 2: bit interested in that. QUI say, the change is potential

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Speaker 2: and so the change there brilliant stuff. Shane.

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Speaker 1: Always good to talk to you. It really appreciate it, Shane.

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Speaker 1: So Harborresset Management.

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