Here's our summary of key economic events overnight that affect New Zealand, with news the expected fast rise of the US economy is leading to the world splitting faster into two clear economic camps.
But first in the US, the latest inflation reading, this one for February, has their CPI rising to +1.7%, a rise that was expected. That is up from +1.4% pa in January. Food prices were up +3.6% pa however. But most other elements rose only modestly, including rents, medical costs, and petrol. It is a measure that is not causing any urgent inflationary concerns. Wall Street is up as the inflation fears recede for the moment.
Also not displaying any warning signs are US mortgage applications which dipped last week. Nor mortgage interest rates which were mixed last week.
Congress is about to give final approval to the US$1.9 tln stimulus package, one that has wide bipartisan support outside of politics (even among Republican voters) and none inside. It will be signed later today and start being disbursed within a few days. Many expect it to turbocharge American economic activity for the rest of the year. That could mean today's muted CPI result will be quickly overshadowed.
A big and long-overdue push into infrastructure renewal is the next big American project.
In Canada, their central bank was sat pat at its latest policy review but kept up its bond buying. They are feeling better about their 2021 prospects.
But China has a consumer deflation problem. For the second month in a row and the third month in the past four, consumer prices have been lower than the same month a year-ago. Prices for fuel and services led this drop.
But they do have inflation in their factory sector. Their PPI rose +1.7% above the February 2020 level, after having been in deflation mode for all of last year.
ANZ analysts say China is about to shift policy and put an upward bias on lending rates this year and control collateralisation. The overall goal is to quell asset price inflation. Rather than "supporting growth" the new focus will be to weigh against asset bubbles.
China’s credit expansion slowed slightly in February during a traditionally slow month for lending because of the Lunar New Year holidays. But that still involves a rise of about +13% year-on-year, so debt is growing at about twice the rate their economy is expanding indicating a very inefficient economic policy structure.
Apple is making fast moves to shift product manufacture out of China and to Vietnam and especially India. And the new Washington Administration looks like it will keep its tech-denial pressure up on China. There is also proper coordination in "Quad" activity, and that includes a fast weaning from reliance on Chinese rare earth minerals. In turn, China is ramping up its drive into high-tech chips although it is fraught with some large stumbles so far.
In China, iron ore prices fell hard yesterday although to be fair only back to levels they were at the end of 2020.
In Chengdu, ANZ said it will lay off 850 technology-focused staff even as it claims China remains a core market for them. It is a move viewed sceptically by some. It is shifting those jobs to India, the Philippines, and a few back to Australia.
Hard on the heals that business confidence report in Australia that was at an eleven year high, now comes the news that Australian consumer confidence is back at a ten year high.
But there is still some way to go in Australia. New data out yesterday shows that in Q4-20 compared to Q4-19 their number of jobs fell -2%, hours worked fell -3.2% and the number of people with secondary jobs rose +3.1%. Overall, they are down -284,200 jobs in the year.
And Aussie regulator ASIC has signaled that it will be ramping up scrutiny and regulation of the Buy-Now-Pay-Later sector focusing on "the harms of BNPL".
In New York, the S&P500 has opened today with a +0.9% rise in early afternoon trade. Overnight European markets closed with +0.7% average gains. Yesterday in Asian markets Tokyo closed flat, and Hong Kong was up +0.5%. The Shanghai was down -0.1% despite active "home team" buying. The ASX200 ended its session yesterday down -0.8% but the NZX50 Capital Index gained +0.9%.
The latest global compilation of COVID-19 data is here. The global tally is still rising and at a fast pace, now at 117,717,000 and up +431,000 in one day, so no let-up globally. Global deaths reported now exceed 2,613,000 and +10,000 in a day. Vaccinations in the first world are rising however and in the US more than a quarter (92.9 mln) have now had this protection. That is quelling their daily death rate although it did jump to +1700 yesterday. The number of active cases there is down to 8,711,000 (-45,000 fewer in one day).
The UST 10yr yield is down -3 bps at 1.51%. The US 2-10 rate curve is unchanged at 137 bps. Their 1-5 curve is flatter at +69 bps, while their 3m-10 year curve is flatter too at just under +150 bps. The Australian Govt 10 year yield is down -6 bps at 1.69%. The China Govt 10 year yield is unchanged at 3.27%. But the New Zealand Govt 10 year yield has fallen -7 bps overnight to 1.82%.
The price of gold starts today little-changed in New York and still just on US$1718/oz.
Oil prices have fallen -US$1 overnight to just under US$63.50/bbl in the US, while the international price is down to just under US$67/bbl.
The Kiwi dollar opens today at 71.7 USc and a small rise overnight. Against the Australian dollar we are unchanged at 93 AUc. Against the euro we are little-changed at 60.3 euro cents. That means our TWI-5 is at 73.8 and little different overnight.
The bitcoin price will start today higher again at US$56,604 and up +4.3% since than this time yesterday. Volatility in the past 24 hours has been +/- 3.3%. The bitcoin rate is charted in the exchange rate set below.
The easiest place to stay up with event risk today is by following our Economic Calendar here ».
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