Here's my summary of the key news overnight in 90 seconds at 9 am, including news from central banks.
(Updated with Fonterra auction results.)
American household debt rose in the latest quarter by the most since before the recession, a sign they may be nearing the end of a multi-year belt-tightening trend, a report from the New York Fed showed overnight. The New York area manufacturing index was not very positive, but probably weather affected.
Also overnight, China's central bank reported it had removed nearly US$8 bln from money markets in a bid to control the amount of credit in the country's financial system. It is a hawkish move showing they don't like the recent decline in money-market rates in light of the explosive growth of bank lending and other forms of financing in January. The PBoC has backed off tough signals in the past when they seem to create stress, so we will see whether this one is for real. It could have wide ranging impacts though.
The China move kind of compounds the US Feds removal of its stimulus.
But the Bank of Japan surprised markets by going the other way and doubling incentives to spur bank lending, weakening the yen at a time when their economy is showing signs of trouble.
The Bank of England is getting the room to raise interest rates. The UK's inflation rate fell to 1.9% in January, the first time in more than four years that it has gone below the Bank of England's 2% target. With good growth being recorded, the British central bank has been letting it be known that rate rises are on the way.
In Australia, it looks like they are losing their chance to sign a free trade agreement with China. And the prospect of much lower iron ore prices got reinforced yesterday with BHP joining Rio Tinto warning of oversupply in China.
Staying in Australia, the ex-WalMart British boss who shook up Coles and the whole Aussie supermarket industry - and we noticed an echo here from his hard-nosed tactics - has been promoted upstairs out of Coles and into owner Wesfarmers corporate suite. Bunnings, Officeworks, Target and KMart are other Wesfarmers businesses.
This morning Westpac has introduced a 5.95% 2 year special mortgage rate, and cut its three year carded rate. Both moves matched the market. The Co-op Bank raised its one year rate and is no longer the market leader in that term - SBS now is.
Farm sales have started out strongly in 2014, with January volumes up 50% on the same month from the past two years.
Overnight we saw falls in the UST 10yr benchmark bond rate to 2.72%. We saw the oil price rise as the WTI benchmark gets closer to the Brent price, and gold is now at US$1,323 an ounce. The production data for 2013 was also out overnight and it saw a 5% rise in mine output, but a big fall in recycling probably due to low 2013 prices.
The Fonterra auction overnight saw prices fall in US dollar terms by 1.2% and the fall was even larger in NZ terms, down 4.0%.
The NZ dollar has fallen overnight and starts today at 83.1 USc, 91.9 AUc and the TWI is at 77.9.
If you want to catch up with all the changes on Monday, we have an update here.
The easiest place to stay up with today's event risk is by following our Economic Calendar here »
8 Comments
Damning article on soil conservation practices and the latest British floods by Monbiot
http://www.theguardian.com/commentisfree/2014/feb/17/farmers-uk-flood-m…
While only part of the causes it does show the tangled mess of subsidises and externalities that encourage behaviour that has a higher overall (externalised) cost.
Don't be forgetting US natural gas prices now will you? Up to a 4 year high at US$5.5. It is funny, gas prices used to get a fairly frequent mention on here, when they fell.
Now, not so much.
I guess it doesn't fit with the narrative.
Oh - and a reminder. Winter does in fact come every year I am reliably informed.
The US actually had an "on average" pretty average winter- it is just that the average is generated by both unusually hot and cold weather the Central/East was a bit colder and got the news, the West (including Alaska) was record breakingly hot. Overall it was 0.1F below the 20th Century average, it is just the extremes were pretty extreme. There is a rather nice map here
http://www.ncdc.noaa.gov/news/ncdc-releases-january-2014-us-climate-rep…
and the demand? ie if the winter demand is up then the price would also rise. The interesting thing to watch is if it drops back in the spring or not.
regards
Things have sure come to a pretty pass when Fox news of all people run stories like this:
http://www.foxbusiness.com/industries/2014/02/17/global-oil-firms-seen-…
''Global oil firms, hit by one of the worst years for discovery in two decades, are about to cut exploration spending, pulling back from frontier areas and jeopardising their future reserves, industry insiders say.''
"It is becoming increasingly difficult to find new oil and gas, and in particular new oil," says Tim Dodson, the exploration chief of Statoil, the world's top conventional explorer last year.
and how much did they spend to get on of the worst years of discovery? sums like 2.4Trillion are commented on.
The intersting thing is now the oil companies talk about BOE, for their reserves so "investors" (read smucks) can see a simple one figure to show the value of teh comany's reserves. Problem is as the fox piece comments teh ratio of oil to gas is changing butthe BOE number hides that...and gas doesnt readily or cheaply do what crude does.
Lots of smoke and mirrors here, nothing to worry about move along please.
regards
Tell the Statoil fellow to get on the blower to Profile and GBH. They'll put him right in a jiffy.
And if that doesn't work, Dodson could ask Hugh P and Phil B. They would explain that he's been gotten to by communist infiltra - i - tors and that he's wrong brcause the median multiple says that oil will always be no more than 3 times the price of a house. They will further explain that if you build more houses, you will get more oil. Some of us find it hard to follow, but it's something to do with 'the market', and appaerntly it can override realities.
Pretty cool. Pity Dobson didn't ask.
Good link. Some of us have been saying this, for some time. Maybe - just maybe - we knew something. Maybe - just maybe - we were right.
Editor at NZ Property Investor. Could say she has gone to the dark side :-P http://www.linkedin.com/pub/amanda-morrall/39/26/78a
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