Here's my summary of the key events overnight that affect New Zealand, with news mostly from China today.
Their foreign exchange reserves fell by US$29 bln in February, a slower pace than the monthly declines of roughly US$100 bln last year.
And at their annual rubber-stamp parliament, China’s leaders are making it clear they will prioritise growth over restructuring this year. But they are also acknowledging they risk inflating debt and asset bubbles as they inject new stimulus money into the economy.
And, the iron ore price jumped +18% yesterday - the most ever - as investors position themselves in expectation of that priority. This enthusiasm spilled over to demand for the Aussie dollar. But not everyone is confident the iron ore price rally will last.
In Hong Kong, residential home sales plunged -70% in February from a year earlier to a 25-year low, as falling prices and economic uncertainty deterred buyers. Last month, only 1,807 homes were sold in Hong Kong, compared with 6,027 a year earlier. (For comparison, New Zealand's February data has not been released yet, but it is expected to be about 7,000 sales.)
And in data out overnight from IATA, world airfreight levels were up +2.7% in January compared with the same month a year ago, indicating a solid start to the year for global trade.
In New York the benchmark UST 10yr yield has risen again and will start today at 1.91%. And a key junk bond index shows that these yields have now fallen back from their shaky highs and are below 8% for the first time since November last year.
The oil price rose as well and is now at US$38/barrel in the US while Brent is at US$41/barrel. US$40/barrel is being talked about as OPEC's preferred floor target.
The gold price is slightly softer on the day at US$1,266/oz.
The NZ dollar will start today at 68 US¢, at 91.1 AU¢, and at 61.8 euro cents. The TWI-5 index is just on 72.2.
If you want to catch up with all the local changes yesterday, we have an update here.
The easiest place to stay up with event risk today is by following our Economic Calendar here ».
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4 Comments
Funny with regard to iron ore, I was just reading this yeaterday.
http://www.bloomberg.com/news/features/2016-03-01/death-and-despair-in-…
The talk of instability is the interesting part. George Friedman was making that prediction 5 years ago and used 7 or 8% growth as the critical threshold. He said the communist regime needs that growth to maintain power. Perhaps we are seeing this play out finally.
And, the iron ore price jumped +18% yesterday - the most ever
A condition generally perceived as financial dislocation - view chart - central banks are noticeably absent doing their utmost to calm such conditions. I wonder if the ponzi gains of commodity rehypothecation are at play again?
The BLS claims a dislocation in another sphere, but nonetheless fantastic.
Overall retail sales, including auto sales, have not been in the range considered of a healthy economy since the summer of 2012, yet the BLS has figured the usual straight line advance in hiring and employment. Since a minor curtailment in the middle of the 2012 weakness and slowdown, the BLS suggests that an enormous 1.08 million retail jobs have been created even though retail sales have lingered at dangerously low levels the whole time. Retail sales during an evident growth period should be rising by 6% minimum, not near or below 3%. In fact, 3% growth has been uniformly associated with recession. Read more
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