Here's our summary of key events over the weekend that affect New Zealand, with news China has posted a current account deficit, it's first in a long time.
But first, the American non-farm payrolls report was a very mixed set of data. The headline jobless rate dipped to a very low 3.9%. That is the lowest rate in more than 17 years. But the number of new jobs created came in far lower than expected at +164,000 (although higher than March's +135,000). What is troubling is that their participation rate was unchanged at a low 62.8%. Average weekly earnings rose +2.9%.
Wall Street shrugged off the weakness and rose nearly +1.5% at the weekly close. That was essentially driven by the out-sized earnings results from Apple. (This is contrast to Asian and Australian markets which ended the week in the red.)
Warren Buffet's Berkshire Hathaway has posted a giant quarterly loss to March 2018 on mark-to-market valuations for his long-term holdings, something he warned would happen with the adoption of short-term accounting rules inappropriate for long term investments.
In Beijing, senior American officials ("the Avengers") have wrapped up talks with Chinese officials over trade issues and seem to have made little progress. Each side is dug in, demanding large concessions from the other, according to unofficial leaks.
This comes as China posted its first current account deficit in 17 years. It was a quarterly deficit of -US$28.2 bln; the last one they had was in 2001. Some analysts are saying this signals a long-term shift where current account deficits become the norm for China.
Argentina surprised markets, again, with another sharp rise in their official interest rates over the weekend. This time they hiked them another +6.25% to 40%. That is the third rise in a week taking the adjustment up from 27.25%. Inflation is high at +25% pa, but their currency was being hammered, exacerbating their inflation. This latest move returned some confidence to the struggling peso. And it was accompanied by some serious fiscal restraint, the first sign runaway government spending is being capped.
Greece’s biggest banks will receive a clean bill of health from the ECB this week, an important step toward the completion of an eight-year bailout program that has strained the country’s economy.
The UST 10yr yield is at 2.95% and up +1 bp from Friday morning (although the same as it was a week ago). The Chinese 10yr is up to 3.66% (+2 bps) while the New Zealand equivalent is at 2.91% (unchanged).
Gold is at US$1,314/oz in New York. Updated data from the World Gold Council shows weak demand in the first quarter of 2018 with demand weak across the board and supply also slipping, but not as fast. In fact, in the year to March, supply exceeded demand by the largest amount in 15 years. The overhang is killing any upside; all risks are to the downside.
Oil prices have jumped more than +US$1.50 in the US to just over US$69.50 and the Brent benchmark is now just under US$75/bbl. Rising prices has seen a jump in the number of oil rigs in operation, especially in the US. American-Iran tensions are behind the rise, but a shift in Saudi policy may also be 'helping'.
The Kiwi dollar ended last week down at 70.2 USc and another -½ USc retreat over the week. On the cross rates we are at 93.1 AUc and 58.7 euro cents. That puts the TWI-5 at 72.7.
Bitcoin is however at US$9,558 and that is a net gain of +7% for all of last week.
This chart is animated here. For previous users, the animation process has been updated and works better now.
The easiest place to stay up with event risk today is by following our Economic Calendar here ».
We welcome your comments below. If you are not already registered, please register to comment.
Remember we welcome robust, respectful and insightful debate. We don't welcome abusive or defamatory comments and will de-register those repeatedly making such comments. Our current comment policy is here.