US on holiday but Canada data points to rate rises; China reports good data but real data undermines it. Beijing worried on multiple fronts; UST 10yr 1.79%; oil unchanged but gold firm; NZ$1 = 68 USc; TWI-5 = 72.3

Here's our summary of key economic events overnight that affect New Zealand with news the sense of worry in Beijing is clearly rising for a number of reasons.

But first in the US, it is a public holiday with both the equity and bond markets closed for Martin Luther King Jr Day. The bullion markets are trading however.

North of the border in their Business Outlook Survey, which the Bank of Canada takes seriously, it hit its highest, most expansionary level ever in the December edition just released. It reveals fast-rising demand, capacity constraints and supply-chain issues, strong labour demand and higher pay, and fast-rising costs for which prices are being raised. If Omicron hadn't hit hard after this survey was conducted, the Canadian central bank almost certainly would be raising rates at their upcoming January meeting next week. Now it's a line-call.

In Japan, November machinery orders rose faster than expected both on a month-on-month basis (+3.4%) and a year-on-year basis (+11.6%). That says a lot of positive things about global investment intentions.

In China they reported their Q4 GDP was up +4.0% from the same quarter in 2020, which is much better than anticipated but down from, +4.9% in Q3-2021.

However, Chinese retail activity struggled in December, rising just +1.7% year-on-year when a +3.7% rise was expected and November was up +3.9%. It's their slowest growth in 16 months, and looking past the 2020 pandemic, the slowest growth in China ever. For all of 2021 retail sales were up +12.5% so most of that came early in the year and relies on a suppressed base effect.

China's industrial production was a bright spot, up +4.3% and its best rise in four months even it is unusually low for them. Only a recovering rest-of-the-world and the export orders from them, saved the day.

Chinese electricity production tells a different and perhaps real story - it actually fell -2.1% year-on-year, so that kind of does cloud the other data results and suggests, even if they are positive, the real story might not be so good. Everything is 'national security' in China, so reporting 'declines' is frowned on again.

Clearly, Beijing is worried. The People’s Bank of China lowered the interest rate on 700 billion yuan worth of 1-year MLF loans by -10 bps to 2.85%, as well as on 100 billion yuan worth of 7-day reverse repos by the same margin to 2.1% late yesterday. But this wasn't enough new policy support to stop a sharp selloff in Chinese property developer bonds yesterday. This whole sector is now in crisis mode.

Adding to the sense of worry, President Xi made a speech where he implored Western nations not to raise interest rates. Even after acknowledging the supply-chain crunch, high commodity prices and tight energy markets, he called on Western central banks to sit tight.

The Beijing worry index is also rising on the Omicron front, with Winter Olympic ticket sales now cancelled. And in a related move anti-doping agency WADA has warned athletes not to eat meat in China because of the elevated likelihood it will contain banned steroids.

In NSW, there were 29,504 new community cases reported yesterday, a sharpish rise, now with 338,613 active locally-acquired cases (and undoubtedly an undercount), and 17 more deaths. Hospitals face serious staff shortages, and they have been told the number of COVID-positive people needing inpatient care could exceed 4500 within the month. They are now up to 2,776. The NSW Chief Health Officer there will be a high number of deaths in coming days. In Victoria they reported 22,429 more new infections yesterday, also an increase. There are now 245,040 active cases in that state - and there were 6 deaths. Queensland is reporting 15,122 new cases and 7 new deaths. In South Australia, new cases have held at 3,829 yesterday with no more deaths. The ACT has 1316 new cases and 2 deaths and Tasmania 1037 new cases. Overall in Australia, 73,258 new cases were reported yesterday.

The UST 10yr yield opens today at 1.79% and holding while the New York bond market is closed. The UST 2-10 rate curve starts today unchanged at +82 bps. Their 1-5 curve is also unchanged at +107 bps, while their 3m-10 year curve is still at +175 bps. The Australian Govt ten year benchmark rate is up +4 bps at 1.91%. The China Govt ten year bond is down -1 bp at 2.80%. The New Zealand Govt ten year is up +7 bps at 2.54%.

While Wall Street is closed, European markets were trading and were up about +0.8%. Yesterday, Tokyo rose +0.7% but Hong Kong fell -0.7% in Monday Trade. Shanghai rose +0.6%. The ASX200 was up +0.3% yesterday, but the NZX50 could only manage a +0.1% rise.

The price of gold starts today at US$1820/oz and up US$2.

And oil prices start today unchanged at just on US$83.50/bbl in the US, while the international Brent price is now just under US$86/bbl. These prices are close to a seven year high.

The Kiwi dollar will open today at 68 USc and unchanged from this time yesterday. Against the Australian dollar we are softish at 94.3 AUc. Against the euro we are holding at 59.6 euro cents. That means our TWI-5 starts the today at 72.3 and the same as this time yesterday.

The bitcoin price has moved down by -2.8% to US$42,174. Volatility over the past 24 hours has been modest at +/- 1.5%.

The easiest place to stay up with event risk today is by following our Economic Calendar here ».