Here's our summary of key economic events overnight that affect New Zealand with news Wall Street is rallying today as the bond sell-off hits a pause.
But first, the Omicron wave is biting into American jobs now. Last week should have seen a large seasonal fall in jobless claims but the actual fall was less than expected. It decreased by an actual -83,000 when -139,000 fall in jobless claims was expected. Now just over 2 mln people are on these benefits. Most other news reports will focus on a rise in the seasonally adjusted number, but there isn't in fact any rise, only a lesser than-expected fall. To say jobless claims 'rose' misrepresents what actually happened.
But there was a real fall in existing home sales in December, driven by a record low availability of houses for sale - just 910,000 in the whole country and an unprecedented level. As a consequence, prices rose to a median of US$358,000 (NZ$526,000) a record, and completing ten straight years of year-on-year price increases. But the expectation is growing that sharpish mortgage rate rises will quell some of this. 30% of their home sales are to first home buyers.
Meanwhile, new housing starts rose more than expected to an annualised rate of just over 1.7 mln in December, the highest since March and beating market forecast of 1.65 mln Housing demand remains strong although high prices for building materials, (especially timber) supply constraints and labour shortages persist and are weighing on construction times. But that is not stopping a very high level of building permit applications.
And the closely-watched Philly Fed factory survey covering an important manufacturing heartland, came in very positive, and up in January from December. Cost and price pressure remains very elevated however.
All this data is emphasising the fact that American public policy settings are supporting a very broad-based expansion now, and are very much more professional than compared to the previous Administration. They seem on to it in their first year.
Japan's exports rose to a record high in December, up more than forecast. Import growth remain high but is declining. As a consequence their trade deficit shrank in December. Japan runs a big trade surplus with New Zealand and big trade deficit with Australia.
Taiwan's export orders remained very strong in December, beating estimates and capping an impressive year.
But the cost of shipping all this trade in containers isn't declining, rather staying at very high levels and actually rose again last week. That said, the cost of shipping bulk cargoes continues to slide and is back to year-ago levels - in fact back to 'normal' levels we have seen over the past 35 years.
China's central bank has stepped in to support a slowing economy that has been weighed down by a slump in the property market during a politically important year for leader Xi Jinping. It has trimmed its housing loan prime rates by -5 bps from the one year, and -10 bps from the official five year benchmark rate. (See charts at the bottom of this page.) But this latest timid cut is more about cushioning impacts of the slowdown than turning anything around. Economic sights are being set lower.
Annual inflation in the EU rose to 5.3% in the year to December 2021, bolstered by Germany (+5.7%) and Spain (+6.6%), but restrained by Italy (4.2%) and France (+3.4%).
In Australia, the world’s first ship carrier of liquefied hydrogen has arrived at Victoria’s Port of Hastings to pick up its inaugural cargo and transport it to Japan, marking a major milestone for the emerging industry.
Meanwhile, the Australian jobless rate fell in December to 4.2% from 4.6%, aided by +65,000 more employed, +42,000 of them full time. But they didn't get their expected improvement in their participation rate. (The New Zealand labour market data comes out on February 2, for Q4-2021. As at Q3 we had a 3.2% jobless rate.)
And in what might be seen as an odd outcome, the Melbourne Institute is reporting their survey of consumer inflation expectations fell from +4.8% in December 2021 to +4.4% in January 2022.
In NSW, there were 30,826 new community cases reported yesterday, a small fall, now with 278,324 active locally-acquired cases, and 25 more deaths. There are now 2,781 in hospital there. In Victoria they reported 21,966 more new infections yesterday, a small rise. There are now 239,402 active cases in that state - and there were 15 more deaths. Queensland is reporting 16,812 new cases and 9 more deaths. In South Australia, new cases have slipped to 3,482 yesterday with no more deaths. The ACT has 982 new cases and Tasmania 927 new cases. Overall in Australia, 74,904 new cases were reported.
The UST 10yr yield opens today at 1.84% and unchanged from this time yesterday. The UST 2-10 rate curve starts today marginally flatter at +79 bps. Their 1-5 curve is softish at +106 bps, while their 3m-10 year curve is unchanged at +179 bps. The Australian Govt ten year benchmark rate is down -1 bp at 1.97%. The China Govt ten year bond is down -2 bps at 2.75%. The New Zealand Govt ten year is up +8 bps at 2.60%.
Wall Street is in to its Thursday session strongly with the S&P500 up 1.3% so far. Overnight most European markets rose about +0.5%, although London fell -0.2%. Yesterday, Tokyo recovered +1.1%, Hong Kong ended up a very strong +3.4% but Shanghai fell -0.1%. The ASX200 was up a minor +0.1% yesterday, but the NZX50 fell hard again, down -0.9%.
The price of gold starts today at US$1841/oz and a mere +US$1 higher.
And oil prices start unchanged at just under US$86.50/bbl in the US, while the international Brent price is now just over US$88.50/bbl.
The Kiwi dollar will open today little-changed at 67.9 USc. But against the Australian dollar we are -½c lower at 93.5 AUc. Against the euro we are holding at 59.9 euro cents. That means our TWI-5 starts the today at 72.2 and despite the Aussie move, little-changed since this time yesterday.
The bitcoin price has moved up today, this time by +3.2% to US$43,285. Volatility over the past 24 hours has again been moderate at +/- 2.3%.
The easiest place to stay up with event risk today is by following our Economic Calendar here ».
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