Here's our summary of key economic events overnight with news the Omicron impact on the soon-to-be released US non farm payrolls report is scaring the bejesus out of the wider global financial markets. Risk is 'off' until the dust settles on this data when it is released tomorrow.
US jobless claims came in without any special jobs effect however. Last week there were 257,000 initial claims and slightly lower than expected. The total number of people on these claims went up slightly however to 2.04 mln, which means fewer came off these registers. Still, the overall level remains lower than pre-pandemic.
The Challenger job cuts data for January remained very low too, also not playing into the non-farm payroll fears either. They say most of those losing their jobs are anti-vax or anti-mandate workers, even if the numbers are actually tiny.
The US service sector PMI slipped, but not by as much as you might expect, and not by as much as analysts had expected. New order levels held up, price pressures eased somewhat, but the employment subcategory isn't expanding as fast as previously. Despite the overall small pullback, the extended expansion remains historically strong.
We also got US factory order data, but that was for the prior month, December. It reported a -0.4% slip from a strong November although these order levels are almost +15% higher than the same month a year ago.
A Canadian banking regulator is warning that some house prices there could fall as much as -20% after their current speculative bubble bursts.
China is buying a fight with India. At its Olympic torch ceremonies, it has politicised them with ceremonies honouring those who died recently in their border clash. India isn't impressed.
South Korea's factory expansion improved in January, although it remains modest. Japan's factory sector contracted slightly. And India's factory sector expanded slower in January.
In Europe, both the European Central Bank and the Bank of England met market expectations with their policy reviews overnight with the BofE raising rates +25bps to 0.50% (a back-to-back increase) and the ECB keeping policy unchanged. However, both meetings unveiled substantial hawkish shifts. The British are reducing their money printing, and the ECB is saying "the situation has changed", setting up conditions for tapering there soon too.
One reason is that producer price inflation isn't easing in the EU. The latest data for January shows it rising to an eye-watering +26% from a year ago, up +2.9% from the prior month and an acceleration from +1.9% in November from October. Yes, the situation is changing, and fast. Energy costs are driving the spectacular rises, but all the non-energy sub-indexes are up way above target too. British PPI is up sharply too, by +9.3% in a year led by a +68% rise in energy costs on the same basis.
In Turkey, their inflation rate has risen to an eye-popping +48% from January a year ago. In January 2021 it was +15% and the local were worried then
In the world of sea shipping, container rates slipped marginally last week, mainly because rates out of China fell. But bulk cargo rates fell too, for the same reason - demand out of China is down.
In NSW, there has been a drop to 12,632 new community cases reported yesterday, now with 110,892 active locally-acquired cases, but a rise to 38 daily deaths. There are now 2,578 in hospital there, off their high. In Victoria they reported 12,157 more new infections yesterday. There are now 66,648 active cases in that state - and there were 34 more deaths there. Queensland is reporting 8,648 new cases and 9 more deaths. In South Australia, new cases have slipped to 1583 yesterday and one death. The ACT has 529 new cases, and Tasmania 656 new cases and 1 death. Overall in Australia, about 37,200 new cases were reported yesterday.
The UST 10yr yield opens today at 1.83% and up +8 bps. The UST 2-10 rate curve starts today a little steeper at +63 bps. Their 1-5 curve is steeper at +89 bps, while their 3m-10 year curve is much steeper at +180 bps. The Australian Govt ten year benchmark rate is up +4 bps at 1.91%. The China Govt ten year bond is unchanged at 2.72%. The New Zealand Govt ten year is another -6 bps lower at 2.52%.
On Wall Street, the S&P500 is down -1.7% to start their Thursday trading. The NASDAQ index fell sharply, mainly because Facebook shares are being dumped. But bucking the anti-tech trend was Google who delivered stellar results. Overnight, European markets were all down by about -1.5% although not as steep in London London. Yesterday, Tokyo lost -1.0%. Hong Kong and Shanghai are closed for their week-long holiday. Yesterday the ASX200 fell a minor -0.1% while the NZX50 rose another +0.4%.
The price of gold starts today at US$1806 and down -US$3 from this time yesterday.
And oil prices start today up by nearly +US$1 from yesterday at just under US$88/bbl in the US, while the international Brent price is now just over US$89.50/bbl.
The Kiwi dollar will open today little-changed at 66.3 USc. Against the Australian dollar we are also little-changed at our lower level at 93 AUc. Against the euro we are marginally firmer at 58.7 euro cents. That means our TWI-5 starts today at 70.9 and a small net rise.
The bitcoin price is down -1.3% since this time yesterday and now at US$36,824. Volatility over the past 24 hours has been modest at +/- 1.9%.
The easiest place to stay up with event risk today is by following our Economic Calendar here ».
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