US consumer sentiment dips; Canada jobs market roars; Japanese households out spending again; China jobs imbalance in focus; Lowe changes his tune; UST 10yr 2.00%; gold and oil lower; NZ$1 = 68.2 USc; TWI-5 = 73.6

Here's our summary of key economic events overnight with news of miscalculations and unintended consequences everywhere as extreme actions cause extreme reactions.

In the US economic sentiment is sinking. The latest University of Michigan consumer sentiment survey fell to its lowest level since November 2011, as inflation expectations rose sharply, of course due to the surge in fuel prices caused by the Russian invasion of Ukraine. Both the 'current economic conditions' index and the 'expectations' gauge fell. The year-ahead expected inflation rate was 5.4% and its highest level since 1981 as expected petrol prices posted their largest monthly upward rise in decades.

In Canada their labour market is expanding fast again, mainly for part-time jobs (+215,000 in February), but even without that, the full-time jobs gain (+122,000) alone would have been good enough to call this an overall positive result, far better than was expected and far more than making up for past weaknesses. It was their best result outside the 2020 pandemic recovery. But despite these gains, their jobless rate is still a high 5.5% (although down sharply from 6.5% in January).

Japan might be rising from its national funk in 2020/2021. Household spending there increased by +6.9% in real terms from the prior year in January, easily beating market forecasts of +3.6% and reversing from a -0.2% fall a month earlier. This was the first rise in personal spending since last July and the strongest pace in eight months, as consumption recovered following soaring vaccinations.

In China, their jobs imbalance is an issue at the highest levels in Beijing. In 2022 16 mln "urban job seekers" will enter their labour force. But Government plans will only accommodate "11 mln to 13 mln urban jobs in 2022". Premier Li Keqiang revealed the imbalance today, and at the same time announcing that he was stepping down (but this item is not suggesting the two issues are related at all). There is still no word on the expected crowning of Xi Jinping as President for life at the current party congress.

And staying in China, vehicle sales surged almost +19% year-on-year to 1.74 mln units in February. That was a sharp improvement from the lackluster January result. Sales of passenger cars rose almost +28% year-on-year to 1.49 mln units.

India is continuing its tradition of underperformance with industrial production rising but well below expectations. India is consumed by their culture wars at present, and governance competence isn't on the minds of voters who have been going to the polls there and delivering strong results for the extremist Hindu nationalist party who currently hold power. 'Miscalculations' on their border with Pakistan are another potential flash-point. They have issues on their eastern border too.

Commodity prices are remaining extremely high, even if they haven't risen further at the end of this week. Nickel still isn't trading again on the LME, a market embarrassment for the exchange operator, and for Beijing who are now weighing 'rescuing' the Chinese billionaire whose short bet has wrecked the market for nickel. Also shut for the foreseeable future the the Moscow stock exchange with authorities there not willing to have losses crystalised in on-market pricing.

Sky-high commodity prices are having other downstream impacts. Insurers in the US are seeing sharp increases in thefts of catalytic converters from cars (exhaust systems) in the hunt for valuable platinum, rhodium and palladium.

The cost of shipping containers by sea slipped again last week, now at its lowest overall level for 2022 even if that isn't much of a standard. Outbound freight rates from China are still the main pressure points.

In Southern California, its backlog of ships waiting to unload containers is easing, and quite quickly now. It is down to 50, a sharp reduction from the peak of 109 at the start of 2022.

Bulk cargo freight rates moved back up again this week, and are now at their highest level of 2022.

In Australia, their new home building sector is under pressure. Their peak industry body said new home sales fell by -7.0% in February following an -8.3% drop in January. But the recent NSW and Queensland floods seem to have destroyed about 5000 houses, and that rebuilding will take years as insurers work through the mess. It won't be a quick salve for the existing home building industry.

And RBA Governor Lowe now says it would be 'prudent' to plan for interest rate increases there, reversing his 'lets be patient' stance. Financial markets are way ahead of him, already pricing in five rate hikes in 2022 as sky-high commodity prices change the inflation landscape.

The UST 10yr yield opens today at 2.00% and down -1 bp from this time yesterday and barely holding the 2% level. The UST 2-10 rate curve starts today flatter at +23 bps. Their 1-5 curve is flatter too at +75 bps and their 30 day-10yr curve is much flatter at +176 bps. The Australian ten year bond is down -6 bps at 2.35%. The China Govt ten year bond is down -5 bps at 2.83%. But the New Zealand Govt ten year is up +4 bps at just under 3.00%.

In New York, the S&P500 started its Friday trade on Wall Street with a gain, but that has withered away and in afternoon trade it is -0.4% lower. It is heading for a weekly loss of -2.0% which in the circumstances seems like a holding-on. Overnight European markets generally rallied by about +1.0%; Paris was up +0.9% for a weekly gain of +6.4%. Frankfurt gained +1.4% on Friday for a weekly rise of +8.0%. London was up +0.8% in its Friday session to be up a more modest +2.4% for the week. Yesterday, Tokyo dropped -2.0% to end its week -1.8% lower. Hong Kong was -1.6% lower on the day and -3.5% lower for the week. Shanghai was up +0.4% yesterday but down -3.8% for the week. The ASX200 ended its Friday session down -0.9% to be -0.7% lower for the week. The NZX50 also ended down -0.9% yesterday and down -2.6% over the whole week.

The price of gold starts today at US$1990/oz and down another -US$7/oz from this time yesterday. But it is up +US$28 in a week.

And oil prices are +US$1/bbl firmer today. In the US they are now just under US$107/bbl. The international price is just over US$110/bbl. A week ago these two benchmark prices were US$110/bbl and US$113.50/bbl, so only a marginal softening in the face of the war.

The Kiwi dollar will open today -40 bps softer at just under 68.2 USc. That is a similar fall for the week. Against the Australian dollar we are now at 93.3 AUc which is a marginal softening since yesterday by a marginal firming for the week. Against the euro we firmish at 62.4 euro cents. That all means our TWI-5 starts today at just on 73.6 and little-changed from either yesterday or this time last week.

The bitcoin price is little-changed today, down -0.8% from this time yesterday to US$38,667. This time last week it was at US$40,871 so a moderate fall since then too, down -5.4%. Yesterday's relief rally didn't last long. Volatility over the past 24 hours has been moderate at +/- 2.6%.

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