US mortgage rates hit 3yr high; US labour market expands again; Ontario raises foreign buyer tax; EU braces for Russian gas threats; UST 10yr 2.35%; gold and oil up; NZ$1 = 69.8 USc; TWI-5 = 74.8

Here's our summary of key economic events overnight that affect New Zealand with news Russia and Germany are in a standoff over energy supplies and financial markets are reassessing their recent optimism.

But first, there was another fall in American mortgage applications last week, again coinciding with sharpish rises in mortgage interest rates. The industry association reports they hit 4.8%, although the metric we watch has them up to 4.4% which is a three year high.

We also get the US labour market reports for March on Saturday (NZT) and analysts expect another good rise of +490,000 in March. Today the pre-cursor ADP Employment Report came in with a +475,000 rise, almost exactly as expected. It's a labour market that is expanding with a very low jobless rate, and very tight for employers. The expansion is very broad-based.

The final reading for the Q4-2021 American economic activity (GDP) came in with a +6.9% expansion, a slight dip from earlier estimates but similar to the original advance estimate. It was another strong result, making it three of the four 2021 quarters with outsized expansions. This one was driven by a recovering services sector. Of course, all eyes are turning to the likely Q1-2022 result and estimates range from +0.9% to +2.7%, much lower because the base is more normal. But with a forecast range like that, there is little consensus.

In Ontario Canada, they are increasing their foreign buyer tax on real estate purchases, and broadening the definition of how it applies. The tax, already 15%, is rising to 20%.

In Japan, retail sales slipped in February, the first year-on-year decline in five months and the third over the past year.

EU business sentiment slipped in March but not by as much as you might has assumed, and certainly nothing like the sharp fall in consumer sentiment.

And German inflation rose to 7.3% in March, a full percentage point higher than expected. It was up +2.5% from February, so it is accelerating. On an EU harmonised basis it was up to 7.6%. For them, it is all about the cost of fossil fuels from Russia and the insecurity of relying on that source. They will come out of this crisis far less reliant on Russian energy. In the meantime, both Germany and Austria are getting ready for gas rationing, rather than buy from Russia.

In Australia, assessments of the assumptions their Government used for it budget forecasts are increasingly unfriendly, although main bank analysts are generally supportive.

The UST 10yr yield opens today at 2.35% and down a further -4 bps from this time yesterday. The UST 2-10 rate curve starts today flat at just +3 bps and still avoiding inversion. Their 1-5 curve is however a little flatter at +79 bps. Their 30 day-10yr curve is unchanged at +221 bps. The Australian ten year bond is down -3 bps at 2.82%. The China Govt ten year bond is unchanged again at 2.82%. And the New Zealand Govt ten year is down by -5 bps at just on 3.30%.

On Wall Street, the S&P500 has opened down -0.4% in Wednesday afternoon trade. In Europe, their equity markets were sharply lower, led by Frankfurt's -1.5% reset after yesterday's spectacular rise. London, which didn't catch any of yesterday's huge run up, rose +0.5%. Yesterday Tokyo ended down -0.8% which Hong Kong was up another +1.4% and Shanghai rose almost +2.0%. The ASX200 ended its Wednesday session up another +0.7% but the NZX50 managed a chunky if unusual gain of +1.5%.

The price of gold starts today at US$1932/oz and up +US$17/oz from this time yesterday.

And oil prices are up +US$ to just on US$106/bbl in the US. And the international Brent price is now up at US$110/bbl.

The Kiwi dollar will open +½c firmer from this time yesterday at 69.8 USc and a four month high. Against the Australian dollar we are up the same at 92.9 AUc. Against the euro we are just a little firmer at 62.5 euro cents. That all means our TWI-5 starts today at just under 74.8.

The bitcoin price is essentially unchanged from this time yesterday at US$47,457 - or the day before. Volatility over the past 24 hours has been modest at +/- 1.4%.

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