Here's our summary of key economic events overnight that affect New Zealand with news that despite lingering recession worries, there are a set of 'comeback' moves on today. Equities are rising, bond yields are firm, currencies are strengthening and some data is expanding. All this gives a comeback vibe, even if none of them are completely convincing on their own.
First in the US, the National Activity Index compiled by the Chicago Fed delivered a rise from sales, orders and jobs, and the gains were from personal consumption and housing. But these April gains were the sixth in the past seven months, so they have now established a rising trend.
And the US Fed has been surveying households and has found most of them are pretty happy with their financial status. Self-reported financial well-being reached its highest level since the series began in 2013. In Q4-2021, almost 80% of adults reported either doing okay or living comfortably financially. Financial well-being also increased among all the racial and ethnic groups measured in the survey, with a particularly large increase among Hispanic adults. Parents were one group who reported large gains in financial well-being with three quarters saying they were doing at least okay financially, up +8 percentage points from 2020. These are results that challenge the accepted narrative that "most people are struggling". It seems that most American are not.
Singapore reported its April inflation data late yesterday and it was highish but not excessive, coming in at 5.4% and unchanged from March.
Hong Kong inflation was even tamer, reporting just +1.3% annualised inflation when 1.9% was expected.
And Taiwanese April inflation came in at 3.4% with a small rise from March. Taiwan also said its April industrial production was up 7.3% and a gain that well exceeded its March result. Retail sales were up +4.7% and a growth rate slightly lower than for March.
In China, more analysts are accepting that their Q2-2022 economic activity will be lower than in Q1. And that seems to include officials in Beijing who have announced new tax cuts and increased rebates, postponed social security payments and loan repayments, and they have rolled out new "investment projects" to support their economy. They say "the downward pressure on the economy continues to increase and it’s very difficult for many market entities". These measures are said to be worth more than NZ$32 bln in this round of stimulus. Recall, they have also recently cut their loan prime rate that underpins mortgages.
And this latest set of economic rescue measures seems to be being driven by Premier Li rather than President Xi.
Meanwhile, the US has assembled 13 countries to be part of its Indo-Pacific Economic Framework (IPEF) free-trade group, its follow-up to the Trump-rejected CPTPP (which includes neither China nor the US nor India), and its answer to the China-sponsored RCEP. New Zealand is 'in' the IPEF, as it is with the other two trade sets as well. India is part of the IPEF, but not the other two. The IPEF will encompass 40% of global GDP. The RCEP encompasses 30%, and the CPTPP covers about 14% - at least until China and Taiwan are accepted.
And there was positive news out of Germany. Their Ifo Business Climate indicator rose unexpectedly to a 3-month high in May and April's reading was revised up. Views of both current conditions and future expectations improved. There are no signs of a recession at the moment in Germany, Europe's largest economy, though demand for industrial products has waned significantly and supply issues persist in industry and retail, according to the surveyers.
And the head of the ECB confirmed it is likely to increase its key interest rate, currently negative, to zero by September and could continue raising rates after that. It is doing this because underlying economic conditions are improving.
The UST 10yr yield will start today at 2.85% and up +6 bps. The UST 2-10 rate curve has steepened a bit at +22 bps and their 1-5 curve is steeper at +80 bps. Their 30 day-10yr curve is a lot steeper at +232 bps. The Australian ten year bond is now at 3.32% and up +8 bps. The China Govt ten year bond is little-changed at 2.82%. And the New Zealand Govt ten year is also up at 3.52%, a rise of +3 bps.
Wall Street has shaken off last week's wobbles, temporarily at least, and the S&P500 is up +1.7% in late Monday trade today. Overnight, European markets were up a similar or slightly lesser amount. Yesterday, Tokyo was up +1.0%, but Hong Kong fell -1.2%. Shanghai closed flat.. The ASX200 ended its Monday session also flat with early gains fading, while the NZX50 rose +0.4% on the day.
The price of gold is a little firmer today, up +US$5 since this time yesterday at US$1852/oz.
And oil prices are marginally softer today and now just under US$109.50/bbl in the US, while the international Brent price is still just over US$110.50/bbl.
The Kiwi dollar will open today back up another +½c against the US dollar, now at 64.6 USc. Against the Australian dollar we are little-changed at 91 AUc. Against the euro we are softish at 60.5 euro cents. That all means our TWI-5 starts today at 71.5 which is up +20 bps from this time yesterday.
The bitcoin price has risen a mere 0.7% from this time yesterday and is now at US$30,131. Volatility over the past 24 hours has been moderate at +/- 2.7%.
The easiest place to stay up with event risk today is by following our Economic Calendar here ».