Doubts about US leading index signals; Canadian PPI eases; Singapore's exports shrink; German PPI still high; commodity prices weaker; UST 10yr 3.83%; gold unchanged and oil lower; NZ$1 = 62.4 USc; TWI-5 = 70.2

Here's our summary of key economic events overnight that affect New Zealand, with news equity prices are falling and bond yields are rising today as markets back-track and accept that the US Fed will hike again on March 23 (NZT), and by +50 bps. Commodity prices are weakening.

But first we should note that the US is heading into another long holiday weekend, for Presidents Day on Monday. We won't see them again until Wednesday, our time.

Today in the US, the Conference Board leading economic index (LEI) fell again in January but not as much as it did in December. Deteriorating were new factory orders, consumers’ expectations of business conditions, and credit conditions, and they more than offset strengths in their labour markets. But equity prices rose +6.2% in the month (S&P500). The contribution of the yield spread component of the LEI also turned negative in the last two months, which is often a signal of recession to come. While the LEI continues to signal recession in the near term, indicators related to the labour market, including employment and personal income, remain strong so far, throwing doubt into the recession scenario this time.

And trucking companies say their retailer customers expect to resume restocking after their summer break after winding down inventories over recent months. Business inventories have been rising relative to sales, but not to excessive levels. Retailers however see their destocking efforts ending mid-year, so a rebuild is on for the latter half of the year. If it pans out like that, it will have been a soft landing - and no recession.

The rise in Canadian producer prices eased off in January, up +5.4% from a year ago and well back on the +7.7% riser in December. The shift from December to January however still has them rising at an annualised +5% rate which was higher than many expected. Most expected a decline.

Singapore's exports fell an eye-watering -25% in January from a year ago in an indication of how much Asian trade is suffering. Still, they rose slightly from December, so perhaps the worst is passed.

Germany is getting no relief yet from producer price hikes even if they have been falling consistently since August. They are up +17% from year-ago levels to January, but from December they fell although not by quite as much as expected. They seem on the right track however, just not fast enough for them.

UK retail sales were weak again, down -5.1% on a volume basis. French CPI inflation is stuck at +6.0% by their count, +7% (harmonised).

Globally, there is widespread weakness in commodity prices. We can observe big falls in natural gas and crude oil (see below). Precious metals are also weak, especially palladium. Coal prices are now also suddenly lower, now below year-ago levels. The wind has gone out of the recent rise in the aluminium price as well. Nickel, tin, lead and zinc have all also seen recent pullbacks. The exception maybe is the copper price, although that isn't exactly a shining light.

We should also note that the NZ carbon price has fallen to $70/NZU, and its lowest since December 2021. And this is in sharp contrast top the benchmark EU carbon price that has risen to a record high €100/tonne (NZ$171/tonne). This is the largest difference between these two prices ever.

The UST 10yr yield starts today at 3.83% and little-changed from yesterday. But it is up +10 bps for the week. The UST 2-10 rate curve is little-changed at -79 bps. But their 1-5 curve inversion is a little more inverted at -96 bps. Their 30 day-10yr curve is also little-changed at -76 bps. The Australian ten year bond is up +2 bps at 3.79%. The China Govt ten year bond is little-changed at 2.91%. The New Zealand Govt ten year is starting today at 4.41% and up +2 bps from yesterday. A week ago it was at 4.22%, so little-changed.

Wall Street has started its Friday session with the S&P500 down -0.5% near the close and heading for a -0.7% weekly loss. Overnight, European markets were all lower by between -0.1% and -0.3%. Paris recorded the strongest weekly gain of +2.8%, while Frankfurt the weakest at +1.0%. Yesterday Tokyo finished down -0.7% for a weekly dip of -0.1%. Hong Kong ended down -1.3% and a weekly retreat of -0.9%. Shanghai ended its Friday session down -0.8% for a full -1.0% weekly fall. The ASX200 ended down -0.9% and a -1.2% weekly loss. And the NZX50 ended dipping just -0.1% and a -0.3% weekly slip.

The price of gold will open today at US$1841/oz and unchanged from this time yesterday. But that is down -US$22 for the week.

And oil prices start today down -US$3 at just over US$76/bbl in the US. The international Brent price is now just over US$82.50/bbl. That is a -US$4 fall for the week.

The Kiwi dollar is at just over 62.4 USc and down nearly -½c in a day. A week ago it was at 63.1 USc. Against the Australian dollar we are softish again at 90.9 AUc. Against the euro we are also soft at 58.4 euro cents. That all means our TWI-5 starts today back at 70.2 and -30 bps lower. For the week we also just -30 bps lower.

The bitcoin price is now at US$24,409 and back -2.2%% from this time yesterday. It did get as high as US$25,018 but retreated sharply to US$23,383 immediately after. Recall, it was at US$21,698 a week ago so it is up +12.5% since then. Volatility over the past 24 hours has been high at +/- 3.5%.

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