Here's our summary of key economic events overnight that affect New Zealand, with news of more signals that the world's major economies may be in for a stuttering phase.
First, we are starting to see some labour market slowdown signals in the US.
Initial jobless claims rose to +238,000 last week, a bigger rise than was expected. There are now just under 2 mln people on these benefits, the highest level in more than a year.
February layoffs rose to 77,770, more than five times higher than the 15,245 job cuts announced a year earlier. So far this year, that takes the total to over 180,000, the highest since 2009. Tech pullbacks accounted for more than a third of these. But the bigger perspective is that this is still tiny in relation to the total 156 mln labour market.
These two metrics are leading indicators, but the real data comes tomorrow in their non-farm payrolls report, which is expected to show payrolls expanding a modest +205,000. However, over the past year or so this data has rarely done 'modest'. Its strength has confounded labour market analysts, and the Fed.
The American economy started the new year strongly according to the Fed's Beige Book survey. It noted steady consumer spending and stabile factory activity. But the forward sentiment is less positive, matching what the wider community expects. It is just that those predictions of a slowdown never seem to materialise. They will at some point of course (the stopped-clock effect), but it is approaching two years since the "slowdown is coming" mantra started.
Opening-up demand in China is not generating consumer inflation. Their CPI fell to 1.0% in February from 2.1% in January. Market analysts had expected February to come in at 1.9%. The actual result was the lowest since February 2022, and was due to a sharp slowdown in price rises for both food and even more so for non-food categories. The January to February rate deflated at a -6% annualised rate. Milk prices rose; beef and lamb prices fell. To be fair, the easing of food prices comes as the Chinese New Year period passes. But that can't hide weaker demand overall.
Corporate China isn't optimistic that policy measures will fix that weak consumer demand any time soon.
Separately, China said producer prices deflated at a -1.4% year-on-year rate in February although there was no change between January and February.
Japanese machine tool orders were expected to rise in February from January and break a long-running decline. But they didn't. In fact they fell -10.7% from year ago levels, a quickening pace of retreat. They were down almost -4% in a month.
Shipping freight rates for containers are still falling, down another -3% last week, dominated by falls in rates out of China. But we are starting to see rates rise in a minor way for cargoes to China. Trans-Atlantic rates are rising now too, even if it is minor. Bulk cargo rates are still rising and in fact are back to their highs for the year.
And it is probably worth noting that wheat prices are falling faster now, well past the stress we saw in mid 2022. They are now back to levels we had at the end of 2020.
The UST 10yr yield starts today at 3.93% and a net -6 bps softer from yesterday. The UST 2-10 rate curve is less inverted at -101 bps. Their 1-5 curve inversion is little changed at -92 bps. Their 30 day-10yr curve is actually less inverted at -67 bps. The Australian ten year bond is up +5 bps at 3.71%. The China Govt ten year bond is unchanged at 2.91%. And the New Zealand Govt ten year is starting today at 4.59% and down -8 bps from this time yesterday.
On Wall Street, the S&P500 is ending its Thursday session down -0.3% in late trade. Overnight, European markets were little-changed except in London where they ended down -0.6%. Yesterday Tokyo ended its session up +0.6%. Hong Kong fell another -0.6%. And Shanghai fell a minor -0.2%. The ASX200 ended its Thursday session up +0.1%, while the NZX50 fell -0.3%.
The price of gold will open today at US$1826/oz and up +US$9 from yesterday.
And oil prices start today +50 USc firmer at just over US$77/bbl in the US. The international Brent price is up to just over US$82.50/bbl. But they have been volatile in between.
The Kiwi dollar is marginally firmer, now at 61.3 USc. Against the Aussie we are up a little at 92.7 AUc. Against the euro we are little-changed at 58 euro cents. That leaves the TWI-5 little-changed at 70.1.
The bitcoin price has fallen from this time yesterday, now at US$21,492 and down -2.9%. However, volatility over the past 24 hours has been remained modest at +/-1.7%.
The easiest place to stay up with event risk today is by following our Economic Calendar here ».
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