Here's our summary of key economic events overnight that affect New Zealand, with news global trade seems to be less of a driving feature of the international economy even if it remains important and there are plenty of shifts. And despite that, the NZD is rising.
But first up today, US mortgage applications bounced back last week after the prior week's large -7.2% fall, to rise +3.7% year-on-year. And that was even though mortgage interest rates were virtually unchanged.
Also rising strongly was the US logistics managers index (LMI), driven by freight rates. It been almost two years since the rising cost of freight has been a factor in this monitoring.
Meanwhile, as expected US exports rose a bit more than imports but their overall trade deficit (goods & services) was little-changed in December. But for the whole of 2023 the deficit was the lowest in three years at 2.7% of GDP. (That is down from -3.0% in 2020.) The 2023 deficit with China shrank to the smallest total since 2010 while trade gaps hit records with Mexico, the EU, South Korea, Taiwan, and India. In fact the US imports more from Mexico now than China. Logistics are easier and safer too.
China's foreign exchange reserves slipped in January to just over US$3.2 tln, but the slip was less than expected.
Although they were up year-on-year, Chinese January vehicle sales fell more than expected from December, especially NEVs which were down almost -39% in the month. The recent economic travails are biting car demand quite hard now in China. Having said that they are running at a 24 mln pa pace, and still easily the world's largest car market.
We should perhaps note that the price of lithium, cobalt and nickel are now all at multi-year lows.
Meanwhile, Beijing is replacing some senior officials in its struggle to control the economic gloom enveloping parts of their economy. But still no word yet of the expected big stimulus.
In Europe, German industrial production fell in December from November to be a full -3.0% lower than year ago levels on a volume (real) basis. The December retreat was its seventh straight month of falls.
And staying in Europe, ex-coal company and now renewables giant Ørsted, the world's largest offshore wind farm developer, has cut 800 jobs, lowered renewable development targets and suspended a dividend after a difficult year of trading. It will also withdraw from the Norwegian, Spanish and Portuguese markets and its chair is to stand down after a decade in the role. Its transition has not gone well.
The UST 10yr yield starts today at 4.11% and up +2 bps from yesterday. The key 2-10 yield curve inversion is lower at -28 bps. Their 1-5 curve inversion is unchanged at -78 bps. And their 3 mth-10yr curve inversion is also essentially unchanged at -127 bps. The Australian 10 year bond yield is now at 4.13% and up another+2 bps from yesterday. The China 10 year bond rate is down -2 bps at 2.45% but still off its lows. The NZ Government 10 year bond rate is up +9 bps at 4.82% and reflecting market nerves that an OCR rise is possible.
Wall Street is in its Wednesday trade and up +0.7% from yesterday to new record highs. Overnight European markets all closed lower by about -0.7%. Yesterday Tokyo ended its Wednesday session down -0.1%. Hong Kong fell -0.3%. But Shanghai rose +1.4% on local stimulus talk. Singapore was up +1.0% yesterday. And the ASX200 rose +0.5% while the NZX50 rose +0.2%.
The price of gold will start today up +US$2/oz from Monday at just on US$2039/oz.
However oil prices are little-changed at just over US$73.50/bbl in the US while the international Brent price is now just over US$78.50/bbl.
The Kiwi dollar starts today at just on 61.1 USc and up a bit less than +½c from this time yesterday. Against the Aussie we are up nearly +½c too at 93.7 AUc. Against the euro we open at 56.7 euro cents and almost a +¼c gain. That all means our TWI-5 starts today at just on 70.4 and up +40 bps from yesterday at this time.
The bitcoin price starts today at US$43,161 and essentially unchanged from this time yesterday. Volatility over the past 24 hours has been low at just on +/- 0.6%.
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