US inflation trends lower; Japanese data mixed; India surges; China declines; freight rates stay very high; UST 10yr 4.25%; gold and oil up; NZ$1 = 60.9 USc; TWI-5 = 70.3

Here's our summary of key economic events overnight that affect New Zealand, with news India is the world's bright economic star at the moment.

But first in the US, the actual number of people claiming jobless benefits fell last week, but by less than expected to 194,000. Continuing jobless claims were unchanged at 2.1 mln, still the highest since November. It was a mixed picture. Seasonally these levels are higher than was expected.

American PCE inflation for January came in at the expected 2.4% which was a dip from the December 2.6%. Core PCE dipped slightly too. Personal income jumped an outsized +1.0% in January from December which puts it +2.1% higher than a year ago (real), while personal spending rose +0.3% on the same basis, also +2.1% higher than a year ago (also real).

The Chicago PMI fell again, its third straight fall. But there was a sharp recovery in the Kansas City Fed factory survey although new order growth was flat.

American pending home sales in January dropped -4.9% as the residential sector stays in the doldrums. The Northeast and West posted monthly gains in transactions while the Midwest and South recorded losses. All four U.S. regions registered year-over-year decreases.

Canadian data for Q4-2023 GDP shows them returning to growth.

Japanese industrial production disappointed in January, coming in -1.5% lower than a year ago. Meanwhile, retail sales in Japan rose +2.3% year-on-year in January, slowing slightly from an upwardly revised +2.4% gain in December.

Meanwhile, Taiwanese retail sales grew just +0.3% year-on-year in January, the lowest expansion since February 2022. But Taiwanese industrial production surged in January, up +16% from a year ago.

India released its Q4 GDP results beating both forecasts and the strong Q3 expansion, to be +8.4% larger than the same quarter a year ago. The Indian economic performance is a strong global highlight. It is impressive given how large it is, a famously difficult place to generate change. (But we probably should be a bit sceptical on this data. The Modi Government has a tight control over their stats, and an election is looming. Just saying ...)

But there are never any contested elections in China. China's per capita gross national income declined in US dollar terms for the first time in 29 years in 2023, data released yesterday shows, pulling it further from the World Bank's threshold for a high-income country. The comparison with India will be causing some concern in Beijing now. China's solution to their woes? More state planning and directed SOE activity. They seem a bit lost at the moment.

The -1.4% decline in real German retail sales continued in January. But that seems to be the price they are prepared to pay to get inflation back to where they need it. In February it fell to +2.5%, its lowest since mid 2021. In between it peaked at almost +9%.

In Australia, the January retail sales brought a modest bounce, but not to a level that satisfied anyone.

Container freight rates eased again last week, but remain very high for the usual climate (Panama) and security (Suez) restriction reasons. They are still almost +90% higher than year ago levels. Bulk cargo rates are rising now too, up a sharp +24% in the past week alone.

The UST 10yr yield starts today at 4.25% and down -4 bps from this time yesterday. The key 2-10 yield curve inversion is little-changed at -39 bps. but their 1-5 curve inversion is deeper at -76 bps. And their 3 mth-10yr curve inversion also deeper at -116 bps. The Australian 10 year bond yield is now at 4.14% and down -3 bps. The China 10 year bond rate is now 2.37%, and a new all-time low. The NZ Government 10 year bond rate is down a mere -1 bp at 4.81%.

Wall Street has started its Thursday session up +0.3% on the S&P500, and back near its record high. Overnight, European markets were mixed; Paris was down -0.1%, Frankfurt up +0.6% and the others in between. Yesterday Tokyo ended its Thursday session little-changed but Hong Kong fell -0.2% with a late dip and Shanghai recovered +1.9% with a late afternoon surge. Singapore ended little-changed. Meanwhile the ASX200 was up +0.5 but the NZX50 ended its Thursday trade down -0.2%.

The price of gold will start today up +US$13/oz from yesterday at US$2045/oz.

Oil prices are up +US$1 at just under US$79/bbl in the US while the international Brent price is now just over US$82.50/bbl.

The Kiwi dollar starts today at just on 60.9 USc and little-changed from this time yesterday. Against the Aussie we are down marginally at 93.7 AUc. Against the euro we have firmed slightly to 56.4 euro cents. That all means our TWI-5 starts today at just over 70.3 and little-changed

The bitcoin price starts today at US$62,275 and up +0.82% from this time yesterday. Volatility over the past 24 hours has been high at +/- 3.9%.

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