US mortgage rates fall; China rescuing Vanke; China blocks crop reporting; EU industrial production tanks; the Aussie PWC purge widens; UST 10yr 4.19%; gold and oil up; NZ$1 = 61.6 USc; TWI-5 = 70.3

Here's our summary of key economic events overnight that affect New Zealand, with news China's inward turn is gathering pace as it fears foreign influence.

But first, US mortgage applications rose strongly last week from the week before, up more than +6%. and that was because mortgage interest rates fell rather sharply, down nearly -20 bps in a week to go under 7% for the benchmark 30 year home loan rate for the first time in a month. Still, mortgage applications are running -11% lower than year-ago levels - and they were very weak then too.

Today's US Treasury 30yr bond auction was well supported and delivered slightly lower yields than the equivalent auction a month ago, but only fractionally lower. Today's event delivered a median yield of 4.28% whereas the month-ago result was 4.31%.

In China, a Beijing-directed rescue of property giant China Vanke is apparently underway. We should all hope it works. But even if it does it will take a tough toll on the Chinese economy, Shenzhen in particular.

And more developers there are falling.

The downstream impacts are also pretty significant. Excavator sales are down -40% from year ago levels, as an example.

China's Ministry of State Security (MSS) is now increasingly focused on "food security". They are banning foreigners travelling the countryside. The MSS says “In recent years, national security agencies have cracked down various espionage activities related to food security, cutting off the "black hands" of foreign espionage targeting China's germplasm resources, preventing and addressing the risks of food security leaks, and ensuring the smooth implementation of the national food security strategy”. That will put paid to the normal global method of sending analysts into the field to assess upcoming grain and crop harvest (something necessary because satellite photos can't yet assess yield prospects - you need to be in the field.) Without that sort of crop intelligence from a major producer (China), global seasonal food planning is going to be far less accurate.

EU industrial production plunged -2.1% in January from December, marking a stark reversal from the downwardly revised -1.6% retreat recorded in December and faring much worse than market projections of a -1.5% decline. It was the sharpest contraction in activity since March 2023. Worse, it is now down -5.7% in a year. Anywhere that would be a lot. In an economic bloc as large as the EU, that is enormous. In fact, Ireland recorded an eye-popping -34% decline.

Media reports say that PwC Australia is cutting another 5% of its staff and partners, a culling of more than -300 jobs as a result of the tax scandal that engulfed the firm in early 2023. The job cuts come on top of 338 announced in November. And after they hived off its advisory business. About 1,400 PwC Australia staff moved over to the new firm which was renamed Scyne Advisory.

And staying in Australia, prudential regulator APRA has cleared NAB (BNZ's parent) of having to hold extra capital due to inadequate governance issues. But is is strangely silent on both Westpac and ANZ who are also facing this capital penalty. CBA (ASB's parent) was never on the APRA radar.

China has proposed easing the punitive tariffs on Australian wine, imposed as part of their displeasure at the Morrison government's foreign policies. But that pullback does not apply to Australian beef - not yet anyway.

The UST 10yr yield starts today at 4.19% and up +3 bps from this time yesterday. The key 2-10 yield curve inversion is unchanged at -43 bps. But their 1-5 curve inversion is also unchanged at -86 bps. And their 3 mth-10yr curve inversion is still at -121 bps. The Australian 10 year bond yield is now at 4.06% and up +6 bps from yesterday. The China 10 year bond rate is -1 bp lower at 2.35%. The NZ Government 10 year bond rate is up +6 bps at 4.71%.

Wall Street has started its Wednesday session with the S&P500 shrugging off earlier losses to move into positive territory. Overnight European markets closed between Paris's +0.6% rise and Frankfurt's no-change. Yesterday Tokyo ended its Wednesday session down -0.3%. Hong Kong slipped a minor -0.1% on the day. Shanghai shed another -0.4%. Singapore ended up +0.6%. The ASX200 ended up +0.2% but the NZX50 was down another -0.2%.

The price of gold will start today +US$8 firmer than yesterday at US$2173/oz.

Oil prices have risen +US$1.50 to just under US$79.50/bbl in the US while the international Brent price is now just over US$83.50/bbl.

The Kiwi dollar starts today at just on 61.6 USc and marginally firmer than this time yesterday. Against the Aussie we are soft at 93 AUc. Against the euro we are holding at 56.3 euro cents. That all means our TWI-5 starts today at just on 70.3 and unchanged from yesterday.

The bitcoin price starts today at US$73,189 and up +3.7% from this time yesterday. Volatility over the past 24 hours has been high at just under +/- 3.5%.

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