After China's FDI comes in low, a new push to join the CPTPP emerges; Japan out of deflation trap; Australia confident of financial system; UST 10yr 4.22%; gold holds and oil unchanged; NZ$1 < 60 USc; TWI-5 = 69.3

Here's our summary of key economic events overnight that affect New Zealand, with news Australia thinks its financial system is fit for purpose facing international risks.

But first, incoming China foreign direct investment fell more than -19% in February from a year ago, the largest fall since the GFC and far more than in the early stages of the pandemic. Recent 'legal' changes and the rise of the MSS in the Middle Kingdom is making it too tough to operate there. The trade disengagement underway isn't ending. Only US$14.3 bln arrived as investment in February about half the stunted levels on one and two years ago.

Meanwhile, China is making a concerted effort to qualify for the CPTPP trade group with new 'negative list for cross-border trade in services' management. "We have proactively aligned our policies and legislation with the CPTPP rules in relevant areas and are well-prepared for market access offers in goods trade, trade in services and investment," a spokesperson said overnight.

The recent visits by Chinese foreign minister Wang Yi to both New Zealand and Australia in an unusual 'charm offensive' by the usually prickly Wolf Warrior needs to be seen in the light of this CPTPP push.

In Japan, inflation is finally embedding there. It's been a long slog to get out of delation. Their inflation rate climbed to 2.8% in February from 2.2% in the prior month, the highest figure since last November. It has been over 2% since March 2022.

Across the Pacific, although they eased in January Canadian retail sales rose in February according to an early estimate. But both shifts are minor. Hesitating car sales are behind the lackluster results.

Across the Atlantic, Germany companies are gaining confidence, and rather quicker now. Sentiment for Europe's largest economy reached its highest point since June 2023, fueled by anticipations of potential interest rate cuts by the European Central Bank and a gradual easing of inflationary pressures. But German consumer sentiment remains stick at low levels, generally unchanged since May 2022.

Closer to home, the Australian central bank released its half-yearly Financial Stability Report yesterday (Friday) and it concluded that while conditions will remain challenging for many households and businesses there this year, "strong conditions in the labour market, the large savings buffers accumulated by many borrowers during the pandemic and rising housing prices are helping households to adapt." The Australian financial system has a high level of resilience and is well positioned to continue to support the economy, they say.

The UST 10yr yield started today at 4.22% and down -6 bps from this time yesterday, and -9 bps from a week ago. The key 2-10 yield curve inversion is slightly more at -38 bps. And their 1-5 curve inversion is less at -78 bps. And their 3 mth-10yr curve inversion is more at -117 bps. The Australian 10 year bond yield is now at 4.03% and down -9 bps. The China 10 year bond rate is holding at 2.31%. The NZ Government 10 year bond rate is now at 4.62% and down -4 bps from yesterday and down -13 bps in a week.

Wall Street opened its Friday session essentially unchanged but is heading for a weekly gain of +1.6%. Frankfurt ended its week with a +1.5% weekly rise. Paris was down -0.3% for the week. London was up +2.6% for the week. Tokyo ended its Friday session up +0.2% for a stellar +6.1% weekly rise and just off an all-time high. Hong Kong ended down a sharpish -2.2% on Friday to end their week sown -1.1%. Shanghai ended its Friday down almost -1.0% for a -0.3% weekly dip. Singapore was unchanged yesterday. The ASX200 closed out its final day of the week down -0.2, but up +1.3% for the week. The NZX50 ended yesterday up +0.5% for a weekly rise of +1.7%.

The Fear & Greed index has changed little in a week and is still in the "greed" level, similar ro a week ago and a month ago.

The price of gold will start today firmish by +US$2 from yesterday at US$2159/oz. And that is very little different to week-ago levels.

Oil prices stayed down at just on US$80.50/bbl in the US while the international Brent price is still at US$85/bbl. These levels are also unchanged in a week.

The Kiwi dollar starts today at just under 60 USc and down -½c from yesterday at this time. A week ago it was at 60.9 USc so almost a -1c fall since then. And it is the first time in four months since we have been below 60 USc. Against the Aussie we are little-changed at just under at 92 AUc. Against the euro we are still just on 55.5 euro cents and also little-changed. That all means our TWI-5 starts today at 69.3 and down -30 bps from yesterday and down -60 bps for the week.

The bitcoin price starts today at US$63,588 and down -4.6% from this time yesterday. A week ago this price was US$68,378 so a -7.0% fall since then, Volatility over the past 24 hours has been high at just on +/- 3.2%.

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