US Fed happy to wait for more inflation retreats; US sentiment rises; China's property crash pressures banks; India educated jobless extreme; UST 10yr 4.21%; gold at new record high and oil up; NZ$1 = 59.8 USc; TWI-5 = 69.1

Here's our summary of key economic events over the past two days that affect New Zealand, with news some key 'risk' commodity prices are rising while our currency is softer.

In the US, Fed Chair Powell said that PCE inflation data for February was along the lines of what the Fed wants to see and broadly expected. However, the latest readings aren’t as good as what policymakers saw last year and the Fed can wait to become more confident before cutting interest rates. In fact, he said policymakers don't need to be in a hurry to reduce borrowing costs. The Fed's base case is for inflation to come down but if the base case doesn't happen the Fed would hold rates where they are for longer, he said.

He was responding to PCE inflation data for February which rose +2.5% and that was following a January 2.4% rate and a December 2.6% rate. Core PCE inflation rose 2.8% after being 2.9% in the prior two months. Powell and his colleagues won't be unhappy with these levels but they aren't seeing downward progress either.

Meanwhile American personal incomes were +1.7% higher than a year ago and personal consumption is +2.4% higher on the same basis. This is the first time income growth trailed spending growth in a long time. It is too soon to know whether this is a turning point, or just a data blip.

However US Q4-2023 economic activity came in +3.4% higher (real) in their third and final 'estimate'. This was better than the prior estimates an means the US economy is running at an annual rate of US$28 tln, nominal, and of course a new record high. With IMF estimates that the world GDP hit US$105 tln, the US accounts for 27.6% of that. The US grew +US$1.5 tln in the year, the world +US$5 tln, so 30% of the global growth was from them. ($870 bln on expansion was from China, half the US level.)

US initial jobless claims were little changed last week from the prior one, but lower than year-ago levels. The total number of people on this support remains unusually low, but is little-changed too.

So perhaps it will be no surprise to know that the University of Michigan sentiment index rose more than expected to its highest level since July 2021.

In Japan, industrial production fell and their jobless rate rose, both not expected changed

in South Korea, industrial production rose more than expected.

In China, the slow motion real estate sector crash rolls on with more troubles at both Vanke and Country Garden. It is more than them of course. And banks that responded earlier to beijing's call for them to support the sector are trapped in growing bad loans. Asset quality pressure is "immense" said one major.

We should note that India has banned YouTube from allowing users to access an ABC program about its extra-judicial killing of a Sikh independence activist in Canada. It will be no surprise to India-watchers that the Modi government suppresses news it doesn't like.

And we should note a new ILO report that shows the jobless rate for Indian graduates at home was a massive 29%, almost nine times higher than the 3.4% for those who can’t read or write. The unemployment rate for young people with secondary or higher education was six times higher at 18.4%. This data reinforces David Hargreaves point that even if New Zealand's local labour market struggles, it will still look attractive to Indian immigrants. It isn't our attractiveness that draws them, it is the job pressure at home that pushes them out.

In Australia, inflation expectations, which had been suck at 4.5% since December, actually slipped in March to 4.3%. While this may be its lowest since October 2021, it does emphasise just how sticky Aussie CPI inflation has become.

China has dropped its tariffs on Australian wine after years of sanctions that crippled the billion-dollar export industry.

And staying in Australia, we should note that Jan Cameron, the founder of Kathmandu and prolific investor, has been found guilty of hiding money in the Caribbean without disclosure in a 2017 ASX filing, and is now subject to an automatic ban on directing or managing a company for five years.

The UST 10yr yield is now at 4.21% and up +2 bps from this time Thursday. The key 2-10 yield curve inversion is deeper at -42 bps. But their 1-5 curve inversion is little-changed at -82 bps. Their 3 mth-10yr curve inversion is now at -117 bps and also little-changed. The Australian 10 year bond yield is now at 4.00% and up +1 bps from Thursday. The China 10 year bond rate is unchanged at 2.31%. The NZ Government 10 year bond rate is now at 4.64% and down -3 bps from Thursday.

Wall Street didn't trade on Friday, and ended its Thursday session up +0.1% on the day and up +0.4% for the week. They may be minor changes but they are also all-time highs. Overnight European markets were closed too. Yesterday Tokyo closed up +0.5% limiting its weekly fall to -1.1%. Hong Kong was closed in Friday, ending unchanged for the week. Shanghai did trade and closed up +1.0% to also end its week unchanged. Singapore didn't trade and neither did the ASX200 or NZX50.

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

The price of gold will start today stronger by +US$42 from Thursday at US$2233/oz. and a new all-time high. the push up has been strong in the past few hours. A week ago this price was US$2159/oz so a net +3.4% rise for the week.

Oil prices have risen +US$2 to just under US$83/bbl in the US while the international Brent price is now just under US$87/bbl. A week ago these prices were US$80.50 and US$85/bbl so a +US$2 rise for the week.

The Kiwi dollar starts today at just on 59.8 USc and -20 bps lower than this time Thursday. A week ago it was at 60 USc so little change since. Against the Aussie we are down -20 bps at 91.7 AUc. Against the euro we are holding at 55.4 euro cents. That all means our TWI-5 starts today just on 69.1 and down -20 bps, the same fall for the week.

The bitcoin price starts today firmer at US$69,386 and +0.6% higher that this time Thursday. This time last week this prices was US$63,588, so up +9% since then. Volatility over the past 24 hours has been modest at just on +/- 1.4%.

Over the Easter holiday break, we will have normal weekend service, and will return with these daily briefings on Tuesday, April 2, 2024.

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