Here's our summary of key economic events overnight that affect New Zealand, with news inflationary pressures shows signs of easing in today's data releases in the shadow of yesterday's highish US CPI release, and there is some talk of rate cuts elsewhere.
First up in the US, the number of new jobless claims fell last week, consigning the prior week's jump to the 'anomaly' basket. There are now 1.9 mln people still on these benefits, virtually unchanged from the prior week level.
The rise in American producer prices was also less than expected in March, coming in just +2.1% higher than a year ago. A year ago they were rising at a +2.7% rate. Producer price rises are not a major factor in their consumer price inflation.
The USDA lowered its price estimates for most key agricultural commodities, especially grains, as good harvests worldwide more than cover global food demand. Global food prices were already running at 3 year lows. Specifically, the Americans are expected to import more beef and produce less milk.
Today the Americans had a UST 30yr bond auction and that was well supported again, drawing US$52 bln in bids for the US$22 bln available. But yields rose +30 bps to 4.61%, up from 4.28% at the prior equivalent event a month ago - and entirely consistent with secondary market moves in that period.
China's consumer prices edged up a mere +0.1% in March from a year ago and much less that the market forecasts of +0.4%, and after an annual +0.7% rise in February. The extended flirting with deflation is dangerous and highlights the economic challenges they face. Demand is actually quite weak - and this data all comes from the officially approved series.
Meanwhile, China's producer prices shrank by -2.8% in March from the same month a year ago. This was the expected drop and compares to February's drop of -2.7%. It was the 18th straight month of contraction in factory gate prices and the steepest decrease since last November, highlighting the persistence of deflationary forces in their economy.
In Japan, a lack of intervention in support of the yen after it weakened beyond 152 to the US dollar for the first time since 1990 has financial markets wondering when or even if the Japanese authorities will step in as has been widely expected. There are many market bets that this would have happened by now. But perhaps Tokyo senses that it is more about the rising USD rather than a weak yen. It certainly isn't that weak against most other currencies.
The ECB held its policy interest rates at record-high levels for a fifth consecutive time during its April meeting overnight, at 4.5% (and their deposit rate at 4%), both at 22 year highs. However they did signal that a rate cut could come there soon, perhaps in June.
We should perhaps also note that Argentina's monthly inflation rate seems to be easing, falling from +25% per month in December to half that in March. That has encouraged them to trim their policy interest rate overnight by -10% to 70% pa. Talk of 'dollarisation' seems to be fading there.
Last week global container shipping rates eased only marginally, staying +64% higher than year-ago levels. Bulk cargo rates fell -7.5% in the week however and are now back at long run averages.
The UST 10yr yield is now at 4.57% and up a minor +1 bp from yesterday as things settle in at the new higher level. The key 2-10 yield curve inversion is a bit less at -40 bps. And their 1-5 curve inversion is also shallower at -58 bps. As is their 3 mth-10yr curve inversion which is now at -85 bps. The Australian 10 year bond yield is now at 4.32% and up another +7 bps. The China 10 year bond rate is holding at just on 2.31%. The NZ Government 10 year bond rate is now at 4.88% and +13 bps higher since this time yesterday.
The S&P500 is up +0.8% on Wall Street in its Thursday session, recovering most of yesterday's drop. Overnight, European markets closed lower by about -0.5%. Yesterday Tokyo ended its Thursday session down -0.4%. Hong Kong was down -0.3% in its daily trade. But Shanghai was up +0.2%. Singapore closed down -.3%. The ASX200 ended its Thursday session down -0.4%. The NZX50 ended down -0.3%.
The price of gold will start today higher by +US$20 from this time yesterday at US$2355/oz but off its all-time high.
Oil prices have fallen -US$1 to just on US$84.50/bbl in the US while the international Brent price is down a bit less to just on US$89/bbl.
The Kiwi dollar starts today at just over 59.9 USc and little-changed from yesterday. Against the Aussie we are softer at 91.7 AUc. Against the euro we are firmer at 55.9 euro cents. That all means our TWI-5 starts today just on 69.4 and up a minor net +10 bps.
The bitcoin price starts today firmer at US$70,258 and up +1.3% from this time yesterday. Volatility over the past 24 hours has also been modest at just on +/- 1.6%.
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