Here's our summary of key economic events overnight that affect New Zealand, with news investors are voting with their money today, with some decidedly risk-off shifts.
It is only about 200 days until the November US presidential election an nervousness about that outcome is starting to show up in sentiment surveys. Consumers are apprehensive that the golden run could be crashed by the vote, or that things could destabilise ahead of it. The University of Michigan consumer sentiment poll is now reflecting some of that apprehension. However it is only off a 33 month high so we shouldn't make too much of this April dip and it remains more than +20% higher than year-ago levels. Still, the shift was noticed by financial markets. Wall Street dipped, bond yields slipped back, and the USD surged against all-comers on the risk-off mood.
India's industrial production rose by +5.7% in February from a year ago, the latest data released overnight, but that missed analyst forecasts of +6% growth, but it was a faster expansion than in each of the prior three months. A year ago this expansion was running at 5.8%, so little change on that comparison.
From Friday next week India will start its long national election process which won't be completed until June 1. This one is distinctive because it is already viewed as being rigged in favour of the BJP, so it may in fact be their last chance for a proper exercise of democracy. The prospects of a fair result however seem dim, especially when their Modi-aligned Election Commissioner made an effort to capture his own Wikipedia page to produce a hagiography worthy of Chinese president Xi.
New bank lending in China picked up in March from February but the results still disappointed. March is usually a strong month for borrowing because banks tend to extend more credit at the end of each quarter to meet lending targets. But the ¥3.1 tln in new March lending was less than the ¥3.6 tln expected and the ¥3.9 tln in March 2023.
Meanwhile, China's exports tumbled in March. They dropped -7.5% from a year ago, reversing sharply from a +5.6% growth in the earlier month. This was very much worse than market forecasts, highlighting the Middle Kingdom's uneven recovery and perhaps suggesting global demand won't drive growth there. It may also be a sign that de-risking from China because of its terrible recent signals to investors is biting harder and earlier than anticipated.
It is not all difficult news in China. A survey shows that for the first time since the end of 2021, wage growth rates are picking up again.
The UST 10yr yield is now at 4.52% and down -5 bps from yesterday. A week ago this rate was 4.39%. The key 2-10 yield curve inversion is a bit less at -38 bps. And their 1-5 curve inversion is unchanged at -59 bps. As is their 3 mth-10yr curve inversion is now at -89 bps and a little deeper. The Australian 10 year bond yield is now at 4.24% and down -8 bps. The China 10 year bond rate is down -2 bps at 2.29%. The NZ Government 10 year bond rate is now at 4.95% and +7 bps higher since this time yesterday. A week ago it was at 4.70% so a large +25 bps rise since then.
Locally, this time last week money markets were pricing in three OCR rate cuts in 2024. But sticky inflation in the US, and here, both have traders changing their tune, so that there are now only two cuts priced in for 2024. The October 9 review is where the first is now priced for, the November 27 review for the second. The conviction for these two is easing off too, and kind of quickly. The earlier May or July pricings have now completely vanished and seem a distant memory.
The S&P500 is down -1.5% on Wall Street in its Friday session, and heading for a similar -1.7% weekly retreat, all decided by Friday's shift lower. Overnight, European markets closed very mixed with London up +0.9% and Paris down -0.2%. Yesterday Tokyo ended its Friday session up +0.2% for a minor +0.3% weekly gain. Hong Kong fell -2.2% in its daily trade to end up +0.4% for the week. Shanghai fell -0.5% on the say to end down -1.2% for the week. Singapore closed down -0.3%. The ASX200 ended its Friday session down -0.3% for a net +0.2% weekly gain. The NZX50 ended unchanged on the day but down -0.7% for the week.
The Fear & Greed index has shifted out the "greed" range, to the 'fear' end of the 'neutral' range. This is the largest shift in more than a month.
The price of gold will start today lower by -US$6 from this time yesterday at US$2349/oz. But that is a +US$23 gain in a week. We should note that this price it its all-time high of US$2432 at about 4am this morning. It has been sharply down after that.
Oil prices have been quite volatile over the past 24 hours but have given up almost all earlier gains to be just +50 USc higher at just on US$85/bbl in the US while the international Brent price is just under US$90/bbl. Both levels are about -US$2 less than a week ago.
The Kiwi dollar starts today at just over 59.4 USc and down -½c from yesterday and down a similar level in a week. Against the Aussie we are firmer at 91.9 AUc. Against the euro we are little-changed at 55.8 euro cents. That all means our TWI-5 starts today just on 69.2 and down -20 bps from yesterday, unchanged for the week.
The bitcoin price starts today much softer at US$67,601 and down -3.8% from this time yesterday. However a week ago this price was US$67,794 so virtually no net change since then. Volatility over the past 24 hours has also been moderate at just on +/- 2.6%.
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