More pushback on Fed rate cut prospects; China FDI weak; Japan inflation stays high for them; German PPI deflation eases; Aussie bankruptcies jump; UST 10yr 4.65%; gold up again but oil stays low; NZ$1 = 58.9 USc; TWI-5 = 68.8

Here's our summary of key economic events overnight that affect New Zealand, with news that oil markets are shrugging off the tit-for-tat drone missile confrontation between Iran and Israel. In fact, Iran said it now won't respond and that has taken some heat out of the situation. (But also see this.)

Meanwhile in the financial world, yet another key voting Fed member is out dampening down prospects of rate cuts. The Atlanta Fed boss said US inflation is only coming down "very, very slowly" and "let's not be in a hurry" on interest rate cuts.

In the US earlier this year their National Labor Relations Board ruled that Google, among others, was in fact a 'joint employer' of many contractors' employees who worked with it. Therefore it had employer obligations to them. Google lost the case because it has a longstanding requirement that contractors pay a living wage and cover its own employees with health insurance, among other benefits. But the NLRB decision forced Google to adopt a far more inclusive relationship and responsibility with its contractor's employees. Today, to put more normal distance between itself and those contractors, it has dropped those in-house standards with contractors so it "is not, and has never been, the employer of our suppliers’ employees." Pushing better conditions for contractor employees turned into an own-goal trap.

In China, and in all of March in all of the country, their incoming foreign direct investment was only +NZ$20.7 bln in March. But that was far better than the tiny +NZ$3 bln in March a year ago. Still the total for the the first three months of the year was down a startling -26% compared to Q4-2023, up just +3.9% from the same quarter a year ago which was unusually weak. From Q1, 2022 the current levels are -28% lower. It will worry Beijing policymakers that these levels are embedding in so low.

Japan's March inflation rate eased to 2.7% from 2.8% in February. This was what markets were expecting. Their core rate, excluding food and energy, dipped to 2.6% and a shift lower by a bit more than was expected.

In Germany, March data shows that their producer price deflationary impulse is easing. Their PPI was down -2.9% from the same month a year ago, but that was far less than the February equivalent of -4.1%. And those March producer prices actually rose +0.2% from the prior month and that was better than the no-change expected.

In the UK, retail sales volumes were unchanged in March from the prior month when a small rise was expected. Basically they spent more on fuel but that was offset by spending less on food.

In Australia, ASIC released data that showed 1131 businesses went bust in March, the most since they started collecting these statistics in 1999. The latest March data is up from 830 in March 2023, and just 439 nationwide in March 2021.

We should also note that it is not only the aluminium price that is rising at present (which is up +20% since the end of February), but the copper price is on the move higher too, up +16% in the same timeframe and actually approaching its all-time high set a year ago.

The UST 10yr yield is now at 4.63% and down -2 bps from yesterday but up +10 bps over the past week. The key 2-10 yield curve inversion is 2 bps more inverted at -36 bps. But their 1-5 curve inversion is unchanged at -51 bps. Their 3 mth-10yr curve inversion more inverted at -78 bps. The Australian 10 year bond yield is now at 4.34% and down -5 bps. The China 10 year bond rate is unchanged at 2.27% and still its lowest level since at least 2002. The NZ Government 10 year bond rate is now at 4.92% and down -5 bps from yesterday and down -3 bps for the week.

Wall Street is lower on the S&P500 in their Friday trade by -0.9% and heading for a sharp -3.5% weekly loss. Overnight European markets were mixed with London up +0.2% and Frankfurt down -0.6%. Yesterday Tokyo ended down a very sharp -2.7% for a weekly dump of -5.1%. Hong Kong was down -1.0% at the end their Friday session, down -1.6% for the week. But Shanghai only fell a minor -0.3% and managed a good net +1.7% gain for the week. However Singapore ended -0.4% lower. The ASX200 ended its Friday session down a fill -1.0% to book a -2.8% weekly retreat while the NZX50 fell -0.3% yesterday to be -1.1% lower for the week.

The Fear & Greed index has shifted much deeper into the "fear" range.

The price of gold will start today up by another +US$11 from this time yesterday at US$2394/oz, up +US$45 for the week.

Despite continuing Middle East tensions and uncertainties, oil prices have stayed lower at just under US$82.50/bbl in the US while the international Brent price is still down at US$86.50/bbl. Over the past week these prices have fallen -US$2.50 respectively.

The Kiwi dollar starts today at just on 58.9 USc and another minor -10 bps from yesterday. But that is down nearly -½c in a week however. Against the Aussie we are down -20 bps at 91.7 AUc. Against the euro we are also marginally softer at 55.3 euro cents. That all means our TWI-5 starts today just on 68.8 and a now -20 bps lower on the day, -30 bps lower for the week..

The bitcoin price starts today back up at US$64,323 and a +1.7% gain from this time yesterday. A week ago this price was US$67,601 so a -4.8% retreat from then. Volatility over the past 24 hours has been very high at just on +/- 4.9%.

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