Here's our summary of key economic events overnight that affect New Zealand, with news we are seeing sharply higher benchmark interest rates and steeper rate curves.
Improving economic growth prospects, ramped up vaccine rollouts, and impending new major stimulus in the US are all combining to juice up "the reflation trade". Markets see all this combining to generate inflation at a level we haven't experience in more than a decade and they are sensing central banks will be caught blind-sided. This new mood is generating some sharp rises in benchmark bond yields, especially at the long end.
And current US retail sales are doing ok, after taking account of the holidays and weather. Last week, on a same-week-a-year-ago basis they are up +4%.
And that is confirmed by the official data for January for retail sales, which was up an impressive +5.8% from the same month a year ago. It was a surprisingly large gain, the best in seven months when pandemic rebounds affected results. This time, the January stimulus payments have generated the gains.
Unfortunately, the same cannot be said for industrial production which was down -1.8% in January from a year ago. Factories involved in consumer goods are making gains, those for business equipment and construction not. And "mining" (coal and oil) are down considerably, more than -10% year-on-year.
The US Fed will released the minutes of their January meeting at about 8am NZ time, and they are staying committed to very loose monetary conditions.
We should also note that the current freezing weather in the US is now expected to have a sizable impact on their February economic data, little of it positive. There are widespread blackouts, and Texas and adjacent states are where the impact is worse.
And one of the world's largest insurers, AIG, is hiking premium rates aggressively for all kinds of coverage.
Canada released its January CPI data overnight and that surprised on the upside, not that the rise was much, gaining +1.6% in the year for the closely-watched core components that exclude food and petrol.
Japanese machinery orders bounced back very strongly in December which makes the surprise Q4 Japanese GDP release of a few days ago more understandable. What is interesting about this latest data is that it isn't being driven by export orders, which is something of a surprise and good for them.
In Europe, Ford has announced that it will be "all electric" by 2030, partly following GM which is transitioning everywhere.
And we should note that red meat production is falling in Australia, down for cattle and lamb, up marginally for sheep.
New York equity markets are lower with the S&P500 down -0.5% in early afternoon trade. Overnight European markets were generally lower, down -0.7% on average. Yesterday, Hong Kong posted a +1.1% gain and up nearly +3% in two days. Tokyo was down -0.6%. Shanghai will be back open later today after their week-long holiday. The ASX200 fell -0.5% yesterday while the NZX50 Capital Index was up +0.5% on good earnings reports.
The latest global compilation of COVID-19 data is here. The global tally is still rising but at a slower pace, now at 109,659,000 and up +374,000 in one day. The pandemic seems to be easing in some notable places in the first world. Global deaths reported now exceed 2,423,000 and +11,000 since yesterday.
More countries (93) have started their vaccination programs. About 178.1 mln doses have been given so far (no update overnight). There is clear evidence the vaccines are working to reduce or even eliminate deaths for those who have taken it.
The largest number of reported cases globally are still in the US, which rose +61,000 over the past day for their tally to reach 28,386,000. The US remains the global epicentre of the virus although there is clearly some easing. The number of active cases fell sharply overnight and is now just on 9,404,000 and -50,000 fewer overnight, so less new infections again than recoveries. Their death total is up at 500,000 (+2000) in one day. The US now has a COVID death rate of 1505/mln, and that compares to the disastrous UK level (1746) where deaths are also still rising (119,000 and +1000) but a bit more slowly now their vaccinations are rolling out.
In Australia, their community control remains impressive. Victoria has eased its lockdown. Their all-time cases reported is now 28,911 and only +6 more cases overnight, zero new cases in the community and the rest new arrivals and all in managed isolation. 42 of these cases are 'active' (-1). Reported deaths are unchanged at 909.
The UST 10yr yield is little-changed at 1.28% today. But their 2-10 rate curve is steeper at 117 bps, their 1-5 curve is unchanged at +48 bps, while their 3m-10 year curve is holding at +124 bps. The Australian Govt 10 year yield is up another +2 bps at 1.40%. The China Govt 10 year yield is still unchanged at 3.26%, while the New Zealand Govt 10 year yield is up another +9 bps at 1.53%.
The price of gold will start today down another -US$17 at US$1778/oz.
Oil prices are up about +US$1 and are now at just over US$60.50/bbl in the US, while the international price is just on US$63/bbl.
And the Kiwi dollar opens today -½c softer at 71.7 USc. Against the Australian dollar we are softer at 92.7 AUc. Against the euro we are at 59.6 euro cents and unchanged. That means our TWI-5 is lower and just below 73.4.
The bitcoin price is now well over US$50,000 and is currently sitting at US$51,367 with a gain of over +5%. The new record high is US$51,735 reached at about 11pm last night. In New Zealand dollars, it is now well above NZ$70,000 at NZ$71,157. Volatility remains high at +/- 4.0%. The bitcoin rate is charted in the exchange rate set below.
The easiest place to stay up with event risk today is by following our Economic Calendar here ».