Here's our summary of key economic events overnight that affect New Zealand, with news both commodity prices and interest rates are rising sharply.
But iron ore prices slipped on Friday after hitting their highest level in more than nine years just a day before. A local survey of stocks of steel products in showed a significant increase, turning around the idea steel mills would ramp up output after their Spring Festival holiday.
Copper prices have however also touched a nine year high on Friday and are not that far off an all-time high. Aluminium prices are rising too. (Remember, when copper reached its 2011 high in February of that year, it then fell by a third over the next eight months.)
And staying in China, the results of their holiday week consumption are now showing up and they have been positive. Online spending, express deliveries, box office revenues and local tours received a strong boost during the Lunar New Year holiday period this year, thanks to the large number of people who shelved travel plans and switched to other forms of celebrating.
A Chinese official says they are looking at relaxing restrictions on outbound investment in a bid to facilitate two-way capital flows as it opens capital markets to more overseas investors. They are to raise the quota on its Qualified Domestic Institutional Investor scheme later this year.
China kept it Prime Rates unchanged at the latest central bank review. That's ten straight months it has been held unchanged.
But they have stepped up their regulation of online lending by domestic commercial banks with a new set of regulations and limits.
In the US, factories there expanded at a healthy rate in the latest update of February activity, and underpinned by rising demand. Their service sector expansion is strong too. The current icy storm is however likely to curtail some of this improvement when the final February data is released.
Risks are remain elevated however. The US Fed says insolvency risks at small and medium-sized firms “remain considerable” even as their economy emerges from the pandemic.
US existing home sales rose more than expected in January when actually a dip was expected. A severe shortage of listings is being attributed to the market perception of demand.
In Canada, data for December retail sales shows they ended on a grim note, far lower than the decline they were expecting. It was their worst retail situation since the start of their pandemic in April.
In Japan, business sentiment is improving in February, largely on the back of new export orders in factories. Their factory PMI was back in expansion mode, but their services sector is continuing to struggle, contracting at a faster - and worrying - pace.
EU business activity fell for a fourth consecutive month in February, driven lower by a further slump in their service sector as pandemic restrictions continued to restrict many businesses. The service sector downturn was offset, however, by faster manufacturing growth, led by Germany.
Although it has fallen back a little, the Australian factory PMI for January has stayed at an elevated level, now at 56.6. (NZ = 57.5) and their services PMI is at a similar level. Holding both up are good level of employment. New order levels are good too.
Australian retail turnover was +10.7% higher in January 2021 than January 2020. That makes it its highest gain since 2015.
Last week most equity markets slipped slightly but are still at or near record highs.
But can these high levels last? The mantra of ‘lower for longer’ is coming under pressure as investors realise the potential damage inflation could inflict on complacent portfolios. Equity prices could be affected if P/E ratios adjust lower and interest rates rise (and private equity firms are making the risk higher), but bond prices face even more risk of a downgrade.
The latest global compilation of COVID-19 data is here. The global tally is still rising at a little-changed pace, now at 111,204,000 and up +255,000 in one day. But it seems to be easing in some notable places in the first world. Global deaths reported now exceed 2,463,000 and +6,000 since yesterday.
Russia has said it has found the first case of bird flu H5N8 in humans although the spread is low at this time.
More countries (101) have started their vaccination programs. About 204.8 mln doses have been given so far (+10.4 in the past day). 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 +46,000 over the past day for their tally to reach 28,714,000. The US remains the global epicentre of the virus although there is clearly some easing. But the number of active cases actually rose overnight and is now just on 9,304,000 and +21,000 more overnight, so more new infections again than recoveries. Their death total is rising at a slower rate and is up at 510,000 (+1000) in one day. More Americans have died from COVID than on the battlefields of World War I, World War II and the Vietnam War combined. The US now has a COVID death rate of 1535/mln, and that compares to the disastrous UK level (1770) where deaths are also still rising (121,000 and +1000) but a bit more slowly now their vaccinations are rolling out.
In Australia, their community control remains impressive. Their all-time cases reported is now 28,926 and only +6 more case overnight, but with no new cases in the community over the weekend and the rest new arrivals, and all in managed isolation. 39 of these cases are 'active' (unchanged). Reported deaths are unchanged at 909.
The UST 10yr yield is up +5 bps at 1.34% today from Friday and now its highest in a year. It has risen +15 bps in a week. Their 2-10 rate curve is a lot steeper at 123 bps and it hasn't been this steep since March 2017. Their 1-5 curve is also steeper at +52 bps, while their 3m-10 year curve is steeper as well at +132 bps. The Australian Govt 10 year yield is at 1.50%. The China Govt 10 year yield is up at 3.30%, but the New Zealand Govt 10 year yield is up at just over 1.52%.
Economists are raising their expectations these benchmark rates will rise a lot further. Some have lifted their target for the US 10 year bond rate by end 2021 from 1.5% to 1.8%. In turn the expected rate by end 2022 has been increased from 1.75% to 2.40%.
The price of gold will start today up a relatively minor +US$5 at US$1785/oz after a late runup in New York at the close of the final session last week.
Oil prices are lower by about -US$0.50 and are now at just on US$59/bbl in the US, while the international price is just on US$62/bbl.
And the Kiwi dollar opens at 73 USc as commodity currencies twist back into favour. Against the Australian dollar we are at 92.8 AUc. Against the euro we are up at 60.3 euro cents. That means our TWI-5 has risen to just under 74.2.
The bitcoin price is now at US$57,692 and +5.6% higher than this time Saturday. That puts it just shy of its new record high achieved just a few hours ago. And it is closing in on NZ$80,000 for one bitcoin. Volatility was a relatively high +/- 3.5%. The capitalisation of this market now exceeds US$1 tln, but remember about 1000 major holders control most of it. 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 ».