Here's our summary of key economic events overnight that affect New Zealand, with news our currency is on a fast elevator up today as the reflation trade picks up too.
But first, mortgage applications fell away sharply last week in the US, held back by rising interest rates, especially the 30yr fixed. The weather isn't being mentioned as a reason but it must have had some impact, in Texas at least.
Sales of new homes are staying high, up +19% in January from the year-ago level. New home sales make up 17% of their annual real estate transactions but you would have thought this strong driver would be keeping mortgage application levels up. But they aren't.
Taiwanese export orders are up a remarkable +49% in January on a year-on-year basis. That is much better than expected and better again than the December outcome. By any measure, this has to be the most successful pandemic recovery stat anywhere.
In Hong Kong, they are hiking taxes with their first rise in Stamp Duty in 18 years which sent their share market tumbling by the most in five years. It is all part of paying for stimulus programs after the city comes up to two years of recession. Even with this, Hong Kong is budgeting on a deficit equivalent to -4.8% of GDP.
China is launching a wave of infrastructure projects totaling NZ$5.3 tln as part of a broader effort to stimulate consumption and growth. This new and enormous program is getting little attention in the West but it is world-scale stimulus, and is more than double the US Biden plan of US$1.9 tln (NZ$2.5 tln).
And staying in China, the owners of the infant formula brand Enfamil are putting it up for sale. It is a heavy-hitter in China but since the British company Reckitt Benkeiser bought it two years ago it has struggled to deliver the gains they planned on. China's birth rate slumped dramatically in 2020 and other big brands like Nestle and Danone are also reportedly reassessing their infant formula business in China.
China is relaunching its international manhunt for its fugitives, mainly for graft reasons. In 2020 a total of 1,421 fugitives, including 28 Red Notice fugitives, were captured are brought back to China. In the past, some key figures were said to be hiding out in New Zealand but no data is available on how many were spirited out of here in 2020.
And China is rolling out minimum pay increases in many of its regions, averaging about +10%. That will take these minimums up to NZ$90/week. Shanghai has the highest minimum pay in the country at $120/week. The difference between these levels and what the Party bosses earn is enormous. China has extreme inequality and it is getting worse. So it is no surprise graft is a real problem. Beijing is making big efforts to "eliminate poverty" and while extreme poverty is reducing fast that is having no noticeable impact on inequality.
Commodity prices are rising faster overnight with copper prices now at a decade high and nearly at their all-time high. Iron ore prices are moving up again.
Wall Street has turned higher today and ending their losing streak, with the S&P500 up by +0.8% in early afternoon trade. Overnight European markets were up an average of +0.4%. Yesterday Asian markets fell very hard, getting worse as the day wore on. Tokyo was down -1.6%. Hong Kong fell a full -3.0% and Shanghai fell a full -2.0%. The ASX200 fell -0.9% yesterday giving up all the prior day's gain and the NZX50 Capital Index ended its session also down -0.9%.
The latest global compilation of COVID-19 data is here. The global tally is still rising but at a new rising pace, now at 112,283,000 and up +405,000 in one day. But it seems to be easing in some notable places in the first world. Global deaths reported now exceed 2,489,000 and +11,000 since yesterday.
More countries (109) have started their vaccination programs. About 216.2 doses have been given so far (+4.1 mln 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 +72,000 over the past day for their tally to reach 28,908,000. The US remains the global epicentre of the virus although there is clearly an easing there. And the number of active cases fell overnight and is now just on 9,178,000 and -21,000 fewer overnight, so more recoveries that new infections again. Their death total is rising at a much slower rate and is up at 515,000 (+2000) in one day. The US now has a COVID death rate of 1551/mln, and that compares to the disastrous UK level (1787) where deaths are also rising a bit more slowly now their vaccinations are rolling out.
In Australia, their community control remains impressive. Their all-time cases reported is now 28,939 and only +2 more case overnight, but with no new cases in the community and the rest new arrivals, and all in managed isolation. 36 of these cases are 'active' (-5). Reported deaths are unchanged at 909.
The UST 10yr yield is up +2 bps at 1.38% today. Their 2-10 rate curve is marginally flatter at 122 bps. Their 1-5 curve is little-changed at +52 bps, while their 3m-10 year curve steeper at +135 bps. The Australian Govt 10 year yield is up +5 bps at 1.68%. The China Govt 10 year yield is little-changed at 3.28%, while the New Zealand Govt 10 year yield has raced up +6 bps to be at 1.70%.
The price of gold will start today down -US$7 at US$1801/oz.
Oil prices are up by about +US$1.50 and are now at just over US$63/bbl in the US, while the international price is just over US$66/bbl.
And the Kiwi dollar opens at 74.1 USc and up +¾c from this time yesterday. This is its highest in more than 3½ years and is up +2c in just one week. Against the Australian dollar we are up as well, up to holding at 93.3 AUc. Against the euro we are up at 61 euro cents. That means our TWI-5 is now up at 75 and a 4½ year high. It's been a dramatic rise overnight.
The bitcoin price is now at US$49,647 and +4.7% higher than this time yesterday and ending the recent fall. It did get up to US$51,446 in between but couldn't hold it and is drifting lower now. Volatility in the past 24 hours is still very high at +/- 6.8%. 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 ».