Here's our summary of key economic events overnight that affect New Zealand, with news bond rates are taking a new turn higher today, rising as you read this.
Annual inflation in the OECD area picked up to 1.5% pa in January 2021, compared with 1.2% in December 2020. On a "without food and energy basis (ie core inflation), New Zealand contributes a +1.9% pa rate to the OECD, a relatively high level.
In China, commodity prices continue their rise with the iron ore prices shifting up yesterday.
And food prices are just taking off. The rise is across the board, but led by vegetable oils and cereals. Meat and dairy prices are up too, but by comparison their increases seem relatively restrained.
Meanwhile, US jobless claims rose last week to the expected 748,000 and taking the total on these benefits to 4.8 mln. In addition another 437,000 people signed up for the Pandemic Unemployment Assistance. There is no evidence yet that this pressure is receding.
Factory orders did rise in January, by a modest +2.6% above December and are now +1.3% higher than a year ago. That makes it nine consecutive months this data has posted a month-on-month rise and the first time it has posted a year-on-year rise.
The rise isn't being bolstered by car sales. Total vehicle sales continue to slide. In February, American vehicle sales ran at the annualised rate of 15.7 mln, the lowest since August 2020, and down sharply from the 16.6 mln recorded for January. And this latest February data is -7.8% below the same month in 2020.
Part of the decline might be capacity constraints due to the global chip shortage. Certainly in the large truck sector there are reports surging orders are blocked by this type of capacity constraint.
The overnight data released for EU retail sales in January just looks awful. They fell -6.4% compared to the same month a year ago, and this is a very serious backsliding there. It is grim in all the main economies, but especially so in France. The lights would have been burning all night in both Brussels and the ECB. A drop was expected in January, but nothing like this.
Not helping is the increasingly ugly Brexit divorce from the UK. Overnight the British reneged on the deal over the Irish border, inflaming things further. This is far from the first time the British have made a deal with the EU, then reneged. For some reason London doesn't feel bound to honor its agreements when it doesn't suit them. It's an arrogance that runs deep.
The UK isn't the only one reneging on agreements. Today Italy has blocked the shipment of vaccines to Australia, saying the EU comes first.
Australia has posted a trade surplus of +AU$9.3 bln in January 2021 (a record), comprising of a goods surplus of just under +AU$8.0 bln and a services surplus of under +AU$1.3 bln. These 2021 levels compare with a January 2020 surplus of just +AU$2.4 bln where the goods surplus was AU$2.9 bln and a services deficit of -AU$0.5 bln. Their goods surplus with China is now +AU$5.5 bln in January 2021, compared to +AU$3.8 bln in January 2020.
In New York the S&P500 is down -1.6% in mid-day trade and sliding. That follows European markets which were generally down -0.2% overnight. Yesterday the very large Tokyo market fell a sharp -2.1%, matched by Hong Kong, and Shanghai fell -2.0% and giving up all of the prior day's gain. The ASX200 fell -0.8% yesterday while the NZX50 Capital Index was down -1.1% with a late sell-off.
The latest global compilation of COVID-19 data is here. The global tally is still rising and at a faster pace, now at 115,331,000 and up +419,000 in one day, so no letup globally. Global deaths reported now exceed 2,563,000 and +10,000 since yesterday.
More countries (129) are into their vaccination programs. About 275.8 mln doses have been given so far (+7.2 mln).
The largest number of reported cases globally are still in the US, which rose +82,000 over the past day for their tally to reach 29,460,000. The number of active cases fell overnight and is now just on 8,925,000 and -18,000 fewer in a day, so many more recoveries that new infections again. Their death total took a jump yesterday however, now at 532,000 (+3000).
The UST 10yr yield is up +7 bps at 1.54%. The US 2-10 rate curve is up marginally at 134 bps. Their 1-5 curve is still at +64 bps, while their 3m-10 year curve is marginally steeper at +145 bps. The Australian Govt 10 year yield is down -1 bp at 1.74%. The China Govt 10 year yield is up +1 bp at 3.29%. The New Zealand Govt 10 year yield is up +11 bp at 1.86% and the outlier here.
The price of gold starts today lower by -US$19 from yesterday and falling, now under US$1698/oz.
Oil prices are up a sharp +US$3 at US$64.50/bbl in the US, while the international price is up to just over US$67/bbl.
And the Kiwi dollar opens at 72.1 USc and more than -½c lower than this time yesterday. Against the Australian dollar we are firmer at 93.1 AUc. Against the euro we are lower at 60.1 euro cents. That means our TWI-5 is down at 73.9.
The bitcoin price is now down at US$49,832 and a retreat of -2.6% since this time yesterday. Volatility in the past 24 hours is still elevated at +/- 3.2%. 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 ».