Here's our summary of key economic events overnight that affect New Zealand, with news of a wide range of variation in the major economies, and their prospects, as they exit the pandemic.
US jobless claims fell slightly last week, down to 709,000 and slightly less than expected. That was their lowest level in four months. There were another 478,000 initial Pandemic Unemployment Assistance claims. That leaves 4.6 mln people on these benefits which are being extended in the stimulus bill just passed by Congress. It will be signed into law today. Hopes are high it will transform the situation for millions and kickstart their economy. Equity investors are betting it will.
January layoff rates declined more than expected too, also a positive sign for the US economy.
The February US Federal Government deficit was -US$311 bln, and far higher than the same month in 2020 (-US$235 bln) and much higher than the -US$265 bln expected. For the twelve months to February, this deficit has swelled to almost -US$3.6 tln or -16.5% of US GDP. It is certain to go much higher before it starts to decline. A huge repair job is ahead of them after a long period of truly awful mismanagement.
But in the private economy, households are recording larger surpluses. Their net worth rose +10.2% in Q4-2020 from the same 2019 quarter to a record high US$130 tln. Rising prices for equities, real estate and other assets have erased losses inflicted by the pandemic and more, and half that gain was recorded in Q4 alone. One thing is very clear however; these stellar gains are not being shared equally among all households.
In China, February vehicle sales were 1.46 mln. That makes them the largest vehicle market in the world even though these February sales were sharply lower than for January, and even lower that the February 2019 level.
The ECB said it would ramp up the pace of its purchases of euro zone debt as it seeks to support the region’s flagging economic recovery. But 'faster' may not necessarily mean 'more' in the long run.
Australia consumer inflation expectations rose to +4.1% in February, a rise back to levels last seen a year ago. This measures consumers’ median expectations for price growth over the coming 12 months. It regularly overshoots actual CPI inflation which in Australia is currently running at 0.9%. A year ago actual CPI inflation was 0.7% pa, so consumers answer these perceptions surveys in an ironically inflated manner.
And S&P has warned Australia it must lower its deficit quickly or it will lose its coveted AAA credit rating. They are pointing out that federal and state deficits of about -14% of GDP forecast for fiscal 2021 are “inconsistent with a triple-A rating". About -10% of that is by the Federal Government and it seem to need to get back to about -3% quickly to satisfy S&P.
In New York, the S&P500 has opened today with a +1.4% rise in early afternoon trade. Overnight European markets closed with +0.5% average gains. Yesterday in Asian markets Tokyo closed up +0.6 and Hong Kong was up +1.7%. The Shanghai was up +2.4% with a big push in "home team" buying. The ASX200 ended its session yesterday unchanged and the NZX50 Capital Index gained just +0.2%.
The latest global compilation of COVID-19 data is here. The global tally is still rising and at a fast pace, now at 118,222,000 and up +505,000 in one day, especially in Brazil, so no let-up globally. Global deaths reported now exceed 2,613,000 and +10,000 in a day. Vaccinations in the first world are rising however and in the US more than a quarter (94.9 mln) have now had this protection. That is quelling their daily death rate although it did stay up at +1600 yesterday. The number of active cases there is down to 8,680,000 (-31,000 fewer in one day).
The UST 10yr yield is up +1 bp at 1.52%. The US 2-10 rate curve is unchanged at 138 bps. Their 1-5 curve is still at +69 bps, while their 3m-10 year curve is stable too at just on +150 bps. The Australian Govt 10 year yield is down another -3 bps at 1.66%. The China Govt 10 year yield is unchanged at 3.27%. But the New Zealand Govt 10 year yield has fallen another -9 bps overnight to 1.73%.
The price of gold starts today firmer in New York, up +US$6 to just on US$1724/oz.
Oil prices have risen more than +US$2 overnight to just under US$66/bbl in the US, while the international price is back up to just over US$69/bbl.
The Kiwi dollar opens today noticeably firmer at 72.1 USc mainly because the greenback has weakened. Against the Australian dollar we are softer at 92.8 AUc. Against the euro we are little-changed at 60.2 euro cents. That means our TWI-5 is at 74 and a small overall firming.
The bitcoin price will start today little-changed from this time yesterday at US$56,577. Volatility in the past 24 hours has been +/- 2.8%. 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 ».
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