Here's our summary of key economic events overnight that affect New Zealand, with news benchmark bond yields have resumed their aggressive rising trend today, causing even more pain for bond investors as inflation expectations stay high.
This latest spurt is soon to be followed by a scheduled US Fed meeting on Thursday (NZT) and all eyes will be on their reaction to these benchmark rises. The Fed grew its balance sheet by +US$140 bln over the past month to almost US$7.6 tln, but perhaps much more is coming. However, at this time markets aren't betting on it.
Elsewhere in the US, consumer sentiment rose very sharply as a result of the passing of their stimulus package, a measure that currently has wide bipartisan support.
In Canada, there has been a surge of hiring in February, and far more than was expected. But although there were good full-time employment gains, most of the rise was in part-time employment. Their jobless rate fell sharply from an uncomfortably high 9.4% to a still-high 8.2%. They have a long way to go yet for their labour market to recover. Canadians are doing the pandemic tough.
In China, they are getting a surge as well, in their case of foreign direct investment. It was up +32% in February from a year ago although to be fair, the 2020 base was severely compromised by the pandemic.
Not surging, or even improving at all is Hong Kong industrial production. The latest data down that down -6% year-on-year, a retreat similar to the prior period data.
India also released industrial production data overnight and that declined too, disappointing because a small rise was expected.
Slightly more positively, EU industrial production rose when a decline was expected. This was led by Ireland and a number of northern and eastern European states. Germany was a drag on these results.
In the UK they are suffering the consequences of their Brexit decision. Their economy is now -9% smaller than a year ago, and shrinking almost -3% in January alone. Exports to the EU have dived more than -40% while imports from the EU shrank -28%. No other trade has stepped up to replace those sorts of shifts and it is unlikely they will either, in the intermediate term at least. Managing atrophy and decline is their immediate priority.
Back in China, their African Swine Fever risk is remaining high, generating tough new restrictions that threaten pork supplies and therefore food prices and to some extent food security. Adding to concerns is the discovery of new variants.
And not helping is the rise and rise of animal feed commodities with soybean and corn prices on the rise again.
Iron ore prices fell almost -2% three days ago, but that shift lower hasn't gained any momentum since. Australian miners will still be very happy at these adjusted levels.
In Australia, they moving to close the 1500 MW Yallourn thermal coal fired electricity generation plant in Victoria. This follows the close of the coal-fired Hazelwood plant earlier. These are actions that reduces electricity generation resilience, but coal is no longer financially viable in the face of fast-falling electricity from renewable sources. They are going to have to live with the variability of renewables, and as they have seen in recent times, that can be painful at just the wrong times.
At the OECD, the conservative Australian politician Mathias Maruis Corman has pulled off an upset to win the Secretary General position.
In New York, the S&P500 has opened today with a -0.2% dip in early afternoon trade. But that is heading for a very respectable +2.2% rise for the week, and the second best week since the sharp jump when the US election result was known in November 2020. Overnight European markets closed with mixed results. Yesterday in Asian markets Tokyo closed up with a very strong +1.7% gain and taking the weekly change to +3.0%. Hong Kong ended yesterday down -2.2% giving a weekly loss there of -1.2%. The Shanghai market was up +0.5% yesterday and for the week it booked a loss or -1.4%. But this is a market where the "home team" is buying hard to prevent a much harder retreat. The Beijing put is in full effect there. The ASX200 ended its session yesterday up +0.8% but for the week it was also up just +0.8%. And the NZX50 Capital Index gained +1.2% in Friday trade, taking the weekly rise to +1.8%.
The latest global compilation of COVID-19 data is here. The global tally is still rising and at a fast pace, now at 118,799,000 and up +577,000 in one day, especially in Brazil, so no let-up globally. Global deaths reported now exceed 2,634,000 and +21,000 in a day. Vaccinations in the first world are rising however and in the US more than a quarter (97.4 mln) have now had this protection. That is quelling the US daily death rate which was +1500 yesterday. The number of active cases there is down sharply to 7,892,000 (-788,000 fewer in one day).
The UST 10yr yield is up +11 bps at 1.63% with a sharp rise to its highest in more than a year. The US 2-10 rate curve is sharply steeper at 148 bps. Their 1-5 curve is also much steeper at +77 bps, while their 3m-10 year curve is steepening too at just on +160 bps. The Australian Govt 10 year yield is up +16 bps at 1.82%. The China Govt 10 year yield remains an island of stability at 3.28%. And the New Zealand Govt 10 year yield has hardly changed overnight, so far up just +1 bp to 1.74%.
The price of gold starts today marginally softer in New York, down -US$2 to just on US$1721/oz. Central banks are back as net sellers of gold, even autocrats like Russia are selling down.
Oil prices have stayed high overnight to just over US$66/bbl in the US, while the international price is now just over US$69.50/bbl.
The Kiwi dollar opens today noticeably weaker at 71.8 USc mainly because the greenback has strengthened. Against the Australian dollar we are softer at 92.5 AUc. Against the euro we are little-changed at 60.1 euro cents. That means our TWI-5 is at 73.8 and a small overall softening.
The bitcoin price will start today up almost exactly +US$1000 from this time yesterday at US$57,578. While that is not an all-time record high, it is close. In New Zealand dollars however, it is, breaching NZ$80,000 for the first time ever. 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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