Here's our summary of key economic events over the weekend that affect New Zealand, with news China is increasingly closing itself off from most meaningful scrutiny.
Tracking what is really going on in China is getting harder as it veers toward media controls that don't permit anything but sycophantic praise for Beijing. It's controls are now pervasive.
But we do know that 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.
China is getting a surge 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.
Worldwide, benchmark bond yields resumed their aggressive rising trend at the end of last week, 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.
In addition to the Fed, central banks are meeting in Japan, Norway, Brazil, the UK and Turkey.
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.
Also 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.
In Australia, they moving to close the 1500 MW Yallourn thermal coal fired electricity generation plant in Victoria. This follows the closure 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.
And we should note the results of a remarkable election in Western Australia. The governing Labor Party has won 52 seats in its 59 seat State parliament. It was already dominant and held 40 seats before this election. Voters are leaning the other way in NSW with an equally lopsided view. It seems politicians who were strict in combating COVID are being rewarded handsomely. The same it true in Victoria.
And Australia is working to establish Singapore as a quarantine gateway, holiday destination and potential vaccination hub for returning Australians, international students and business travellers. If successful it could kick-start the multi billion-dollar market for international students at Australian universities.
At the OECD, the conservative Australian politician Mathias Corman has apparently pulled off an upset to win the Secretary General position and beating out a strong female candidate. There is some clear irony here as the OECD has been promoting its program, "Recovery through Women's leadership".
The latest global compilation of COVID-19 data is here. The global tally is still rising and at a fast pace, now at 119,688,000 and up +889,000 in two days, especially in Brazil, so no let-up globally. Global deaths reported now exceed 2,651,000 and +17,000 in two days, so perhaps slowing. Vaccinations in the first world are rising however and in the US more than a quarter (104.8 mln) have now had this protection. That is quelling the US daily death rate which was +1000 yesterday. The number of active cases there is down sharply to 7,388,000 (-504,000 fewer in two days).
The UST 10yr yield is up +11 bps from Friday at 1.63% with a sharp rise to its highest in more than a year. The US 2-10 rate curve is steeper at 148 bps. Their 1-5 curve is also steeper at +77 bps, while their 3m-10 year curve has steepened too at just on +160 bps. The Australian Govt 10 year yield is up at 1.81%. The China Govt 10 year yield remains an island of stability at 3.28%. And the New Zealand Govt 10 year yield is still at 1.74%.
The price of gold starts today firmer after closing in New York up +US$7 to just on US$1728/oz.
Oil prices have stayed high over the weekend dipping just +50 USc to just over US$65.50/bbl in the US, while the international price is now just over US$69/bbl.
The Kiwi dollar opens today holding at 71.7 USc and about where it was a week ago. Against the Australian dollar we are at 92.5 AUc. Against the euro we are just under 60.1 euro cents. That means our TWI-5 opens the week at 73.7.
The bitcoin price will start today up +3.6% from this time Saturday at US$57,578. But in between, it powered up to US$61,557 and a new all-time record high reached a bit before 10am NZT yesterday. It has drifted lower since. In New Zealand dollars, it is currently at NZ$83,100 and has risen +NZ$15,000 in a month. Volatility in the past 24 hours has been a relatively low +/- 1.9%. 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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