Here's our summary of key economic events overnight that affect New Zealand, with news of new inflation risks from the dramatic Suez Canal blockage that will upset most global supply chains.
But first in the US, there was a sharp drop in initial jobless claims last week, falling more than -100,000 to 657,000 and the lowest in a year. In addition there were 242,000 Pandemic Unemployment Assistance claims filed, also a very sharp reduction. (Interestingly, exactly a year ago, the first of the huge spikes in claims started with almost 3 mln people filing claims then in one week.) There are now 3,870,000 people still on these benefits. This is very much lower than analysts were expecting.
The next regional factory survey, this one by the Kansas City Fed, shows the solid expansion well embedded with strong new order growth. But this latest survey continues the reporting that input costs are rising fast and most firms say they can pass most of them on.
The Atlanta Fed's GDPNow forecast has the US economy growing at +5.4% pa in March.
The US Treasury had a big bond tender for its benchmark 7yr Note and the yield rose to +1.3% pa and well above its prior 1.195%. US$150 bln was tendered for the US$73 bln that was accepted. Today's result takes the yield back to higher than a year ago after the suppressed pandemic falls.
In the dramatic Suez Canal blockage and shutdown, it is now expected to "take weeks" to clear the problem. The blockage is creating long tailbacks in the waterway, with more than 150 vessels currently waiting in the area to pass. The alternative Cape Town route can add two weeks plus to the journey. There will be a global impact from this problem, sharply increasing shipping costs and container availability everywhere, all adding to an already stressed and expensive problem.
In Canada their housing regulator is pointing out their vulnerability to a downward price correction there. Toronto is the key market at risk, but these risks of overheating are spreading to other cities they say, and the coming correction could be sharp.
In Germany, there was a notable shrinkage in their negative consumer sentiment, a result of the easing of their lockdown conditions.
In China, a different kind of supply chain problem is growing. The boycott of the use of forced or slave labour in making Chinese cotton is seeing Beijing force its ecommerce firms to remove the products of companies who adhere to that boycott. It is an issue that is further fracturing relations between the West and China, and China's sensitivity over the issue (in support of slave labour) is hard to understand except as a challenge to their wounded pride. The Australians have called China a 'vindictive' and 'unreliable' trading partner, an escalation that is sure to draw a response.
After being lower earlier, Wall Street in their Thursday session is flat in early afternoon trade. Overnight, European markets were little-changed except London which dropped -0.6%. Yesterday, Tokyo recovered with a +1.1% rise after the Wednesday drop, and both Hong Kong and Shanghai ended with a no-change result. Both the ASX200 an the NZX50 Capital Index rose +0.2%.
The latest global compilation of COVID-19 data is here. The global tally is still rising and at a fast pace, now 124,985,000 have been infected at some point, up +555,000 in one day. Global deaths reported now exceed 2,747,000 and +9,000 in one day. Vaccinations in the world are rising fast however, now up to 490 mln and in the US almost 40% of their population (129.3 mln) have now had this protection (+2.2 mln) as they achieve a very fast rollout. The number of active cases there fell yesterday to 7,021,000 (-29,000 in one day), resuming the reducing trend and taking the number currently infected down to 2.1% of their population.
The UST 10yr yield is unchanged at 1.62%. The US 2-10 rate curve is marginally flatter at 147 bps. Their 1-5 curve is unchanged at +76 bps, while their 3m-10 year curve is flatter at +160 bps. The Australian Govt 10 year yield is also down -3 bps at 1.68%. The China Govt 10 year yield is unchanged at 3.22%. But the New Zealand Govt 10 year yield has recovered some of yesterday's big fall, up +6 bps to 1.59%.
The price of gold starts today back down -US$7 in New York at US$1728/oz.
Oil prices have given up all of yesterday's recovery and more, down -US$3/bbl and are now at just over US$58/bbl in the US, while the international price is now just under US$61.50/bbl.
The Kiwi dollar opens today even lower at 69.6 USc with an extended devaluation that has now reached -4.0% in just over a week. Against the Australian dollar we are holding at 91.7 AUc. Against the euro we are also holding at 59.1 euro cents. Today's shifts are again all about a rising greenback. That means our TWI-5 opens today marginally lower at 72.2.
The bitcoin price will start today at US$51,153 and down a sharp -8.5% from this time yesterday. Volatility in the past 24 hours has been very high at +/- 5.9%. 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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