Here's our summary of key economic events overnight that affect New Zealand, with news Australia may be facing a new wave of small business failures as their recovery misses the mark for many.
But first in the US, personal income fell -7% in February from January, after the +10% stimulus-boost it got in January. Of course there is the current additional stimulus going out so it will get a March boost as well. Personal spending fell -1% in response in February after the +3.4% January rise. We will be seeing distorting stimulus changes for a few months yet, so it will be hard to tell the background progress, if any, they make in household incomes or spending.
US PCE inflation is essentially unchanged in February from January, but it is up +1.6% from a year ago and that is a rising pace.
The more current surveys of consumer sentiment are quite positive, with the latest UofM survey up more than +10% in March from February, and now to its highest level in more than a year.
The American merchandise trade deficit for February came in at -US$86.7 bln, its worst ever. Exports fell -7% year-on-year and imports rose +8% year-on-year. This means they are running their goods trade deficit at the rate of -US$1 tln per year. Of course they have a trade surplus in services, and the net of the two is equivalent to -3.2% of GDP.
The Fed's balance sheet swelled by another US$26 bln last week to US$7.7 tln, although this latest rise is actually small in the perspective of recent changes. Since the start of 2021 their 'assets' have risen +US$356 bln or almost +5%. The US Fed balance sheet is now at about 35% of US GDP. For comparison, the RBNZ balance sheet is 'only' 24% of NZ GDP, even after all our pandemic support operations. In Australia it is just on 20%.
While dramatic, the Suez Canal blockage will have a global impact, especially on shipping issues and costs. But it is a crisis that will affect Europe the most (and play heavy in their media). It will have a much lesser impact on us.
China’s economy is expected to increase +8.1% this year, after growing +2.9% last year, according to a new upgraded forecast by the World Bank.
To help keep up the momentum, China announced 24 new measures to boost new types of consumption, including accelerating "new infrastructure" construction, and rollout of pilot programs for the sovereign digital currency, all as part of efforts to drive domestic demand.
ANZ analysts say they expect Chinese steel output to rise slightly by +2.3% in 2021. With demand for steel moderating, the risks of over-supply are rising. As a result, steel prices may face a soft patch following the current boom. Over the longer term till 2025, China’s intention to consolidate the steel industry capacity and to increase self-dependency for iron ore will pose downside risks to its iron ore imports, but the impact will be gradual. Current iron ore prices are holding high.
South Korean consumer confidence is rising in March and faster than was expected. Especially encouraging for them was the indication consumer spending is about to rise even faster. This is the first time sentiment is net positive there since before the onset of the pandemic.
Singaporean industrial production continues to expand at a fast clip, up +16% year-on-year although some of this is because the 2020 base was pandemically low. Still, the February result was higher than expected.
Australian household net worth hit a new record high in Q4-2020 according to official data. It was pushed up by property prices and their superannuation accounts, rising +AU$½ tln in just three months to AU$12 tln and an average of NZ$510,000 per person. Obviously, it is not evenly spread. Household assets values rose +5.3% to AU$14.6 tln but liabilities only rose +0.9% to AU$2.5 tln. New Zealand's Q4-20 household net worth will be reported by the RBNZ on Tuesday, March 30, 2021.
But things are not so positive in the small business community there. Business insolvencies are expected to spike in the wake of JobKeeper’s end with credit analysts Equifax warning the end of the subsidy was one of a number of factors that were about to trigger a wave of 300,000 to 400,000 business failures across Australia, with the pain felt overwhelmingly among small and medium firms. And especially in Victoria.
Wall Street in their Friday session is up +1% in early afternoon trade and heading for a +0.9% gain for the week. Overnight, European markets did better, rising on average about +0.9%. Yesterday, Tokyo, Hong Kong and Shanghai all rose +1.6% in each of their sessions. That means Tokyo ended the week down a net -2.1%, Hong Kong was up a minor +0.4% for the week. The ASX200 rose +0.5% yesterday to end the week +1.7% higher. And the NZX50 Capital Index fell -0.3% yesterday to cap a week where it declined -1.3%.
The latest global compilation of COVID-19 data is here. The global tally is rising and at a faster pace, now 125,747,000 have been infected at some point, up +762,000 in one day. Global deaths reported now exceed 2,759,000 and +12,000 in one day. Vaccinations in the world are rising fast however, now up to 509 mln and in the US almost 40% of their population (132.1 mln) have now had this protection (+2.8 mln) as they achieve a very fast rollout. The number of active cases there actually rose yesterday to 7,034,000 (+13,000 in one day), as they get an unwelcome spike in infections.
The UST 10yr yield is up +4 bps at 1.66%. The US 2-10 rate curve is much steeper at 152 bps. Their 1-5 curve is also steeper at +79 bps, while their 3m-10 year curve is steeper at +165 bps. The Australian Govt 10 year yield is also up +4 bps at 1.72%. The China Govt 10 year yield is unchanged at 3.22%. But the New Zealand Govt 10 year yield has risen for a second day, up another +6 bps to 1.65%.
The price of gold starts today back up +US$4 in New York at US$1732/oz. Gold has meandered in a tight range all week.
Oil prices have overcome yesterday's sharp drop and are back up +US$3/bbl and are now at just over US$61/bbl in the US, while the international price is now just over US$64.50/bbl. More well are being brought back into production in the US.
The Kiwi dollar opens today with a small recovery to 69.9 USc but that leaves the weekly devaluation at -2.4%. Against the Australian dollar we are holding at 91.6 AUc. Against the euro we are also firmish at 59.3 euro cents. That means our TWI-5 opens today marginally firmer at 72.4.
The bitcoin price will start today at US$53,759 and down a bounce back of +5.1% after yesterday's sharp drop. But for the week, this crypto is down -8%. Volatility in the past 24 hours has been moderate at +/- 2.7%. 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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