Here's our summary of key economic events over the weekend that affect New Zealand as the world waits for high tide and a full moon in Egypt.
While dramatic, and the so-far six-day Suez Canal blockage will have a global impact, especially on shipping issues and costs, 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. And we shouldn't overplay it at this time.
The Baltic Dry Index, which tracks rates for capesize, panamax and supramax cargo ships, fell -22 points on Saturday, or -1%, its lowest since March 17. But it is still at an 18 month high in a run-up that started five months ago and essentially doubling since then. Pre-pandemic it was an index at 400; now it is at 2178. But recall that just before the GFC it had reached its record high of 11,793. The pricing for these heavily capital intensive vessels can get very extreme very quickly. It is a market that is 'normally volatile'.
According to a new upgraded forecast by the World Bank, China’s economy is expected to increase +8.1% this year, after growing +2.9% last year.
To help keep up the momentum, China announced 24 new measures to boost new types of consumption, including accelerating "new infrastructure" construction, and a rollout of pilot programs for the sovereign digital currency, all as part of efforts to drive domestic demand.
Chinese industrial profits surged in the first two months of 2021. Of course, a year ago they were battling their pandemic so the comparison with 2020 isn't terribly relevant. But compared with 2019, this latest update is +31% higher, so is actually quite impressive.
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 pandemicly low. Still, the February result was higher than expected.
In Saudi Arabia, it said it will plant 10 billion trees in the coming decades as part of an ambitious campaign to reduce carbon emissions and combat pollution and land degradation. Six months ago it started with a 10 mln goal, but this has been raised 1000 fold now.
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$1 tln per year. Of course they have a trade surplus in services, and the net of the two is equivalent to -3.2% of GDP.
Australian household net worth hit a new record high in Q4-2020 according to official data. It was pushed up by property prices and their superannuation accounts, rising +AU$½ tln in just three months to AU$12 tln and an average of NZ$510,000 per person.
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.
The latest global compilation of COVID-19 data is here. The global tally is rising and at a faster pace, now 126,911,000 have been infected at some point, up +1,164,000 in two days in a resurgence in Brazil and other South American countries, India, and mainland Europe. Global deaths reported now exceed 2,780,000 and +21,000 in two days. Vaccinations in the world are rising fast however, now up to 541 mln and in the US more than 40% of their population (138.9 mln) have now had this protection (+6.8 mln in two days) as they achieve a very fast rollout. The number of active cases there fell to 7,014,000 (-20,000 in two day) despite fears of an unwelcome spike in infections and talk of a "third wave".
The UST 10yr yield is up +1 bp at 1.67%. The US 2-10 rate curve is a tad steeper at 153 bps. Their 1-5 curve is little-changed at +80 bps, while their 3m-10 year curve is also a tad steeper at +166 bps. The Australian Govt 10 year yield is also up +1 bp at 1.73%. The China Govt 10 year yield is unchanged at 3.22%. And the New Zealand Govt 10 year yield is also unchanged at 1.65%.
The price of gold starts today little-changed at US$1733/oz.
Oil prices have plateaued with a softish tone and are now at just over US$60.50/bbl in the US, while the international price is now just over US$64/bbl.
The Kiwi dollar opens today at just under 70 USc. Against the Australian dollar we are holding at 91.6 AUc. Against the euro we are also holding at 59.4 euro cents. That means our TWI-5 opens today unchanged at 72.4.
The bitcoin price will start today at US$56,218 and up +4.6% from this time Saturday. Volatility in the past 24 hours has been low at +/- 1.2%. 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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