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US retail sales stutter but confidence surges; China readies huge African iron ore supply; Japanese retail sales rise; Brisbane faces Easter lockdown; UST 10yr at 1.72%; oil and gold down; NZ$1 = 69.7 USc; TWI-5 = 72.5

US retail sales stutter but confidence surges; China readies huge African iron ore supply; Japanese retail sales rise; Brisbane faces Easter lockdown; UST 10yr at 1.72%; oil and gold down; NZ$1 = 69.7 USc; TWI-5 = 72.5

Here's our summary of key economic events overnight that affect New Zealand with news we are in a period of messy transition before the expected global economic growth surge arrives.

In the US, retail sales as tracked weekly by the Johnson Redbook are increasingly hard to judge because of the 2020 pandemic distortion. But there are no signs in 2021 that consumers have started spending their latest stimulus payments in a significant way yet. But those at the bottom of the economic ladder will start getting their stimulus payments next week.

But the latest tracking of consumer confidence suggests this surge may not be far away. The US Conference Board confidence report shows a sharp rise in sentiment, its highest in more than a year, with both the 'present' and 'future' indexes moving higher.

And American home-price growth in January accelerated to its highest annual rate in 15 years as the supply of homes for sale dropped to a new low. The S&P CoreLogic Case-Shiller National Home Price Index rose more than +11% in the year.

In Canada they reported January payroll data, which shows the number of people in payroll employment falling, but average weekly earnings rising, and rising quite sharply (up +8.3% year-on-year). This is twisted because it is the low-paid who are losing jobs there, and those in jobs are working longer hours. Still, consumer confidence in Canada is back rising in March.

In China, new investment is being poured into a giant iron ore mining project in Guinea, West Africa. The quality of the iron ore is expected to be better than from Western Australia's Pilbara region. But the transportation risk is greater. However, it is a project that sends a clear message that China is trying to separate itself from its dependence on its trade with Australia.

Iron ore prices are softening. Freight prices are inching their way lower too after the Suez spike.

China's decade-long dash to construct high-speed rail is heading for a reckoning. They have built more than there is demand for. Now they are pulling back. The era of vanity rail project may be over as economic realities set in.

And China is on the back foot again over its use of forced labour in its Western provinces. The UN has released details of its current concerns, something China has been desperate to avoid. The pressure is squarely on customers of Chinese cotton.

Japanese retail sales are starting to show some life in February, with a good month-on-month rise and pairing back the year-on-year decline. It was their best result in more than six months.

Hong Kong retail sales in February remain highly depressed, and their year-on-year comparisons are distorted by the 2020 pandemic and civil unrest. Compared to February 2019, the 2021 result is -27% lower. Hong Kong is now a retail shadow.

In Australia, Queensland and Brisbane especially is looking at an extension of their lockdown, one that will be over Easter.

Wall Street is lower with the S&P500 is now down -0.4% in early afternoon trade. Overnight, European markets closed about +1% higher, led by Frankfurt, lagged by London. Yesterday, Tokyo closed with a +0.2% gain. Hong Kong was up +0.8%. Shanghai closed with a +0.6% rise. The ASX200 ended its session -0.9% lower while the NZX50 Capital Index ended +0.6% higher.

The latest global compilation of COVID-19 data is here. The global tally is still rising, now 127,863,000 have been infected at some point, up +544,000 in one day. Global deaths reported now exceed 2,796,000 and +10,000 in one day. Vaccinations in the world are also rising fast, now up to 552 mln and in the US more than 40% of their population (142.2 mln) have now had this protection (+3.3 mln in one day) as they achieve a very fast rollout. The number of active cases there fell to 6,967,000 (-30,000 in one day), so no overall sign yet of an unwelcome spike in infections and talk of a "fourth wave" in some states.

The UST 10yr yield is up +1 bp at 1.72% and earlier hit their highest levels since January 2020. The US 2-10 rate curve is steeper again at 158 bps. Their 1-5 curve is also steeper at +85 bps, while their 3m-10 year curve is also much steeper up at +171 bps. The Australian Govt 10 year yield is also up +3 bps at 1.78%. The China Govt 10 year yield is unchanged at 3.22%. And the New Zealand Govt 10 year yield is up +8 bps at 1.77%.

The price of gold starts today down another -US$28 at US$1685/oz and back to levels we last saw about a year ago. Silver is near a six month low.

Oil prices have fallen by about -US$1 and are now at just under US$60.50/bbl in the US, while the international price is now just under US$64/bbl.

The Kiwi dollar opens today softer at just on 69.7 USc. Against the Australian dollar we are marginally firmer at 91.9 AUc. Against the euro we are unchanged at 59.5 euro cents. That means our TWI-5 opens today dipping slightly to 72.5.

The bitcoin price will start today at US$58,683 and up another +1.8% from this time yesterday. Volatility in the past 24 hours has been moderate at +/- 2.0%. 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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71 Comments

Any gold bugs online today with any commentary, as I have been hearing it will break out this year over $2k..whats going on?

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Hoarding for when war breaks out? Only partially kidding.

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Bond prices up = Gold down.

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Collateral liquidation to meet margin call losses elsewhere.

The demand for pristine UST collateral at the Fed's Reverse Repo window rose to $104.725 billion, today.
The Fed's new O/N interest rate metric is stuck down at at 0.01%.
US TBills are in such demand their yields are locked down closer to zero than not.
5 yr TIPS real yields trade at minus 1.78%

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Audaxes, will these sales be enough to contain this issue do you think?

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The links I posted are symptoms of an unaddressed plumbing problem in the US financial system.

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Gold is a threat to the US$ (see Chinese gold back petro yaun) so it is continually manipulated down. Crypto, particularly BTC is being encouraged as a gold replacement - much to the joy of the Fed as they know they can collapse crypto any time they like. Gold not so.
Buying opp for gold and silver.

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Central banks sit on a hoard of bullion. Gold threatens them very little.

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"much to the joy of the Fed as they know they can collapse crypto any time they like. Gold not so." -- nice one rolled off my seat in laughter at that one!

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good for you. No doubt you are into buying NFT's as well. Same madness.

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Nope..don't understand nor have the time to go down NFT rabbit hole. BTC HODL...

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People might be buying Bitcoin instead of Gold after the Fed's comment...

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Visa Allows Users To Pay Using Cryptocurrency, Ethereum And Bitcoin
https://www.indiatimes.com/technology/news/visa-pay-cryptocurrency-ethe…

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Meanwhile GME is heading to the moon.

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Do you think China cares about what the UN thinks? At least they want to retain their sovereignty.

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Jesus
And commit genocide at the same time...

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The Entire World Should Be Laughing At America For Pretending To Care About Muslims In China

"The only sane response to the US empire feigning concern for the wellbeing of a foreign Muslim population is laughter, derision, and ridicule." Link

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I get that the USA and the west generally has lots of double standards, and supports some regieme that are doing dodgy stuff. It's a very valid criticism.
But it doesn't excuse what the CCO is doing. And doing directly and in a systematic way in their own country.
I don't know, perhaps it isn't really any worse than what the west does in a less direct way???

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In time CCP & China will be as embarrassed by their current behaviour. Somewhat like the English with the Irish potato famine and the USA and its history of black slavery. All three China now and the UK & USA 170 years ago were countries experiencing astonishing economic and social progress.

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It definitely doesn't, the CCP should be getting exactly what they are getting, international scorn.

However I can't remember a single comment on here over the past few years of the US supplying weapons to be dropped onto civilians in Yemen causing one of the worst humanitarian crisis in modern times. Nor the US's continual use of drones to murder targets and civilians in extra judicial killings. Nowhere do I see us talking about our best friends inhumane treatment against asylum seekers and refugees or ongoing marginalisation and abuse of their native people. I suspect it's because they look like us, a type of "well they are like us, so they must have a good reason" glazing over our "friends" continual abuse of others around the world.

People do know that there has been a rather large Islamic insurgency in China right? When living there Beijing was attacked in a series of co-ordinated attacks which closed down the city. My question is: how would the US react to a Islamic insurgency within it's own borders? Oh wait, we know, it would go to war against 2 countries and kill millions in response...

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Valid points.
And China's concern over insurgency is valid, I think. But the response is disproportionate and inhumane.

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Not really Fritz they have a huge population to "Control" in China and keep on the right path. Inhumane would have been to shoot the lot of them and throw them in a hole. Pretty big difference between what the Chinese are doing and what the Germans did at Auschwitz. The media seems a little one sided, there are wars that have been going on for years like in Yemen with tens of thousands killed and millions displaced and nobody really cares and nothing gets done to stop it. What should be pretty obvious is that a country functions better with ONE religion.

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Obviously the nazi's behaviour was the height of inhumanity, but come on!

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Agree. They should have just dropped bombs on them from afar. That would have made us far more comfortable, right?

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I don't know, perhaps it isn't really any worse than what the west does in a less direct way???

I don't wish to see NZ making regrettable statements, under pressure from the US, in respect of actions in the geo-political stomping grounds of sovereign elephants.

With battle lines openly drawn amongst the big powers, the prospect of the UN imposing any sanctions against Myanmar is receding — although UN Secretary-General Antonio Guterres who is seeking another term in office with US support is nowadays generally helpful by voicing opinions. The clumsy unprecedented move by the chiefs of defence of 8 NATO countries and Japan, South Korea, Australia and New Zealand to issue a condemnatory statement against the Myanmar military Saturday only shows what a high-stakes diplomatic pirouette Myanmar is becoming.

Fomin’s visit highlights the geopolitical struggle endemic to our transformative era. Warning bells must have rung in Moscow following the mobilisation of the pro-western non-Bamar ethnic separatist groups lately by British intelligence to create another “front” for the Myanmar military. The attack by the so-called Karen Liberation Army — make no mistake, KLA is a creation of British intelligence — on the Myanmar military and its capture of a military outpost on Saturday morning on the remote eastern border with Thailand is an indicator of the shape of things to come. Link

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Notwithstanding my points above, I find your CCP sympathies just a little weird.

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I find the lack of negative comment from Turkey and Saudia Arabia in respect of Chinese muslim genocide claims more weird.

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The USA has the world's most rapidly growing Muslim population so don't assume universal anti-Muslim prejudice. It is not just the US who is expressing concern - many other countries were expressing regrets before them. Admittedly the USA is bigger and louder and more noticeable.

The litmus test for checking if expressed repulsion for the suppression of Uighurs is really just anti-China sentiment is whether similar comments are made about the treatment of the Rohingya in Myanmar.

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It's more than just the USA who aren't happy to endorse another round of genocide.

Not sure that past occurrences of genocide excuse in any way current rounds of genocide.

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The Simple Equation

To begin with, even though CNY is China’s currency it’s not only bad for China but, eventually, it ends up being bad for the entire global economy. If it ends up being more than short run market fluctuations, like 2014 and 2018, then whatever or however “robust” the global economy is being spun at that time you can be assured that even the media cheerleaders won’t be able to keep up the sunny pretense for very long thereafter.

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" before the expected global economic growth surge arrives"

Come on David - that's rebuttable on first principles.

Where's the extra energy coming from? Where are the efficiency gains coming from? And after how much (more) energy is set aside for entropy-parrying-slash-triage? What resources and at what state of disparity are they?

All else is virtual magnification of issued debt, in other words a ponzi bubble-in-waiting. Blowing that balloon more will just result in a bigger bang. We have been more than a decade on life-support, with promises of interest-rate hikes and growth always just around the corner. Trouble is, it it taking more than a $ of global debt, to generate a $ of GDP (and that measure is already a massive fudge, in-and-out count-wise).

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No PDK DC is correct, people do expect an economic growth surge as the pandemic restrictions come off. That this is foolish, if not stupid is beside the point. Denial is rampant out there as the powerful and wealthy seek to further entrench their dominance, and the only way they can do that is to perpetuate the myth. Any other approach would require them to have to admit they have screwed the pooch and don't know how to fix it. This is just another religion now, another great lie.

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What I'm suggesting it that journalism should be questioning whether such is possible.

Reporting the instinct of a herd, unchallenged, is to reinforce that instinct by default.

Epitaph of the MSM in a nutshell, really.

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The Canadian data is interesting; with the low end stats dropping from the charts, the averages will rise anyway. the problem is Governments and economists can twist this information and claim it to mean something else, using it to justify denying pay increases and benefits across the workforce. Care has to be taken as to how this information is presented and used.

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Unfortunately we invested in houses, and not manufacturing and businesses that produce them.

How are the house producing/ development companies going on the stock exchange....

Isn’t this guy just wanting more can kicking down the road with more credit.

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Maybe, but I think his point is that his business is booming because the banks have limits to how much they can fund developers. If the govt underwrites the banks then they will be freed up to lend more.

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gnx - never forget that manufacturing is end-destined for houses, either to make them, to service them, or to fill them with 'stuff'.

That's all there is.

There is nothing else.

Even that stranded ship, was just full of house-destined stuff.

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“I'm between a rock and a hard place. I can't move forward, I can't move back, I can't move anywhere.”
Lyall Magee’s two rental properties also remain, after he requested an extension to remove them. They were his retirement plan."

Until we can change that last sentence from 'property' to 'savings from work effort', it's going to be hard going.
As this story shows, property is no guarantee of retirement savings.
https://www.stuff.co.nz/environment/124643201/the-last-resident-of-mata…

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Re Chinese vanity railway projects- none could be as vain as the farcical te Huia!!!!

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Kiwirail - now there a misnomour!

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Geopolitically it's a fascinating time, with China's manoeuvring...

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So in one year 0.03% of the world population has died of Covid. Does this meet the definition of "pandemic"? Is the economic price caused by the lockdowns, paid by 99. 97% of the population worthwhile?

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Yes and is it over? News to me..

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Would be interesting to know when it started. There were big influenza spikes in western Oz and NZ in 2019 that occurred earlier in the season than usual. Have we ever done any serology testing from 2019 blood samples?
https://ww2.health.wa.gov.au/-/media/Files/Corporate/Reports-and-public…
https://www.nzherald.co.nz/nz/four-times-as-many-aucklanders-suffering-…

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Yvil,

Ok, perfectly reasonable comment. But, you then need to spell out what we should have done. Without a lockdown, NZ would have had more deaths and many more in hospital, putting even greater strains on an already under resourced system.
Even without a lockdown, there would have been significant economic effects. How many deaths would you have been prepared to accept?

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If the borders were closed when MOH advised there would have been even less deaths, if any. In NZ lockdown seems to be conflated with border closure. The link between death rate and lockdown is weak - at best. Of the 0.3% that did die they were, on average, older than average life expectancy or already very ill. In Oz it is running at 86 years and the UK 82 years. We used to be happy when people died in their 80's because they made old bones - now we expect people to put their lives on hold and livelihoods on the pyre.
"Higher Covid death rates are observed in the [25/65°] latitude and in the [−35/−125°] longitude ranges. The national criteria most associated with death rate are life expectancy and its slowdown, public health context (metabolic and non-communicable diseases (NCD) burden vs. infectious diseases prevalence), economy (growth national product, financial support), and environment (temperature, ultra-violet index). Stringency of the measures settled to fight pandemia, including lockdown, did not appear to be linked with death rate."
https://www.frontiersin.org/articles/10.3389/fpubh.2020.604339/full
https://www.health.gov.au/resources/publications/coronavirus-covid-19-a…
https://www.health.govt.nz/system/files/documents/publications/final_re…

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profile: I agree with your thesis regarding old people. We seem to have unaccountably strayed from the historical norm where it was those in their teens and 20s who were considered to have reached the end of their life expectancy as they were trundled off to the endless wars throughout the history of mankind.
I agree with the collateral inference from your thesis that we should return to what is the more 'natural' condition of mankind and send each young generation off to some military conflagration knowing that half of them would never return to pester our society with demands for houses and keeping cafes open in the event of some new plague.
To further the object of your thesis we should immediately euthanize those few of advanced age that are still alive from that generation that saved the world from Japanese militarism and German Third Reich fascism; ACTion Mouse's Euthanasia act should facilitate this proposal.

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Only 0.03% because of what was done. Much higher if we did nothing.

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COVID, so far, has killed over 2% of those infected. Imagine if we lived 100 years ago? Like in the days of "Spanish" Flu

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*DUPLICATE ACCIDENTAL POST*

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"... paid by 99. 97% of the population ... "

The economic costs will likely be, and are already being, borne by people in lower socio-economic strata - the top 10-20% will likely come out of this with more money and resources.

Impossible to answer your question without understanding what the alternative response would have been

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8014..."the top 10 - 20% will likely come out of this with more money". How about the top 10-20% have already made a killing in the last 12 months. I am guessing that over 95% of the top 20% in NZ are far better off financially now than they were a year ago.

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What will be the economic price of the lingering health effects of COVID-19? A reasonable percentage suffer from some form of organ damage, after catching it. It'll be interesting once this stops, as we will be able to take stock of this. The Americans will be the most interesting example as they've foolishly allowed 9.3% (and counting) of their population to become infected. And with no universal healthcare either.....

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150 million Americans have probably had it. You are confusing the CFR with the IFR.

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Could you expand on that? I don't believe I'm confusing the infection rate, as I'm not referencing against fatalies per se - just infection rate overall. The US currently has had over 93,000 cases per 1 million population. I'll let you work out the percentage. But I'd love to know how that "probably had it" figure was estimated.

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donny.. I think America will have done their 200M+ people vaccination before we start on our general population.

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Covid Death rate USA 550K
Covid death rate NZ 26

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We are importing them, shutting them up in MIQ, then tipping them out, to await their Covid-19-long organ damage appear in our hospitals

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Don't worry Yvil, back here in NZ a minor (by popn %) failing socio economic group is having 25% of babies. Popn will recover.

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You know many nations were doing business with Nazi Germany right until the first shells dropped.

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There were many nazi sympathizers in England, at least until the bombs started dropping.

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Recommended listening: Hamish Douglass, CIO of Magellan Financial Group, on the perhaps irrational belief that the current vaccine rollout will result in certain elimination of the coronavirus. Particularly interesting is cited scientific research on the lack of efficacy of current vaccines against the variant in South Africa.

https://www.podbean.com/ew/pb-fukeh-ff1db4

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Mitsubishi UFJ Financial's warning of potential losses follows similar statements from Nomura and Credit Suisse...
Banks’ Archegos Hit May Be Up to $10B: JPMorgan.
“We are still puzzled why Credit Suisse and Nomura have been unable to unwind all their positions at this point,” the analysts wrote, adding that they expect to see full disclosures from lenders by the end of this week."

https://www.thinkadvisor.com/2021/03/30/banks-archegos-hit-may-be-up-to…

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Ray Dalio gives his latest update...

"Based both on how things have worked historically and what is happening now, I am confident that tax changes will also play an important role in driving capital flows to different investment assets and different locations, and those movements will influence market movements. If history and logic are to be a guide, policy makers who are short of money will raise taxes and won’t like these capital movements out of debt assets and into other storehold of wealth assets and other tax domains so they could very well impose prohibitions against capital movements to other assets (e.g., gold, Bitcoin, etc.) and other locations. These tax changes could be more shocking than expected."

"I also believe that assets in the mature developed reserve currency countries will underperform the Asian (including Chinese) emerging countries’ markets. I also believe that one should be mindful of tax changes and the possibility of capital controls."

https://www.linkedin.com/pulse/why-world-would-you-own-bonds-when-ray-d…

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Found it interesting that Dalio points out there is a reasonable possibility the Fed impose prohibitions against capital flows to gold and bitcoin. Things could get very interesting the next few years when people collectively realise just how much the Fed are destroying the value off fiat currency - there could be a mad scramble out of cash to any other store of wealth they can get their hands on, but limited by what the Fed allows them to buy or to move their cash into. Inflation could be very high.

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He’s probably filling his BTC bags on the sly.

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Fed digital wallet will be on the way soon.

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Yep its just a matter of time before we go digital. People with Bitcoin think its going to be the next reserve currency but I think it will just get wiped out by the creation of a new digital currency.

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"creation of a new digital currency" can you expand on will it be decentralized or who will own this new currency you talk about.?

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