Here's our summary of key economic events overnight that affect New Zealand with news the international economy is basically healthy again as we move into the long holiday break.
First today, the new US President has announced his big infrastructure plan, a US$2.25 tln proposal and funded in part by raising the corporate tax rate and 'closing loopholes'. Believe it or not, Wall Street likes the plan and rose sharply today, even if they don't want the taxes aimed at them. It is a plan that may face trenchant Republican opposition, but given the Biden success in pushing through the first stimulus plan, this one may also have a reasonable chance of success.
Elsewhere in the US, fast rising mortgage interest rates have capped the growth in mortgage applications. Those rising rates may have also taken the steam out of their residential real estate market with pending home sales down -10.6% in February in a nationwide trend. In fact, they now have a year-on-year decline as well, snapping a long string of housing market volume gains.
On Saturday (NZT) we will get the March non-farm payrolls report for the US, and another strong gain is expected of +647,000 after a strong February. Today expectations for the ADP Employment Report were high as well (+550,000) but the actual result was slightly lower at +517,000. There were gains across the board, but especially in their services sector, and especially in hospitality as they reopen.
Also very positive is the Chicago PMI which came in at its highest in nearly three years. Among the main five indicators, Production saw the largest gain, while Order Backlogs saw the biggest drop. Prices paid at the factory gate escalated for the seventh month in a row.
In China, they reported a small but welcome improvement in their factory PMIs. A much bigger improvement was reported in their service sector PMIs. This is positive data, but compared to the rebound in the US, it is relatively tame.
And China said it had an investment outflow in 2020, allowing funds to flow out of the country in part to ease the pressure on the yuan. The amounts involved are not huge however, about NZ$110 bln over the whole annual period.
South Korea reported February factory production data overnight and there were strong month-on-month gains (+4.9%) and a small +1.0% year-on-year rise.
Japan also reported February factory production data and that wasn't positive, with declines month-on-month (-2.1%) and year-on-year (-2.6%). The best they can say is that these declines are less than previously.
In Australia, there are suggestions that the Bank of Queensland might be contemplating a purchase of Westpac NZ.
Wall Street is higher today with the S&P500 is now up +0.8% in early afternoon trade. Overnight, European markets closed about -0.3% lower, although London was down -0.9%. Yesterday, Tokyo also closed with a -0.9% drop. Hong Kong was down -0.7%. Shanghai closed with a -0.4% loss. The ASX200 ended its session -0.8% higher and making back the Tuesday loss, while the NZX50 Capital Index ended with a +0.9% gain on top of the good prior day gain.
The latest global compilation of COVID-19 data is here. The global tally is still rising, now 128,451,000 have been infected at some point, up +588,000 in one day. Global deaths reported now exceed 2,807,000 and +11,000 in one day. Vaccinations in the world are also rising fast, now up to 552 mln and in the US almost 45% of their population (146.3 mln) have now had this protection (+4.1 mln in one day) as they achieve a very fast rollout. The number of active cases there fell to 6,954,000 (-13,000 in one day), so no overall sign yet of an unwelcome spike in infections.
The UST 10yr yield is up +1 bp at 1.73%. The US 2-10 rate curve has flattened slightly to 156 bps. Their 1-5 curve is unchanged at +85 bps, while their 3m-10 year curve is also unchanged at +171 bps. The Australian Govt 10 year yield is up +3 bps at 1.81%. The China Govt 10 year yield is unchanged at 3.22%. And the New Zealand Govt 10 year yield is up +5 bps at 1.82%.
The price of gold starts today having recovered yesterday's sharp fall, up +US$29 at US$1714/oz. For the month, the gold price is virtually unchanged.
Oil prices have stabilised 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 marginally firmer at just on 70 USc. Against the Australian dollar we are unchanged at 91.9 AUc. Against the euro we are also virtually unchanged at 59.6 euro cents. That means our TWI-5 opens today fractionally higher at 72.7. And that means our currency devalued by -1.8% over the month of March.
The bitcoin price will start today at US$58,916 and up a mere +0.4% from this time yesterday. But it rose a massive +26% over the whole March month. Volatility in the past 24 hours has been moderate at +/- 2.5%. 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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