IMF sees growth rising in first world, but developing world to struggle; China PMIs weaken; US jobs growth surges; Yellen calls for big tax changes; UST 10yr at 1.71%; oil jumps and gold lower; NZ$1 = 70.6 USc; TWI-5 = 73.1

Here's our summary of key economic events over the long holiday weekend that affect New Zealand with news Janet Yellen is calling for a global minimum tax on multinationals.

But first up today, the IMF has released a series of global economic reports, the heart of which show rising economic growth rates especially in the first world, but problems for the developing world and rising inequality. The improving American economy is drawing billions of dollars in capital from emerging markets, stirring concerns that investor flight may destabilise these countries where pandemic infections remain high and the prospect of an economic recovery seems distant. Not helping are awful local public policy positions in places like Turkey and Brazil.

The IMF is also warning about the rising nonfinancial sector leverage, which they see as a real risk to be addressed and entirely a consequence of loose monetary policies and vast pandemic stimulus. And it is pointing out the global risks from commercial real estate in the post-pandemic environment.

In China, there was a not-so-flash private sector Caixin PMI report. Like its official version, this one reports a cooling in their expansion of activity in private factories and the heat has well and truly gone out of their sharp recovery. It was the slowest 'expansion' in almost a year.

But price rises, some quite sharp, are becoming more common. For example, corn prices have risen almost +50% in a year, and there are moves to substitute it wheat and rice in animal feed. That may have future food security issues for China.

In South Korean factories remain in a solid expansion mode. Factories in Taiwan are expanding even faster.

In the US, the March non-farm payrolls report was a good, positive one, led by an accelerating pace of vaccinations and the anticipation of more stimulus. Employers added +916,000 jobs in March, up from +416,000 in February and the most since August 2020. The leisure and hospitality sector led the way, adding +280,000 jobs as Americans returned to restaurants and resorts in greater numbers. However, these gain left the pandemic deficit at an -8.4 mln jobs lost since February 2020, so they have a long way to go. Analysts say that future gains will grow from here, with the April data likely to be even better because the March data was collected before most states opened up, and before the latest stimulus payments actually arrived.

One feature we should watch; as more lower-paid jobs open up in their workforce, the strong growth in average weekly earnings is moderating, but it is still higher by +4.2% pa, just not as high as the prior +5.2% pa.

The number of initial claims for unemployment benefits actually rose marginally last week, although to be fair, the prior week's numbers were revised lower. That means the total number of these benefits is now 4.1 mln, and a level lower than a week ago.

The labour market improvements are also reflected in the state of American factories. They are running at the best levels in 14 years and since before the GFC. The March results were affected by well-publicised supply-channel problems, but new order levels are high, and hiring is rising. The previously noted sharp rises in costs and prices is also a feature of these reports. The locally-watched ISM PMI reported strong conditions in the face of pandemic difficulties. The internationally benchmarked Markit PMI was equally positive, as was their services sector expansion.

American vehicle sales rose sharply in March to a rate of 17.7 mln per year, up from 15.5 mln per year in February. Still, this leaves the American car markets still well into second place behind China.

Canadian building permits rose unexpectedly strongly, in this case in February from January, with notable rises in non-residential construction permits. Building permit levels for residential construction were lower in February than January, but year-on-year they are up a very notable +25%.

In Chicago, Treasury Secretary Janet Yellen has called for a global corporate minimum tax on multinationals.

In Washington, a key consumer protection regulator is proposing some rule changes to "prevent avoidable foreclosures" as the emergency pandemic measure expire. Essentially, they are extending the time borrowers have to work through repayment stress issues.

In Europe, their factory sector is rising as well. Record increases in output, new orders, exports and purchasing activity were recorded, while unprecedented supply-chain delays drove their sharpest rise in input costs for a decade.

In Australia, their factories are expanding faster too.

While a top producer in the minerals world says it expected the iron ore price to fall -50% in 2021, in fact it is holding high, and there are reports of more supply disruptions and the immediate risk of for even higher prices. Inflation isn't getting any respite from core commodities. Further, in a few days, we will get the latest update on global food prices, and almost certainly they have risen in March.

On Wall Street, the S&P500 is up a strong +1.3% in early afternoon trade. European markets were closed overnight for Easter. Yesterday, the Shanghai and Hong Kong exchanges were closed for local holidays, but Tokyo was open and it rose +0.8%. Obviously, the ASX and NZX were closed yesterday.

The latest global compilation of COVID-19 data is here. The global tally is still rising, now 131,548,000 have been infected at some point, up +1,638,000 in two days. Global deaths reported now exceed 2,856,000 and +18,000 in two days. Vaccinations in the world are still rising fast, now up to 653 mln and in the US almost 45% of their population (163.6 mln and up +11.3 mln in 5 days) have now had this protection as they achieve a very fast rollout. The number of active cases there fell to 6,904,000 and down -38,000 since Saturday.

The UST 10yr yield is up +1 bp at 1.72%. The US 2-10 rate curve has steepened slightly to 154 bps. Their 1-5 curve is flatter at +88 bps, while their 3m-10 year curve is unchanged at +169 bps. The Australian Govt 10 year yield is up +1 bp at 1.77%. The China Govt 10 year yield is unchanged at 3.22%. And the New Zealand Govt 10 year yield is unchanged as well at 1.83%.

The price of gold starts today down -US$4 from Saturday at US$1726/oz.

Oil prices have slumped over the weekend by about -US$2.50 and are now at just under US$58.50/bbl in the US, while the international price is now just over US$62/bbl.

The Kiwi dollar opens today marginally firmer at just on 70.6 USc. Against the Australian dollar we are unchanged at 92.3AUc. Against the euro we are also virtually unchanged at 59.8 euro cents. That means our TWI-5 opens today a little higher at 73.1.

The bitcoin price will start today at US$58,977 and down -0.3% from this time Saturday. Volatility in the past 24 hours has been moderate at +/- 2.1%. 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 ».