Here's our summary of key economic events overnight with news there has been a very large rise in consumer credit growth in the US in February as optimism gathered steam.
Consumer credit rose a rather remarkable +7.9% year-on-year, or up +US$27 bln from January, the largest rise ever. There was a good rise in credit card (revolving) balances, but the really big increase was for personal loans, especially car loans.
The US Federal Reserve has released minutes from its last meeting. And the Fed officials say it will be "some time" before conditions would be met for scaling back their US$120 billion a month asset-purchase campaign.
They said it would likely be some time until substantial further progress toward the Fed's maximum-employment and price-stability goals would be realised.
They had previously forecast they would keep the benchmark lending rate near zero until at least 2023. That was despite sharply upgrading their forecasts for growth this year amid rising confidence and a fresh round of fiscal stimulus.
Meanwhile, the much faster pick up in US economic activity after the effects of the Covid pandemic have seen the US trade deficit jump 4.8% to a record $71.1 billion in February. The deficit was higher than market forecasts of a $70.5 billion deficit. The goods trade gap was also the highest on record.
Main driver of the deficit was trade with China, the the deficit there increasing $3.1 billion to $30.3 billion in February. Exports decreased $4.5 billion to $10.4 billion and imports decreased $1.5 billion to $40.6 billion.
Consumer goods exports fell as did those of motor vehicles, parts and engines. There were also fewer food exports. The pandemic remained a drag on services exports, especially travel.
Elsewhere in the US, JP Morgan Chase CEO Jamie Dimon in his influential annual letter to shareholders has said the US economy will now likely boom. He says this will be based on a a combination of excess savings, deficit spending, a potential infrastructure bill, vaccinations and “euphoria around the end of the pandemic.” He believes the boom “could easily run into 2023.” That could justify high equity valuations, but not the price of US. debt, given the “huge supply” soon to hit the market.
And he also says there is a chance that a rise in inflation would be “more than temporary,” which would force the US Fed to raise interest rates aggressively. Dimon hopes though for the so-called Goldilocks scenario. That would see fast growth, gently increasing inflation and a measured rise in interest rates.
In Canada merchandise exports decreased by 2.7%, in February while imports fell 2.4%. As a result, Canada's merchandise trade surplus with the world narrowed from C$1.2 billion in January to $1.0 billion in February. This was the first time since late 2016 that the trade balance was in a surplus position for two consecutive months.
In international news, although the airline passenger travel recovery seems a very long way off, the aircargo rebound has been very strong in February 2021. Compared with the robust conditions in February 2019, this year they were a rather remarkable +9.6% higher, with the Asia/Pacific region up almost +11% on that same basis. (Of course, the year-on-year gains are highly distorted.)
The Chinese reported another slip in their foreign exchange reserves in March compared with February. It wasn't large, but it was slightly more than analysts were expecting. They are down to under US$3.2 tln now. But recall, they were US$3.06 tln in March 2020, so they are now +3.6% higher now.
Although they have been stable for weeks now, yesterday there was a notable slip in the iron ore price, with it falling an unusual -1.5% on the day. Coking coal prices fell more than -1% on the day as well.
China saw a total of 9.66 million newly registered motor vehicles in the first quarter of this year, a record high for the same period in any year. This brought the total number of motor vehicles in China to 378 million by the end of March, including 287 million cars.
And staying in China, reports that the energy consumption and carbon emissions from Bitcoin mining will undercut China’s climate efforts without more stringent regulations and policy changes, according to a new study from academics in China, the US and UK.
If things carry on as they are China’s energy consumption from Bitcoin mining in 2024 will exceed the total energy consumption of countries like Italy and Saudi Arabia, the study said. And the carbon emissions will top the annual greenhouse gas emissions of countries including the Netherlands, Spain and the Czech Republic.
On Wall Street, the S&P500 is flat in early afternoon trade. European markets were down an average of -0.2% overnight, but London was the outlier again, rising another strong +0.9%. Yesterday, the Shanghai market ended down -0.1%, Hong Kong was down -0.9% and giving up part of the prior day's large gain, while the very large Tokyo market closed up a minor +0.1%. The ASX200 rose +0.6% yesterday, and the NZX50 Capital Index rose +0.7%.
The latest global compilation of COVID-19 data is here. The global tally is still rising, now 132,658,000 have been infected at some point, up +634,000 in one day, mostly in Brazil (+83,000), Turkey (+50,000) and India (+105,000). Global deaths reported now exceed 2,878,000 and +13,000 in one day. Vaccinations in the world are still rising fast, now up to 694 mln (+15 mln) and in the US half of their population (167.1 mln have had al least one dose and up +1.3 mln in one day) have now had this protection as they achieve a very fast rollout. The number of active cases there fell to 6,868,000 and down only -2,000 overnight as some new hotspots emerge with problematic variants.
The UST 10yr yield is down -1 bp at 1.65%. The US 2-10 rate curve is unchanged at 150 bps. Their 1-5 curve is flatter at +80 bps, while their 3m-10 year curve is unchanged at +164 bps. The Australian Govt 10 year yield is down by -3 bps at 1.68%. The China Govt 10 year yield is firmish at 3.24%. But the New Zealand Govt 10 year yield is down by -4 bps at 1.76%.
The price of gold starts today down -US$3 from this time yesterday at US$1740/oz.
Oil prices are little-changed from this time yesterday at just under US$59.50/bbl in the US, while the international price is now just under US$63/bbl. But it has been quite volatile in between.
The Kiwi dollar opens today marginally softer at just on 70.2 USc. Against the Australian dollar we are firmer at 92.2 AUc. Against the euro we are weaker at 59.1 euro cents. That means our TWI-5 opens today a little lower at 72.6.
The bitcoin price will start today at US$56,181 and down another -3.6% from this time yesterday. Volatility in the past 24 hours has been moderate at +/- 2.6%. 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 ».