Here's our summary of key economic events overnight with news economic activity is continuing to pick up, but so is inflation and so are expectations of inflation.
In the United States the Federal Reserve Bank of New York's Center for Microeconomic Data Survey of Consumer Expectations, for March shows a continuation in the recent upward trend in inflation, home price and spending growth expectations. In particular, expectations about home, gas, and rent price changes all reached new series highs in March. Median inflation expectations at the one-year and three-year horizons both increased 0.1 percentage point in March to 3.2% and 3.1%, respectively. Inflation expectations at both horizons have increased steadily over the past five months and they are now at their highest since mid-2014.
Labor market expectations continued to recover with higher expectations about job security and improved unemployment expectations. Finally, households were more positive about their current and expected financial situation and their ability to access credit.
Median year-ahead home price change expectations increased 0.8 percentage point to 4.8% in March, a new series high. The increase was driven mostly by respondents who live in the "West" and "Midwest" Census regions. The median one-year ahead expected change in the price of gas and in the price of rent increased by 0.3 and 0.2 percentage point in March to new series highs at 9.9% and 9.3%, respectively. The median expected change in food prices remained unchanged in March, while the median expected change in the cost of medical care and in the cost of a college education decreased by 0.1 and 0.2 percentage point to 9.3% and 5.6%, respectively.
The latest US inflation figures are due for release tomorrow, with the expectation annual inflation will rise to 2.5% from 1.7%.
And the US Government's latest Budget statement for March has just come out. It shows that America Inc ran up a US$659.6 billion deficit in the month, a record for a March, as Covid stimulus payments were sent out, up from US$311 billion in February, and up from just under US$119 billion in March a year ago. The deficit for the year to date is over US$1.7 trillion, which is a record for six months..
The Bank of Canada's latest Business Outlook Survey has shown a sharp rise in the outlook and mood of Canadian businesses. The BOS Indicator measuring the overall mood soared to 2.87 in March from just 1.3 in December. In the middle of last year that same indicator plunged to -6.87. Future sales and investment expectations of firms all increased strongly, but employment intentions remained around the same.
In China's massive financial sector China's new yuan-denominated loans totalled 2.73 trillion yuan (about 416.3 billion US. dollars) in March, down by 103.9 billion yuan year on year, central bank data shows. In the first quarter of 2021, new yuan loans hit 7.67 trillion yuan, with a year-on-year increase of 574.1 billion yuan, the People's Bank of China said. Loans in the household and corporate sectors increased by 2.56 trillion yuan and 5.35 trillion yuan, respectively. The data also showed China's new yuan deposits hit 8.35 trillion yuan in the first three months, up by 284.4 billion yuan from the same period a year earlier. By the end of March, the outstanding yuan deposits increased by 9.9 percent, year on year, to 220.92 trillion yuan.
And China has imposed a sweeping restructuring on Jack Ma’s Ant Group, the fintech conglomerate whose record $37 billion IPO was derailed by regulators in November, underscoring Beijing’s determination to rein in its internet giants. The overhaul, in the works for several months, includes Ant turning itself into a financial holding firm, a move expected to curb its profitability and valuation by curtailing some of its freewheeling businesses. It comes two days after Ma’s Alibaba Group Holding Ltd, of which Ant is an affiliate, was hit with a record $2.8 billion antitrust penalty as China tightens controls on the booming “platform economy”.
Japanese bank lending rose 6.3% in March from a year earlier, as restaurants and hotels sought more loans to weather the hit from the Covid-19 pandemic. Deposits held by banks were also up 9.9% in March as households continued to save rather than spend on uncertainty over the pandemic’s fallout, the Bank of Japan data showed. Outstanding loans held by the country’s four main categories of banks, including “shinkin” or credit unions, hit a fresh record at 579.995 trillion yen ($5.29 trillion), according to the data. In February, total loans increased 6.2%. The introduction of a new scheme that offers incentives to banks that channel more funds to pandemic-hit firms has yet to have a major impact on bank lending, a BOJ official said.
Producer prices in Japan have come in much stronger than forecast in March, while previous figures have been revised upwards too helping give an annual increase about double that forecast. The PPI rose 0.8% from the previous month, February, when there was a revised 0.6% rise (up from 0.4%). The forecast rise for March had been 0.4%, while the annual forecast rise had been 0.5% - but the figure actually came in at 1%. In March, nearly half of the rise in the PPI was due to petroleum and coal products, while there was also a strong upward contribution from copper-related products and chemical products. The export price index rose 1.1% from February and the import price index rose 1.7%.
The latest Roy Morgan survey in Australia for March showed Australians expected inflation of 3.8% annually over the next two years, up 0.1% points on February, and the highest since March 2020 (4.0%). Inflation Expectations are now 0.9% points below their long-term average of 4.7% but have increased by 0.6% points since reaching a record low of only 3.2% in August 2020.
Red ink overnight on major markets: On Wall Street, the S&P500 is down a modest -0.2% in early afternoon trade. Major European markets were down an average of -0.3% overnight. Yesterday, the Shanghai market ended down -1.1%, Hong Kong down -0.9%, while the very large Tokyo market closed down -0.8%. The ASX200 fell -0.3% yesterday, and the NZX50 Capital Index fell -0.4%.
The latest global compilation of COVID-19 data is here. The global tally is still rising, now 136,209,000 have been infected at some point, up +592,000 in one day. Global deaths reported now exceed 2,940,000 and up +9,000 in one day. Vaccinations in the world are also rising fast, now up to 789 mln (+34 mln) and in the US more than half of their population (185.5 mln) have had at least one dose as they achieve a very fast rollout. The number of active cases there fell to 6,872,000 and down -5,000 overnight.
The UST 10yr yield is up +1 bp at 1.67%. The US 2-10 rate curve is unchanged at 150 bps. Their 1-5 curve is a little steeper at +82 bps, as is their 3m-10 year curve at +166 bps. The Australian Govt 10 year yield is unchanged again at 1.73%. The China Govt 10 year yield is softer by -2 bps at 3.22%. But the New Zealand Govt 10 year yield is up +2 bps at 1.74%.
The price of gold starts today at US$1733/oz and down -US$11 in a day.
Oil prices are little-changed from this time yesterday, now just over US$59.50/bbl in the US, while the international price is now just over US$63/bbl.
The Kiwi dollar opens unchanged at 70.3 USc. Against the Australian dollar we are slightly softer at 92.2 AUc. Against the euro we are soft at 59 euro cents. That means our TWI-5 is just below 72.7.
The bitcoin price will start today at US$59,790 and also essentially unchanged from this time yesterday. However, at one point between it reached US$61,220. Volatility in the past 24 hours has been moderate at +/- 1.5%. 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 ».