Here's our summary of key economic events overnight with news crypto is going mainstream, through the much-talked about sharemarket listing of crypto exchange Coinbase.
But first, the US Federal Reserve has just released its latest Beige Book summary of commentary from around the US on the economy. And it says national economic activity "accelerated to a moderate pace from late February to early April". Consumer spending strengthened and despite widespread supply chain disruptions, manufacturing activity expanded further with half the 12 Districts in the Federal Reserve system citing robust growth. Prices "accelerated slightly" since the last report, with many Districts reporting moderate price increases and some saying prices rose more robustly.
"Input costs rose across the board, but especially in the manufacturing, construction, retail, and transportation sectors—specifically, metals, lumber, food, and fuel prices. Cost increases were partly attributed to ongoing supply chain disruptions, temporarily exacerbated in some cases by winter weather events.
"There were widespread reports of increased selling prices also, but typically not on pace with rising costs. Contacts generally expect continued price increases in the near term," the Fed said.
And Federal Reserve chair Jerome Powell told the Economic Club of Washington that the Fed will 'taper' - that is, it will reduce its monthly bond purchases - before it commits to an interest rate increase. But Powell didn't give timeframes. The Fed is currently buying US$120 billion of bonds a month and has committed to doing so till the economy recovers.
Powell says the bond buying programme will start to phase out before the Fed gets to the point of raising the target interest rate from its current highly supporting near zero level. “We will reach the time at which we will taper asset purchases when we have made substantial further progress towards our goals from last December,” Powell said. “That would in all likelihood be before, well before, the time we would consider raising interest rates. We have not voted on that order but that is the sense of the guidance.”
In the massive US housing market, mortgage applications declined last week for the third straight week, falling by 3.7%, according to data from the Mortgage Bankers Association's (MBA). The fall is seen as a sign that rising home prices and tight supply are constraining home sales, especially in the lower tiers. While applications last week were still above last year's pandemic impacted low point they were behind the same week in 2019.
Prices for both US imports and exports rose by more than expected in March, according to the US Import and Export Price Indexes. The imports rose 1.2%, after increasing 1.3% the previous month, while the exports rose 2.1%, following a 1.6% rise in February. The 4.1% increase in import prices from December to March was the largest three-month rise for import prices since the index since May 2011. While fuel prices were a major contributor, non-fuel prices were up substantially as well.
In terms of the exports, the 6.5% advance in prices from December to March was actually the largest three-month increase since the index was first published in September 1983. In March, higher prices for agricultural and nonagricultural exports both contributed to the advance in export prices.
So, yes, Coinbase. The 2012-founded exchange, which provides the gateway for much of the trading in cryptocurrency heavyweights Bitcoin and Ethereum, has started trading on Nasdaq. The listing of Coinbase is being seen as the big 'coming out party' for cryptocurrency - the point at which it goes, if you like, 'legitimate'. Coinbase was given a 'reference price' of US$250 a share, but there was no real significance to that as this was a 'direct' listing rather than an IPO (Initial Public Offering). Anyway, the US$250 price was soon left behind as it opened at US$381, valuing the company at US$99.6 billion and catapulting it into the top 85 largest companies. The shares traded as high as US$429 before dropping back to around US$329 at time of writing.
Still in the US, Bernard Madoff, who was convicted for running the largest known Ponzi scheme in history, has died in prison where he was serving a 150-year sentence, the Federal Bureau of Prisons said. He was 82.
Growth to flag in Japan? New figures out show Japan's core private-sector machinery orders fell surprisingly for the second straight month in February, down by 8.5% from the previous month to about US$7.1 billion. This followed a 4.5% drop in January. The latest figures fell way short of market estimates for a 2.8% rise in February. These 'core private sector machinery' orders, which exclude the volatile shipping and electricity utility orders are seen as a leading indicator of private capital investment. Manufacturing industry orders dropped 5.5% and the non-manufacturing industry (excluding ships and electricity) decreased 10.9%. The latest figures cast down on whether Japan will see the kind of private-sector-led growth that will pull it out of the slump induced by the Covid pandemic.
Singapore's central bank has kept its policy settings unchanged and sees ongoing recovery for the Singapore economy this year and benign levels of inflation. In its latest six-month monetary policy statement the Monetary Authority of Singapore (MAS) says prospects for global growth have firmed and should provide support to the ongoing recovery in the Singapore economy. "Nevertheless, output will still be below potential in 2021. Although MAS Core Inflation is expected to rise gradually this year from its current low levels, it will remain short of its historical average," MAS says.
It says the Singapore economy will grow at an above-trend pace this year, but the sectors worst hit by the crisis will continue to face significant demand shortfalls. The bank, which targets the Nominal Effective Exchange Rate (NEER) and has a 'policy band' around that says it will therefore maintain a zero percent per annum rate of appreciation of the policy band. "As core inflation is expected to stay low this year, MAS assesses that an accommodative policy stance remains appropriate."
Meanwhile, the Singapore economy has surprised by actually managing to grow slightly in the past year - albeit by just 0.2%. The economy grew by a seasonally adjusted 2% in the first quarter of 2021, according to official advanced estimates, extending the 3.8% expansion in the fourth quarter of last year as the country bounced back from Covid disruptions. Year-on-year there was 0.2% growth (which beat the forecast for a 0.2% drop), compared with a 2.4% contraction as of the fourth quarter of 2020.The manufacturing and construction sectors continued to bounce back strongly, but the picture remained very mixed in the services sector.
In Australia consumer sentiment continues to go through the roof. The latest of several stellar survey outcomes is the Westpac-Melbourne Institute Index of Consumer Sentiment, which has hit an 11-year high. Westpac chief economist Bill Evans said it was "an extraordinary result". The Index is now at its highest level since August 2010 when Australia’s post-GFC rebound and mining boom were in full swing. "The survey continues to signal that the consumer will be the key driver of above-trend growth in 2021," he said.
On Wall Street, the S&P500 is down -0.3% in early afternoon trade. Major European markets were up an average of +04% overnight, but Germany was down 0.2%. Yesterday, the Shanghai market ended up +0.6%, Hong Kong was up +1.4%, while the very large Tokyo market closed up +0.3%. The ASX200 rose +0.7% yesterday, and the NZX50 Capital Index rose +0.8%.
The latest global compilation of COVID-19 data is here. The global tally is still rising, now 137,812,000 have been infected at some point, up a sharp +919,000 in just one day. Global deaths reported now exceed 2,965,000 and up +15,000 in one day. Vaccinations in the world are also rising fast, now up to 825 mln (+19 mln) and in the US more than half of their population (190.6 mln) have had at least one dose as they achieve a very fast rollout. The number of active cases there rose to 6,879,000 and up +9,000 overnight as new pockets of infection variants take hold.
The UST 10yr yield is marginally higher at 1.64% after yesterday's big retreat. The US 2-10 rate curve is marginally steeper than yesterday at 148 bps. Their 1-5 curve is a little steeper too at +80 bps, as is their 3m-10 year curve at +163 bps. The Australian Govt 10 year yield is up +3 bps at 1.74%. The China Govt 10 year yield is fractionally lower at just under 3.19%. And the New Zealand Govt 10 year yield has also now retreated, down -6 bps at 1.70% in a sympathetic move to yesterday's global retreat.
The price of gold starts today at US$1736/oz and down -US$11 in a day.
Oil prices are much firmer from this time yesterday, shooting up by +US$3/bbl to now just under US$63.50/bbl in the US, while the international price is now just over US$66.50/bbl.
The Kiwi dollar opens today a lot higher, up a whole +1c at 71.5 USc. Against the Australian dollar we are also slightly firmer at 92.5 AUc. Against the euro we are up +60 bps at 59.6 euro cents. That means our TWI-5 is just under 73.5 and its highest since March 22, 2021.
The bitcoin price will start today at US$62,751, lower by -0.7% from this time yesterday, but essentially holding on to yesterday's large jump. In between, it hit a record high of US$64,829 at about midnight last night. Volatility in the past 24 hours has been moderate at +/- 1.9%. The bitcoin rate is charted in the exchange rate set below.
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