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US debt growth mirrors China's; Canada & Australia in new housebuilding boom; Japanese exports shine; China travel recovers; UN warns on climate consequences; UST 10yr at 1.60%; oil and gold steady; NZ$1 = 71.8 USc; TWI-5 = 73.5

US debt growth mirrors China's; Canada & Australia in new housebuilding boom; Japanese exports shine; China travel recovers; UN warns on climate consequences; UST 10yr at 1.60%; oil and gold steady; NZ$1 = 71.8 USc; TWI-5 = 73.5

Here's our summary of key economic events overnight that affect New Zealand with news the global economic recovery seems to be very bad news for the climate.

But first, in the US both equity and debt issuance has been 'enthusiastic' in early 2021. The value of debt origination in the US reached a record US$1.45 tln for the month of March 2021, +80% higher than in March 2020 which itself was +30% higher than in March 2019. The debt binge isn't only just a Chinese 'thing'.

In Canada, housing starts for March were very strong, duplicating the trend higher we reported earlier for the US. They were up a massive +22% in March compared with the previous month, easily beating expectations and hitting a new record.

Japanese exports posted a +16% gain in March, the first double-digit rise in more than three years. It is another indication that a recovery in global trade is gaining strength. Exports to New Zealand rose +19% while imports from us fell -8.4%. That resulted in a larger trade deficit for New Zealand in this trade.

There was a further improvement reported for Taiwanese consumer confidence in March, although it is not yet back to pre-pandemic levels. In China, the latest survey is for February done for the OECD and this one is back higher than pre-pandemic levels now.

In China, iron ore prices rose yet again yesterday, and coal prices held at their new higher levels. Global steel demand is rising as the two largest economies are on expansion tracks together.

And China has seen the number of domestic air passenger trips recover to pre-pandemic levels in March as the country has largely put the COVID-19 outbreak behind it. Their domestic tourism sector is now expecting a record number of tourist trips during the upcoming Labour Day holidays (May 1 - 5).

All this activity is causing some global leaders to issue warnings over the climate consequences. 2020 was one of the three hottest years on record, marked by wildfires, droughts, floods and melting glaciers, a WMO report said, prompting the UN Secretary-General to say the world stands “on the verge of the abyss”.

In Australia, new home sales surged by more than +40% in the March quarter as buyers scrambled to access the last and final phase of their HomeBuilder grant.

The housing frenzy extends to the general real estate market too, and banks are now expecting new curbs by regulators to rein in the froth.

The latest global compilation of COVID-19 data is here. The global tally is still rising, now 141,643,000 have been infected at some point, up +688,000 in just one day. New lockdowns in India are underway. Global deaths reported now exceed 3,023,000 and up +9,000 in one day. Vaccinations in the world are also rising fast, now up to 907 mln (+14 mln) and in the US more than half of their population (207.5 mln) have had at least one dose as they keep up their fast rollout. A quarter have been fully vaccinated. The number of active cases there dipped to 6,870,000 and down -7,000 in a day.

The UST 10yr yield starts today at 1.60% and little-changed. The US 2-10 rate curve is very slightly steeper at 144 bps. Their 1-5 curve is unchanged at +77 bps, as is their 3m-10 year curve at +159 bps. The Australian Govt 10 year yield is is unchanged at 1.70%. The China Govt 10 year yield is holding at just on 3.18%. And the New Zealand Govt 10 year yield is now at 1.62% and -2 bps lower.

The price of gold starts today at US$1771/oz and that is down -US$6 since this time yesterday.

Oil prices are little-changed at just under US$63.50/bbl in the US, while the international price is just over US$66.50/bbl.

The Kiwi dollar opens today at just under 71.8 USc. Against the Australian dollar we are little-changed at 92.5 AUc. Against the euro we are also unchanged at 59.6 euro cents. That means our TWI-5 is just on 73.5.

The bitcoin price will start today at the same lower level were at yesterday, at US$55,555 and a mere +0.4% higher. Volatility in the past 24 hours has been moderate at +/- 2.0%. 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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31 Comments

Japan. The Rising Sun. My, just how important, vital in fact, have they now become industrially, financially and geographically, strategically in every regard, for the western democracies for want of a better description.Noted about a year ago that their government announced a drive to return the country to more self production and independence. For all his tremendous contradictions and arrogance, guess you can acknowledge that Gen Douglas MacArthur did foresee and construct a pathway for Japan to bring them along into the modern world, western style, so to speak.

Yes that huge ego was indeed a true visionary. But inevitably that ego met it's brick wall, and for MacArthur that was in Korea, and wanting the force to kick the Chinese out and unify the peninsula. Fear of the conflict escalating to the third world war stopped that.

"with news the global economic recovery seems to be very bad news for the climate..."

Its the economy OR the environment
cant have both

Full steam ahead and damm the torpedoes

That's just plain wrong. The economy (whatever that means) could be turned carbon neutral within a decade - if there was a will. I think what you meant was "constantly accelerating GDP growth OR the environment".

I don't think it's wrong, I just think you put it better.

Yep, we're in for an interesting (negative interesting, probably) time.

The economy (what that means) = Debt based fiat.
You cant have shrinking GDP (for long) in this system. Its not geared to keep going smaller.
Debt based fiat (has locked in massive INCREASING resource drawdown into the future) ... thats what INTEREST does. It mandates growth in net energy drawdown (or temporary faked growth if this isnt possible ..... ).

All wealth claims are DEBT claims. All the value of stocks / assets / pensions funds etc etc etc are dependent on this Growth in drawdown happening.

So sorry, youre wrong.
The ONLY way out ultimately is to crash ALL wealth claims together.
At which point historically is where war normally enters stage left

I can see two solutions right away:
1. "or temporary faked growth" - change the definition of 'temporary' so that it covers 10+ years, or
2. change the system so that 'stagnant' wouldn't be a swear word anymore. Growth should be driven by innovation, not a constantly increasing debt burden. Innovation ultimately comes from a combination of creative minds and incentives to innovate - right now the way debt is directed pretty much de-incentivises innovation.

Ha ... we have had temporary faked growth since 2008 at least!!
So we are in now approaching 13 years + ....

call for innovation all you like .... we just cant outrun the physical limits of a finite planet and too many humans drawing too many resources
(note even waste is GREAT as far as Debt is concerned ... its just wants MORE... so efficiencies don't cut it)

But if you go back a step, the $$ you have in your hand/bank/asset is ONLY worth something if you can trade it for a product of energy down the track. So to reduce the burden, you need to reduce the drawdown value of that $$

The edge of the climate change abyss has been a great place for growing crops.
"Global grain production in 2020-21 is forecast to increase to a record 2.224 billion tonnes, according to the most recent grain market report from the International Grains Council."

16
up

..and in other news "The world’s already overtaxed fisheries are being stressed to their limits by climate change, putting at risk a critical component of the world’s diet. As temperatures rise, fish populations are projected to plummet and disappear in some regions, especially in the tropics"

Watch "Seaspiracy" on Netflix!

I heard many of their facts are debunked?

Overfishing of wild stocks in a travesty rastus but we are not running out of fish so unwring those hands.

The world now produces more seafood from fish farms than wild catch
https://ourworldindata.org/grapher/capture-fisheries-vs-aquaculture-farm...

'The world quietly reached a milestone in the evolution of the human diet in 2011. For the first time in modern history, world farmed fish production topped beef production.'

I don’t know who you think you are kidding - or are you just trolling?
Producing more than catching now due to rapid fish stock depletion.
And how do we feed farmed fish? Oil based production methods.

Producing more than catching now due to rapid fish stock depletion? Perhaps have a look at the handy chart I included. Wild fish capture has been flat since the mid 90s.

Lol. That’s REPORTED catch to 2015. You are so easy to debunk - world catch has been declining for the last two decades.
I don’t know why I bother, your research is totally focused on what you believe personally, no interest at all in facts.
Ends.

From the handy FAO chart - rather than my personal belief - "Capture fishery production is the volume of wild fish catches landed for all commercial, industrial, recreational and subsistence purposes.". You're welcome.

How do we feed farmed fish? Why, with minced up wild caught fish, of course. https://www.themarinediaries.com/tmd-blog/aquaculture-why-we-must-stop-f...

NZ Salmon. A major part of their diet comes from abattoir by-products – off-cuts from poultry processing, including feathermeal, as well as bloodmeal from cattle, pigs and sheep. Just under 10 percent of the feed is fishmeal derived primarily from Peruvian anchovies. Fish oil comprises 7 percent. Farmed salmon's artificial habitat also means their feed has to be supplemented with astaxanthin, a carotenoid pigment, to give the fish their distinctive pink flesh.

Feeling healthy eating that farmed salmon now?

Blimey, that may explain a non productive visit to an open home 1980s vintage, wherein what was normally white porcelain chattels, WC for instance, , were instead a delectable shade of “salmon”

If it's made up nonsense like cowspiracy and that other vegan one (eggs are just as dangerous as cigarettes), I recommend don't bother.

Funnily enough, higher CO2 levels increase plant growth. Might not be a surprise to people in the planted aquarium hobby.

CO2 increases growth? Well yes, up to a point, but other growth factors, such as temperature and moisture, also affect growth and these factors are becoming heavily influenced by CO2 driven planetary heating.

It sure does! So we should just get to 40% atmospheric CO2 and plants will be growing like crazy!

Hang on, the atmospheric temperature might be in the hundreds of degrees...

Must be the extra production off all that wrecked Amazon rainforest?

"The housing frenzy extends to the general real estate market too, and banks are now expecting new curbs by regulators to rein in the froth."

Regarding Australia, any idea on what these new curbs will be?

Let us all speculate on just who will print munny the fastest and where we will all end up in the near ......"Futures"

Driverless cars may be your future...not mine.

New???...Game playing League Football worth Billions...you will foot the Bill. Watch this space....eh!

Electrifying...ain't it.

They're just kicking for touch.

Ponzi schemes everywhere. Here I thought we were special. Be kind.

Good, Productivity Commission report addresses immigration:
https://www.nzherald.co.nz/business/time-to-review-migration-policy-prod...