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US PMIs at reord levels; demand for Chinese bonds high; iron ore price rises again; Japan factories expanding; EU doing better; UST 10yr at 1.56%; oil up and gold down; NZ$1 = 71.9 USc; TWI-5 = 73.6

US PMIs at reord levels; demand for Chinese bonds high; iron ore price rises again; Japan factories expanding; EU doing better; UST 10yr at 1.56%; oil up and gold down; NZ$1 = 71.9 USc; TWI-5 = 73.6
Hamilton's Gap, Awhitu Peninsula, Waiuku, on Auckland's West Coast

Here's our summary of key economic events overnight that affect New Zealand with news the world's economic expansion seems to be gathering more momentum.

Overnight there were a set of key PMIs out, led by the one for the US which was very strong, for both the factory and services sectors. In fact, both components are recording their strongest expansion since these internationally-benchmarked PMIs started in 2007. This result has encouraged the Wall Street equity markets to new record highs.

Sales of new homes exceeded 97,000 in March, and far above the expected level, juiced because the existing home resale market is in low supply. This is a new high-water mark for their home-building sector, one that is actually struggling with timber supplies and other supply-chain issues, but still getting the job done. The March sales take their annual sales rate above 1 mln, also a new record high.

In China, short bets in their main share markets hit a new record high yesterday. That is because demand for hedging against the risks of policy tightening, and further fallout from the antitrust crackdown on their big tech firms, are rising sharply.

But away from the stock markets, foreign investors boosted their holdings of Chinese bonds in the first quarter by +US$63 bln, or up +11% from Q4-2020.

Prices for iron ore and coking coal ended the week with strong rises. Prices for key agricultural commodities rose during the week too.

In Japan, their factory PMI rose to a healthy expansion in April, and better than the good March result. New orders, and new export orders both drove this improvement. Unfortunately, their dominant services sector is still contracting.

In Hong Kong, business confidence pulled back from a deeply negative situation in January to one where optimists equal pessimists in April.

In Taiwan, industrial production rose sharply again in March, aided by the worldwide shortage of computer chips. But all that is at risk as the drought in the country deepens. The immediate prospects are not great. However, Taiwanese retail sales improved much more vigorously as well as the industrial situation.

In the EU, they recorded a standout improvement in their factory PMI in April, its most expansionary since this series started in 1997. It was their tenth straight month of gains, and is being led by Germany. Their services sector isn't expanding, but it is now not contracting, so there is a stabilisation there which counts as an improvement. (The UK recorded a good, but lesser improvement in their factory PMI, and a better services improvement.)

The Russian central bank raised its policy rate by +½% to 5% and that was double the rise expected. This has helped stem the slide in the Russian currency that had depreciated -6% since mid-March. Russia coordinated other geopolitical moves like troop-easings, allowing opposition leader Navalny access to he own doctors, etc. at the same time.

The Australian PMIs are expanding at healthy levels too.

In Australia, their prime minister is rejecting calls for the country to join the international fight against greenhouse gas emissions. Rather he is targeting holding on to electorates in Queensland and Western Australia that depend on coal mining. He is calling for "realism" rather than action.

On Wall Street, the S&P500 is touching a new record high in afternoon trading today, heading for a good +1.3% gain on the day and enough to wipe out all the downs of the past week. It has gotten past its tax-tantrum. Overnight, European markets slipped marginally. Yesterday, Shanghai ended up +0.3%, Hong Kong ended up +1.1%, but Tokyo slipped back by -0.6% on the day. For the week, Tokyo fell -2.2%, Hong Kong was up +0.4% and Shanghai booked a +1.4% gain. The ASX200 ended yesterday flat for a flat weekly outcome, and the NZX50 Capital Index ended up +0.6% on the day but down -0.3% for the week.

The latest global compilation of COVID-19 data is here. The global tally is still rising, now 144,979,000 have been infected at some point, up +803,000 in just one day, largely driven by rises in India where new lock downs and super spreading events are underway. Global deaths reported now exceed 3,076,000 and up +12,000 in one day. Vaccinations in the world are also rising fast, now up to 976 mln (+23 mln) and in the US more than half of their population (217 mln) have had at least one dose as they keep up their fast rollout. More than a quarter have been fully vaccinated. The number of active cases there is stubbornly unchanged at 6,861,000 with +8,000 more new infections as recoveries.

The UST 10yr yield starts today at 1.56% and regaining +1 bp. The US 2-10 rate curve is flatter at 140 bps. But their 1-5 curve is stable at +74 bps, as is their 3m-10 year curve at +155 bps. The Australian Govt 10 year yield is up +2 bps at 1.69%. The China Govt 10 year yield is also holding at just on 3.19%. But the New Zealand Govt 10 year yield is now at 1.61% and +5 bps higher.

The price of gold starts today at US$1777/oz and that is down -US$4 since this time yesterday.

Oil prices are up +US$1 at just over US$62/bbl in the US, while the international price is just over US$65.50/bbl.

The Kiwi dollar opens today at just over 71.9 USc and firmer from this time yesterday. Against the Australian dollar we are marginally softer at 92.8 AUc. Against the euro we are also marginally softer at 59.5 euro cents. That means our TWI-5 is little-changed at 73.6 and little-changed over the whole past week.

The bitcoin price will start today lower than this time yesterday yet again, at US$51,210 and down another -5%. In fact it did get as low as US$47,468 at about 8pm last night, but has moved up hesitantly since then. Volatility in the past 24 hours has been a massive +/- 6.3%. 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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27 Comments

I haven't seen any more recent info on the India-NZ travel ban; all I can find is "expected to end on the scheduled date, April 28" in and article on Stuff dated April 16. I'm wondering if we might see an extension of this one shortly, as those case numbers in India are running pretty hot.

Ah! Found more info - it's being opened, but restricted:

"India, Brazil, PNG and Pakistan will be classified as very high risk, and only New Zealand citizens, their partners and children and parents of children who are New Zealand citizens will be allowed into the country from those nations."

https://www.tvnz.co.nz/one-news/new-zealand/india-pakistan-brazil-and-pn...

I notice that the New border case details section showing the origin of those testing positive in managed isolation is not published on the MOH media release page today. Up to now this information was made available in every release, almost daily.
No new community cases; 3 cases of COVID-19 in managed isolation 24th April 2021
To allow people in from India at this time (from April 28th) is a dangerous mistake. To suppress this information is an outrage.

hardly surprising. from day one first priority has been keeping one’s yard arm clear, lot of arses need to be kept covered, shiny ones mostly.

dp - apologies

dp - apologies again

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Agree - all travellers from India need to be stopped from flying into NZ - well beyond the April 28 deadline. Also a full investigation needs to be undertaken as to why thousands of Indian/NZ residents have been freely flying out of NZ since May last year and then weeks later flying back into NZ. There is still an official travel warning from the NZ Govt warning residents/citizens not to flyout out from NZ (Aus excepted). Why is this warning being ignored? Who, and how many, NZers/Residents are flying out & back into NZ to non-Australian destinations taking up MIQ places and putting the country at risk unnecessarily?

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"are expanding at healthy levels too"

No, Mr Chaston, that is existentially incorrect. The growth which you perpetually laud, is killing our life-supporting systems. Some folk may well need to believe that wealth is dollar-accounted (ultimately, it is not), but there is no excuse to conflate that with health.

In existential parlance, extraction, consumption and dumping of processed parts of the planet is unhealthy.

Daily morning broadcast. Beats me why you didn’t choose Cassandra as a pseudonym?

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Dawn chorus from the tui of doom

Amen. Resource depletion and mounting piles of toxic waste need to be viewed as positive.

Well it might be good news from the rest of the planets perspective as we draw down exponentially faster on finite resources and bathe in our toxic wastes, thereby bringing forward our demise at an ever increasing pace.

Throw $10t at world credit market, State and private and of course it will expand. Crux is resultant inflation. All this spending trying to revive plunging economies simply results in Sam curve up and down of virus waves.

The Russian Central bank moved interest rates up .5%. That's about as hard as a one arm pullup for the fine folk over at the RB

Nothing personal, but from personal experience, given the physique of either the RB Governor or the Minister of Finance, would think even a two arm pull up well beyond the relative prowess. Mind you, observing the effort would undoubtedly be entertaining.

The only things that are expanding are Debt and Covid. I think we should be pretty concerned with the way Covid is moving in India. India is nowhere near the peak of this wave and I cannot believe how slow other countries have been at stopping flights from there. More cases are bad news because more case mean a higher chance of mutations and there is no better place for it to mutate than in places with large slums.

Weekend briefing: Global economy expands faster, UST 10yr at 1.56%

With so much good news including in Europe where having suffered setback after setback this year, even that ridiculous situation is trending favorably again. It’s all coming up in exactly the right way, everything getting better or so it seems.

Why, then, aren’t bonds globally getting their coupons ripped off by desperate sellers running for the reflationary exits anticipating a world emergent and rip-roaring ready to go after its serious slipup? So much “excess” cash, so little time to spend it once shutdowns, lockdowns, and cutdowns come to their necessary ends.

It’s been just about two months since the Feb 24-25-26 calendar triangle of curiosities, and the data, at least, has gotten only better along the way. Uncle Joe’s big “stimulus” checks have cleared, the Chinese economy is said to be inviting Australia’s blistering rebirth, and Europe, again, is becoming less Europe-y by the week.

Something’s obviously missing here. Link

Tokyo just went into lockdown lite.

State of emergency, right?

I see some highly leveraged investors with multiple properties are now being advised they will need to also fund provisional tax payments...a double whammy for some

It’s going to be a very interesting few years to watch how this pans out

I think the governments recent fine tuning of bank bail ins is preparation for the removal of interest only loans.Again this will be done over four years I guess.

https://youtu.be/PUObFkFugdA

"New Zealand has sold its soul to China' - Australia Media

"In Australia, their prime minister is rejecting calls for the country to join the international fight against greenhouse gas emissions. Rather he is targeting holding on to electorates in Queensland and Western Australia that depend on coal mining. He is calling for "realism" rather than action." Obviously Morrison is challenged by the definition of "realism".

From Radio New Zealand:
'I had tears in my eyes': Thousands attend Anzac Day services around Aotearoa.

Prime Minister Jacinda Ardern gave a short address, paying special tribute to the women of wartime New Zealand - those who served and those who sacrificed in other ways.

"Each Anzac Day we commemorate the past but also the present. So to those who give of themselves now - men and women - who've cared for us through Covid-19, given comfort in times of disaster, performed rescues in the midst of crisis, we say thank you," Ardern said.

https://www.rnz.co.nz/news/national/441202/i-had-tears-in-my-eyes-thousa...

Bless the Westpac Rescue helicopter for doing what its name suggests.

I bet you're fun at parties. Your comment was predictable though, any opportunity to thinly veil your love for Ardern.

Comparing COVID workers to ANZACs is distasteful at the least

Though it is a quote from Ardern apparently