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US durable goods orders disappoint; China Huarong misses another deadline; Singapore factories struggle; mineral and food commodity prices jump; UST 10yr at 1.57%; oil unchanged and gold down; NZ$1 = 72.4 USc; TWI-5 = 74

US durable goods orders disappoint; China Huarong misses another deadline; Singapore factories struggle; mineral and food commodity prices jump; UST 10yr at 1.57%; oil unchanged and gold down; NZ$1 = 72.4 USc; TWI-5 = 74

Here's our summary of key economic events over the ANZAC holiday weekend that affect New Zealand with news prices are jolting higher for both hard and soft commodities.

But first, new orders for US durable goods orders came in with a very disappointing result in March, up just +0.5% when a strong +2.5% result was expected. (They were +26% above the pandemic-affected March 2020.) Orders for non-defense capital goods fell a worrying -4.7%. These results are a little curious, given the strong PMIs and the upbeat regional Fed factory surveys.

In fact, the Dallas Fed reported results for its region for April, and that revealed very upbeat factory conditions, and with a strong outlook.

The latest UST 5yr Note auction for US$61 bln was very well supported with US$141 bln of bids. The resulting yield was 0.80% and little-changed from the prior auction of this maturity. Eurozone yields edged higher.

China's largest distressed debt manager, China Huarong, has announced it will miss another results disclosure deadline, further unsettling bond investors and raising fresh concerns over a potential default. The company owes bondholders the equivalent of US$42 bln, with US$17 bln of that falling due by the end of next year.

Singapore's industrial production in March also came in with a disappointing result, well below expectations. The year-on-year result was pandemic affected, but the gain from February wasn't flash at all and developing a softening trend. Without strong gains in their electronics industries, this would have been a terrible overall result.

The prices of hard commodities are rising, and actually approaching levels of the last commodity super cycle. Prices for iron ore, aluminium, and copper are at decade highs. Copper - a bellwether for the global economy - rose as much as +2.4% to US$9,780/MT, the highest since August 2011. And this trend may only just be starting, juiced along by global stimulus, and further by the transition to a de-carboned economy that will require vast amounts of copper.

Worldwide, crop prices are also soaring, with bad crop weather in key-producing regions the major culprit - especially in North America, South America, Russia and Europe. It comes as Chinese demand is high and getting higher. Jolting food inflation is on its way.

But in Australia, after good rainfalls this time last year, and even better conditions this year, growers are set to plant record crop acreages for their winter growing seasons. This is setting them up for another huge crop in 2021 right at the time prices are high and rising fast. Fortunately for them, this comes after huge 2020 crops, and the politicised trade punishment being meted out by China on Australia for standing up to their human rights record just does not seem to be hurting Australia at all.

The latest global compilation of COVID-19 data is here. The global tally is still rising, now 147,350,000 have been infected at some point, up +642,000 in the day, largely driven by rises in India where nationwide super spreading events are underway featuring a "double mutant" strain - and a huge global risk. Global deaths reported now exceed 3,112,000 and up +9,000 in a day. Vaccinations in the world are also rising fast, now up to 1.026 bln (+20 mln) and in the US more than half of their population (227 mln) have had at least one dose as they keep up their fast rollout. Almost 30% have been fully vaccinated (96 mln people). The number of active cases there remains stubbornly unchanged at 6,861,000 with just 5,000 more recoveries than new infections.

On Wall Street, the S&P500 has started their week up a modest +0.3%. Overnight, European markets ended up a similar amount. Yesterday, Shanghai fell almost -1.0%, Hong Kong retreated -0.4%, but Tokyo rose +0.4%. It wasn't a holiday for most of Australia and the ASX traded, slipping -0.2%. Of course, our market was closed.

The UST 10yr yield starts today at 1.57%, up +1 bps overnight. The US 2-10 rate curve is unchanged at 140 bps. But their 1-5 curve is steeper at +77 bps, as is their 3m-10 year curve at +147 bps. The Australian Govt 10 year yield is up +1 bp at 1.69%. The China Govt 10 year yield is up +1 bp at just on 3.21%. But the New Zealand Govt 10 year yield is unchanged at 1.61%.

The price of gold starts today at US$1780/oz and that is up +US$3 since this time yesterday.

Oil prices are little-changed at just over US$62/bbl in the US, while the international price is just under US$65.50/bbl. But they have been weaker in between.

The Kiwi dollar opens today at just under 72.4 USc and a gain of almost +½c since this time yesterday. Against the Australian dollar we are marginally softer at 92.8 AUc. Against the euro we are stronger as well at 59.9 euro cents. That means our TWI-5 is up to 74 and its strongest since mid-March.

The bitcoin price has made a strong recovery after falling to as low as US$47,079 in the past 24 hours. It is now at US$54,016 and up +8.5% since this time yesterday. Volatility in the past 24 hours has been extreme at +/- 7.8%. 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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60 Comments

Spectacular clear out of Bitcoin leverage over the past week. This will be a good platform for the next leg up. Waiting for Jamie Dimon’s inevitable capitulation.

https://www.coindesk.com/jpmorgan-to-let-clients-invest-in-bitcoin-fund-...

No orange headline banner "Bitcoin up over 8% ..more news to come"?

Cheeky frazz. Nothing out of the ordinary for BTC at this time. Prometheus' liver has grown back and price discovery continues https://www.man.com/maninstitute/views-from-the-floor-2021-jan-12

If it moves, Wall St will find a way to trade it.

A few questions re: Bitcoin:
1. Given it's volatility can it really be considered to be "a store of value"?
2. Will it still be as shiny if regulated?
3. What happens to the crowd when a bigger, shinier, more easily accesable digital "coin" comes along?
4. Anyone know what happened to Netscape?

1. Adoption phase always volatile.
2. It is regulated.
3. "Bigger, shinier..." if the new coin can solve the problem of hard money better than Bitcoin, then great. But Bitcoin is the wheel.
4. Anyone know what happened to the wheel?

What is your historical precedent for a new currency being volatile? In this case more volatile than that which it purports to solve all the problems for.

It's not just a new currency. It's also decentralised, that's the big difference.

If it’s a currency then where are the contracts over any timeline being set using btc? They ain’t, it’s always converted to fiat. Whatever it is it’s not a currency.

Still in the adoption phase. You and I arguing either way is insignificant, we will find out sooner or later whether cryptocurrencies destroy fiat or not.

Never gonna be allowed happen. As Gaddafi found out.

? Can you expand on that comment

Gaddafi wanted to create a gold backed African currency to replace the USD.

Gotcha - so the USA will invade and assassinate everyone at home using BTC?

They might like to but they can't. Unless they're going to invade China

Your thinking is clearly boxed and unimaginative. Govts whomever they are will not allow their currencies to be subservient to btc or whatever. The naivety of the btc mob is extraordinary.

Thats the thing. Bitcoin is a peaceful OPT IN secondary monetary system. It doesnt care if the government trys to ban it, it will just keep on doing what it does, producing a new block every 10 min.
I mean come on, the government has been waging a war on drugs for the last half a century and that involves moving masses of a physical substance and corresponding money. Do you really think they can stop natively digital token that can be moved over a communication channel??
Sure they can curtail the inflow of new fiat through regulating exchanges, but that will only do so much.

Time will tell.

Time will tell but if using Bitcoin becomes illegal (much as drugs are) will it become the second monetary system (apart from criminals who are already extensive users)?

ahem ... you have heard of sanctions? ... its not the currency, its the stuff thats important

"Your thinking is clearly boxed and unimaginative" as you two bicker and knash your teeth the world moves on. The Fed is the only one keeping the show on the road at the moment, but hold tight to your beliefs - I care as much as someone swerving a model T around a horse and cart.

Bicker not. Just amazed how you clever people think a bit of clunky software will be the new world currency. Pipe dream.

Even us dummies think that. More and more of us are on the losing side of inflating fiat currency and, speaking for myself, are desperately casting about to get out of that system. And it's not just kids - I've probably got 30 years on the average crypto buyer.

dp

dont need to imagine ... the world is moving on right into supply chain issues (thats actual stuff in case you are interested)

So a problem like this ...
https://www.theage.com.au/business/the-economy/a-tiny-part-s-big-effect-...

will be solved by some blockchain which circumvents nasty government intervention

People power!
People power!
cmon chant with me

Well if it makes people pause before buying crap its working - long term horizon, meanwhile some of us cannot even wait for a comment to post before pushing ENTER!

some of us cannot even wait for a comment to post before pushing ENTER!..

are you referring to double post?
Yes computer froze.
Imagine.
Wont be a problem when we are all bitcoining

The head of Turkey’s central bank ruled out a total ban of cryptocurrencies and said a wide range of crypto regulations is coming within two weeks, Trade Moneta reported.

Speaking on state-run channel TRT, Governor Şahap Kavacıoğlu said, "You cannot fix anything by banning crypto, and we do not intend to do this."

Michael Saylor sums it up pretty good in the last few minutes of this video. The USD and other strong currencies will win out as the dominant payment rails in the mobile banking network. The Bitcoin blockchain will form the settlement layer and store of value layer. Weak currencies will lose out.

https://youtu.be/9VpxcaE3LU4

Great clip Pacman (apart from the number of ads). Zoom into to 5:29 where Saylor talks about the components of money - clears up what folks in the thread above on both sides of the argument are confused about.

Money has two components - a currency component as a medium of exchange, and an asset component which is a long term store of value.

Bitcoin is the base layer (store of value).

Humanity has never experienced the monetisation of a item in real time. The road from less than a cent to the global reserve currency is not going to be a smooth one. And volatility is how you make money, seeing the writing on the wall and beating the banks to the punch. As the saying goes, everyone buys Bitcoin at the price they deserve to.

Reserve asset maybe, not a currency.

Do you remember when the internet was invented..well Bitcoin is similar to that, and the internet is quite successful I think? It is free, nobody owns it, universally accessible digital currency.

Warning - Zerohedge!!

India recently met with USA,Japan,Australia as The Quad, to discuss, let say. mostly regional security. India is CV19 stricken. Aid from UK,USA forthcoming. Remains to be seen, from an opportunistic, advantageous angle, , whether their neighbour China, remains quiet on India’s North East border.

#China is all set to provide support for #India's needs, and some supplies of emergency aid have already been quickly shipped to the country! #IndiaFightsCOVID19 #indianeedoxygen #COVID19India #India Link

The latest UST 5yr Note auction for US$61 bln was very well supported with US$141 bln of bids. The resulting yield was 0.80% and little-changed from the prior auction of this maturity.

In contrast to : Ugly, Tailing 2Y Auction Is Ill Omen As Bid-To-Cover; Indirect Bid Both Plunge

Direct reference

More Zerohedge

Why would Marama say such a things?

https://www.rnz.co.nz/news/national/441256/inhumane-conditions-green-par...

The Ministry of Social Development (MSD) hands out the grants, but there are no contracts with motels or other providers. The only expectations are emergency housing guests are treated the same as anyone else off the street.

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Moteliers are absolutely creaming it. The prices they are charging (often over $1000 pw) are ridiculous for what they provide. The whole system is broken. Half the time you could rent upmarket multi bedroom houses in nice suburbs for the price we are subsidising moteliers to provide squalid slum like conditions.

Don't believe me? Check out John Campbells tour of a $2k per week motel unit: https://www.tvnz.co.nz/one-news/new-zealand/john-campbell-takes-tour-eme...

Compare to: https://www.trademe.co.nz/a/property/residential/rent/auckland/auckland-...

It's ridiculous isn't it. Guaranteed cash cow similar to the accommodation supplement - govt has a duty of care (not that it's being exercised all too well with the state of some of these places) so can't really threaten to walk away. Might as well put that money to use buying the places and either refit or bowl and rebuild to some proper quality state housing.

Meanwhile Rentlords dont give $^% in Wellington as the black mould season starts ups = " Landlords would point to a Healthy Homes statement, signed at the beginning of the tenancy – often during the summer months – as evidence the property wasn’t damp. “They can say ‘hang on, you signed it, you’re not taking care of the house’.”
'It's hard to breathe': Dampness, mould return to Wellington flats as cold weather arrives https://www.stuff.co.nz/dominion-post/business/residential-property/1249...

13
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That is a blatant misuse of tax payer money. You could literally build container housing from shipping containers with some basic upgrades for nowhere near that price. And it would be better than some of those pissy rooms!

15
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I mean it's only been going on for what... 5 years now? How many billions have we spent on these s#%t boxes, we literally could have built or even bought thousands of decent houses for the same cost... both the idiot parties responsible for this farce are to blame for stupendous negligence of the countries finances and poor people.

11
up

It’s $1,500 a week and some families get two units. Yep $150k per year plus their benefit on top.

I have decided to stop working, have a dozen kids and move from Motel to Motel, yes even a Hotel now and again at the Taxpayers Expence and call it a "Working Holiday"..

"Why work, be happy"...no need to pay Taxes, free as a Bird........a Magpie...maybe??...... lay my eggs in other peoples .....Nests.

Nomadland. NZ style! Sequel coming. And then some more.

Yes it is eye-watering isn't it. Unfortunately we are now in a position where this is the only civilised treatment (I won't say solution) for a problem that has been cooking for some time.

It appears that some of this situation is brought about by our policy of supporting unemployed people to have more children through incentives. We could look at that I think.

On a WINZ Facebook page yesterday, a couple of people posted screenshots of their MSD pages.

$1132.09 per week & $1107.89 per week in the hand, for being a Solo mum of 4 kids. The equivalent of a $78k per year salary earner each to sit at home with 4 kids

Here's a screenshot of one: https://ibb.co/dDDr9bk

Barfoot is Auctioning 67 properties today in Manukau at Highbrook Drive, will be interesting :

https://www.barfoot.co.nz/auctions-live/sessions

Doesn't look like a bloodbath at the moment, but this isnt my area, await your analysis with interest

Commodity supercycle ... until something gives.

The trend .. A decreasing net (surplus) energy leading to high inflation of essentials (deflation of non-essentials until they are very scarce) leading to ever higher unemployment until the entire system collapses

Commodity supercycle ... until something gives

Yep. And interesting to note that the 'anti-fiat' gold is sitting at the bottom of the list in the ridiculous price gains. So much not really adding up.

Inflation is alive and well. I usually purchase two 2L bottles of Meadowfresh original milk from the local gas station and its usually $10 but the other day it was $11 so that's a 10% increase in one hit.

Green shoots? No that’s just inflation. Our fish market sole fillets regularly about $25/27 pkg for yonks. Last week $32.95. Don’t suppose that’s seasonal?

Interesting isn't it. There is a counter-cycle energy model (with it's own issues) in solar and wind energy so it will be interesting to see how it plays out. Unquestionably the injection of unique levels of monetary support (a fraction to the populace in the 'states) will find its way into consumables (washed out from asset sales or as components of new assets) eventually.

I guess with the price of corn and soy rising rapidly, this will negatively affect milk production in the US and probably be beneficial to the NZ dairy farmer, $8+ kg/ms next season!

There is an opportunity here for the financialisaton of commodities to be lead by WMP I think. This will happen eventually and can only be a matter of time (extreme asset prices often lead to financialisaton of those assets both to allow partial ownership and leverage for speculation) so I look forward to the WMPCOIN and the blockchain that enables it's entry as a financialised asset class. I can picture that $45 milkshake now... (paid for in Bitcoin of course lol)

Hmmm WMPCoin you say, who says you can’t eat money!