Here's our summary of key economic events overnight that affect New Zealand with news China may be going off the boil somewhat, but the rest of the developed world is in a full 'shortages everywhere' situation.
In New York, business activity continued to grow at a solid clip in the State, according to the Fed factory survey there. New orders and shipments expanded strongly, and unfilled orders increased in May. Both input prices and selling prices rose at a record-setting pace. Firms said they were optimistic that conditions would improve over the next six months, and expected significant increases in both employment and prices.
April housing starts in Canada came in lower than expected and much lower than for March. But it is at the end of a frenetic 'up' period, so an easing isn't necessarily negative.
House prices in China rose almost +6% in April in their major cities from a year earlier, and that is a fast pace for them. In second tier cities the year-on-year rise was more than +11%, and fast enough to cause policy-makers some concerns.
China's industrial production grew a hot +9.8% year-on-year in April, but that was a slower expansion that the March +14% expansion (although that was affected by the pandemic-affected base).
Electricity production was up +11% in April (and an increase of 11.3% over April 2019) so this is evidence the pandemic impacts are now behind them. However, over the two years, this suggests the real recovery is relatively subdued.
China's retail sales growth data feeds into that feeling. Retail sales were up +34% in March (pandemic base affected) and a +25% year-on-year gain was widely expected for April. But it only came in up +18% and that is considered a big miss. Excluding price factors, the real volume increase was only +16% in one year, and only +2.3% over two years, confirming the weakness of the retail bounce back.
The bounceback in Japanese machine tool orders was very strong in April, continuing what we saw in March. Of course the year-on-year gains are distorted by the base effect, but from April 2019, the 2021 data is +16.5% higher, so the gains are very healthy indeed.
Japan also reported producer price data for April and that revealed a +3.6% rise year-on-year, well above the March +1.2% and also above the +3.1% expected. One component is eye-catching - export prices are up +8.2% year-on-year.
Very high demand for intermediate goods just isn't going away. The new week has started with prices for key commodities rising again, especially for iron ore and copper. And the latest edition of a key logistics manager survey suggests strongly that shortages and high prices are here to stay for at least the next year. This 'shortages everywhere' situation feeds on itself as firms order early and heavily to try and beat the rush.
In Australia, their Federal Government is getting deeper into the reverse mortgage business. Their existing “Pension Loans Scheme” was broadened in last week’s budget to allow retirees from July 2022 to borrow upfront AU$12,000 for singles and AU$18,000 for couples, effectively drawing on the equity in their home. The expectation is that this will 'unlock' up to AU$½ tln in home equity for retirees.
The latest global compilation of COVID-19 data is here. The global tally is still rising, now 163,181,000 people have been infected at some point, up +537,000 in one day, still largely driven by rises in India and Brazil. A fast-spreading Indian variant is now a new and dangerous risk. Global deaths reported now exceed 3,382,000 and up +10,000 in one day. Vaccinations in the world are also rising fast, now up to 1.475 bln (+23 mln in one day), and in the US almost half of their population (47.9%) have had at least one dose as they struggle to keep up the pace of vaccinations. Now more than one third have been fully vaccinated (124.8 mln people). The number of active cases there has fallen to 5,980,000 with fewer new infections than recoveries recently and steady progress.
On equity markets, the global risk appetite is pulling back and a more cautious tone is around as markets meander at or near record high levels. Wall Street has opened lower, currently down -0.3%. Overnight, European markets were down about -0.2%. Yesterday the very large Tokyo market closed down -0.9% but Hong Kong closed up +0.6% and Shanghai closed up +0.8%. The ASX200 ended its session up a minor +0.1%, and the NZX50 Capital Index ended up +0.3%.
The UST 10yr yield starts today at 1.64% and unchanged from this time yesterday. The US 2-10 rate curve is at +148 bps and little-changed. Their 1-5 curve is also little-changed at +78 bps, while their 3m-10 year curve is still at +163 bps. The Australian Govt ten year benchmark rate is up +1 bp at 1.72%. The China Govt ten year bond is up +2 bps at 3.17%. But the New Zealand Govt ten year is down -2 bps at 1.89%.
The price of gold starts today up a strong +US$22 from this time yesterday at US$1867/oz.
Oil prices start today slightly firmer at just over US$66/bbl in the US, while the international Brent price is just over US$69/bbl.
The Kiwi dollar opens today at 72.1 USc after an overnight softening. Against the Australian dollar we are lower at 92.9 AUc. Against the euro we are down at 59.4 euro cents. That means our TWI-5 starts today at 73.7 after the across the board retreat.
The bitcoin price is now at US$42,847 and down another -9.1% from this time yesterday. Over the past week, the bitcoin price has fallen -23%. In New Zealand dollars it is now below NZ$60,000 for the first time in 100 days. Volatility in the past 24 hours has been extreme at +/- 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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