Here's our summary of key economic events over the weekend that affect New Zealand with news a sharp V-shaped economic recovery is worldwide now, making the 2020 downturn one of the shortest recessions on record.
In China, their tax take is recovering sharply in 2021, basically split between Beijing and local governments. Income taxes are up an impressive +27%, and their GST is up +24% year-on-year. This is clear evidence the Chinese economy is on a good upswing.
In Japan, there is also some evidence that consumers are feeling more bullish than they have for a long time.
In Europe, we may be seeing a revival in their overall economy too. The May flash PMIs shows demand surging at its fastest rate for 15 years. Both manufacturing and services are benefiting, with strong rises for new orders, and employment growth seems to be following. They also recorded their sharpest rise in output price inflation on record. The German rise is at the core of these gains, although other countries are now showing faster expansions. The UK and France are among them.
All this positivity among business prospects is improving consumer sentiment - but they haven't yet got to the stage where optimists outnumber pessimists. A net scepticism still pervades Europe's consumers.
The UK has reportedly offered Australia a path to zero tariffs - but to be phased in over 15 years. But that is causing sharp pushback from the British rural sector. A similar deal will no doubt be offered to New Zealand, making a UK FTA virtually useless to us. We have trade progress in the TPP and RCEP that is actually moving our needle.
Globally, iron ore and copper prices look like they have topped out. And shipping prices are showing the same. After hitting an index level of 3200 and its highest in more than ten years, the Baltic Dry Index has settled back to over 2800.
In the US. the latest May updates of factory PMI's shows them expanding faster, in fact to a series high. And their service sector is expanding faster than that. Both are in full recovery mode. With all key categories rising (new orders, employment, etc.) the main interest in these surveys is on the price pressures. This survey noted: "The steep rise in costs fed through to the sharpest increase in output charges since data collection began in October 2009, with record rates of inflation registered for both goods and services as soaring demand boosted firms’ pricing power." The inflation genie may be out of the bottle.
But some Fed officials are now warning that a softer period may be ahead - especially for employment.
Consumers may be flush and buying, and factories roaring - but there was a surprise in their residential real estate market. April sales volumes were expected to rise +2%, but the data shows they actually fell -2.7%. April was supposed to bounce back from the -3.7% retreat in March but it compounded the earlier month fall. That is six straight months of declining sales since October 2020. It is as though Americans are shunning their housing market as mortgage rates start to rise - even though those rises are quite minor. "Supply" has been the excuse for a while now and that may actually be the case. Median prices are +19% higher than a year ago. Further, mega corporate landlords are snapping up many homes before the public can bid on them.
Canadian retail sales in March were stronger, up at an annual rate of +3.6% when a +2.3% rise was expected. (The year-on-year gains is pandemic-affected of course.) From March 2019 they are up +8.6%.
The latest global compilation of COVID-19 data is here. The global tally is still rising, now 166,825,000 people have been infected at some point, up +566,000 per day and a slowing increase as new case numbers ease on India. But they remain very high in Brazil. But an outbreak of black fungus is piling on the misery in India. Global deaths reported now exceed 3,457,000 and up +12,000 per day. Vaccinations in the world are still rising but at a slower pace, now up to 1.65 bln with +180 mln doses given in the past week. In the US almost half of their population (49.5%) have had at least one dose. Approaching 40% of Americans have been fully vaccinated (130.8 mln people). The number of active cases there has fallen to 5,808,000 with fewer new infections than recoveries recently and steady progress.
The UST 10yr yield starts today softish at 1.62% from this time Saturday. The US 2-10 rate curve is at +147 bps and unchanged. Their 1-5 curve is also unchanged at +78 bps, while their 3m-10 year curve is stable at +162 bps. The Australian Govt ten year benchmark rate is down -1 bp at 1.67%. The China Govt ten year bond is unchanged at its new lower level of 3.09%. And the New Zealand Govt ten year is unchanged at 1.84% making it a -7 bps fall in a week.
The price of gold starts today up at US$1881/oz, a rise of +US$39 in a week.
Oil prices start today marginally firmer at just under US$64/bbl in the US, while the international Brent price is just over US$66.50/bbl.
The Kiwi dollar opens today at 71.7 USc. Against the Australian dollar we are at 92.7 AUc. Against the euro we are at 58.9 euro cents. All of these levels are unchanged from where we left them on Saturday. That means our TWI-5 starts today still at 73.3 and a -1.1% weekly devaluation.
The bitcoin price is now at US$33,021 and another -7.5% drop from this time Saturday. Volatility in the past 24 hours has still been extreme at +/- 11.3%. The Bitcoin price has fallen -27% in just one week, -35% in a month.
The easiest place to stay up with event risk today is by following our Economic Calendar here ».
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