Here's our summary of key economic events overnight that affect New Zealand with news that while the global recovery is certainly underway, investors seem nervous about where to from here.
The Conference Board is reporting high but unchanged American consumer sentiment levels in May.
Sales of new single family home sales in the US stumbled in April, mirroring the hesitation in the existing homes market. After jumping to a new higher level in June/July 2020, it has been a slow trend shift lower since. And the level of unsold units is creeping up. Meanwhile, March brought a high annual rate of price growth in home prices, up +13.2% pa and the highest since December 2005, according to the Case-Shiller index.
The next US regional Fed manufacturing survey, this one from the Richmond Fed, shows activity is holding high in May, but that price pressures are unusually extreme. Employment levels are little-changed.
There was a UST 2yr note auction earlier today and yields fell. This one went for +0.11% pa for the US$71.6 bln offered (the Fed took US$11.6 bln). At the prior equivalent auction the yield was 0.15% for identical amounts raised.
The Chinese yuan has hit its highest level against the US dollar in three years, as it appears Beijing is using the appreciation as a way of limiting inflationary pressures at home. But it will have a tough impact on their goods exports if they keep this up. It won't hurt New Zealand exports however.
And after falling marginally on Monday (and many media reports highlighted that slip) the iron ore price resumed yesterday with a small rise on Chinese futures markets. Given Beijing's weekend instructions, that rise is somewhat unexpected. The same turn higher happened for coking coal prices.
Singaporean industrial production data for April disappointed, undermined by an unexpectedly large fall in their biomedical sector.
In Germany, sentiment among managers has improved considerably. A widely-watched survey reached its highest value since May 2019. Companies were more satisfied with their current business situation. They are also more optimistic regarding the immediate future. The German economy is picking up speed.
In Turkey, the President has done it yet again, firing senior central bank managers because they can't bring price or exchange rate stability with his crazy economic settings.
In Australia, the lockdown again in Melbourne is a wakeup call for all of us that we are risking a lot with our complacency on the risks of the global pandemic. Europe and the US may be tolerating high levels of community infection, even if they are falling, but here a re-emergence would have sharp economic impacts. Normalisation in the travel sector seems a long way off.
The OECD is reporting that the international trade in goods reached record levels in Q1-2021. The rises was fast. Compared with the previous quarter, exports and imports increased by +8.0% and +8.1%, respectively. Prices for agricultural commodities, including cereals and vegetable oils, increased by over +10%. They say the UK was the only G20 economy to record negative merchandise trade growth, both for exports (-5.7%) and for imports (-10.5%).
On Wall Street, the S&P500 lazing around unchanged today in afternoon trade. Overnight, European markets were mixed but little-changed in their Tuesday sessions. Yesterday the very large Tokyo market ended up +0.7%, Hong Kong ended up +1.7%, while Shanghai ended its session up a very strong +2.4%, a rise driven by strong foreign demand. The ASX200 rose a full +1.0% but the NZX50 fell -0.9%.
The latest global compilation of COVID-19 data is here. The global tally is still rising, now 167,454,000 people have been infected at some point, up +469,000 per day. Global deaths reported now exceed 3,476,000 and up +9,000 per day. Vaccinations in the world are still rising but at a slower pace, now up to 1.7 bln. In the US half of their population (49.9%) have had at least one dose. Almost 40% of Americans have been fully vaccinated (132.4 mln people). The number of active cases there has fallen to 5,755,000 with fewer new infections than recoveries recently and steady progress.
The UST 10yr yield starts today -5 bps lower at 1.56%. The US 2-10 rate curve is at +142 bps and flatter. Their 1-5 curve is also flatter at +73 bps, while their 3m-10 year curve is flatter at +156 bps. The Australian Govt ten year benchmark rate is down -3 bps at 1.60%. The China Govt ten year bond is unchanged at its new lower level of 3.09%. And the New Zealand Govt ten year is down -2 bps at 1.81%.
The price of gold starts today up at US$1899/oz, a rise of +US$16 today. And that is a five month high.
Oil prices start today unchanged at just under US$66/bbl in the US, while the international Brent price is just under US$68.50/bbl.
The Kiwi dollar opens today marginally firmer at 72.3 USc. Against the Australian dollar we are up at 93.2 AUc. Against the euro we are unchanged at 59.1 euro cents. That means our TWI-5 starts today at 73.7.
The bitcoin price is now at US$37,936 and a trivial +0.4% higher than this time yesterday. However, volatility in the past 24 hours has still been very high at +/- 4.8%.
Locally today, there are some major economic events due, including a Fonterra update and a Reserve Bank monetary policy statement. We will have full coverage.
The easiest place to stay up with event risk today is by following our Economic Calendar here ».
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