US prices suggest inflation; China house prices fall; Greece stress rises; Russia data dismal; US gives fast track authority for TPPA deal; NZ$1 = 76.8 US¢, TWI = 81.5

Here's my summary of the key issues from over the weekend that affect New Zealand, with news of a 'boost' to the Trans Pacific Partnership negotiations.

But first, American consumer prices fell -0.1% year-on-year to March is data out Friday in Washington. The one key metric the US Fed watches however - CPI less food and energy - was up +1.8%, a sign of emerging inflationary pressure. That has been seen bolstering the likelihood of a Fed rate hike this year ... and markets promptly went into another 'tantrum', falling sharply on Wall Steeet. Their previous 'taper tantrum' proved ill-founded and it is likely this one will too.

(To be fair, other factors were at play in the stock market retreat, including new worries about Greece and China announcing a new clampdown on margin trading.)

The New Zealand CPI is due out later this morning, and the Aussie CPI on Wednesday. Similar results are expected as for the US. Central bankers look past the season food effects and past the realignment in the oil price. Energy prices do have downstream impacts and the 'petrol bonus' is showing up in higher purchasing power.

China's real estate market is still weakening with new home prices in March registering month-on-month declines in most of the big 70  cities included in an official survey out over the weekend. Now top Chinese officials are pleading with banks to raise their lending levels and roll over loans that are falling due. And late yesterday, the Chinese central bank reduced its reserve requirement for its banks.

The latest rhetoric on Greece is here and here.

Also out over the weekend was data from Russia, which was particularly dismal for them. Real wages plunged and retail sales fell sharply. It could get even more ugly there.

Back in the US, the American Congress has agreed to give President Obama 'fast track' authority to negotiate the Trans Pacific Partnership deal. That makes agreement much more likely in 2015. Now the really tough negotiating ramps up.

Here's an interesting factoid to start the week: The New Zealand passport is the ninth most valuable in the world on a 'power ranking' basis, one better than Australia. Singapore, Japan, Malaysia and Canada rank ahead of us as do most European countries and the US.

UST 10yr yields fell on Wall Street in trading at the end of last week to 1.87%. New Zealand swap rates also fell -2 bps across the curve and are now completely flat with just 1 bp separating one and five year rates. Rates for 2, 3 and 4 years are even lower.

The US oil price has remains at about US$56/barrel, while Brent crude held at US$64/barrel in trading on Friday. Your view of the impact of cheap oil very much depends on your politics and your location. New Zealand certainly is a winner. (This map helps explain why sentiment seems to be improving sharply in Europe.)

The gold price gained US$6/oz and now trades at US$1,204/oz.

The New Zealand dollar starts the week at 76.8US¢, at 98.6 AU¢, and 71.1 euro cents. The TWI is the highest it's been since July 2014, at 81.5.

And as we get closer to ANZAC Day, the Aussies are trotting out their usual superficial thinking that New Zealand should join Australia economically and politically. Fat chance that will get any consideration on this side of the ditch even though large groups of powerful Australian CEOs always think it is a good idea. I doubt it will ever be a good idea for New Zealand. The noise will die away after this coming weekend.

If you want to catch up with all the local changes yesterday, we have an update here.

The easiest place to stay up with event risk is by following our Economic Calendar here »