US retail sales rise, sentiment slips; China retail sales strong; PBoC claim all is well; Aust. graduate job market improves; UST 10yr yield 1.75%; oil rises; gold drops; NZ$1 = 66.3 US¢, TWI-5 = 70.7

US retail sales rise, sentiment slips; China retail sales strong; PBoC claim all is well; Aust. graduate job market improves; UST 10yr yield 1.75%; oil rises; gold drops; NZ$1 = 66.3 US¢, TWI-5 = 70.7

Here's my summary of the key events over the weekend that affect New Zealand, with news of improving consumer demand in both the world's largest economies.

First, American retail sales were up +3.4% in January from the same month a year ago, which is impressive when inflation is so low. Car sales were the out-performer.

But the American consumer is slightly less optimistic than last month, or even a year ago, according to a respected survey out over the weekend. The small early February decline was due to a less favorable perceptions for their local economy during the immediate year ahead, while they see longer term prospects remaining unchanged at favorable levels. This survey indicates that consumption will grow +2.7% in the next twelve months.

China's financial markets are getting ready to open later today after the Golden Week holiday. China's consumers seem positive as well. Official data out yesterday claimed China's retail sales grew an impressive +11.2% during this vacation period compared with the same holiday period last year.

And according to China's central bank governor, there is no basis for continued depreciation of the yuan because "the balance of payments is good, capital outflows are normal and the exchange rate is basically stable". He rejected the idea that China planned to tighten capital controls and said there was no need to worry about a short-term decline in foreign-exchange reserves, adding that the country has ample holdings for payments and to defend the currency's stability.

These comments will have many market analysts wondering about the ability the central bank to properly analyse or appropriately influence China's monetary situation.

In Australia, it is reported that for the first time in seven years, graduating students are facing a job market on the rise with both salaries and employment levels rising, even if it is only slightly

In New York on Saturday, the benchmark UST 10yr yield made a strong comeback to 1.75%. Expect that jump to be reflected in local swap rates today.

The US oil price also rose but from very low levels. It is now US$29/barrel while Brent is just on US$33. Some analysts are taking heart in this rise, but really it is just noise at this stage.

The gold price fell to US$1,239/oz.

The NZ dollar still in its tight range. While it starts lower today, it is only at levels we saw mid last week. It is still at 66.3 US¢, at 93.2 AU¢, and at 58.9 euro cents. The TWI-5 will start today at 70.7.

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

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

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1 Comments

PBoC say all is fine, hmmm makes you wonder what the real story is from behind the wall