US industrial production and PPI rise; US housing market weaker than expected; Iran silent on joining oil output capping pact; UST 10yr yield 1.84%; oil down, gold up; NZ$1 = 66.3 US¢, TWI-5 = 70.9

US industrial production and PPI rise; US housing market weaker than expected; Iran silent on joining oil output capping pact; UST 10yr yield 1.84%; oil down, gold up; NZ$1 = 66.3 US¢, TWI-5 = 70.9

Here's my summary of the key events overnight that affect New Zealand, with news of better than expected data out of the US.

Industrial production in the US rose by the most in 14 months in January. The rise was largely driven by an increase in manufacturing and utilities output, reflecting gains in the output of long-lasting goods, as well as food and chemicals. While these figures are good, manufacturing is not out of the woods yet and will continue to be buffeted by a strong US dollar, weak global demand and lower oil prices.

Producer inflation in the US also edged up in January, yet a question mark still hangs over whether it'll push consumer inflation towards the Fed's 2% target. The producer price index (PPI) was up 0.1% off the back of price increases for machinery and equipment, prices related to securities brokerage and dealing, loan services, apparel and footwear. Energy prices on the other hand dropped 5%.

Staying in the US, activity on new housing projects fell more than expected - a seasonally adjusted 3.8% in January. The number of building permits issued dipped 0.2%, indicating building activity will rebound in coming months. Economists believe the housing market will be one of the bright spots in the US's domestic economy this year, largely due to strong job growth and low interest rates.

In other news, Iran is stopping short of offering to restrain oil output as part of a global pact to freeze production to prop up prices. It wants to recapture the market share it lost during years of sanctions, despite requests from fellow OPEC members to restrict output. Iran's stance will complicate talks on output levels after Russia and Saudi Arabia this week agreed to freeze output at January's historically high levels.

Nonetheless, markets have responded well to news of oil leaders coming to some consensus; the US oil price increasing overnight to US$31/barrel. Brent has jumped to just under US$35/barrel. 

The gold price is fairly stable at US$1,210/oz.

In New York the benchmark UST 10yr yield is up substantially to 1.84%.

Improved risk sentiment has seen the NZ dollar strengthen overnight to 66.3 US¢, 92.4 AU¢, and 59.5 euro centsThe NZD is also the strongest it's been against the pound since June last year. The TWI-5 is up to 70.9.

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 today is by following our Economic Calendar here ».

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3 Comments

Did Japan liquidate it's holdings of U S Treasuries or just mobilise them as collateral for worthier endeavours? Read more

BNZ announces 3.75% 2 year mortgage - can't wait to see a headline like that sometime soon on the 90 seconds at 9am!

"markets have responded well" - says who? Well for oil producing despots. Not so well for consumers, who have to pay more for the stuff, directly and indirectly.