Here's my summary of the key events overnight that affect New Zealand, with news commodity prices are rising today.
But first, February data highlighted a setback for the American factory sector, with growth rates slipping back again after the slight rise seen at the start of 2016. The latest survey pointed to the weakest overall improvement in business conditions for just over three years. In Europe, the story was similar, but with notable price falls. In Japan, it is similar again, with only marginal growth occurring. Prices are more stable there.
If you don't like banks who make increasingly big profits, then you are likely to love today's HSBC results which report a slide in profitability and a loss in their 4Q. This is a globally important bank with less than US$200 bln in capital, but liabilities of some US$2.2 tln, meaning that if the value of their loans to customers and other investments falls only -8%, their shareholders are wiped out. Still, that is not too different to the big Aussie banks. Without big profits, confidence leaks. Without confidence, they are toast. Bank leverage is a tough, tough mistress.
In Australia, the price of iron ore, the icon weak point of commodities last year as world supply overwhelmed demand, has clawed its way back above $US50 a metric ton. The rise which was unexpected, not only looks like it will hold, but is now above what the Australian Federal government assumed in its last budget update, so it will surprise on the upside for them with their tax revenues. Behind this price rise is higher volume demand from China.
In New York the benchmark UST 10yr yield is marginally higher by +2 bps to 1.76%. Yesterday, local swap rates rose even less, up just +1 bp across the curve.
The oil price is higher today to US$31.50/barrel in the US while Brent is just on US$34.50/barrel aided by the release of a major report. Globally, growth in the oil supply has 'plunged' as an extended period of low prices takes its toll; so says the International Energy Agency in its annual Medium-Term Oil Market Report. But while American light, tight oil output is falling steeply for now, the market will begin rebalancing in 2017 they say – and by 2021 the United States and Iran are seen leading production gains among non-OPEC and OPEC countries, respectively.
The gold price is US$12 lower today at US$1,212/oz.
The NZ dollar is up 1c this morning. The US is falling, the euro even more. The Kiwi dollar is now at 67.2 US¢, at 92.8 AU¢, and at 61 euro cents. The TWI-5 will start today at 71.8. Most cross rates are now back to where they were at the beginning of January.
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 ».