US Q4 growth surprises, US inflation rises, low; Buffet bullish; G20 fail again; UST 10yr yield 1.76%; oil and gold unchanged; NZ$1 = 66.3 US¢, TWI-5 = 71.5

Here's my summary of the key events over the weekend that affect New Zealand, with news of public negativity masking real gains.

The US economy grew at a faster pace than previously thought in the fourth quarter of 2015, according to the latest official figures. It grew at an annualised pace of 1% in the quarter, compared with an initial estimate of 0.7%. Most economists had taken a more pessimistic view, expecting the figure would be revised downwards. This 'surprise' will likely flow into sentiment, equity markets and currency markets later today. Real US growth in all of 2015 was +2.4%, the same level it recorded in 2014.

Also released on Saturday was the US inflation measure preferred by the Fed, PCE (Personal Consumption Expenditure). American consumers are facing the strongest inflation pressures in year and a half, a sign of economic vitality that is likely to be welcomed by them. The cost of products from housing to medical care to furnishings increased in January, and petrol prices, the primary driver of deflationary pressures the past 18 months, are falling at a slower rate. As a result, inflation gauges are quickly moving back toward levels recorded during most other economic expansions. They rose +1.3% year-on-year and their fastest rate in three years. They were up +0.5% in January alone.

Warren Buffet released his annual letter to shareholders over the weekend and as usual it is an intriguing read. It's been a record year for Berkshire Hathaway. One thing Buffet did say is that the campaigning politicians have it all wrong about the state of the US economy. In an interesting analysis, he says that young people entering the US workforce today are more likely than ever before to earn considerably more than their parents, a view at odds with almost all Republican and Democrat presidential contenders.

And, in a statement dripping with unintended irony, the world's G20 economies declared that they need to look beyond ultra-low interest rates and printing money and renew their focus on structural reform to spark higher economic activity. Of course, almost everyone signing that communique is responsible for close to 100% of the world's QE. Another way to look at this is to see it as an admission that low rates and money printing are failed policy. In the end, the G20 meeting was also a failure to act, so the focus is back on central banks to get us out of this trap.

At the very same meeting the boss of the Chinese central bank signaled that China has room for lower rates and more QE.

Also, different to almost all other G20 meetings, access to communiques and documents is very opaque for this one organised by Beijing. Unless you are there, it looks like a propaganda exercise for President Xi.

In New York the benchmark UST 10yr yield rose at the end of last week to 1.76%.

The oil price is a little higher at US$33/barrel in the US while Brent is at US$35/barrel.

The gold price is however US$24/oz lower at US$1,220/oz.

The NZ dollar will start the week at 66.3 US¢, at 93 AU¢, and at 60.7 euro cents. The TWI-5 will start at 71.5 and still in the range that has been with us all year.

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 ».