Here's my summary of the key events overnight that affect New Zealand, with news of improving investor sentiment.
The latest dairy auction this morning saw prices rise a modest +1.4% from the last event two weeks ago. But masked in that was a +5.5% rise in WMP.
In New Zealand dollars, prices are only +0.5% higher than the last auction. Since the beginning of the year they are -9% lower; since this time last year they are -23% lower and that is aided somewhat by the fall in the exchange rate. In US dollars, year-on-year, prices are -33% lower.
In the US, February car sales reports showed no signs of decelerating as most major automakers posted big gains from a year ago (which weren't too shabby themselves), and this was despite fears of an eventual slowdown after a record 2015.
American construction spending in January surprised on the high side as well.
If you needed evidence the world's financial markets are in an odd place, there is more today. Japan, the world’s most heavily indebted nation, is now getting paid to borrow. The Japanese government for the first time overnight issued benchmark 10-year bonds with negative yields, meaning it is effectively charging investors for the privilege of lending it money. This auction was 3x oversubscribed! Maybe the situation is not so risky internationally; 90% of their debt is held by Japanese 'investors', and more than a third of it is held by their central bank.
In China, we are seeing private sector moves to address air quality concerns. Commercial rooftops are sprouting solar panels in a trend that seems long overdue. Everywhere.
In Europe, their jobless rate fell for a third consecutive month in January, dropping to its lowest rate since August 2011. It was 10.3% in January from 10.4% in December. The number of people unemployed fell by 105,000 to 16.6 mln. But the variation between countries is large. In Germany, the unemployment rate is 4.3%; in France 10.2%; and in Spain it is just over 20%.
On Wall Street this morning, equities are up almost +2% as investors return to a risk-on mood. This follows healthy rises in Shanghai, Tokyo and Australia yesterday. There are also some signs commodities are back in favour.
In New York the benchmark UST 10yr yield is essentially unchanged again today at 1.75%. (Update: They have jumped to 1.84% in a later rise.) CDS spreads are falling noticeably, even for Australasian corporates. Local swap rates will start today even lower than the record lows we saw yesterday; and the two year is also almost at a record alltime low as well. We could well achieve that distinction in today's trading.
The oil price is marginally higher again today at US$34.50/barrel in the US while Brent is at US$37/barrel.
The gold price is slightly lower at US$1,230/oz.
The NZ dollar will start today at 66.2 US¢ with a minor bounce from the dairy auction, at 92.3 AU¢, and at 61 euro cents. The TWI-5 is at 71.4.
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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