US inflation rising; US car loan defaults up; Moody's thinks China can't win; Eurozone factories buzzing; credit card benefits fade, UST 10yr yield 1.96%; oil down, gold down; NZ$1 = 66.8 US¢, TWI-5 = 70.7

Here's my summary of the key events overnight that affect New Zealand, with news of a surprise jump in factory output in Europe.

But first, a regular survey of consumer expectations done by the New York Fed in February points to rising inflation, and growth in home prices, earnings, income and spending. Janet Yellen reviews their policy settings later this week and data like this will undoubtedly influence her. No hike is expected this month but expect signals that 'gradual' rate hikes are on track for 2016.

They may also be considering this: delinquencies on bottom-end American car loans have climbed to their highest level in almost 20 years. The level of “subprime” car loans overdue by more than 60 days rose to above 5% in February according to ratings agency Fitch. This is higher than the GFC peak and was the highest since October 1996 when it was 5.96%.

And another ratings agency is calling out China's strategy. China is bound to fail in at least one of its three conflicting aims to achieve growth, institute reform and maintain stability, says Moody’s as it engages in a war of words with Beijing over the country’s economic prospects. China’s three policy objectives formed an “impossible trinity”, the ratings agency said in a research report recently. Beijing could at best achieve only two of those objectives at one time, it said.

In Europe, industrial production grew at its highest rate in more than six years during January, driven by a sharp increase in output from Ireland. Production rose by +2.8% compared with the same month a year ago, reversing negative readings in December and November. Month-on-month it rose +2.1% and is the highest monthly rise since September 2009, when monthly output climbed +2.3%. Irish production jumped a remarkable +12.7% month-on-month.

One of the more under-reported aspects of the falls in our OCR and the parallel dive in our 90 day bank bill rate is that credit card rates have not moved, and certainly not given back any hikes that banks claimed they needed when the OCR was rising. Now credit card users are about to be stiffed again. In Australia, ANZ is withdrawing some of the benefits of their card reward programs, and they are not the first to do it over there. It is a trend that may well surface here.

In New York the benchmark UST 10yr yield is slightly lower in mid-day trade at 1.96%.

The oil price is also lower by $1 at US$37/barrel in the US while Brent is at US$39/barrel. American crude stockpiles continue to mount and Iran maintains little interest in a global production freeze.

The gold price is falling as well and is now at US$1,244/oz.

The NZ dollar is following all these commodity trends down too. The NZD starts today at 66.8 US¢, at 88.9 AU¢, and at 60.1 euro cents. The TWI-5 index is back down to 70.7.

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 ».