Here's my summary of the key events overnight that affect New Zealand, with news Wall Street is up +1% in late trading today.
But first, a few minutes ago the US Fed released the minutes of its last meeting and those show it is unlikely to raise its policy rate at its next meeting on April 28. Policy makers have turned more cautious, especially wary of global stresses more so than their domestic situation. They are trying not to signal an inappropriate urgency. But unless those global headwinds change the expanding US economy, their caution will only delay the next hike by a meeting or so.
The Panama Papers may have taken down a democratically elected prime minister, but countries with less open governments are responding much more defensively. China has blocked any conversation about the issue. But the evidence that powerful Chinese families have used tax havens to shelter their personal wealth is mounting, implicating even President Xi. Not that anyone in China will know, however. There is still no major scalp revealed in New Zealand yet (apart from our general reputation of course).
In China, on average, each person now has four bank cards, according to an official report. That's 5.1 bln debit cards and 432 mln credit cards. And on those credit cards, they have borrowed NZ$1.6 tln (or NZ$3,700 each).
Staying in China, people there were more enthusiastic about buying a car in March as fuel costs fell and the perception of the current timing for buying a car turned more favourable. Their Car Purchase Indicator – a composite indicator designed to gauge future demand for cars – rose to 91.4 in March from 88.2 in February, marking its third consecutive increase, and the highest reading since May 2014.
The latest international airfreight volume data shows some trade headwinds however - volumes were down a sizable -5.6% in February compared with the same month a year ago. But one big factor distorts the result. Last year there was a US port strike which unusually boosted overall volumes. Adjusting for this, IATA says freight growth in the first two months of 2016 is up +3.2%.
In New York the benchmark UST 10yr yield is steady at 1.75%. Equities on Wall Street are higher by about +1% today, given a push up by the tone of the Fed minutes.
The oil price is rising today too, and now at US$38/barrel in the US, while Brent is just under US$40/barrel. Markets are surprised at the higher-than-expected draw on US crude stocks in the past week as demand rises there.
The gold price is down, now at US$1,221/oz, erasing yesterday's gain.
And finally, the NZ dollar will start today still in its range at 68 US¢, at 89.8 AU¢, and at 59.7 euro cents. The TWI-5 index is at 71.1
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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