Eyes on Yellen; US payrolls strong; global factories expanding; air cargo growth very strong; credit card fraud rises; insurers look for +4% price hikes; UST 10yr yield at 2.50%; oil and gold lower; NZ$1 = 72.5 US¢, TWI-5 = 77.9

Eyes on Yellen; US payrolls strong; global factories expanding; air cargo growth very strong; credit card fraud rises; insurers look for +4% price hikes; UST 10yr yield at 2.50%; oil and gold lower; NZ$1 = 72.5 US¢, TWI-5 = 77.9

Here's my summary of the key events overnight that affect New Zealand, with news of quickly improving factory activity, and trade.

But first, all eyes will be on Janet Yellen today, and the latest Fed review will be out just after we publish this. We will add the results of that review here when they are to hand just after 8am. Update: The US Fed made no change to any of its policy settings today, and kept its review very brief.

Meanwhile, there are indications that Saturday's non-farm payrolls report will be very strong. The very large precursor ADP January survey of the private sector has reported its strongest monthly gains since June 2016 and the second largest in more than two years. Of particular note is the continuation of fast rises by America's largest employers. The non-farm payrolls report is expected to show a much lower gain than the ADP survey has reported so there could well be an upside surprise here.

Similarly positive, two surveys of the American factory sector expansion have both come in with strong results, reaching two year highs. However the rising pace may struggle to be maintained. American carmakers reported lower January sales, but it was from particularly strong December results.

In fact global factory activity is also at a two year high with new orders expanding at a faster pace, as are exports, which is reassuring. The Eurozone is a bright spot in all of this, and even Mexico is still expanding although confidence has taken a large hit. Japan has picked up too. We will get the first look at the unofficial Caixin Chinese survey on Saturday, although the official survey also reported sligjhtly slower expansion.

Supporting this positive trade backdrop is the latest air cargo data. The final quarter of 2016 ended on a very strong note with cargoes up almost +10% in December, driven especially by a European surge.

Here's something you don't read everyday: "Pakistan, often in the headlines for terrorism, coups and poverty, has developed something else in recent years: a burgeoning middle class that is fueling economic growth and bolstering a fragile democracy".

And, world wide, credit card fraud keeps rising, despite those new security chips. Identity fraud is being driven by rise in fraudulent online purchases. In fact, more consumers became victims of identity fraud last year than at any point in more than a decade despite a raft of new security protections. 2016 was a banner year for fraudsters.

In Australia, a new report says insurers are preparing to push through higher insurance premium increases for home and car policies. The rises could top +4% and are seen as a boost to the industry's profitability.

In New York, the UST 10yr yield is higher in mid-day trading and now at 2.50%.

Oil prices are a touch lower today than this time yesterday, now just over US$53 for the US benchmark, while the Brent benchmark is just under US$56 a barrel.

The gold price is also lower, now at US$1,203/oz

The New Zealand dollar is lower as well as the greenback has risen and now at 72.5 US¢. On the cross rates we are at 95.8 AU¢, and against the euro at 67.4 euro cents. The NZ TWI-5 index has slipped marginally to 77.9.

If you want to catch up with all the 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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2 Comments

Wow another 4% for short-term insurance , and that's on top of the new methodology for valuing houses introduced last year ( or 2014) and the earthquake risk loading that caused premiums to spike .

Just in ( 17 minutes ago) Reuters has reported the Fed has held interest rates unchanged, Yellen sees outlook as "improved "

Improved ?

Now watch the media put a spin on this to blame Donald Trump