US jobless claims at 44yr low; resi property investing surges in US; Merkel 'no' to eurobonds; Germany posts budget surplus; China M&A grows astonishingly; UST 10yr yield at 2.39%; oil and gold higher; NZ$1 = 72.4 US¢, TWI-5 = 77.7

US jobless claims at 44yr low; resi property investing surges in US; Merkel 'no' to eurobonds; Germany posts budget surplus; China M&A grows astonishingly; UST 10yr yield at 2.39%; oil and gold higher; NZ$1 = 72.4 US¢, TWI-5 = 77.7

Here's my summary of the key events overnight that affect New Zealand, with news mum+dad residential property 'investment' is gaining in popularity in the US too.

But first, there was a slight uptick in the latest American data for jobless claims - but also some prior week revisions lower. The 4-week moving average was 241,000, the lowest level for this average since July 1973 when it was 239,500. In that time the US employed labour force has grown from 80 mln to 152 mln.

New data out shows that small-time residential property investing is growing increasingly popular in the US too. Last year, 37% of homes sold were acquired by buyers who didn’t live in them. That number may include second homes, or properties acquired by property flippers, but it’s also a strong indication that landlords are playing a larger role in the housing market - and just at the time corporates are pulling back in that market. The American home ownership rate is now down to 63.7% (similar to New Zealand but still more than what we see in Auckland).

In Europe, Germany has reinforced its opposition to EU bonds. Angela Merkel said she remained opposed to "shared debt within euro zone" and that she supported the principle of "individual responsibility" for debt within the currency bloc.

And staying in Germany, their 2016 budget surplus hit a post-reunification high of nearly €24 bln euros (NZ$35 bln). A higher tax take and rising employment both boosted the result. This is the third year in a row of surpluses. However, there was an increase in spending on housing and integrating refugees. Under their budget law, some of the surplus money will go into a fund to support refugees. Separate data confirmed their economy grew by +1.9% in 2016 mainly because of higher spending by consumers and government.

In China, PwC is reporting some pretty startling facts in a review of Chinese M&A and deal activity. The +38% growth in the number of transactions was largely driven by the financial sector and a +142% jump in outbound M&A. Both categories reached new record highs. In value terms, China outbound M&A grew by an astonishing +246% - nearly 3.5 times the previous record set at the end of 2015. There were 51 outbound transactions valued at over US$1 billion - more than double the previous record.

In New York, the UST 10yr yield is falling and now at 2.39% mainly on reported comments by a Trump administration Treasury official.

Oil prices are back up today by almost +US$1, now just under US$54.50 for the US benchmark, while the Brent benchmark is just under US$56.50 a barrel.

The gold price is up sharply, up by +US$18 to US$1,250/oz.

And the New Zealand dollar has risen almost 1c against a very much weaker greenback and is now at 72.4 USc. On the cross rates we are little changed from where we ended yesterday at 93.8 AU¢, and against the euro at 68.4 euro cents. The NZ TWI-5 index is now at 77.7.

And finally, bitcoin hit its highest levels in more than three years overnight and the famously volatile digital currency came within $3 of its all-time high on speculation that the first bitcoin exchange-traded fund is set to receive regulatory approval. The SEC will decide by March 12 whether to approve one filed almost four years ago by Cameron and Tyler Winklevoss. If approved, it would be the first bitcoin ETF issued and regulated in the US.

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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In Europe, Germany has reinforced its opposition to EU bonds. Angela Merkel said she remained opposed to "shared debt within euro zone" and that she supported the principle of "individual responsibility" for debt within the currency bloc.

It would seem the Bundesbank has implemented considerable loss provisioning for possible collectively driven QE purchase losses.

"The purchases of long-term securities (at very low interest rates) for monetary policy purposes and the new targeted longer-term refinancing operations (four-year maturity at a negative interest rate) have given rise to ... mounting interest rate risk," the Bundesbank said in the report. Read more

One for our property investors, Ireland rents have risen at fastest level since records started in 2002 in the 4Q 2016, at 13.5 percent nationwide. Dublin , just under 14.8 percent. Of interest their census data showed in 2006, 300, 000 households lived in rental accomodation (split 145/155 private/social) this had risen to 475000 households in 2011, at just under 30 percent of total households. Results for 2016 census due soon, will show a further rise of those renting, mostly within the private sector.

Wouldn't the number of people renting decrease following a housing collapse as FHBs/OOs would be entering the market?

CB involvement, now trying to retain financial stability .In part a consequence of tighter lending rules to avoid a second housing collapse using DTI tools among others .FHB with new rules and many of those at tail end of 2007/8 collapse have suffered and unable to enter market. Lack of new supply. Only 17000 homes added to existing stock between 2011-2016, lack of new social housing, yet population rose by 170000. Migration has again turned positive. Land use and high construction costs ,( highest in Europe). Under 4000 homes nationwide to rent, just 1800 in Dublin. Supply of homes for sale has collapsed, for multiple reasons, which again lead to a surge in prices 2014/2015 .Everything has a consequence. Bottom line , never let housing be used for speculation and do not let lemmings believe that house prices can only continue rising. Would not happen in New Zealand.

Ah, that makes a lot of sense. Thanks for explaining it Cowpat :)

The gold price is up sharply, up by +US$18 to US$1,250/oz.

Who and why trashed copper? View chart