Here's my summary of the key events overnight that affect New Zealand, with news of more energy issues bedeviling Australia.
Firstly, dairy prices are down -6.3% in today's auction with WMP down a startling -12.4%.
The OECD is reporting that inflation in the group of 35 nations rose to +2.3% in January. That is up from +1.8% in December and the highest rise since April 2012. Rising oil prices are said to be behind the shift up.
The American trade deficit jumped to US$48.5 bln, a near five-year high in January as cell phones and rising oil prices helped to push up the import bill, suggesting trade would again weigh on economic growth in the first quarter. January exports were US$192.1 bln, US$1.1 bln more than December exports. January imports were US$240.6 bln, US$5.3 bln more than December imports. When Americans import more, that powers world trade. Their trade deficit is now running at about a bit less than -2.9% of GDP. By way of comparison, New Zealand ran a trade surplus for both goods and services in the year to 2016 of NZ$3.6 bln.
The OECD is begrudgingly acknowledging that world trade is in good shape. Global economic growth is expected to pick up modestly next year to rise by around +3.6 % from a projected +3.3% in 2017. But they are highlighting the risks of rising protectionism, financial vulnerabilities, potential volatility from divergent interest rate paths that hang over the trade outlook.
Meanwhile, air passenger travel is off to a strong start in 2017 with demand at levels not seen since 2011. Airlines claim this is supported by "the upturn in the global economic cycle", as evidenced by their rising freight volumes.
Even in the EU, growth is picking up - even if this news is overshadowed by European political squabbling. It is interesting to note the detail which shows it is Eastern Europe posting the fastest improvements. New Zealand and the EU have agreed overnight to 'joint scoping' for their proposed Free Trade Agreement, a necessary step to a process that is actually moving quite fast now.
It is not great everywhere of course. Brazil’s worst recession on record extended for a second- consecutive year, dealing a blow to living standards and raising doubts about the pace of recovery for the once-dynamic emerging economy. Brazil’s GDP shrank -3.6% in 2016, following a contraction of -3.8% in 2015. They are in a tough spot.
And as a followup today to yesterday's note on the stunning hikes in electricity prices in Australia, more stress is on the way from a shortage of natural gas supplies. Producers are exporting it all and there is a looming domestic shortage.
In New York, the UST 10yr yield is unchanged at 2.51%. Although there has been little movement in New Zealand wholesale rates, yesterday's small shift pushed the 2-10 curve to its steepest in over three years.
Oil prices are unchanged today, at just on US$53 for the US benchmark, while the Brent benchmark is just on US$56 a barrel.
The gold price is down however, by -US$8, to US$1,218/oz.
And the New Zealand dollar has fallen to 69.8 USc. On the cross rates we are down at 91.8 AU¢, and against the euro at just under 66 euro cents. The NZ TWI-5 index is down to 75.5 and that is a five month low.
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 ».