US job cuts fall away; US household net worth jumps; ECB sits pat, but with better tone; China restricts talk of new capital controls; Aussies try new affordability plan; UST 10yr yield at 2.59%; oil and gold lower; NZ$1 = 69 US¢, TWI-5 = 74.9

US job cuts fall away; US household net worth jumps; ECB sits pat, but with better tone; China restricts talk of new capital controls; Aussies try new affordability plan; UST 10yr yield at 2.59%; oil and gold lower; NZ$1 = 69 US¢, TWI-5 = 74.9

Here's my summary of the key events overnight that affect New Zealand, with news of a new approach to affordable housing in Australia.

Last week's initial unemployment benefit claims report was a little higher than expected, taking it off its 44 year low from the previous week. US-based employers announced 37,000 job cuts in February, down -19% from January and an impressive -40% lower than the same month a year ago.

Meanwhile, American household net worth rose US$2 tln in the December quarter, an impressive +6.3% higher than in the same quarter of the previous year. Rising real estate values and rising stock markets were behind the rises. The same report showed that the growth of household debt eased a little in the quarter, and the same was true for businesses and government.

Now, all eyes are on tomorrow's non-farm payrolls report. The latest expectation is for a strong +200,000 rise.

Across the Atlantic, the eurozone is seeing sharply higher inflation, but that has not triggered any rate response from the ECB overnight. In fact, the only thing they raised was their growth forecast for the region. Their QE is still in place, adding €80 bln to their liquidity each month and that now totals more than €2.4 tln since the start of their money-printing. There was no suggestion today that this is to be tapered soon, but today's tone was more upbeat. The euro did rise on the announcement, and their bond yields firmed.

In China, the permier's annual 'Work Report' to parliament has received much coverage, but in the detail - but not in his speech - there has been much underground talk about the re-imposition of capital controls to slow the outflow of foreign currency. Apparently the Party has a blackout on discussing the issue.

And in Australia, their government has approved a scheme where the private sector would be given access to cheap capital in return for more affordable housing. Under the plan, a Federal bond aggregator will provide a long-term funding source of up to 20 years. Their current direct government efforts are considered to be significantly under-performing for the large amount of funds allocated. They are about to try something different to grow affordable supply.

In New York, the UST 10yr yield is rising still and is now up to 2.59%. We also saw some meaningful rises in local wholesale rates yesterday with the 2-10 rate curve its steepest in three years. We may see more today.

Oil prices are down sharply again today at just under US$49 for the US benchmark, while the Brent benchmark is just under US$52 a barrel. That is more than a -US$2 drop. The weakness is due to record American crude inventories, pointing to a global glut despite OPEC-led supply cuts.

The gold price is also down by -US$2, to US$1,206/oz.

And the New Zealand dollar held at its new lower level overnight at 69 USc. On the cross rates the Kiwi dollar is at 91.9 AU¢, and against the euro is at 65.2 euro cents. The NZ TWI-5 index is down to 74.9 and that is another 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 ».

Daily exchange rates

Select chart tabs »

The 'US$' chart will be drawn here.
Loading...
Daily benchmark rate
Source: RBNZ
The 'AU$' chart will be drawn here.
Loading...
Daily benchmark rate
Source: RBNZ
The 'TWI' chart will be drawn here.
Loading...
Daily benchmark rate
Source: RBNZ
The '¥en' chart will be drawn here.
Loading...
Daily benchmark rate
Source: RBNZ
The '¥uan' chart will be drawn here.
Loading...
Daily benchmark rate
Source: RBNZ
The '€uro' chart will be drawn here.
Loading...
Daily benchmark rate
Source: RBNZ
The 'GBP' chart will be drawn here.
Loading...
Daily benchmark rate
Source: RBNZ
The 'Bitcoin' chart will be drawn here.
Loading...
USD 
NZD
End of day UTC
Source: CoinDesk

We welcome your help to improve our coverage of this issue. Any examples or experiences to relate? Any links to other news, data or research to shed more light on this? Any insight or views on what might happen next or what should happen next? Any errors to correct?

We welcome your comments below. If you are not already registered, please register to comment.

Remember we welcome robust, respectful and insightful debate. We don't welcome abusive or defamatory comments and will de-register those repeatedly making such comments. Our current comment policy is here.

14 Comments

Comment Filter

Highlight new comments in the last hr(s).

Gross,

I'm with Will Rogers. Don't be allured by the Trump mirage of 3-4% growth and the magical benefits of tax cuts and deregulation. The U.S. and indeed the global economy is walking a fine line due to increasing leverage and the potential for too high (or too low) interest rates to wreak havoc on an increasingly stressed financial system. Be more concerned about the return of your money than the return on your money in 2017 and beyond.

https://www.janus.com/insights/bill-gross-investment-outlook/?utm_campai...

It's 1994 Again: Why Albert Edwards Expects An Imminent "Bond Market Bloodbath"

Make no mistake. Unlike most in the markets, I remain a secular bond bull and do not think this 35 year long bull bond market is over. I believe the US Fed has created another massive credit bubble that will, when it bursts, lay the global economy very low indeed. Combine this with the problems of a Chinese economy dependent on increasingly ineffective injections of credit to produce increasingly pedestrian GDP growth and you have a right global mess. The 2007/8 Global Financial Crisis will look like a soft-landing when the Fed blows this sucker sky high. The seeds for that debacle have already been sown with the Fed having presided over one of the biggest corporate credit bubbles in US history. All that is needed now is for the Fed to sprinkle life-giving rate hikes onto these, as yet dormant, seeds of destruction. Accelerated Fed rate hikes will cause tremors in the Treasury bond markets, forcing rates up, most especially in the 2 year – just like 1994. But as yet another central bank-inspired global recession unfolds, I believe US 10y bond yields will ultimately converge with Japanese and European yields well below zero – in other words, buy 10y bonds on weakness!

http://www.zerohedge.com/news/2017-03-09/albert-edwards-next-week-fed-wi...

I still stand by my prediction that interest rates must go down. Doesn't stop high points in the trend though. A lot of talk of rising interest rates, but no talk of what is supporting that theory. Just blind expectations.

I'm renewing a mortgage today. One year at 4.39% or two years at 4.75%? I'm going for one year on the strength of your comment! The bank seemed very keen to go for the longer term.

2 years @ 4.75!?!?!?! AHAHAHAHA.

OnwardsUpwards - Too high?

Yes too high. You should get 4.45% @ 2 years

I'd go for 1 year, actually I have renewed a mortgage for 1 year last week on the 3rd at 4.29% with ANZ (I have several mortgages with them).
I do not buy the large future increase in interest rates either

The problem is that next correction might be governed under populist politics. Populism tends to more public overspending and interventionism, rather than allowing greater liquidity to the private sector.

Zach it is a little high Are you using a broker at all? I renewed mine a couple of months ago and got 4.49 for 2 years through my broker.

Agree - Oil prices are already on the slide .... so a rate hike will make things worse.

While there's some upwards pressure on the interest rates (bank profit margins) the Euro is propped up on hot air. The ECB is concealing that many countries cannot pay their debt servicing costs. Now I see why nothing was done Germany's economy seems to be running into problems.
http://www.cnbc.com/2017/03/09/germanys-powerhouse-economy-is-cracking-a...

I was thinking of splitting across 1, 2 and 3 year fixed terms but this is not looking like the best choice as there are some bubbles that are likely to burst within 2 years.

"American household net worth rose US$2 tln ... Rising real estate values and rising stock markets were behind the rises. "

When you are the worlds reserve currency you can just print your wealth. But as the periphery comes under more pressure, this wont hold.

Ah the mysteries and the perils of Fractional Reserve Banking.

Zero marks to our masters for lessons learnt from the 2008 "practical".