Here's my summary of the key events over the weekend that affect New Zealand, with news the next stage of winding back QE is about to start.
The Federal Reserve could begin shrinking its US$4.5 tln balance sheet as soon as this year, earlier than most economists expect. New York Fed President William Dudley gave the signal over the weekend in the central bank's most definitive comments on the question that looms over financial markets. They are zeroing in on a strategy to begin winding down their portfolio of mortgage and Treasury securities, as part of their broader effort to drain reservoirs of stimulus out of the US and world financial system. The tap may have been turned off in October 2014 but all that QE is out there still. The job of withdrawing it will not come without its own pressures.
Inflation in the US is now back over +2% pa. The latest release of the "personal consumption index" (or PCE) preferred by the Fed pegs it at +2.1%. Also revealed in the release was a personal savings rate of 5.6%.
Consumer sentiment about their. economy remained high in March, mainly because of higher incomes and favorable job prospects, but it was also held up by a view that lower economic growth is the new normal.
China's official PMI indexes were released over the weekend and both rose in March. The factory one is at its highest in over a year, and the services one is on a similar trend, but even higher.
And Chinese companies are struggling to get money out of the country for their acquisition spree. So they are turning to raising it offshore. Chinese firms have issued more than $50 bln worth of US dollar bonds in the last 90 days, up sharply from last year.
In Europe, Brexit is about to get very messy. The EU has restated its formal position that divorce must be completed with Britain before any negotiations of new trading arrangements with the block can be started. They said Britain must agree to pay its bills and to protect millions of Europeans living in Britain before reaching a new trading relationship. They warned that the negotiations could be “confrontational.”
And Credit Suisse, the second-largest Swiss wealth manager, faces a sweeping tax evasion and money laundering investigation spanning five countries and potentially involving thousands of account holders. Investigators in the Netherlands arrested two people - seizing a gold bar, paintings and jewelery - and are probing dozens more suspected of concealing millions of euros in Swiss accounts. Criminal investigations are also underway in Australia, Germany, the UK and France and the roles of bank employees are part of the inquiries. Australia's Serious Financial Crime Taskforce said it had identified 346 of its citizens "with links to Swiss banking relationship managers alleged to have actively promoted and facilitated tax evasion schemes". No word yet of any Kiwis being caught up in this.
In New York, the UST 10yr yield will open lower at 2.39%.
Oil prices are up slightly today to just over US$50.50 for the US benchmark, while the Brent benchmark is just over US$53.50 a barrel.
The gold price is higher too, up +US$3 to US$1,247/oz.
And the New Zealand dollar starts today just a little lower at 70 USc. On the cross rates the Kiwi dollar is at 91.8 AU¢, and against the euro is at 65.8 euro cents. The NZ TWI-5 index is at 75.2.
If you want to catch up with all the changes on Friday, 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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