Here's our summary of key events overnight that affect New Zealand, with news that benchmark bond yields climbed steeply again overnight.
But first in the US, new data out to December shows that private sector spending rose solidly as consumer demand increased, but the gain came at the expense of savings, which dropped to a 10-year low. It is now only +2.4% of personal income. That is not a good sign for future consumption and economic growth. (The New Zealand household savings rate in 2017 was -2.8%, also its lowest in ten years.)
The Fed's preferred measure of inflation, the PCE, came in as expected at +1.5% and unchanged from the previous quarter.
The Dallas Fed's manufacturing survey has come in better than expected. In fact, the region's general business activity index pushed up further to 33.4, its highest reading in more than 12 years.
Concerns about the reach of Chinese intelligence through firms like Huawei and ZTE, the US is actually looking at an option, among others, of nationalising their soon-to-be-launched 5G mobile network and building it in partnership with Japan and the EU. The Chinese reach is now so extensive, the risk of a 'bad actor' attack is focusing minds. Opposition to the nationalising option is no surprise, but that it is on the table at all indicates the level of concern.
India has launched a forecast that its economy will grow by up to +7.5% in 2018 after growth of 6.75% last year.
The UST 10yr yield has has pushed on up over 2.70%, a gain of +4 bps in the last 24 hours, That is its highest since April 2014. There were similar rises for shorter Treasury durations (but not the 30 yr). The equivalent 10yr China sovereign bond is up just a little at 3.96% (+1 bp). The equivalent NZ 10yr sovereign bond is also up +3 bps to 2.95%.
Oil prices are down today and currently just over US$65.50 a barrel, while the Brent benchmark is now over US$69.50.
Gold is also down, by another -US$8 overnight and now at US$1,341/oz.
The Kiwi dollar starts today lower as well at 73.1 USc. On the cross rates there is little change either and we are now at 90.3 AUc, and against the euro at 59.1 euro cents. That puts the TWI-5 a little lower at 73.8.
Bitcoin is now at US$11,256, -3% lower than where it was at this time yesterday. Keeping prices restrained are worried investors after reports of a massive (NZ$500 mln) theft of bitcoins on one exchange.
The easiest place to stay up with event risk today is by following our Economic Calendar here ».
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7 Comments
Look at the car market in the States, something is wrong when you offer %0 finance
"Manufacturer Offers10 $500 and 0.0% on select Ford models Retail Customer Cash"
http://www.damerowford.com/new/Ford/2018-Ford-Explorer-for-sale-near-Po…
Who would save at such ridiculous saving rates?
Bank of America reward savings rate, on over $2500 is %0.03
https://www.bankofamerica.com/deposits/savings/savings-accounts/
The Fed's preferred measure of inflation, the PCE, came in as expected at +1.5% and unchanged from the previous quarter.
Confirmed by the T10s versus T2s spread. Those buying flattening trades are yet to be disappointed by widespread global central bank failure to conduct their actions in a manner consistent with manipulating preferred inflation variables on an upward trajectory.
There isn’t even the slightest hint those kinds of hasty positive pressures are building up right now (UST 10s yields would be already passing 3.5% in a straight line on their way to 4%, with the yield curve blowing out first steeper, rather than 2.5% to maybe get up to 3% and flattening to nearly nothing). Economists keep pointing to the unemployment rate, but the unemployment rate’s extreme low level has coincided with the slowdown, not acceleration, in national (labor) income. It’s been totally disproven, particularly last year.
Instead, this all points toward 2017 being what it was – another phony recovery year predicated on dubious positive expectations for tomorrow. It was a year when that idea was given its full chance. The income data doesn’t suggest a lot of the same wiggle room for 2018. This is the year the boom has to boom, and do so starting with almost nothing going for it. These are the outer limits of sentiment. They can’t keep only talking about tomorrow’s economy; it has to show up today. Read more
Robo advice is almost here.
http://investmentnews.co.nz/investment-news/march-for-the-robots-auto-a…
There seem to be a lot of warnings of correction and the big casino banks exiting positions. Of course Goldman are saying to buy a 5% correction.
https://www.bloomberg.com/news/articles/2018-01-04/morgan-stanley-wealt…
https://www.cnbc.com/2018/01/29/goldman-sachs-sees-high-probability-of-…
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