Here's our summary of key events overnight that affect New Zealand, with news of what is starting to look like an unstable economic situation developing in the US.
First, new Fed chairman Jerome Powell has been testifying before Congress and his remarks have been taken as a relatively hawksih signal - that there are likely to be four US rate rises in 2018 as the US central bank tries to take the edge off overheating from the US corporate tax cuts.
He is not the only one worried about the policy track. Reports are that Japanese investors are selling USTs over worries that current policy will result in fx losses for them if they hold these bonds. The impact may become self-fulfilling.
And evidence of unrealistic optimism can be found in a widely-watched consumer sentiment survey out today. It is now at its highest level since November 2000. Pay may be rising quickly in many places, but investors worry that it is not being matched by productivity, and they know that is the only sustainable way higher pay can be held - unless inflation reignites. The signs are not good for US productivity, so that is why investors see - and fear - inflation. Bottom line; there is a move to sell out of US Treasuries which will raise yields.
The American trade balance worsened in December to an monthly rate of -US$74.4 bln and well above market expectations. That is only the 'goods' portion; they run a surplus in 'services' of about $21 bln per month.
The January data on durable goods orders are not too flash either, down -3.7% and far lower than the expected -2.0% decline. Unsurprisingly, inventories, both retail and wholesale, rose and by more than expected.
In Germany, a landmark court ruling gives cities the power to ban diesel cars. These have been shown to be a major cause of pollution. Some say it is a death warrant for diesel cars. (New Zealand is full of such older diesel-powered vehicles.)
And staying in Germany, the head of their central bank, and a persistent critic of the ECB, said that QE bond purchases could end this year if the economic upswing continues, another step on a long road to unwinding unconventional stimulus. He is seen as a possible successor to Mario Draghi whose term expires in 2019.
In China, home sales in 21 major cities surveyed fell -29% year-on-year in February as the Lunar New Year holiday threw cold water on property transactions across the country, state media reported.
In New York, the UST 10 yr yield is up +6 bps to 2.92% on the Powell testimony.
The gold price is down sharply by -US$16 to US$1,315/oz probably for the same reason.
Oil prices are a lower by about -US$1 today with the US benchmark now just over US$63/bbl and the Brent benchmark over US$66.50/bbl.
The Kiwi dollar will also start today about ½cent lower at 72.4 USc. On the cross rates we lower too at 92.8 AUc and at 59.2 euro cents. That puts the TWI-5 down at 73.7.
Bitcoin is now at US$10,610, up +4.2% from this time yesterday.
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The easiest place to stay up with event risk today is by following our Economic Calendar here ».
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