China digs in; US scrambles to resolve NAFTA; Wall Street rises; CBO sees US$1 tln deficit much sooner; IMF sees a political obsession; Baltic Dry slumps; UST 10yr at 2.78%; oil and gold up; NZ$1 = 73.2 USc; TWI-5 = 74.4

Here's our summary of key events overnight that affect New Zealand, with news trade tensions seem to be spreading and the US isn't calling the shots at the moment.

Firstly, just as officials in Washington DC offer soothing remarks about progress on trade with China, attempting to calm things down, China stepped up its attacks on the Trump administration overnight over its threats of billions of dollars worth of new tariffs, saying Washington is to blame for trade frictions and saying it was impossible to negotiate under "current circumstances".

Meanwhile, the US seems caught between this and the NAFTA trade negotiations. Indications are it wants to clear up the NAFTA situation so it can concentrate on the China one. Indications from Washington DC and Mexico City that the NAFTA talks will be wrapped up by early May. The Canadians also see the finish line. Congressional pressure is pushing the Administration to sort NAFTA out quickly.

Despite these pressures, Wall Street is strongly positive today, up more than +1.5%. That is not the case in Moscow where the stock market is taking a hammering on new sanction actions against Putin's favoured oligarch. Putin is apparently not happy, perhaps because he may be the vehicle for Putin's own secret vast wealth.

Most equity markets may be higher, including Wall Street, but they haven't yet tuned in to the Congressional Budget Office update that shows the annual US Federal deficit will exceed US$1 tln much faster than previously predicted - and now by 2020.

The IMF has warned about the political obsession over manufacturing jobs. It says they haven't played a unique role in advanced economies for a long time, and play an even lesser role in emerging economies. The key is growth in service jobs, they say and we should wind back the anxiety over factory jobs.

In Germany, February exports have seen their biggest drop in about two and a half years. The decrease came as a surprise to many analysts who had predicted in an uptick.

All this trade uncertainty may not be affecting airfreight but it has taken the steam out of shipping rates. The Baltic Dry index is back below the 1000 level for the first time in 2018, a place it hasn't been for eight months.

The UST 10yr yield is slipping today and is now at 2.78%. The Chinese 10yr is at 3.75% (unchanged) and the New Zealand 10 yr is at 2.75% (+2 bps).

Gold is up +US$4 to US$1,337/oz.

Oil prices are also up, up almost +US$1.50/bbl today with the US benchmark now just under US$63.50 and the Brent benchmark just over US$68.50/bbl.

Our currency is higher as well and now at 73.2 USc, a one month high. On the cross rates we are also firmer at 95 AUc its highest in nine months and 59.4 euro cents, a six week high. That puts the TWI-5 at 74.4 and at the top of its 2018 range.

Bitcoin is down to US$6,743 which is a -5.6% fall from where we left it yesterday afternoon.

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