Here's our summary of key events over the weekend that affect New Zealand, with news of more indications the top of the current economic cycle has passed.
The first estimate of American economic growth for the March 2018 quarter is out and shows an expansion of +2.3%. This was slightly higher than analysts expected (+2.0%), but well below the December 2017 quarter rate of +2.9%. This result is the slowest growth rate over the past year. Basically consumers reined in spending even though tax cuts improved take-home pay in many households.
The data also showed personal consumption expenditures (PCE), the inflation metric the Fed likes best, rose at a slightly faster rate. The 'core' measure, which excludes food and energy) was up +1.6% year-on-year although the q-on-q rate was at a more notable +2.5% rate. That is high enough for some analysts to change their forecasts to expect four Fed hikes in 2018 rather than three.
And the other major US consumer sentiment survey was out over the weekend, confirming the positive reading although the high levels are slipping.
Mortgage interest rates are rising in Canada. The new fixed rates are lower than here for terms shorter than five years, but similar at five years. Canada's central bank policy rate is 1.25% which is -0.5% lower than ours.
And the NAFTA negotiations seem to have stalled; reports indicate the US is wanting last-minute changes.
In Japan, their central bank has abandoned its attempt to predict when they will reach 2% inflation, another sign that country has yet to escape its long period of falling prices.
Norway's giant sovereign wealth fund is struggling to make gains now. It actually posted a loss in the first quarter of 2018, mirroring the difficulty other investors are having. Their equity portfolio was down -2.2% and their bond portfolio was down nearly -0.5%.
Argentina’s central bank surprised markets late on Friday by jerking its key interest rate up +3% to 30.25%, citing the effect a stronger US dollar is having and vowing to act again if high inflation persists. Inflation is running at +25% in Argentina.
In England, their growth rate slipped to just +1.2% in Q1-2018 and there is talk of 'stagnation' in their economy. Their currency fell on the news. And in March, 86% of all English properties sold for less than their asking price, the highest level seen since this metric started in 2013.
The UST 10yr yield is now at 2.96% and down -1 bp. The Chinese 10yr is up to 3.65% (+1 bp) while the New Zealand equivalent is at 2.91% (unchanged).
Gold is at US$1,323/oz in New York. That is up +US$7 since this time on Friday.
Oil prices however are little changed today at just over US$68 and the Brent benchmark just over US$74.50/bbl.
The Kiwi dollar is starting the week down at 70.8 USc after another retreat over the past week; it was 72 at this time last week, so a fall of more than -1c on top of the precious 1½c fall. On the cross rates we are at 93.4 AUc and 58.4 euro cents. That puts the TWI-5 on 72.8.
Bitcoin is however at US$9,301 and that is a net gain of +3.5% since Saturday.
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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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