US jobs data in major miss; Canada jobs grow; Japan GDP up; China debt growth slows; China price growth falls; AU polls suggest change; UST 10yr 2.63%; oil and gold up; NZ$1 = 68 USc; TWI-5 = 72.9

US jobs data in major miss; Canada jobs grow; Japan GDP up; China debt growth slows; China price growth falls; AU polls suggest change; UST 10yr 2.63%; oil and gold up; NZ$1 = 68 USc; TWI-5 = 72.9

Here's our summary of key events over the weekend that affect New Zealand, with news there is no real progress in either the US-China trade talks, nor the Brexit negotiations.

But there has been a major miss in the US non-farm payrolls report for February. Analysts were expecting a +180,000 rise which would have been modest following January's stong +300,000 showing. But the gain was only +20,000. Markets rumbled. It is true that their unemployment rate dipped lower to 3.8% but that was only because their participation rate turned worse (63.2%). And don't forget, this month those Federal workers returned to work after the shutdown, so that should have boosted the jobs gain. But firms in the parcel delivery sector for example slashed 10,000s of jobs in the month. Cutting low wage jobs aggressively has brought a rise in average pay. Year-on-year, average hourly earnings rose +3.4%.

This jobs fail will make the US Fed even more 'patient'.

The jobs fail is just an American thing. Across the border, Canada reported a good gain of +56,000 jobs in February which was much better than expected but almost all of it was in Ontario.

And the average price of detached houses sold in certain premium parts of Vancouver has plunged more than -C$1 mln over the past 16-months from its bubble high, a drop of a third.

Japan has turned in a Q4 2018 growth rate of +1.9% and better than expected.

But China reported weak exports in February (down -16.6%) and a trade surplus far lower than expected - it was almost in balance. The export fall was their largest in three years. But the timing of the Chinese New Year holiday may be overstating the weakness.

And also falling in China are price rises. Consumer prices rose +1.5% in the year to February as expected but this was their slowest pace in more than a year. Falling food prices are the driver here. Their producer prices rose just +0.1% the slowest since September 2016 - and that came after three years of deflation. This time the driver is weak export demand.

Meanwhile, debt growth in China is also slowing fast. Recall that the rise in January was a spectacular increase of NZ$1 tln; but in February the growth was 'only' NZ$15 bln and actually less than the same month a year ago.

In India, they have set the dates for their general election which will now be held From April 11 to May 19 in seven phases.

In Australia, their May general election edges closer and the latest opinion poll (by the right-leaning Murdoch papers) shows the opposition ALP has a solid, sticky lead over the Government Coalition (54:46) which is the 50th time this poll has recorded a lead for the opposition. The implications for New Zealand may not be positive if the Labor Party institutes its stronger union-preference policies.

The UST 10yr yield is fallen today and is now at 2.63%. That's a -12 bps drop in a week. Their 2-10 curve is down to just on +16 bps while their negative 1-5 curve has returned at -9 bps. The Aussie Govt 10yr is down -14 bps this past week to 2.03%, the China Govt 10yr is down -4 bps on the same weekly basis to 3.16%, while the NZ Govt 10 yr is down -10 bps to 2.10%. New Zealand 10 year swap rates are now at record lows.

Gold is up sharply, up to US$1,298 and a +US$13 rise since this time Friday. However, it is only back to about where it was at the start of last week.

US oil prices are now just over US$56/bbl while the Brent benchmark is just under US$66/bbl. That's a small rise from Saturday.

The Kiwi dollar is at 68 USc and little-changed. On the cross rates we have gained on the Aussie and now at 96.6 AUc which is its highest level since September 2016. Against the euro we are at 60.6 euro cents. That puts the TWI-5 noticeably firmer at 72.9.

Bitcoin is marginally firmer at US$3,894. This rate is charted in the exchange rate set below.

The easiest place to stay up with event risk today is by following our Economic Calendar here ».

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14 Comments

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“premium parts of Vancouver has plunged more than -C$1 mln over the past 16-months from its bubble high, a drop of a third.”
Oof. Plunge happening in other unaffordable markets Vancouver and Sydney, but won’t happen in Auckland? Yeah right.

There will be consumer debt forgiveness on a grand scale at some time in the future, I suspect.

If the recent past is anything to go by more likely debt forgiveness for the banks and a haircut for depositors/shareholders, followed by a bonus for bank staff.

You'll put the fear of God into RP talking about 'a haircut for depositors/shareholders'

Do you include housing, or collatoral backed, debt in your comment?

Before you jump out the window (yes, the numbers are big) you might like to look at these debt levels in relation to the assets that back them up.

https://www.federalreserve.gov/releases/z1/dataviz/z1/balance_sheet/chart/

Perspective is important.

It is easy to make something look scary on a stock:flow basis. But before you do that, check the stock:stock relationships first (above link), then the flow:flow relationships (see here). The third order is then stock:flow. If the first two are ok, then you can put off that jump even if the third one looks a little out of whack. Wait a bit.

Are you overlooking the assumption that valuations are based on a going concern basis? In a crisis valuation tends to look at residual break up value instead.

Mark to market amplifies this, hence the wrong decision to bankrupt Merrill Lynch rather than lend it some money for a few weeks, thus stopping world trade 'cos the daft know it alls didn't realise that was what Merrill Lynch did.

Trump is a terrible President, 3.8% unemployment and 3.4% wage growth, the sooner he is impeached the better!

Biggest trade deficit in 10 years, biggest government deficit ever and growing. Tick, tick, tick...

Maybe he’s just a proponent of MMT but not admitting to it? Debt doesn’t matter, print forever etc. - It would answer a lot of what’s going on.

Super Mario Draghi’s Day of Reckoning Has Arrived

https://tomluongo.me/2019/03/09/draghi-cant-kick-can-next-guy/

"Super Mario Draghi" LMAO.