Dairy prices rise again; US factory order growth fades; China pushes back on US demands; China holds up AU coal imports; RBA sanguine; UST 10yr 2.61%; oil and gold firm; NZ$1 = 68.6 USc; TWI-5 = 73.1

Dairy prices rise again; US factory order growth fades; China pushes back on US demands; China holds up AU coal imports; RBA sanguine; UST 10yr 2.61%; oil and gold firm; NZ$1 = 68.6 USc; TWI-5 = 73.1

Here's our summary of key events overnight that affect New Zealand, with news world markets are hanging around waiting for the latest Fed decision.

This morning's dairy auction brought a very good rise in butter prices (up +9%) and the expected rise in WMP prices (up +4%), but weaker prices in SMP (-2.4%) and some other lines limited the overall rise to just +1.9% in US dollars. The higher Kiwi dollar weakened it further, so in local currency the rise is just +0.8%. However this does represent the eighth consecutive rise, taking the gain since the beginning of December to an impressive +26%. And the latest WMP price is back to levels we last saw in January 2017, and overall prices back to September 2017 levels. Fonterra will report its half year results early this morning.

Orders for American factory goods came in weaker than expected and only marginally positive, up +0.1% month-on-month (lower than the flash report), and up +3.8% year on year as the recent month weaken.

The US Fed is meeting again and markets are bidding up benchmark bond yields a little in expectations their 'patient' stance will continue. Equity prices are moving sideways. Speculation on the Fed's "dot plot' is rife.

Trade talks between China and the US aren't going so well with reports that China is pushing back on American demands. Negotiators are planning new rounds of talks with a new target date for a deal by the end of April now. Chinese President Xi is skipping a visit to the US in March, all but ruling out a deal this month. And American farmers are also feel the pressure from the TPP, with notable losses in business for them in Japan.

Seaborne imports into the biggest American west coast ports for Asia trade fell sharply in February, halting a recent shipping surge driven by strong consumer demand and a rush by companies to bring goods into the country ahead of potential new tariffs. The flush is over.

China is sharply slowing the importing of Australian coal. Ship unloading times have blown out from about 5 days to more than three weeks and longer. The Aussies suspect it is reprisal for their Huawei decisions. The downstream impacts will be significant.

Germany business is still pessimistic about the future, but less so in the latest sentiment survey. The turn up is being called 'significant'.

Back in Australia, two other major supermarkets have followed Woolworths in raising the price of milk, ending an eight-year supermarket price war.

And yesterday's release of the RBA minutes still show divergent conditions in Australia. The RBA sees housing markets under pressure, but they also see export markets performing very well, labour markets with upward pressures, and consumer sentiment and spending helping to drive their economic growth up. With views like that, a rate cut there doesn't seem likely.

The UST 10yr yield is little-changed at 2.61%. Their 2-10 curve is still at +15 bps while their negative 1-5 curve is now at -9 bps. The Aussie Govt 10yr is down -4 bps to 1.93%, the China Govt 10yr is also firmer by +1 bp and back at 3.16%, while the NZ Govt 10 yr is down -2 bps at 2.08%.

Gold is up +US$5 to US$1,307.

US oil prices are marginally softer, now just over US$58.50/bbl while the Brent benchmark is just on US$67.50/bbl.

The Kiwi dollar is at 68.6 USc and little-changed as well overnight. On the cross rates we are marginally firmer at 96.7 AUc. Against the euro we are still at 60.4 euro cents. That holds the TWI-5 at 73.1.

Bitcoin is unchanged at US$3,997. This rate is charted in the exchange rate set below.

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12 Comments

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Highlight new comments in the last hr(s).

Those scary Brexit predictions were about as accurate as runaway global warming, acid rain, population bomb, peak oil, Y2K.. . "The unemployment rate has fallen below 4% for the first time since 1975, according to official figures.

The Office for National Statistics (ONS) said the jobless rate was 3.9% in the three months to January, down from 4% at the end of 2018."
https://news.sky.com/story/jobless-rate-below-4-for-first-time-since-197...

You forgot to mention GE!

Brexit hasn't happened yet. Acid rain was stopped by restricting emissions through international agreement. Y2K was prevented by concerted effort by IT staff the world over. Problems can be prevented or mitigated if the work is done, with Brexit the work cannot be done yet as noone knows what is going to happen.

NL built dykes....

Gave it thumbs up but to be accurate Y2K was 99.9% hype designed to sell IT Hardware and Software and for IT managers to grab a little status and minor perks and it was 0.01% IT staff effort. I was involved.

I know a lot of IT staff that got paid double time to work over NYE for twiddling their thumbs, Also heaps of overtime updating code. I'm sure the managers got their cut also...

Concerted effort on Y2K? "But over in Italy they're sure not buying it. Italy was one of those countries that listened to the Y2K warnings and then turned over and went back to sleep.

This week's headline in the Italian newspaper La Repubblica: "The Bug Was a Dud."

English translation: I told you so.

In Russia, too, where cash-flow problems dictated little if any Y2K compliancy testing and where they nonetheless passed the millennium barrier with hardly a computer glitch, they couldn't resist a little smugness..."
www.deseretnews.com/article/807969/100-billion-to-fix-Y2K-was-wasted.amp

The UK is doing well currently as they have two advantages - a lowered exchange rate due to Brexit uncertainty and EU trade deals. The former will likely hang around but they will lose the latter once Brexit happens.

In other news, Libor appears to have quietly peaked. Draw the slider back to see what usually happens next.
https://fred.stlouisfed.org/graph/?graph_id=530410

Interest rates trending down eh?

Housing stock values Australia style. regions separated
http://stat.data.abs.gov.au/Index.aspx?DataSetCode=RES_DWEL_ST#