US Fed signals no more rate hikes, end of balance sheet drawdown; US CEOs pull back; more US tariffs; RBA sees stability issues in housing; UST 10yr 2.54%; oil and gold firm; NZ$1 = 69.2 USc; TWI-5 = 73.4

US Fed signals no more rate hikes, end of balance sheet drawdown; US CEOs pull back; more US tariffs; RBA sees stability issues in housing; UST 10yr 2.54%; oil and gold firm; NZ$1 = 69.2 USc; TWI-5 = 73.4

Here's our summary of key events overnight that affect New Zealand, with news American policies are changing again and the effects are being felt worldwide.

The US Fed has kept its rates unchanged at today's meeting and signaled via its dot-plot that there are unlikely to be any rate hikes in 2019. They also said they will stop reducing their reservoir of QE asset purchases, scaling back that effort between May and September after which their balance sheet will be put on hold.

Before that, Wall Street was down noticeably today, the S&P500 down -0.5% following Europe which was down much more overnight (Frankfurt tumbled -1.6%). Yesterday, Asian markets ended mixed. But following the Fed meeting Wall Street rose sharply back into a gain for the day. Since the start of the year, the S&P500 has gained +12%. Bond market yields have dived. the US dollar has fallen and that has pushed the Kiwi dollar suddenly higher, catapulting it up to almost 69 USc.

All this follows a report that confidence by top US chief executives is on the slide, even if it is still at relatively high levels. The international trade situation is behind the retreat. Hiring plans, capital investment, and sales expectations are all dipping at the same time. Senior business leaders are worried that decades of trade expansion could be coming to an end, all driven by misguided US policies.

The US President is compounding the mistakes as it seems clear now he will not win the concessions he aimed for in the trade talks with China. Few other countries are following the tariff path however.

But the US is building a bigger wall of protection around itself, today ruling that structural steel made in Canada and elsewhere can't be competed with and so their locals deserve protection. All this will build a floppy, sloppy uncompetitive American economy.

There are elections due soon everywhere and the rhetoric is ramping up in dangerous ways. In Indonesia, they will vote in less than a month and both ruling and opposition parties are increasingly focusing on conservative Muslims, a voter bloc that could decide the contest between incumbent Joko Widodo and his more religious opponent. In Turkey, religion is playing a big role in their local body campaigns too as the government there is under pressure in its handling of their economy and is invoking nationalism as a diversion.

In Sydney, the apartment market is "quite soft" due to a sharp rise in supply, and that's increased risks to financial stability says the RBA. Maybe the RBA is placing more weight on the downstream impacts of a falling Aussie housing market now.

The UST 10yr yield is down -7 bps at 2.54% following the Fed announcement. Their 2-10 curve is still at +15 bps but their negative 1-5 curve is now at -12 bps. The Aussie Govt 10yr is down -1 bp to 1.92%, the China Govt 10yr is little-changed at 3.15%, while the NZ Govt 10 yr is also unchanged at 2.08%.

Gold is up +US$8 to US$1,315.

US oil prices are higher today, now just under US$60/bbl while the Brent benchmark is just on US$68/bbl. Crude supplies in the US are lower than expected this week.

The Kiwi dollar is now at 69.2 USc and a +½c gain on the Fed move. On the cross rates we are up at 96.9 AUc. Against the euro we are firmer at 60.\5 euro cents. That lifts the TWI-5 to 73.4.

Bitcoin is virtually unchanged at US$3,997. 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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the FED stopping rises, you could see that a mile away, there is too much debt to be serviced to ever normalize rates now

https://www.theautomaticearth.com/2019/03/green-new-physics/

"And get educated. But forget about universities, they’re one of the leading drivers behind the mess you find yourselves in".

I don't totally agree, but I'm not far off it. Those youngsters who marched on Friday mostly won't have been taught about the multiple/cascading/compounding problems they will have to contend with.

The pressure has been on to stop the $50b per month balance sheet reduction, despite the political pressure it's obvious the Fed doesn't have a choice.

Replacing quality Canadian steel with low quality US steel doesn't sound like a great option. People's lives depend on structures and paying more for lower quality will have consequences. Poor decisions being made now will also compound the global slowdown that's now visible.

The arguments defending our economic system are flimsy and preposterous. Peel them away, and you see that the whole structure is founded on looting: looting from other people, looting from other nations, looting from other species and looting from the future.

https://www.monbiot.com/2019/03/18/intergenerational-theft/?

Will the Kiwi$ go back over US.70 Cents ?