Dairy prices inch up; US durable goods orders fall; Vancouver housing slumps; Australia moves into surplus; RBA holds; AU housing weak; UST 10yr under 2.49%; oil up and gold unchanged; NZ$1 = 67.4 USc; TWI-5 = 72.2

Here's our summary of key events overnight that affect New Zealand, with news the Aussie Government has turned around large deficits into large surpluses.

But first, there was another dairy auction overnight and that was a relatively tame affair, on the surface at least. Low volumes of product were offered, in fact the lowest since April 2018. And the overall price rose just +0.8% and this was the ninth consecutive rise. But the key WMP price actually fell -1.3% in USD terms. There is a silver lining however. In NZD terms, the rise was +2.5% from the prior auction, and the WMP price is up +0.8% in local currency. Good rises were recorded for butter, SMP and cheese, enhanced by the lower NZD. In fact the cheddar price is now at a record all-time high in NZD. Given that most cheese products are not sold on the auction platform, this bodes well for the direct trade transactions.

US durable goods orders in February were -1.6% lower than for January and the small January gain was revised down. The important capital goods orders component also fell. It is an unimpressive result and Wall Street is flat-lining today after yesterday's gains.

American carmakers reported weak sales for March and the first quarter in a tough start to the year. Most reported -3% to -7% sales declines and they will be significant to the overall US manufacturing sector. Boeing's sudden fall from grace is another blow.

And it is not just an American thing.

Worldwide, the shift by large carmakers to electric vehicles is going to have extensive economic and employment ramifications in many places with old plants shuttered and many layoffs. Cars are becoming software-driven bodies; complex, high-tech engines will no longer need skilled workforces. Servo drives are cheap. Lawmakers can now impose much tighter emissions rules. The transition could be fast, and ugly. Not devloping a car industry here was smart; Australia ending its subsidies was smart too.

In Vancouver, house sales there have tumbled to a 33 year low, driven down by strict new regulations on everyone. Last month’s sales were 46% below their 10-year March sales average and were the lowest total for the month since 1986. Median prices are down -7.7% in a year, larger declines for houses, smaller for apartments.

In Australia, their Federal Government reported a surplus in their latest budget, the first in 12 years, and an improving fiscal outlook. This result needs to be seen in light of the upcoming Federal election in May. And as a result, the Government signaled extensive tax cuts - almost all of which will come after the next 4 year term of government. However, the opposition Labour Party is expected to match them and a change of government is still odds-on, according to latest polling.

Also yesterday, the RBA held its policy rate at 1.5% and has a sanguine view of the Aussie economy's future prospects as well, even if they note the headwinds in other parts of the world. This didn't seem like a central bank about to cut rates.

Their economy may be doing ok but their housing market isn't. Building consents fell more than -12% in February. For the year to February, they are down more than -10%. That means there have been more than 23,000 fewer dwelling consents in the past year than the year before.

We should also note that the NZX50 is shining brightly in a small corner of the equity market world. It was up a full +1% yesterday, meaning that in 2019 the gain has been an impressive +14%. In the past year this index is up +20%. These are better gains than the ASX200 (+13%, +8% ) or the S&P500 (+14%, +11%), or even Shanghai which has gone gangbusters in 2019 (+29%, +1%).

The UST 10yr yield is little-changed this morning to 2.49%. Their 2-10 curve is still at +18 bps and their negative 1-5 curve is still at -11 bps. The Aussie Govt 10yr is lower at 1.82%, down -4 bps, the China Govt 10yr is higher, up another +4 bps to 3.17%, while the NZ Govt 10 yr is also up, now at 1.89%, up another +3 bps since this time yesterday. Yesterday local swap rates softened, especially at the shorter end.

Gold is also little-changed at US$1,291.

US oil prices are firm again and up +US$1, now just on US$62.50/bbl while the Brent benchmark is unchanged at US$69/bbl.

The Kiwi dollar is weaker this morning by about -¾c to 67.4 USc. On the cross rates we are marginally lower at 95.5 AUc. Against the euro we are down -½c at 60.2 euro cents. That puts the TWI-5 at 72.2 and that is a seven week low.

Bitcoin has starred in the past 24 hours and is up +14% to US$4,720. It is not clear what is driving this other than herd sentiment following a few days of +1% gains. 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 ».