Retail sales rise in the US and Canada; awful US housing starts data; PMIs turn down, NAFTA deal gets panned; China loses at WTO; Aussie PMI turns up; UST 10yr 2.56%; oil and gold firm; NZ$1 = 66.9 USc; TWI-5 = 71.5

Retail sales rise in the US and Canada; awful US housing starts data; PMIs turn down, NAFTA deal gets panned; China loses at WTO; Aussie PMI turns up; UST 10yr 2.56%; oil and gold firm; NZ$1 = 66.9 USc; TWI-5 = 71.5

Here's our summary of key events overnight that affect New Zealand, with news things don't seem to be going the way of the US - or China.

Firstly however, there was some good data out of North America at the end of this week. American retail sales were up much more than analysts were expecting posting a +1.6% month-on-month annualised gain in March when half that was expected. That is most of the +3.6% gain from the same month a year ago. Given that US inflation is +1.9%, that is a modest real rise in retail sales.

And their inventory-to-sales ratio surprised by not getting worse.

But US housing start data wasn't so good for March, down a concerning -15% from the same month a year ago.

And the early look at April business activity in the US shows it's growth is slowing sharply. In fact, that is now at a 31 month low driven by their giant services sector. Output, new orders and hiring all show sharp pullbacks.

This downtrend is supported by the Philadelphia Feds regional index which also came in way below expectations. It declined to a reading of 8.5 in April from 13.7 in March. This index was at 32.3 in May 2018. so it has come a long way off.

Over the border to the north, Canadian retail sales data also brought a stronger-that-expected rise in February data released overnight. But to be fair, most of this rise is accounted for by inflation.

Trade over that border is supposed to be subject to the new updated NAFTA. But a new official review casts doubt on the likely benefit for the US and that may reinforce the trouble the Administration has getting Congressional consent. Apparently its not a great deal at all for the Americans, even if it is for Mexico and Canada.

China has lost a key WTO ruling in a dispute with the US over tariff levels for wheat, rice and corn.

In Australia, a ray of hope for their manufacturing sector. After declining for a many months, the latest PMI data shows it expanding again.

Equity markets ended last week in generally positive territory. For all of 2019 so far, the S&P500 is up nearly +16%, the German DAX is up a similar amount, The British FTSE has gained a bit more than +10%. In Asia, Tokyo is up more than +13%, Hong Kong is up +19% and Shanghai takes the cake, up +33%. Locally, the ASX is up +13% and the NZX50 is up +14%.

The UST 10yr yield has drifted off its recent rise and now down -4 bps at 2.56%, but that is exactly where it was a week ago. Their 2-10 curve is little-changed at +16 bps but their negative 1-5 curve is wider at -8 bps. The Aussie Govt 10yr is at 1.95% and an overnight dip of -2 bps, the China Govt 10yr is down -4 bps at 3.39%, while the NZ Govt 10 yr is at 2.00% and down -1 bp overnight.

Gold is unchanged overnight at US$1,276 which is a +US$2 gain from Thursday but a -$15 from for the week.

The VIX volatility index is unchanged this week at 12. The average over the past year has been 16. The Fear & Greed index we follow is also unchanged and still firmly on the ‘greed’ side.

US oil prices are a little firmer, now just on US$64/bbl while the Brent benchmark is at US$72/bbl. And the US rig count fell a little this week after last week's gain but it is still at a similar level to where it was last year.

The Kiwi dollar is weaker this morning at 66.9 USc which is almost a -1c fall since this time last week, all triggered by the CPI miss. On the cross rates we are lower 93.5 AUc. Against the euro we are at 59.5 euro cents. That puts the TWI-5 down to 71.5.

Bitcoin is at US$5,273 and that is a +4.5% gain since this time last week. 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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2 Comments

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Highlight new comments in the last hr(s).

This is kind of obvious but the sales for April in Auckland will be really low given the market is bad and Easter and Anzac Day have hit in such a big combo.

Surprising, at least in the areas i'm monitoring the number of listings being sold has picked up a bit.