China house prices jump; China industrial profits drop; US GDP in good rise; Sweden and Singapore slowdown; eyes on RBA; UST 10yr 2.50%; oil down and gold up; NZ$1 = 66.6 USc; TWI-5 = 71.6

Here's our summary of key events over the weekend that affect New Zealand, with news international data is scrambling how central bankers are assessing their risks.

Firstly this morning in China, house prices are rising fast again, and it's pervasive. A private survey shows that average prices increased more than +13% in the first quarter from the same period year ago, in 100 large Chinese cities, including the four largest ones, 32 second-tier cities and 64 smaller ones. They were up more than +20% in 23 of them.

But industrial profits were sharply lower again in March, down -3.3% compared with the same period a year ago. A year ago, we were reported this up almost +12%. A month ago we reported them as down -14% so from February to March the decline seems to have been arrested.

It is this continuing reversal of profitability that is probably behind the sharp turn in the Shanghai equities market which was down -1.2% on Friday. Prices on this market rose almost +33% to the beginning of April from the start of 2019 but the recent pullback has this gain noticeably lower now, up only +25% from the start of 2019.

In the US, their advance 'flash' report on GDP growth for Q1 2019 has delivered a positive surprise. Their economy grew at a +3.2% rate suggesting the 10-year recovery retains momentum, despite recent fears that the year was off to a slow start. Among the drivers were good rises in personal consumption and government (deficit) spending. Going the other way, imports fell, inventories rose and there was a decrease in residential investment. PCE inflation was a modest 1.3%.

It is growth that kind of vindicates the Fed's 2018 rate hikes. Equities rose on the news, but bonds and the greenback fell. The high-growth but low-inflation signals from this data have scrambled the views on what this means for the Fed now and its next decision later this week.

Sweden is the latest country to signal dovish policy pullbacks, signals that drove down the value of their currency. The Swedish krona dropped more than -1% against the euro late last week as their central bank extended its bond-purchase program and signaled interest rates will stay below zero for longer than previously indicated. They follow the Bank of Canada who abandoned its tightening bias this week after the ECB, Bank of Korea and RBA all flagged growth risks in the past few weeks.

And in Singapore, their central bank is warning that the slowdown in the city-state's economy could continue for several quarters. Their data showed some unexpected weak spots as growth momentum wanes.

In Australia, markets are betting there will be a pre-election May interest rate cut. The next RBA review is on May 8 and the election is ten days later. The RBA's track record shows interest rate cuts often come in May, the easing cycle is often immediately after quarterly inflation data and an election campaign is no barrier.

The UST 10yr yield is now at 2.50%, and that is -3 bps lower than on Friday. Their 2-10 curve is holding at +21 bps and their negative 1-5 curve is at -12 bps. The Aussie Govt 10yr is at 1.78%, the China Govt 10yr is at 3.42%, while the NZ Govt 10 yr is at 1.93% - all unchanged from the end of last week.

Gold is up +US$8 from Friday at US$1,286/oz.

US oil prices are sharply lower today, now just over US$63/bbl while the Brent benchmark is unchanged at US$72/bbl.

The Kiwi dollar will open the week firmer this morning at 66.6 USc which is back close to where it was this time last week. On the cross rates we more than +1c higher in a week at 94.7 AUc. Against the euro we are firm at 59.7 euro cents. That all makes the TWI-5 at 71.6.

Bitcoin is at US$5,170 and that is a -US$120 loss since this time last week and almost a -US$400 loss since this time last Wednesday. 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 ».