Here's our summary of key events overnight that affect New Zealand, with news US Treasury Secretary Steven Mnuchin has said the next round of tariffs on US$300 billion in Chinese imports will be at least a month away as they study the potential effects on consumers. Washington this month increased existing tariffs on US$200 billion worth of Chinese goods which prompted Beijing to retaliate with its own protectionist measures after talks between the world’s two largest economies stalled.
While Federal Reserve chair Jerome Powell says despite talk of a slowdown US monetary policy remains on hold for now as the Federal Reserve watches developments both in America and internationally. He expects the US economy to continue to grow at a slower but solid pace in 2019 with the US jobs market remaining strong with healthy wage gains for workers and unemployment near historic lows, while inflation remains near the Federal Reserve’s 2% goal.
In Canada, retail sales rose more than markets expected and would have been higher had they not been restrained by slower car sales.
In China their food security is once again under threat from another serious biological disease. The Fall Armyworm pest is already destroying crops in the south of the country, and it could well get devastating for some key crops in the north. This could not come at a worse time for China which is struggling with the African Swine Fever scourge affecting their pig herd. The country's own tariffs restrict its ability to buy American supplies.
In Japan exports fell 2.4% in April. Shipments to China fell more than 6%. Meanwhile Japanese imports rose 6% and that means the Japanese trade surplus plumged in April to be close to being in balance. Interestingly, Japanese exports to the US rose almost 10% but their exports to New Zealand fell a massive 27%. Japan also reported machinery orders and while down year-on-year again, recent order levels suggest quite a good upturn in April (+10%).
While in the EU new figures suggest Germany may have performed stronger than expected in the first quarter of 2019 posting a growth rate of 0.4%. That’s despite a slump in manufacturing and concerns in the EU about the ongoing trade conflict between the US and China. But growth in Germany is still forecast to slow to 0.5% this year from 1.4% in 2018 and Euro-area expansion is predicted to ease from 1.2% from 1.9%. Today also marks the start of the 2019 EU elections with people across the Europe heading to the polls.
While closer to home, the value of construction work in Australia is on a rather steep downward track. In the March quarter, it was down more than -10% below the same quarter in 2018. For the full year to March, the early gains have evaporated. Leading the way down is engineering construction, down -16% over the year. Building construction is weak too, but nowhere near as weak as in the engineering sector.
The UST 10yr yield down a sharp -4 bps to 2.39% today so far. Their 2-10 curve is now at +16 bps and their negative 1-5 curve has pushed out to -18 bps. The Aussie Govt 10yr is at 1.61% and down -5 bps since this time yesterday. The China Govt 10yr is up +1 bp to 3.32%, while the NZ Govt 10 yr is down -2 bps and now at 1.81%.
Gold is up +US$2 this morning at US$1,276/oz.
US oil prices are also sharply lower today, now just over US$61.50/bbl and a drop of more than -US$1.50 while the Brent benchmark is just on US$70.50/bbl. This was probably pushed lower by an unusually large rise petrol inventories in the US.
The Kiwi dollar is still at its new lower level of 65 USc. On the cross rates we at 94.4 AUc. Against the euro we are soft at 58.2 euro cents. The TWI-5 lis now at 70.2.
Bitcoin is little-changed at US$7,958. 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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