China, Japan and the EU report better economic data; commodity prices exceed; US PMIs grow rapidly with prices; Housing in the United States in the squeeze of supply; 10-year UST at 1.62%; firmer gold and oil; NZ $ 1 = 71.7 USc; TWI-5 = 73.3
Here’s our recap of the main weekend economic events affecting New Zealand with news of a strong V-shaped economic recovery around the world, making the 2020 recession one of the shortest recessions on record. .
In China, their tax intake will pick up sharply in 2021, mainly split between Beijing and local governments. Income taxes are up an impressive 27%, and their GST is up + 24% year over year. This is clear proof that the Chinese economy is on a good recovery.
In Japan, there are also proof that consumers feel more optimistic than they have been for a long time.
In Europe, we may also be seeing a recovery in their global economy. the Can flash PMIs shows that demand has grown at its fastest rate in 15 years. Industry and services are benefiting, with strong increases in new orders, and job growth appears to follow. They also recorded their largest increase in producer price inflation on record. the German ascension is at the heart of these gains, although other countries are now showing faster expansions. the UK and France are among them.
All this prospect positivity is improve consumer sentiment – but they have not yet reached the stage where optimists outnumber pessimists. Clear skepticism still pervades European consumers.
UK has would have offered Australia a path to zero tariffs – but one that was to be phased in over 15 years. But this is causing a strong push from the British rural sector. A similar deal will undoubtedly be offered to New Zealand, making a British FTA practically unnecessary for us. We have commercial advancements in the TPP and RCEP that really move our needle forward.
Overall, iron-ore and copper the prices seem to have exceeded. And shipping price show the same. After hitting an index level of 3200 and its highest in over ten years, the Baltic Dry Index has returned to over 2800.
In the USA. the last May updates of Factory PMI shows them expanding faster, in fact at a high series. And their service sector grows faster than that. Both are in full recovery mode. With all key categories on the rise (new orders, employment, etc.), the main focus of these surveys is on price pressures. This survey noted: âThe sharp rise in costs has translated into the largest increase in production costs since data collection began in October 2009, with record inflation rates recorded for both goods and services. services as growing demand has boosted the pricing power of firms. The inflation genie may be out of the bottle.
But some Fed officials are now Warning that a milder period may be ahead – especially for employment.
Consumers can shave and buy, and factories roar – but there has been a surprise in their residential real estate market. April’s sales volumes are expected to increase + 2%, but data shows they are actually down -2.7%. April was supposed to rebound from the -3.7% decline in March, but it compounded the drop from the previous month. That is to say six consecutive months of declining sales since October 2020. It’s as if Americans are avoiding their real estate market as mortgage rates start to rise – even if the hikes are quite minor. âSupplyâ has been the excuse for a while now and maybe it is. Median prices are + 19% higher than a year ago. Further, mega business owners are snatching up many homes before the public can bid.
Retail sales in Canada in March were stronger, up at an annual rate of + 3.6% while an increase of + 2.3% was expected. (Year-over-year gains are of course affected by the pandemic.) As of March 2019, they are up 8.6%.
The latest global compilation of COVID-19 data is here. The global tally continues to rise, now 166,825,000 people have been infected at any one time, up + 566,000 per day and an increase slowing as the number of new cases declines in India. But they are still very high in Brazil. But a black fungus epidemic is building up on misery in India. The number of reported deaths worldwide now exceeds 3,457,000 and over 12,000 per day. Vaccinations worldwide continue to increase but at a slower rate, now up to 1.65 billion with +180 million doses administered last week. In the United States, almost half of its population (49.5%) received at least one dose. Almost 40% of Americans have been fully immunized (130.8 million people). The number of active cases there has fallen to 5,808,000 with fewer new infections than recent recoveries and steady progress.
The 10 year UST yield today begins to decline to 1.62% as of this time Saturday. The US 2-10 yield curve is at +147bp and unchanged. Their 1-5 curve is also unchanged at +78 bp, while their 3m-10 year curve is stable at +162 bp. The benchmark ten-year Australian government rate was down -1bp to 1.67%. The 10-year Chinese government bond is unchanged at its new lower level of 3.09%. And the ten-year New Zealand government is unchanged at 1.84%, making it down -7bp in one week.
The price of gold starts today at US $ 1,881 / oz, an increase of + US $ 39 in one week.
Oil prices today start slightly firmer at just under US $ 64 / bbl in the United States, while the international price of Brent is slightly above US $ 66.50 / bbl.
The Kiwi dollar opened today at 71.7 USc. Against the Australian dollar, we are at 92.7 AUc. Against the euro, we are at 58.9 euro cents. All of these levels are unchanged from where we left them on Saturday. This means that our TWI-5 today still starts at 73.3 and a weekly devaluation of -1.1%.
The price of bitcoin is now at US $ 33,021 and a further -7.5% drop from Saturday. Volatility over the past 24 hours has always been extreme at +/- 11.3%. The price of Bitcoin has fallen by -27% in just one week, -35% in a month.
The easiest place to stay on top of event risk today is to follow our Economic calendar here Â».