Here's our summary of key economic events overnight with news inflation's rise is now suddenly on everyone's mind, but how it is hitting varies widely around the world.
But first, the latest closely-watched measure of American consumer sentiment shows rising angst. The University of Michigan survey fell sharply for a second straight month to 61.7 in February, the lowest in more than ten years and well below market forecasts of 67.5. The recent slide been driven by perceptions of weaker personal financial prospects, largely due to rising inflation, less confidence in the current economic policies, and the least favourable view of the long term economic outlook in a decade.
We noted yesterday that a small +US$25 bln surplus was expected in the US Federal Budget in January. In the event it was a +US$119 bln surplus, a massive +US$282 bln turnaround from January 2021 and the best result since April 2019.
In Canada, their senior loan officer survey remained negative, only slightly less so.
Taiwanese inflation rose to 2.8% in January, and although it is rising, it remains well controlled there. Their PPI remains high, although it was flat in January from December, suggesting it is past its peak.
Meanwhile, Taiwanese exports remain very high, although they did slip in January from December. Recall, there is no base effect in these levels with the island nation a regional export powerhouse.
The German inflation rate eased slightly to 4.9% in January, the expected level, after hitting a 30 year high in December of 5.3%. Base effects are easing now. But energy prices remain the core reason German inflation is high.
The Russian central bank raised its policy rate sharply overnight, by +100 bps to 9.5% and its highest in five years in a bid to tame persistently high inflation and as their currency was hit by the Ukraine crisis. They said more hikes will likely be necessary. Inflation there is running at almost +9%. A year ago it was under fi%. They say the will be on this tightening track until inflation is back under 4%.
The Ukraine crisis might seem a very European cold war era tussle, but it is likely to have global implications if it turns hot. Ukraine is a top global gain exporter, especially of wheat. Russia is a top oil exporter. A hot war, even a minor one that invokes sanctions retaliation by NATO will cause commodity prices to spike, especially food and oil, and both are currently at high levels to start with. It will certainly put the focus squarely back on food security, and global supply chain integration. Shipping will suddenly go from very bad now to much worse.
The latest container shipping rate levels have eased overall only marginally last week. But the the overall picture masks the fact the rates out of China remain sky high, those to China very low. Rates to destinations other than China are also quite low. Bulk cargo rates have been on a downward track since October, but rose marginally last week.
In Australia, their competition regulator has had to make a very embarrassing backdown on a case it said was of cartel behaviour, a case that was brought at the height of the Hayne bank bashing saga, and what it turns out was just a regulator pile-on. The prosecuting agency withdrew the case when it became clear that there was no chance of any conviction based on the 'evidence' the regulator wanted to present. Despite the failure, the ACCC boss will keep his job. It is a situation that besmirches all regulators with the idea that they might just play with the current political whims. And this was a case that promised to have a media feeding frenzy attached, so there are today outsized media grumblings about its removal from the field.
In NSW, there has been a fall to 8,950 new community cases reported yesterday, now with 64,813 active locally-acquired cases, and another 19 daily deaths. There are now 1,716 in hospital there, off their high but staying stubbornly at this level. In Victoria they reported 8,521 more new infections yesterday. There are now 55,617 active cases in that state - and there were 13 more deaths there. Queensland is reporting 5,977 new cases and 14 more deaths. In South Australia, new cases have slipped to 1445 yesterday and 2 more deaths. The ACT has 500 new cases and no deaths, and Tasmania 552 new cases and no deaths. Overall in Australia, about 26,000 new cases were reported yesterday.
The UST 10yr yield opens today at 2.04% and +1 bp higher than this time yesterday. It is however +11 bps higher in a week and taking it to a level we last had in July 2019, 30 months ago. The UST 2-10 rate curve starts today much flatter again at +46 bps. Their 1-5 curve is also flatter at +84 bps, while their 3m-10 year curve is holding steeper at +199 bps. The Australian Govt ten year benchmark rate is unchanged at 2.19%. The China Govt ten year bond is +5 bps at 2.81%. The New Zealand Govt ten year is up +8 bps and also at 2.81%.
On Wall Street, the S&P500 is down -1.3% in late afternoon Friday trade and heading for a weekly dip of the same amount. Overnight, European markets closed all down between Paris's -1.3% drop and London's -0.2% dip. Yesterday, Tokyo was closed for a national holiday, Hong Kong ended -0.1% down, and Shanghai was down -0.7%. The ASX200 ended down -1.0% while the NZX50 ended down -1.9% with late selloffs. But the ASX ended its week with a +1.4% gain, whereas the NZX50 posted a -1.3% loss.
The price of gold starts today at US$1854/oz and up +US$12 from this time yesterday. But it is up +US$50 in a week.
However oil prices are unchanged at just over US$90.50/bbl in the US, while the international Brent price is still just over US$93/bbl. These are up about +US$1 in a week. There has been a sharp rise in the number of US oil rigs brought back into production over the past week.
The Kiwi dollar will open today softer at 66.6 USc and unable to hold yesterday's rise. But it is +½c higher than this time last week. Against the Australian dollar however we have risen slightly to 93.1 AUc. Against the euro we are holding at 58.6 euro cents. That means our TWI-5 starts today just over 71.1 and up almost +30 bps in a week.
The bitcoin price is -6.0% lower since this time yesterday and now at US$42,673 However, it is +2.0% higher than this time last week. Volatility over the past 24 hours has been high at +/- 3.2%.
The easiest place to stay up with event risk today is by following our Economic Calendar here ».
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