Here's our summary of key economic events overnight with news there was an overnight phone conference between the US and Chinese presidents regarding the Ukraine invasion. Markets responded positively that something like that even happened. But there is no evidence yet of any changed positions.
Meanwhile, American existing home sales faded in February continuing the see-sawing pattern of the past few months. High mortgage interest rates are one reason they were down a rather sharp -7.2% from January, and down -2.4% from a year ago. The other reason is the very unusually low houses being offered for sale at present, about seven weeks worth at the current rate. Those that are selling are at the top end of the market, so average prices seem like they are rising.
The very good Canadian data continues. Their retail sales rose more than expected in January, up +3.2% from the prior month, up +12% in a year. The virtuous trend continued for strong February jobs gains too. The ADP report showed a +475,000 gain in the month, more than making up for the under-result in January. It was also the strongest monthly rise ever recorded in this series.
Japan's consumer inflation rose by +0.9% in the year to February, and as low as that may seem to us it is the most since April 2019. It comes after a +0.5% January gain. The latest figure marked the 6th straight month of annual inflation, with food prices rising at the fastest pace in 4 years, up +2.8% pa. Japan's central; bank likes the rise, but it was not enough for them to shift their policy direction.
The Bank of Japan reviewed its policy settings late yesterday, leaving them unchanged at +0.1%. The recent pickup in their economy is undermined by the recent Ukraine war impacts
The Russian central bank also reviewed their monetary policy settings overnight, and they too left things unchanged - at a 20% policy rate. There is little they can do after their government invaded its neighbour. Inflation is rampant, their currency is in the toilet. Monetary policy isn't able to do anything about either in the short term. But they know a huge decline is ahead of them, calling it a “large-scale structural transformation”.
Aluminium prices spiked on the invasion of Ukraine. Since, they have stayed high, volatile in the past six weeks, and again this week. But they are ending high.
Although global coal prices remain very high, they are easing off their early March peak.
High prices are one thing, but commodity markets are also suffering a liquidity crisis as intermediating traders disappear because the risks are too high and real buyers and real sellers have trouble agreeing terms directly. Aluminium isn't being spared in this crisis.
The IEA is warning of "the biggest supply crisis in decades" as war consequences sweep over energy markets. But it also reports sudden important responses in regions hardest it, especially Europe. Measures implemented this year could bring down European gas imports from Russia by over one-third, with additional temporary options to deepen these cuts to well over half - while still lowering emissions. It seems war is bringing sudden innovations in some areas. It is a great shame it takes a war crisis to motivate these adaptions.
A Parliamentary report on Australia's housing affordability problems has recommended that their States should ditch stamp duty and replace it over time with a broad-based land tax, review the taxes holding back development of the emerging build-to-rent sector and reform surging developer contributions that are not being used to fund crucial local infrastructure. These are just a few of their 16 recommendations to improve long term housing affordability there.
And you know it is election season in Australia when talk of tax cuts grows even as their deficit rises.
And there is more evidence that the Hayne financial services review is being gutted. The Canberra government is going to let the obvious conflict of interest stand that mortgage brokers have by receiving commissions from banks. New Zealand regulators turn a blind eye to that as well. Few things in the financial world are more obvious than this, but no one wants to do any about it.
The UST 10yr yield opens today at 2.14% and down -4 bps from this time yesterday. A week ago though this yield had just risen to 2.00% so it has been a big mover up this past week. The UST 2-10 rate curve starts today flatter at +19 bps. Their 1-5 curve is steeper however at +93 bps (and much steeper over the week) but their 30 day-10yr curve is flatter at +194 bps (but much steeper in a week). The Australian ten year bond is up +1 bp at 2.53%. The China Govt ten year bond is unchanged at 2.82%. And the New Zealand Govt ten year is little-changed at just on 3.19%.
Wall Street is up +1.0% on the S&P500 in Friday afternoon trade and heading for a heroic +6.1% rise for the week. That Biden-Xi phone call is helping the immediate mood. But it is still -7.5% lower than its year-end record high. Overnight, European markets were all up about +0.2%. That means Paris was up +5.1% for the week, Frankfurt was up +4.2% and London was up +3.5% for the week. Yesterday, Tokyo ended +0.7% higher on the day and up +5.9% for the week. Hong Kong was down -0.4% yesterday, but up almost +6.0% for the week. And Shanghai rose +1.1% yesterday, but it booked a retreat for the week of -0.6%. The ASX200 rose +0.6% in its Friday session, taking its weekly gain to +3.3%. The NZX50 finished with a flourish, up +1.5% yesterday, and up +2.9% for the week.
The price of gold starts today at US$1929/oz and still yo-yoing and down -US$15/oz from this time yesterday. A week ago it was at US$1990/oz but that was its recent high point.
And oil prices are higher today, up +US$2/bbl. In the US they are now just under US$103.50/bbl. The international price is just on US$106/bbl. But both are -US$4/bbl lower than a week ago and -US$7/bbl lower than two weeks ago.
The Kiwi dollar will open today firmer again, now at just on 69.1 USc and a four month high. The Kiwi dollar has appreciated +1.6% in a week. Against the Australian dollar we are little-changed at 93.2 AUc. Against the euro we are +½c up from this time yesterday at 62.5 euro cents. That all means our TWI-5 starts today at just over 74.2 and also a four month high.
The bitcoin price was up +1.9% from this time yesterday to US$41,579. That is a +7.5% weekly gain but really only taking it back to levels of two weeks ago. Volatility over the past 24 hours has been modest at +/- 1.9%.
The easiest place to stay up with event risk today is by following our Economic Calendar here ».
We welcome your comments below. If you are not already registered, please register to comment
Remember we welcome robust, respectful and insightful debate. We don't welcome abusive or defamatory comments and will de-register those repeatedly making such comments. Our current comment policy is here.