Here's our summary of key economic events overnight that affect New Zealand with news the US labour market keeps on delivering positive momentum.
There were 195,000 new jobless claims in the US last week, low and taking the total people on these benefits down to 1.675 mln, and an all-time low in a record that goes back to the 1960s. Markets expect the March non-farm payrolls growth to be released tomorrow showing an increase of +490,000, a lower jobless rate, and higher pay.
Job layoffs might have risen in March but they are at a tiny level still.
The bellwether Chicago PMI for March came in strongly after an outlier February dip, an expansion that remains impressive and supports the low labour stress data.
These labour pressures are contributing to inflation. But personal spending rose +0.2% in February from January on an inflation-adjusted basis, but below analysts' expectations of a +0.5% rise. But January was revised up to a surging +2.7%. The February result reflects an increase of +$94 bln in spending for services, namely food services and accommodations as Covid-19 infections from the Omicron variant faded. Meanwhile, spending on goods, mainly cars declined by -$59 bln. Yet, high inflation is likely to continue to weigh on spending in the coming months, forcing consumers to cut down on many items to afford more expensive petrol, rent and food. The PCE price index jumped 6.4% from a year ago, the largest increase in 40 years. Excluding food and energy, prices were up +5.4%, the biggest rise since 1983.
Updated mortgage rate data has their benchmark 30 year fixed-rate loan jumping to 4.67% (plus points) and within sight of 5% for the first time in four years. That is hurting their real estate sales industry.
Data for Japanese housing starts impressed in February, rising more than +6% from year ago levels. But Japanese industrial production data was weaker than expected, but at least it grew after the January shrinkage.
South Korean industrial production grew much more healthily in February and that followed a good January expansion.
But in China, their official PMI's (factory, services) both sank into contraction in March. These were faster retreats than were expected. Spreading pandemic lockdowns are not helping.
And Shanghai's ports are 'freezing up' as pandemic measures restrict movement in the area. Growing uncertainties in the overall Chinese economy has most observers expecting significant stimulus soon, starting from their central bank.
German retail sales actually rose in February, a better result than expected, and that was even on an inflation-adjusted basis. And despite the immediate security issues, jobs expanded in the month and the jobless rate was an unchanged and low 3.1%.
Global container shipping freight rates have slipped to nine-month lows in the latest assessment for last week. Bulk cargo rates slipped last week too.
The UST 10yr yield opens today at 2.32% and down a further -3 bps from this time yesterday. The UST 2-10 rate curve starts today still flat at just +2 bps and still just avoiding inversion. Their 1-5 curve is however a little steeper at +82 bps. Their 30 day-10yr curve is marginally flatter at +219 bps. The Australian ten year bond is down another -3 bps at 2.79%. The China Govt ten year bond is up +1 bp at 2.83%. And the New Zealand Govt ten year is down another -5 bps at just on 3.25%.
On Wall Street, the S&P500 has opened down -0.4% in Thursday afternoon trade, just like yesterday. They are headed for their worst quarterly result since the pandemic crash. In Europe, their equity markets were sharply lower, led by Frankfurt's -1.4%. London fell the least, but it was still down -0.8%. Yesterday Tokyo ended down -0.7% while Hong Kong was down -1.1% and Shanghai fell -0.4%. The ASX200 ended its Thursday session down -0.2% but the NZX50 managed an unusual, even if tiny gain, of +0.1%.
The price of gold starts today at US$1944/oz and up another +US$12/oz from this time yesterday.
And oil prices are down -US$3.50 to just on US$102.50/bbl in the US. And the international Brent price is now just under US$107.50/bbl. These falls are because the US has ordered its largest-ever release of strategic reserves. Meanwhile, Russia and Europe are heading for a head-butting moment over whether payments will be made in rubles. The arrival of warmer weather in Europe comes at a good time for them.
The Kiwi dollar will open -½c weaker than at this time yesterday at 69.3 USc. Against the Australian dollar we are down a similar amount at 92.5 AUc. Against the euro we are just a little firmer at 62.6 euro cents. That all means our TWI-5 starts today at just under 74.5 and -40 bps lower in a week.
The bitcoin price is lower today, down -3.5% from this time yesterday to US$45,798. Volatility over the past 24 hours has been moderate at +/- 2.1%.
The easiest place to stay up with event risk today is by following our Economic Calendar here ».
Daily exchange rates
Select chart tabs
30 Comments
LOL - Russia will view refusal of paying for gas in rubles as breach of contract — Putin
India to allow Russia to invest, borrow from domestic market amid sanctions on Moscow
US Will ‘Allow’ India to Buy Russian Oil, Threatens Sanctions If New Delhi Buys Too Much: Report
Ok for me but not for thee: US exempts critical Russian commodity from sanctions
And where did he get this idea from?
In 1974, Washington and Riyadh struck a deal by which Saudi Arabia could buy US treasury bills before they were auctioned.
In return, Saudi Arabia would sell its oil in dollars—not only enlarging the currency's liquidity but also using those dollars to buy US debt and products.
Putin aint stupid.
No he isn't - he had to be headed somewhere, and this was it. April Fool may turn out to be the West.
Petro ruble/yuan here we come. New world order - and the unrepayable western debt?
Weimar territory.
And the western media won't get it, because they've steadfastly swallowed the 'money is a real store of wealth' (even when it's spun into existence as debt') story. Biggest fairy-tale ever told - but in this case the standard ending might have to be re-written.
Who blinks first?
I have not sought out the 'Putin' side of this war. However it is concerning and blindingly obvious that our western Govts are not allowing the Russian view to be heard. There is only one side folks and that's the side cnn/fox/bbc etc are feeding you.
It was the same with covid.
Not defending Putin. But we should still have RT on our screens and uncensored information.
The Russians have passed a law so that no-one can call their unprovoked attack an invasion, or a war. Many Russians believe that Ukrainians are bombing their own cities and the Ukrainian Government are all Nazis.
Western media is not perfect, but I think the truth is far from half-way between the two. Maybe 90/10% or 80/20%?
In this particular case 90/10 sounds about right. But that 10 stills needs to be available.
The real irony is that the Ukraine stats about Russian deaths/casualties appear to actually be understated based on what little accurate information appears to have somehow escaped Russia.
The truth sits half way between? So the bigger the lie Russia tells, then the closer the 'truth' moves to their side?
On the west you have a free media, yes the large outfits are owned by the elite, and with their own biases. On the other you have free press banned in law, and only state propaganda allowed air time. You say the truth lies in the middle of those two?
Sorry Ras, but Putin's statements have been well publicised. And it is equally clear that you could drive a truck, in fact several of them, through the gaps in logic. But a few identified and even Biden has said it now, that Putin lives in a bubble. It is apparent that his view of the world is highly filtered and likely very inaccurate, so while what he thinks appears irrational to us, it likely does not to him.
But there are some developments that are at the same time hopeful and potentially concerning. Russia appears to be pulling back from some areas, claiming it is repositioning, and is also now stating it's goal is to ensure the independence of the breakaway regions of Donetsk and Luhansk. But it is equally clear that Russia severely underestimated the resistance they would face from the Ukrainians. In another thread, I opined that Putin had to be prepared for an "all or nothing" outcome when he took on this "special military operation". Especially considering the possibility that the EU and possibly NATO may have taken his stance that NATO was a threat if Ukraine was a member, and decided that Russia was a threat if it controlled Ukraine. Putin put nukes on the table himself, defining the upper limit of the "all" part of "All or Nothing", and if he was truly prepared to use his nukes then, he must still be, so the military pull back could also be in preparation for the Russians to use tactical nukes in Ukraine. I truly hope not, but I don't think we've seen the limits to where he will go to yet. When he really realises just how much of a pariah he has turned himself and Russia into I think he has great potential to toss a serious temper tantrum.
The Nuke theory is an interesting one. There are a lot of permutations to run through.
Personally, While Putin may be thinking it, the Russian Nuclear command have historically shown that they are quite reasonable and very willing to ignore the orders. So I have my doubts it will eventuate.
Of course, I could be wrong, in which case, what would the West do? and how would the other Nuclear powers react? or the Permanent UN Security Council Members?
I have a feeling, that a small tactical Nuke could well be ignored in the interests of the greater good i.e. avoid WW3 at all costs. But. I also imagine Putin's role would suddenly become vacant, with a very plausible reason as to his sudden death from a very manly and heroic illness.
There's an interesting article on CNN written by a Douglas London, apparently former CIA, which I found quite good and refreshingly candid about the world's view of the US leadership. He too suggests the most likely course for leadership change in Russia is as you suggest. Essentially some form of conspiracy.
i too hope the military who actually control the nukes are sensible people, but who really knows? You could well be right if one is launched, but one wouldn't be enough to get Russia what it wants.
Putin is not likely to sit down at an interview where he could be openly challenged on his perspectives. Instead he has released a number of statements, directly or through spokespeople in the Kremlin and made public addresses from which the same conclusions can be drawn. And you can add how they are treating their own people. While it may be possible to suggest we don't know the whole truth, there is plenty to suggest we have a fairly good idea of it though.
Hah, payment in rubles IS a breach of the contract.
In coming years EU purchases of gas and oil from Russia will drop right away. Now they can see the risks and have urgency around alternative plans.
Putin imitating his soldiers and shooting himself in the foot again.
No - he's calling the west's bluff.
This is as epochal as it comes; a Versailles Treaty moment - and folk are wittering about the war on the ground, or other such social stuff. They miss the point in spades. This is about REAL wealth - and we will turn out to be in the clique who hold.................... a lot of debt. And not much real.
If altering terms of payment is a breach of contract, then what is the seizure of lawfully accumulated FX reserves?
Goose, gander, but the RUB is that one cannot print Commodities like gas, oil, neon, titanium, wheat, nickel or platinum into existence. Whereas USD and EUR......
One wonders what will happen once the reserves run dry...
dry...https://www.whitehouse.gov/briefing-room/statements-releases/2022/03/31…
And in other financial news - I guess we were lucky it was only a mere $290 million.
"Auditor-General finds failings in $290m tourism support scheme
Ministers used unclear criteria when dishing out tens of millions of dollars in tourism grants in 2020 and kept few records explaining their decisions.
...Ryan noted the scheme was designed to be delivered at speed in a changing environment, but said those circumstances were no excuse for the lack of documentation and the lack of clarity around decisions.
"Trust and confidence in government depends on transparency and accountability when spending public money," he said.
"Trust and confidence can be undermined where the criteria are not clear and when some applicants are treated, or are perceived to be treated, differently than most applicants or where there is limited documentation supporting decisions made by ministers. We saw aspects of each of these factors."
Mindlessness of bureaucrats advising the government and ideological refusal to diversify and restore industry and jobs. The short sightedness and blind acceptance of neoliberal 'free market' ideologies is causing a lot of harm. but those in control both willfully ignore the evidence in front of them and then deny the impacts.
Our tourism company has decided not to apply for $50000 in Tourism assistance because some divisions are propping up others and we are doing alright financially. But big foreign owned outfits in Qt have grabbed everything they can and whipped it back to their own countries. Then they will fight to keep it if checked later.
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.