Japan's negative rate faces end; China data weakish; US sentiment holds up; Canada housing starts rise; La Niña switch coming; UST 10yr 4.31%; gold and oil slip; NZ$1 = 60.9 USc; TWI-5 = 69.9

Here's our summary of key economic events over the weekend that affect New Zealand, with news of a week of big policy announcements with some potentially very big implications.

First all eyes will be on Japan's rate review (tomorrow, Tuesday). Strong wage gains in Japan, and by much more than expected, are fueling speculation that the Bank of Japan won't wait any longer and will shift out of its negative policy rate when they meet.

And the US Fed meets Thursday NZT with a review that includes economic forecasts and the so-called 'dot plot' interest rate projections. Also, in the US indicators such as Manufacturing and Services PMIs, along with building permits, housing starts, and sales of existing homes will be under review. Australia, Brazil, Turkey, Switzerland, the UK and Norway will all also be be reviewing their monetary policy positions and official interest rates. And this week we get inflation data from Canada, the UK, and Japan. Services PMIs from Australia, Japan, India, the EU are coming too this week. In China, they are scheduled to release data on industrial production, retail sales, their labour market, fixed asset investment. And their loan prime rate (LPR) reviews are on the docket as well.

Chinese banks extended ¥1.45 tln in new loans in February, down from the record ¥4.9 tln in January. (January is usually a seasonal high.) The February level was basically as expected. But authorities would be disappointed it is not higher because they had taken action to encourage lending. The central bank had announced its largest-ever reduction in a key mortgage reference rate. And they signaled recently there was still room for cutting banks' reserve ratios, following a 50-basis point cut in January. Banks are finding to tougher to identify lending opportunities.

China's house prices are falling, and a bit faster now according to official data. New house prices were down -1.4% from a year ago. In January the decline was -0.7%. Only seven of the 70 largest cities recorded any rise, all tiny, from a month ago. From a year ago only 13 showed rises. For resales, only two of those same 70 cities recorded a rise in February from January, none on a year-ago basis. But prices are -6.3% lower than year-ago levels and the largest fall since these records started in 2011.

China's one-year medium-term lending facility (MLF) rate was unchanged at 2.5% in Friday's update.

China’s national emissions trading scheme is set to expand to cover their aluminium sector as the compulsory carbon market pushes ahead to expand beyond the power sector and include more heavy emitters.

Global steel and iron ore prices are falling rather quickly now. Steel (rebar) is down -2.7% over the past week, and iron ore is down -10% over the same timeframe and may now be below US$100/tonne. Since the start of the year the reductions at -11% and -24% respectively. The steel price is back to 2009 levels as mill and port inventories rise and some steel mill profits have vanished. These pullbacks directly relate to soft Chinese demand. But copper is making a bit of a recovery, back to year ago levels after a longish soft patch. Supply limitations are driving this price higher.

Across the Pacific, American consumer sentiment is holding its recent highs in March, essentially the same as the past three months and back at levels prevailing in mid 2021. And at these current levels it is up a sharp +23% in a year.

American industrial production rose (slightly) in February from January following a previous month retreat. Most of the gains were in construction activity. But it is still marginally lower (in real terms) than year ago levels.

But March won't be helped by activity in the New York region. They reported a sharpish decline in their latest survey.

Home buyer and sellers have had a major win in the US with their real estate industry conceding their ability to price-fix commission levels. The groundbreaking NZ$700 mln legal deal ends years of dispute and could drive down commission rates and shrink the number of real-estate agents over time.

In Canada, housing starts jumped by +14% in February from January, to 253,500 units and well above market expectations of 230,000 units, according to official data. It was the highest reading in four months.

We perhaps should note that the current El Niño weather pattern is changing. The experts are saying La Niña is on its way with its cooler-than-average seawater in the central and eastern Pacific Ocean. In the past La Niña typically delivers northeasterly wind trends, bringing moist, rainy conditions to northeastern areas of the North Island and reduced rainfall to the lower and western South Island. Warmer than average air and sea temperatures can occur around New Zealand during La Niña. In Australia, rural areas typically benefit from more rainfall. But as global temperatures are elevated, maybe 'typical' reactions this time will be different. They were with the current El Niño.

The UST 10yr yield starts today at 4.31% and unchanged from Saturday but it is up a sharp +29 bps for the week. The key 2-10 yield curve inversion is unchanged at -42 bps. And their 1-5 curve inversion is a tad less less at -75 bps. And their 3 mth-10yr curve inversion is unchanged at -109 bps. The Australian 10 year bond yield is now at 4.16% and unchanged. The China 10 year bond rate is also unchanged at 2.34%. The NZ Government 10 year bond rate is up +2 bps at 4.77%.

The price of gold will start today -US$1 lower than Saturday at US$2156/oz and -US$30 lower than a week ago.

Oil prices are little-changed at just on US$80.50/bbl in the US while the international Brent price is now just under at US$85/bbl. That is nearly +4% higher in a week however.

The Kiwi dollar starts today at just on 60.8 USc and unchanged from Saturday. But that is a full -1c lower than a week ago. Against the Aussie we are still at 92.8 AUc. Against the euro we are still at 55.9 euro cents. That all means our TWI-5 starts today at just on 69.9 and unchanged as well but -40 bps lower in a week.

The bitcoin price starts today at US$67,946 and a mere -0.6% slip from this time Saturday. And this level is virtually unchanged from a week ago. Volatility over the past 24 hours has been moderate at just on +/- 2.9%.

The easiest place to stay up with event risk is by following our Economic Calendar here ».