Here's our summary of key economic events overnight that affect New Zealand, with news market-moving data is scarce today but investors should be reading the latest US CBO update.
First, there was only a modest rise in consumer debt in March, up a mere +1.5% and substantially less than the rise analysts were expecting. Stepping back for a longer term trend view, Americans have been growing their consumer debt appetite at slowing rates since 2012. This is quite different to the assumption many jump to.
US mortgage applications actually rose +2.6% last week from the prior week, recovering from the -2.3% decline in that earlier week. But they remain -17% lower than year-ago levels. Maybe one reason last week's level was higher was because benchmark interest rates actually fell, the first reversal in more than a month.
In yet another very well supported US Treasury bond auction, this one for their 10 year Note, the median yield came in at 4.42%, and actually lower than the 4.47% at the prior equivalent event a month ago.
New estimates from the US Congress Budget Office make clear the cost of extending the Trump 2017 tax cuts will likely exceed US$5.8 tln and are the single largest contributor to the swelling American federal deficits. (It is seven times more than their annual defence budget, more than three times their Health & Human Services budget.)
Across the Pacific, Taiwanese exports rose in April by a modest +4.3% amount, the sixth consecutive monthly rise, but far less than the stellar rise in March. There was disappointment all the same because they were expecting another +15% rise.
In Hong Kong, the locally imposed government is now banning songs. Invented "national security" is now covering their insecurities. The things that made the City an investment magnet, the common law and independent and transparent decision making, have been replaced by a complicit judiciary enforcing Beijing's will, which in the end will erode its advantages.
German industrial production fell as expected in March following the surprisingly good February result. But it is still -3.3% lower than a year ago in real terms. But continuing its comeback was their construction sector.
In Sweden, their central bank cut its policy rate to 3.75%, which involved the -25 bps reduction analysts were expecting. They say inflation is now approaching the target while economic activity is weak. It is their first cut since 2016, following the tightening campaign that started two years ago. They said that if the outlook for inflation stays lower, their policy rate will be cut two more times during the second half of 2024.
Perhaps we should note that Elon Musk's X-Prize competition, the largest ever science competition with US$50 mln to the overall winner, has shortlisted 20 finalists in the carbon removal category, one of whom has a New Zealand connection.
The UST 10yr yield is now at 4.49% and unchanged from yesterday. The key 2-10 yield curve inversion is shallower at -35 bps. And their 1-5 curve inversion is now at -66 bps. Their 3 mth-10yr curve inversion is now at -90 bps and 4 bps shallower. The Australian 10 year bond yield is now at 4.37% and -7 bps lower from yesterday. The China 10 year bond rate is is back up to 2.31%, a +9 bps recovery. The NZ Government 10 year bond rate is now at 4.73% and down another -5 bps from yesterday.
Wall Street is ending its Wednesday trade little-changed in late trade on the S&P500. Overnight, European markets were all up about +0.5% on average. Yesterday Tokyo ended down -1.6%. Hong Kong fell -0.9% while Shanghai fell -0.6%. Singapore ended down -1.1%. The ASX200 was up +0.1% in its Wednesday trade but the NZX50 slipped another -0.2%.
The price of gold will start today down a minor -US$2 from yesterday at US$2314/oz.
Oil prices have changed little at just under US$78.50/bbl in the US while the international Brent price is now just under US$83.50/bbl.
The Kiwi dollar starts today little-changed from yesterday at just on 60 USc. Against the Aussie we are +¼c firmer at 91.3 AUc. Against the euro we are little-changed at 55.9 euro cents. That all means our TWI-5 starts today just under 69.5 and again marginally firmer from yesterday.
The bitcoin price starts today at US$62,573 and down -1.2% from this time yesterday. Volatility over the past 24 hours has been very low at just under +/- 0.5%.
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