Here's our summary of key economic events overnight that affect New Zealand, with news it is risk-off today in international markets and the New Zealand dollar has been rated sharply lower.
The latest weekly Johnson Redbook tally of American retail sales shows them stumbling along with the same month-on-month pullback. They are up year-on-year but that is only because the pandemic retreat was biting in 2020. The 2021 retail impulse is not helping their recovery, and there is no sign those stimulus payments are boosting retail activity yet.
Likewise, new home sales in the US are falling away, even if it is off a very high period.
But as we have seen in other recent factory surveys, the latest one from the Richmond Fed is very positive. It is expanding at 'normal' levels with good new orders reported and expected. But like other surveys, they are also seeing a sharp spike in the cost of inputs. Inflating input costs are now nationwide.
The Fed boss is testifying before Congress today and acknowledged inflation is rising. But he also said in response to questions it is likely to be temporary and won't get out of hand. He is more focused on getting a full economic recovery than short term price impacts. Janet Yellen is also testifying as Treasury Secretary. She is saying more needs to be done and that a big push in infrastructure spending is needed, as much a US$3 tln. On top of the already approved $1.9 tln stimulus, that has bond markets worried.
In Taiwan there has been a turnaround in their data with retail sales rising (+13%) and a softening of industrial production (+3%), both on a year-on-year basis, so the onset of the pandemic in 2020 affects these comparisons. Looking through those shows a healthy rising trend is being maintained especially for industrial production.
New Zealand and Australia have jointly expressed support for a sanctions blitz by Western countries against Chinese officials over alleged human rights abuses in western China, despite not imposing penalties of their own.
China is not backing down on confrontations. It has sent a 200+ flotilla of ships to occupy a reef in claimed Philippine waters, 300 kms off their coast.
In Australia, the economic impact of the floods in NSW are still being assessed. They won't be insignificant.
And the Australian government’s AU$90 bln JobKeeper wage subsidy ends next week. While millions of workers have stopped using it, there are still about 1 mln people on the program and the impact for them will be significant.
On Wall Street, their Tuesday session is flat to lower in early afternoon trade. Overnight, European markets were lower by an average of -0.4% but Frankfurt managed a small gain. Yesterday, Tokyo ended with another -0.6% loss, Hong Kong with a heavier -1.3% retreat, and Shanghai ended with a -0.9% loss which wiped out the prior day's rise. The ASX200 was down -0.1% but the NZX50 Capital Index was the outlier, up +0.5%.
The latest global compilation of COVID-19 data is here. The global tally is still rising and at a fast pace, now at 123,868,000 and up +519,000 in one day. Global deaths reported now exceed 2,727,000 and +10,000 in one day. Vaccinations in the world are rising fast however, now up to 451 mln and in the US a third (125.4 mln) have now had this protection (+2.0 mln) and they are achieving a very fast rollout. The number of active cases there fell yesterday to 7,179,000 (-37,000 in one day), resuming the reducing trend and taking the number currently infected down to under 2.2% of their population.
The UST 10yr yield is lower by -5 bps at just on 1.64%. The US 2-10 rate curve is flatter at 150 bps. Their 1-5 curve is also flatter at +77 bps, while their 3m-10 year curve is flatter at +163 bps. The Australian Govt 10 year yield is also down -7 bps at 1.72%. The China Govt 10 year yield is down -1 bp at 3.25%. And the New Zealand Govt 10 year yield is down -6 bps at 1.70%.
The price of gold starts today down -US$14 in New York at US$1727/oz.
Oil prices have dropped sharply and are now at just under US$59/bbl in the US which is a -US$2 retreat, while the international price is now just on US$62/bbl.
The Kiwi dollar opens today sharply lower at 70.2 USc and down by more than -1½c, and suddenly outside the long term 71c-73c range it has been in all year. Against the Australian dollar we are down sharply too at 91.6 AUc and a -1c drop. Against the euro we are also -1c lower at 59.2 euro cents. That means our TWI-5 opens today down at 72.4 and its lowest since before Christmas 2020.
The bitcoin price will start today at $55,483 and down -2.1% from this time yesterday. Volatility in the past 24 hours has been high at +/- 3.9%. The bitcoin rate is charted in the exchange rate set below.
The easiest place to stay up with event risk today is by following our Economic Calendar here ».
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