Here's my summary of the key events over the long weekend that affect New Zealand, with news China's growth returns.
First up, in the US ports there are reporting a strong rise in trade. The California ports of Los Angeles and Long Beach, each said they imported a combined a +26% increase over the same month last year and a +13% rise from February. Together, these are the largest seaport system in the country and focus on the China trade.
However, American retail sales fell for a second straight month in March and consumer prices dropped for the first time in just over a year. You have to wonder if the Americans are picking up the effect of the online shift in their retail sales - or whether the stall is more to do with evaporating margins from traditional retailers, rather than a volume fall. But with their labour market near full employment, these weak reports failed to change views that the Federal Reserve will raise interest rates again in June. Economists expect a rebound in both retail sales and monthly inflation.
American demand may be one reason the Chinese economy is humming along. It grew officially by +6.9% in the first quarter from a year earlier, slightly faster than expected. Other supports are a government infrastructure spending spree and a frothy housing market that is showing signs of overheating. Electricity production was up +6.7% (with more brown coal mined), and retail sales rose +10.9%. (The online component was up a staggering +32% year-on-year.) The new aspect here is the surprising strength of the Chinese consumer.
But the costs are high. Beijing was hit by the rare combination of a sandstorm and smog on yesterday, creating a cocktail of air pollutants that shrouded the city’s skyline in a thick brown haze.
In Australia, it is becoming clear that the RBA is lining up with ASIC and APRA, increasingly worried over bank lending standards. Their Financial Stability Review also made a point of the special risks their banks have in New Zealand (p 11). They also point out that in Australia, around one-third of borrowers have built either no financial buffer or a buffer of less than one month’s repayments (p 21) and this group will quickly become a financial system problem if stresses rise.
In New York, the UST 10yr yield is lower again at 2.26%. However it did get down to 2.20% over the weekend and is back rising this morning.
Oil prices are down a little today and now just over US$52.50 for the US benchmark, while the Brent benchmark is now just under US$55.50 a barrel. They fell after the failed North Korean missile test, And new data that showed a higher US rig count
The gold price has pushed up even higher to US$1,290/oz.
However the New Zealand dollar will start pretty much unchanged at 70.2 USc. On the cross rates the Kiwi dollar is at 92.3 AU¢ and against the euro we are at 65.9 euro cents. The NZ TWI-5 index is now at 75.1.
If you want to catch up with all the changes yesterday, we have an update here.
The easiest place to stay up with event risk today is by following our Economic Calendar here ».
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