Here's our round-up of the key economic events affecting New Zealand overnight, with news that bullish American consumers are likely to push back on the likelihood of the US Federal Reserve cutting its key interest rate any time soon.
Financial markets are pricing in just two rate cuts this year, one in September and one in December, far fewer than the four priced in at the start of the year. And the belief in these reduced indicators wears off pretty quickly. The latest prices suggest that the September date could still take place, but there is a greater chance that the December date will be missed.
And that's because they're American Retail sales achieved impressive results in March and February results were revised upwards significantly. These revisions mean they were up +2.1% year-on-year in February, and up 4.0% in March on the same basis. Consumer spending belies consumer sentiment. What they do is much more positive than what they say.
Total now Company inventories in February remain in control and maintain their relative level to sales. There is no tension building on this front.
On this data, the USD rose again, bond yields rose – again – and stock prices sadly showed that they are unlikely to receive the rate cuts they were expecting.
However, it's not all positive. Locally at the New York Fed Factory survey reported that both new orders and deliveries fell significantly in March and unsatisfied orders continued to decline. The optimism of these companies is muted.
And we should note that automaker Tesla is cutting 10% of its global workforce, or 14,000 jobs, due to sputtering sales and profitability issues. The share price fell a further -5% in today's trading and is -35% so far this year, down -59% from its peak on November 5, 2021.
Canada reported The manufacturing sector recorded increases in February compared to January and even slight increases compared to the previous year's levels. These gains, miniscule as they may be, were also adjusted for inflation.
A new industry in China report From a corner of their economy, they learn how difficult it has become to do business there. Wages at Chinese private equity and venture capital firms fell as much as 40% in 2023 compared to the previous year as the industry downturn showed no signs of abating.
Just to clarify, the People's Bank of China had theirs monthly review the key interest rate for the one-year medium-term lending facility, the main interest rate at which the central bank lends to large commercial banks, and left it unchanged at 2.5%.
In Japan, Machine orders jumped +7.7% in February compared to January, reversing the -0.7% decline in January and far exceeding market expectations with a gain of just +0.8%. This means they are a whopping +9.4% higher than the previous year.
In the EU, industrial production rose again in February, making it the third increase in the past four months. Analysts expected such an improvement. But despite this month-over-month increase, they still have a long way to go to turn this into year-over-year gains.
We should also note that the rise and rise of the aluminum price The value of the last eight weeks increased significantly yesterday and returned to the June 2022 level. This shift is largely due to the sanctions against Russian supplies.
In Australia it is employers and unions close to a national agreement This allows employees to take twice as much vacation time at half pay. Details still need to be agreed, but the principle for this flexibility will be established.
The 10-year US Treasury yield is now at 4.63%, up +11 basis points from yesterday. The important 2-10 yield curve inversion is significantly lower at -30 basis points. And their 1-5 curve inversion is also lower at -53 bps. As is their 3-month 10-year curve inversion, which is now at -75 basis points and represents a very significant flattening. The Australian 10-year bond yield is now at 4.36%, up +10 basis points. The interest rate on 10-year Chinese bonds remains at 2.29%. New Zealand's 10-year government bond interest rate is now at 4.88%, down -7 basis points from yesterday.
After starting today in positive territory, Wall Street has slumped and is heading for a -1.2% decline in the S&P500 in Monday trading. The retail sales data simply underscores that Fed rate cuts are further away than markets had priced in. Overnight, European markets were mixed, with London down -0.4% while Frankfurt gained +0.5%. Yesterday, Topky closed down -0.7%. This was reflected in Hong Kong, which also fell -0.7%. But Shanghai rose +1.3%. Singapore fell -1.0%. The ASX200 ended its Monday session down -0.5%, while the NZX50 slipped just -0.1%.
The price of gold will start today +$20 higher than this time yesterday at $2363/oz.
Despite ongoing tensions and uncertainties in the Middle East, oil prices fell by -$50 overnight to $84.50 per barrel in the US, while international Brent prices remained unchanged at $89.50 per barrel lies.
The Kiwi dollar starts today at just over $59.1, down -20 basis points from yesterday and a five-month low. We are also down -20 basis points against the Aussie at 91.7 AUc. We also fell by -20 basis points against the euro to 55.6 euro cents. This all means our TWI-5 starts today at just under 69, below its own -20 basis points, but that's just a ten-day low.
Bitcoin price starts today slightly firmer at $64,004, up +0.3% from this time yesterday. Volatility was moderate at just +/- 2.8% in the last 24 hours.
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