US data surprises with improvements but major risks remain. IMF sees China, India and the US supplying half of global growth. Singapore does its own pro-growth thing.
Kia ora,
Welcome to Tuesday’s Economy Watch where we follow the economic events and trends that affect Aotearoa/New Zealand.
I'm David Chaston and this is the international edition from Interest.co.nz.
And today we lead with news China seems to be emerging from its doldrums.
But first up today, and to the surprise of many, the local Fed's factory survey for New York State reported a sharp improvement - and it was across the board. New order inflows were at a one year high, and activity perked right up. But cost pressures remain unchanged. However, firms expect business conditions to improve over the next six months, with measures of capital expenditures and employment also rising. This survey hasn't been very positive for a few months now, so this is a 'welcome' improvement locally.
Also improving is American home builder sentiment. It rose for a fourth month in April, a fresh high since September and came in better than expected.
And the Wall Street earnings reports for Q1 are off to surprisingly good start. Of the 30 S&P 500 companies comprising 10% of the index that have reported results so far, 90% have easily earnings-per-share estimates while three quarters of them have topped sales forecasts.
For some regional banks reporting, it is exposing the size of deposit flight. Regulators will be nervous.
Despite all this, the US Congress's debt ceiling game of chicken is nearing a flash point with Republicans pushing to gut most social programs - except Medicare, Medicaid and Obamacare. It is a brinkmanship game that is raising US bond yields, mainly because the negotiators are taking extreme positions.
Also potentially inflationary, there is a rising threat of strike action at US West Coast ports in coming weeks.
Separately, IMF data shows that China will be the top source of economic growth in the next five years, followed by India and the US. More than 20% of that growth will come from China's expansion, with more than 10% from each of the other two. Indonesia is the next largest, followed by Germany, Turkey and Japan.
Singaporean exports rose in March from February and by much more than expected. A small rise was anticipated after a weak February. But in fact the rise was substantial, paring back a long series of declines so that year-on-year their non-oil exports are down 'only' -8.3%, half the drop in February.
Meanwhile, its ruling party said the City-State will push through increases to GST (from 7% to 9%), but it has no plans to go down the path of welfarism - it is ruling out becoming like a Nordic state.
In Australia, banks both large and small are 'slashing' their fixed rate offers. CBA today cut its advertised 3 year fixed rate by -40 bps to 5.59%. (Their new 'comparison rate’ which loads in the myriad costs Aussie banks also charge - which NZ banks don't - takes that rate to 7.20%. For perspective, ASB, CBA's New Zealand subsidiary offers a 3 year fixed rate at 6.59%).
The UST 10yr yield starts today at 3.59%, and up +7 bps from this time yesterday.
The price of gold is at US$1995/oz and down -US$9 from this time yesterday.
And oil prices are at down -US$1.50 and just under US$81/bbl in the US. The international Brent price is just under US$84.50/bbl.
The Kiwi dollar has moved down further against the USD and now at 61.7 USc and a -½c fall. Against the Aussie we are have fallen -40 bps to 92.2 AUc. Against the euro we are unchanged at 56.5 euro cents. That means the TWI-5 is at 69.5, down -30 bps and still its lowest in almost six months.
The bitcoin price is lower today, now at US$29,502 and down -2.7% from this time yesterday. Volatility over the past 24 hours has been moderate at +/- 2.2%.
You can find links to the articles mentioned today in our show notes.
You can get more news affecting the economy in New Zealand from interest.co.nz.
Kia ora. I'm David Chaston and we’ll do this again tomorrow.