US retail and mortgage rates rise. Canada CPI at 30 year high. China's wheat imports surge. Germany and UK report high CPI.
Kia ora,
Welcome to Thursday’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.
Today we lead with news inflation's pressure and higher interest rates are spreading around the world.
But first, American retail sales held their high levels last week, up more than +15% from year-ago levels although base year effects embellish that. All the same, it is a good positive result and better than anticipated.
US mortgage rates are now all turning noticeably higher with their benchmark 30yr fixed almost back to levels last seen two years ago. But while they are in a longish term shift lower for mortgage applications, this latest jump in rates hasn't hurt recent application levels.
Canada’s headline inflation rate rose faster to 4.8% in December from 4.7% in November and October, matching market expectations. Their 'core' inflation rate rose quicker. That was the steepest inflation rate in 30 years, amid ongoing supply disruptions and low base year effects.
China is drafting nationwide rules to make it easier for property developers there to access funds from sales still held in escrow accounts in its latest move to ease a severe cash crunch in the sector. China Evergrande, which was once China's top-selling developer, is now the world's most indebted property firm with liabilities in excess of US$300 bln and essentially in State administration. All Chinese property developers have almost US$20 bln in offshore debt maturing in the first quarter of 2022, the highest level since 2015.
The iron ore price rose to a four month high on the news of renewed Chinese stimulus.
Meanwhile, China is buying up the world's available wheat supplies, putting sharp upward pressure on prices. Global wheat prices are up +23% in a year and China's imports rose +17% in the same time, an increase of almost 10 mln tonnes in 2021. A key driver is a shift in diet towards bread in China, but high corn prices for animal feed bolstered demand. The local harvest of wheat in 2021 was down too.
Germany reported a 5.3% November inflation rate, although this is 5.7% on an EU harmonised basis. The UK reported its full December inflation rate at 5.4% (although they no longer have to declare a standardised European rate of course).
And in Germany, their 10yr government bond yield turned positive for the first time since May 2019.
In Australia, a big player in the self managed super fund sector, Dixon Advisory, has said it wants to go in to voluntary liquidation, a move that will affect tens of thousands of retirees there. The move is in response to mounting class action claims over how they managed the investments. It claims to "support over 8000 Australian trustees".
And staying in Australia, international students and backpackers will have their visa fees refunded for the coming weeks in a bid to entice them back to the country to fill critical worker shortages.
The UST 10yr yield opens today at 1.84% and down -2 bps from where this time yesterday and giving up some of yesterday's shift higher.
The price of gold starts today at US$1840/oz and a +US$25 shift higher.
And oil prices start today up +US$2.50 at just under US$86.50/bbl in the US, while the international Brent price is now just under US$88.50/bbl.
The Kiwi dollar will open today marginally firmer at 67.9 USc. Against the Australian dollar we are softish at 94 AUc. Against the euro we are holding at 59.8 euro cents. That means our TWI-5 starts the today at 72.3 and a minor rise since this time yesterday.
The bitcoin price has moved sideways again, this time by +0.7% to US$41,921. Volatility over the past 24 hours has again been modest at +/- 1.8%.
You can find links to the articles mentioned today in our show notes.
And 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.