US housing markets retreat. Inflation up in Singapore, UK. China faces food and energy issues. EU sentiment falls.
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 markets are having second thoughts after yesterday's across the board surges.
First, American mortgage applications fell rather sharply last week, and mortgage interest rates rose sharply too. These shifts are undoubtedly related.
Perhaps they are taking a toll on new home sales, which fell unexpectedly in February. A bounce-back from a weakish January was expected but didn't eventuate. The median price of a new home in the US fell to US$400,000 (NZ$575,000) indicating the market is shifting to less expensive units.
The US Treasury auctioned a 20 year bond today, and event that was well supported even without much Fed activity. They sought US$19 bln and were offered US$47 bln. The median yield rose from 2.33% at the prior event (five weeks ago) to 2.60% this time.
Singapore's inflation rate rose to 4.3% in February, a rise from 4% in January and a new nine year high for them.
Taiwan's industrial production is staying very elevated and was up +10.1% in February, impressive because this is a month with extra holidays for them. Those holidays didn't boost retail sales there however.
In China, the country’s agriculture minister said last year’s record-breaking floods have created “big difficulties” with food production, especially for wheat. The drive for food security apparently isn't yielding results. Rising demand has pushed imports of corn, soybeans and wheat to record levels, making Beijing increasingly vulnerable to trade tensions and supply shocks. At the same time, climate change-induced disasters have caused widespread crop damage and shrunk the amount of arable land, making it harder to boost local production.
China is also increasingly concerned about energy security.
In Thailand, they have effectively banned the use of cryptocurrencies as a means of payment, saying the wider use of digital assets threatens the nation’s financial system and economy.
As you might expect, the March survey of European consumer sentiment has turned quite dark. The security situation in Ukraine has had a sharp major impact on how people in the EU see the future. A sharp shift negative was anticipated, but the actual level is lower again.
In the UK, they reported their highest inflation rate - 6.2% pa - in 30 years.
In Russia, some brave officials are resigning top Kremlin positions - or want to. But they are second-tier, not inner-circle officials. They include an ambassador and the central bank boss.
The UST 10yr yield opens today at 2.31% and a -7 bps correction from this time yesterday after yesterday's jump.
The price of gold starts today at US$1934/oz and up +US$14/oz from this time yesterday.
And oil prices are up strongly today, up by +US$5.50 to US$113.50/bbl. And the international Brent price is up to just on US$117.50/bbl. New restrictions on buying Russian oil are driving the rises.
The Kiwi dollar will open today firmer again, now at just on 69.6 USc and a new four month high. In fact, our currency has now appreciated +4% since the start on the month and that is a lot. Against the Australian dollar we are down at 92.9 AUc while the Aussie dollar makes even bigger gains. Against the euro we are up at 63.3 euro cents. That all means our TWI-5 starts today at just at 74.9 and a new four month high.
The bitcoin price is virtually unchanged from this time yesterday at US$42,549. Volatility over the past 24 hours has been modest at +/- 1.3%.
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.