Wall Street volatility is increasing; US ICN earnings; Taiwan’s export orders remain high; Australian retail bill; climate wars have revived in Australia; The 10-year UST remains at 1.48%; rising gold and oil; NZ $ 1 = 70 USc; TWI-5 = 72.4
Here is our summary of the key overnight economic events affecting New Zealand with news you may have “sold in May and gone“after fainting last week.
Then you would have missed the overnight equity rally where some investors were determined to “buy the dipsWall Street dumps -1.3% on Friday, and up – and ignores the huge -3.3% drop in Tokyo earlier. Tokyo’s drop was said to have been triggered by rising interest rates short term in the US, so the question is why is Wall Street rising now, mainly in sectors that benefit from reflation trading.
In the United States, the Chicago Fed national activity index reported a large gain in May with all components up – except personal spending which paused. Sales, production and employment categories all rose and reversed April’s declines.
In Taiwan, their growth in export orders in May eased somewhat from its wild increase of + 43% in April. May’s increase is “only” + 35% over one year (or + 38% compared to May 2019).
Retail sales in Australia increased less than expected in May. The instant lockdown in Melbourne that month restricted things. A national increase of + 0.5% compared to April was expected but it stood at + 0.1%. However, the -1.5% drop in Victoria was offset by increases of + 1.5% in Queensland and Western Australia. Separate data from NSW has not been released. Year over year, national retail sales were + 7.4% higher than in May 2020. Compared with May 2019, May 2021 sales are 13.6% higher.
And staying in Australia, Barnaby Joyce’s return as Deputy Prime Minister and Country / National Party leader is a victory for coal miners and the fossil fuel industry in general. It will be interesting to see how Prime Minister Scott Morrison balances his G7 commitments on limiting GHG emissions with the stance of his new coalition partner. An early election in Australia is an option. In any event, climate policy wars are likely to escalate for some time with this rearguard activity.
Wall Street started its week on a positive note, up + 1.4% in afternoon trading. Overnight, European markets set the tone with an increase of + 0.6% on most stock exchanges, with the exception of Frankfurt which is up + 1.0%. Yesterday, the very large Tokyo market was a shock, down -3.3%. Hong Kong is down -1.1%. But Shanghai managed to hold on (+ 0.1%). The ASX200 ended with its own terrible fall of -1.8% while the NZX50 Capital index ended with a slide of -0.4%.
The 10-year UST yield starts today up + 4bp to 1.48%. The US 2-10 yield curve is steeper at +123 bps. Their 1-5 curve is also unchanged at +80 bps, while their 3m-10 year curve is steeper at +144 bps. The benchmark Australian government ten-year rate starts today at 1.54% and a rally of +3bp. The 10-year Chinese government bond was down -3 basis points to 3.12%. And the ten-year New Zealand government is now at 1.75%, down -5 basis points.
The price of gold starts at US $ 1,784 / oz, which is up + US $ 20 / oz from this hour yesterday.
Oil prices are much stronger in the US at just US $ 73 / bbl which is a daily increase of + US $ 2, while the international price of Brent is only US $ 74 / bbl , which represents a gain of + US $ 1.50.
The Kiwi dollar opened today at 70 USc and a full rally of + ¾c overnight. Against the Australian dollar we are firm at 92.8 AUc. Against the euro, we are also firmer at 58.7 euro cents. This means our TWI-5 starts today at 72.4 and what it was on Friday.
The price of bitcoin is now at US $ 32,463 and down -6.0% from yesterday. Volatility over the past 24 hours has been extreme at +/- 6.9%. In China, their central bank told banks and Alipay to be more aggressive in the crackdown on cryptocurrencies.
The easiest way to stay on top of the risks of events today is to follow our Economic calendar here ».