Kia ora,
Welcome to Thursday's Economy Watch where we follow the economic events and trends that affect New Zealand.
I'm David Chaston and this is the International edition from Interest.co.nz.
Today we lead with of increasing signs of drift rather than progress.
The large US$29 bln US Treasury 20yr bond auction today went at a yield of 2.144% pa, down from the 2.29% at the March auction for this same bond. US$62 bln was bid and that was the lowest level of support since the 20yr term was relaunched in May 2020 after a 34 year hiatus. Market observers called today's auction evidence of struggling demand.
US mortgage applications rose last week, but are still running -10% lower than for the same week a year ago. American mortgage interest rates are starting to dip again.
In Canada their inflation rate is rising, now at 2.2% but the gain was not as much as was expected.
The Canadian central bank held its policy rate unchanged in an overnight review, still at 0.25%. But they did taper their bond buying, reflecting "progress made in the economic recovery". And markets now expect them to start raising their policy interest rate in the second half of next year.
In the Middle-East, Emirates airline may need to raise more cash this year, possibly through another equity injection from the Dubai government, if demand for air travel does not pick up soon, it confirmed overnight.
The spot price of iron ore surged higher yesterday and today, resetting at its highest in more than a decade, on strong Chinese steel mill margins and continuing supply concerns from Brazil. China is frustrated at "being milked". Coal prices are rising in China too. China sees these rises and pressures are short-term however, and expects to cope with them without too much problem.
Meanwhile in Australia, Canberra has torn up Victoria’s controversial Belt and Road agreement with China, saying it falls foul of the country’s national interest, in a move that will further inflame tensions between the two countries.
And staying in Australia, retail sales were up +2.5% in March from the same month a year ago, and rising at a rate slightly above what was expected. This is a bounce back from the February snap lock downs.
The UST 10yr yield starts today at 1.57% and a small +1 bp rise.
The price of gold starts today at US$1794/oz and that is up +US$16 since this time yesterday, and that takes it to its highest level since late February. Silver is rising too, but only to a one month high.
Oil prices are much softer, down -US$1.50 at just over US$61/bbl in the US, while the international price is just under US$65/bbl. There are rumours of an imminent deal for Iran to export crude oil again.
The Kiwi dollar opens today at just under 72.1 USc and firmer from this time yesterday and in fact its highest in more than a month. Against the Australian dollar we are marginally firmer at 93 AUc. Against the euro we are also a little firmer at 59.9 euro cents. That means our TWI-5 is up at 73.9 and also a one month high.
The bitcoin price will start today at a marginally lower level than this time yesterday, at US$55,852 and a mere -0.4% lower. Volatility in the past 24 hours has been moderate at +/- 2.5%.
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.