Kia ora,
Welcome to Tuesday'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 news that costs seem to be rising fast in both the US and China.
But first we should note that the giant container ship that was blocking the Suez Canal has been refloated and has moved under its own power to a passing lake (Great Bitter Lake) where it will be inspected. Now the task is to clear the 437 waiting ships that built up in the seven days of this crisis. Industry experts say it will take 4 or 5 days to clear that backlog. But the work of the lawyers and insurers will take much longer to resolve.
The Dallas Fed is the latest American region to report a sharp improvement in their factory survey. New orders help power this survey to its highest level ever. But they also reported fast rises in costs and payrolls.
In Washington, a US Fed official has directly said it will not keep policy interest rates low to save the Federal Government budget cost, nor will it buy US Treasuries just to fund the Federal Government. The claim is that monetary policy has economic goals only, and won't consider the fiscal impact on government.
Meanwhile on Wall Street, a very ugly liquidation is taking place. A fire sale of stocks from a large investor slammed global investment banks, which said they could incur substantial losses related to the trades approaching US$30 bln. This is a huge systemic risk. Credit Suisse and Nomura are especially at risk. The equity market slumped on the news, but has recovered since.
In China, it is becoming clear that exporters there are raising prices sharply. Not only are shipping costs behind the shift, steel and aluminium prices are key contributors too, in fact most commodity prices. After being a source of global deflation for decades, the tide has turned in 2021 and buyers are expecting China to be a source of goods inflation.
Real estate auction activity is surging in Australia. There were 3,791 homes taken to auction across the combined capital cities last week, the busiest auction week since the week ending 25th March 2018.
With ten new cases overnight, Brisbane has been plunged into a snap three-day lockdown. The NSW Government has urged its citizens to cancel Easter holidays to Queensland.
In the UK, they are finding that City of London financial firms are mostly signing up to EU regulations to keep their EU-related business. This is annoying British officials who actually can't do anything to stop the trend. In addition, a new trade fight is brewing between the US and the UK.
The UST 10yr yield is up +5 bps at 1.71%.
The price of gold starts today down -US$20 at US$1713/oz.
Oil prices have risen by more than +US$0.50 and are now at just under US$61.50/bbl in the US, while the international price is now just over US$64.50/bbl.
The Kiwi dollar opens today firmer at just on 70.1 USc. Against the Australian dollar we are also firmer at 91.8 AUc. Against the euro we are also firm at 59.5 euro cents. That means our TWI-5 opens today up to 72.6.
The bitcoin price will start today at US$57,637 and up another +2.5% from this time yesterday. Volatility in the past 24 hours has been high at +/- 3.3%.
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. We will do this again tomorrow.