Europe's banks follow the Fed

Kia ora,

Welcome to Friday’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.

And today we lead with news that despite the expectations of bears, the US labour market hasn't wobbled yet.

US jobless claims rose +213,000 and a small dip from the previous week. This was about what markets expected and still no indication a any special American labour market stress. There are now less than 1.9 mln people on these programs. This overall little-changed result is actually quite impressive given all the news of growing tech and start-up layoffs recently.

Sales of new single family houses rose +1.1% in February from January to an annualised rate of 640,000, the highest level since August last year. Given the upturn in the existing home market, analysts had expected an even stronger result however. And the industry will be disappointed because they have more than 8 months of unsold inventory at present.

The Chicago Fed's national activity index for February revealed little material change even if the index softened marginally.

The Kansas City Fed factory survey also had little-material change but at least it was positive in March.

Canada's population is now approaching 40 mln in a fast 2022 spurt. They added a record +1 mln new people over in 2022, largely boosted by immigrants and the substantial intake of Ukrainian refugees. The expansion is a stunning +2.7% in one year, their fastest ever post WWII.

Taiwan's industrial production fell a sharp -8.7% in February from the same month a year ago. But as bad as that sounds, it is far less than the -20% retreat in January. Still it is the fifth month-on-month fall in the past six months, and global tech demand, especially from China, remains very weak.

Taiwanese retail sales slumped in February from January, but were still up +4.2% above year-ago levels. This is quite good in fact given their inflation ran at 2.4% over the same period.

Taiwan's central bank raised their policy rates by +12.5 bps with their key rate now 1.875% with a hike that wasn't expected.

The EU's consumer sentiment survey for March was out overnight and while it remained quite negative, it remained near its best level in over a year.

Overnight three European central banks reviewed their policy rates and two mimicked the US Fed with a +25 bps rise. Norway raised theirs to 3.0% and England raised theirs to 4.25%. Norway has inflation running at 6.3% and in England it is running at 10.4%. The Swiss raised their by +50 bps to 1.5%. They also reminded investors in Tier 1 bonds that they agreed to have them treated as capital in the event of a bank failure and those who invested in Credit Cuisse AT1 bonds can have no complaints because that is what they agreed to.

In Australia, the State of NSW votes this Saturday, and the latest poll suggest that the ALP is widening its lead over the Liberal incumbents. 

Freight rates for global containerised shipping fell again last week, extending the long decline. They fell another -2% in a week to be almost -80% below year ago levels and are now -35% lower than ten year averages. Bulk freight rates, which have been rising recently, topped out this week and are also falling now too.

And the lithium price retreat is getting even steeper.

The UST 10yr yield starts today at 3.44% and down a large -11 bps from this time yesterday, and back to early February levels. 

The price of gold will open today at US$1995/oz and up a strong +US$47 from this time yesterday. And that is a new one-year high for the yellow metal.

And oil prices start today a little softer from yesterday at just over US$70/bbl in the US. The international Brent price is still just under US$76/bbl.

The Kiwi dollar is up almost +½c against the USD and now at 62.9 USc. Against the Aussie we are also almost +½c firmer at 93.5 AUc. Against the euro we are also a little firmer at 57.7 euro cents. That puts the TWI-5 up at 70.6 with a +20 bps gain.

The bitcoin price is marginally lower today, now at US$28,544 and down -0.5% from this time yesterday. And volatility over the past 24 hours has been very high however at +/-4.1%.

You can find links to the articles mentioned today in our show notes.

Good journalism and independent financial news coverage is an expensive business and we need your support to keep doing what we do.

You can 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 on Monday.