Here’s our summary of key economic events overnight that affect New Zealand, with news this is a week where we get a fuller set of global inflation data, including from the UK, Japan, Canada, South Africa, Malaysia, and New Zealand on Thursday. We will also get Chinese GDP growth data for Q1-2023, industrial production and retail sales for March on Tuesday. And there is a dairy auction due on Wednesday.

But first up today, China’s new home prices rose in March from February at the fastest pace in 21 months, official data showed on Saturday, suggesting the market is out of the doldrums amid a flurry of support policies, but there is uncertainty on the strength of the momentum. New home prices in March edged up +0.5% month-on-month after a +0.3% rise in February, marking the fastest pace since June 2021 and the third consecutive monthly rise. But they are still lower on a year-on-year basis although only by -0.8%.

Internationally, it is becoming clear that China’s Belt & Road Initiative – a giant infrastructure system tying global facilities to China – is in deep trouble. Chinese lending to these projects has been slashed and it has become “a road and belt to nowhere.” Over 60 developing countries today face a debt crisis brought on by overborrowing for these Chinese-promoted projects during the heady 2010s. In 2022, 60% of Chinese overseas loans went to distressed borrowers, up from 5% in 2010. Many cannot repay.

Separately late Friday, Singapore surprised analysts with an unexpectedly weak Q1-2023 GDP result, down -0.7% from the prior quarter. Actually the Q4-2022 result showed virtually no growth, so they are knocking on the door of ‘recession’. Their year-on-year +2.1% rise in 2022 crashed to just +0.1% in Q1-2023 from Q1-2022.

Meanwhile, the central bank of Singapore has been reported as asking financial institutions to keep quiet the flood of money coming in from wealthy Chinese.

But the biggest weekend news is that American retail sales fell in March from February to be just +2.9% higher than year ago levels and far less than inflation’s bite. It was a result that surprised analysts who expected a -0.4% month-on-month fall when they got -1.0%.

However other American indicators weren’t so negative. Industrial production rose +0.4% in March from February to be +0.5% higher than year ago levels. This data is ‘real’ without inflation.

And consumer sentiment, as measured in the widely-watched University of Michigan survey rose too. That shift wasn’t expected, but it was in both views of current conditions and expected future conditions. However, Americans apparently think inflation will rise (contrary to most other data that shows it falling).

Meanwhile, the leakage from deposits at US bank accounts, which fell sharply from the start of March (-US$400 bln or -2.3%) are stabilising in the April updates. But that masks big shifts from smaller banks to the majors, who are now reporting bumper profits. And too, big funds like Blackrock. During this time the Federal Reserve stepped in with more market support, suspending its tightening. Although over this past week, it has resumed the drawdown. One consequence of the banking turmoil is that regional American banks are now offering much higher interest rates to attract back depositors.

In Canada, their real estate industry is talking ‘green shoots’ as they enter their Spring selling season. After declining for 12 consecutive months, their national home price index rose +0.2% to C$709,000 (NZ$855,000) from February to March. Their market suffers from an unusually low number of listings available. But their much higher interest rates will make it challenging to build any sort of meaningful recovery.

The OECD is pointing out that that global labour markets remain very tight in developed countries. In February, the unemployment rate remained at its record low in the OECD (4.8%) and this is despite the Euro area still much higher (6.6%). The unemployment rate was stable or decreased in more than 70% of OECD countries, but close to its lowest level in only seven countries, including Canada, France, Germany, Japan, Australia and New Zealand. It remained stable in Canada at 5.0% in March 2023 for the fifth consecutive month, while it fell slightly to 3.5% in the United States.

The UST 10yr yield starts today at 3.52%, and very little change. The UST 2-10 rate curve is unchanged at -58 bps. Their 1-5 curve inversion is now at -119 bps and marginally less inverted too. And their 30 day-10yr curve is now inverted at -72 bps and also marginally less. The Australian ten year bond is unchanged at 3.41%. The China Govt ten year bond is still at 2.85%. And the New Zealand Govt ten year remains at 4.15%.

This week and the following two will be interesting for watching earnings reports, especially from American consumer discretionary companies. They could give vital clues on how the US economy is faring amid high inflation and the much higher interest rates.

The price of gold is at US$2004/oz and down -US$1 from Saturday. A week ago it was at US$2008/oz, so actually very little net change.

And oil prices are at up +50 USc and just over US$82.50/bbl in the US. The international Brent price is just over US$86/bbl. But a week ago these prices were US$2 lower so the net move up since then has been +2.5%.

The Kiwi dollar has stayed down against the USD and still at 62.1 USc. Against the Aussie we are have remained to 92.6 AUc. Against the euro we are still at 56.5 euro cents. That means the TWI-5 is at 69.8, unchanged since Saturday and still its lowest in almost six months.

The bitcoin price is again little-changed, still at US$30,331 and that’s six straight days at this level. But a week ago it was at US$27,924 so it has been a major +8.6% move up from then. Volatility over the past 24 hours has remained very low at +/- 0.4%.

The easiest place to stay up with event risk today is by following our Economic Calendar here ».