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Podcast: Economy Watch
Episode:

Expecting higher inflation
Category: Business
Duration: 00:03:37
Publish Date: 2021-07-12 19:42:44
Description:

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 inflation isn't going away in some large economies.

Markets are awaiting the June US CPI data due tomorrow and a number close to 5% is expected, but first up today, inflation expectations in the US are still rising and fast. They jumped to +4% in May, and gave now jumped higher again to +4.8% in June as the expectation of prices in one year. And that is a series high for data that started in 2013. Expectations of house price gains in one year rose to +6.2% and also a new series high.

The US Treasury tendered a 10 year bond overnight and that brought lower yield bids. The US$44 bln tender brought $97 bln in bids (of which US$6 was taken by the Fed) and the median yield was 1.31%, down from the 1.44% at the equivalent tender a month ago.

In China, there is increasing concern even in official channels of a slowing economy.

In India, their June inflation rate was released overnight, coming in at +6.3% and well above the RBI target (of 4%). Food prices (+5.2%) helped keep it high but it was fuel (+12%) that was the monthly driver.

Japanese machine tool orders made a very strong recovery in June, up +6.6% from a strong May and their best post-pandemic level by far. From June 2019 this latest data is an impressive +34% higher, so this sector is in fully back, and more.

The overall level of Japanese machinery orders in May also rose far above expectations, a surge that took them up to almost ¥2.8 tln and +20% higher than for May 2019.

In Australia, NSW reported +112 new locally acquired cases, taking the current known infection level to 626. 63 are in hospital, 18 are in ICU. High numbers are expected today.

The UST 10yr yield starts today at 1.36% and unchanged. 

The price of gold is now just over US$1805/oz which is down -US$3/oz from this time yesterday.

Oil prices have fallen -US$1.50/bbl and in the US they are now just over US$72.50/bbl, while the international Brent price is now just over US$74.50/bbl.

The Kiwi dollar opens today just under 69.8 USc and marginally softer than where we left it on yesterday. Against the Australian dollar we are softer at 93.3 AUc. Against the euro we are also softer at 58.8 euro cents. That means our TWI-5 starts today down slightly at 72.5.

The bitcoin price is now at US$33,088 and down -2.4% from this time on yesterday. Volatility in the past 24 hours has been moderate at +/- 2.4%.

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.
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