Search

Home > Economy Watch > Price rise expectations spread
Podcast: Economy Watch
Episode:

Price rise expectations spread
Category: Business
Duration: 00:04:13
Publish Date: 2021-05-13 19:46:56
Description:

Kia ora,

Welcome to Friday'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 of more indications price rises are spreading.

But first in the US, they reported a good reduction in the number of jobless claims for last week, even less than the decline expected. There are now 3.7 mln people on these benefits and back to a similar level a year ago, just as the pandemic was threatening to bite. But it is still twice as high as the pre-pandemic levels.

And staying in the US, producer prices are up +6.2% in April from a year ago, a sharp rise from the already-high +4.2% gain they reported for March. Prices are rising fast, in ways that seem temporary, yet this could change expectations in ways that are self-reinforcing.

Consumer prices are getting no respite in the US following the oil pipeline hack there. Temporary sure, but it is feeding rising price expectations. Still, Fed officials don't see the pressures embedding.

There was another big US Treasury bond issue today, this time for US$44 bln for their 30 year maturity. US$14 bln was allocated to the US Fed. The median yield was 2.315% compared to the same issue a month ago at 2.23% pa. This one wasn't quite as popular with 'only' US$74 bln being bid

In Canada, they reported their producer price data for April as well, and it was up an eye-watering +14% from a year ago. That leap is their largest in more than 40 years and was driven primarily by lumber prices, itself driven by housebuilding demand in the US. Dairy, meat and fish prices also rose sharply but nothing like the timber prices.

In China, foreign direct investment rose +39% in the year to April, but that is a leveling off of the +44% rate in the year to March.

The iron ore price is taking a breather, falling from US$230/tonne yesterday to US$218/tonne today. Obviously it can't keep rising at the vertical rate track it has been on. Copper is showing the same sign.

In Australia, the expectations for inflation are quite different, and no-one sees it on the horizon. The RBA survey of economists see it at +1.7% in a year. The same survey of union officials pegs it at just +1.5%. The Melbourne Institute consumer survey has it up at +3.2% but that is unchanged from a year ago. Current CPI inflation in Australia is +1.1% pa.

The UST 10yr yield starts today at 1.67% and down -1 bp from this time yesterday. 

The price of gold starts today virtually unchanged at US$1823/oz.

Oil prices start today up almost giving up all of yesterday's rise, and more, down -US$3 at just over US$63.50/bbl in the US, while the international Brent price is just under US$67/bbl.

The Kiwi dollar opens today stable at 71.7 USc. Against the Australian dollar we are back up to 93 AUc. Against the euro we are marginally firmer at 59.4 euro cents. That means our TWI-5 starts today at 73.6.

The bitcoin price is now at US$48,183 and a huge -12.3% lower than this time yesterday. Volatility in the past 24 hours has been a extreme +/- 9.6%. 

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 on Monday.
Total Play: 0