Search

Home > Economy Watch > Commodity boom stokes inflation fears
Podcast: Economy Watch
Episode:

Commodity boom stokes inflation fears
Category: Business
Duration: 00:03:20
Publish Date: 2021-05-10 19:31:41
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 it's all about commodities and inflation today.

Rising commodity prices are no longer news, but the acceleration in their rises is. The iron ore price jumped +10% yesterday. Copper prices rose sharply too. The reason for the sudden move isn't clear, but a suspect is that central banks have been universally signaling that easy money will be here for some time. These sharp rises build on inflation fears.

And that seems to be borne out in the New York Fed's national survey of inflation expectations. That shows them up to 3.4% over the next year, up from 3.1% (and before all the international cost pressures have really bitten).

Also inflating are US state tax revenues. California has announced a huge +US$76 bln surplus, and a very sharp improvement in the Golden State's economic fortunes.

A good way to see the recovery in US economic activity is to look at the CASS trucking activity index. And when you do, you see that the cost of road freight is skyrocketing higher.

In China, major steelmakers are hiking prices sharply.

In Australia, they are a primary beneficiary of the commodities boom. Their stock market is making outsized gains. And the latest NAB business sentiment survey was very strong, even bettering the strong March survey. Confidence rose to a survey high (since 1998). The gain in the month was driven by large increases in mining and the services sectors with finance, business & property now the strongest non-mining industry. Inflationary pressures are not an issue in these results.

The UST 10yr yield starts today at 1.60% and back up +2 bps from this time yesterday. 

The price of gold starts today at US$1837/oz and that is up +US$6 since this time yesterday. Chinese gold consumption is recovering very sharply.

Oil prices start toady still at just under US$65/bbl in the US, while the international Brent price is still just over US$68/bbl.

The Kiwi dollar opens today at 72.9 USc and little-changed overnight. Against the Australian dollar we are still at 92.8 AUc. Against the euro we are at 60 euro cents. That means our TWI-5 starts today at 74.3.

The bitcoin price is now at US$56,997 and -0.9% lower than this time yesterday. Volatility in the past 24 hours has been a moderate +/- 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.
Total Play: 0