US producer price inflation data was hotter than expected. US bond yields are up, as is the US dollar. US stocks are down. House prices in New Zealand are flat, although net migration to NZ set new record highs. Iron ore could fall to US$100/tonne.
In our bonus deep dive interview, ANZ Chief Economist for Greater China Raymond Yeung wraps up his analysis of China’s National People’s Congress (NPC) and explains why the focus is shifting away from the annual growth target to longer-term structural reform.
5 things to know:
US producer prices rose 0.6% in February from January, which was double the consensus. US bond yields spiked as much as 10 basis points, driving the S&P 500 down 0.5% as of 5am Sydney/Melbourne time. The US$ rose vs the A$ & NZ$. ANZ Economist Bansi Madhavani says the data led to markets reducing the expected chances of a Fed rate cut in June to around 65% from 80% earlier.
The control group measure of US retail sales was flat in February, says Bansi.
New Zealand’s housing market went sideways in February. ANZ Senior Economist Miles Workman says there isn’t much risk housing will drive inflation pressures, although the market outlook is complicated.
New Zealand recorded record inflows and outflows of migrants in the year to January, but the recent upswing looks to have turned. However, Miles notes data revisions show more migrants arrived last year than previously thought.
Australian Federal Treasurer Jim Chalmers yesterday indicated iron ore prices could drop to US$100/tonne from as high as US$140 in January, which would affect Government revenues. ANZ Commodity Strategist Soni Kumari cites investor disappointment after China’s NPC for the price drop.
Cheers
Bernard
PS: Catch you next week with rate decisions from the US Federal Reserve, the Bank of Japan and Bank of England.
