Stronger US wage data adds to fears rates will be held high for longer. Core inflation progress in Europe supports a June cut by the ECB. China’s factory output rises. Weak Australian retail sales cause a rethink on the RBA’s rate track.
In our bonus deep dive interview, ANZ Economist Miles Workman looks closely at why New Zealand consumers are just as down in the dumps as many Australians.
5 things to know:
US Treasury yields rose and stocks fell on fears the US Federal Reserve may hold rates high for longer following stronger-than-forecast US employment cost data. Ahead of tomorrow’s FOMC decision, ANZ Head of G3 Economics Brian Martin expects US Fed Chair Jerome Powell to emphasise the FOMC’s resolve to get inflation back to target.
The Aussie and Kiwi dollars are down on a strong US dollar overnight, but also after Australian retail sales fell 0.4% in March, when a 0.2% rise was expected. ANZ Economist Maddy Dunk says the weakness caused traders to partly unwind bets that the RBA might hike in November after last week’s strong CPI.
Chinese manufacturing continued to expand in April, with the official PMI reading of 50.4 slightly above expectations. ANZ Senior China Strategist ZhaoPeng Xing says strong export orders are offsetting a still-weak property sector.
Taiwan’s GDP rose 6.5% in the March quarter from a year ago, beating expectations. ANZ Chief Economist for Greater China, Raymond Yeung says surging exports of AI chips mean the data reflects US economic strength.
ANZ NZ’s Business Outlook survey found a sharp fall in confidence in April. ANZ Economist Susan Kilsby says there were mixed messages for the RBNZ, as inflation gauges indicated upwards pressure, but past wage growth softened.
Cheers
Bernard
PS: Catch you tomorrow with the latest from the FOMC.
