Kia ora,

Welcome to Friday’s Economy Watch where we follow the economic events and trends that affect Aotearoa/New Zealand.

I'm David Chaston and this is the international edition from Interest.co.nz.

And today we lead with that there is a surprise renewed jump in global shipping freight rates underway again.

But first, new US jobless claims rose last week. The headline seasonally adjusted rate "surged" to +231,000 and up from +209,000 the prior week. But the actual number of new claims was only 209,000. It rose too, but it is too soon to conclude this is a new trend. There are 1.75 mln people on these benefits, which is a decrease from lasrt week. But it is up from 1.66 mln a year ago. The current level is tiny compared to their employed workforce of 161 mln people.

But the headline "surge" has had echoes in currency and bond markets today.

There was a UST 30yr bond auction earlier today successfully raising US$25 bln (so much smaller than yesterday's 10 year event). It was heavily supported with median yields slipping to 4.59% from 4.61% at the prior equivalent event a month ago. We are no longer reporting rising yields.

China's exports rose to a three month high in April, but basically only back to the general monthly level of the past year. The rise looks good only in the perspective of the past two months. Overall their exports rose +1.5% from the same month a year ago. But this masks some quite big moves. Exports to the US fell -1.0%, to the EU they were down -4.8%. To Japan down -9.2%. to New Zealand they were down -2.0% and Australia down -7.7%. But they rose +21% to Brazil, +20% to Vietnam, +7% to Malaysia although to be fair the dollar values of these increases were not high. Interestingly Chinese exports to Russia slipped -1.9%, and to India were little-changed.

Overnight, the Bank of England maintained its key bank rate at 5.25%, as expected. However, two committee members preferred to reduce the rate by -25 bps, compared to only one member in the prior meeting. Further, officials revised down their inflation forecast and raised the growth outlook. Those projections foresee a decline in their policy rate to 3.75% over the next three years.

There was an unexpected rise in global freight rates for containerised cargoes last week, up +16% in the week, principally on outbound rates from China. These rates are now a massive +80% higher than the same week a year ago. The rise will affect other trade routes globally. Meanwhile, bulk cargo rates rose +30% last week as well although they are "only" 57% higher than year ago levels. It is not clear why rates have jumped in the past week so suddenly but it may relate to renewal of time charter rates after the first flush of increases after the Panama and Suez Canal stresses that just are not easing.

It is cold nationwide this morning. After yesterday's Transpower warning, we should note that as we write this, electricity prices are only marginally elevated indicating a normal situation so far, and not the extreme stress we saw two days ago.

The UST 10yr yield is now at 4.46% and down -3 bps from yesterday. 

The price of gold will start today up +US$19 from yesterday at US$2333/oz.

Oil prices have risen +50 USc at just under US$79/bbl in the US while the international Brent price is unchanged, now just under US$83.50/bbl.

The Kiwi dollar starts today up +¼c from yesterday at just under 60.3 USc. Against the Aussie we are softish at 91.1 AUc. Against the euro we are little-changed at 55.9 euro cents. That all means our TWI-5 starts today just under 69.6 and again marginally firmer from yesterday.

The bitcoin price starts today at US$61,901 and down -1.1% from this time yesterday. Volatility over the past 24 hours has been modest at just on +/- 1.7%.

You can find links to the articles mentioned today in our show notes.

You can get more news affecting the economy in New Zealand from interest.co.nz.

Kia ora. I'm David Chaston. And we will do this again on Monday.