Kia ora,

Welcome to Wednesday’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 news at face value at least, the US banking crisis appears to have passed.

American regulators are uncovering some very questionable practices at the banks they have closed or taken over. But the crisis seems to have passed. Equity markets are recovering the share price of many regional banks in the US as they deem regulator action successful over the weekend.

In the absence of the banking industry issues, today's American inflation report for February would have been a big deal. In the event, it reported CPI inflation running at 6.0%, the rate markets were expecting and down from 6.4% in January. The annualised rate between January and February fell to below 5%. This is progress of a sort, but still a long way from the Fed's 2% target. Food prices (+9.2% year-on-year) kept the rate up, and by more than expected. Petrol prices (-2.0%) was a major restraining factor. Rents (+8.1%) were another major helping keep the rate elevated and that kept their "core inflation" at 5.5%.

US retail sales had another weak week, up a mere +2.6% from year-ago levels on a same-store basis. Despite easing inflation pressures, their retail impulse can't keep up with retail inflation, so retail volumes keep sliding. This is the second straight week with this feature.

Meta/Facebook said it was laying off 10,000 employees in a major restructuring and downsizing. Another 5000 current vacancies will be left unfilled. It currently has 76,000 employees.

China is relaxing visa requirements for outbound tourism. They have added another 40 countries to its list for which group tours are allowed, bringing the total number of countries to 60. New Zealand is included. But the list still excludes Japan, South Korea, Australia and the United States.

In Australia, there were two consumer sentiment surveys out for March (here and here) and both were quite week, holding near 30 year lows. Equally concerning is that consumer inflation expectations are rising there, these survey indicate.

Not quite so negative is Australian business sentiment and monitored by the respected NAB survey. It shifted sharply lower too in February, but only to a level we last saw in November. Confidence may be fragile and volatile they report, but conditions remained "strong".

The UST 10yr yield starts today at 3.61% and recovering +8 bps from this time yesterday. (Recall, its recent peak was 4.08% on March 3, 2023.) 

The price of gold will open today at US$1909 and down -US$2 from this time yesterday but essentially holding its new higher level.

And oil prices start today down -US$2 at just under US$73/bbl in the US. The international Brent price is now just on US$78.50/bbl.

The Kiwi dollar has remained firm, still at 62.2 USc. Against the Aussie we are still at 93.4 AUc and a high for the year. Against the euro we are firm too at 58.1 euro cents. That keeps the TWI-5 at 70.6 and +50 bps higher than week-ago levels.

The bitcoin price is much higher again today and is now at US$25,668 and up another +7.0% from this time yesterday. And volatility over the past 24 hours has remained extreme at +/-5.4%.

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.