Increase in credit in the United States; Record US trade deficit; The Fed is keeping the line stable; rebounds in air freight; China’s foreign exchange reserves are slipping; 10-year UST at 1.65%; stable oil, lower gold; NZ $ 1 = 70.2 USc; TWI-5 = 72.6

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Here is our summary of key economic events overnight with news that there has been a very strong increase in the growth of consumer credit in the United States in February as optimism accelerated.

Consumer credit increased quite remarkably by + 7.9% year on year, or + US $ 27 billion compared to January, the largest increase on record. There has been a good increase in revolving credit card balances, but the very strong increase is in personal loans, especially auto loans.

US Federal Reserve released minutes from his last meeting. And Fed officials say it will be “some time” before the conditions are right to cut their asset-buying campaign by $ 120 billion per month.

They said it would likely be some time before further substantial progress towards the Fed’s targets for maximum employment and price stability is achieved.

They had previously planned that they would keep the benchmark lending rate close to zero until at least 2023. This is despite a sharp upward revision of their growth forecasts this year amid growing confidence and a new round of fiscal stimulus.

Meanwhile, the much faster recovery in US economic activity from the effects of the Covid pandemic has seen the US trade deficit jumps 4.8% to hit a record $ 71.1 billion in February. The deficit was higher than the market forecast of a deficit of $ 70.5 billion. The merchandise trade gap was also the highest on record.

The main driver of the deficit was trade with China, with the deficit increasing by $ 3.1 billion to $ 30.3 billion in February. Exports fell $ 4.5 billion to $ 10.4 billion, and imports fell $ 1.5 billion to $ 40.6 billion.

Exports of consumer goods declined, as did those of motor vehicles, parts and engines. There were also fewer food exports. The pandemic remained a drag on exports of services, in particular travel.

Elsewhere in the United States, JP Morgan Chase CEO Jamie Dimon in his influence annual letter to shareholders said the US economy would now experience a likely boom. He says it will be based on a combination of excess savings, deficit spending, a potential infrastructure bill, vaccinations and “the euphoria towards the end of the pandemic.” He thinks the boom “could easily reach 2023”. This could justify high valuations of stocks, but not the price of the United States. debt, given the “huge supply” that will soon hit the market.

And he also says there is a chance that a rise in inflation will be “more than temporary”, forcing the US Fed to aggressively raise interest rates. Dimon however hopes the scenario known as Goldilocks. This would lead to rapid growth, a slight increase in inflation and a measured rise in interest rates.

In Merchandise exports from Canada declined 2.7% in February while imports fell 2.4%. As a result, Canada’s trade surplus with the world fell from C $ 1.2 billion in January to $ 1.0 billion in February. It was the first time since the end of 2016 that the trade balance was in surplus for two consecutive months.

In international news, although the air passenger travel the recovery seems very distant, the rebound in air freight was very strong in February 2021. Compared to the robust conditions of February 2019, this year they were rather remarkable + 9.6%, with the Asia / Pacific region increasing by almost + 11% on that same basis. (Of course, the year-over-year gains are heavily skewed.)

The Chinese reported a further decline in their foreign exchange reserves in March compared to February. It wasn’t big, but it was slightly more than analysts expected. They are now less than US $ 3.2 billion. But remember, they were US $ 3.06 billion in March 2020, so they are now + 3.6% higher now.

Although they have been stable for weeks, yesterday there was a noticeable drop in the price of iron ore, with an unusual drop of -1.5% on the day. Coking Coal Price also fell more than -1% on the day.

China saw a total of 9.66 million newly registered motor vehicles in the first quarter of this year, a record for the same period of any year. That brought the total number of motor vehicles in China to 378 million at the end of March, including 287 million cars.

And stay in China, reports that energy consumption and carbon emissions from Bitcoin mining will undermine China’s climate efforts without more stringent regulations and policy changes, according to a new study academics in China, the United States and the United Kingdom.

If things continue as they are, China’s energy consumption from Bitcoin mining in 2024 will exceed the total energy consumption of countries like Italy and Saudi Arabia, according to the study. And the carbon emissions will exceed the annual greenhouse gas emissions of countries like the Netherlands, Spain and the Czech Republic.

On Wall Street, the S & P500 is stable in the early afternoon. European markets fell an average of -0.2% overnight, but London was the outlier again, rising again + 0.9%. Yesterday, the Shanghai market ended down -0.1%, Hong Kong lost -0.9% and gave up some of the large gain from the day before, while the very large Tokyo market closed slightly increase of + 0.1%. The ASX200 rose + 0.6% yesterday and the NZX50 Capital index rose + 0.7%.

The latest global compilation of COVID-19 data is here. The global tally continues to rise, now 132,658,000 have been infected at any given time, up from + 634,000 in one day, mainly in Brazil (+ 83,000), Turkey (+ 50,000) and India ( + 105,000). Global reported deaths now exceed 2,878,000 and +13,000 in one day. Vaccination worldwide continue to increase rapidly, up to 694 million (+15 million) and in the United States, half of their population (167.1 million received at least one dose and up to +1.3 million in a day) have now had this protection because they deploy very quickly. The number of active cases there has dropped to 6,868,000 and just -2,000 overnight as new hot spots emerge with problematic variants.

The 10-year UST yield was down -1 bps to 1.65%. The US 2-10 yield curve is unchanged at 150 bps. Their 1-5 curve is flatter at +80 bps, while their 3m-10 year curve is unchanged at +164 bps. The 10-year Australian government yield is down -3 basis points to 1.68%. The Chinese 10-year government yield is firm at 3.24%. But the 10-year New Zealand government yield is down -4 basis points to 1.76%.

The price of gold starts today down -3 USD compared to yesterday at 1,740 USD / oz.

Oil prices are little changed from yesterday at just under US $ 59.50 / bbl in the US, while the international price is now just below US $ 63 / bbl. But he’s been pretty volatile between the two.

The Kiwi dollar today opened slightly more slowly at just 70.2 USc. Against the Aussie we are firmer at 92.2 AUc. Against the euro, we are weaker at 59.1 euro cents. This means that our TWI-5 today opens a little lower at 72.6.

The price of bitcoin will start today at US $ 56,181 and will drop a further -3.6% from yesterday. Volatility over the past 24 hours has been moderate to +/- 2.6%. The bitcoin rate is shown in the exchange rate set below.

The easiest way to stay on top of the risks of events today is to follow our Economic calendar here ».

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