Trump tweets 'Trade wars are good'; Canada GDP growth soft; Japan jobless low; eyes on Italy's election; NZ car sales level off; UST 10yr 2.86%; Fear index higher; oil down and gold up; NZ$1 = 72.3 USc; TWI-5 = 73.4

Here’s our summary of key events overnight that affect New Zealand, with news of a cavalier US President who is ignoring the lessons of history has tweeted “Trade wars are good and easy to win’. Retaliation seems certain. America’s allies are recoiling.

Separately in the US, car loan interest rates are rising, and quite quickly. According to one survey, they now average 5.2% pa which is up from 3.9% five years ago. This latest level is the highest in eight years. And it is pushing buyers to seek lower payments by extending the length of their loans.

Canada’s GDP expanded at a slower pace than expected in the December 2017 quarter, marking a disappointing end to a strong year and adding to worries that their economy faces stiff headwinds from American trade and tax policy.

In Japan, their jobless rate fell to 2.4% in January. That’s a 25 year record low, while a ratio of job openings remained at a 44-year high, the latest signs that their labour market is tightening as growth improves. China claims a jobless rate of 3.9%.

This weekend brings an important election in Italy that could possibly add new (and old) unstable politicians to the EU scene. Italy’s banks struggle with bad loans and the state itself is saddled with massive debt – but the voters don’t seem to care, and even their finance minister is relaxed about it all. The choice seems to be between billionaire (and previous failure) Berlusconi, or comedian Grillo. Competent alternatives aren’t rising.

In Australia, banking giant CBA is reportedly cutting interest rates to property investor clients.

Sales of new passenger vehicles in New Zealand were -7.9% lower in February 2018 than the same month a year ago. But SUVs took a remarkable 59.1% share of that. Sedans are now a minority segment. The sales of commercial vehicles continues its record setting trend, up +10.3% on the same month a year ago, taking the annual rate to a new record and +14.1% higher than the equivalent period last year.

The UST 10yr yield has bounced back to 2.86% today on Wall Street. The Chinese 10yr is at 3.87% (up +2 bps) and the New Zealand equivalent is at 2.96% (down -1 bp).

Local swap rates ended the week flatter, and are now approaching their flattest of 2018. Average Australasian investment-grade corporate CDS spreads are now lower than their US counterparts, something we see rarely.

The VIX hasn’t retraced to the levels before the mid-February wobbles and is still over 20. The Fear & Greed index is even more strongly on the fear side than this time last week.

Gold markets aren’t closed yet but the price of gold has bounced back strongly from yesterday’s steep drop to US$1,322 in New York. But over the week, that still represents a -US$6 fall.

Oil prices are lower today with the US benchmark now just under US$61.50 and the Brent benchmark under US$64.50/bbl. The US active rig count is now at its highest level in three years.

The Kiwi dollar is slipping today is now at just under 72.3 USc. On the cross rates we are at 93.2 AUc and 59.7 euro cents. That puts the TWI-5 back at 73.4 and ½ point below this time last week and right at the bottom of the 2018 range.

Bitcoin is now at US$10,868 and down -2.3% below where we left it yesterday afternoon.

The easiest place to stay up with event risk today is by following our Economic Calendar here ».

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