Global food prices surge

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By Interest.co.nz, Interest.co.nz / Podcasts NZ, and David Chaston. Discovered by Player FM and our community — copyright is owned by the publisher, not Player FM, and audio is streamed directly from their servers. Hit the Subscribe button to track updates in Player FM, or paste the feed URL into other podcast apps.

Kia ora,

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

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

Today we lead with news global food prices rocketed high again in March.

But first, there was a somewhat surprising rise in US jobless claims last week, surprising because it cuts across the recent narrative that things are improving fast in their labour market. There were +741,000 new claims last week, well above the expected level of +680,000. Now there are just on 4 mln people on these benefits.

US housing market activity is probably slowing too, with mortgage applications down -5% last week from the prior week, and now down -20% on a year-on-year basis. Mortgage interest rates had an interruption to their 2021 trend higher, with the benchmark 30yr fixed rate slipping slightly to 3.13% plus points.

Internationally, US Treasury Secretary Janet Yellen's push for a global minimum tax rate for multinational companies got a boost from her boss who said these companies should pay taxes where they operate. But it is getting some surprising pushback from the World Bank, the boss of which claimed the suggested 21% minimum was "too high". And China, and it tax haven Hong Kong, is not on board with these reforms yet.

In Hong Kong, one of the world's most unaffordable cities for housing, more than 4% of its homes were unoccupied at the end of 2020, according to data just released. That is a +17% rise over the year and the highest level since records began for this metric in 2015.

In the EU, producer prices are on the move higher, a harbinger of future inflation. Already higher are EU house prices - and rents... although to be fair, these rises are tame from the New Zealand perspectives.

Global food prices rose another +2.1% in the month of March alone, from February. Dairy prices jumped +3.9% on that basis and meat prices were up +2.3%. Overall, prices are up a worrying +25% in a year, led by the price of vegetable oils that are rocketing higher and up almost +90% in a year. The cost of food is now approaching the all-time peak reached in 2011 in nominal terms, although in real terms the peak was in 1974. In the 1970s that was a time of extreme inflation generally, and non-existent growth, known as stagflation.

The UST 10yr yield is down another -2 bp to 1.63%.

The price of gold starts today up +US$16 from this time yesterday at US$1756/oz and a one-month high. This comes as ETF holdings for gold are declining.

Oil prices are little-changed from this time yesterday, still at just on US$59.50/bbl in the US, while the international price is now just on US$63/bbl.

The Kiwi dollar opens today marginally firmer at just on 70.5 USc. Against the Australian dollar we are unchanged at 92.2 AUc. Against the euro we are also little-changed at 59.2 euro cents. That means our TWI-5 opens today a little firmer at 72.8.

The bitcoin price will start today at US$57,660 and up+2.6% from this time yesterday. Volatility in the past 24 hours has been moderate at +/- 2.2%.

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. I am taking a week off, so I will join you again next, in a week from Monday.

535 episodes