US inflation sticky pushing back rate cut bets; Indian industrial growth eases; China rocked by Moody's downgrade of China Vanke; Aussie business sentiment dips; UST 10yr 4.16%; gold lower and oil unchanged; NZ$1 = 61.5 USc; TWI-5 = 70.3

Here's our summary of key economic events overnight that affect New Zealand, with news the never-ending car crash that is China's residential property development sector, took another bump today.

But first in the US, their inflation rate unexpectedly edged up to 3.2% in February, compared to 3.1% in January and above forecasts of 3.1%. The closely-watched core inflation rate slipped to 3.8% when it was expected to come in at 3.7%. And it will not have escaped the market's notice that the +0.4% monthly rise from January was the same as the prior month and the highest since April 2023. That means the recent pressure is building again.

These misses bolster the Fed's view that they need to be patient to get conditions where consumer inflation actually will fall into its target range before they start cutting rates.

The Redbook index of retail rates in the US rose +3.0% last week from the same week a year ago, and not quite enough to cover inflation..

There was a well-supported US Treasury 10yr bond auction today which saw a median yield achieved of 4.10% and that was actually not too different to the same auction a month ago where the median yield was 4.04% pa.

India's January industrial production came in lower than expected, rising +3.8% from a year ago when a 4.1% rise was expected , and down from +4.2% in December. The heady growth they reported most months to October now seems to have been exhausted, although expansions at the current lower level will still be looked on with envy by others. India's CPI inflation remained stuck at 5.1% in February.

India's car sales rose +9.5% in February from a year ago, also an easing from the +14% rise in January. Over the past year, 3.6 mln passenger vehicles were sold, a far smaller market than the US (18 mln) or China (22 mln).

China's property sector has taken another blow. State-backed property development giant Vanke had its investment-grade rating stripped by Moody's overnight who warned of potential further cuts, predicting credit metrics and liquidity will weaken because of falling home sales and funding uncertainties. Immediately, Vanke went into talks with banks (State-owned banks) on a debt swap that should help them stave off its first-ever bond default. Earlier this week they felt compelled to announce that they had made the most recent bond repayment. But the obligations ahead look daunting.

As expected, the German inflation rate eased to 2.5% in February, down from 2.9% in January and 3.7% in December. Inflation-control progress is coming fast in Europe's largest economy, even if it is at the expense of demand.

Not expected was a fall in British employment in January and a rise in their jobless rate.

In Australia, the NAB business sentiment survey reported that business conditions rose in February, signalling their economy has remained resilient in the new year but inflation is still a challenge despite slowing growth. Business confidence fell slightly however, as firms struggled to deal with the combination.

Russia's invasion of Ukraine caused wheat prices to spike. But that is over now with prices falling to a four year low and back to levels we had in the 2015-2020 period. Buyers rule. And now China is cancelling purchase contracts from the US - and at a rate faster than usual. This is because it can buy supplies cheaper elsewhere.

The UST 10yr yield starts today at 4.16% and up +6 bps from this time yesterday in a rising market. The key 2-10 yield curve inversion is unchanged at -43 bps. But their 1-5 curve inversion is less at -86 bps. Their 3 mth-10yr curve inversion is notably less at -122 bps. The Australian 10 year bond yield is now at 4.00% and up +2 bps from yesterday. The China 10 year bond rate is +5 bps higher at 2.36%. The NZ Government 10 year bond rate is down -1 bp at 4.65%.

Wall Street has started its Tuesday session with the S&P500 up +0.9%. Overnight European markets closed all up an average of +1%. Yesterday Tokyo ended its Tuesday session virtually unchanged. But Hong Kong added a huge +3.1% on the day. Going the other way Shanghai shed -0.4%. Singapore ended up a minor +0.1%. The ASX200 also ended up +0.1% but the NZX50 was down another -0.4%.

The price of gold will start today -US$13 lower than yesterday at US$2165/oz.

Oil prices have firmed less than +50 USc just under US$78/bbl in the US while the international Brent price is now just over US$82/bbl. These minimal changes come even after Russia suffers broad strikes on its oil refineries by Ukraine, as Ukraine tries to balance its resources deficit compared to the invader.

The Kiwi dollar starts today at just on 61.5 USc and nearly -¼c lower than this time yesterday. Against the Aussie we are soft as well at 93.2 AUc. Against the euro we have slipped to 56.3 euro cents and -20 bps lower. That all means our TWI-5 starts today at just on 70.3 and also -20 bps lower.

The bitcoin price starts today at US$70,562 and down -2.6% from this time yesterday. Volatility over the past 24 hours has been moderate at just under +/- 2.0%.

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