US sentiment improves; world grain crisis eases; Chinese banks lend less than expected; industrial production rises everywhere (except Russia); Aussie new home sales tank; UST 10yr 2.84%; gold up and oil down; NZ$1 = 64.5 USc; TWI-5 = 72.7

Here's our summary of key economic events overnight that affect New Zealand, with news of an easing of economic fears that have been pervasive since the invasion of Ukraine, and the blockade of Taiwan.

The latest American sentiment survey, this one for August and by the closely-watched University of Michigan series, indicates rising optimism. But to be fair, it is only off its deep low for current conditions. However, the year-ahead economic outlook rose substantially and that is probably significant.

The USDA WASDE report paints a much more relaxed picture for the international grain situation. Despite the European war, they now think most regions will have production increases, especially for wheat. Corn and other coarse grains might become a bit tighter they say, but the rice trade will have plenty available even if slightly lower than last year. They also see slightly higher dairy prices, and higher beef prices, but few supply issues.

In China, banks extended ¥679 bln in new yuan loans in July, the lowest reading in three months and well below ¥1.08 tln a year earlier. The reading also disappointed investors which were expecting an expansion similar to last year but the ongoing property crisis weighed on consumers mood and government bond issuance has slowed.

In Malaysia, they reported an economic expansion in the June quarter that was more than expected, charging up at an almost +9% annualised rate and impressive even if it is off a lowish base.

India has reported positively on their June industrial production levels, a fourth consecutive month of outsized gains.

EU industrial production data was released for June and that also brought a positive surprise. It grew +3.2% in the whole EU from a year ago, very much better than the +1% expected. UK industrial production rose +2.4% on the same basis.

In Germany, some local regulators are calling out shrinkflation practices. Shrinkflation isn't a new strategy by supermarkets and manufacturers to look like they are holding the line on prices, but it seems to rankle in Germany. "Cheating lists" of "deceptive packaging" are getting focus and can show shrinkflation is an effective price hike by up to +25%. Manufacturers also claim their costs are going up by similar amounts.

In Russia, their economy contracted steeply in the June quarter as the economic consequences of its war in Ukraine took hold. Their economy shrank -4% from April through June compared with a year ago. It is the first quarterly gross domestic product report to fully capture the change in the economy since the invasion of Ukraine in February, when Western sanctions shut Russia off from much of the global financial system, and many countries severed trading relationships with Moscow. It was also a sharp reversal from the first quarter, when the economy rose +3.5%.

In Australia, new home sales plunged -13% in July from June, swinging from an almost +2% gain in June. The sudden slump is being blamed on the recent increases in the cash rate, with builders reporting fewer enquires and visits to display sites.

The UST 10yr yield starts today at 2.84% and -4 bps lower than this time yesterday. It is very little different from week-ago levels. The UST 2-10 rate curve is more inverted today, now at -40 bps and their 1-5 curve is also a bit more inverted at -28 bps. Their 30 day-10yr curve is now at +66 bps and slightly flatter from this time yesterday. The Australian ten year bond is up +1 bps at 3.41%. The China Govt ten year bond is unchanged at 2.75%. And the New Zealand Govt ten year will start today up at 3.52% and up another +10 bps from this time yesterday. A week ago it was at 3.33% so a +19 bps recovery.

Wall Street is firm in its late Friday trade with the S&P500 up 1.4% from this time yesterday and is +2.7% higher in a week. Overnight, European markets all rose about +0.5%. Yesterday, Tokyo was closed up +2.6% for a +2.3% weekly gain. Hong Kong closed up +0.5% for a weekly gain of +0.6%. Shanghai slipped -0.2% yesterday to end their week up +1.8%. The ASX200 ended its Friday trade down -0.5% for a trivial weekly rise of +0.2% while the NZX50 was down -0.3% on Friday to end its week unchanged.

The price of gold will open today at US$1802/oz which is up +US$13/oz from this time yesterday, and up +US$28/oz in a week, +1.6%. It is also the first time above US$1800 in seven weeks.

And oil prices start down -US$2.50bbl from this time yesterday at just under US$91.50/bbl in the US, while the international Brent price is now just under US$97.50/bbl. A week ago these prices were US$88.50 and US$94.50/bbl respectively, so a +3% weekly rise.

The Kiwi dollar will open today at 64.5 USc which is holding Thursday's jump. But it is now more than +2c higher than this time last week and its highest since early June. Against the Australian dollar we are holding higher at 90.6 AUc. Against the euro we up +½c overnight at 62.9 euro cents. That all means our TWI-5 starts today at 72.7, our highest in more than three months. It is a +2.4% appreciation in a week.

The bitcoin price is down -1.1% this time yesterday at US$24,076. Volatility over the past 24 hours has been modest at just under +/-1.5%.

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