US data positive but yields rise sharply; consumer sentiment holds; China profits hold; UK lenders pull back on home loans; Optus scandal spreads; UST 10yr 3.97%; gold and oil firm; NZ$1 = 56.3 USc; TWI-5 = 67.2

Here's our summary of key economic events overnight that affect New Zealand, with news of further chunky benchmark interest rate rises and growing market fear despite much economic data released being generally positive.

American durable goods orders slipped in August from July, but less than was anticipated by analysts (-0.4%) and the dip was very minor (-0.2%). They remain +11.2% higher than a year ago. Non-defense capital goods orders were up +6.3% on that same basis.

US retail sales as measured on a same store basis rose last week to be +11% higher than a year ago.

After declining all year, there was an unexpectedly large surge in sales of new homes in August, rising to an annual rate of 685,000 and far above the +500,000 rate expected. It was particularly notable in the South and West.

There was also a better-than-expected improvement in consumer sentiment in September, according to the widely-watched Conference Board survey.

Adding to the upbeat data, the Richmond Fed's factory survey in the Mid-Atlantic states came in better than expected too, but it really only recovered the unexpected July drop and new orders are not growing.

The US Treasury auctioned a 5 year bond today and that repeated yesterday's outsized rise in yields demanded by bidders. This one was just as large. The tender was very well supported by the median yield was 4.13% and up from 3.15% at the same event a month ago. At some point these much higher interest rates paid will weigh on the US federal deficit, but recall it has been falling at an amazing pace, down from disastrous levels in a very rapid repair.

There were a series of other consumer confidence surveys out yesterday. These have increasing importance given the background economic data is wobbling. If consumer sentiment wobbles too, a downbeat future is all-but-certain. In Australia, consumer sentiment is rising in this ANZ-Roy Morgan survey and is now at a four month high. But in the longer-term perspective 'high' might be stretching it. In Taiwan, their consumer sentiment survey slipped slightly in September. In South Korea their consumer sentiment rose and is now well off its July drop.

In China, industrial profits were unchanged in August, embedding in a small fall for the first eight months of 2022. Given the sluggish Chinese economy, a fall is consistent with other data. But that they have limited the slippage to just -2.1% is impressive, if true.

Meanwhile, the yuan is falling faster against the US dollar. An aggressive pushback by the Chinese central bank is now expected.

Hungary is in the EU but not in the eurozone. It is following a conservative populist path. Economically it is making a hash of it. It has consumer inflation running at 15.6% and far above the eurozone rate of 9.1%. Producer prices are rising even faster. It is battling inflation with economic policies that seem to make it worse, much like Turkey. And today they raised their official interest rates by more than expected, up +125 bps to 13%.

In the UK, there is a growing and significant trend of mortgage lenders withdrawing loan offers as their real estate market faces a sharp and sudden retreat. Lenders fear borrowers will go underwater quickly in this market leaving them with losses. Major lenders are among those pulling back.

And just one day after indicating it wasn't about to move its policy to protect the British Pound, an official at the Bank of England said "significant" policy moves are coming. Markets will remain sceptical until they see action.

In Australia, the Optus breach scandal is spreading. It is one that may affect over half their adult population and cause AML/CFT issues for millions.

The UST 10yr yield starts today at 3.97% and another +8 bps higher than this time yesterday in a continuing push up. It's a new 14 year high now. The UST 2-10 rate curve is again much less inverted at -36 bps. Their 1-5 curve has turned more positive at +8 bp. And their 30 day-10yr curve is also more positive +130 bps. The Australian ten year bond is higher, up +2 bps at 4.10%. The China Govt ten year bond is unchanged at 2.73%. The New Zealand Govt ten year will start today at 4.30%, up +14 bps and if the US rate rises hold, will go even higher later today. This is a new eight year high.

Wall Street started out more positively but hasn't been able to hold it and the S&P500 is down -0.7% in late trade. Overnight, European markets all fell about -0.5%. Yesterday, Tokyo ended up +0.5%. Hong Kong ended little-changed. Shanghai had a good day ending up +1.4%. The ASX200 ended its Tuesday session up +0.4%. But the NZX50 has a terrible day, losing -1.9% in a very late sharp sell-off.

The price of gold will open today at US$1630/oz. This is up +US$2 from this time yesterday.

And oil prices start today +US$1 firmer at just under US$78/bbl in the US while the international Brent price has risen about +US$1.50 to be just under US$84.50/bbl. A Russian gas pipeline to Europe appears to have been sabotaged overnight. Its supply disruption won't have a meaningful impact on their energy crisis however. No word yet who may be responsible, but it wasn't entirely unexpected.

The Kiwi dollar will open today at just on 56.3 USc and marginally softer than this time yesterday and still close to the pandemic low and the rate that applied in April 2009. Against the Australian dollar we are firmer at just on 87.7 AUc. Against the euro we are also slightly firmer 58.8 euro cents. That all means our TWI-5 starts today at just 67.2, and little-changed in a day.

The bitcoin price is now at US$19,160 and again up a mere +0.4% from this time yesterday. But in between it did pop up over US$20,000 but could not hold it. Volatility over the past 24 hours has been high at just on +/- 3.8%.

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