Global PMIs rise in April; Japan's inflation stays above 3%; Chile nationalises its lithium industry; eyes on commercial property valuations; UST 10yr 3.57%; gold and oil down; NZ$1 = 61.4 USc; TWI-5 = 69.1

Here's our summary of key economic events overnight that affect New Zealand, with news the road to recession (either soft or hard) can have some positive diversions along the way.

Firstly, and despite the recent run of weakish second-tier data, the American PMIs for April are showing improvements. The factory PMI turned from a minor contraction to a minor expansion. And the services PMI expanded faster in April than March. These improvements were mot foreseen by analysts. The good thing was stronger demand conditions supported the sharper growth in April. New orders rose their fastest in 11 months. But also this survey shows renewed but unexpected inflation momentum. This PMI survey is the Markit version, the internationally benchmarked one. The more closely watched ISM one won't be available until May 1.

But we should probably also note that the recent round of price cuts by Tesla, which previously spurred sales rises, hasn't this time. That isn't a good forward-looking signal.

Canadian retail sales were reported for February earlier today and they slipped from January, although not as much as was expected. Holding them froma larger fall were car sales.

Japanese economic activity is expanding at a good rate in April according to their PMIs. The contraction in their factory sector eased and has almost vanished. That amplified the positive expansion in their services sector.

Meanwhile Japan reported consumer inflation at over 3% again. That means Japanese inflation has been above the Bank of Japan's 2% target now for twelve consecutive months. The February to March rate also ran at a rate exceeding 3%, so the recent pace isn't slacking.

The Bank of Japan is now 'under new management' with Governor Ueda, but isn't expected to change its ultra loose monetary policies when it meets next week. But the meeting will be closely watched because signals for change will surely be coming soon. They have been doing the cheap-money thing now for more than 25 years. Their financial stability review was a conservative one pointing to the global stability threats.

Japan also reported its population data as at the end of March, now 124.5 mln and down -0.4% in a year, or a loss of -440,000 people. The long decline continues but it didn't accelerate over this past year. The proportion of their population 65 years and older is just over 29%, those under 15 years is just under 12%, both markers little-changed. (In New Zealand, our population rose +0.4% in 2022 with 17% over 65 years and rising and 19% under 15 years and slipping.)

The official statistics agency of Hong Kong reported that business confidence there shot up to its highest level since 2011. This was completely unexpected, and not mirrored by their stock market performance. Oddly, Hong Kong is transitioning to a laundering center.

In Europe, the flash April PMIs were mixed. Factories contracted at a faster rate than expected whereas services expanded at a faster rate than expected. This was mirrored in Germany which showed the same disparity. In the bloc, economic activity is quicking despite a contraction in their manufacturing sectors.

In Chile, they have announced they will nationalise the country’s lithium industry, applying a model in which the state will partner with companies to enable local development. It comes as lithium prices fall. In fact most commodity prices are retreating on global demand concerns.

In Argentina, they too are heading for an October election but are facing huge financial challenges which is likely to morph into a deep crisis. They have a harmful mix of a drought-induced recession and skyrocketing inflation.

In the EU, carbon prices ended at €94.17/tonne this week (NZ$168.50) and down -6% in a week but back to levels they have generally been since February. The New Zealand price is now $61.15 and down -4% in the week.

Turkey is also heading for an election, but theirs is upon them in mid May. Inflation has fallen from over 80% there to now 'just' 50%. That is the big threat to the incumbent president, although he has other more unsavory levels to pull to suppress his opponents.

The Australian flash PMI for April shows a similar trend as the US and EU ones - faster expansion in overall economic activity despite the drag from manufacturing.

In Australia we should keep an eye on office building valuations. Vacancy rates are rising fast, but rents have yet to acknowledge the retreating demand. When that happens, the valuations bloodbath will cascade over the whole commercial property market. However, industry voices claim those lower valuations are already priced in. Only time will tell.

The UST 10yr yield starts today at 3.57%, and up +2 bps from this time yesterday. And that is up from .3.51% a week ago. The UST 2-10 rate curve is little-changed at -66 bps. Their 1-5 curve inversion is still at -111 bps. But their 30 day-10yr curve has turned positive, now at +23 bps. It is the first time that curve has been positive since . The Australian ten year bond is down -6 bps at 3.49%. The China Govt ten year bond is still at 2.85%. But the New Zealand Govt ten year is down -11 bps to 4.17%.

On Wall Street, the S&P500 was little-changed in its Friday trade and booking a minor -0.1% weekly dip. Markets there are awaiting financial results from big tech companies. Overnight, European markets all closed up +0.5%, except London which was up just +0.2%. Yesterday Tokyo ended down -0.3% to end its week virtually unchanged. Hong Kong ended its Friday session down -1.6% for a weekly selloff of -1.5%. Shanghai ended down -2.0% yesterday for a weekly retreat of -1.1%. The ASX200 ended its Friday session down -0.4% which has also the weekly dip. The NZX50 ended up +0.4% and that too was its weekly gain.

The price of gold is at US$1980/oz and down -US$25 from this time yesterday and a weekly fall of -1.2%.

And oil prices are holding lower and just over US$77.50/bbl in the US. The international Brent price is just over US$81.50/bbl. These are more than -5% falls in a week.

The Kiwi dollar is softer against the USD and now at 61.4 USc with a further -½c retreat. In fact that is a -3.0% fall in a week. Against the Aussie we are holding at 91.7 AUc. Against the euro we are down -½c at 55.9 euro cents. That means the TWI-5 is a 69.1, down another -40 bps to a new six month low.

The bitcoin price is again lower today, now down further to US$27,836.27 with another -2.2% fall from this time yesterday. For the week it has fallen -8.2%. Volatility over the past 24 hours has stayed modest at +/- 1.1%.

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