US jobless claims rise; US producer price pressures ease; China CPI inflation vanishes; China PPI deflates; England raises rates again; Aussie inflation expectations rise; UST 10yr 3.40%; gold and oil down; NZ$1 = 63 USc; TWI-5 = 70.9

Here's our summary of key economic events overnight that affect New Zealand, with news weakish Chinese data is hurting commodity prices.

But first up today, American initial jobless claims rose last week and by more than expected. They rose +234,000 so there are now 1.67 mln people on these programs. Seasonal factors should have seen these initial claims fall, so the rise is probably the long awaited start of the softening of their tight labour market.

Meanwhile, American producer prices rose at a reduced rate. There were up only +2.3% from year-ago levels in April which is lower than the +2.7% rise in March. Even the annualised rate from March to April was only +2.4%, so cost pressure is evaporating quite quickly now. Without a slightly higher rise from services, the goods price pressures are even lower. This easing feeds into the expectations the giant American economy is slowing.

In Los Angeles, shares in another regional bank, PacWest, dropped by more than -20% today, compounding earlier falls. Today's fall came after they said its deposits declined and that it had posted more collateral to the US Federal Reserve to boost its liquidity.

Of course, the regional bank woes, annoying as they are, are minor compared to the threat their Federal debt-ceiling standoff poses.

It is easy to dwell on the negatives. There are plenty to choose from. But there are positives. American worker job satisfaction is now at an all-time high. And recent changes show a fast improvement. Crowded out by the 'bad news' there is clearly a lot of positive stuff going on that doesn't make the headlines.

In China, they don't have an inflation problem. But they might be facing a deflation problem. In April, consumer prices were only +0.1% higher than a year ago, much lower than the minor +0.7% in March and also below the expected +0.4%. That is at a two year low, down to pandemic levels. The annualised rate between March and April was a deflationary -1.2% pa (although that is not a seasonally-adjusted result). Lamb and beef prices are falling but milk prices are rising. However none of these changes are large.

And staying in China, their producer prices are definitely deflating. They were down -3.6% in April from a year ago and falling at an annualised -6.0% rate in April from March. No hiding deflation there.

There are elections in Turkey this weekend. Overnight, a third-party candidate withdrew from the contest so as not to split the anti-Erdogan vote in what was seen as a tight race before the withdrawal. Now all depends on whether the vote will be manipulated by the incumbent. The Turkish stock market rose sharply on the withdrawal.

There is also an election this weekend in Thailand.

As expected, the Bank of England raised its policy rate again, and again by +25 bps to 4.5%, the 12th consecutive rate hike. That makes it their highest since 2008 and because inflation there is still over 10%, their battle will continue.

In Australia, their inflation expectations ticked up slightly to 5.0% in May from 4.6% in April. It is not something the RBA will be pleased about. Some think the federal Budget will be inflationary too, so the tide is challenging the RBA.

Global container freight costs fell yet again last week, down another -1% to be -35% lower than the ten year average, a period that included the pandemic spikes. They fell in all major markets. But freight costs for bulk cargoes are not showing the same retreat.

The UST 10yr yield starts today at 3.40%, and down another -5 bps from yesterday. That puts it back to week-ago levels. Their key 2-10 yield curve is a bit more inverted at -50 bps. Their 1-5 curve is little-changed by -141 bps. But their 3 mth-10yr curve is more even inverted than yesterday, now by -213 bps. The Australian 10 year bond yield is now at 3.34% and down another -6 bps from yesterday. The China 10 year bond rate is down -1 bp at 2.72%. And the NZ Government 10 year bond rate is now at 4.16% and down -5 bps from this time yesterday.

On Wall Street, the S&P500 is down -0.2% in its Thursday session. Overnight European markets were mixed with Paris up +0.3%, Frankfurt down -0.4% and the others in between. Yesterday Tokyo ended unchanged. Hong Kong ended its Thursday session down a minor -0.1% and Shanghai went further, dropping -0.3% on the day. The ASX200 closed Thursday down -0.1% while the NZX50 gave up all its prior day's gain, down -0.8% on the day.

The price of gold will start today at US$2011/oz and down -US$20 from this time yesterday.

And oil prices have fallen another -US$1.50 from yesterday to be just under US$71/bbl in the US. The international Brent price is just under US$75/bbl. Downward pressure is strong today.

The Kiwi dollar is -½c weaker against the USD and now just under 63 USc. Against the Aussie we are a touch firmer at 94.1 AUc. Against the euro we are marginally softer at 57.7 euro cents. That means the TWI-5 is now at 70.9 and -30 bps lower than this time yesterday.

The bitcoin price is lower again today, now at US$26,872 and down another -1.7% from this time yesterday. Volatility over the past 24 hours has been moderate at just over +/- 2.3%.

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