Here's our summary of key economic events overnight that affect New Zealand, with news there is still no US debt deal, and that is starting to raise financial market nerves.
Also, American retail sales are still in the doldrums, rising minorly above last year level in last week's same-store assessment, but still well below the expansion that inflation requires to just stay even.
And the latest look at the American factory PMI (for May) shows them slipping from a steady state into a minor contraction. However, that was cancelled out and more by an improving services landscape where the expansion gathered pace in May and is now at more than a one year high
But that services improvement is not reflected in the mid-Atlantic states, where the Richmond Fed reports weakness in both their services and factory sectors.
American new home sales activity picked up minorly in April from March, and is now running +12% higher than year-ago levels. However the year-ago base was unusually low.
In Canada, their producer prices are dropping - signaling deflation may be coming there. Those producer prices were -0.2% lower in April than March and recall March also recorded a fall from February. And year-on-year they are now -3.5% lower, also a faster decline than in March. But at least it wasn't as fast a fall-away than the -5.6% drop analysts were expecting. Driving this sharpish decline is energy costs, which they probably appreciate (unless you are an oil producer).
In Japan, their flash May PMIs have come in strong, in fact the strongest rise in private sector activity in almost ten years. Their services sector expanded faster at 56.8, and their factory sector shifted from a contraction in April to a modest expansion in May.
In South Korea, their central bank's Composite Consumer Sentiment Index came in at 98 points in May of 2023, up from 95.1 points in the previous month. It marked the highest figure since May a year ago as easing inflation expectations led to a rise in "living conditions".
Singapore's inflation rate is rising again, now up to +5.7% in April from March's +5.2%, but down from the peak in August of +7.5%. For them it is food, housing and fuel that is keeping this pace up, and it is surprising they haven't benefited from the lower oil prices.
Retail sales in Taiwan rise +7.5% in April from a year ago, much faster than their 2.4% inflation rate. But their industrial production is really suffering, now more than -20% lower than year-ago levels.
In Europe, their early look at May PMIs shows their services sector still expanding at a good pace, but their factory sector still in a small contraction.
While not strong in the first place, the latest PMIs for Australia indicate a further softening of activity. Their services PMI fell to 51.8 (now only just expanding) in May. Their manufacturing PMI didn't change from its contraction, holding at its weakest level since May 2020.
We should note that the price of copper, a bellwether for the Chinese economy and the global economy more generally, is slipping and is back at levels we last saw last year, and down -15% from its early 2023 peak.
The UST 10yr yield starts today at 3.70% and down -1 bp from yesterday. Their key 2-10 yield curve is slightly more inverted at -64 bps. Their 1-5 curve is at -135 bps and also slightly more inverted. And their 3 mth-10yr curve is virtually unchanged at -190 bps. The Australian 10 year bond yield is now at 3.66% and up +4 bps from yesterday. The China 10 year bond rate is little-changed at 2.72%. And the NZ Government 10 year bond rate is at 4.42% and down -3 bps bp from yesterday.
Wall Street has opened its Tuesday session soft with the S&P500 down -1.0%. Overnight, European markets closed lower with Paris down -1.3% at the weak end and London down just -0.1% at the other end. Yesterday Tokyo closed its Tuesday session down -0.4%. But Hong Kong was down -1.3% continuing is volatile run. Shanghai ended down -1.5% and an unusually large fall for them. The ASX200 ended its Tuesday session down -0.1% while the NZX50 found things harder going again, dropping another -0.4%.
The price of gold will start today at US$1976/oz and little-changed from yesterday.
And oil prices are +US$1 firmer from where we left them yesterday to be just over US$73/bbl in the US. The international Brent price is now just over US$77/bbl.
The Kiwi dollar is slightly softer against the USD from yesterday and now just on 62.5 USc. Against the Aussie we are little-changed at just on 94.5 AUc although that is its highest of the year. Against the euro we are still at just over 58 euro cents. That means the TWI-5 is has slipped slightly to 71.2 and just off its five month high.
The bitcoin price is up +1.2% today, now at US$27,195. Volatility over the past 24 hours has been modest at just on +/- 1.2%.
Join is at 2 pm today for full coverage of the RBNZ Monetary Policy Statement and its decision of the Official Cash rate change. Analysts expect a +25 bps rise to 5.50% although financial markets have priced in an equal chance of a +25 bps or +50 bps rise.
The easiest place to stay up with event risk today is by following our Economic Calendar here ».
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