US economic data impresses; Canadian inflation eases faster; China's clamp in negative thought spreads; ECB sees second inflation wave; Australian surplus larger; UST 10yr 3.77%; gold and oil weaker; NZ$1 = 61.7 USc; TWI-5 = 70

Here's our summary of key economic events overnight that affect New Zealand, with news of a raft of strong first-tier US data. Their expansion cycle isn't done yet.

New orders for American factory durable goods jumped +1.7% month-on-month in May, following an upwardly revised +1.2% rise in April and easily beating market expectations of a -1% decline. This is the third straight month of rising durable goods orders, led by a surge in orders for aircraft and motor vehicles. Year-on-year they are up +7.3% so a real, after inflation gain now. Capital goods order growth was strong, up +15%. Boardrooms have been bullish, it seems.

Sales of new houses were very strong in May too, up a full +20% from year ago levels, although to be fair they weren't flash a year ago. These rises matches rising recent building consent data.

Not so strong was last week's retail sales data. On a same-store basis it rose only +0.5% from year-ago levels and much lower than inflations bite.

But that hasn't held back rising consumer sentiment. The latest survey from the widely-watched Conference Board was noticeably brighter, rising to its highest since January 2022. It was led by younger people, under 35 years.

Yesterday we noted the dour Texas factory survey. But that isn't indicative of all regions. Today, the Richmond Fed's factory survey came in much less negative in June than May, driven by a better new order situation. But to be fair, output levels remained lowish in June.

The Dallas Fed released its services survey for June today, and the troubling factory survey there is matched by a downbeat one in their services and retail sectors.

In Canada, falling energy costs allowed their May CPI inflation to fall to 3.4% from 4.4% in the previous month, the lowest since June 2021 but it was in line with market expectations. And the result was broadly in line with their central bank’s baseline scenario that inflation will slow to the 3% mark by the next month or two. By getting close to that official assumption it does raise doubts about the rate hikes left in its tightening campaign.

In China, with a spreading ban on commentary Beijing doesn't like, including of respected commentators on the independent Caixin platform, it is becoming harder to discern what is going on in their economy. But the bans reinforce the idea that the trends are not positive. Also, see this.

In Europe, ECB President Lagarde was talking overnight and said they will raise rates again in July, and they have much more work to to to tame inflation. She noted that wage growth is now pressuring inflation, and they are entering a second stage - first energy push, now wage-push - and this set to linger for some time. This was an unusually direct set of signals from Lagarde. And the IMF is also worried about how long it is taking Europe to get on top of its inflation problem.

In Australia, despite their slowdown, their government surplus is now expected to rise, according to their Treasurer. The budget surplus for this financial year will be “significantly” higher than the AU$4+ bln forecast last month, thanks to revenue from their still expanding labour market, sustained high prices for commodities, and company profits. Again, it is hard to have a recession when the jobless rate is low.

The UST 10yr yield will start today at 3.77% and up +5 bps. Markets have thrown in their hand and lost the conviction rates will drop later this year. They believe Powell and the Fed now. Their key 2-10 yield curve inversion is little-changed at -100 bps. Their 1-5 curve is still inverted at -132 bps. But their 3 mth-10yr curve is less inverted, now by -134 bps. The Australian 10 year bond yield is now at 3.94% and back up +4 bps. The China 10 year bond rate is unchanged at 2.71%. And the NZ Government 10 year bond rate is up +2 bps at 4.58%.

Wall Street has opened its Tuesday trade with a strong +1.1% gain in the S&P500. Overnight, European markets were mixed with London up +0.1% and Paris up +0.4%. Frankfurt was in between at +0.2% Yesterday, Tokyo ended its Tuesday trade up +1.9%. Hong Kong rose +1.2%, and Shanghai rose +1.0%. The ASX200 ended its session up +0.6%. But the NZX50 only managed a +0.1% gain and only because of a late burst from earlier losses.

The price of gold will start today at US$1912/oz and that's down -US$13/oz from yesterday.

And oil prices are -US$2 lower from yesterday to now be just under US$68/bbl in the US. The international Brent price is now just under US$72.50/bbl.

The Kiwi dollar starts today at 61.7 USc and unchanged from yesterday. Against the Aussie we are little-changed at 92.3 AUc. Against the euro we are softer at 56.3 euro cents. That means the TWI-5 is now just on 70 and down a mere -10 bps since this time yesterday.

The bitcoin price has risen from this time yesterday and now is at US$30,722 which is a +2.1% gain. Volatility over the past 24 hours has remained modest at just under +/- 1.6%.

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