Here's our summary of key economic events overnight that affect New Zealand, with news long bond yields are rising sharply again.
But first, US factory orders rose in May by the same rate as in April, but that disappointed analysts who were expecting a better improvement. But at least it was a rise, countering the PMI signals. Orders for aircraft and electronic goods underpinned this result. Construction spending rose as well with another solid result even if it too was marginally less than expected.
And new vehicle sales rose in the June quarter on improving supply and strong demand, signaling that rising interest rates have not yet had a meaningful impact on purchases.
The US logistics PMI fell again and for a fifth straight month. Primarily it was a shedding of inventories that drove this fall, suggesting that American businesses are carefully managing stocks and not weighed down by excesses. When a solid upturn in new orders arrives, it could be turbocharged by lower-than normal stock levels.
But there are no signs an upturn is about to be driven by rising retail sales. The weekly Redbook survey of same-store sales has it still bouncing along at minor gains and not enough to account for inflation.
The Fed FOMC minutes of their June 15 meeting were released overnight revealing that all officials agreed that, with inflation still well above their 2% goal and the labour market remaining very tight, maintaining a restrictive stance for monetary policy is still the right course and almost all thought they should raise their benchmark rate further this year. There was disagreement about when the next rise should come however. The release of these minutes brought a yawn from equity and currency markets but set US bond yields noticeably higher, especially at the long end. That will no doubt echo in our markets later today.
In China, the extreme temperatures in the north are continuing, and the floods in the south are as well.
But China's yuan slide seems to have ended for now, although it is yet to gain back any of its recent devaluation. Maybe it is bravado, but their central bank has approved some commentary saying they have plenty of tools to stem any further backsliding.
Shanghai is skiting about its minimum wage rise, the highest in China. That will take the Shanghai minimum to NZ$138.50 per week (NZ$3.46/hour). Yes, China has its billionaires but most are not.
There were a set of key services PMIs released overnight. But the important US services PMI will not be released until tonight. And in that sector we should note that major freight company UPS is facing the threat of a very rare strike. In China, their Caixin survey confirmed a slowdown in their expansion to a level matching their lower official version as well.
In Japan their services sector expanded faster running with good solid gains.
In India their services sector is expanding faster too and at an impressive rate.
In the EU the expansion of their services sector continues but at a much more modest rate and slipping to a 5 month low.
Meanwhile, producer prices fell in the EU in May. It was their first month of decline since December 2020, driven by a significant -13% retreat in energy costs. The cap on Russian oil and gas imports seems to be working well for Europe, not well for Russia.
Air cargo demand, a key indicator of global trade, remained weak in May. In the Asia/Pacific region was as weak as anywhere else.
The UST 10yr yield will start today at 3.94% and up a sharp +8 bps from yesterday. That is its highest since early March. Their key 2-10 yield curve inversion is lower at -100 bps. Their 1-5 curve is unchanged at -124 bps. And their 3 mth-10yr curve is lower at -126 bps. The Australian 10 year bond yield is now at 4.04% and up another +3 bps. The China 10 year bond rate is little-changed at 2.70%. And the NZ Government 10 year bond rate is up another +4 bps at 4.73% and touching its early March highs.
Wall Street is back trading today and heading for a minor -0.2% slip. Overnight, European markets were sharply lower with London down the most at -1.0%, and Frankfurt down the least at -0.6%. Yesterday, Tokyo ended its Wednesday session down -0.3%. But Hong Kong fell a sharp -1.6%, while Shanghai was down -0.7. The ASX200 ended its Wednesday session down -0.4% while the NZX50 rose +0.2% after a very late rally.
The price of gold will start today at US$1919/oz and down -US$6 from yesterday.
But oil prices are up +US$1 at just over US$72/bbl in the US. The international Brent price is firmer too at just under US$77/bbl.
The Kiwi dollar starts today just under 61.9 USc and little-changed from this time yesterday. Against the Aussie we are up another +¼c at 92.8 AUc. Against the euro we are marginally higher at 57 euro cents. That means the TWI-5 is now just under 70.5, our highest since late May and no net change on the day.
The bitcoin price has fallen marginally from this time yesterday and now is at US$30,520 which is a -1.2% fall. Volatility over the past 24 hours has been modest too at just under +/- 1.2%.
The easiest place to stay up with event risk today is by following our Economic Calendar here ».
We welcome your comments below. If you are not already registered, please register to comment
Remember we welcome robust, respectful and insightful debate. We don't welcome abusive or defamatory comments and will de-register those repeatedly making such comments. Our current comment policy is here.