US inflation pressures ease; US consumers resist more personal debt; China extends & pretends; China faces deflation threat; UST 10yr 3.99%; gold and oil hold; NZ$1 = 62.1 USc; TWI-5 = 70.3

Here's our summary of key economic events overnight that affect New Zealand, with news of more signals inflation pressure is fading.

First today, American inflation expectations fell in June to 3.8% over the next year, the third consecutive retreat and the lowest level since April 2021. In fact from its peak in June 2022 when it topped out at 6.8%, it has now fallen -300 bps.

On Thursday we will get their actual CPI rate and it is expected to come in at 3.1%.

Meanwhile data for American consumer debt appetite has come in low for May. It rose +5.7% in the year to April but that impetus eased back in May to just a +1.8% expansion. Instead of growing by the expected +US$20 bln, it only grew by an insignificant +US$7 bln.

After coming in somewhat low in April, Canadian building consents recovered a bit in May to be up 10% from April but they are still down -14% from a year ago.

In China, their central bank extended some policies in a November rescue package to shore up the real estate sector until the end of 2024. However because these policies have failed to gain traction, this extension is being taken a s a signal that more stimulus will be rolled out soon.

China's annual inflation rate was unexpectedly flat in June (0.0%), compared with market expectations and May's figure of +0.2%. This was the lowest reading since deflation in February 2021.

China's producer prices dropped -5.4% in June from a year ago, a faster decline than a -4.6% fall in May and worse than market forecasts of a -5.0% drop. It was the ninth straight month of producer deflation and the steepest fall since December 2015. It comes amid weakening demand and fast-easing commodity prices.

The UST 10yr yield will start today at 3.99% and down -8 bps from this time yesterday. Their key 2-10 yield curve inversion is holding at -88 bps. Their 1-5 curve is much more inverted at -116 bps. And their 3 mth-10yr curve is more inverted at -127 bps. The Australian 10 year bond yield is now at 4.22% and down -6 bps from yesterday. The China 10 year bond rate is marginally lower at 2.69%. The NZ Government 10 year bond rate has stayed up, rising +5 bps from yesterday to 4.95% and a new twelve year high.

On Wall Street, the S&P500 has started their week little-changed. Overnight, European markets all rose about +0.5%. Yesterday, Tokyo ended it Monday session down -0.6% while Hong Kong was up +0.6%. Shanghai ended up +0.2%. The ASX200 finished down -0.5% while the NZX50 ended down -0.6%.

The price of gold will start today at US$1926/oz and up +US$2 from yesterday.

And oil prices are -50 USc softer at just under US$73/bbl in the US. The international Brent price is now at just under US$77.50/bbl.

The Kiwi dollar starts today unchanged at just over 62.1 USc. Against the Aussie we are slightly firmer at just under 9.1 AUc. Against the euro we are holding at 56.5 euro cents. That means the TWI-5 is still just over 70.3 and little-changed from yesterday.

The bitcoin price has slipped marginally from this time yesterday and now is at US$30,170 which is a minor -0.4% shift lower and a developing yo-yo pattern. Volatility over the past 24 hours has been low at just under +/- 0.7%.

[There will be no podcast or video versions today.]

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