Canadian PPI turns back up; Japan CPI stays high; China FDI slumps; Aussie construction pipeline at record high; ATO battles TikTok GST fraud; UST 10yr 4.25%; gold and oil firm; NZ$1 = 59.4 USc; TWI-5 = 68.5

Here's our summary of key economic events overnight that affect New Zealand, with news investors are heading for the exits in China.

But first we should note that central bankers will again be gathering at Jackson Hole, WO, for their annual talkfest. It runs from Friday to Sunday (NZT) next weekend.

North of the border, Canadian producer prices rose +0.4% in July from June, a big shift from the -0.6% decline in the previous month. This was their first rise of producer prices since October 2022. Year-on-year Canadian PPI is down -2.7%.

Across the Pacific, the Japanese CPI inflation rate was unchanged at +3.3% in July but this was notably higher than market expectations of +2.5%. Core inflation stayed above 3% too. Prices continued to rise for food which was up +8.8% in July from a year ago, compared with +8.4% in June. The latest figures are well above the Bank of Japan's 2% target, and for the 16th consecutive month.

Foreign direct investment in China slumped in July; in fact it turned to a net outflow in the month, something that hasn't occurred in more than the 25 years they have been releasing this data. It is a stunning manifestation of the decoupling, 'de-risking' and overall pullback from the Middle Kingdom. On a net basis, it fell -US$30 mln in July from June. But that won't be the full story because they are still attracting investment from their 'friends'. That means Western companies are now rushing for the exits. And their central bank moves to keep the yuan value elevated for wider stability reasons means those leaving now are not getting hurt by the exchange rate

Meanwhile, China's Evergrande Group, once the country's second-largest property developer (Country Garden is now the largest), filed for bankruptcy in New York earlier yesterday. It was a Chapter 15 bankruptcy filing meaning its actually a Chinese (Hong Kong) bankruptcy, a move that protects its US assets from creditors while it works on a restructuring deal elsewhere. Rival Country Garden is going down the same 'restructuring' path.

In Australia, their pipeline of investment projects has climbed to a new record high in 2023. The value of projects in the investment pipeline was worth AU$946 bln in the June quarter 2023, a +AU$180 bln (+22%) increase on the level prior to the pandemic.

Meanwhile, the AFR is reporting that a TikTok-fuelled fraud wave that started in late 2020 has overwhelmed their tax authorities. The ATO has blocked AU$2.7 bln of fraudulent claims but paid out AU$1.6 bln in the scam. It has added AU$300 mln in penalties and interest for the cases identified so far, but unpaid GST debt, which went from AU$20 bln to more than $27 bln as at June 30, 2022, is expected to rise to more than AU$30 bln in yet to be released ATO accounts.

Since October 2022, the price of cocoa for chocolate-making has risen +40%, which may explain why your guilty pleasure is more costly these days.

The UST 10yr yield will start today at 4.25% and down -6 bps from yesterday. But they are +9 bps higher than week-ago levels. Their key 2-10 yield curve inversion is less, now at -68 bps. Their 1-5 curve is has moved a bit more inverted, now -97 bps. Their 3 mth-10yr curve is more inverted as well at -113 bps. The Australian 10 year bond yield is now at 4.23% and back down -8 bps from yesterday. The China 10 year bond rate is holding at 2.58% and its lowest since the temporary drop at the start of the pandemic in early 2020. Apart from that it is a 20 year low. And the NZ Government 10 year bond rate is down -3 bps, now at 5.09%. A week ago it was 4.90%.

Wall Street is little-changed on the S&P500 and ends its week down -2.0%. Overnight, European equity markets were all down about -0.6%. Yesterday, Tokyo ended its Friday session down -0.6% for a -3.1% weekly drop. Hong Kong ended with a very sharp -2.1% drop on the day for a weekly -4.0% rout. Shanghai fell -1.0% even with 'home team' support. For the week it was down -0.9%. The ASX200 ended unchanged on Friday for a weekly drop of -2.6%. The NZX50 fell -0.4% on Friday for a weekly retreat of -1.9%.

The Fear & Greed Index has shifted over just into the 'fear' range from the mid-greed range a week ago.

The price of gold will start today at US$1889/oz and up +US$4 from yesterday. But it is down -US$13 from a week ago.

And oil prices are +50 USc firmer at just over US$80.50/bbl in the US. The international Brent price is just under US$84.50/bbl. But these levels are a net -US$2 lower than week ago levels.

The Kiwi dollar starts today slightly firmish at just on 59.4 USc, up +10 bps but for the week it is a net -40 bps lower. Against the Aussie we are a little firmer at 92.6 AUc. Against the euro we are marginally firmer at 54.6 euro cents. That all means the TWI-5 is still at 68.5 and little-changed from this time yesterday and little-changed from a week ago.

The bitcoin price is very much lower again today and now at US$26,268 and down another big -5.9%. For the week it is down -10.4%. Small events in this very illiquid market can have large price impacts and more positions are being liquidated at present. But to be fair, this is really just part of the overall market pullback from risk assets. Volatility over the past 24 hours has been extreme at just on +/- 5.0%.

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