American retail sales strong but factories ease; Strong demand for US Treasuries; Japan, Taiwan and India get rising factory activity; UST 10yr 4.60%; gold eases and oil rises; NZ$1 = 59.4 USc; TWI-5 = 69.1

Here's our summary of key economic events overnight that affect New Zealand, with news the world's factories are getting busier, especially in India.

But first, the strong run of American retail sales is continuing. Sales at bricks & mortar stores on a same-store basis were +5.3% higher last week than the same week a year ago. This extends the +5% expansion to four consecutive weeks, and the above-inflation streak to eight consecutive weeks.

There were American PMI's out for April, the internationally-benchmarked set, but they revealed growth slowing amid signs of demand weakness. The factory PMI slipped to a minor contraction, and the services expansion slowed marginally.

However, sales of new-built houses soared +8.8% in March from February, the highest level in six months, and rebounding from a -5.1% drop in February. Demand seems to be returning despite elevated mortgage rates. Meanwhile, building consents and housing starts eased back in the month. This will have the effect of tightening inventories of unsold new-builds.

The latest US Treasury bond tender brough rising support, and rising yields. But the push higher seems to be rising. Almost US$184 bln was bid for the US$69 bln on offer. The median yield on these two year Notes was 4.85%, up +31 bps from the prior equivalent event. A year ago the equivalent auction went for 3.92%.

In fact investors are now starting to price in the chance of a US Fed rate hike, rather than a cut, in 2024.

In Japan, their factory PMI made big gains in April, meaning the sector is now stabilised and no longer contracting. Their services PMI rose at a good rate too, expanding faster. Both are now at 11 month highs.

Taiwan industrial production rose +4.0% in March from the same month a year ago, confirming the strong recent export order data we have previously reported. But the retail sales growth impetus is slowing, up only +0.7% in the month.

The severe flooding in the Pearl River basin in southern China continues and is predicted to get worse before it eases.

Led by its factory sector, Indian PMIs revealed economic growth continued to strengthen in April. Positive demand trends fuelled new order intakes and output. In both cases, rates of expansion were the fastest in close to 14 years. India is in a significant expansion. In fact, it is now enough to topple Japan from being the fourth largest economy globally on a gross basis sooner than expected (although nowhere near on a per capita basis of course). That switch is expected to happen in 2025, a year earlier than previously forecast.

The Eurozone recovery is building momentum in April according to the overnight release of their PMIs, but price pressures are also revived.

In Australia, their 'flash' PMI rose at a good clip too, expanding for a third consecutive month and at the quickest pace since April 2022. Although most of the rise was from the services sector, like Japan, their factory sector improved sharply too to a 'stable' level.

The UST 10yr yield is now at 4.60% and down -2 bps from this time yesterday. The key 2-10 yield curve inversion is unchanged at -34 bps. And their 1-5 curve inversion is marginally deeper at -53 bps. Their 3 mth-10yr curve inversion is now at -81 bps and also slightly deeper. The Australian 10 year bond yield is now at 4.33% and down -2 bps. The China 10 year bond rate is now just under at 2.24%, down -2 bps to a new all-time low. The NZ Government 10 year bond rate is now at 4.96% and down -4 bps from yesterday.

Wall Street is still roaring today with the S&P500 up another +1.2%. The expected good earnings are being delivered in this reporting period. Tesla and Visa are both set to release quarterly results after today's closing bell. Overnight European markets all rose, led by Frankfurt's +1.6% and trailed by London's +0.3%. Yesterday, Tokyo ended its Tuesday session up +0.3%. Hong Kong ended up +1.9%. But Shanghai fell a further -0.7%. Singapore ended up +1.5%. The ASX200 finished up +0.5% but the NZX50 closed down -0.4%.

The price of gold will start today marginally lower, down -US$4 from this time yesterday at US$2326/oz.

Oil prices have risen +US$2 to just under US$83.50/bbl in the US while the international Brent price is up a bit less at just over US$87.50/bbl.

The Kiwi dollar starts today up nearly +¼c at just over 59.4 USc. Against the Aussie we are softer at 91.6 AUc. Against the euro we are unchanged at 55.5 euro cents. That all means our TWI-5 starts today just on 69.1 and little-changed from yesterday.

The bitcoin price starts today virtually unchanged at US$66,766. Volatility over the past 24 hours has been modest at just on +/- 1.0%.

Tomorrow, Thursday, April 25 is ANZAC Day in New Zealand, a public holiday. We will not be publishing that day, but will be back to normal on Friday.

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