US PMIs rise but home sales fall; Japanese PMIs mixed; India PMIs strong; China FDI inflows stop; China property defaults head to liquidations; UST 10yr 4.26%; gold and oil down; NZ$1 = 61.2 USc; TWI-5 = 70.9

Here's our summary of key economic events overnight that affect New Zealand with news that the extent of the de-risking from China is now becoming quite the thing.

But first, the first of the June PMIs are in for the US, the internationally benchmarked versions. Their factory sector PMI rose but still a modest expansion and a 3 month high. And their services PMI rose to a good expansion to a 2 year high. Both were on the back of rising new orders. Making this a bit more impressive is that cost inflation was much lower in both sectors, and business confidence in the immediate future (1 year) rose. This report that for the first time in 3 months, companies planned to expand their workforce.

In what might seem like a bit of irony, the Conference Board leading index was released overnight and it retreated - but it was more May and isn't reporting on the same period as the June PMIs. It's a 'leading index' that trails current data.

Also for May, American existing home sales fell -0.7% in May from April to a seasonally adjusted annualised rate of 4.11 mln units, the lowest in four months. The decline comes as the median sales price climbed to a record high of US$419,300 (NZ$685,000). Meanwhile, unsold inventory sits at a 3.7-month supply at the current sales pace. Interestingly, it you match the housing sales level between the US and New Zealand on a population basis, they will sell about 64,200 houses in a year on a NZ equivalent basis. Over the past year to May we have sold 67,400. Both markets are in the doldrums.

Retail sales in Canada are projected to have dropped by -0.6% in May 2024 compared to the previous month, according to a flash estimate. This would represent the steepest decline since March 2023. Such a decrease would offset the +0.7% surge in April, the largest in a year.

Canadian producer prices rose +1.8% in May, their fastest increase since January 2023.

The early versions of the Japanese PMIs reported gains in their factory sector to a modest expansion, but a fall back in their services sector to a modest contraction.

Japanese CPI inflation rose in May to 2.8%, up from 2.5% in April. Food was up +4.1%,

In India, their early PMIs rose to faster expanding levels in both sectors.

China attracted virtually no new foreign direct investment in May from April in an outcome that will probably alarm Beijing privately. That puts the May FDI level -28% lower than the year-ago level in a trajectory that is as tough for them as in the depths of the GFC. And it is probably going to get tougher for them, especially for important tech.

In Hong Kong, four defaulted Chinese developers are headed into court hearings on liquidation demands next week, marking one of the busiest such stretches ever for the sector. They include Kaisa, Shimao, Dafa, and Redsun. If they are in fact liquidated, they will join a number of other high profile defaulters in China's property sector like Evergrande and Dexin. Sunshine is sure to be added to the list as well, and don't forget Country Garden is yet to be resolved. If that too is liquidated that will be another giant to fall. Some of the lenders taking action to get them liquidated are Chinese state banks.

In the EU, their PMIs show their recovery is slowing in June as new orders fall for first time in four months. Their huge service sector is still expanding, but their factory sector is contracting at a slightly faster rate.

The UST 10yr yield is now at 4.26% and unchanged from this time yesterday. The key 2-10 yield curve inversion is still at -47 bps. Their 1-5 curve is still inverted by -84 bps. But their 3 mth-10yr curve inversion is more inverted at -106 bps. The Australian 10 year bond yield is down -3 bps at 4.25%. The China 10 year bond rate is up +2 bps at 2.27%. The NZ Government 10 year bond rate is now at 4.68% and up +3 bps from yesterday.

Wall Street is marginally lower with the S&P500 is down -0.1% in Friday trade. Overnight, European markets were all down about -0.5%. Yesterday Tokyo ended its Friday session down -0.1%. Hong Kong was down a sharp -1.7% and Shanghai fell another -0.2%. Singapore was also down -0.2%. The ASX200 ended up +0.3% on Friday but the NZX50 fell -0.8% in a broad retreat.

The price of gold will start today down -US$35 at US$2320/oz.

Oil prices are down -50 USc at US$80.50/bbl in the US while the international Brent price is now just on US$84.50/bbl.

The Kiwi dollar starts today unchanged at 61.2 USc. Against the Aussie we are marginally firmer at 92.1 AUc. Against the euro we are also marginally firmer at 57.2 euro cents. That all means our TWI-5 starts today up +20 bps at 70.9.

The bitcoin price starts today at US$63,975 and down -1.1% from this time yesterday. Volatility over the past 24 hours has again been modest at just on +/- 1.4%.

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