US sentiment mixed, retail eases and PPI gives inflation signals; US demographics changing; China bank lending up; Aussie sentiment lower; UST 10yr at 4.81%; gold up and oil down; NZ$1 = 56 USc; TWI = 67

Here's our summary of key economic events overnight that affect New Zealand with news long term rates just keep on rising ahead of the change in the US Administration. And now the USD is slipping back.

First up however, the overnight GDT dairy Pulse auction brought the expected changes. The SMP price extended its recent rises, and the WMP price essentially held its full auction recovery. This event didn't signal any changes or concerns.

In the US, their Redbook retail pulse index rose 'only' +5% last week from the same week a year ago, but to be fair the base was strong. No unusual signals here either.

There were two January sentiment surveys out overnight. The NFIB one for SMEs was quite bullish and at a six year high. But the RCM/TIPP investor one went backwards unexpectedly, although it was off a 40 month high.

As expected, overall American producer prices rose, rising +3.3% from a year ago, although the rise wasn't quite as much as the +3.4% expected. While the lid was kept on by the unchanged services component, we need to keep an eye on the goods rise in December from November, which jumped +0.6% in the month, an unusually high shift. They won't want that to repeat.

In a new report, the US Congressional Budget Office is projecting a sharp change in American demographics if the cap in migration is enforced. American will join Japan, China and Europe by growing older quicker - and much quicker than previously expected. And while this aging is going on, population growth will stall out at 370 mln in 2055. The viability of safety net programs will involve difficult choices.

In China, their December new yuan loan data was released overnight and there is some impact from their recent stimulus efforts showing up here. It was expected to show a weak borrowing impulse, and it did, just not as weak as was anticipated. Chinese banks extended ¥990 bln in new loans in December, above ¥580 bln in November (which was the lowest since 2012) and above forecasts of ¥850 bln. Still this was the lowest December rise since 2017.

China is making a "stable yuan" a core policy objective. It is a stability against the USD they are managing.

A sidebar update for once highflying Evergrande Property development company; A PRC court has ruled it must make payments it hasn't the resources to make. And a Hong Kong court has ordered its liquidation. The next saga will be the legal proceedings against its auditor PwC by the liquidator.

And we should note that today is the start of their enormous internal annual migration. January 14 is the kickoff of their Spring Festival travel rush, as workers begin to head home for the long vacation over the Lunar New Year. The Golden Week holiday around this event formally starts on January 28 and runs until February 4. But people are on the move now - including for international vacations.

After slipping in December, the Westpac consumer sentiment survey for Australia slipped again in January. Homeowners and renters got more pessimistic about current conditions. But they are better than year-ago levels. And their forward looking views are positive now.

The UST 10yr yield is now at just on 4.81%, and up +4 bps from this time yesterday. This level is threatening their October 2023 high, and prior to that it is the highest since 2007. The key 2-10 yield curve is now positive by +43 bps. Their 1-5 curve is slightly more positive at +38 bps. And their 3 mth-10yr curve is unchanged, still by +49 bps. The Australian 10 year bond yield starts today at 4.70% and up +1 bp. The China 10 year bond rate is now at 1.66% and up +1 bp. The NZ Government 10 year bond rate is now at 4.79% and up another +7 bps, essentially matching the US equivalent.

Wall Street is in its Tuesday session and down -0.2% on the S&P500. Overnight, European markets were quite mixed with London down -0.3%, Frankfurt up +0.7% and Paris up +0.2%. Tokyo ended its Tuesday trade down -1.8%, Hong Kong was up +1.8% and Shanghai rose a very strong +2.5%. Singapore dipped -0.1%. The ASX200 ended its Tuesday recovering +0.5% while the NZX50 ended up +0.4%.

The price of gold will start today at US$2671/oz and up +US$6 from yesterday.

Oil prices are down -US$1 from yesterday at just over US$77.50/bbl in the US while the international Brent price is now just on US$80.

The Kiwi dollar starts today just on 56 USc and up +½c from this time yesterday. Against the Aussie we are up +30 bps at 90.5 AUc. Against the euro we are unchanged at 54.4 euro cents. That all means our TWI-5 starts today at just on 67 and up +40 bps from yesterday.

The bitcoin price starts today at US$95,517 and back up +3.7% from this time yesterday. Volatility over the past 24 hours has remained high at +/- 3.3%.

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