Sudden stockpiling pushes US PMIs up; Canada similar but with more exports; Japan factories expand faster; China chooses Airbus for big orders; Hormuz mess lingers; UST 10yr at 4.38%; gold and oil on hold; NZ$1 = 59 USc; TWI-5 = 62.3

Here's our summary of key economic events overnight that affect New Zealand with news the US seems to have driven itself into isolationism. The contrast in trajectories will be on full show when the Trump meets with Xi in Beijing in the middle of this month.

First in the US, there were two factory PMI surveys out overnight and both were positive. The ISM reported a modest expansion, unchanged from a month ago. But they also reported a rise in new orders even though export orders fell. And employment fell, and rather sharply. Prices rose sharply and at their fastest pace since the pandemic.

The S&P Global US Manufacturing PMI was even more positive, but they said it was driven by stockpiling amid rising prices and supply disruptions. New orders increased at the fastest pace in four years, despite an eleventh consecutive monthly decline in exports. On the price front, input cost inflation reached a ten-month high.

If stockpiling and inventory builds are behind this American rise, while they lose global market share, this is not very sustainable.

For years, USDA data has been the gold standard when watching global agriculture trends. However relentless partisanship by the Trump Administration has frustrated American farmers so much they are declining to take part in the crucial surveys that underpin these reviews.

Stock building seems to be behind a sharp rise in Canadian factory activity too. Their PMI showed production, employment and purchasing all increased in April. But theirs also featured new export orders which rose solidly and at the fastest rate since the start of 2022.

Across the Pacific, Japanese factories are reporting their fastest expansion in twelve years. It is no doubt welcome, but they are now having capacity problems affecting supply-chain performance. This April production data supports earlier official industrial production reports for March.

And the Japanese yen strengthened suddenly and sharply yesterday, ending a long period of devaluation against the USD. The shift is likely due to Bank of Japan intervention which seems to have cost the US$35 bln to pull off.

In China, China Southern Airlines has ordered 137 aircraft from Airbus said to be worth US$28 bln. This comes after China Eastern Airlines ordered 101 Airbus aircraft worth US$16 bln a month ago. It appears that China won't be offering Trump aircraft orders when Xi and he meets on May 14 in Beijing.

The UST 10yr yield is now just on 4.38%, down -1 bp from this time Friday but up +7 bps for the week. The key 2-10 yield curve is now at +50 bps (-1 bp). Their 1-5 curve is now at +30 bps (unchanged) and the 3 mth-10yr curve is at +71 bps (-4 bps). The China 10 year bond rate is now at 1.75%, unchanged. The Japanese 10 year bond yield is down -2 bps at 2.50%. The Australian 10 year bond yield starts today at 5.00%, down -2 bps from yesterday, up +5 bps for the week. The NZ Government 10 year bond rate is down -4 bps at 4.72%, unchanged for the week.

Wall Street was higher today with the S&P500 up +0.3% in Friday trade, up +1.1% for the week. Overnight European markets were closed for the May Day holiday, except London which was -0.1% lower. Yesterday Tokyo rose +0.4% for a weekly gain of +0.2%. Hong Kong and Shanghai were closed and their short week delivered a rose of +0.2% and +0.8% respectively. Singapore was closed too. The ASX200 ended up +0.7% but for the week down -0.2%. But the NZX50 was up +1.1% on Friday, up +1.2% for the week, and snapping a two week losing streak.

The Fear & Greed index is still in the 'greed' zone, where it was for the last two weeks.

The price of gold will start today up +US$4 at US$4620/oz but down -US$98/oz for the week. Silver is up +US$2 at just under US$76/oz, little-changed for the week..

American oil prices are down -US$1 at just on US$102.50/bbl, while the international Brent price is down -50 USc, and now at US$108.50/bbl. A week ago these prices were US$94/bbl and US$105/bbl so the big move up was in the US.

And we should note, US petrol prices are now up +47% since the start of Trump's Gulf War, diesel was up similarly. (New Zealand prices are up +31% over the same period.)

While the Strait of Hormuz is largely closed, there are still vessels getting through - 14 yesterday alone (7 in, 7 out). The US is frustrated.

The Kiwi dollar is up +10 bps from yesterday at this time at 59 USc, up +20 bps for the week. Against the Aussie we are down -10 bps at 81.9 AUc. Against the euro we are up +10 bps at just on 50.4 euro cents. That all means our TWI-5 starts today at just under 62.3 which is up +10 bps from yesterday and up +10 bps from this time last week.

The bitcoin price starts today at US$78,494 and up +3.1% from this time yesterday. It is up only +1.1% from a week ago however. Volatility over the past 24 hours has been modest at just over +/- 1.8%.

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