US sentiment worse than originally reported; Fed's Waller sees rate hikes; Canadian PPI leaps; Japanese CPI tame; Korean sentiment up; UST 10yr at 4.55%; gold dips but oil holds; NZ$1 = 58.6 USc; TWI-5 = 62.1

Here's our summary of key economic events overnight that affect New Zealand with news investors are bullish that the Iran-US war will end soon, but consumers are very negative about how all this is hurting them. Profits are remaining high, insulated from the rising costs, but household living costs are making consumers very grumpy.

First today in the US, the University of Michigan’s Consumer Sentiment Index plunged to a record low in May, revised down sharply from the earlier and preliminary report. This is the third straight monthly decline. Petrol prices are getting the blame and it's cause, the chaotic Middle East adventure. The cost of living remained the top concern in this survey, with 57% of consumers spontaneously citing high prices as eroding their personal finances.

Lower-income consumers and those without college degrees posted the steepest declines, as these groups are more sensitive to rising gas and essentials costs. Critically, consumers grew increasingly worried that inflation would spread beyond fuel prices in the long term. Year-ahead inflation expectations edged up to 4.8% from 4.7%, while long-run expectations climbed to 3.9% from 3.5%.

Things may not get easier, even with slightly lower oil prices. Fed governor Waller said overnight that he supports removing the "easing bias" language from the Fed's outlook, and the next change could be a hike, even if it is some way off. He followed that up with remarks that it would be "crazy" to lower rates at this time.

More generally, Trump's partisan ODNI head has quit, the fourth woman to leave his cabinet this year. No men have. Separately, the US said it will require all green card applicants to only do so from their home countries. This will affect thousands working in the US, even long term, for their companies. Fear of foreigners is now a frenzy, especially non-white ones. (White South Africans get a special pass.)

In Canada, and for a fourth month in a row, retail sales rose in April, but largely because petrol prices are higher. And that is even after the volume of petrol sales fell. In fact, overall sales volumes are trending lower.

Canadian producer prices rose a sharp +2.0% in April from March, to be an uncomfortable +11.4% higher than year-ago levels. These changes are worse than expected.

Despite all the global pressure their business are under, Japanese consumers avoided the impacts in April. Their inflation edged down to 1.4% from 1.5% in March. Food prices rose the least in 18 months amid a further slowdown in rice costs.

After falling sharply in April, South Korean consumer sentiment rebounded in May, although not quite back to levels it was between June 2025 and March 2026. Still, this new level is above every month from December 2021 to May 2025 and was a much stronger bounce-back than was anticipated. (Outcomes like this will help anyone feel better about life.)

We should note that this will be a long weekend holiday in the US, Memorial Day, and their unofficial start of 'summer'. For the record, tradition states that investors should "sell in May and go away" until the end of this period on their Labor Day (September 7). This 'rule' is a warning that their summer financial markets can be volatile. Wall Street will re-open on Wednesday, NZT.

The UST 10yr yield is now just on 4.55%, down -3 bps from this time yesterday, down -5 bps for the week. The key 2-10 yield curve is now at +44 bps (-7 bps). Their 1-5 curve is now at +41 bps (unchanged) and the 3 mth-10yr curve is at +89 bps (-4 bps). The flattening trend is still there. The China 10 year bond rate is now at 1.75%, unchanged from yesterday and a week ago. The Japanese 10 year bond yield is down -1 bp at 2.75%, up +3 bps for the week. The Australian 10 year bond yield starts today at 4.92%, down -3 bps from yesterday but down -19 bps for the week. And the NZ Government 10 year bond rate is down -3 bps at 4.72%, down -6 bps for the week.

Wall Street ended its week higher before their long weekend, with the S&P500 up +0.4% to be up +0.8% for the week and near its all-time record on May 14. Overnight European markets closed mixed, between Frankfurt's +1.1% and London's +0.2%. Yesterday Tokyo ended its Friday trade in another rush, up +2.7%, which means it is up +3.3% for the week. Hong Kong rose +0.9% on Friday to be -0.9% lower for its week. Shanghai also rose +0.9% to end the week, down -0.2%. Singapore ended up +0.4%. The ASX200 also ended up +0.4% on Friday for a weekly gain of +0.9%. The NZX50 ended Friday up +0.9% and a weekly net +0.2% rise.

The Fear & Greed index is still in the 'greed' zone where it has been for the past five weeks.

The price of gold will start today down -US$38 at US$4515/oz to be down the same for the week. Silver is down -US$1 at just under US$76/oz, also down -$1 for the week..

Oil prices have dipped -50 USc to just over US$96.50/bbl in the US, while the international Brent price is unchanged at just on US$103.50/bbl. These levels are down from US$105.50 and US$109.50/bbl a week ago. In the US, there is a small recovery in the number of oil wells in operation (+4), the first uptick in four years.

The Kiwi dollar is down -20 bps from yesterday at this time at 58.6 USc but up +20 bps from a week ago. Against the Aussie we are holding at 82.1 AUc. Against the euro we are down -10 bps at just on 50.5 euro cents. That all means our TWI-5 starts today at just under 62.1 which is down -20 bps from yesterday, up +20 bps for the week.

The bitcoin price starts today at US$76,648 and down -1.4% from this time yesterday, down -3.2% from this time last week. Volatility over the past 24 hours has been low at just under +/- 0.9%.

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