US inflation rises as activity weakens, firms start to 'recover' AI costs, although there are some positive spots; container freight rates rise; UST 10yr at 4.39%; gold up and oil rises after ship attack; NZ$1 = 56.5 USc; TWI-5 = 60.4

Here's our summary of key economic events that affect New Zealand, with news more vessels are moving out of the Strait of Hormuz, but 'incidents' are generating nervousness in a fragile situation.

First, US PCE inflation rose to 4.1% in May and as expected, a rise from 3.8% in April. Core PCE inflation rose too, also as expected and is now at 3.4%. Meanwhile both personal income and personal spending rose at essentially the same pace.

More generally, it is not only the Gulf war impacts driving inflation. AI is pushing companies to raise prices to cover its 'investment'. For example, Macbooks and iPads are up +20% on this 'recovery' push.

May durable goods orders in the US fell sharply from April, but recall that April was relatively strong. But from a year ago they are also lower, down -4.4%. Capital goods orders dived -21.5% in May from a year ago largely on very weak aircraft orders.

US initial jobless claims fell slightly more than expected last week and more than seasonal factors would have indicated. There are now 1.73 mln people on these benefits, lower than year-ago levels. But much tighter requirements are preventing many from claiming this or other social safety net options.

The Chicago Fed's national activity index slipped lower in May after the somewhat unusual improvement in April. That means it has decreased in eight of the past twelve months, and was flat in another one.

However the Kansas City Fed factory survey was much more positive in that region in its June edition, delivering one of its most upbeat results since the post-pandemic recovery.

Global container freight rates rose another +5% last week to extend its rising trend that started in early May by adding +82% in that period. From a year ago it is up only +40%. Driving this latest rise are outbound rate from China to the US West Coast. Bulk cargo freight rates were little-changed this week however, remaining +60% higher than year-ago levels.

The UST 10yr yield is now just on 4.39%, down -1 bp from this time yesterday. The key 2-10 yield curve is now at +27 bps (up +1 bp). Their 1-5 curve is now at +21 bps (+1 bp) and the 3 mth-10yr curve is at +75 bps (down -3 bps). The China 10 year bond rate is down -1 bp at 1.73%. The Japanese 10 year bond yield is down -4 bp at 2.63%. The Australian 10 year bond yield starts today at 4.73%, up +1 bp from yesterday. And the NZ Government 10 year bond rate is at 4.37% to be down another -4 bps.

Wall Street is soft again today, little-changed on the S&P500 while the Nasdaq is down -0.6%. Overnight, European markets were higher between Frankfurt's +1.0% dip and Paris's +0.5%. Yesterday Tokyo closed up a huge +4.6%. Hong Kong closed down -1.4% but Shanghai firmed +0.2%. Singapore ended up +0.1%. The ASX200 ended its Thursday session down -0.7%. But the NZX50 rose +0.7%.

The price of gold has risen back to US$4032/oz, up a net +US$54/oz from yesterday. Silver is just on US$58/oz, up +US$1.50 from yesterday.

Oil prices are up +US$1 from yesterday at just on US$71.50/bbl in the US, while the international Brent price is now just on US$75/bbl. Hormuz transits have picked up with 41 crude or product tankers exiting over the past 24 hours (3 dark with transponders off) and 21 entering for new loads (3 dark). There are still hundreds yet to try their luck, no doubt inhibited by insurance issues. And overnight one ship was hit by live-fire after an Iran warning and this incident saw the oil price rise.

The Kiwi dollar is up +10 bps from this time yesterday at just on 56.5 USc. Against the Aussie we are down -20 bps at 81.7 AUc. Against the euro we are unchanged at just on 49.7 euro cents. That all means our TWI-5 starts today at just on 60.4 which is unchanged from yesterday, and still near its lowest since the GFC in 2009.

The bitcoin price starts today at US$59,377 and essentially unchanged from this time yesterday. Volatility over the past 24 hours has again been high at just over +/- 3.1%.

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