American data positive; Russia defaults; Chinese profits retreat; PBoC floods cash; Aussie demographics change sharply; UST 10yr 3.20%; gold down and oil up; NZ$1 = 63 USc; TWI-5 = 70.8

Here's our summary of key economic events overnight that affect New Zealand, with news American economic data is generally more positive while Chinese economic data is generally less positive.

First, American durable goods orders for May came in better than expected with a +12% rise from year-ago levels. As good, orders for capital goods also rose +12% on the same basis reflecting that board rooms are still investing strongly. For both measures, the month-on-month gains also beat forecasts.

Also positive, pending home sales broke a six-month skid with a slight rise of +0.7% in May from April. There was a noticeable surge in the Northeast region. Year-on-year they are down however -13.6%.

Not positive however is the Dallas Fed factory survey for June with a sharpish deceleration recorded. Of particular concern is the quick fall-off in new orders.

The US Treasury tendered their five year bond earlier today and it was again well supported. The resulting median yield however jumped to 3.18% pa from 2.66% pa at the prior equivalent tender a month ago. That is quite a rise.

In Japan, new data shows that the Bank of Japan now owns half of all Government bonds there, a relentless buildup as they continue their easy money policies to bring back inflation.

Meanwhile, Russia has defaulted on its foreign debt. It can't pay largely as a result of sanctions inhibiting its ability to shift funds. It's their first default of foreign debt in 100 years. But during Russia’s financial crisis and ruble collapse of 1998, then-President Boris Yeltsin’s government defaulted on $US40 bln of its local debt.

(We should also note that the Russian theft of Ukrainian wheat (and shipping it to Syria in exchange for Syrian fighters) is actually suppressing the global price of wheat by removing a major buyer from the demand side.)

The struggles of China's industrial companies continued into May. In the month, profits were -6.5% lower than the same month a year ago, and it is little comfort that decrease was less than for April. That takes their year-to-date gains back to just +1.0%. The whole situation is actually much grimmer; manufacturing profits are almost -18% lower and utility companies -6% lower. The overall results are only restrained by profit surges in coal and other mining companies.

The Chinese central bank injected a total ¥100 bln (NZ$23 bln) into their banking system yesterday, by a seven-day reverse repurchase at a rate 2.1%, to ease pressure from rising cash demand toward the end of the first half of the year. They started pumping more cash into the financial system on Friday. Demand usually surges towards the end of the quarter, when commercial banks also have to shore up cash positions for an administrative quarterly health check by the central bank. But the size of this may suggest more is at play this time.

Taiwanese consumer sentiment fell in June, and the slip from May was sharp as it has been for a couple of months now, and it is now at its lowest since November 2009, lower than during the 2020 pandemic

In Australia, they released 2021 census data today and that shows some important trends in their demographics. For example the millennial demographic now equals the boomer population (both now at 21.5% of their population), and soon to outnumber it. And it also shows that more than half of their population is first or second generation immigrant.

The UST 10yr yield starts today up +6 bps from this time yesterday at 3.20%. The UST 2-10 rate curve is little-changed at +6 bps and their 1-5 curve is also little-changed at +38 bps. Their 30 day-10yr curve is steeper at +205 bps. The Australian ten year bond is +13 bps higher at 3.84%. The China Govt ten year bond is up +3 bps at 2.85%. And the New Zealand Govt ten year will start today down -10 bps lower level of 3.91% after yesterday's retreat.

On Wall Street, they have opened their Monday session a little lower, down -0.2% on the S&P500. Overnight, European markets were mixed with London up +0.9% but Paris down -0.4%. Yesterday Tokyo ended up a strong +1.4%, Hong Kong went even better up +2.4%, and Shanghai managed a +0.9% gain. The ASX200 ended its Monday session up +1.9% and the NZX50 ended its day up +1.7%.

The price of gold is at US$1823/oz in New York and down -US$3 from this time yesterday.

And oil prices are +US$3/bbl higher from this time Saturday at just over US$109/bbl in the US, while the international Brent price is now just over US$111.50/bbl.

The Kiwi dollar will open today at just over 63 USc. Against the Australian dollar we are unchanged at just under 91 AUc. Against the euro we are nearly -½c lower at 59.5 euro cents. That all means our TWI-5 starts today at just on 70.8 and down -30 bps.

The bitcoin price has moved lower from this time yesterday and is now at US$20,699 and down -2.4%. Volatility over the past 24 hours has been moderate at +/- 2.4%.

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