US household wealth recovers; China tightens capital controls; US trade slips; OECD sees rising inflation; ECB opens door to cuts; UST 10yr yield at 2.12%; oil and gold up; NZ$1 = 66.3 USc; TWI-5 = 71

Here's our summary of key events overnight that affect New Zealand, with news China is showing some first signs of real economic stress.

But first, data for US household net worth in the March quarter of 2019 showed this wealth recovered sharply after the Q4 2018 plunge. It increased by a massive +US$4.7 tln or +4.5% after the -3.7$ drop in the previous quarter. And the growth in household debt slowed to +2.3% annual pace, the lowest rise since 2015. US household debt levels are now at 74.8% of GDP, a load that is slowly falling.

In China, they are tightening their capital controls, and that is having some interesting day-to-day consequences. Despite claims they have everything under control, foreign banks are increasingly reluctant to lend US dollars to Chinese banks, and the nervous behaviour of some Chinese citizens as they scramble to get foreign currency is raising concerns.

And a recent mid-sized bank failure, which authorities claim is an isolated case, may be more widespread than that. The central bank is pumping in much more market liquidity than that bank's situation needs.

It's not just banking that is showing signs of stress. The recent sharp falls in car sales aren't responding to stimulus measures. Overall, confidence is taking some hits. (And to be fair, it is not just the Chinese car industry under pressure.)

The trade war policies are causing US exports and US imports to shrink and quite quickly too.

Brazil has suspended beef exports to China after confirming a case of mad cow disease. But it may be a short-lived suspension and the international animal health body hasn't changed its status for Brazil.

The OECD says inflation is rising. It said among their member countries it picked up to 2.5% in April 2019, compared with 2.3% in March, as energy prices increased by 3.8%.

In Europe, the ECB opened the door to interest-rate cuts, a significant policy shift that amplifies a global trend toward easier monetary policy to combat weaker growth. And it is clear that the US Fed is considering them as well. Others are too.

In Australia, AfterPay has disclosed that it is "in dialogue with regulator Austrac" regarding AML compliance issues.

And former Westpac NZ boss George Frazis is jumping the Westpac ship to become CEO of Bank of Queensland, a listed second tier bank that also runs a franchised branch network. It's a job that has a AU$1.3 mln base salary, plus incentives. He is guaranteed a 90%-of-salary bonus in his first year.

And staying in Australia, their Federal Police have been conducting chilling raids at news organisations, the ABC and Murdoch papers, to try and find the journalist who ferreted out some official documents they classified as 'secret'. Publishing leaked documents that embarrasses their Government is a jailable crime now.

The UST 10yr yield is little-changed overnight and is still at 2.12%. And their rate curves are little-changed with the 2-10 curve now at +25 bps and their negative 1-5 curve down to -16 bps. The Aussie Govt 10yr is at 1.49% and unchanged overnight. The China Govt 10yr is up +1 bp to 3.26%, while the NZ Govt 10 yr is down -2 bps at 1.70%.

Gold keeps rising, today up +US$7, now at US$1,336/oz.

US oil prices rose a little overnight, up +US$1 to just on US$53/bbl. The Brent benchmark is now US$62/bbl.

The Kiwi dollar is still holding. It is now at 66.3 USc. On the cross rates we are unchanged at 95 AUc. Against the euro we are stable at 58.8 euro cents. The TWI-5 remains at 71.

Bitcoin has fallen back today, now down to US$7,640 and a -2% drop overnight. Bitcoin is charted in the exchange rate set below.

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