Bitcoin leaps; US durable goods orders sink; US inventories jump; US trade deficit swells; China bans Canadian meat; Aussies don't trust China; UST 10yr yield at 2.05%; oil up and gold down; NZ$1 = 66.9 USc; TWI-5 = 71.4

Here's our summary of key events overnight that affect New Zealand, with news dominated by a speculative surge.

Bitcoin has leaped overnight, now at US$13,600 and a gain of more than +US$2000 or +19% since this time yesterday. Since the start of this week, it is up +25%; since the start of last week bitcoin is up more than +50%. In New Zealand dollars, it has breached NZ$20,000, the highest since January 2018. The bitcoin rate is charted in the exchange rate set below.

In the US, new orders for durable goods fell -3.3% in May from the same month a year ago. In April they showed zero year-on-year growth. Much of the decline is because of Boeing’s 737 MAX problems, but the drying up of aircraft orders isn’t the only weak spot. Capital goods orders fell -10%.

American retail inventories jumped almost +5% in May 2019 from May 2018. Wholesale inventories are up almost +8% on the same basis. Orders falling and unsold stock rising is not a great signal.

Meanwhile their merchandise trade deficit rose to -US$78 bln in May, 10% more than the same month a year ago. Their exports are down -2%, their imports are up +1.9% on that basis. Although the tariff strategy doesn't seem to be working, the US Administration looks like it is preparing to do more of it. It is not China selling, it is American firms buying that seems to be the real issue.

However, the US Treasury Secretary is giving an upbeat assessment of the chances of a trade deal when the Presidents of China and the US meet this weekend.

Wall Street has reacted by rolling back early session gains and the S&P500 is now lower. The US dollar is falling.

And Wall Street has downgraded America's largest milk processor to "penny stock" status. Dean Foods has far larger problems than Fonterra.

Meanwhile, US avocado prices are soaring.

China has halted all meat imports from Canada. It claims it has found forged certificates in some shipments. An initial investigation by the Canadians confirms the problem. This comes as China is trying to pressure Canada on trade to prevent the extradition of a top Huawei executive to the US on sanctions charges.

In Australia, a new survey records that less than a third of Australians trust China to act responsibly, a 20-point plunge compared to last year and the lowest proportion recorded since the survey began in 2005. The same survey says Aussies rate New Zealand as "best friends".

Meanwhile, the value of engineering work completed in Australia is down sharply. This is not normally a data item we follow, but the -13% year-on-year fall to March is significant.

And Melbourne is the venue for 'secret' negotiations to bring the RCEP trade deal over the line. Its like a watered down TPP deal that can include China and Japan, but it won't include the US.

The UST 10yr yield is rising today and now at 2.05% and firmer by +6 bps. Their 2-10 curve is now at +27 bps an their negative 1-5 curve is at -17 bps. The Aussie Govt 10yr is at 1.33% and a +5 bps rise from yesterday. The China Govt 10yr is little-changed at 3.28%, while the NZ Govt 10 yr is up +2 bps to 1.57%.

Gold is lower today, down by -US13 to US$1,411/oz.

US oil prices are higher today. They are now just over US$59.50/bbl because the latest American crude stocks data came in unexpectedly low. The Brent benchmark is now at US$66.50.

The Kiwi dollar is still rising and across the board, and is now at 66.9 USc. On the cross rates we are also firm at 95.7 AUc. Against the euro we are up at 58.8 euro cents. That all pushes the TWI-5 up to 71.4 and a three month high.

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