Dairy prices dip again; US factories expanding faster; Chinese factories less so; huge hack at major global beef processor; EU inflation rises; UST 10yr slips to 1.62%; gold slips and oil firm; NZ$1 = 72.6 USc; TWI-5 = 74

Here's our summary of key economic events overnight that affect New Zealand with news worldwide, factories seem to be in overdrive.

But first, the latest dairy auction has brought lower prices again, now the fifth fall in the prior six auctions. This one fell by almost -0.9% in US dollar terms and -1.0% in New Zealand dollar terms. Since the large +14% rise three months ago overall prices have fallen -5%. Butter retreated by -5.4% today from the prior auction and was the biggest mover. But most other changes were small with SMP up +0.5% and WMP down -0.5%.

In the rest of the world, the data is all about factory PMIs.

In the US, their factory PMIs expanded faster. The locally-watched ISM one starred with a strong result, bolstered by very high new order, and order backlog readings. The prices measure is still reflecting high stress although it wasn't quite as extreme as for April. The Markit one was equally expansionary and reached a new record high. This one reported "soaring cost pressures". (But there was one data item that was soft: employment.)

Interestingly, in the Dallas Fed factory survey their fast expansion slowed somewhat in May, but input prices and wage pressures accelerated further in the month. Perhaps this is an early sign those raging cost increases are working to take the top off their factory boom.

But the US LMI logistics managers index is still reporting above average expansions and the strains of this growth are being felt in sharply higher prices for everything.

Elsewhere in the US, a major cyber attack on their largest beef processor has severely disrupted meat markets there. But it is an attack on the global operations of this huge Brazilian company so plants in Brazil, Canada and Australia are also affected. The attackers are said to be Russian.

In Canada, their factory PMI is reporting a much more modest expansion, but output prices rose at quickest rate in this survey's history.

An even more modest expansion was reported in the private Caixin survey in China, which barely matched the tame official version. But at least new orders, including new export orders, did rise.

In Australia, the factory expansion looks more like the US than China. New business growth and price pressures both hit new records. A separate local PMI also shows the same strong expansion, but while it notes extreme input cost pressure, output price rises are more restrained.

And staying in Australia, their central bank left all its settings unchanged in its regular monthly review of monetary policy.

In the EU, CPI inflation in the 19 countries sharing the euro accelerated to 2% in May from 1.6% in April, driven by higher energy costs, to its fastest rate since late 2018 and above the ECB's aim of "below but close to 2%".

Wall Street opened its post-holiday session strongly but all those gains have slipped away by early afternoon trade. European markets closed about +0.8% higher. Yesterday, Tokyo closed-0.2% lower, Hong Kong closed +1.1% higher and Shanghai closed up +0.3%. The ASX200 ended its session down -0.3% but the NZX50 Capital Index ended up a creditable +1.3%.

The latest global compilation of COVID-19 data is here. The global tally is still rising, now 170,837,000 people have been infected at some point, up +385,000 in one day. India seems to be getting relief with a falling infection rate. Global deaths reported now exceed 3,552,000 and up +8,000 in one day. Vaccinations in the world are still rising but at a slower pace, now up to 1.94 bln. In the US half of their population (51.1%) have had at least one dose. More than 40% of Americans have been fully vaccinated (137.1 mln people). The number of active cases there has fallen to 5,640,000 with fewer new infections than recoveries recently and steady progress.

The UST 10yr yield starts today up +4 bps at 1.62% as Wall Street is back from holiday. The US 2-10 rate curve is a little steeper at +146 bps. Their 1-5 curve is at +76 bps and little-changed, while their 3m-10 year curve is steeper at +160 bps The Australian Govt ten year benchmark rate is up +4 bps at 1.68%. The China Govt ten year bond is unchanged at 3.10%. However, the New Zealand Govt ten year is down another -6 bps at 1.75%.

The price of gold starts today at US$1902/oz, a dip of -US$5 from this time yesterday.

Oil prices start today +US$1 firmer at just over US$67.50/bbl in the US, while the international Brent price is now just over US$70/bbl, and that is a two year high.

The Kiwi dollar opens today at 72.6 USc and small softening overnight. Against the Australian dollar we are down more than -½c at 93.5 AUc. Against the euro we are soft at 59.3 euro cents. That means our TWI-5 starts today at 74 which is actually the same level it was a week ago.

The bitcoin price is now at US$36,157 and a -2.0% slip from this time yesterday. Volatility in the past 24 hours has still been high again at +/- 3.1%.

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