US retail flat; China growth slows, stimulus 'extra urgent'; EU retail rises; Moody's warns on Aussie housing; UST 10yr yield 2.27%, oil waivers, gold up; NZ$1 = 74.8 US¢, TWI-5 = 77.3

Here's my summary of the key issues from overnight that affect New Zealand, with news of challenges everywhere to keep economic growth healthy.

American retail sales were flat in April as households cut back on purchases of automobiles and other big-ticket items, the latest sign their economy was struggling to regain some momentum after barely growing in the first quarter.

Data out overnight in China suggests they are losing steam as well. China's money supply grew at its slowest pace on record and investment growth sank to its lowest in nearly 15 years - and this despite a concentrated burst of policy easing. And their retail sales "only" grew at +10% pa in April, the slowest rise in years.

The Wall Street Journal is reporting this morning that China is launching a broad stimulus program - marked as 'extra urgent' - to help local governments restructure trillions of dollars in debt, and encouraging banks to lend more.

In contrast, Europe seems to be getting some signs of growth. Data out overnight for the March quarter showed an annual +1% growth, boosted somewhat by retail spending. For them that is quite good and is the third quarter in a row that the rate has risen.

Moody's is warning that Australian banks face challenges from the rising likelihood of a long-term "correction" in their housing market. Their research note out late yesterday argues there is a growing likelihood of an eventual house price "correction" – which refers to a fall of -10% from peak levels – because of "imbalances" in housing markets. These include the dominant role of investors and pressures on affordability. They could also be talking about New Zealand.

While today's news is generally downbeat it is important to keep things in perspective. The US Federal Government reported a US$157 bln surplus in April. And while the Baltic Dry Index may be low, efficient dry cargo shipping lines are doing very well out of world trade.

In New York, the UST 10yr benchmark yield only gained a small amount in today's trading and is now at 2.27%.

The US oil price was unchanged at US$60/barrel, while Brent crude rose marginally to US$67/barrel. These prices are near five-month highs and come after American crude stocks fell for a second straight week.

The gold price posted another good gain and is now at US$1,215/oz.

The New Zealand dollar starts today quite a bit higher from where it was at this time yesterday at 74.8 US¢ as the US dollar sank against most currencies, at 92.2 AU¢, and at 65.8 euro cents. The TWI-5 is at 77.3.

If you want to catch up with all the local changes yesterday, we have an update here.

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