US bosses grow wary; airlines creaming it; China trade weak; G7 seeks end of fossil fuel; Japan stars; UST 10yr yield 2.38%; NZ$1 = 71.4 US¢, TWI-5 = 75.3

Here's my summary of the key issues from over the weekend that affect New Zealand, with news of strength in Japan and weakness in China.

But first in the US, big business CEOs surveyed have become a bit more pessimistic in their outlook for the American economy in 2015 and fewer of them expect to increase sales, investment and hiring this year.

Globally, airlines raised their 2015 industry profit forecasts by more than 17% to more than NZ$40 bln, almost doubling from last year. Recent data shows that passenger traffic is booming, while high levels of airfreight traffic are leveling off. This is a big contrast to the languishing sea freight industry.

In China, imports of both iron ore and coal have taken tumbles in May, and quite large ones in the case of coal - trends that work against Australia.

In fact, China's May trade data shows very weak domestic conditions. Exports were lower, but it was the continuing fall in imports that is really causing concern. Lower energy prices are only a part of the reason.

In Germany, the G7 leaders have formally agreed to phase out the use of fossil fuels this century. In fact they said they supported cutting greenhouse gases by 40% to 70% by 2050 from 2010 levels - the first time they have backed such a precise long-term target. But this agreement only applies to the US, Germany, France, the UK, Japan, Canada and Italy. Notably, China, India, Brazil and Russia all of whom may be larger than the European countries this century are not making any such commitment.

And finally in Japan, their Q1 GDP growth was expected to be at a very creditable +2.8% rate, but it has blitzed that expectation coming in at +3.9%. That is some impressive momentum for Japan.

In New York, the UST 10yr benchmark yield was lower by -3 bps today at 2.38%. NZ swap rates open higher again today, and our rate curves have steepened yet again. The 1-5 curve is now its steepest since November, and the 2-10 curve is its steepest in over a year. In fact international investment grade CDS spreads are also widening.

The US oil markets are marginally lower with the US benchmark price at US$58/barrel, and Brent crude is at US$63/barrel.

The gold price is up $3 to US$1,173/oz.

The New Zealand dollar is higher morning, currently at 71.4 US¢ a whole 1c higher than this time yesterday, at 92.7 AU¢, and at 63.3 euro cents. The TWI-5 is now at 75.3.

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 »