Here's my summary of the key events over the weekend that affect New Zealand, with news the impact of a potential Brexit is seriously over-hyped.
But first, in the US, consumer prices were up +2.6% year-on-year for all items except food and energy. This is the core data the Fed uses and is slightly up on the last reading. Including food and energy, prices were up +1.0% year-on-year which was a tick lower than last month. This data actually tipped one US Fed member to change his mind and become a bit more dovish.
Housing starts in May came in +9.5% higher than the same month a year ago which will boost construction for a while yet in the US. But building permits issued for May came in -10% lower than the same month a year ago so that boost may run out of steam in the next year or so unless for building permits are applied for soon.
In China, house price gains are extending into second tier cities, even though they are moderating somewhat in the largest urban areas. In May, 50 of the 70 major cities tracked saw year-on-year price gains, up from 46 in April. Average new home prices have climbed +6.9% year-on-year, up from April's +6.2% rise. This expanding trend creates an interesting problem for Beijing because it is a rare "bright spot" in their economy at present but is also just an asset price bubble when the productive sectors are under pressure. It is hard to see much value in this "bright spot" - other than reinforcing the wealth effect.
The Indian central bank boss has quit, realising he would not get reappointed after it became clear he was being undermined by members of the Indian government at the very senior level. He was increasingly opposed by hard line Indian nationalists, the Indian version of the Trump / Johnson / le Pen forces that are shaking the Western world. However, this resignation has had no impact so far on their currency so far, although markets are closed until about 3pm NZ time today.
In Europe, all the news focus is on the Brexit vote. The IMF weighed in warning of the dangers on a "leave" vote, but mainly for Britain. The French warned the UK would become irrelevant. The Russians are stirring the pot hoping a "Leave" vote will weaken NATO and the EU. But more voices are seeing the risks either way all to the UK. Few now think a "Leave" vote will have much impact on the global financial system.
In New York, the benchmark UST 10yr yield ended last week up +5 bps and back to 1.61%.
The oil price rose marginally over the weekend but is still low. The US benchmark is now just on US$48/barrel and the Brent benchmark just on US$49/barrel. For the first time in a while, we are seeing rises in the number of drilling rigs in action in the US, up +10 in a week. Even though they are only at half the level they were a year ago, that is now four consecutive weeks of rises.
The gold price is marginally higher at US$1,293/oz.
And finally, the NZ dollar will start the week at 70.5 US¢, at 95.4 AU¢, and at 62.6 euro cents. The TWI-5 index is at 73.8. The currency has been remarkably stable since its re-rating higher after the RBNZ MPS. Some think that if the Brexit risks moderate, the NZD could rise by as much as 1c.
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 ».
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