US house prices, demand rises; MSCI adds China to EM index; NZ up in social progress; Chinese target food companies; UST 10yr yield 2.15%; oil and gold fall again; NZ$1 = 72.2 US¢, TWI-5 = 76.7

Here's my summary of the key events from overnight that affect New Zealand, with news a new wave of Chinese investment in food companies is coming.

But firstly in the US, existing-home sales unexpectedly rose in May following a notable decline in April. Low inventory levels helped propel the median sales price to a new high while pushing down the median days a home is on the market to a new low. Their median price is now US$252,800 (NZ$350,000) which is up +5.8% from the same month a year ago and is the 63^rd consecutive month of a rise. In that market, their own industry body says this track is "not sustainable".

And for the first time, US stock index provider MSCI has agreed to include China's mainland domestic shares in its emerging markets index. The MSCI Emerging Market Index currently has about US$1.6 tln tracking it. This decision could prompt changes to how Chinese companies are run, and how Chinese policy makers reform their stock market, even if the initial amount of capital inflows won’t be large in global terms. It is a small step, but many observers think it signals a significant shift. It had an immediate impact yesterday with the Shanghai index rising as nearly every other market fell. Even with the tiny first step, just to start as much as US$10 bln will be flowing into Chinese shares over the next year. Inclusion in this specific will likely draw some KiwiSaver funds into the realignment.

Another one of those international benchmarking surveys was out overnight, the 2017 Social Progress Index. This has New Zealand's score rising and now has us 9^th equal with Australia (whose raw score also rose, but their rank was unchanged while we are up from 11th last year). We came in below seven European countries and Canada. We scored creditably high on most measures, some surprisingly strong. But we were let down by affordable housing.

Update: In yet another ranking, the Mercer cost of living series shows Auckland the 61^st most expensive global city and Wellington the 86^th. Last year Auckland ranked 98^th and Wellington ranked 123^rd.

In Australia, at an Agi-Investor forum in Melbourne, it is claimed that Chinese investor appetite for food companies, especially dairy, is about to grow strongly again. And local regulation pushbacks are not deterring the fundamental interest from these Chinese investors. High-quality food, with high regulatory, biosecurity and environmental standards are all an important part of the attraction. And a key appeal was that freehold land could be bought in perpetuity.

In New York, the UST 10yr yield is a tick lower today at 2.15%.

The price of oil is down sharply again today and is now under US$42.50 a barrel, while the Brent benchmark is now just on US$44.50. That is now a ten month low and the biggest first half slide in more than 20 years. The rise and rise of unsold inventories, including crude stored in tankers at sea, is behind the drop. Fast-rising output from places like Libya are upending this market.

And the price of gold is lower as well, down another -US1 to US$1,242/oz.

But the Kiwi dollar is little changed at 72.2 USc. On the cross rates we are higher at 95.7 AU¢, and 64.8 euro cents. The TWI-5 index is at 76.7.

Stay tuned for the RBNZ OCR decision at 9am. We will have the full details.

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

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