US inflation stirs on strong retail; China's trade surplus slips; NZ exports too much cheese; India bars PwC; Merkel nears deal; key US and China rates jump; oil slips and gold up; NZ$1 = 72.5 USc; TWI-5 = 74.2

Here's our summary of key events overnight that affect New Zealand, with news some key benchmark interest rates are on the move higher.

Firstly in the US, a rise in consumer prices in December and solid growth in retail sales which were up +5.4% in a year bolstered expectations that inflation is firming after a long run of softness. The CPI increases were their largest increase in 11 months on strong gains in the cost of rental accommodation and healthcare. Analysts suggested this is the start of an accelerated inflation track.

China’s exports and imports both increased for the first time in three years in 2017, but trade tensions with the US and cooling domestic demand are clouding prospects this year. Their trade surplus shrank -14.2% in 2017 following a -9.1% reduction in 2016. China's exports increased +7.9%, the fastest growth since 2011, but imports surged +15.9%, also the strongest rise since 2011. But China reported its largest-ever annual trade surplus with the US which is sure to raise tensions, especially as it is a stronger American economy that is partly driving the changes.

And China also noted that New Zealand has exceeded its cheese shipments to the country more than what is provided for in our free trade deal. So MFN duties are now applying.

In India, PwC has been debarred from auditing any listed company following its failure to detect fraud at one of them in 2009. The move may result in major losses for the firm in the country.

Commodity demand is in the ascendancy these days with prices rising across the board especially for 'hards'. Of special note are the rising prices for aluminium and zinc.

In Germany, Angela Merkel looks like she has the basis of a deal with a left-leaning party to form a grand coalition government. Remember, Germany had an MMP election on the same weekend we did; coalition negotiations there have taken much longer.

The UST 10yr yield is unchanged at 2.56% today. However, the UST 2yr yield jumped above 2%, a key psychological level last seen almost ten years ago. And in China, the equivalent 10yr sovereign bond has jumped to 4.03% (+7 bp) its highest since September 2014, while the equivalent NZ 10yr sovereign bond is unchanged at 2.87%.

Oil prices slipped a little today with the WTI benchmark now just over US$64 a barrel, while the Brent benchmark is just over US$69.50. But essentially they are holding at a very high level.

Gold however is up strongly, up +US$13 to US$1,330/oz.

The Kiwi dollar is unchanged this morning at just on 72.5 USc. On the cross rates it is at 91.8 AUc, and against the euro it's at 59.6 euro cents. That puts the TWI-5 at 74.2.

Bitcoin has slipped again over the past 24 hours, by -US$150 this time to US$13,542, a -1% decline. That is the smallest daily move we have seen in a while.

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