US inflation rises; markets calm; US debt a national security risk; Japan grows modestly; India hit with bank fraud; EU growth accelerates; APRA tightens capital rules; UST 10yr at 2.91%; oil and gold up; NZ$1 = 73.3 USc; TWI-5 = 74.3

Here's our summary of key events overnight that affect New Zealand, with news of growth and calmer markets.

Firstly in the US, data out overnight shows inflation rose faster than expected in January, stoking expectations that interest rates rises will accelerate this year. The CPI rose +2.1% versus expectations of a +1.9% rise. The rises are widespread, other than for food and cars. Earlier this month jobs data accelerating US wage growth. And that triggered the equity and bond market volatility of the past ten days. After today's data release, the US dollar fell and benchmark bond yields rose. But the equity markets have taken the news more calmly. In fact, the S&P500 is now up +1% in mid-day trade.

Markets are accepting that the Fed will push ahead with its rate hike 'normalisation', that bond prices will fall, and that life will go on.

And this is despite somewhat disappointing retail sales numbers for January.

In Washington, a top intelligence agency boss has told lawmakers that the US Government debt levels are a major security risk, one able to be exploited by rivals. But few lawmakers or Administration officials are listening.

Japan is also reporting good, if modest, economic growth. That run now extends to eight straight quarters, the longest streak since its heyday in the late 1980s. Growth was +1.7% in all of 2017. Analysts generally expect the modest expansion to continue this year.

In China, Standard & Poor's has lowered its credit assessment of HNA to CCC from B, the second downgrade in three months, saying it now needs official support to survive its unbalance liquidity position. The company is furious with the downgrade.

In India, fraud at a major regional bank is causing jitters in their banking system. The scandal at the state-owned bank risks drying up the very loans that are needed for the country’s small- and medium-size businesses to help steer the National government’s ambitious growth programs.

Meanwhile the EU grew at its fastest rate in a decade, data out overnight confirms. This growth was broadly based across most countries, led by Germany, France and Spain. But eastern Europe countries also caught up a little faster. Only the UK posted an annual growth rate below 2%.

In Australia, regulator APRA has signaled that banks will have to hold more capital against higher-risk property loans. This is a position that will be much tougher for smaller banks to accept than any of the majors.

In New York, the UST 10yr yield has resumed it rising trend and is now over 2.91%, following that US CPI data and that is its highest level since January 2014.

Measures of market volatility have settled back further today.

The gold price has jumped +US$23 today. This morning it is at US$1,350.

Oil prices are up marginally with the US benchmark now just under US$59.50/bbl and the Brent benchmark over US$63/bbl.

This morning, the Kiwi dollar is up nearly ½c again at 73.3 USc. On the cross rates we higher too at 93.1 AUc and 59.2 euro cents. That puts the TWI-5 at just up to 74.3 but still within its 2018 range.

Bitcoin is at US$9,273, a sharp +7.5% rise from this time yesterday and the first time it has been over US$9,000 in eleven days.

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