Here's our summary of key events overnight that affect New Zealand, with news benchmark interest rates have jumped sharply.
Firstly however, today's dairy auction sold a lowish volume of 18,161 tonnes but prices rose +1.9% in USD terms. All the main volume lines brought price rises, but the central WMP price was only up +0.2%. On the other hand, SMP rose +3.0%, butter was up +2.4% and cheese was up +4.4%. This result will be boosted by the sharply lower NZD, and that brought an overall rise in local currency terms of +4.0%. Over the past four auctions, prices have risen +3% in USD terms and +7.6% in New Zealand dollar terms, so that will start to have an impact on farm gate pricing outlooks.
Data on American retail sales for April showed only a small rise but it was fast rising petrol prices that cut into discretionary spending. That is an inflation signal, and both the greenback and benchmark interest rate yields rose on the expectation this will encourage the Fed to raise rates sooner or more often. A NY Fed survey backed up the inflation signals. Wall Street is down almost -1% for those same reasons. Despite the small retail sales increase consumer spending appeared on track to accelerate after slowing sharply in the first quarter.
Exports from US West Coast ports hit an unusual high in April as shippers raced to get their goods away and cleared "before the gates close". At the two huge Los Angeles ports, they jumped +12% year-on-year.
Canadian house prices plunged -11% in the year to April. The volume of sales dropped almost -14% compared to the same month a year ago and the lowest level since 2011.
In China, new data out late yesterday shows that industrial production rose more than expected in April, but retail sales growth slipped surprisingly as did new business capital investment. But electricity production was +6.9% higher in April than a year ago. This is often used as a marker for the real growth in their economy, and the April rise was sharply higher than the +2.1% March rise.
China's jobless rate in April was said to be 4.9% in urban areas, similar to the 5.0% in April 2017. And their average salary was ¥45,761 or NZ$9,900 on the same basis, which is up +6.8% in a year, China claims.
At the WTO, they have ruled that the European Union paid billions of dollars in illegal subsidies to Airbus. That paves the way for American retaliation.
Meanwhile, German economic growth rose +1.6% in the March quarter from a year ago, below expectations and well below the +2.3% rise in the final quarter of 2017.
However, overall EU economic growth has come in at +2.5% for the same Q1-18 period, and that is unchanged from Q4-17.
The UST 10yr yield is now at 3.08%, up +9 bps on the American inflation prospect. The Chinese 10yr is at 3.72% (up +1 bp) while the New Zealand equivalent is at 2.77% (up +4 bps).
Gold is down sharply to US$1,291/oz in New York. That is down another -US$23 today.
Oil prices are up again and are now just under US$71.50 and the Brent benchmark is now just under US$78.50/bbl.
The Kiwi dollar is much weaker again, this time mainly because of a surging greenback. It is now at 68.6 USc, another ½c drop overnight, and the lowest since December 2017 and approaching its two year lows. On the cross rates we are at 91.8 AUc and 57.9 euro cents, both similar to yesterday's levels. That puts the TWI-5 just under 71.5.
Bitcoin is now at US$8,519 and that is down -2.7% from this time yesterday.
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