Wall Street recovers; Fed's Beige Book positive; Canada readies rate hikes; German inflation rises; world airfreight higher; OECD bullish; UST 10yr at 2.84%; oil up, gold down; NZ$1 = 69.9 USc; TWI-5 = 72.9

Here's our summary of key events overnight that affect New Zealand, with news yesterday's market tantrum is over.

Wall Street has recovered most of yesterday's losses as investors considered whether the selloff driven by Italy’s unfolding political drama might have been overdone. And there has been some positive data news, especially the forward-looking stuff.

Firstly, in the US the Federal Reserve reports that economic activity expanded moderately in late April and early May with few shifts in the pattern of growth. The Dallas District was an exception, where overall economic activity sped up to a solid pace. And manufacturing shifted into higher gear with more than half of the Districts reporting a pickup in industrial activity and a third of the Districts classifying activity as "strong".

This weekend we will get the May non-farm payrolls data and markets expect to see +190,000 new jobs created. Today, ADP released their data and that showed a gain of +176,000 new jobs in May. That is an improvement over April but it is lower than May a year ago and the second lowest gain in 2018.

Also sagging a little is over US economic growth. We got the second revision of Q1 GDP growth overnight and the revision was down to +2.2% and that is the slowest rate of gain in a year.

In Canada, their central bank gave an upbeat assessment of their economic prospects. While they left their policy rate unchanged at 1.25%, they have laid the groundwork for a rise, or multiple rises, later in the year.

Somewhat surprisingly, inflation in Germany is on a move higher, coming in at +2.2% in May. Markets were only expecting a +1.9% pa gain.

The EU's sentiment surveys continue to show them running at historically high levels, especially business sentiment.

And having fallen rather sharply in March, the April growth rate in world airfreight has picked up again to +4.1% pa. International airfreight growth is higher at +4.9%, and growth in the Asia-Pacific region is higher still at +5.6%.

And the OECD agrees that the pessimism is overdone. It says the global economy is experiencing stronger growth, driven by a rebound in trade, higher investment and buoyant job creation, and supported by very accommodative monetary policy and fiscal easing. It also says that our new Government's continuation of economic settings from the previous one is a good thing.

Indonesia’s central bank raised its benchmark interest rate for the second time in two weeks late yesterday by another +25 bps to 4.75% and signaled more increases might come as it seeks to bolster their currency and contain capital outflows.

And sadly, we need to report that another journalist reporting independently on Russia has been shot dead overnight. That takes the tally to four in two years. It is a very tough job reporting honestly on Vladimir Putin and Russia.

The UST 10yr yield has recovered to 2.84% and up +5 bps as Wall Street seems to accept that yesterday's fall was an over-reaction. The Chinese 10yr is at 3.62% (down -2 bps) while the New Zealand equivalent is at 2.75% (down -1 bp).

Gold is down slightly to US$1,301/oz in overnight trading, down -US$2/oz.

Oil prices have jumped back up today. They are now just over US$68.50/bbl in the US and the Brent benchmark is now just over US$77.50/bbl, both a rise of +US$2 on the day.

The Kiwi dollar will start today at 69.9 USc and up nearly +1c as risk appetites return. On the cross rates we are also firmer at 92.3 AUc and now just over 60 euro cents. That puts the TWI-5 up to 72.9.

Bitcoin is now at US$7,297 resuming its downward trend and now -2.8% lower than this time yesterday.

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