US slaps tariffs on China, China retaliates; US factor production sags; Canada house sales drop; China power consumption leaps, EMs struggle; UST 10yr at 2.92%; oil and gold drop sharply; NZ$1 = 69.5 USc; TWI-5 = 72.8

Here's our summary of key events over the weekend that affect New Zealand, with news threats to trade are rising, but not precipitously so yet.

The US President has announced 25% tariffs on 800 Chinese products worth about US$50 bln of trade between the two countries. Beijing responded in kind.

Wall Street greeted the news gloomily, closing lower. Commodity prices tanked. Just the fear of a trade war is restraining the global economy.

Meanwhile, American industrial production ended three straight months of growth with an unexpected decline. Output slipped -0.1% in May from April. Analysts had expected a +0.2% rise. That leaves year-on-year growth at just +1.6%. Production of consumer goods and business equipment led the numbers lower.

Going the other way, American consumer sentiment rose slightly in early June due to consumers' more favourable assessments of their current financial situation and more favourable views of current buying conditions for household durables.

In Canada, sales of existing homes hit a five year low in May. The data was a seven year low for May data. However, sales in Toronto rebounded, and in Vancouver they were also higher. National prices were down -6.4% year-on-year but are up a startling +11.5% in Vancouver led by townhouses and apartment prices.

In China, new data on electricity consumption shows it up more than +11% in May from the same month a year ago. Factory consumption was up less than +8%, with service sector and residential consumption rose at about twice that rate. China is just not adding generation capacity at anything like these rates, so the consumption growth is unsustainable.

In Argentina, their currency resumed its sharp downward fall caused by the sudden resignation of its central bank governor. The rapid appointment of a market-friendly figure did nothing the stop investors facing for the exits.

In Turkey, their currency slid an eye-popping -6%. There is a liquidity crunch there and 10-year bond yields rose toward the highest closing level on record, as traders braced for a deluge of debt sales this week.

In Indonesia, their central bank governor said another rate hike there is on the cards at their June meeting to protect their currency. Korea and Thailand are also now on the EM watchlist.

In Australia, Westpac identified a rogue adviser and dismissed him. Now the regulator is suing for hiring him in the first place. It is dangerous for banks no matter what they do to clean up their adviser networks.

And the Aussie bank Royal Commission fallout seems likely to clamp down on Mum & Dad loans, and cast a pall over most small business lending. Australia is facing a serious credit crunch.

The UST 10yr yield eased to 2.92% and down -2 bps . The Chinese 10yr is at 3.65% (up +2 bps) while the New Zealand equivalent is now at 2.94% and unchanged.

Gold has tanked, down -US$23/oz in New York to just US$1,279/oz.

Oil prices have also fell again by another -US$2.50/bbl and the US price is now on US$65/bbl. The Brent benchmark is now just over US$73/bbl.

The Kiwi dollar will start today at 69.5 USc. But on the cross rates we are firmer at 93.2 AUc, and 59.8 euro cents. That keeps the TWI-5 at 72.8 and still in its very tight June range.

Bitcoin is still at US$6,505 and the general level it has been at for the past six days.

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