Dairy prices inch up; US data weakens; Wall Street hesitates; China equities leap; China house prices rise; Moody's rates NZ highly; UST 10yr 2.59%; oil firm and gold drops; NZ$1 = 67.6 USc; TWI-5 = 72.1

Here's our summary of key events overnight that affect New Zealand, with news optimism in China is flowering.

Firstly however we need to report there was a dairy auction overnight. But seasonally low volumes were offered (also a six year low) and prices were little changed. Overall prices rose +0.5% in US dollar terms and +0.2% in New Zealand dollar terms. The key WMP price actually fell -0.7%, but some of the other commodities rose with butter up +3.5%. cheese up +1.4% and SMP up +0.2%. It was a lackluster affair but fewer bidders took more of the product on offer; in fact you have to go back more than six years to find as few winning bidders. The number of participating bidders was fairly normal however.

In the US, industrial production data was weak for March, falling when a rise was expected. In fact, two of the past three months have recorded declines and that is the first quarterly drop in production in more than two years. Weakness is especially noticeable in consumer goods production, and 'mining' which includes the oil patch.

In fact, American corrugated box shipment data came in surprisingly weak overnight, and packaging companies are scrambling with sharply lower prices. On top of the big drop in freight system employment in the recent non-farm payrolls report, this is painting a picture of an economy running out of steam.

Canadian industrial production is stagnant as well.

Wall Street is unchanged today with earlier gains pared back as the poor data was revealed. Overnight European markets made solid gains, and yesterday Asian markets rose strongly with Tokyo up +0.2%, Hong Kong was up +1.1% and there was bursting enthusiasm in Shanghai where their equities market was up +2.4%. The view is growing that China will 'win' its trade tussle with the US.

In China, 65 of the 70 major cities surveyed showed rises in house prices in March, up sharply from 57 of 70 in February. This was 'better' than expected and is a rebound that will encourage policymakers. The overall rise was just under +11% year-on-year and is being seen as a boost in buyer confidence.

The German ZEW headline numbers for April showed that the economic sentiment index jumped to +3.1 points, well above the +0.8 expected and the drop of -3.6 in March. But the data on both new orders and industrial production still points to a rather weak economic environment in Europe's dominant economy.

In Australia, the craziness of their election campaign is underway. In its shadow, the just-released minutes from the RBA's April meeting show they think a rate cut could be appropriate if the Aussie jobless rate started to move up, which a few economists are forecasting. But it is just one scenario they discussed. They also see their economy trucking along well with low unemployment levels, inflation rising to their target and growth in the real economy holding firm. Housing risks are the only ones holding them back, and they are watching how the wealth effect plays out on consumption. These minutes had virtually zero impact on the AUD exchange rate.

Ratings agency Moody's has given New Zealand top good marks for its economic situation. They say in an updated review overnight that our "policymaking highly effective while policy space is ample" and the they see "ongoing steady real GDP growth". They also make the now-standard warnings on domestic and external risks however. Moody's has New Zealand's sovereign credit rating as Aaa Stable, the best rating available.

The UST 10yr yield has moved on higher today, gaining +4 bps to 2.59%. Their 2-10 curve is little-changed however at +18 bps and their negative 1-5 curve is still at -5 bps. The Aussie Govt 10yr is unchanged at 1.95%, the China Govt 10yr is still rising, up +2 bps at 3.40%, while the NZ Govt 10 yr is at 2.05% and down -3 bps.

Gold is down sharply today at US$1,275/oz, down -US$13. It first fell in London, and is falling further in New York as the trading session runs on.

US oil prices are a little firmer today at just on US$64/bbl while the Brent benchmark is still at US$71.50/bbl.

The Kiwi dollar will start today little-changed at 67.6 USc. On the cross rates we are down at 94.2 AUc. Against the euro we are unchanged at 59.9 euro cents. That leaves the TWI-5 at 72.1.

Bitcoin is at US$5,194 and up +2.7% overnight. This rate is charted in the exchange rate set below.

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