Dairy prices slip; US house sales lower; US softens Huawei restrictions; EU consumers less gloomy; RBA signals rate cut; APRA backs off; UST 10yr 2.43%; oil unchanged and gold lower; NZ$1 = 65 USc; TWI-5 = 70.1

Here's our summary of key events overnight that affect New Zealand, with news markets are trying to read the Huawei tea leaves for what that says about the next tariff  war moves.

But first, the latest dairy auction has brought an end to the eleven straight rises, today falling by -1.2%. It seems buyers can't accept the rising US dollar so this was a relatively long auction event and had relatively fewer participating bidders. The key WMP price fell -2.1%. But there was a star in the show today; cheddar cheese prices jumped +15% from the last auction and that is now at its highest level in more than five years. This price is up +51% since the start of this year. Overall prices may have been down, but the lower NZ dollar compensates and in our currency, prices were unchanged from the previous auction. And they are still at their highest overall level since 2014.

In the US, industry analysts were expecting a +2.5% rise in house sales in April as their Spring selling season gets underway, countering the -4.9% fall in March. But a recovery didn't materialise, with April sales down -4.4% from the same month a year ago even though the number of houses offered for sale rose +10% from March.

And staying in the US, we should note that live self-driving truck trials for the US Postal Service have started.

And Google is suspending some Android services for Huawei smartphones after the Chinese company was placed on a US trade blacklist. The move effectively bars Huawei from making phones and tablets for sale outside China. It is likely to benefit Samsung in a significant way. However, the US has later today softened its timeline, allowing a 90 day transition.

In Europe, economists polled by Reuters had expected consumer sentiment there to fall in May from April. But it actually improved and quite noticeably and bucking a downward trend that started in early 2018. But it is Europe, and we should note that pessimists still outnumber optimists, just by less a margin in May.

In the UK, you may recall that lawmakers there have been pushing to reform the cosy position of the big four accounting firms and their chronic conflicts of interest with audits-for-life. Well, it turns out those firms have been working furiously behind the scenes, and the regulators look like they will now side with the auditors and shelve any reforms, in direct defiance of their Parliament. The minister is deferring bringing necessary legislation up for a vote.

Yesterday in Australia, there were two major policy signals from their banking mandarins. Firstly their central bank signaled interest rates will likely be cut next month. At the same time they are challenging both the federal and state governments to join in the heavy lifting by doing some painful structural reform.

And secondly, their banking prudential regulator, APRA, said it will loosen the serviceability requirements for home loans that banks must meet. Some industry observers think this signal might arrest the downward pressure in Australian house prices.

Equity markets are generally positive today with both Wall Street and European markets posting solid gains, all a bit less than +1%. Yesterday, Asian markets were less enthusiastic, except Shanghai which posted a strong +1.2% gain. The perception signals from the Huawei temporary reprieve may be behind all these gains.

The UST 10yr yield is +2 bps firmer at 2.43%. Their 2-10 curve is now at +17 bps and their negative 1-5 curve is at -13 bps. The Aussie Govt 10yr is at 1.66% and down -2 bps since yesterday. The China Govt 10yr is up +1 bp to 3.31%, while the NZ Govt 10 yr is down -1 bp and now at 1.83%.

Gold is down -US$3 this morning at US$1,274/oz.

US oil prices are unchanged today, still just on US$63/bbl while the Brent benchmark is just on US$72/bbl.

The Kiwi dollar is lower at 65 USc and that is its lowest level since October 2018. On the cross rates we at 94.5 AUc. Against the euro we are soft at 58.3 euro cents. That pushes the TWI-5 lower to 70.1.

Bitcoin is now at US$7,975 and that is +2.7% higher than at this time yesterday. 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 ».