Beige Book positive; Canada holds; EU inflation slips; German workers win pay rises; IMF warns on China debt; India faces cash crunch; UST 10yr at 2.87%; oil jumps and gold up; NZ$1 = 73.2 USc; TWI-5 = 74.2

Here's our summary of key events overnight that affect New Zealand, with news China's debt growth is raising eyebrows everywhere.

But first, the US Fed's national survey of firms (the Beige Book) reported that economic activity expanded across the country in March and early April, with widespread employment growth but mostly modest wage increases even as some high-skill areas are in hot demand. There are also reports of sharp rises in steel prices and some other construction products. No region reported stable prices, but overall they saw prices rising "moderately" from the current +2.4% rate.

The Bank of Canada, who raised rates three times in 2017, held them in their latest review overnight. However, they were quite direct that as inflation is now at 2% in Canada and rising, they will need to raise them again and probably as soon as their next review at the end of May.

In the EU, inflation in March came in at +1.3% which was slightly lower than expected even if it was up on February. A year ago, it was +1.5%.

In Germany, public sector workers have just won a big pay rise. The increase is +7.5% over 2½ years. The ECB will take notice as it will undoubtedly help boost that EU inflation rate.

The IMF is warning of the risks from sharp rises in global debt, especially government debt. Its latest Report shows that the problem is almost exclusively Chinese debt. Debt levels in advanced economies have shown some stability, while those for most emerging economies showed strong debt growth. But for China, the growth has been on a world scale, distorting the international data and almost equaling all other debt increases from emerging economies.

And in a sign of the times, driverless street sweepers are now working Shanghai streets as part of a full trial.

And in India, with memories of an arbitrary 2016 'demonetisation' fresh and rumours swirly about financial institution fraud, people are rushing ATMs to extract cash. It forced the authorities to issue a calming statement. But Indian's trust and faith in their banking systems is waning fast and a severe cash and credit crunch is a very real risk now.

The UST 10yr yield is rising today and now at 2.87% (+6 bps). The US 2-10 rate curve is holding. The Chinese 10yr is at 3.61% (-7 bps) while the New Zealand equivalent is at 2.84% (-1 bp). Yields may be sinking in China, but their 2-10 curve is widening recently. Chinese companies are borrowing heavily again. But the viability of some big projects is in question.

Gold is at US$1,351/oz in New York, and up +US$4.

Oil prices are up sharply today by more than +US$2/bbl and now just over US$68.50/bbl and the Brent benchmark just over US$73.50/bbl. American petrol and crude oil inventories have taken a sharp tumble in the past week, surprising analysts. And growth in the world's largest shale oil patch is causing problems. US$80/bbl oil seems more likely now.

The Kiwi dollar is in a slow retreat this week after last week's rise and this morning is at 73.2 USc. On the cross rates we are at 94.1 AUc and 59.1 euro cents. That puts the TWI-5 at 74.2, and now back in the middle of its 2018 range.

Bitcoin is now at US$8,116 which is a +3.1% rise from this time yesterday.

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