US sentiment slips but still in rising trend; Canada jobs rise; India industrial production up; China FDI growth slows fast; Australia targets social housing fix; UST 10yr 4.50%; gold up and oil down; NZ$1 = 60.2 USc; TWI-5 = 69.6

Here's our summary of key economic events overnight that affect New Zealand, with news the week ends with a bit of a whimper.

The widely-watched US consumer sentiment survey by the University of Michigan fell in May and by more than expected. The driver was the expectation that future inflation will rise again and that unemployment and interest rates may all be moving in an unfavorable direction in the year ahead. But we should also note that May often delivers pessimist results in this survey and the current level is +14% higher than a year ago. Since June 2022 the trend has been rising and the latest result is not out of trend.

And here's something you may not have expected. The US Federal government had a surplus in April and a larger one than for the same month a year go. But only April and August typically produce monthly surpluses (occasionally Januarys too). In the first six months of the fiscal year, the deficit decreased by -US$70 bln, or -8%, to US$855 bln or about 6% of US GDP. (And don't forget States and local governments typically record surpluses. So the overall net public deficit is smaller than the Federal one.)

Global wheat prices rose to their best level since August after the important May USDA WASDE updated production and demand estimates. Rising production in the US, China, Australia and Canada is offset by falling output in the huge Russian regions, Ukraine, and the EU. Global corn and rice output is expected to rise. American beef production is expected to be lowe as herds are rebuilt in 2024/25. And they have raised their forecast milk price.

Canada delivered its best jobs report in April since the start of 2023 with an increase of +90,400 new jobs in the month with a broad-based rise. But full-time positions increased by +40,100 while part-time jobs rose by +50,300. There are now 20.5 mln people employed in their workforce with a jobless rate of 6.1%.

Meanwhile their senior loan officer survey signaled better credit conditions in a broad rise.

In Japan, household spending there dropped in real terms by -1.2% in the year to March, compared with market forecasts of a -2.4% fall, after a -0.5% decline in the prior month. It was the 13th straight month of declining personal expenditure, dragged by weak spending on housing, fuel, electricity & water charges. In contrast, expenditure for food, transport & communication, and education all rose.

Indian industrial production rose +4.9% in March, which was less than the expected +5.1% rise and lower than the February +5.6% rise. There are signs that the election underway there is creating some uncertainty and some voters tiring of BJP rule. But the BJP controls the voting system so a change to the Modi government isn't expected, just that tensions might be being suppressed.

In China, foreign direct investment fell a sharp -56% on the year in the first quarter of 2024, according to official data. It rose +US$12.5 bln in March from February 2024, much lower than the +US19.7 bln rise in the same period in 2023, and the +US$21.5 bln in the year prior. Global business are still reluctant to invest in an economy grappling with weak internal demand, and veering into Party controls of business operations. Foreign companies made just US$10.3 bln in net direct investments lower than during the same period last year. It is a falling trend that started by Shanghai's COVID lockdown.

Coming later this weekend is data on Chinese CPI inflation (no change expected), producer prices (marginally less deflation), and new yuan loan demand (a reduced expansion). Outsized shifts from these expectations might move Monday markets.

The Australian federal budget will be released on Tuesday, May 14 and more "pre budget announcements" are being released. A big one overnight is that they will spend more than AU$11 bln on social housing initiatives to try and get on top of their housing crisis for low income people.

The UST 10yr yield is now at 4.50% and up +4 bps from yesterday. But it is unchanged in a week. The key 2-10 yield curve inversion is unchanged at -36 bps. And their 1-5 curve inversion is also still at -67 bps. Their 3 mth-10yr curve inversion is now at -89 bps and 3 bps shallower. The Australian 10 year bond yield is now at 4.41% and +3 bps firmer from yesterday. The China 10 year bond rate is still 2.33%. The NZ Government 10 year bond rate is now at 4.80% and unchanged from yesterday. A week ago it was at 4.89%.

Wall Street is ending its Friday trade up +0.2% on the S&P500 and will be up +1.6% for the week. Overnight, European markets were up about +0.5%. Yesterday Tokyo ended up +0.4% (up +0.6% for the week). Hong Kong rose +2.3% (up +2.6% for the week) while Shanghai ended unchanged on the day (up +0.7% for the week). Singapore ended up +0.8%. The ASX200 was up +0.4% in its Friday trade and up +1.6% for the week, while the NZX50 was little-changed yesterday but shed -1.5% for the week.

The Fear & Greed index has moved back from the "fear" range to the "neutral" range as risk appetites return.

The price of gold will start today up another +US$35 from yesterday at US$2368/oz. It is on the rise again, mainly on Chinese demand, and heading back toward its mid-April all-time high. For reference it was US$2300 a week ago, so up +3.0% in the past seven days.

Oil prices have fallen -US$1 at just over US$78/bbl in the US while the international Brent price is now just under US$82.50/bbl. These are both the same levels of a week ago.

The Kiwi dollar starts today little-changed from yesterday at just under 60.2 USc. A week ago it was at exactly the same level. Against the Aussie we are also unchanged at 91.1 AUc. Against the euro we are unchanged at 55.9 euro cents. That all means our TWI-5 starts today just under 69.6 unchanged from yesterday but marginally firmer from a week ago.

The bitcoin price starts today at US$60,436 and down -1.5% from this time yesterday. A week ago this price was US$61,761. Volatility over the past 24 hours has been moderate at just on +/- 2.7%.

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