US data confirms inflation beaten; Canada and India grow as expected;; Japan data good; EU inflation low; Aussie retail weak; UST 10yr 3.91%; gold and oil lower; NZ$1 = 62.4; TWI = 70.4

Here's our summary of key economic events overnight that affect New Zealand with news the global economic expansion seems to be settling in now for an extended stay, one that features much lower inflation. Perceptions of 'normal' appear to have returned.

But first, the US is ending its summer with a major national three-day-weekend holiday, Labor Day. Their markets return in full on Wednesday NZ time.

But before that weekend started, another set of their policy jigsaw was put in place for the US Fed, the PCE inflation level and that came in low and little-changed, confirming the conditions for a September rate cut. The July core PCE price index rose just +0.2% from the previous month and the market-expected change. The +0.2% monthly increase in headline PCE prices was also in line with expectations. That puts it +2.6% up on a year ago. Nothing disturbed market expectations here - although it probably means the chance of a -50 bps Fed cut is completely off the table.

Perhaps helping, there was a slight improvement in the Chicago PMI from the American industrial heartland although this is more of a "contracting less" situation rather than an expansion. New order levels edged up.

The 'flash' gain in the University of Michigan consumer sentiment survey was confirmed overnight for August.

Canada said its economy grew at a good +2.1% rate in Q2-2024 and that was better than what was expected by analysts there (+1.8%). Higher wages and savings helped, which drove more government spending.

India also released its Q2-2024 GDP and that rise was in a different league - up +6.7% from a year ago. However analysts had expected a +6.9% rise to that result was tinged with a slight disappointment.

Japanese industrial production expanded in July, a good recovery from the June dip. But Japanese retail sales rose at a slightly slower rate than expected.

The annual inflation rate in the Eurozone fell to 2.2% in August from 2.6% in the prior month, matching market expectations to result in the smallest rise in consumer prices since July of 2021. Much lower energy costs allowed the moderation.

Australian retail sales were a disappointment in July, with no rise from June and up +2.3% from the same month a year ago, well short of inflation's impact. It is worse on a per capita basis. And given the elevated inflation level they face the real prospect of an interest rate hike. (Financial markets however are not pricing in a hike.)

Global container freight rates fell modestly again last week, down -3% from the prior week to be +265% higher than the pre-pandemic average. Nothing has ben resolved around the causes of these high costs in the Suez Canal/Red Sea choke-point with security there still terrible. But the Panama Canal lake levels are returning to their five-year averages. Bulk cargo rates rose +4% last week.

The UST 10yr yield is now at just on 3.91% and up +4 bps from this time yesterday, up +11 bps for the week The key 2-10 yield curve inversion is less at -2 bps and much flatter than last week's -10 bps. Their 1-5 curve inversion is little-changed however at -71 bps. And their 3 mth-10yr curve inversion is now mujxs less inverted at -137 bps. The Australian 10 year bond yield starts today at 4.00% and down -2 bps. The China 10 year bond rate is at 2.19% and up +2 bps. The NZ Government 10 year bond rate is now just on 4.30% and down -2 bps from yesterday and up +7 bps from this time a week ago.

Wall Street is ending the week firmer with the S&P500 up +1.0% in its Friday trade with a late-session surge. That gives it only a +0.1% weekly gain however. Overnight European markets were all little-changed. Yesterday Tokyo closed its Friday session up +0.7% capping another +1.3% weekly gain. And Hong Kong was up +1.1% for a +1.6% weekly rise, with Shanghai up +0.7% on Friday for a -0.5% weekly retreat. Singapore rose +1.1% yesterday. The ASX ended its Friday session up +0.6% and was up +0.9% for the week. The NZX50 was up +0.8% on Friday to end down -0.7% for the week.

The Fear & Greed Index ends the week in the 'greed' range, from last week's 'neutral' range.

The price of gold will start today down -US$23 from yesterday at US$2501/oz. A week ago it was US$2510, so little net change.

Oil prices are down - US$2.50 from yesterday, now just under US$73.50/bbl in the US while the international Brent price is now just under US$77/bbl.

The Kiwi dollar starts today down -30 bps from yesterday at 62.4 USc but up +10 bps from this time last week. Against the Aussie we are unchanged at 92.3 AUc but up more than +½c in the week. Against the euro we are down -0 bps at 56.5 euro cents. That all means our TWI-5 starts today at 70.4 and down -10 bps from yesterday, up +50 bps in a week.

The bitcoin price starts today at US$58,681 and down -1.3% from this time yesterday. Volatility over the past 24 hours has been moderate at just on +/- 2.1%. A week ago it was US$60,305 so down -2.7% since then.

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