US inflation rising; Argentina edges to default; Beijing house market slumps; China focuses on ag investment; dairy prices rise; NZ$1 = US$0.865, TWI = 80.7

Here's my summary of the key news overnight in 90 seconds at 9 am, including news of of a clear shift in investor interest in agriculture and food supply chains.

But first, American consumer prices recorded their largest increase in more than a year in May rising +2.1% from the same month a year ago as costs for a range of goods and services rose, and likely easing any concerns the Federal Reserve may have had that inflation was running too low.

US housing starts and building permits both came in much weaker than expected. Building permits were almost 2% below May a year ago, but housing starts were more than 9% above the year ago data.

Argentina has refused to accept the US court judgment in the case of its hold-out bondholders. The scene is now set for an ugly default and wider implications.

In Europe, rebels or other forces, have blown up one of the two gas pipelines that flow through the Ukraine suppling Europe.

In China, there is more news that parts of their housing market is tanking. Sales of residences in Beijing slumped an amazing 35% in this year's January to May period compared to the same period a year ago. Both volumes and prices are falling.

Following on from our item yesterday that Grand Farm is buying up sheepmeat capacity, today the Chinese leadership has signaled that its sovereign wealth fund is shifting its focus to investment in agriculture. This will have deep implications for the pricing of agricultural assets worldwide. For a start, there are clear signs private equity firms are already shifting their focus the same way, seeing the Chinese as a honey pot.

Overnight, the latest dairy auction was held and that had mixed results. Overall, prices in US dollars were up +0.9%, the first rise in nine auctions. But in NZ dollars, prices were down -1.75%. There was a good sign though in that wholemilk powder rose by +2.4%, its largest rise this year. Cheese also gained, and is up more than 10% in the past two auctions.

In New York, yields on UST 10 yr bonds jumped to 2.64% today following the US inflation data. Gold and oil are both down on the US benchmarks, but the oil price is up slightly on the Brent and Dubai benchmarks. China is concerned about the rise in the oil price.

On the exchange rate the NZD starts today at about the same level it has been for the past four business days, although it is noticeably higher against the Aussie. It is at 86.5 USc, at 92.7 AUc and the TWI is at 80.7. 

If you want to catch up with all the changes from yesterday we have an update here.

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