Here’s our summary of key economic events overnight that affect New Zealand, with news China seems to have debt exhaustion while little is going right for the US as it stumbles further in its recent economic mismanagement.

The pessimistic turn continues there. The widely-watched University of Michigan consumer sentiment survey delivered downbeat results in September, sharply lower from August and well below what analysts had expected. They had expected a turn lower but not be this much. Declines strongest among lower- and middle-income households because concerns grew over business conditions, jobs, and inflation. Both short and long term sentiment fell back. This index is more than -20% lower than year-ago levels.

Meanwhile, year-ahead inflation expectations held steady at 4.8% while the five-year expectations moved up for the second straight month to 3.9% from 3.5%.

Financial markets reacted after the release of this downbeat assessment.

The September USDA WASDE report points to strong global grain production and an assumption the global buyers will keep taking US production, which might be a bit brave under the geopolitical situation when buyers have choices. The same report sees higher lean beef imports into the US at higher prices, and higher US milk production with higher US cheese exports.

Canadian building consents were unchanged in July from June but down -8.2% from a year ago. But most of this was due to non-residential work; residential consents were up, especially in Toronto.

In China, August data for new yuan loans came in well below what was expected although expectations weren’t high. It was the lowest amount of bank debt for an August since 2011, extending the current period of weak credit demand amid the weakening consumer debt demand and the prolonged crisis for housing. The debt appetite dropped despite central bank efforts to loosen monetary conditions and stimulate borrowing.

In India, consumer inflation rose, as expected, but only to 2.1% and ending a ten month period where it fell consistently from 6.2% to 1.6% in July. Food prices were little-changed and had no effect on the overall result.

In Russia, their central bank cut its policy rate by -100 bps to 17% which was less than the -200 bps cut expected. They are still worried about war inflation which is running over 8% currently and they don’t really see that easing.

We should also note this.

The UST 10yr yield is now at 4.07%, up +6 bps from yesterday to be down -2 bps from a week ago. The key 2-10 yield curve is now at +50 bps. Their 1-5 curve is now inverted by -4 bps. And their 3 mth-10yr curve is now inverted -10 bps. The China 10 year bond rate is unchanged at 1.80%, up +3 bps for the week. The Australian 10 year bond yield starts today at 4.23, up +2 bps overnight but down -9 bps from a week ago. The NZ Government 10 year bond rate starts today at just under 4.31%, down -2 bps from Friday but down -12 bps from a week ago.

Wall Street was marginally firmer in Friday trade with the S&P500 up +0.2% to be up +1.6 for the week and a new record high. But after the University of Michigan consumer sentiment data was released, it turned negative. Overnight, European markets were little-changed except London’s was down -0.2%. Yesterday, Tokyo closed up +0.9% on Friday and up +3.0% for the week. Hong Kong closed up +1.2% for a +3.7% weekly gain, and Shanghai closed down -0.1% on Friday for a +1.6% weekly gain. Singapore ended its session down -0.3%. The ASX200 ended its Friday up +0.7% for a net +0.1% for the week. And the NZX ended unchanged on Friday for an unchanged week.

The Fear & Greed index is still in the ‘neutral’ zone and unchanged from last week.

The price of gold will start today at US$3,648/oz, up +US$13 from yesterday. That is up +US$55 from a week ago. Silver had another spurt overnight, now up over US$42/oz.

American oil prices are unchanged at just on US$62.50/bbl but up +50 USc for the week, with the international Brent price still just over US$66.50/bbl and up +US$1 for the week.

The Kiwi dollar is at just under 59.6 USc and down -10 bps from yesterday, but up +70 bps from a week ago. Against the Aussie we are down -10 bps 89.6 AUc. Against the euro we are also down -10 bps at 50.8 euro cents. That all means our TWI-5 starts today at just under 66.8, little-changed from yesterday by up +50 bps for the week.

The bitcoin price starts today at US$116,400 and up +1.6% from this time yesterday, up a net +4.7% from a week ago. Volatility over the past 24 hours has been low at just under +/- 1.0%.

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