Tech profits zoom on AI payoff; US PCE inflation up with spending up more than incomes; Japan data solid; Taiwan again excels; ECB holds; UST 10yr at 4.39%; gold up as oil dips; AU$1 = 71.9 USc

Here's our summary of key economic events overnight that affect New Zealand with news investors are ignoring big (geopolitical) risks by taking even bigger new tech risks. [And who are these 'investors'? Probably the fund managers of your Super funds. They don't get paid for pulling back.]

On Wall Street, tech firms are reporting a profit gusher. Google (+81% rise in profits), Amazon (+56%) and Microsoft (+24%) delivered bonanza profit results yesterday, crediting AI for these outsized results. Meta was up too (+61%), but held back by a misfiring AI strategy that will require huge new investment. The positive results will likely boost valuations ever higher. In fact, Big Tech has committed to US$750 bln in new spending in the sector.

And this impulse is a big part of driving US economic activity which expanded +2% in Q1-2026 in their initial estimate, up from a modest +0.5% gain in Q4-2025 (which was revised lower at each subsequent update). However the current result was below market expectations of +2.3% growth. The outcome was driven primarily by AI investment, exports, and both consumer and government spending.

But their PCE inflation was reported for March at its highest in more than two years at 3.5%, with +0.7% of that coming in March alone, the steepest monthly increase since the pandemic distortions. Almost certainly April will have been higher, and probably by some margin.

Personal income, before adjusting for inflation, rose +4.2% while personal spending rose +5.4%. No wonder most Americans don't feel like they are making economic progress - although Big Tech won't feel the same way.

US initial jobless claims came in at 180,000 last week, a decrease and by more than seasonal factors would have indicated.

But although it was expected to continue to expand, in fact the Chicago PMI slipped into contraction in April. This unexpected shift was driven by a drop in new orders and a sharper than expected rise in input costs.

In Japan, retail sales (+1.7% vs expectations of +0.8% year-on-year) and industrial production data (+2.3% vs +0.4% in February) out yesterday for March were much stronger than any analyst was expecting. But it was only for March, and questions linger about their April data. Still it is better to lead into that with a good prior month.

There were two factory PMI surveys out for China yesterday. The official one has it expanding marginally slower and at a quite modest rate. The unofficial S&P Global version reported a slightly stronger expansion. The official services PMI showed a slightly larger contraction after the surprise tiny March expansion.

In Taiwan, they also reported GDP and it will be no surprise that it was a strong +13.7% growth, well exceeding the expected +11.3% expansion.

The EU said they expect April CPI inflation to come in at 3.0%, up from +2.6% in March and all driven by higher energy costs.

The ECB reviewed its monetary policy settings overnight and left its policy rate unchanged, as expected. (The English central bank did the same.)

Here in Australia, CoreLogic said its Home Value Index rose by +0.3% in April, slowing from a +0.6% increase in March and this latest level is the weakest growth in nearly a year. But values are now falling in the nation’s two largest property markets and they are easing in every other capital city. The prospect of another rate hike next Tuesday isn't helping.

Global container freight rates were little-changed last week from the prior one, and are now +6% higher than year-ago levels. There were few notable regional route changes. And bulk freight rates also held unchanged over the past week although at a high level. From a year ago these rates are up +90% however.

The UST 10yr yield is now just on 4.39%, down -2 bps from this time yesterday. The key 2-10 yield curve is now at +51 bps (+2 bps). Their 1-5 curve is now at +30 bps (unchanged) and the 3 mth-10yr curve is at +75 bps (-1 bp). The China 10 year bond rate is now at 1.75%, unchanged. The Japanese 10 year bond yield is up +6 bps at 2.52% and again a new modern record. The Australian 10 year bond yield starts today at 5.02%, unchanged from yesterday. 

Wall Street was higher today with the S&P500 up +1.1% in Thursday trade. Overnight European markets were all higher too between London's +1.6% and Paris's +0.5%. Yesterday Tokyo fell -1.1%. Hong Kong fell -1.3% while Shanghai was up a minor +0.1%. Singapore rose a sharp +1.1%. The ASX200 ended down -0.2%. 

The price of gold will start today up +US$72 at US$4616/oz. Silver is up +US$3 at just under US$74/oz.

American oil prices are down -US$3 at just on US$103.50/bbl, while the international Brent price is down -US$9.50, and now at US$109/bbl.

The Australian dollar is back up +60 bps from yesterday at this time at 71.9 USc. Against the Japanese yen we are down -120 bps at ¥112.4. Against the euro we are up +30 bps at just on 61.3 euro cents. 

The bitcoin price starts today at US$76,167 and up +0.3% from this time yesterday. Volatility over the past 24 hours has been modest at just under +/- 1.2%.