Economy Watch

Kia ora,Welcome to Thursday's Economy Watch where we follow the economic events and trends that affect Aotearoa/New Zealand.I'm David Chaston and this is the international edition from Interest.co.nz.And today we lead with news the US yield curve has steepened overnight on messy talk about the US Fed's independence, and arbitrary US tariff statements.In more direct economic news, US mortgage applications fell sharply last week, even after adjusting for the holiday weekend. There were -10% lower than the prior week. But they are still +18% higher than a year ago. To be fair, year-ago levels were unusually low. Rising interest rates are getting the blame for the recent fall-off in activityAmerican producer prices rose +2.3% in June which was much less than the May +2.7% rise and less than the expected +2.5%. A rather large and unusual monthly drop in logistics costs kept the overall index restrained.Meanwhile US industrial production inched higher, up +0.7% in June from a year ago. It was driven by a good rise in businesses equipment and mining but that masked a fall in the much larger sector manufacturing consumer goods. But to give better context, neither of those year-on-year gains showed up in June.And that flat recent trend is showing up in the Fed's July Beige Book surveys. Economic activity increased slightly from late May through early July. Five Districts reported slight or modest gains, five had flat activity, and the remaining two Districts noted modest declines in activity. There was nothing here indicating rising business or consumer sentiment and impending investment - pointedly, quite the opposite.Across the border, Canadian housing starts in June stayed high, and certainly higher than expected. They were expected to retreat somewhat after a strong May, but remained at those elevated levels.And staying in Canada, they have released data that shows the gap between the top earners and the bottom earners has reached a record divide. The bottom 40% of households now have less than 3% of all household wealth. The top 10% have almost half. It is a twist that foreshadows future social stresses.Later today we will get Japanese trade data for June, and that is expected to be positive.And as expected. the Indonesian central bank cut its policy rate late yesterday by-25 bps to 5.25%. They said the tariff-rate 'deal' with the US will be positive for them.Also later today we will be watching the June labour market report for Australia. Another good jobs gain is expected (+20,000), skewed sharply towards full-time positions. And we will get an update in Australian inflation expectations.The UST 10yr yield is now at 4.46%, down -3 bps from yesterday at this time. The price of gold will start today at US$3,354/oz, up +US$27 from yesterday at this time.American oil prices are little-changed at US$66.50/bbl while the international Brent price is still just over US$68.50/bbl.The Kiwi dollar is now at 59.5 USc and up +10 bps from this time yesterday. Against the Aussie we are down -20 bps at 91.1 AUc. Against the euro we are also down -20 bps at 51.1 euro cents. That all means our TWI-5 starts today at just on 67.2, and down -20 bps.The bitcoin price starts today at US$119,039 and up +1.4% from this time yesterday. And that takes it back to NZ$200,000. Volatility over the past 24 hours has been modest, at just on +/-1.5%.You can get more news affecting the economy in New Zealand from interest.co.nz.Kia ora. I'm David Chaston. And we will do this again tomorrow.

Kia ora,Welcome to Wednesday's Economy Watch where we follow the economic events and trends that affect Aotearoa/New Zealand.I'm David Chaston and this is the international edition from Interest.co.nz.And today we lead with news US inflation is rising and tariffs are getting the blame.But first, the overnight dairy auction brought prices +1.1% higher in USD terms, +3.6% higher in NZD terms. It was the first rise we have had in these full auctions since yearly May. This time, the expected +2.5% rise in SMP was matched by an unexpected rise of +1.7% in WMP prices. Butter prices were unchanged but cheddar cheese prices fell a sharpish -5.6%.In the US they got the expected rise in CPI inflation for June, up 2.7% when it was rising 2.4% in May. The Fed will have noticed that "core inflation" rose 2.9%. Food prices rose 3.0% and rents up 3.8%. The overall level was restrained by an -8.3% drop in petrol prices. As those year-ago petrol prices normalise in future months, they won't be restraining anything. Just in time for the pass-through of the tariff-taxes. An independent Fed will be concerned about the upwad trajectory.A Fed factory survey in the New York state recorded a rise in July, their first since February. But they are seeing input cost pressure picking up. However they also report it is easier to pass on those costs and seemed relieved about that.Canada also reported its June CPI inflation rate, coming in at 1.9%, up from 1.7% in May.India reported declining merchandise exports in June, in fact their lowest level of the year and almost -8% lower than year-ago levels. Imports fell too. But strong services exports (outsourcing services) balanced things out. In contrast to China, India's rise is domestically-driven, not foreign trade driven, making them somewhat insulated from the tariff-wars.China reported that its Q2-2025 economy expanded +5.2% in inflation-adjusted terms from Q2-2024. This was bang on what Beijing had set as a target, and what observers were expecting them to announce. Strong exports and consumer subsidies helped a lot.China said its retail sales were up +4.8% in June from a year ago, its industrial production up +6.8%. So that suggests they had the best of both worlds - rising industry and rising internal consumption. That they seem to have done this all with only a modest rise in electricity production (+1.7%) would be impressive if it was believable. They are almost certainly making big strides in energy efficiency but it is unlikely as reported. Despite these cred issues however, it is clear that the Chinese economy is not going backward.But even if they aren't as steep as they have been over any of the past 15 months, new house prices in China are still falling. Only 12 of the 70 largest cities had prices that held basically unchanged however. But for resales, none were in that category. The lure of housing speculation in China is but a distant memory. For most developers that is trouble. But pockets like in Shenzhen may be seeing a bit of a shine.In the EU, industrial production surprised with a good +3.4% gain in May, far better than expected and continuing the 2025 expansion. The gains were even stronger in the euro areaSo it will be no surprise to learn that German ZEW sentiment seems to be in full recovery mode; this data for July, so those industrial production gains have likely continued.In Australia, the Westpac/Melbourne Institute consumer sentiment survey showed a third consecutive rise in July, although a small one. Despite the surprise no-cut by the RBA recently, most consumers still expect interest rates to move lower from here. But they remain uncertain about the outlook for the overall economy and jobs. Housing-related sentiment dipped slightly but price expectations remained high.And staying in Australia, the RBA has reached the preliminary view that it would be in the public interest to remove surcharging on eftpos, Mastercard and Visa cards. They also want to lower the cap on interchange fees paid by businesses, and require card networks and large acquirers to publish the fees they charge. They are now in the 'consultation' phase, which will no doubt involve fierce pushback. Here the Commerce Commission has been looking at the same issues, and will report on the New Zealand changes they want to see, very soon.The UST 10yr yield is now at 4.49%, up +6 bps from yesterday at this time.The price of gold will start today at US$3,327/oz, down -US$22 from yesterday at this time.American oil prices are down -50 USc to US$66.50/bbl while the international Brent price is just over US$68.50/bbl.The Kiwi dollar is now at 59.4 USc and down -30 bps from this time yesterday. Against the Aussie we are unchanged at 91.3 AUc. Against the euro we are also unchanged at 51.3 euro cents. That all means our TWI-5 starts today at just under 67.4, and down -10 bps.The bitcoin price starts today at US$117,421 and down -2.0% from this time yesterday. And that takes it back below NZ$200,000. Volatility over the past 24 hours has been modest, still just on +/-1.9%.You can get more news affecting the economy in New Zealand from interest.co.nz.Kia ora. I'm David Chaston. And we will do this again tomorrow.

Kia ora,Welcome to Tuesday's Economy Watch where we follow the economic events and trends that affect Aotearoa/New Zealand.I'm David Chaston and this is the international edition from Interest.co.nz.And today we lead with news there may be trade policy chaos, and it may get worse, but you wouldn't know it from today's data, especially June data from China.But first, India said its CPI inflation is falling, and quite quickly now, taken lower by falling food prices. Their CPI fell for the eighth straight month, down to 2.1% in June, the lowest level since January 2019, down from 2.8% in May. Analysts had expected it to fall to 2.5% in June, so this is quite a sharper move lower. You may recall the recent 7.4% peak in October 2024, then also driven by food prices.The question now is, will the RBI cut its 5.5% policy rate. Many analysts don't think the Indian central bank is ready yet to do that. They next meet on August 7.In Singapore they said their economy was 4.3% higher in Q2-2025 than Q2-2024. Their GDP rose +1.4% s.a. in the three months through June. Analysts had expected the rise to be only +0.8% increase. Construction helped drive the June result, surging 4.4%. The Q1-2025 contract was revised to -0.5%. Apart from that Q1-2025 stumble, their expansion has been rising since early 2023.In Japan, machinery orders didn't fall as much in May as anticipated (after a big dip in April), so they ended +6.6% higher than year ago levels.In China, so far, the Trump tariffs or the uncertainty surrounding them have had no noticeable negative impact on their exports. They came in at US$325 bln in June, up +5.8% from a year ago and up +$9 bln from May. This was better than expected. Imports were also little-changed, up +1.1% from a year ago, slightly softer than expected. The main impact of the US tariff war against everyone is that China is benefiting as the US makes enemies everywhere. The details by country are here.China's trade surplus widened significantly to +US$115 bln in June, up from +US$99 bln in June 2024. China's trade surplus with the US widened to US$26.5 bln in June, up +47% from May.Meanwhile, new yuan loans rose in June, and by more than expected. Typically, we see a June rise as banks push to achieve quarterly targets. But this rise is far better than even for that, and better than the rise a year ago. Helping was a Beijing push to front-load bond sales being rolled out to support their economy during the tariff trade war. In the end they issued ¥2.24 tln in new loans in June, well above the expected ¥1.8 tln. (This data never shows how much is directed to SOE borrowing.)We should not forget the impact of the consumer subsidies being deployed to keep China's retail demand elevated. They seem quite effective, but clearly they cannot continue indefinitely. Some regions are already starting to turn them off due to cost reasons, so we won't have long to find the reaction to that.In the US all eyes are on what the June CPI inflation will come in at. It was 2.4% in May, and is widely expected to come in at 2.7% in June when it is reported tomorrow. Markets price no chance of a rate cut by the Fed at their next review at the end of the month.The UST 10yr yield is now at 4.43%, little-changed from yesterday at this time. The price of gold will start today at US$3,349/oz, down -US$6 from yesterday at this time.American oil prices are down -US$1.50 just on US$67/bbl while the international Brent price is just over US$69/bbl.The Kiwi dollar is now at 59.7 USc and down -40 bps from this time yesterday. Against the Aussie we are down -10 bps at 91.3 AUc. Against the euro we are down -20 bps at 51.3 euro cents. That all means our TWI-5 starts today at just on 67.4, and down -20 bps.The bitcoin price starts today at US$119,767 and up +0.8% from this time yesterday. And that takes it just on NZ$200,000. Volatility over the past 24 hours has been modest at just on +/-1.9%.You can get more news affecting the economy in New Zealand from interest.co.nz.Kia ora. I'm David Chaston. And we will do this again tomorrow.

Kia ora,Welcome to Monday's Economy Watch where we follow the economic events and trends that affect Aotearoa/New Zealand.I'm David Chaston and this is the international edition from Interest.co.nz.And today we lead with news August 1 is the new deadline for tariff negotiations with the US. It's an endlessly moving 'deadline' bourne out of frustration at being unable to make any meaningful deals.This week will feature a first peek at June inflation components with the selected price data due out on Thursday. Maybe before that we will get the June REINZ data. In Australia, all eyes will be on their June labour market data due on Thursday too.Later today we will get China's June export and import data to be followed later in the week with China's big monthly data dump which will include their Q2-2025 GDP result. It will be a surprise if they have to admit a variance to their official target (5.2%?).In the US it will be all about tariff-setting, interspersed with June CPI data (also likely to match what their government wants - 2.5%). Canada will also release their June inflation result, with a more credible process, and markets expect (3.0%). Japan chimes in with its version, expected to be 3.3%.In the background there will be the start of Q2 earnings results from Wall Street majors, including some big banks.Over the weekend, Canada reported something of a surprise, because their labour market strengthened in June. Not only did they generate +83,000 new jobs in the month when no gains were expected, their jobless rate dipped when it was expected to rise. Even though +70,000 of those new jobs were part-time, the +13,000 new full-time jobs was much better than the -1,000 full-time job losses expected. Even wages rose +3.2% from a year ago, although they did slip slightly from May and have remained flat since January. Given the forces being applied by their bully neighbour, it is hard to know whether this overall June result is just an anomaly or an indication of resilience. Only time will tell.Canada also released May building consent data overnight and it was also unusually strong, up at a +12% pa rate from April. From a year ago the June consent values were up +5.1% on an inflation-adjusted basis. By any standard this is very good too.In the US, the level of tariff-taxes being imposed on Americans is becoming clearer. The latest US Government accounts show them hitting US$27 bln in June, US$113 bln for the nine months to June. Tariffs are paid by the importer and become a cost that will be embedded into how those products are sold. Treasury officials anticipate further growth in tariffs collected, expecting them to reach US$300 bln in the 2025 calendar year.Those added taxes allowed the US Federal Government to report a +US$27 bln surplus in June. In June 2024 they reported a -US$71 bln deficit. In the twelve months to June, they have accumulated a -US$1.9 tln deficit, more than the -US$1.8 tln in the 2024 fiscal year.The tariff boost for June got the benefit of some seasonal shifts, Treasury officials noted. Adjusting for those, June would have shown a -US$70 bln deficit instead of the +US$27 bln surplus actually reported, they said.The weekend brought new tariff threats to Mexico and the EU of 35%. They are moving to unilateral positions because they seem hopeless at negotiating, completely misunderstanding the process.Perhaps we should note that the US dollar has fallen -11% from the Trump II January inauguration to now. In the whole of the Trump I presidency it fell a net -10%. So the decline in the value of the greenback is just getting started this time, it seems. Holding American assets by foreigners is going to involve sinking currency pressures. And it will become much more costly for American investors to buy foreign assets for the same reason. With fiscal mismanagement rife, it is hard to see this 'improving' in the next few years.And some of that uncertainty is leaking into company balance sheets. Credit rating downgrades now exceed upgrade in the listed US corporate scene, the first time that has happened since 2021. Company cash balances are shrinking - not fast yet, but that is a turn. More companies are losing investment grade status. All this goes to the heart of company valuation levels. The forward 12-month P/E ratio for the S&P 500 is 22.3, far higher than historic benchmarks.And in Japan, we should keep an eye on parliamentary elections that will be held on Sunday, July 20 for their upper house. Given the the national government of conservative Shigeru Ishiba relies on a tenuous coalition with a small religious party, this has become a referendum on Ishiba's stewardship.And China announced a +2% increase in their national state pension starting January 2025. Because we are more than six months into this year, presumably back-pay will be involved. This year's increase, the 21st in a row, comes as studies project the system is on track to run out of money in about a decade. Until 2015, the annual increases were +10% but have shrunk away sharply since as the demographic forces have turned tougher. Their pension system is expected to run out of funds in about 10 years.The UST 10yr yield is now at 4.42%, unchanged from Saturday, up +10 bps for the week.The price of gold will start today at US$3,355/oz, little-changed from Saturday, but up a net +US$18/oz from a week ago.American oil prices are still just over US$68.50/bbl while the international Brent price is just over US$70.50/bbl. That is up a net +US$2 in a week.The Kiwi dollar is now at 60.1 USc, unchanged from Saturday, but down -½c from this time last week. Against the Aussie we are up +10 bps at 91.4 AUc. Against the euro we are holding at 51.4 euro cents. That all means our TWI-5 starts today still at just on 67.6, but down -30 bps for the week.The bitcoin price starts today at US$118,763, a new record high and up +1.1% from this time Saturday. Volatility over the past 24 hours has been modest at just on +/-0.9%.You can get more news affecting the economy in New Zealand from interest.co.nz.Kia ora. I'm David Chaston. And we will do this again tomorrow.

Kia ora,Welcome to Friday's Economy Watch where we follow the economic events and trends that affect Aotearoa/New Zealand.I'm David Chaston and this is the international edition from Interest.co.nz.And today we lead with news commodity currencies are in favour at the end of the week as global commodity prices get a halo boost from the taxes Americans are prepared to pay for commodities. Risk is in favour; 'greed is good' and blindness to the downside possibilities seems wilful. It helps that heavyweight investors have gone on their summer vacations.But first, US initial jobless claims came in at 240,800 last week, an increase and a bit more than seasonal factors would have expected. There are now 1.91 mln people on these benefits, +111,000 or +6.2% or more than at this time last year. That is their highest level since 2021.There was a smaller US Treasury 30yr bond auction earlier today and if it wasn't for the SOMA activity from the New York Fed, demand would have been lighter than at the prior event. In the end, it delivered a median yield of 4.84%, little-changed from the 4.80% at the prior equivalent event.In Japan, their June producer prices were up +2.9% from a year ago, a notable easing from the +4.3% rise in March. In fact, from May, Japanese producer prices slipped marginally. From early 2022, there has been an overall trend of these price increases easing and they may be now heading into a bit of a deflationary period.China's vehicle sales grew by almost +14% in June from the same month a year ago following an +11% rise in May. Sales of new energy vehicles (NEVs) surged more than +26% in June, marking the fourth consecutive monthly increase. In the first half of 2025, total vehicle sales climbed +11%, while NEV sales jumped more than +40%. They are on target for NEV sales to exceed 16 mln units - which is more than all vehicle sales in the US. China is on track for sales of 33 mln for the full year, easily the world's largest vehicle market.The Korean central bank kept its policy rate unchanged at 2.5% as expected. It last cut its rate in May.Australian business turnover data has revealed that May activity was softish, recording a small slip from April. May was held back by a fall in their mining sector. But from a year ago, May 2025 was overall +5.9% higher on a current price basis.Container freight rates fell -5% last week from the prior week, almost all on outbound cargoes from China. Overall rates are now half year-ago levels, although to be fair those year-ago levels were juiced up by the Red Sea crisis. Bulk cargo rates were little changed this week but are -25% lower than year-ago levels.The UST 10yr yield is now at 4.35%, and up +1 bp from yesterday.The price of gold will start today at US$3,317/oz, and up +US$9 from yesterday.American oil prices are down -US$2 at US$66.50/bbl while the international Brent price is now just over US$68.50/bbl.The Kiwi dollar is now at 60.3 USc, up +25 bps from yesterday. Against the Aussie we are down -10 bps at 91.6 AUc. Against the euro we are up +30 bps at 51.5 euro cents. That all means our TWI-5 starts today at just on 67.7 and +20 bps firmer than yesterday at this time.The bitcoin price starts today at US$113,549, a record high and up +4.0% from this time yesterday. Volatility over the past 24 hours has been moderate at just on +/-2.0%.You can get more news affecting the economy in New Zealand from interest.co.nz.Kia ora. I'm David Chaston. And we will do this again on Monday.

Kia ora,Welcome to Thursday's Economy Watch where we follow the economic events and trends that affect Aotearoa/New Zealand.I'm David Chaston and this is the international edition from Interest.co.nz.And today we lead with news of more tariff threats, but markets are over that drama, shoving its impact to the background. If there is news on a US-EU deal, then that will likely change.First in the US, even though the benchmark 30 year home loan interest rate was little-changed, mortgage applications rose a sharpish +9.3% from the prior week, and that was a rise for a third week in a row, a relatively unusual streak. Both refinance and new home purchases had good gains this week.One reason they may be more active is that Americans are shunning international travel, kind of like in the pandemic emergency, perhaps fearful of the reception they will get in both Europe, South America and Asia. And the feeling is mutual. EU-US airfares are diving and services are being cut back. But Canada is now a hit, with other-than-the-US destinations much more popular, and Toronto especially is getting a surge. In the world of travel, the US is the only major market suffering declines in visitors.The US Federal reserve released the minutes of its June 19 (NZT) meeting. And that hinted at a developing divide among members between those who support the Trump view that the tariff-tax impact on inflation will be transitory, and those that think it will be 'persistent' and do long-term and lasting damage to American cost competitiveness. And that divergence affected their view of when to next cut rates. At this meeting at least those with the fear of embedded inflation won out and rates were left unchanged. But financial markets have priced in two more -25 bps rate cuts later this year.At least one of their number are in a broader Apprentice-style competition for Powell's job - Christopher Waller.There was another US Treasury bond auction overnight, for their 10 year maturity, and it was normally supported. It delivered an median yield of 4.31% compared to the 4.38% at the prior equivalent event a month ago.Across the Pacific, Japanese machine tool orders rose in June from May, maintaining their better level in a trend that started in March. And it was demand from domestic manufacturers that were especially strong. Even though in total they were just marginally less than a year ago, that year ago benchmark was unusually strong for a 2024 month.The heart of the northern hemisphere holiday season is underway and financial market activity is lighter than usual. This period will likely last until the end of August, culminating at the American Labor Day long weekend.The UST 10yr yield is now at 4.34%, and down -8 bps from yesterday.And we should note that Nvidia has become the first company to command an equity valuation of US$4 tln.The price of gold will start today at US$3,308/oz, and up a mere +US$2 from yesterday.American oil prices are unchanged at US$68.50/bbl while the international Brent price is still just under US$70.50/bbl.The Kiwi dollar is still just on 60 USc, essentially unchanged from yesterday. Against the Aussie we are down -20 bps at 91.7 AUc. Against the euro we are holding at 51.2 euro cents. That all means our TWI-5 starts today at just on 67.5 and -10 bps lower from yesterday at this time.The bitcoin price starts today at US$109,140 and virtually unchanged (+0.1%) from this time yesterday. Volatility over the past 24 hours has been low at just on +/-0.6%.You can get more news affecting the economy in New Zealand from interest.co.nz.Kia ora. I'm David Chaston. And we will do this again tomorrow.

Kia ora,Welcome to Wednesday's Economy Watch where we follow the economic events and trends that affect Aotearoa/New Zealand.I'm David Chaston and this is the international edition from Interest.co.nz.And today we lead with news US tariff threats are shifting from being aimed at trading 'partners' to a focus on commodities, today especially copper. Protection of favoured US business interests is the goal, cloaked in the labels of 'national security'.But first up today, the overnight dairy Pulse auction delivered less change than expected, essentially holding on to the SMP and WMP prices at the prior week's full auction. But in the meantime the NZD has retreated so both delivered good gains in NZD, up +1.1% for SMP and up +3.1% for WMP.The US retail impulse as measured by the Redbook survey delivered a very good +5.9% gain over the same week a year ago, but it should be noted that earlier base week was an unusual down one.And the New York Fed's national survey of consumer inflation expectations returned to a 'normal' 3% in June, and a five month low. But some components remain a worry. Those surveyed thing food prices will rise 5.5%, rents will rise +9.1% and medical care by +9.3%Meanwhile the NFIB Small Business Optimism Index for June was little changed at it long run levelThe popular US Treasury three year bond auction delivered unchanged demand and little-change on the median yields achieved. Today that came in at 3.84%, whereas the equivalent event a month ago was at 3.92%.US consumer debt grew a very modest +US$5 bln in May, half the expansion in April and well below the average for the past year. The slowdown was very acute for revolving debt, like credit cards.In Canada, the widely-watched local PMI turned positive in June following two toughish months.In Germany, both exports and imports were expected to decline in May from April, and they did, but by slightly more than was expected. But both remain higher than year ago levels.In Australia, the widely watched NAB business sentiment survey picked up and that was a much better outcome than the contraction expected. In fact this June result for business conditions broke the mould of the long-running decline that started in June 2022.That survey didn't point to anything special in terms of cost pressures. But those cost pressures clearly worried the RBA when it surprised financial markets with its no-change decision yesterday. The widely-expected rate cut didn't happen and so household budgets will have to wait for more relief. The RBA did pick up the resilience in the overall economy, but judged it too early to respond to perceptions of economic weaknesses. In fact they saw the balance of risks from trade and labour market cost activity not requiring a boost from a cut in interest rates.We should note that US tariff uncertainty is screwing around with some key commodity prices, especially copper, which has soared over the past day or so to over US$12,000/tonne and easily a new record high. Some US futures contracts are now up over US$13,000/tonne. US products that use copper are going to get a cost jolt. Because it is a jolt directly related to a new US tariff-tax, it won't affect products made outside the US.The UST 10yr yield is now at 4.42%, and up another +3 bps from yesterday.The price of gold will start today at US$3,306/oz, and down -US$25 from yesterday.American oil prices are up another +US$1 at just under US$68.50/bbl while the international Brent price is now just under US$70.50/bbl.The Kiwi dollar is now just on 60 USc, little-changed from yesterday. Against the Aussie we are down -50 bps at 91.9 AUc. Against the euro we are down -10 bps at 51.2 euro cents. That all means our TWI-5 starts today at just on 67.6 and -10 bps lower from yesterday at this time.The bitcoin price starts today at US$109,015 and up +1.0% from this time yesterday. Volatility over the past 24 hours has been moderate at just on +/-2.3%.You can get more news affecting the economy in New Zealand from interest.co.nz.Kia ora. I'm David Chaston. And we will do this again tomorrow.

Kia ora,Welcome to Tuesday's Economy Watch where we follow the economic events and trends that affect Aotearoa/New Zealand.I'm David Chaston and this is the international edition from Interest.co.nz.And today we lead with news financial markets have turned cautious, unsure of what to make of the set of 'tariff letters'.In Washington, because they couldn't complete tariff deals in the "90 deals in 90 days" to July 9, they have moved the 'deadline' to August 1. The shambles extends. And the capricious tariff letters are starting to be issued, first to Japan and South Korea at 25%, and then a bunch of developing countries including Malaysia (25%) and South Africa (30%).Essentially, the US is pushing countries into China's orbit, and creating conditions where many will shy away from buying US goods due to the bald insult. US businesses are likely to suffer, not only from financial market reactions, but also on the demand front. Other governments' trust in the US is in free-fall.Separately, we can also report that the NY Fed's Global Supply Chain Pressure index was neutral in June, back to its long run 'normal level'. That amounts to an easing of the May pressure as the rush to beat the tariff-taxes faded.Across the Pacific, China said its foreign exchange reserves rose by +US$32 bln to US$3.317 tln in June and that is the highest level they have had in nearly ten years (December 2015).Singapore's foreign exchange reserves stayed very high in June, even if they did dip marginally from their record high level in May.In the EU, they report retail sales by volume (inflation adjusted) and it slipped in May from April. But it stayed higher than year-ago levels although by less than +1%.Meanwhile, Germany reported its May industrial production turned up and by much more than expected. Although to be fair, it is in a bit of an overall yoyo pattern. Still, on a volume basis it too is +1.0% higher than year ago levels.So overall, even though some of it is over a month old, this set of second tier data, from the US, to Asia, to Europe isn't painting a picture of special stress.How the Australian central bank see it will be revealed later today when the RBA issues its decision on its cash rate target. Market pricing has only two-thirds of a -25 bps cut priced in although most economists think it will happen, and take their policy rate down from 3.85% to 3.60%. That will flow through to homeowner's household budgets quickly because most have variable rate deals.However it its far from certain this will give the Aussie domestic economy the boost a rate cut should deliver. It almost certainly will juice up house prices, which are already rising in anticipation. But existing borrowers seem to have decided en masse that the cash gains from lower rates will be used to pay down debt rather than be spent in generating more economic activity, which is why the RBA is cutting. To get that effect, the central bank may have to cut again later in the year. There are reviews in August, September, November and December yet to come, so plenty of opportunities for more cuts.The UST 10yr yield is now at 4.39%, and up +6 bps from yesterday.The price of gold will start today at US$3,332/oz, and down -US$4 from yesterday.American oil prices are up +US$1 at just under US$67.50/bbl while the international Brent price is now just over US$69/bbl.The Kiwi dollar is now just on 60 USc, down an outsized -60 bps from yesterday. Against the Aussie we are down -10 bps at 92.4 AUc. Against the euro we are down -20 bps at 51.3 euro cents. That all means our TWI-5 starts today at just under 67.7 and -30 bps lower from yesterday at this time.The bitcoin price starts today at US$107,923 and down -0.9% from this time yesterday. Volatility over the past 24 hours has remained low at just on +/-0.8%.You can get more news affecting the economy in New Zealand from interest.co.nz.Kia ora. I'm David Chaston. And we will do this again tomorrow.

Kia ora,Welcome to Monday's Economy Watch where we follow the economic events and trends that affect Aotearoa/New Zealand.I'm David Chaston and this is the international edition from Interest.co.nz.And today we lead with news the world is working out how live with a capricious America.First though, the week ahead will feature Wednesday afternoon's OCR review from the RBNZ, preceded Tuesday by the RBA's cash rate review. The Aussies are expected to cut their rate by -25 bps to 3.60% but the RBNZ is expected to hold at 3.25%. We will be covering the outcomes and implications of both reviews.Both Malaysia and South Korea will also be reviewing their official rates. The Malaysian will likely leave their rate unchanged at 3.00%, and the South Koreans are expected to cut theirs by -25 bps to 2.25%.In the US, apparently negotiating trade deals is complicated (who knew?) so Trump is dispensing with all that and just "sending letters" unilaterally. "90 deals in 90 days" is too hard for him. He might have got one over the line with Vietnam (he claims but the Vietnamese haven't confirmed). He sort of got one with the UK but before the 90 day clock started. And the China one he claims leaves the US in a worse position. His Treasury Secretary is promising "a few more" over the next few days and weeks. "Best deal maker of all time".And we should probably note that the integrity of official US data, from the Census Bureau, the BLS and the BEA, all now under Trump control (in the Lutnick Commerce Department), is getting increasingly questioned. Sharp budget cutbacks is resulting in fewer actual surveys, more 'estimates by officials'. Even Fed boss Powell expressed concern over the issue in questioning at the recent Congressional testimony. The data reporters are moving to a "Make Trump Look Good" approach.Suspicion is rising because there are widespread indications tariff-tax price increases are being pushed through but the BLS data isn't reflecting that.In China we will get CPI and PPI updates for June later this week. It would be supremely ironic if users came to view Chinese economic data was more trustworthy than American. It no longer seems far-fetched.Across the Pacific in Japan, household spending jumped +4.7% in May from a year ago, reversing a -0.1% fall in April and far exceeding an expected +1.2% rise. It was their fastest growth since August 2022, and that August 2022 was only good because it was off the very weak pandemic-affected base a year earlier.Singaporean retail sales rose by +1.4% in May from a year ago, accelerating from a downwardly revised +0.2% rise in April. This was the third straight month of growth and the fastest annual increase since January. But to be fair, most of the increase was driven by car sales, a very expensive and exclusive corner of their retail sector.Next, halfway around the world, EU producer prices eased again in May so that it is only +0.4% higher than year ago levels, less in the euro area. The past three months have delivered producer prices lower than in each of the prior months.German factory orders dropped by -1.4% in May from April and that was weaker than expected, but the April gain was revised higher. The May weakness however came after some very large-scale computer, electronic and optical orders in April. From a year ago, these factory orders were up +5.3%.And we should probably note that EU house prices are rising, up +5.7% from a year ago led by 10%-plus gains in Portugal (+16%), Bulgaria (+15%), Croatia (+13%), Slovakia (+12%), Hungary (+12%), and Spain (+12%).In Australia, household spending rose in May and by more than expected with a good recovery from a weak month in April. This spending was up +4.2% from May a year ago. It was their best gain in 7 months.The FAO food price index was little-changed in June from May, holding its gains from a year ago. Within that, both meat and dairy prices rose.The UST 10yr yield is now at 4.33%, and unchanged from yesterday. The price of gold will start today at US$3,336/oz, and unchanged from Saturday.American oil prices are unchanged at just under US$66.50/bbl while the international Brent price is also little-changed at just under US$68.50/bbl.The Kiwi dollar is now just on 60.6 USc, unchanged from Saturday. For the week it is up +20 bps. Against the Aussie we are up +10 bps at 92.5 AUc. Against the euro we are up +10 bps at 51.5 euro cents. That all means our TWI-5 starts today at just under 68 and up +10 bps from yesterday, and unchanged for the week.The bitcoin price starts today at US$108,921 and up +1.0% from this time yesterday. Volatility over the past 24 hours has been low at just on +/-0.5%.You can get more news affecting the economy in New Zealand from interest.co.nz.Kia ora. I'm David Chaston. And we will do this again tomorrow.

Kia ora,Welcome to Friday's Economy Watch where we follow the economic events and trends that affect Aotearoa/New Zealand.I'm David Chaston and this is the international edition from Interest.co.nz.And today we lead with news the US budget bill has now been approved by Congress setting up a big shift in fortunes for big business at the expense of those on low incomes - and handing their future generations a substantially larger deficit headache. In fact, one so large, it will impact the global economy.In the US, they are about to have another national public holiday, Independence Day, so there has been an early data dump there in advance.US non-farm payrolls expanded +147,000 in June, very similar to the May expansion and better than the expected +110,000. The variance from yesterday's ADP Employment Report will raise a few questions. Average weekly earnings went down in June from May, but were up +3.4% from a year ago. In May that annual gain was +3.8% so this metric is tightening. Month on month decreases have happened before but they are relatively infrequent and usually indicate overtime earnings are drying up.US initial jobless claims came in a 231,500 has week and similar to what was expected, taking the continuing claims level to 1.91 mln, +90,000 higher than year ago levels.These two labour market reports probably take pressure off the Fed to cut their policy rate at their next review at the very end of this month.US exports fell -4.0% in May whereas imports dipped a minor -0.1%. That saw their trade deficit rise from the prior month but stay considerably lower than the same month a year ago.US services exports dipped in the month. But locally the June ISM service sector PMI improved from its tiny May decline to a small June expansion. The S&P Global/Markit services PMI told a similar story. But both noted the rising cost worries.May American factory order levels were up sharply in May from April, to be +3.2% higher than year-ago levels. But aircraft orders drove the rise and without that the year-on-year gain was just +0.2% and far less than can be accounted for by inflation. Even the month-on-month gain without aircraft wasn't significant, but at least it was a gain.And Trump's boast he will do "90 deals in 90 days" resulting from his tariff pressure looks like it will fall completely flat. The US has announced one, with Vietnam, but the Vietnamese will only say they are still working through the details. The talks on all the others are dragging on inconclusively.In Canada, their export and import data for May was little-changed overall. But in fact that hides some pretty significant shifts. Their trade with the US fell a lot, and they how have the smallest share going to the US since 1997, twenty eight years ago. In short order, Canadians have managed to reorient their trade to others successfully.Across the Pacific, analysts had expected the Caixin services PMI for China to maintain its small but steady expansion. But it weakened. Not a lot, and it is still expanding, but it will be disconcerting all the same. And it is now at a nine month low.Surprising analysts who expected a +AU$5 bln monthly trade surplus, the actual Australian trade surplus for May came in at half that level, to its lowest level in five years. May exports fell faster, down -2.7% from April while May imports rose faster, up +3.8% from April. Interestingly, exports of gold are down -3.4% in May from a year ago - and that is in AU$ terms, not volume.Container freight rates fell -5.7% last week from the prior week to be -45% lower than year ago levels. Trans-Pacific rates fell -15% as the trade war crimps these supply chains. Bulk freight rates fell -13% in the past week and are now -33% lower than year-ago levels.The UST 10yr yield is now at 4.34%, and up +5 bps from yesterday at this time.The price of gold will start today at US$3,326/oz, and down -US$20 from yesterday.American oil prices are little-changed at just under US$67/bbl while the international Brent price is down -50 USc at just over US$68.50/bbl. Last week's North American rig counts took an unusually sharp dip. There is certainly no evidence yet that investors are piling in to drill more aggressively.The Kiwi dollar is now just under 60.7 USc, down -10 bps from yesterday. Against the Aussie we are down -20 bps at 92.3 AUc. Against the euro we are unchanged at 51.6 euro cents. That all means our TWI-5 starts today at just over 68 and down -10 bps from yesterday.The bitcoin price starts today at US$109,173 and up +0.5% from this time yesterday. Volatility over the past 24 hours has been low at just over +/-0.8%.You can get more news affecting the economy in New Zealand from interest.co.nz.Kia ora. I'm David Chaston. And we will do this again on Monday.

Kia ora,Welcome to Thursday's Economy Watch where we follow the economic events and trends that affect Aotearoa/New Zealand.I'm David Chaston and this is the international edition from Interest.co.nz.And today we lead with news the financial markets are awaiting the reconciliation of the US budget bill between the Senate and House versions. And they are waiting for news of "the countries lining up to make a [tariff] deal". There only seems to be one, Vietnam, and the details of that 'deal' remain murky.Meanwhile, American home loan interest rates fell last week to a three month low and that brought a surge in refinancing, although applications for a new mortgage were basically unchanged at a low level. That resulted in the total volume of mortgage applications rising by +2.7% last week from the prior week.Monitored job cuts in June shows it a relatively quiet month with 47,000 layoffs recorded. So far in 2025, the retail sector has cut the most private-sector jobs this year with 80,000 lost, hit by tariffs, inflation, and uncertainty. The expected DOGE cuts aren't as prominent yet due to the ongoing legal action uncertainty.But in contract, the US ADP Employment Report recorded a shrinkage in private payrolls in June by -33,000 when a +95,000 gain was expected. That's a big miss. This is a precursor for tomorrow's non-farm payrolls report for June which is expected to show a low +110,000 jobs gain. And while the ADP Report has a spotty track record matching the official data, you would have to suspect there are downside risks to the non-farm payroll estimates.Whatever the actual data shows, it seems pretty clear the stuffing is being knocked out of the once-strong engine of the US economy. 2025 is shaping up to be their weakest jobs growth since at least 2015 (pandemic excepted).US vehicle sales are also easing, down to a 15.3 mln annual rate and well below the March rate of 17.8 mln. The pre-tariff surge has created a shadow. But few analysts think it will rise much, mainly because of the tariff taxes.We don't have the equivalent China vehicle sales data yet but it will be very much higher (32.7 mln in the year to May), However they have their own problems of very rapid innovation and obsolescence, and worrying viability of large parts of their industry. Xiaomi's sudden entry into this sector is causing an existential shock for its rivals.Singapore's manufacturing PMI inched up out of contraction in June from May, snapping a two-month retreat as firms likely front-loaded orders ahead of looming American tariff deadlines. The recovery was primarily driven by faster expansion in new orders, new exports, and input purchases.In Australia, retail sales rose marginally in May to be +3.3% higher than year-ago levels. For context, Australian CPI was up +2.4% in the year to March, up +2.1% in their monthly inflation indicator for the year to May. So they have been getting 'real' volume increases although that may have faded recently. And this recent fade may bolster the case for a July 8 RBA rate cut.Meanwhile Australian building consents stopped falling in May as they had done in April, and are now +6.5% higher than May 2024. Multi-unit buildings are back driving the increase. The RBA's May 21 rate cut is getting the credit.The UST 10yr yield is now at 4.29%, and up +4 bps from yesterday at this time.The price of gold will start today at US$3,347/oz, and up +US$10 from yesterday.American oil prices are much firmer from yesterday, up +US$1.50 at just over US$67/bbl while the international Brent price is up the same at just under US$69/bbl.The Kiwi dollar is now just on 60.8 USc, down -10 bps from yesterday. Against the Aussie we are down -10 bps at 92.5 AUc. Against the euro we are down the same at 51.6 euro cents. That all means our TWI-5 starts today at 68.1 and also down -10 bps from yesterday.The bitcoin price starts today at US$109,025 and up +2.6% from this time yesterday. Volatility over the past 24 hours has been modest at just over +/-1.9%.You can get more news affecting the economy in New Zealand from interest.co.nz.Kia ora. I'm David Chaston. And we will do this again tomorrow.

Kia ora,Welcome to Wednesday's Economy Watch where we follow the economic events and trends that affect Aotearoa/New Zealand.I'm David Chaston and this is the international edition from Interest.co.nz.And today we lead with news the US Senate has agreed the Trump budget, but only after the Vice President broke a deadlock with a casting vote. Financial markets are wondering about the wisdom in all this with equities hesitating, bond yields turning up, and the USD drifting lower. To be fair, none of these movements are large today. But the implications of massively higher US debt levels are as is the opening of the magic-money accounting they have adopted. It will be the bond market that makes the practical judgement.First however, the overnight dairy auction came in as weak as the futures market suggested it might. The SMP price fell -1.7%, but only to match the prior week's Pulse event. However the more important WMP price fell -5.1% and back to levels last seen at the beginning of the year. One local reason may have been the sharp increase in volumes offered, +10,000 tonnes more than at the prior event two weeks ago, and +6.7% more than the event in the same week a year ago. This volume offer jump came as milk production rose in all key producing regions (except Australia).Overall, prices were down -4.1% in USD terms at this even, down -5.2% in NZD as the greenback weakens further.The price downshift will have analysts reaching for their pencils although it might be too soon for them to backtrack on their 2025/26 payout forecasts. Fonterra's current season results are pretty much locked in and will be reported in late September. But their new year may be off to a soft start.Last week, the US Redbook index was +4.9% higher than year ago levels but still in the easing trend that started in early April.The May level of job openings rose unexpectedly to more than 7.7 mln largely on a surge for foodservice jobs. Analysts didn't see this coming but perhaps they should have given the sharp ICE immigration crackdowns underway. These roles at these volumes will be hard to fill.The latest factory PMI report from the ISM shows a sector still in contraction, being led by weak new order inflows. The internationally benchmarked S&P Global/Markit version reported an expansion and a moderate one at that, But both noted rising inflation pressures.It appears that the expected rise in June car sales didn't occur, dipping to its slowest pace of the year.Apparently its a good time to be in the logistics sector in the US with inventory levels rising and supply chains being stressed. The Logistics Managers Index is running at an unusually high level.The Dallas Fed regional services survey reported a continuing contraction, although not as steep in June as May.And the RCM/TIPP Economic Optimism Index was expected to bounce back in July but in fact it resumed the decline in a trend that started in December 2024.After falling to a recent low in April, Japanese consumer sentiment is on the rise again, back to where it was at the start of the year, but not yet back to 2024 levels. But at least it is rising.Yesterday we noted that the official factory PMI for China "improved" but was still showing a contraction. Today, the alternative Caixin factory PMI came in a little better than that, rising from May's tiney contraction to June's small expansion. These shifts don't mean a lot, but at least they are going in an improved direction. The Caixin survey noted "Higher new order inflows supported a renewed rise in production. That said, the rate at which new orders expanded was only marginal amid subdued exports." Trump's trade war may have kneecapped Chinese growth but it hasn't knocked them over.Overnight the ECB released the results of its May survey of consumer inflation expectations and they dipped to 2.8% when a small rise was expected. Consumers apparently thought inflation was running at 3.1% over the past 12 months. Separately the EU released its June CPI data and that shows it running at 2.0%, up from 1.9% in May.In Australia, large parts of the east cost is hunkering down for a lashing of strong winds and heavy rain. And that will include Sydney.The UST 10yr yield is now at 4.25%, and up +2 bps from yesterday at this time.The price of gold will start today at US$3,337/oz, and up +US$45 from yesterday.American oil prices are marginally firmer from yesterday, up +50 USc at just on US$65.50/bbl while the international Brent price is up the same at just over US$67/bbl.The Kiwi dollar is now just on 60.9 USc, unchanged from yesterday. Against the Aussie we are down -10 bps at 92.6 AUc. Against the euro we are down the same at 51.7 euro cents. That all means our TWI-5 starts today at 68.2 and unchanged from yesterday.The bitcoin price starts today at US$106,292 and down -1.3% from this time yesterday. Volatility over the past 24 hours has stayed low at just over +/-0.9%.You can get more news affecting the economy in New Zealand from interest.co.nz.Kia ora. I'm David Chaston. And we will do this again tomorrow.

Kia ora,Welcome to Tuesday's Economy Watch where we follow the economic events and trends that affect Aotearoa/New Zealand.I'm David Chaston and this is the international edition from Interest.co.nz.And today we lead with news the US budget debate has financial markets on edge.But first up today, the Chicago PMI did not report the expected modest bounceback in June from the very weak May result. In fact is stayed in a severe contraction, disappointing everyone involved. It's been nearly three years since they have had any regular expansion and 2025 looks like it is shaping up the be the worst of the three.The Dallas Fed's factory survey for June was weak as well featuring shrinking new order levels. At least it was little-changed from May.As you read this, the US Senate is debating, and about to vote, on the big Trump budget bill. After years of complaining about US deficit spending and refusing to move the debt ceiling law, they are weighing whether to accede to Trump's demand to give him a free pass on both, including 'hiding' US$3.8 tln of tax cut costs. If they pass the budget, it is likely the bond market will deliver a thumbs down response, one that will affect global financial markets.On the US tariff trade bullying, there are few negotiations going well at present, for any of the parties involved.In Canada, they seem to have conceded the digital services tax issue to try and make progress on bigger issues. But the DST is still a live issue in the UK-US talks.Meanwhile, things are softening in India too. Their industrial production was up +1.2% in May from the same month in 2024, their weakest expansion in nine months and well weaker than expected.In China, there were no surprises and little movement in their official PMIs for June. Their factory sector contracted very marginally - again - and the services sector expanded marginally, also again. Basically they describe an economy marking time. But also one resilient to the trade shocks thrown at it which were designed to throw it off balance. That just hasn't happened, yet anyway.German inflation came in at 2.0% in June, a touch less than anticipated and little-different from April and May's 2.1% level. As small as it was, they weren't expecting a dip. Food prices there rose a modest +2.0% but keeping a lid on other rises was the -3.5% drop in energy prices.In Australia, Cotality/CoreLogic said its Home Value Index rose +0.6% in June from May, up marginally from the prior month but it is the strongest monthly gain since June 2024. Improved market sentiment in most major cities was behind the firming and active first home buyers are behind that. On a yearly basis, national home values climbed 2.7%. Meanwhile, rental growth continued to ease, with national rents up +3.4% over the past 12 months, the slowest annual increase since early 2021.Global air cargo demand rose +2.2% in May from a year ago, up +3.0% for international airfreight. The Asia/Pacific volumes were up a very healthy +8.2% on the same basis, no doubt related to the rush to beat US tariff deadlines. These overall volumes would have been better if the North American components hadn't been so weak (+-5.8%).Meanwhile, May air passenger travel rose +5.0%, up +6.7% for international travel and up +13.3% in the Asia/Pacific region. The only region to decline was North America (-0.5%) and mostly because of weak domestic travel.The UST 10yr yield is now at 4.23%, and down -4 bps from yesterday at this time.The price of gold will start today at US$3,2952/oz, and up +US$19 from yesterday.American oil prices are marginally softer from yesterday at just under US$65/bbl while the international Brent price is down -US$1, now just over US$66.50/bbl.The Kiwi dollar is now just on 60.9 USc, up +30 bps from yesterday. Against the Aussie we are unchanged at 92.7 AUc. Against the euro we are little-changed at 51.8 euro cents. That all means our TWI-5 starts today at 68.2 and +10 bps firmer than yesterday.The bitcoin price starts today at US$107,683 and up +0.2% from this time yesterday. Volatility over the past 24 hours has stayed low at just on +/-0.9%.You can get more news affecting the economy in New Zealand from interest.co.nz.Kia ora. I'm David Chaston. And we will do this again tomorrow.

Kia ora,Welcome to Monday's Economy Watch where we follow the economic events and trends that affect Aotearoa/New Zealand.I'm David Chaston and this is the international edition from Interest.co.nz.And today we lead with news we are now halfway through 2025, closer to the next summer holiday break than the last one. We may need it more this time because economic 'progress' is hard to find.Looking ahead this week, the big end of month data dumps for May from the RBNZ will give us an updated look at mortgage and term deposit activity. The ANZ will also update us on their business sentiment survey for June. Then later in the week the June updates from the real estate industry will be released.In Australia it will also be about retail and trade updates for May.The week end with the US on another summer holiday break, this one for their Independence Day. Their June labour market report will come a day earlier this week (another low +129,000 is expected), preceded by PMI updates from all over. Markets also expect the US to announce tariff actions after the so-called 90 day pause. But Trump deadlines mean little in war and other diplomatic areas so don't be surprised if they mean little here too. He will go head if they don't hurt his own businesses, pull back if they do.Of more importance to us will be the results of both Chinese and Japanese data and surveys.In China, deflationary pressures not helped by the tariff war are keeping China's industrial profits in a low zone. They barely hit ¥600 bln in May and that was their lowest level for a May month since 2019 and -9.1% lower than May 2024. For the five months they were down -1.1% so the pace of decline is unfortunately building.Across the Pacific in the US, the squeeze on American household incomes shows up in the latest data for personal incomes and spending, this data for May. Incomes were only +1.7% higher than a year ago. Decreases in income support for struggling households is showing up in this data. And after inflation, they will be going backwards on the income front. On the consumption front, spending was up +2.2% from a year ago, also lower than the May 2.4% CPI inflation.This is a sure sign of rising economic stress that is spreading.The final reading of the University of Michigan survey of June consumer sentiment was out overnight and it confirmed the spreading household stress. This survey has been stuck at one of its worst readings on record for two months after plunging almost -30% in the first four months of 2025. Over the 80 years of the survey, a drop this large this fast has almost always predicted a recession. Sentiment readings improved slightly at the start of June but were -18% lower than at the start of the year to indicate Americans expect much higher prices and a much slower economy in the coming year. It should be no surprise this is the outcome of the changed US public policy direction - but the financial markets are ignoring this signal; willfully it seems.They seem to be overlooking these same survey results that show sentiment has fallen fastest this year for the most well-off consumers, whose post-pandemic spending spree helped insulate the American economy from recession then. They aren't there to do it this time, according to the UofM survey data.In Canada, they got weekend news that Trump is going to use tariffs to punish them for trying to tax US Big Tech companies via its Digital Services Tax initiative. The US wants free access to Canada and tax-free. Earlier the Canadians had confirmed the DST, which had been passed by their Parliament, would go into effect on June 30.Separately, Canada has ordered one of the world's largest video surveillance equipment manufacturers, State-owned Hikvision, to cease operations there on national security grounds. The order bars Hikvision from conducting business in Canada and prohibits government departments and agencies from purchasing its products. Existing installations of Hikvision equipment across government properties are under review to ensure their eventual removal. Hikvision cameras and monitoring systems are widely available in Australia and New Zealand.Economic sabotage may be spreading, but so are climate risks. It is early in the northern hemisphere summer season still, but both the US and Europe are struggling with dangerous heat dome conditions. China is not immune. These are sure to have economic implications if they extend through to September as expected.The UST 10yr yield is now at 4.27%, and unchanged from Saturday.The price of gold will start today at US$3,273/oz, and little-changed from Saturday. A week ago it was at US$3365/oz so a -2.8% fall from then.American oil prices are +50c softer from Saturday at just on US$65/bbl while the international Brent price is now just on US$67.50/bbl.The Kiwi dollar is now just on 60.6 USc, up +20 bps from Saturday. A week ago it was at 59.7 USc so a net +1.5% appreciation. Against the Aussie we are -10 bps softer at 92.7 AUc. Against the euro we are unchanged at 51.7 euro cents. That all means our TWI-5 starts today at 68.1 and +10 bps firmer than Saturday. A week ago it was at 67.7 so a net +40 bps gain.The bitcoin price starts today at US$107,509 and up +0.6% from this time Saturday. Volatility over the past 24 hours has stayed low at just on +/-0.6%.You can get more news affecting the economy in New Zealand from interest.co.nz.Kia ora. I'm David Chaston. And we will do this again tomorrow.

Kia ora,Welcome to Friday's Economy Watch where we follow the economic events and trends that affect Aotearoa/New Zealand.I'm David Chaston and this is the international edition from Interest.co.nz.And today we lead with news its all about the US and the sharp weakening of the greenback. It is now at its lowest level since early 2022. And a key part of the reason is worries about the Trump attack on the Fed's independence.Meanwhile, US initial jobless claims have stayed elevated although they fell from the prior week to +227,000 which is marginally above the same week a year ago. There are now 1.87 mln people on these benefits, +124,000 more than the 1.75 mln a year ago.US Q1-2025 PCE inflation was revised higher overnight to 3.7% in updated data - and that is up from 2.4% on Q4-2025. Early impacts of tariff-taxes are starting to show through here. Real consumer spending was revised down to just +0.5% growth from the initial estimate of +1.2% and well below the Q4-2024 rise of +4.0%. These revisions don't paint a very good picture about how American consumers fared in early 2025. Final GDP 'growth' fell -0.5% in the quarter, the first decline in three years.But there was a good rise in durable goods orders in May, up +17.5% from the same month a year ago. But non-defense capital goods orders rose only +2.4% suggesting board rooms remain hesitant, and see the tariff-related order rush as nothing more than temporary.Certainly the Chicago Fed's National Activity Index doesn't point to any upturn. Nor does the latest regional Fed survey, this one from the Kansas City Fed.The May US trade balance wasn't great either, coming in with a worse deficit than expected at -US$93.7 bln with exports dipping and imports rising from April. From a year ago the result was little-different.Globally, policy imbalances cause distortions as you would expect, and in the short term at least, they can juice up trade activity despite their intentions.Elsewhere in Singapore, industrial production slipped in May to be 'only' +3.9% higher than year-ago levels. In April the gain was +5.6% so a clear easing, even if it wasn't as much as was anticipated.More generally, we will need to be careful talking about commodity prices when the US dollar is on a downslide. Almost everything is quoted in USD so rising prices now largely reflect that depreciation.Freight rates are falling after the relatively brief 'Iran crisis' hot war. And they too are quoted in USD so the falls will be magnified in other currencies. Container freight rates were down -9% last week from the week before to be -38% lower than year-ago levels - but a year-ago they were in their own Suez crisis stress. Bulk cargo rates are falling too.The UST 10yr yield is now at 4.25%, and down -4 bps from this time yesterday.The price of gold will start today at US$3,334/oz, and up +US$12 from yesterday.American oil prices are unchanged from yesterday at just on US$65.50/bbl while the international Brent price is still just on US$68/bbl. Meanwhile Shell confirmed it isn't currently bidding for the underperforming BP, and that it is required to wait six month under UK law to take another look.The Kiwi dollar is now just on 60.7 USc, up +40 bps from yesterday and that's an eight-month high. However, against the Aussie we are -20 bps softer at 92.5 AUc. Against the euro we are unchanged at 51.8 euro cents. That all means our TWI-5 starts today at 68.1 and +10 bps firmer than yesterday.The bitcoin price starts today at US$107,338 and up +0.3% from this time yesterday. Volatility over the past 24 hours has been low at just on +/-0.7%.You can get more news affecting the economy in New Zealand from interest.co.nz.Kia ora. I'm David Chaston. And we will do this again on Monday.

Kia ora,Welcome to Thursday's Economy Watch where we follow the economic events and trends that affect Aotearoa/New Zealand.I'm David Chaston and this is the international edition from Interest.co.nz.And today we lead with news tariff-tax cost threats to inflation are being joined by seasonal climate threats in the US.First, it is hot in large parts of the US, including the heavily populated North-East. Air-conditioners are working overtime. And that means electricity grids are overloaded. Retail electricity prices have spiked to nearly US$2,400/MWhr (NZ$4000/MWhr) during peak evening demand last night. Wholesale prices on Long Island topped US$7,000/MWh. Just for context, New Zealand prices this morning are about $60/MWhr. It's a crisis here they reach NZ$1000/MWhr.Meanwhile, US mortgage applications rose last week slightly from the week before, but only because refinance activity rose. Applications to buy a new home were down sharply from the prior week although up from the same week a year ago. Interest rates were little changed.But May sales of new single-family homes dropped sharply by almost -14% from the prior month to an annualised rate of 623,000 units and far below the expected 700,000 units rate and the sharpest decline since mid 2022. May 2025 was -6.3% below year ago levels. Getting the blame was uncertain economic conditions that is causing potential buyers to wait before committing to a purchase. And things could get worse - there are now 10 month's supply of built but unsold homes at the current sales rate. We may start to see some aggressive discounting ahead - or more builders going bust.The big US Treasury 5yr bond tender earlier today was well supported even if not quite at the level of the last event. This event delivered a median yield of 3.82%, a bit less than the 4.01% at the prior equivalent event a month ago.And in Senate testimony, Fed boss Powell acknowledged that tariff-taxes could be a one-off threat to inflation, but he said that is not a law of nature, and they are worried they could also drive persistent rises in costs. He said they will stay on guard until they know the actual effect.In China, their central bank injected ¥300 bln into financial institutions through a one-year medium-term lending facility (MLF) into the country's banking system. This is what was expected.And in a first, President Xi will not attend the Brazilian-hosted BRICS meeting this year, the first time he has skipped that. The reasons why aren't clear, and that is fueling speculation.In Australia, their monthly inflation indicator fell to 2.1% in May, down from 2.4% in both March and April. That is a seven month low, and lower than the 2.3% rate expected. The main influence for the reduction were fruit & vegetable prices (from +6.1% to +2.8%), and travel & accommodation (from +5.3% to +0.6%).The UST 10yr yield is now at 4.29%, and down -1 bp from this time yesterday. The price of gold will start today at US$3,322/oz, and up an insignificant US$2 from yesterday.American oil prices are up +US$1 from yesterday at just on US$65.50/bbl while the international Brent price is now just over US$68/bbl.And we should probably note that the Wall Street Journal is reporting that Dutch oil company Shell is in talks to buy British rival BP. Currently, Shell is denying the report.The Kiwi dollar is now just on 60.3 USc, up +10 bps from yesterday. Against the Aussie we are +10 bps firmer at 92.7 AUc. Against the euro we are unchanged at 51.8 euro cents. That all means our TWI-5 starts today at 68 and +10 bps firmer than yesterday.The bitcoin price starts today at US$107,062 and up +0.9% from this time yesterday. Volatility over the past 24 hours has been modest at just on +1.2%.You can get more news affecting the economy in New Zealand from interest.co.nz.Kia ora. I'm David Chaston. And we will do this again tomorrow.

Kia ora,Welcome to Wednesday's Economy Watch where we follow the economic events and trends that affect Aotearoa/New Zealand.I'm David Chaston and this is the international edition from Interest.co.nz.And today we lead with news the US dollar is falling, and the benchmark US 10 year treasury yield is down also, near a seven week low. These are the key reactions to the easing of Middle East hostilities.But first up today, we should note that the weekly Pulse dairy auction for the two main powder products brought lower prices yer again. The SMP price fell -2.6% from last week's full auction to US$2704/tonne, which the WMP price fell -1.9% tp US$4006/tonne. The represent yet another retreat which essentially cancel the April to May price gains.In the US, Fed boss Powell was at Congress today giving his semiannual Monetary Policy Report. He is back again tomorrow. He repeated that they are in no rush to cut rates, certainly not in July, and that their scenario of two more -25 bps reductions in 2025 remains their current outlook. Their focus is on inflation risks which they still have worries about, not economic growth, and that is helped by a stable labour market.Meanwhile, the weekly Redbook survey of the US retail impulse showed sales volume growth easing lower, the lowest since the April tariff-tax induced price spike in early April. And if you exclude the seasonal dips at the end of 2024/25, this growth is the lowest since March 2024 even with the tariff-tax push effect on retail pricing.The US Conference Board's survey of consumer sentiment weakened in June. And this time the weakness spread to 'present conditions'. They report consumers were more pessimistic about business conditions and job availability over the next six months, and optimism about future income prospects eroded. It is a trend they have been noting since the start of 2025.Also fading was the Richmond Fed's latest factory survey for June. Although new order intakes declined more slowly, it still declined and the order backlogs in the region are now falling faster. Unless they get an improvement in new orders, production cutbacks are looking. And the service sector survey in the same mid-Atlantic states region is no better. In this district too, reshoring is not in evidence.We should also note that credit stress for US commercial real estate is staying unusually high. This extended trouble will force an increasing number of lenders there to book losses, and because the worst losses are coming from the largest buildings, it could be destabilising for some mid-sized banks. There was a large well supported US Treasury bond auction earlier today for their 2 year Note. This delivered a median yield of 3.73%, down from the 3.90% at the prior equivalent event a month ago.In Canada, their May inflation rate was reported overnight, unchanged at 1.7%, which was the expected result.Taiwanese retail sales were weaker in May, down -1.6% from the same month a year ago and extending a weaker trend. They were expected to rise marginally. However Taiwanese industrial production was outstandingly strong, up more than +20% from the same month a year ago and extending the April surge.In South Korea, consumer sentiment has improved sharply since the election of a reform-minded new president. Apart from a brief post-pandemic spike, they haven't been this optimistic there since 2017.And in case we don't miss it, the German economy is rising again, gaining in confidence and extending the gains that started in mid 2024. The turnaround hasn't been dramatic, but it has built more than you might have thought.The UST 10yr yield is now at 4.30%, and down -3 bps from this time yesterday. The price of gold will start today at US$3,320/oz, and down -US$61 from yesterday.American oil prices are down another -US$4.50 from yesterday at just over US$64.50/bbl while the international Brent price is now just under US$67.50/bbl as Middle East security concerns seem to fade.The Kiwi dollar is now just on 60.2 USc, back up +½c from yesterday. Against the Aussie we are +10 bps firmer at 92.6 AUc. Against the euro we are up +20 bps at 51.8 euro cents. That all means our TWI-5 starts today at under 67.9 and +20 bps firmer than yesterday.The bitcoin price starts today at US$106,141 and up +3.7% from this time yesterday. Volatility over the past 24 hours has been modest at just on +1.9%.You can get more news affecting the economy in New Zealand from interest.co.nz.Kia ora. I'm David Chaston. And we will do this again tomorrow.

Kia ora,Welcome to Tuesday's Economy Watch where we follow the economic events and trends that affect Aotearoa/New Zealand.I'm David Chaston and this is the international edition from Interest.co.nz.And today we lead with news markets seemed relieved that the Iranians responded in a localised and 'measured' way to the US attack. They took this as a sign the conflict will stay regional. Even the oil price eased back. To financial markets, 'normal' doesn't look like it is being threatened.But that is not to say 'normal' is great. And it looks like markets are stubbornly refusing to price in geopolitical risks, even when they are obviously high. If they have this collective judgement wrong, then the correction could be sharp.Meanwhile, the S&P Global/Markit PMIs for the US report that the factory sector held at a small expansion, one underpinned by a small rise in new orders, even if new export orders fell rather notably. More notable was the sharpish rise in costs and prices. This sector is losing its international competitiveness. Their service sector is expanding but the modest pace slowed in June.US existing home sales however brought a surprise surge in May from April to a sales rate exceeding 4 mln/year. However that is still lower than year-ago levels, and listings surged even more. Still, the average price rose to US$422,800, although to be fair that is only back to about the level it first achieved in June 2022.The US heatwave, which we noted yesterday may affect 200 mln people there, is worrying their electricity grid operators. They anticipate a 14 year high for electricity demand in the US north east. So it will be no surprise to know that they have issued warnings about supply interruptions.In China, Bloomberg is reporting that Beijing regulators are instructing state-owned developers to avoid defaulting on publicly issued debt. It is the latest attempt by authorities to keep a lid on their property crisis that just won't end or get properly resolved. There are about 20 SOE developers, all large, and all troubled. Clearly credit risk is still worryingly high.In Japan, although new order growth wasn't flash, their manufacturing sector expanded on a stock-build. And that was their first expansion in over a year. Meanwhile their services expansion extended, now for more than 12 months consecutively, and that was driven by new orders. These conclusions come from the early June PMI released by S&P Global/Markit.In India, their advance June PMIs show gains in both their factory and service sectors from already very good levels of expansion.In Europe, the same June PMIs show new order declines have basically ended, and in Germany in particular they rose for the first time in more than three years. Cost inflation is down, and now no longer an issue. Business sentiment rose. Their factory sector is expanding while their services sector stopped contracting in June. While none of this is vigorous, if it is a turning point, it is turning in the right way for themMeanwhile the modest expansion the S&P Global/Markit PMIs report in Australia extends this modesty to six straight months there. They haven't had a run like this since late 2022. While an expansion will be hard to notice on the ground, it is encouraging that both the factory sector and the service sector are moving in the same upward direction.The UST 10yr yield is now at 4.33%, and down -5 bps from this time yesterday.The price of gold will start today at US$3,381/oz, and up +US$14 from yesterday.American oil prices are down -US$4 from yesterday at just under US$74/bbl while the international Brent price is now just over US$72.50/bbl and down a bit more.The Kiwi dollar is still just on 59.7 USc, little-changed from yesterday. Against the Aussie we are holding at 92.5 AUc. Against the euro we are down -20 bps at 51.6 euro cents. That all means our TWI-5 starts today at under 67.7 and just marginally softer than yesterday.The bitcoin price starts today at US$102,349 and back up 2.8% from this time yesterday. Volatility over the past 24 hours has been moderate at just under +/-2.0%. There was a general recovery yesterday across most cryptos, but they are still down sharply from a week ago.You can get more news affecting the economy in New Zealand from interest.co.nz.Kia ora. I'm David Chaston. And we will do this again tomorrow.

Kia ora,Welcome to Monday's Economy Watch where we follow the economic events and trends that affect Aotearoa/New Zealand.I'm David Chaston and this is the international edition from Interest.co.nz.And today we lead with news the world's two largest economies are showing outsized vulnerabilities - geopolitical, economic, and environmental.First in China, the eye-catching retreat of foreign direct investment in April (a net outflow -US$4.8 bln) was arrested in May, positive by +US$17.8 bln for the month even if it was off the unusually declining base in April. Still, year to date, foreign direct investment into China remains unusually low, barely +US$50 bln in those five months and well below the almost US$70 bln in the same five months of 2024. For either year, these are not large amounts for a country the size of China. In 2023 the five month inflow was +US$84 bln, in 2022 it was +US$88 bln. It is a negative track that is sensitive for them.Separately, excessively hot weather and unusually heavy rain are affecting large parts of central and southern China.In Japan, May CPI inflation edged lower to 3.5%, the lowest annual rate of the year. Energy costs remained elevated, but dipped in the month. Also elevated and also dipping were food prices, now running at a +6.5% rate. However within that rice prices are almost double year ago levels, a very high profile marker that worries everyone.In the US, weekend data shows the Philly Fed's factory index booked another retreat, the third in a row although only a small one. They aren't yet benefiting from reshoring. New order levels fell. And price increases reported continued at a high level although the pace eased somewhat in this latest update.That data was just a part of the Conference Board's leading economic indicator series. And this slipped yet again in May, with the April index being revised sharply lower. They say this is "triggering the recession signal." Industrial production was the weakest contributor to the index in May. Readers may not be surprised that a Trump tariff-tax recession is on the way for the US, but we probably should brace for global consequences in 2025. It could be tougher than anticipated.At least one influential Fed governor thinks the FOMC will have to start cutting interest rates soon to lean against the recession threat. A July cut is what he suggested, saying “I think we've got room to bring it down, and then we can kind of see what happens with inflation.” Recession threats trump inflation threats for him.But inflation threats may just be starting. Until now, importers have been paying some of the tariff-taxes. But that can't last.And inflation isn't the only thing heating up in the US. Forecasters warn that dangerously hot and humid weather will blanket nearly 200 million people this coming week as a phenomenon known as a heat dome trap builds.Elsewhere, the weekend brought a raft of other central bank rate review decisions. In Turkey, their central bank left its policy rate unchanged at 46%, as expected. You may recall they raised it +350 bps at their May review.Meanwhile, at the Bank of England their governors voted 6-3 to keep their policy rate steady at 4.25% at its June meeting. Although this was the result expected, the three dissenters wanted a -25 bps cut and that was one more dissenter than was expected.In Norway however, they cut their policy rate by -25 bps to 4.25%. That was their first cut in five years.Taiwan held its official rate steady at 2%.The Philippines cut theirs by -25 bps to 5.25%.In China, their central bank left its Loan Prime Rates unchanged at their record low levels after the -10 bps dip last month.Meanwhile, Aussie miners are looking at some surprisingly weak May data for steel production in China. May and June are usually their peak months for production, but not this year. The May data shows it -6.9% lower than the same month in 2024, at 86.5 mln tonnes. That represents a very large fall away in looming iron ore requirements if it holds in June, a more than -6 mln tonne shortfall per month. (Steel production data can be seen here.)In the week ahead, we are watching for what a raft of early June PMIs tell us about the global economy. In Australia, the focus will be on the monthly CPI Indicator on Wednesday although little change at 2.4% is anticipated. Here, there will be key updates for the mortgage market activity on Friday. And in the US, Fed boss Powell will be testifying before Congress, and Trump is sure to have his attack dogs primed for that. Data on American durable goods orders are due (recovering from the sharp April drop expected), along with the May trade deficit update (no improvement expected).The UST 10yr yield is now at 4.38%, and unchanged from Saturday.The price of gold will start today at US$3,367/oz, and up +US$2 from Saturday.American oil prices are little-changed from Saturday at just on US$74/bbl while the international Brent price is now just over US$77/bbl.The Kiwi dollar is now just on 59.7 USc, little-changed from Saturday. Against the Aussie we are holding at 92.5 AUc. Against the euro we are still at 51.8 euro cents. That all means our TWI-5 starts today at on 67.7 and unchanged from Saturday.The bitcoin price starts today at US$99,713 down -3.5% from Saturday, its lowest since early May. Volatility over the past 24 hours has been moderate at just over +/-2.2%. The fall in the bitcoin price is the least of what other crypto prices are shifting. Generally stablecoins are holding with only very minor losses, but Binance is down -5.8% from a week ago, Bitcoin Cash is down -1.8% on the same basis, the official Trump coin is down -14.8%, and Ether is down -14.0%.You can get more news affecting the economy in New Zealand from interest.co.nz.Kia ora. I'm David Chaston. And we will do this again tomorrow.

Kia ora,Welcome to Thursday's Economy Watch where we follow the economic events and trends that affect Aotearoa/New Zealand.I'm David Chaston and this is the international edition from Interest.co.nz.And today we lead with news the Fed governors are clearly worried about the inflation threat from the new tariff taxes.The US Fed has kept rates unchanged in their decision earlier today, holding their core policy rate at 4.25%. The projection dot plot suggested that they have two more -25 bps rate cuts pencilled in for 2025 and one more for 2026. They also downgraded their expectations on growth in the US economy, dropping the 2025 estimate from +1.7% to +1.4%, and trimming their forecast for 2026 to +1.6%. Fed boss Powell said these growth downgrades will come as higher tariffs hinder the US economy and put upward pressure on US inflation.Meanwhile US initial jobless claims eased lower to 236,000 but the reduction is all accounted for by seasonal effects. There are now 1.82 mln people on these benefits, almost +100,000 more than this time last year.US mortgage applications fell last week despite the benchmark mortgage interest rate easing lower at the same time.Also falling and rather sharply, were new housing starts in May. They fell almost -10% from April to be -1% lower than the same month a year ago.Across the Pacific, Japanese machinery orders fell more than -9% in April, a sharp reversal from March's +13% surge. This was the weakest reading since April 2020, but about what was expected. Still, they remain +6.6% higher than year-ago levels. Meanwhile Japanese exports fell in May after seven consecutive months of expansion. A retreat was expected and what they got wasn't a sharp as those expectations. However, imports slumped -7.7% from a year ago and more than expected.Meanwhile, Japanese car exports to the US fell in volume terms by almost -4% in May, but in value terms they were down almost -25%, suggesting that at the moment, Japanese carmakers are absorbing some of the new US tariffs to maintain their market share.The iron ore price is under pressure, unable to get out of its new lower range, and confirming the overall slowdown in the global economy.Meanwhile, the silver price has pushed up to a new all-time high.The UST 10yr yield is now at 4.40%, and up +1 bp from yesterday, clawing back earlier falls after the Fed commentary. The price of gold will start today at US$3,386/oz, and down -US$3 from yesterday.American oil prices are still in the higher zone, unchanged from yesterday at just on US$74.50/bbl while the international Brent price is now just over US$76/bbl.The Kiwi dollar is now just over 60.2 USc, unchanged from yesterday. The USD firmed slightly after the Fed decision. Against the Aussie we are down -30 bps at 92.7 AUc. Against the euro we are up +10 bps at 52.5 euro cents. That all means our TWI-5 starts today at on 68.2 and unchanged from yesterday.The bitcoin price starts today at US$104,247 and up +0.3% from yesterday. Volatility over the past 24 hours has been low at just under +/-0.9%.Tomorrow is a public holiday in New Zealand, Matariki, and this briefing will take a break. And remember, it is a holiday in the US tomorrow, Juneteenth. You can get more news affecting the economy in New Zealand from interest.co.nz.Kia ora. I'm David Chaston. And we will do this again on Monday.

Kia ora,Welcome to Wednesday's Economy Watch where we follow the economic events and trends that affect Aotearoa/New Zealand.I'm David Chaston and this is the international edition from Interest.co.nz.And today we lead with news we are seeing signs of the US economy losing steam just as the US Fed meets.First up today, the overnight full dairy auction brought slightly lower prices, down nearly -1% overall. This was a smaller decline than the futures market expected. In NZD terms the dip was marginally more, down -1.2%. In the end the dip in the WMP price was only -2.1% and far less than expected. The SMP price dipped -1.3%. The volumes sold were at seasonal lows. All-in-all an auction event that will change little.Also uninspiring were US retail sales in May. It slowed to a +3.3% expansion year-on-year from a downwardly revised +5.0% in the previous month. Given that US CPI inflation is being recorded at 2.4%, the volume steam has gone right out of the American retail impulse. It is surprising many analysts. Month on month, retail sales actually fell. Overall, this was the weakest result since November 2024.US industrial production in May fell too, down -0.2% from the prior month, to be +0.6% higher than a year ago. These are 'real' volume numbers and signal what the Beige Book has been suggesting - a factory sector that is losing ground.It is no better in their housebuilding sector. The NAHB/Wells Fargo Housing Market Index fell in June to its lowest since December 2022. Expectations were that it would improve, so another economic drag is building. Builders aren't happy facing higher tariff-tax costs when demand is leaking away.But these may be just the start. The tough new policies toward immigrants are being felt in ways some foresaw and will have a long term impact on American demographics. Suddenly the outflow of people from the US exceeds the inflow. And it is younger workers leaving which is making costs for servicing an expanding older population rise and much more suddenly that was expected. The speed of these changes is quite corrosive, the first time in 50 years they have had to face the fact that the US is no longer a magnet for the aspirational.And the big all-in-one US budget bill from the Trump Administration, which is struggling to get Congressional approval, is already having a depressive impact. International investors, including the giant sovereign wealth funds, face sharp new American taxes on their US investments. Most have now halted assigning funds to US opportunities. If the bill passes, there could be a rather sharp outflow of existing investments, one that would impact the USD and their current account.The US Fed FOMC is currently meeting and will report is decisions tomorrow. No change to their 4.5% policy interest rate is expected, but they will be watching the stagflation pressures of higher inflation and lower growth with some alarm, you would imagine.Across the Pacific, the Bank of Japan also held its key interest rate steady following a two-day policy meeting, keeping its rate at 0.5% amid economic uncertainty stemming from US trade policies. This marks the third consecutive meeting after which the central bank has maintained the rate; the last increase came in January.In China, new data forecasts out from the IEA shows that China's oil demand is set to peak in 2027, a trend that it calls a "fundamental transformation" in the global energy market. China has accounted for 60% of the growth in global oil demand in the past decade and slowing demand in the world's second largest economy is set to contribute to a significant surplus in oil by the end of this one.It is not all gloom. In Germany, the ZEW Indicator of Economic Sentiment surged in June to its highest level since March's three-year peak and far exceeding market expectations. That sudden sentiment boost helped propel the wider EU survey results too.The UST 10yr yield is now at 4.39%, and down -7 bps from yesterday. The price of gold will start today at US$3,387/oz, and down -US$4 from yesterday.American oil prices are still in the higher zone, up +US$2.50 from yesterday at just on US$74.50/bbl while the international Brent price is now just under US$76/bbl.The Kiwi dollar is now just under 60.2 USc, back down -½c from yesterday. Against the Aussie we are up +20 bps at 93 AUc. Against the euro we are down -10 bps at 52.4 euro cents. That all means our TWI-5 starts today at on 68.2 and down -20 bps from yesterday.The bitcoin price starts today at US$103,962 and down -3.7% from yesterday. Volatility over the past 24 hours has been moderate at just on +/-2.4%.You can get more news affecting the economy in New Zealand from interest.co.nz.Kia ora. I'm David Chaston. And we will do this again tomorrow.

Kia ora,Welcome to Tuesday's Economy Watch where we follow the economic events and trends that affect Aotearoa/New Zealand.I'm David Chaston and this is the international edition from Interest.co.nz.And today we lead with news there are hopes, early ones at this stage, that Iran is looking for an off-ramp in its fight with Israel, or at least, so says Trump. That was enough to bolster equity markets today. But the USD is falling and bond yields are rising.But it is shaky with the G7 summit talks starting in Banff, Canada, and all participants having starkly different viewpoints from the US which seems to be trying to get Putin's Russia back into the group. Included in those sidebar meetings is one between Trump and Australian prime minister Albanese. It's going to be a weird experience, but weird is what the US does these days on public policy.Back focusing on economic data, so far there are few signs of manufacturing reshoring in the New York region. Business activity continued to decline in New York State in June, according to firms responding to the Empire State Manufacturing Survey. The headline general business conditions index fell seven points to a deeper contraction. New orders and shipments both declined. However, the outlook of firms surveyed brightened to 'less negative'.There was another long bond auction of US Treasuries earlier today, for the 20 year bond. This drew -13% less demand so the recent investor appetite pullback is extending. It delivered a median yield of 4.88% which was actually lower than the 4.97% at the prior equivalent event a month ago.A recent review by the New York Fed of "who is paying the tariffs" found about 90% of manufacturers and about three-quarters of service firms import some goods, with the average imported input share among all firms at around 30%. And so far most businesses are passing on most of these additional costs to their customers. And relatively quickly. So it is a bit of a puzzle why the tariff taxes haven't yet shown up in consumer price indexes.In Canada, housing starts stayed very high again in May after the unusual jump in April, coming it at almost +280,000 annualised rate when only +248,000 were expected. This was almost the best month since September 2022 and the best two month gain ever. Canadian new house building is on a roll, especially in Montreal (+11%) and Vancouver (+10%). It would be interesting to know how much this is being driven by political refugees from the US, but we have no indications on that.Bolstering the rise in housing starts is that home sales rose in May, their first rise since November.India released its May trade data overnight and its exports delivered an unremarkable result, reinforcing that the rise of Indian manufacturing is not being export-led. Its imports actually eased lower in the month.There was important Chinese released yesterday showing electricity production was only up +0.5% in May from the same month a year ago, maintaining the weak gains that started in November 2024. This is hard to square with their data claim that industrial production was up +5.8% on the same basis.China also reported that its May retail sales rose a very healthy +6.4% from a year ago, well above the +5.0% expected and the +5.1% gain in April. It is a 15 month high. At face value this is a surprisingly strong gain.In their housing markets, China reported that new house prices fell -3.5% but the least year-on-year fall in a year. Month on month they say more gains are now showing. Prices for resales were down more year-on-year, and there are no major cities where they are rising.And recent remarks by Chinese Premier Li seem to confirm that their residential property development market is not improving, and perhaps at a new dangerous stage. Beijing is facing a new round of bailouts to prevent collapse in the sector, once a star of the Chinese economy.In the EU, they reported that wage growth in Q1-2025 was up +4.1%, less in the euro area. This was a slowing from the recent peak of +5.7% in Q1-2024. These is a rather fast cooling-off in Germany, Italy and the Netherlands, whereas wages are rising faster in Spain and France.Off to a very strong start, Airbus has announced huge orders at the Paris air show. The troubles at Boeing have meant that their CEO is a notable no-show. Also of interest is that France has shut down the Israeli presence at the trade event.The UST 10yr yield is now at 4.46%, and up +5 bps from yesterday. The price of gold will start today at US$3,392/oz, and down -US$38 from yesterday.American oil prices are still in a higher zone, although down -US$1 from yesterday at just on US$72/bbl while the international Brent price is now just over US$73/bbl.The Kiwi dollar is now just under 60.7 USc, up +½c from yesterday. Against the Aussie we are uup +10 bps at 92.8 AUc. Against the euro we are up +40 bps at 52.5 euro cents. That all means our TWI-5 starts today at on 68.4 and up +50 bps from yesterday.The bitcoin price starts today at US$107,915 and up +2.0% from yesterday. Volatility over the past 24 hours has been modest at just on +/-1.6%.You can get more news affecting the economy in New Zealand from interest.co.nz.Kia ora. I'm David Chaston. And we will do this again tomorrow.

Kia ora,Welcome to Monday's Economy Watch where we follow the economic events and trends that affect Aotearoa/New Zealand.I'm David Chaston and this is the international edition from Interest.co.nz.And today we lead with news the hot-war tensions in the Middle East from Israel's attack on Iran has generated substantial financial market reaction. And a 'hot' war between Israel and Iran could go on for a very long time. The first three days may only be the startThe gold price has jumped. The oil price has soared. Equity prices are falling, although the futures market suggests Wall Street may open tomorrow unchanged. Bond yields are up after an earlier risk-aversion fall. The US dollar has been falling but is now in a wavering phase.Coming up this shortened week locally are a first look at May inflation with the selected price indexes, and on Thursday, Q1-2025 GDP. Expect a +0.7% expansion from Q4-2024. And there will be a full dairy auction on Wednesday.Geopolitical tensions in the Middle East will remain in focus next week following Israel's strike on Iran's nuclear facilities, heightening fears of a broader regional conflict. Markets will also be closely watching any progress on trade negotiations between the US and its key partners.Meanwhile, attention shifts to the G7 Summit in Canada, where leaders of the world's largest economies will meet to discuss major global challenges. But one not on the formal agenda is the US's trade war with these allies. Of course it will be a hot topic in non-official discussions. Of special interest will be the meeting between Australia's Albanese and Trump.It's also a busy week for monetary policy decisions. The US Federal Reserve (4.50%), People's Bank of China (LPR 3.0%), Bank of Japan (0.5%), and Bank of England (4.25%) are all expected to keep interest rates unchanged. Decisions are also due from central banks in Switzerland, Sweden, Norway, Turkey, Brazil, Indonesia, the Philippines, and Taiwan. On the data front, we get China's industrial production and retail sales, and Japan's trade data.Australia's May labour market data will be updated on Thursday. So a lot to absorb this week irrespective of the uncertainties swirling over the hot wars.Bur first in China, their banks extended ¥620 biln in new yuan loans in May, up from ¥280 bln in April, but that was the lowest level for that month since 2005. Despite the monthly rebound, the May new loan figure was way less than the expected ¥850 bln, and even lower than the ¥950 bln in May 2024. Low interest rates are not encouraging lending. The average rate in May was little-changed at 1.55%.Japanese industrial production also fell in April from March, down -1.1%, but remained +0.5% higher than a year ago.Malaysian retail sales were up +4.7% in April from a year ago, but as good as that sounds it is the weakest year-on-year rise since May 2023. And these gains are before inflation, which is running in Malaysia at only +1.4%.In the US was news American consumer sentiment improved in early June from May in the widely-followed University of Michigan survey which was taken June 2-7, 2025. Although this is the first improvement in the past six months, it is off a record low and is still -11% lower than year-ago levels. This survey pre-dates the current crises. And it predates the widespread (2000+) series of well-attended protest rallies in the US (attended by up to 5 mln people), even in the face of an assassination of one Democrat lawmaker and the attempted assassination of another. Given the Proud Boys Telegram chatter, this isn't so surprising.On the US West Coast, container traffic at the large Los Angeles shipping terminals fell in May. Import traffic was down -19% from April, down -9% from a year ago. Export loadings were down -5% from a year ago. (The Long Beach May data isn't available yet but it is likely to be similar.)North of the border, and perhaps somewhat surprisingly, Canadian vehicle purchases rose in April to 195,700, the highest level since June 2019. Perhaps this is boosted by buyers wanting to avoid tariff-related price hikes. The jump was country-wide and was +11% above the year-ago level.Meanwhile Canadian manufacturing sales fell -2.8% in April, with the tariff impacts starting to be felt. It was down -2.7% from a year ago. Recession risks are rising in Canada.EU industrial production sagged in April from March after a strong March gain, but managed to stay marginally higher than year-ago levels. The EU publishes this data on a volume basis, so this is a 'real' gain.Finally we should probably note that the price of lithium carbonate has now crashed -90% from its giddy height in 2022. It is now back to late 2020 levels before the frenzy.The UST 10yr yield is now at 4.41%, and unchanged from Saturday.The price of gold will start today at US$3,430/oz, and down -US$3 from Saturday but up +US$115 from a week ago. In contrast the silver price at US$36.17/oz is little-changed from a week ago.American oil prices are holding higher, although down -50 USc from Saturday at just on US$73/bbl while the international Brent price is now just under US$74.50/bbl. These are large jumps from a week ago on the war risks. And the full assessment of supply risks are not yet understood, so this price could be volatile this week.The Kiwi dollar is now just under 60.2 USc, down -10 bps from Saturday. Against the Aussie we are unchanged at 92.7 AUc. Against the euro we are down -10 bps at 52.1 euro cents. That all means our TWI-5 starts today at over 67.9 and down -20 bps from Saturday (shifted a bit by a fall against the British pound).The bitcoin price starts today at US$105,794 and up +0.6% from Saturday. Volatility over the past 24 hours has been low at just on +/-0.8%.You can get more news affecting the economy in New Zealand from interest.co.nz.Kia ora. I'm David Chaston. And we will do this again tomorrow.

Kia ora,Welcome to Friday's Economy Watch where we follow the economic events and trends that affect Aotearoa/New Zealand.I'm David Chaston and this is the international edition from Interest.co.nz.And today we lead with news incoherent trade policies have driven the US dollar to its lowest level since 2022 as markets don't see any easing of geopolitical risks driven out of Washington. The US said it will set unilateral tariff rates on most trading partners at the end of the month.Meanwhile, US initial jobless claims came in at 245,000 last week, little-changed from the prior week. This embeds the recent higher level and extends the 2025 rising trend. We haven't seen two consecutive high-claims weeks since mid 2023. There are now 1.8 mln people on these benefits, +7.1 more than year-ago levels.The immigration crackdown on undocumented farm and hospitality workers is having ripple impacts on corporate America, with some major brands reporting stuttering sales.And the Congressional Budget Office has set out how the Trump Budget Bill will hurt middle and poor Americans, and enrich wealthy ones. It is a report sure to annoy the President.And he is already annoyed by the Fed not cutting interest rates.Separately, as analysts expected, US producer prices came in +2.6% higher in May than a year ago.The UST 30yr bond auction today saw a -7.5% fall in investor demand, mirroring the -10% drop in support we noted yesterday in the UST 10yr auction. The median yield came in at 4.80%, up from the 4.75% at the prior equivalent event a month ago.Elsewhere, India's CPI inflation fell to 2.8% in May from 3.2% in April and dipping below analyst expectations of 3%. This is their lowest reading since February 2019, so a six year low. It is also getting closer to the bottom of their central bank's inflation target range of 2%-6%. Food price rises fell to the lowest level since October 2021, and drove the easing.In Australia, the Melbourne Institute survey for June shows inflation expectations there rising to 5.0%, the highest level since July 2023 and up sharply from the 4.1% in May.International container freight rates were unchanged last week from the prior week to now be -26% lower than year-ago levels. A year ago rates were in a strong rising trend which lasted until July, then they eased steadily until May 2025. Bulk freight rates rose +6.8% last week from the week before to their highest level since early November. They are now -5.2% lower than year ago levels.The UST 10yr yield is now at 4.36%, and down -6 bps from this time yesterday.The price of gold will start today at US$3,383/oz, and up +US$60 from yesterday.American oil prices are up another +US$1.50 at just over US$68.50/bbl while the international Brent price is now just over US$69.50/bbl.The Kiwi dollar is now just over 60.6 USc, up +20 bps from yesterday. Against the Aussie we are also up +20 bps at 92.9 AUc. Against the euro we are down -20 bps at 52.4 euro cents. That all means our TWI-5 starts today at under 68.3 and essentially unchanged from yesterday.The bitcoin price starts today at US$108,419 and down -0.6% from yesterday. Volatility over the past 24 hours has been modest at just on +/-1.1%.You can get more news affecting the economy in New Zealand from interest.co.nz.Kia ora. I'm David Chaston. And we will do this again on Monday.

Kia ora,Welcome to Thursday's Economy Watch where we follow the economic events and trends that affect Aotearoa/New Zealand.I'm David Chaston and this is the international edition from Interest.co.nz.And today we lead with news China and the US seem to have agreed some sort of trade deal although the details are still quite fuzzy. However a key part seem to be that the US will only get access to the rare earth minerals on a 180 day rolling basis. That means Beijing will retain key leverage over these negotiations as they develop.From data out in the US, CPI inflation was recorded at 2.4% in May, up marginally from 2.3% in April but coming in lower than the +2.5% expected. Food prices however were up +2.9%, rents up +3.9% in this survey. The only reason the overall level was modest is that petrol prices fell -3.5% from a year ago.Interestingly, US crude oil prices were near a one-year high a year ago at US$78/bbl. Today they are at US$67/bbl. But they have fallen steadily from there so after August it seems likely that US petrol prices will generate upward pressure on their CPI, just about at the time tariff-tax flow throughs start to bite. Could get "interesting" in about 90 days.Meanwhile US mortgage applications jumped more than +12% last week from the prior weak three weeks. It is a pattern we have observed since September - three weeks of declines followed by a single week of recovery, usually because those holding off refinancing while waiting for rates to fall can't wait any longer. The benchmark 30 year fixed rate was unchanged last week at 6.93% plus points.There was another US Treasury 10 year bond tender earlier today, and this one featured an outsized fall in demand. There were more than -10% less bids than at the prior equivalent event. The median yield achieved was 4.38% today, up from 4.28% at that prior equivalent event.This is the first time we have seen a big fall-off in demand in these official tenders, so it will be worth keeping an eye on it going forward to see if this is a one-off, or the feared pullback in investor appetite for Trump-debt.At the same time, the US Budget Statement for May showed a monthly deficit of -US$316 bln, only marginally less than the -US$346 bln for the same month a year ago. Higher tariff collections at the border are getting the credit, of US$23 bln in the month. That would mean the DOGE has had zero impact on the budget. They have booked a -US$2 tln deficit in the twelve months to May, and on track for more than that for their fiscal year to September. If the current Budget Bill passes with its tax cuts for the rich, and suspension of the debt ceiling, you can see why investors would want sharply higher risk premiums for holding US federal debt when the mismanagement is so rife.In Canada, April building consents came in -6.6% below March levels to be -16% lower than year ago levels (which featured a strong April 2024 surge).In China, May vehicle sales came in at almost 2.7 mln units in the month with almost half of them NEVs. That puts sales for the past year at a remarkable 32.7 mln, and more than double the level in the US (15.6 mln units in the past year). One key reason is the Beijing-backed trade-in incentives that are designed to support their manufacturing activity through the tariff-war and their drive to build and rely more on internal consumption. It seems to be working with this incentive in place, but can they wean themselves off it?The UST 10yr yield is now at 4.42%, and down -5 bps from this time yesterday. The price of gold will start today at US$3,323/oz, and virtually unchanged from yesterday.American oil prices are up +US$2 at just over US$67/bbl while the international Brent price is now just under US$69/bbl.The Kiwi dollar is now just over 60.4 USc, basically holding from yesterday. Against the Aussie we are also holding at 92.7 AUc. Against the euro we are down -30 bps at 52.6 euro cents. That all means our TWI-5 starts today at under 68.3 and down about -10 bps from yesterday.The bitcoin price starts today at US$109,115 and up +0.4% from yesterday. Volatility over the past 24 hours has remained low at just on +/-0.8%.You can get more news affecting the economy in New Zealand from interest.co.nz.Kia ora. I'm David Chaston. And we will do this again tomorrow.

Kia ora,Welcome to Wednesday's Economy Watch where we follow the economic events and trends that affect Aotearoa/New Zealand.I'm David Chaston and this is the international edition from Interest.co.nz.And today we lead with news we are still waiting for indications of the China-US trade talks in London.Meanwhile, the World Bank said global trade expansion is now at its weakest since 2008 as the tariff tit-for-tat undermines it. They say without a swift course correction, "the harm to living standards could be deep". But they still see a global expansion of +2.3%, largely driven by China, Indonesia, Thailand and India. The retreat of growth in the US will be sharp they say halving in 2025 (+1.4%) from 2024 (+2.8%). The EU will be largely unaffected and maintain their low growth. Japan's low growth is expected to rise in the next three years. They don't review Australia or New Zealand.Elsewhere, the overnight dairy Pulse auction brought downbeat results. The key WMP price fell -1.1% in a retreat expected by the derivatives market. But even at this level it remains in the rising trend that started in mid-2024. However, the SMP price fell a hard -4.8% and much more than expected. In fact, SMP prices have now broken through their weak rising trend, and look quite vulnerable.Also showing signs of running out of steam were US retail sales growth as measured by their Redbook survey. They were up +4.6% from the same week a year ago, the weakest rise since March 2024. After inflation, this isn't any better.The the US NFIB small business optimism survey turned up in May, the first time it has done that in 2025.There was a US Treasury 3 year bond auction earlier today and that showed a small fall-off in support, something worth watching. The winning investors got a median yield of 3.92%, up from the 3.77% at the prior equivalent event a month ago.Across the Pacific, Japanese machine tool orders came in at a similar level in May as April, but that is only a +3.4% gain from the same month a year ago. It was kept positive by export orders, although domestic orders, which had been strong earlier in the year, are now cooling.In China, concerns persist about overproduction in their car manufacturing sector even though local new-vehicle sales overall, including exports, rose almost +10% in April. Those concerns are rippling through commodities that supply this juggernaut industry. Rubber prices, for example, are being hit hard as buyers lose confidence the China car industry can avoid a crash like the property sector. There are signs the government there is worried too, with Beijing telling carmakers to make sensible commercial decisions.In Australia, the Westpac-Melbourne Institute consumer sentiment survey wasn't particularly upbeat, coming in little-changed in June from May. But at least it isn't going backwards. Aussie consumers remain relatively averse to real estate as an investment option and to risk in general. Indeed, responses to a question on the ‘wisest place for savings' suggest that the tariff-related turmoil this year has seen what was already a high level of risk aversion intensify even further.And staying in Australia, the closely-watched NAB business sentiment survey has improved marginally in May, recording its first positive reading in four months. But, business conditions weakened in this survey and it will be hard for sentiment to improve if business conditions get weaker. Those weaker conditions came from ongoing profitability pressures and soft demand, with signs of a further softening in labour demand.The UST 10yr yield is now at 4.47%, and down -2 bps from this time yesterday.The price of gold will start today at US$3,323/oz, and down -US$10 from yesterday.American oil prices are little-changed at just on US$65/bbl while the international Brent price is now just on US$67/bbl.The Kiwi dollar is now at 60.4 USc, and dipping -10 bps from yesterday at this time. Against the Aussie we are also down -10 bps at 92.7 AUc. Against the euro we are down -10 bps at 52.9 euro cents. That all means our TWI-5 starts today at under 68.4 and down a bit less than -10 bps from yesterday.The bitcoin price starts today at US$108,723 and up +0.4% from yesterday. Volatility over the past 24 hours has been low at just on +/-0.9%.You can get more news affecting the economy in New Zealand from interest.co.nz.Kia ora. I'm David Chaston. And we will do this again tomorrow.

Kia ora,Welcome to Tuesday's Economy Watch where we follow the economic events and trends that affect Aotearoa/New Zealand.I'm David Chaston and this is the international edition from Interest.co.nz.And today we lead with news the US and China are meeting in London to discuss China's block on exports of rare earth minerals that the US manufacturing sector needs. The hope is that the settlement will have the US pull back from its tariff-tax war. More likely, it will be a trade of US AI chips for Chinese rare earth minerals.In the background, the dismantling of civil society and the rule of law continues in the US, but you will have to get news of those overnight events elsewhere - even though they will have a corrosive impact on commerce.Our first item in the US is that consumer inflation expectations fell back in June to 3.2% for the year ahead, which wasn't what was expected. But a look at the components explains why. It was driven by the expectation that petrol prices will drop - on a weakening economy. On the other hand those surveyed expected food prices to rise to 5.5% which is a two year high, rents by 8.4%. The expectation that their jobless rate will rise remained high.And we should probably point out that analysts are noting that the UST 10 year yield (4.5%) is now well above the US nominal GDP growth rate (3.8%) for the fits time since 2011, and that is seen as a signal that corporate insolvencies will now rise noticeably after a long period of relative stability.China said its CPI price change held at -0.1% of deflation. That is the third month in a rose it has reported that, the fourth recording deflation. It does seem odd, and a tad unlikely, that Chinese consumer prices are consistently deflating at such a low level. Anecdotal observations talk of 'raging price wars'. According to the official data these are having zero impact. Year-on-year they say beef prices are down -0.1%, lamb prices are down -2.8% and milk prices are -1.5% lower. But beef prices did rise in May from April, according to this data.Meanwhile Chinese producer prices deflated more, down -3.3% from a year ago to their fastest rate of decline since July 2023.And China booked another bumper trade surplus in May. Exports rose +4.8% (about what was expected but historically low), while imports fell -3.4% and far more than expected. They benefited from the TACO trade in May. Their surplus with the US was +US$18 bln for the month although they did export less and import more. To New Zealand, they exported -3% less but imported +11% more, so our surplus rose. To Australia, their exports were little-changed but they imported almost -19% less in May.In Taiwan, they far outshone their neighbour and rival with a huge rise in exports (a new record high) and a large rise in imports from the same month a year ago. That contributed to a trade surplus of +US$12.6 bln in the month, now one eighth that of China even though their economy is only one twentieth as large.The UST 10yr yield is now at 4.49%, and down -2 bps from this time yesterday. The price of gold will start today at US$3,334/oz, and up +US$26 from yesterday.American oil prices are firmish, up +50 USc at just on US$65/bbl while the international Brent price is just under US$67/bbl.The Kiwi dollar is now at 60.5 USc, and up +30 bps from yesterday at this time. Against the Aussie we are up +10 bps at 92.8 AUc. Against the euro we are up +20 bps at 53 euro cents. That all means our TWI-5 starts today at over 68.4 and up +20 bps from yesterday.The bitcoin price starts today at US$108,312 and up +1.9% from yesterday. Volatility over the past 24 hours has been modest at just on +/-1.4%.You can get more news affecting the economy in New Zealand from interest.co.nz.Kia ora. I'm David Chaston. And we will do this again tomorrow.

Kia ora,Welcome to Monday's Economy Watch where we follow the economic events and trends that affect Aotearoa/New Zealand.I'm David Chaston and this is the international edition from Interest.co.nz.And today we lead with news that despite the Trump-generated spectacle of intimidation and violence in Los Angeles against immigrant communities, the economic news has been contained.This coming week is not a big one for local data releases, but in Australia we will get updated surveys of both consumer (Westpac/MI), and business (NAB) sentiment surveys. Not a lot of change is expected in either.There will be a June update of American consumer sentiment from the widely watched University of Michigan. And we will get CPI updates for May from both the US (expect a small rise to 2.5% (and China (expect slightly deeper deflation at -.2%). India will also release May CPI data (expect little change).The Chinese will also release export and import data. Japan will update its machine tool order data. And Germany will release some wholesale price data too.Over the weekend, and in something of a relief, the US May non-farm payrolls growth came in at +139,000, little different to the expected +130,000 and only a minor retreat from the +147,000 growth in April. But that is a bit below the average for 2024 and well below the average for 2023, and the lowest expansion for a May since 2020. In data not seasonally adjusted, it was the lowest since 2016. The US labour market seems to be plateauing after a rather strong recovery in the prior four years.Average US weekly earnings rose +3.9% in May from the same month a year ago, similar to earlier 2025 months and the same as the average for a May over the past ten years. The jobless rate was unchanged at 4.2%.But hiring freezes and production cutbacks seem to be the themes coming out of corporate America. The landscape for reshoring isn't good, apparently.And the data is becoming clearer that foreigners are avoiding the US as a travel destination, and not just Canadians, with anti-American sentiment on the rise in Europe too. Companies like Airbnb, Booking.com and Expedia all said that their financial results will be weaker than expected because of the softening demand.Total US consumer credit rose by +US$18 bln in April or +4.3%, up from a +$10 bln increase in March and better than expected. So this expansion, while modest, is back to a 'normal' pace. Revolving credit (credit cards) increased at an annual rate of +7%, while nonrevolving credit (car loans and similar) rose at a letter 3.3% rate.There was May Canadian labour market data out over the weekend too. Somewhat surprisingly, that delivered an expansion of +8,800 jobs when a -15,000 reduction was anticipated. Even better, +57,700 new full-time jobs were added in May balanced by a reduction of -48,800 part-time jobs. So, overall a rather surprising net gain.However, their jobless rate rose to 7%, the first time it has hit that level since 2016 (apart from the pandemic), so that probably raises the chance of a rate cut at their next review at the end of July.In Japan, the level of central bank bond buying tapering continues to raise concerns and undermine demand by other potential investors. It is also raising questions about the value of the yen. There is elevated debate about the right level from here and the central bank may have to slow its tapering operation. The void their tapering is leaving is not being filled by the private sector. And that could seriously twist Japanese interest rates.Late on Friday, the Indian central bank cut its policy rate again, with an outsized -50 bps cut to 5.5% when a -25 bps trim was expected. That makes it a full -100 bps reduction since February. They say the outsized move was required by the combination of fast- easing inflation and ongoing uncertainty surrounding global trade tensions.The Russian central bank also surprised with a rate cut when one wasn't expected. It cut -100 bps to 20% under Kremlin pressure, and claiming that "inflation is under control".EU retail sales for April came in surprisingly strong. They report these on a volume basis and were +2.8% higher than in April 2024. Only a +1.4% expansion was expected, and the March expansion was +1.9%. So a great result for them. Most other countries are not getting inflation-adjusted retail growth anything like this.Today is a public holiday in Australia, so our markets will be quiet.Meanwhile, both sides seem to be gearing up for trade talks between China and the US - in London.The UST 10yr yield is now at 4.51%, and unchanged from Saturday, up +9 bps for the week. The price of gold will start today at US$3,308/oz, and down -US$10 from Saturday. That is up +US$24 from US$3294/oz a week ago.American oil prices are holding at just on US$64.50/bbl while the international Brent price is still the same at just on US$66.50/bbl.The Kiwi dollar is now at 60.2 USc, and unchanged from Saturday at this time. Against the Aussie we are also unchanged at 92.7 AUc. Against the euro we are still at 52.8 euro cents. That all means our TWI-5 starts today at just on 68.2 and unchanged from Saturday.The bitcoin price starts today at US$106,270 and up +1.5% from Saturday. Volatility over the past 24 hours has been low at just under +/-0.6%.You can get more news affecting the economy in New Zealand from interest.co.nz.

Kia ora,Welcome to Friday's Economy Watch where we follow the economic events and trends that affect Aotearoa/New Zealand.I'm David Chaston and this is the international edition from Interest.co.nz.And today we lead with news US Republicans are becoming more like the CPC than they probably realise.But first, there were 209,000 initial jobless claims in the US last week, a small decrease from the prior week but less of a decrease seasonal factors would have assumed. That resulted in the widely reported seasonally adjusted level to jump to its highest in eight months. There are now 1.757 mln people on these benefits, almost +100,000 more than at this time last year.That level may grow. The Challenger job cut report came in with another outsized count for May, and were up +47% over the same in 2024. They say layoff activity is now spreading to other sectors than just the Federal government.US exports rose slightly in April, enough to claim an all-time record high. And as expected, actually a bit more than expected, US imports fell sharply after the March pre-tariff splurge. The average of March and April was about the same level they recorded in each of January and February 2025. For April 2025, the US$350 bln in imports were little-different to the April 2024 level of US$340 bln. It only looks like a big drop because of all the front-loading generated by tariff-tax uncertainty.We should note that US data reliability may become more like Chinese data - heavily influenced by politics. In a random note, the BLS said it isn't going to survey prices as deeply anymore, which could mean "inflation" will be what the Administration says it is. They are also shifting that statistics agency to be under Howard Lutnick's control. And the Republicans have gone on the attack at the bipartisan Congressional Budget Office for saying their new Budget will swell their deficit by US$2.4 tln. The employees who released that are being laid off. They will be replaced with more compliant analysts.Meanwhile, there has been a phone call between China president Xi and US President Trump. But is seems to have achieved little other than agreement for more talks. However, mutual visits are a likely result, and the set-piece opportunities may give Xi an opportunity to get Trump to "chicken out".North of the border, Canadian exports fell more than -10% while their imports fell -3.5% in April. Again, the same trade and tariff-war factors are at play here, and that has resulted in a record trade deficit for them.In China, the Caixin China General Services PMI rose in May from April's seven-month low and in line with market forecasts of only a very modest expansion. This survey shows a small uptick in new business and activity, despite a renewed decline in new export orders. New export orders fell for the first time in 2025, dampened by Trump's tariffs. The official Chinese services PMI also showed a modest expansion, one weaker than this Caixin version.In Taiwan, their inflation rate eased to 1.6% in May from 2.0% in April, and that is its lowest rate since March 2021. They are back to about what it was running in the years prior to the pandemic.Singapore released April retail sales data and that showed virtually no expansion there. Over the past six months, their retail activity has been quite unstable in its ups and downs.As expected, the ECB cut its key interest rates by -25 bps at its overnight meeting, to 2.15%. Updated inflation and economic forecasts show eurozone inflation is near their 2% target, with projections showing 2.0% in 2025 (vs 2.3% previously), 1.6% in 2026 (vs 1.9% previously), and 2.0% in 2027. They say their expansion is being held back by global events but all the same they see their combined economy expanding slightly faster over the next three years.Australia's exports rose +2.1% in April from the same month a year ago. Their imports were up +3.5% on the same basis. The result was a sharp weakening in their merchandise trade surplus, as you might have expected. It would have been worse if their gold exports had not come in +48% higher than year ago levels in April. The longer term view of the year to April 2025 compared to the year to April 2024 saw exports down -5.2% and imports up +2.7% showing the balance is tightening over the longer term too.Household spending in Australia in April was flat. But spending on recreational and cultural activities, health, and dining out contributed to a +1.5% rise in services spending, while spending on goods fell by -1.1%, with households buying less clothing and footwear and new vehicles.Last week, container freight rates jumped an outsized +41% from the prior week, with capacity struggling to cope with the sudden Trump tariff-tax pause and a new rush to beat what might happen in 90 days. It was impossible for shipping lines to adjust capacity for this unexpected shift. The largest rises were trans-Pacific rises, up almost +60%. Despite that, these container freight rates are now -25% lower than year-ago levels, although those year ago levels were in a sharp upswing that ran to mid-July 2024. Bulk cargo rates are also on the move up, gaining +9.5% in the past week.The UST 10yr yield is now at 4.39%, and up +4 bps from yesterday. Wall Street is weaker with the S&P500 down -0.7% in Thursday trade as confidence in public policy fades in a sudden Trump/Musk slanging match. The price of gold will start today at US$3,352/oz, and down -US$28 from yesterday.American oil prices are up +50 USc at just over US$63/bbl while the international Brent price is up the same at just over US$65/bbl.The Kiwi dollar is still at 60.4 USc, essentially unchanged from yesterday at this time. Against the Aussie we are also unchanged at just under 92.8 AUc. Against the euro we are up +10 bps at 52.9 euro cents. That all means our TWI-5 starts today at just on 68.3 and up +10 bps from yesterday.The bitcoin price starts today at US$103,373 and down -1.6% from yesterday. Volatility over the past 24 hours has been modest at just under +/-1.2%.You can get more news affecting the economy in New Zealand from interest.co.nz.Kia ora. I'm David Chaston. And we will do this again on Monday.

Kia ora,Welcome to Thursday's Economy Watch where we follow the economic events and trends that affect Aotearoa/New Zealand.I'm David Chaston and this is the international edition from Interest.co.nz.And today we lead with news that poor American data has seen risk aversion rise in financial markets with the USD falling, benchmark bond prices rising (yields falling), many key commodity prices either falling or showing weakness, and Wall Street underperforming global markets.The poor data was important and widespread.US mortgage applications fell last week for a third week in a row, this time by a solid -3.9% from the prior week but is +18% higher than year ago levels, even if year ago levels were quite weak. The benchmark 30 year mortgage interest rate dipped last week which makes the application levels look even weaker.Meanwhile there was weakness in the US labour market. We get the non-farm payrolls report on Saturday (NZT) but the pre-cursor ADP Employment Report was out today and it was expected to show a +117,000 jobs gain in May. But in fact it only reported a +37,000 gain - and April data was revised lower. There is no evidence in this data that factories are hiring to meet reshoring demand.And the widely watched ISM services PMI isn't showing much optimism either, slipping into a small contraction, its first since June 2024 with all the post-election hubris now evaporated. A feature of this report is the sharpness of the 'new business' component fall.And staying in the US, vehicle sales tumbled in May, falling to an annual rate of 15.65 million units. That was well short of analyst's cut-down expectations of 16.3 million and the steepest monthly decline in nearly five years. In April, sales ran at a 17.25 million rate and that was itself below the 17.8 mln rate in March when buyers rushed to get ahead of anticipated tariff-tax price hikes. Although sales at a 15.65 mln rate isn't nothing, it does indicate the margins of this market is quite price sensitive.So it will be no surprise to know that the US Fed Beige Book for May paints an uninspiring picture in most regions. Half of the Districts reported slight to moderate declines in activity, three Districts reported no change, and three Districts reported slight growth. All District reports indicated that higher tariff rates were putting upward pressure on costs and prices.Things may not improve for the American. Trump is now whining that XI won't take his call. (But he did call Putin who took his call.) And China seems to be on the verge of signing a massive aircraft deal with Airbus, at the direct expense of Boeing.Finally, the Congressional Budget Office has calculated the fiscal impact of the big Trump Budget Bill - saying it will add US$2.4 tln to US deficits, the largest expansion of these deficits ever through gigantic tax cuts for the wealthy. It may be no surprise that Trump can't do basic math, but that the whole Republican congressional party votes for this type of economic damage is quite astounding.In Canada, their central bank review of monetary policy settings left the policy interest rate unchanged at 2.75%, as was expected. They have inflation at 1.7% and an economic expansion of +2.2% in the March quarter, although that is not expected to last. They are watch for downward pressures on inflation from a weaker economy and the upward pressures on inflation from higher costs.In Japan, the 2024 total number of births was 686,061, down -5.7% from the previous year. This was the first time annual births have fallen below 700,000 since record-keeping began in 1899.Australia released its Q1-2025 GDP growth data yesterday. Their economy grew +0.2% in Q1-2025 from Q4-2024, slowing from +0.6% in Q4 and falling short of the +0.4% expected by analysts. This marked the 14th quarter of expansion but the softest pace in three quarters. On an annual basis, the GDP expanded +1.3%, holding steady for the second straight quarter but missing the expected +1.5% rise.The UST 10yr yield is now at 4.36%, and down -10 bps from yesterday.The price of gold will start today at US$3,379/oz, and up +US$26 from yesterday.Oil prices are down -US$1 in the US at just over US$62.50/bbl while the international Brent price is down -US$1.50 at US$64.50/bbl.The Kiwi dollar is now at 60.4 USc, a +30 bps rise from yesterday at this time. Against the Aussie we are unchanged at just over 92.8 AUc. Against the euro we are up +10 bps at 52.8 euro cents. That all means our TWI-5 starts today at just on 68.2 and up +10 bps from yesterday.The bitcoin price starts today at US$105,010 and down -0.9% from yesterday. Volatility over the past 24 hours has been modest at just under +/-1.0%.You can get more news affecting the economy in New Zealand from interest.co.nz.Kia ora. I'm David Chaston. And we will do this again tomorrow.

Kia ora,Welcome to Wednesday's Economy Watch where we follow the economic events and trends that affect Aotearoa/New Zealand.I'm David Chaston and this is the international edition from Interest.co.nz.And today we lead with news the global economic expansion is losing pace, led by the US.But first up today, the overnight full dairy auction pulled back, and expected, but perhaps not be as much as the derivatives markets suggested. In the end prices were down -1.6% in USD terms and -3.0% in NZD terms on a rising Kiwi dollar. It was a mixed picture across the commodities offered.In the US, the weekly Redbook retail monitor pulled back last week to be 'only' +4.9% higher than the same week a year ago. That is a sharpish dip from the prior week's +6.1% and mid-April's +7.4%. Much of this may be attributable to tariff-tax increases, with sales volumes easing faster now.Meanwhile, April job openings were little-changed but they did come in slightly higher than expected at 7.4 mln. We get the May non-farm payrolls report this Saturday (NZT) and that is expected to show a modest +130,000 rise.Meanwhile April factory orders came in weak, down a sharp -3.7% following the boosted March gain of +3.4%. Between the two months, a slight easing that was setting in since November. From April 2024 these order levels are up +0.6% and that is before accounting for inflation.The US Logistics Managers Index rose, but because inventory costs, warehousing utilisation, and transportation prices all rose at a faster rate, probably not the indicators that help their economy.But the latest RCM/TIPP optimism survey did rise for 'positive' reasons, but only back to levels it was in November after retreating rather sharply from a February high. The tariff-tax staggers may be easing among investors and the surveyors say this indicates US "consumers are closer to optimism".In Canada, Canadians have so heavily altered their travel plans to the US that the duty-free stores at the border seem to be on their knees in what is being called a 'collapse'.In South Korea, the candidate of the more liberal Democratic Party seems to be the winner of Tuesday's snap presidential election. It is a clear break, with voters turning away from the conservative party, who's previous President triggered their constitutional crisis. It's a win for the rule of law. The other main candidate has conceded.In China, they have delivered something of a surprise. The May Caixin China factory PMI unexpectedly dropped to 48.3, down from April's expanding 50.4 and missing market forecasts of a faster expansion (50.6). This was the first contraction in the sector in eight months and the steepest since September 2022. Output shrank alongside a renewed drop in new orders, with foreign sales declining at a faster pace. The official factory PMI came in at 49.5, a small improvement (lesser decline).Eurozone consumer price inflation eased to 1.9% in May, down from 2.2% in April and below market expectations of 2.0%. With inflation under control, that gives the ECB some room to trim interest rates further at their Friday (NZT) review.Globally, the OECD has lowered its economic expansion forecasts as the Trump tariff-taxes bite, and the US an economy they see suffering as much as others from the impact.That is spurring free trade talks among other nations, especially between Australia and the EU.In Australia, their Fair Work Commission's Expert Panel announced the National Minimum Wage and award wages will increase by +3.5% from 1 July 2025, following the 2024-25 Annual Wage Review. That means their National Minimum Wage will increase by +AU$0.85 to AU$24.95 per hour. (NZ$26.90/hr) The New Zealand adult minimum wage is currently $23.50/hr.The UST 10yr yield is now at 4.46%, and unchanged from yesterday.The price of gold will start today at US$3,353/oz, and down -US$22 from yesterday.Oil prices are up +50 USc in the US at just over US$63.50/bbl and the international Brent price is up +US$1 at US$66/bbl.The Kiwi dollar is now at 60.1 USc, a -10 bps dip from yesterday at this time. Against the Aussie we are down -10 bps at just on 92.8 AUc. Against the euro we are unchanged at 52.7 euro cents. That all means our TWI-5 starts today at just on 68.1 and down -10 bps from yesterday.The bitcoin price starts today at US$105,965 and up +1.6% from yesterday. Volatility over the past 24 hours has been modest at just on +/-1.2%.You can get more news affecting the economy in New Zealand from interest.co.nz.Kia ora. I'm David Chaston. And we will do this again tomorrow.

Kia ora,Welcome to Tuesday's Economy Watch where we follow the economic events and trends that affect Aotearoa/New Zealand.I'm David Chaston and this is the international edition from Interest.co.nz.And today we lead with news the Americans seem to be making a concerted effort to adopt a stagflation policy. The USD is falling toward a three year low, gold is rising again, as are US benchmark interest rates.But first, the week ahead will feature central bank rate decisions from Canada (expect a hold at 2.75%), the ECB (-25 bps to 2.15%) and India (-25 bps to 5.75%). And the week will end with the US non-farm payrolls report (+130,000 and extending the ho-hum trend).But the week will be dominated by factory and service sector PMIs, closely watched for the consequences of trade war activity. More damage came from the US over the weekend with the doubling of steel tariffs, from 25% to 50%. These are certain to make the US steel industry even less competitive globally, embedding higher producer costs for American factories and higher prices for its customers.We can see that from the latest ISM factory PMI for May, where a small contraction is now taking place, and the cost pressures are still very high. The final S&P/Markit May factory PMI recorded the most cost pressure since 2022, but a tiny expansion in this one.China released its official PMIs over the weekend, with the factory version contracting much less, and their services little-changed in a tiny expansion. Inflation pressures aren't evident here. The US trade pressure may be preventing China's economy from growing much but it isn't pushing it into a contraction. And so far, Beijing has resisted Trump's request for a phone call with Xi.And there were May PMIs out for Japan (contracting less), Canada,(holding a sharp contraction) Taiwan (contracting less), Korea (small contraction, but stable) Singapore (stable small contraction) and Australia (stable but expanding a bit less) on Monday. So this set isn't yet showing much change, but the trade war does seem to be embedding stagnation. Inflation doesn't seem to be much of a problem here, it is only the US that is getting them both.Stagnation without inflation does allow central banks to try a rate cut remedy - a remedy not available to the Americans.In China they are applying both monetary (lower rates) and fiscal policies (more spending) to stabilise their situation. Beijing is spending big to counter the downward pressure on its economy. As a result, the country's broad fiscal deficit expanded at its quickest clip since 2023 in the first four months of 2025, reaching a -¥2.7 tln (-NZ$630 bln) deficit in the period, almost 60% more than in the same period in 2024.They need all of that because it is pretty clear their real estate sector slump isn't anywhere near over yet, despite all the official help for it.We should also note that it is a holiday in China today, for Dragon Boat Festival.India reported Q1-2025 GDP outcomes, claiming a heady expansion of +7.4% from a year earlier, far better than the +6.7% expected and the +6.4% expansion in Q4-2024. This expansion was led by both the construction sector, and consumer spending.And Canada also reported an expanding economy in Q1-2025, gaining +0.5% in the quarter to be +2.2% higher for the year. Both these indicators of economic activity are better than analysts had expected. Of course these are only of historical interest because they pre-date the tariff-war actions of the US that started in April.Back in the US, the final University of Michigan consumer sentiment survey recovered its early month drop in the second half of the month, ending similar to the April level. The pause in the tariff war and the hope this would ease inflation pressures during the survey period was said to be behind the mood change. Still, this level is very pessimistic, -24% lower than year-ago levels.In Australia, job ad growth has turned into a decline, with the number of job ads dropping -1.2% in May from April, when they fell a downwardly revised -0.3%. Year on year they are down -5.7% although they remained +14% higher than pre-pandemic levels.The UST 10yr yield is now at 4.46%, and up +6 bps from Friday. The price of gold will start today at US$3,375/oz, and up +US$86 from yesterday.Oil prices are up +US$2 in the US at just under US$63/bbl and the international Brent price is just under US$65/bbl.The Kiwi dollar is now at 60.2 USc, a +50 bps rise from yesterday at this time. Against the Aussie we are up +20 bps at just on 92.9 AUc. Against the euro we are up +10 bps at 52.7 euro cents. That all means our TWI-5 starts today at just on 68.2 and up +30 bps from yesterday.The bitcoin price starts today at US$104,272 and down -0.9% from yesterday. Volatility over the past 24 hours has been modest at just on +/-1.0%.You can get more news affecting the economy in New Zealand from interest.co.nz.Kia ora. I'm David Chaston. And we will do this again tomorrow.

Kia ora,Welcome to Friday's Economy Watch where we follow the economic events and trends that affect Aotearoa/New Zealand.I'm David Chaston and this is the international edition from Interest.co.nz.And today we lead with news the legality of the US tariff taxes is now under court scrutiny.But first, US initial jobless claims rose +10,000 last week from the prior week to 212,000 when seasonal factors suggested it should have fallen -7,000. (The headline number was +240,000.) There are now 1.78 mln people on these benefits, +120,000 more than this time last year or a +7% rise.There was an update to the Q1-2025 US GDP growth rate out overnight, and it was little-changed, still showing a stall. Now they say it contracted at an annualised rate of -0.2% in the quarter, a slight improvement from the initial estimate of a -0.3% decline. However, it is still the first quarterly GDP contraction in three years. The slight improvement was driven by stronger-than-expected investment, which partially offset weaker consumer spending and a larger-than-anticipated drag from trade.The same data showed corporate profits fell sharply in the period and could continue to be squeezed this year by higher costs from tariffs.Pending home sales retreated an outsized -6.3% in April from March, far more than the -0.9% drop anticipated by analysts and fully erasing the revised +5.5% increase in March. The industry blames "high interest rates".The US Treasury 7yr bond auction today was supported a bit better than the prior event, resulting in a median yield of 4.14% compared to the 4.07% at the prior equivalent event a month ago.In a US Federal Court, the Trump Administration lost a key case challenging the imposition of his "Liberation Day" tariffs, where it was claimed the President didn't have the authority to impose them without Congressional approval. The issue will end up in the US Supreme Court soon for 'final' resolution. If it doesn't go Trump's way in his stacked court, things could get 'interesting'.In Japan, consumer sentiment is still trending down after peaking in March 2024. But the May survey recorded a bounce back from the unusual drop in April.In Australia, capex investment is not growing, especially for plant and equipment. And that is a hesitation in the rising trend that started in 2014 and continued until September 2024. The recent Q1-2025 data softness seems to be embedding.Globally, passenger air travel demand was up +8.0% with international travel demand rising almost +11%. In the Asia/Pacific region it was up more than +14%. Wanderlust is back fully after the pandemic period.Air cargo demand was up +5.8% in April, up +10% in the Asia/Pacific region, no doubt boosted by the rush to beat US tariffs.Meanwhile, container freight rates rose +10% last week from the week before to be -41% lower than year-ago levels. Trade uncertainty surrounding 'new' tariff-taxes is causing the current scramble to get goods moved. Bulk cargo rates dipped -2.5% in the past week however.The UST 10yr yield is now at 4.43%, and down -5 bps from yesterday.The price of gold will start today at US$3,322/oz, and up +US$26 from yesterday.Oil prices are down -US$1 at just under US$61/bbl in the US and the international Brent price is now at US$64/bbl.The Kiwi dollar is now at 59.9 USc, a +30 bps rise from yesterday at this time. Against the Aussie we are unchanged at just under 92.8 AUc. Against the euro we are down -20 bps at 52.6 euro cents. That all means our TWI-5 starts today at just under 68 and up +10 bps from yesterday.The bitcoin price starts today at US$106,229 and down -1.1% from yesterday. Volatility over the past 24 hours has been modest at just on +/-1.3%.You can get more news affecting the economy in New Zealand from interest.co.nz.Kia ora. I'm David Chaston. And we will do this again on Tuesday.

Kia ora,Welcome to Thursday's Economy Watch where we follow the economic events and trends that affect Aotearoa/New Zealand.I'm David Chaston and this is the international edition from Interest.co.nz.And today we lead with news the trade chaos and tariff-war skirmishes have markets worldwide watching for inflation signals as much as growth signals.First, in the US their Redbook retail index was up +6.1% last week from the same week a year ago, driven increasingly by tariff-tax price increases, which is why this metric is diverging so much from the formal retail sales volume data.American mortgage applications fell last week from the prior week. That is consistent with the benchmark 30 year mortgage rate rising, now almost touching 7% again.The Richmond Fed's regional factory survey came in negative again in May with activity slowing and new order levels still quite weak. The service sector report for the same mid-Atlantic region was weaker too. In both cases they recorded price pressures over +6%.The Dallas Fed services survey was just as negative, in fact even more so. Input prices are a real issue here too, over 5%..The well-supported US Treasury 5 year bond auction continued the trend of bidders wanting and getting higher risk premiums. This one delivered a median yield of 4.01%, up from 3.93% at the prior equivalent event a month ago.The minutes of the May 8 (NZT) Fed meeting released overnight revealed policymakers are uncertain on how to assess the future risks of inflation and their labour market, and how they can meet their dual mandate when forces are pushing in different directions. They seem to see the inflation risks are the key priority. They are also watching the USD depreciation because that too brings inflation risks. For them, it is a waiting game.India's April industrial production expansion slowed from March, but not by as much as was expected. It seems to be settling in at an under +3% rate which is far more modest than the overall economic expansion there. India's economic rise isn't really being built on manufacturing prowess. Of course the trade and tariff-war backdrop won't be helping.Euro area inflation expectations are rising again, and came in at 3.1% in the latest survey (in April) for the ECB, results they won't have liked. These expectations are back to early 2024 levels, unwinding the progress the ECB policymakers had thought they had won.In Australia, their monthly inflation indicator, also for April, shows it stuck at 2.4%. A small easing was expected but didn't eventuate. But 2.4% isn't a killer level and probably doesn't change expectations that the RBA will keep reducing its cash rate target, currently at 3.85%, by another -25 bps at their next meeting on July 8, 2025. A lot could change in between however, and analysts will be watching for upside risks.The UST 10yr yield is now at 4.48%, and up +4 bps from yesterday.The price of gold will start today at US$3,296/oz, and down -US$6 from yesterday.Oil prices are up +US$1.50 at just on US$62/bbl in the US and the international Brent price is now at US$65/bbl.The Kiwi dollar is down at 59.6 USc, a small +10 bps rise from yesterday at this time. Against the Aussie we are up +50 bps at just under 92.8 AUc. Against the euro we are up +30 bps at 52.8 euro cents. That all means our TWI-5 starts today still just under 67.9 and back up +30 bps from yesterday.The bitcoin price starts today at US$107,462 and down -2.6% from yesterday. Volatility over the past 24 hours has been modest at just on +/-1.4%.You can get more news affecting the economy in New Zealand from interest.co.nz.Kia ora. I'm David Chaston. And we will do this again tomorrow.

Kia ora,Welcome to Wednesday's Economy Watch where we follow the economic events and trends that affect Aotearoa/New Zealand.I'm David Chaston and this is the international edition from Interest.co.nz.And today we lead with news a relief rally is underway on Wall Street, responding to the delays in tariffs by the US on EU goods.But first, an update of the overnight dairy Pulse auction where prices for both SMP and WMP slipped although less than the futures market had suggested. The WMP was down -2.7% in USD from the prior week's full event, and a bit more in NZD. To be fair both prices had risen sharply since April but this pullback still leaves it in a rising trend despite today's adjustment.Data releases resumed in the US after their weekend holiday with durable goods orders pulling back in April after the unusually strong March gains. The pullback was largely in line with what was expected however, -6.3% lower than the prior month but up +2.7% from a year ago. Perhaps worryingly, excluding aircraft orders, nomn-defence capital goods barely budged in April, a sign that boardrooms remain skittish about future investment.That was matched by the Dallas Fed's May factory survey where activity was reported flat with a decline in new orders.But consumers seem happier, according to the Conference Board's May survey of consumer sentiment. But it was a survey taken before the latest US threats on the EU, so there is a sense of 'relief rally' here after the China tariff pullback. However, despite the month-on-month gain, this indicator is still tracking lower on the longer term, still lower than year-ago levels.Sentiment will be challenged again soon. There were a couple of housing indicators out overnight, and both recorded falls in American house prices. The FHA one was spun as an improvement, but it wasn't. The S&P/Case-Shiller one was a gain but a tiny one and the least since mid-2023.The bond market isn't feeling any better. The latest US Treasury 2 year auction, although as well supported as usual, brought a median yield of 3.90%, up from 3.74% at the prior equivalent event a month ago.And we can note that pricing for Trump Media shares, a marketplace that basically attracts investors who are supporters, is doing terribly. TMTG is down -11% today, down -33% so far this year, down more than -50% from a year ago. To rescue itself, it says it wants to raise US$2.5 bln to shift into crypto investing. It is an idea not going down well with shareholders.Across the border, core Canadian business activity is struggling a bit too. April wholesale trade was down -0.9% from March. That is kind of a lot for a one-month impact, one that records the initial tariff-war skirmishes.Across the Pacific in China, profits at industrial firms rose +1.4% in the first four months of 2025 compared to the same four months in 2024, picking up from +0.8% growth in the January–March period. For April alone, that was a rise of +5.2% from April 2024. Having noted that, April 2024 was a weak base. Still, given the trade challenges, and that China's factories are still very export oriented and vulnerable to trade war risks, this has to be seen as a good result in the circumstances.And we should start to keep an eye on China's carmakers. It is attracting increasing scrutiny because the economic fundamentals seem to be leaking away and quite fast. It could be another 'property development' industry failure, and could have just as large consequences if it wobbles too. They have no problem making cars, and good ones. But not only are they making more than the world needs, there are serious questions as to whether they can sell them for more than they cost to make.We should probably note that South Korean consumer sentiment jumped in May, rising back to levels that were common in November 2024 and prior. The ugly confusion period when its president went full-Trump and tried a palace coup (which resulted in impeachment, one that was upheld by the courts) is now behind it and Koreans are breathing easier. The rule of law won against a power grab. South Koreans will vote in a snap presidential election on Tuesday, June 3.And still in South Korea, they should join the CPTPP and diversify its trade as part of the bloc in the face of US uncertainties, a senior trade ex-minister is saying. (New Zealand runs a huge trade deficit with Korea.)In the EU, consumer and business sentiment basically held steady in May, according to the latest update. The trade wars are not yet unnerving the Europeans.The UST 10yr yield is now at 4.44%, and down -6 bps from yesterday.The price of gold will start today at US$3,302/oz, and down -US$38 from yesterday.Oil prices are down -US$1 at just over US$60.50/bbl in the US and the international Brent price is still just under US$64/bbl.The Kiwi dollar is down at 59.5 USc, a -½c retreat from yesterday at this time as commodity currencies are out of favour today. Against the Aussie we are down -20 bps at just on 92.3 AUc. Against the euro we are holding at 52.5 euro cents. That all means our TWI-5 starts today still just over 67.6 and down -30 bps from yesterday.The bitcoin price starts today at US$110,309 and up another +1.2% from yesterday. Volatility over the past 24 hours has been modest at just on +/-1.2%.Check back with us at 2pm for the RBNZ's May Monetary Policy Statement and OCR review. As you will knwo by now, 'everyone' expects a -25 bps cut. But the outlook from there is reasonably clouded, so Governor Hawkesby's analysis at 3pm is keenly awaited. We will have full coverage.You can get more news affecting the economy in New Zealand from interest.co.nz.Kia ora. I'm David Chaston. And we will do this again tomorrow.

Kia ora,Welcome to Tuesday's Economy Watch where we follow the economic events and trends that affect Aotearoa/New Zealand.I'm David Chaston and this is the international edition from Interest.co.nz.And today we lead with news we are being reminded of the central role the giant Wall Street markets play in global finance.It is a US holiday weekend, Memorial Day, and without those US markets operating, data releases and other market activity is very restrained.But in the US, Fed boss Powell delivered a graduation speech that contained a spirited defense of those who run public services and the core role they play in a crisis. He clearly showed there are no libertarians in a recession or threat of one. They all want "the government" to cover their backs.And the Trump Administration also shows the power of 'active' government policy setting. The using of tax policy to help your friends (and family) and punish your perceived enemies is on full display. And the use of tariffs to screw the scrum is a lever that also shows that clearly.From his bully-pulpit, Trump has delayed a punitive tariff threat on EU goods to July 9. It was enough to depress the USD on the capricious uncertainty and the EUR as hit a one-month high.We should note that American hot-rolled steel prices are now at US$900/tonne which is +29% higher than when Trumps tariff actions started to take shape at the start of 2025. These are policies that are embedding sharp producer price inflation there. And of course, they will rise from here, as tariff pressure builds on other efficient manufacturers outside the US.You can contrast that with Chinese steel prices. We don't have hot-rolled coil steel prices for China to hand, but we do have rebar steel prices there and they are now US$425/tonne, down from US$460/tonne at the start of 2025, so a -7.5% decrease. A crude matching of the US and China steel price shifts suggests the Chinese-sourced products have gained a +35% advantage in the period, largely offsetting the tariff actions. It is American consumers paying for all this infantile policy-making.Meanwhile, the world is getting on with business, but just with fewer data signals to start the week.In Canada, factory sales there were weakish in April, the weakest month of the year so far. Key to the fall were declining output in both their oil industry, and their car manufacturing.A recent review of the Canadian economy by the OECD suggests it will avoid recession, but that expansion will be hard to find in the present trade-war climate.Meanwhile, the province of Alberta is feeling very uneasy. There is a fringe movement there to cede from Canada and become a US state, built on the feeling that federal Canada doesn't appreciate the economic role they play in the Federation. But that overlooks the central role the US is playing in depressing the oil demand and prices they claim is 'theirs'. Joining the US would only accentuate the feelings of 'victimisation'.Across the Pacific, Singapore also released April factory production data and that rose faster from March, to be +5.9% higher than year-ago levels.The UST 10yr yield is now at 4.51%, and unchanged from yesterday while the New York bond market was closed. The price of gold will start today at US$3,340/oz, and down -US$17 from yesterday.Oil prices are holding at just on US$61.50/bbl in the US and the international Brent price is still just under US$65/bbl.The Kiwi dollar is still at 60 USc, and up +10 bps at this time. Against the Aussie we are up +30 bps at just on 92.5 AUc. Against the euro we are down -20 bps at 52.5 euro cents. That all means our TWI-5 starts today still just under 67.9 and up +10 bps from yesterday.The bitcoin price starts today at US$109,020 and up +1.6% from yesterday. Volatility over the past 24 hours has been modest at just on +/-1.4%.You can get more news affecting the economy in New Zealand from interest.co.nz.Kia ora. I'm David Chaston. And we will do this again tomorrow.

Kia ora,Welcome to Monday's Economy Watch where we follow the economic events and trends that affect Aotearoa/New Zealand.I'm David Chaston and this is the international edition from Interest.co.nz.And today we lead with news we have ended a turbulent week where the USD fell, US Treasury benchmark rates rose, and equities retreated. Gold jumped.The turbulence will continue into this coming week with the US president lashing out because his signature tariff policies aren't producing the economic growth or reshoring he anticipated and other countries have worked out how to game him. His new lashes are at the EU, and Apple, for not reshoring. Neither seem in awe of his power any more.But first, the coming week will be dominated by Wednesday's ORC review where a -25 bps rate cut to 3.25% is widely anticipated. Earlier that day there will be a dairy Pulse auction too.In Australia, they will update their monthly consumer price indicator, also on Wednesday. Elsewhere, South Korea will be reviewing its monetary policy settings this week, and Japan will release important industrial production, retail sales, and consumer sentiment updates.In the US, after their long weekend, markets are bracing for another uncertain week, driven by those tariff threats from Trump targeting the European Union and Apple. Investors will also focus on commentary from Fed officials, as well as the FOMC meeting minutes. Key US economic indicators include personal income and spending, the PCE price indices, durable goods orders, trade balance, the second estimate of Q1 GDP growth, corporate profits, pending home sales among others.But first we should note in China, their central bank injected ¥500 bln (NZ$120 bln) of new liquidity into financial institutions through their one-year medium-term lending facility on Friday. But that was less than the ¥600 bln added in April.China's net foreign direct investment actually fell in April from March, a very unusual shift. The fall wasn't large at -US$4.8 bln for the month but a notable shift from the +US$7.2 bln rise in April 2024 which was considered unusually small. Go back to April 2023 and it was +US$14.1 bln and +US$15.4 bln the year before. In the past two years, the August levels have stalled (but not retreated) and this is the first we have ever seen where there was a net outflow of foreign investment from China in a month. And Nikkei is reporting that the protracted real estate woes are pushing down lending rates, and now 80% of Chinese banks have seen their interest margins fall below the industry threshold for profitability, raising concerns over the sector's stability. Fifty-four of 58 commercial banks listed in mainland China and Hong Kong posted reduced interest margins compared with the previous fiscal year, according to the analysis, which evaluated financial results announced for the year ended December 2024.Japanese inflation is holding high, and came in at 3.6% in April, the same as in March. But that was its lowest since December. Food prices rose the least in four months but were still up +6.5% from a year ago, down from the March +7.4%. This dip came after the government took steps to curb rice prices that have doubled over the past year. High rice prices have cost the government minister 'responsible' for that sector his job last week.In Singapore, April CPI inflation held art a very low 0.9%, but that belies the monthly fall of -0.3% from March. This is the second month in a row they have had month-on-month deflation. That is largely due to falling costs for clothing, household durables, and entertainment. Food price increases were modest.Taiwanese retail sales growth was weak again in April. It hasn't really recovered after the unexpectedly large drop in February, bumping along essentially at year-ago levels.But Taiwanese industrial production is on fire, rising another sharp +22% in April from the same month a year ago. That is the best growth rate on record for them, apart from the distorted pandemic recovery.Across the Pacific in the US, this is the long Memorial Day holiday weekend in the US, the start of their summer season which won't end until their Labor Day holiday on September 1. (Traditional investors "sold in May, and went away" because volumes lighten and become more volatile over this northern summer period.)This is also the start of the US summer 'driving season'. American petrol prices are currently averaging US$3.196/US gallon. That is NZ$1.41/L. (A year ago it was +10% higher, equivalent to NZ$1.566/L.)And it is the start of their barbeque season. But prices are likely to rise further from the already record high levels because the number of cattle on feedlots is down, and the amount of beef stored in freezers is lower too.But of course, business carries on. There was an unusually large rise in new home sales in the US in April, taking them up to an annualised rate of 743,000, a level they haven't seen since mid-2022. After a string of weak months (and downwardly revised earlier data) builders are now resorting to widespread incentives to move stock, and it seems to have worked in April. Housing starts remained weak, and new building consents are declining still.In Australia and on their eastern seaboard it has been very wet with widespread flooding. And that is having a substantial impact on rural output. In particular, milk volumes are falling and milk prices are rising fast.The UST 10yr yield is now at 4.51%, and down -1 bp from this time Saturday. The price of gold will start today at US$3,357/oz, and down -US$5 from Saturday. But that makes it +US$170 higher than a week ago, a +5.5% jump.Oil prices are holding at just on US$61.50/bbl in the US and the international Brent price is still just under US$65/bbl.The Kiwi dollar is still at 59.9 USc, and unchanged from Saturday at this time. A week ago it was at 58.8 USc so an outsized +110 bps rise since then. Against the Aussie we are holding at just under 92.2 AUc. Against the euro we are unchanged at 52.7 euro cents. That all means our TWI-5 starts today still just under 67.8 and unchanged but up +40 bps for the week.The bitcoin price starts today at US$107,270 and down -2.5% from Saturday. Volatility over the past 24 hours has been modest at just on +/-1.1%.You can get more news affecting the economy in New Zealand from interest.co.nz.Kia ora. I'm David Chaston. And we will do this again tomorrow.

Kia ora,Welcome to Friday's Economy Watch where we follow the economic events and trends that affect Aotearoa/New Zealand.I'm David Chaston and this is the international edition from Interest.co.nz.And today we lead with news risk premiums keep on rising.But first, the OECD is reporting that the global expansion is leaking away, and quite quickly now. Economic activity rose by just +0.1% in the first quarter of 2025, significantly down from an +0.5% rise in the previous quarter. The US and Japan were the main drags in their data. And they say this is a departure from the higher and relatively stable growth rates recorded in the OECD area over the past two years.US initial jobless claims eased lower marginally, all accounted for by seasonal factors. There are now 1.79 mln people on these benefits, +103,000 more than at the same time last year.Existing home sales in the US fell -0.5% in April 2025, to their lowest in seven months and notably below what was expected. High mortgage rates are getting the blame.The first of the US PMI survey is out for May, the S&P/Markit one, and that reported output growth improved in the month, but prices spiked higher from the tariff impacts. And this was true for both the factory category, and their services category. It is better than a decline but in a broader historical perspective this isn't very impressive.Supporting that was the Chicago Fed's National Activity Index which not only recorded a decline in April, but March was revised lower too.Meanwhile, the Kansas City Fed factory survey for May slipped more negative again, even if hopes for the future remain positive.We don't usually report results of the US Treasury Inflation Protected Securities (TIPS), but today's 10 year event reveals the rising risk premiums investors are demanding, even as background inflation rises. Today's event delivered a median yield of 2.14% plus inflation, compared to the prior equivalent event a month ago of 1.86% plus inflation. These premiums are on the move wider, and are likely to widen substantially if Trumps 2025 Budget gets through Congress.North of the border, and in a bit of a surprise, Canadian producer prices slipped in April to be just +2.0% higher than a year ago. It turns out that many components for Canadian factories are sourced from the US and the falling US dollar has made them cheaper. That is certainly true for energy products, but true for many other components as well. Cheaper input costs will help Canadian factories push back against the tariff taxes their US customers have to pay.In Japan, they booked record high machinery orders in March, up +8.4% from a year ago, and far above what was anticipated. The outlook for the next three months looks good too. But we should note these gains are built on fast-rising domestic orders. Export order contributions were weak.Meanwhile, the Japanese May PMIs both slipped lower to be essentially flat (a marginal contraction for factories, a marginal expansion for services).In China, and in a sign of how broken their real estate development sector has become, local authorities are using bond funds to buy back unused land from struggling developers as a way to stop them completely collapsing.Singapore reported its change in economic activity for March and that came in at +3.9%, lower than the 5.0% growth in the December quarter but better than the expected +3.6%. But officials there downgraded their full 2025 expectations saying they will be lucky to get +2.0% growth this full calendar year - for all the obvious reasons.The Indian PMI for May stayed little-changed with a robust expansion. But they too are now noting rising price pressures.The flash Australia PMIs for May report a growth stall, for both their factory sector and their services sector. That was because they had their slowest growth in new orders in 2025 so far.Global container freight rates stayed low last week, up +2% from the prior week to be -28% lower than year-ago levels. And bulk freight rates rose +5.0% from a week ago but remain in the general low range they have been since early April.The UST 10yr yield is now at 4.55%, and down -5 bps from this time yesterday.The price of gold will start today at US$3,294/oz, and down -US$18 from yesterday.Oil prices are -50 USc softer today at just under US$61/bbl in the US and the international Brent price is just under US$64.50/bbl.The Kiwi dollar is now at 59 USc, and down -½c from yesterday at this time. Against the Aussie we are down -30 bps at 92 AUc. Against the euro we are down -10 bps at 52.4 euro cents. That all means our TWI-5 starts today still just under 67.4 and down a net -20 bps from yesterday.The bitcoin price starts today at US$111,542 and up +5.0% from yesterday. Volatility over the past 24 hours has been moderate at just on +/-2.5%.You can find links to the articles mentioned today in our show notes.You can get more news affecting the economy in New Zealand from interest.co.nz.Kia ora. I'm David Chaston. And we will do this again on Monday.

Kia ora,Welcome to Thursday's Economy Watch where we follow the economic events and trends that affect Aotearoa/New Zealand.I'm David Chaston and this is the international edition from Interest.co.nz.And today we lead with news the bond market is speaking, passing judgement on the Trump Budget - it doesn't like it.The benchmark US Treasury 10yr, 20yr and 30yr bond yields have all jumped +12 bps so far today. That means their holders are taking sharp capital losses as the price of 'safety', and new buyers want sharply higher risk premiums. These rates are closing in on pre-GFC levels now.After a couple of weeks of rises, US mortgage applications fell last week and that too was because of rising mortgage interest rates. Their benchmark 30 year rate is very much tied to the equivalent UST rates, so next week it is very likely mortgage interest rates will jump sharply too, with a consequential fall in new mortgage applications.And those rate rises are flowing through to the primary market as well. The overnight US Treasury 20 year bond auction was still well-supported but at a price, with the median yield jumping to 4.97%, up +22 bps from 4.75% at the prior equivalent event a month ago. It has been a long time since we have seen as sharp a price signal in the primary market.It is actually starker than that. At that prior event, the high bid was 4.81% and 6.5% of the auction was allocated at that level. At this latest auction, the high bid was 5.05% and 41% was allocated at that level.Stagflation, recession fears, and a clearly irresponsible Federal Budget proposal (just designed for one family's interest) is gnawing away at sentiment and now consumer demand. Overnight, current US crude oil stocks jumped on unexpectedly low demand. These inventories rose by +1.328 million barrels in the week that ended May 16, defying market expectations of a -1.85 million barrel decrease. That is a large, unexpected turn.It is too much for the equities market, which fell sharply on all this bond and demand news.In Canada, and in a surprise, new home prices fell, and rather sharply to be back to early 2024 levels. In fact the dip was the sharpest since the pandemic.Across the Pacific, Japan is facing bond stress as well. Yields on long-term Japanese sovereign bonds are soaring as demand for such debt falters, with many market experts saying the situation is unlikely to change anytime soon. Behind the shrinking demand are mounting investor worries over the health of Asia's No. 2 economy and fallout from US trade tariffs. Yields on 20-year JGBs rose yesterday (Wednesday) to 2.575%, their highest since 2000.Meanwhile, Taiwanese export orders surged almost +20% in April from a year ago to US$56.4 bln and easily exceeding market expectations of a +10% increase. This is their best month ever, outside the distorted period of the pandemic and its aftermath when volatility reigned.The Indonesian central bank cut its policy rate by -25 bps cut to 5.50%, as expected and taking it back to a level first fit in December 2022. Even though inflation is rising there it is only at just under 2% and well within its target range.In Australia, the six-month annualised growth rate in the Westpac-Melbourne Institute Leading Index, which indicates the likely pace of economic activity relative to trend three to nine months into the future, slowed to 0.2% in April from 0.5% in March, a stalling that wasn't expected.In a new update, the ABS said Aussie employers paid a record AU$104.8 bln in salaries and wages in March. Annual growth ranged from +3.7% in the mining industry to +11.9% in Electricity, gas, water and waste services. In dollar terms, the rises were greatest in the healthcare and social assistance services industry (+$1.1 billion or +7.8%), public administration and safety (+$0.6 billion or +8.1%), and construction ($0.6 billion or +7.1%).Join us for the Budget 2025 release after 2pm this afternoon. Although much has already been signaled, some will have been saved for the theatre on the annual budget release, and this is our opportunity to assess the overall health of the Crown accounts - and when we are next likely to return to surplus.The UST 10yr yield is now at 4.60%, up a very sharp +12 bp from this time yesterday. Wall Street is sharply lower, with the S&P500 down -1.5% in Wednesday trade. The price of gold will start today at US$3,313/oz, and up +US$28 from yesterday. (Remember the record high is US$3520/oz set on April 22, 2025.)Oil prices are a tad softer today at just over US$61.50/bbl in the US and the international Brent price is -50 USc lower at US$65/bbl.The Kiwi dollar is now at 59.5 USc, up another +30 bps from yesterday at this time. Against the Aussie we are up +10 bps at 92.3 AUc. Against the euro we are unchanged at 52.5 euro cents. That all means our TWI-5 starts today still just over 67.6 and up +10 bps from yesterday.The bitcoin price starts today at US$106,238 and essentially unchanged from yesterday. At one point it briefly hit US$109,500, but fell back just as quickly. Volatility over the past 24 hours has been moderate at just on +/-2.0%.You can find links to the articles mentioned today in our show notes.You can get more news affecting the economy in New Zealand from interest.co.nz.Kia ora. I'm David Chaston. And we will do this again tomorrow.

Kia ora,Welcome to Wednesday's Economy Watch where we follow the economic events and trends that affect Aotearoa/New Zealand.I'm David Chaston and this is the international edition from Interest.co.nz.And today we lead with news both superpowers are dicing with unsustainable budget deficits that are posed to explode. The Moody's downgrade was just a teaser. The bond market will make the real judgment.But first today, the overnight dairy auction brought the expected settling of prices, even though they remain high. They dipped overall by -0.85% on the low volumes offered but with the backdrop that the European season is currently at its peak. WMP and SMP both dipped minorly and as signaled in the derivatives market. The Cheese price sank -9.2% however but it had probably gotten excessively high in prior events, so an unsurprising correction. Chinese buying presence was a feature of this event.US retail salesrose +5.4% last week from the same week a year ago, but this is clouded by the unknown impact of their new tariff-taxes. It is their slowest rise since late March and the impact of the tariff taxes will be starting to show up now. So it could well be that retail sales volumes are starting to decline now as a consequence.On Wall Street, there is growing nervousness about how the Federal Government's budget is being planned. If it goes through as the Administration is proposing, the US deficit to balloon sharply. And the bond market will have something sharp to say about that.In Canada, their inflation rate fell to 1.7% in April, but there was a special on-off factor that helped it. It dropped from 2.3% in March not quite hitting the expected 1.6% May level. A large part was a drop in energy prices not only because the oil price is easing but they also removed the consumer carbon tax. Food prices prices were up +3.8% however, especially the cost of fresh food.China has cut its key lending rates to record lows at yesterday's May fixing. The one-year loan prime rate, the benchmark for most corporate and household loans, was lowered by 10 basis points to 3.0%, while the five-year LPR, which is the basis for mortgage rates, was cut by the same margin to 3.5%. These changes were what markets were expecting and the first reductions since October. It is another in the string of monetary easing measures announced earlier this month.That official move was immediately followed by the four largest Chinese state-owned banks who cut deposit rates by between -5 bps and -25 bps. Those four core SOE banks are Bank of China, China Construction Bank, ICBC, (all of whom have New Zealand subsidiaries) and the Agricultural Bank of China. Other banks followed. Money is flowing out of savings accounts now, back to higher earning "wealth products', a move that in the past has been fraught with risk.The US isn't the only superpower flirting with deficit spending danger. China is too, as its fiscal stimulus pushed its four-month budget deficit to a record high of -¥2.65 tln in 2025 (-NZ$620 bln). And there is no public pushback on the wisdom of that.Malaysian exports took off in April with a strong +16.4% rise from the same month a year ago. If we look past the pandemic recovery growth, it was near their best export performance since 2018. But also came as imports surged +20% to a new all-time record high.In Europe, it might have been marginal but it is worth noting all the same - consumer sentiment got less bad in May. This seems to have broken the 2025 run of declines in these survey results, a decline that really started in late 2024.In Australia, they cut their cash rate target by -25 bps as expected to 3.85% which they say is still at a restrictive level, just less so. Inflation and trade uncertainties are still on their mind - and the risks to their continuing expansion were more so that markets were anticipating. Governor Bullock's press conference comments were more dovish than the rate change statement, and more dovish that many were expecting. The RBA also trimmed its growth forecasts. Markets now expect at least two more -25 bps rate cuts to come through in 2025. Yesterday's Bullock comments opens up the possibility of more.The UST 10yr yield is at 4.48%, up a mere +1 bp from this time yesterday.The price of gold will start today at US$3285/oz, and up +US$58 from yesterday.Oil prices are a tad softer today at just over US$62/bbl in the US but the international Brent price is +50 USc firmer at US$65.50/bbl.The Kiwi dollar is now at 59.2 USc, up +30 bps from yesterday at this time. Against the Aussie we are up +40 bps at 92.2 AUc. Against the euro we are down -20 bps at 52.5 euro cents. That all means our TWI-5 starts today still just over 67.5 and essentially unchanged from yesterday.The bitcoin price starts today at US$106,320 and up +0.9% from yesterday. Volatility over the past 24 hours has been modest however at just under +/-1.2%.You can find links to the articles mentioned today in our show notes.You can get more news affecting the economy in New Zealand from interest.co.nz.Kia ora. I'm David Chaston. And we will do this again tomorrow.

Kia ora,Welcome to Tuesday's Economy Watch where we follow the economic events and trends that affect Aotearoa/New Zealand.I'm David Chaston and this is the international edition from Interest.co.nz.And today we lead with news the US downgrade is seeing the trend of higher interest rates extend.And in the US, we have more negative signals. The Conference Board's Leading Economic Index (LEI) "plunged" by -1.0% in April, after declining sharply by -0.8% in March. The LEI has declined by -2.0% in the six-month period ending April and is now just shy of signaling 'recession' they say. But it is actually back lower than in the last Trump presidency when there was recession.At an investor day in New York, the boss of the US's largest bank, JPMorgan Chase, said investors are underestimating geopolitical and inflation risks. “Credit today is a bad risk,” he said earlier today. “The people who haven't been through a major downturn are missing the point about what can happen in credit.”In Canada, their largest province has announced a Budget that prioritises higher spending and larger deficits in the coming year in a direct effort to "protect Ontario". The next federal Canadian budget isn't due until at least September.In China, retail sales rose by +5.1% in April from the same month a year ago, moderating from March's over 1-year high of +5.9% and missing market estimates of +5.5%. But is was one of the still-good data releases from China, one that is in a rising trend and even better because they have virtually no inflation.Another positive data release from China came from their industrial production which grew by a claimed +6.1% in April from a year ago and better than the expected +5.5% gain. However, the latest figure eased from the +7.7% growth recorded in March. Meanwhile, electricity production rose only +0.9% in April, hardly supporting the much stronger industrial production data.China, which regulates the wholesale price of petrol and diesel, announced cuts overnight, to take effect immediately.Meanwhile their national real estate development investment fell sharply yet again, and the residential sector was down -9.6% from April last year. And prices for new, and previously-owned housing are still down sharply on a year-on-year basis even if there are small pockets of regional improvements.Meanwhile, Chinese residents trading foreign stocks or holding offshore accounts are being put on notice as authorities take fuller advantage of cross-border data to trace unreported earnings.In the EU, their economy is projected to grow by +1.1% in 2025 and +1.5% in 2026, and both are downgrades from the levels forecasted last autumn. This is according to the European Commission's Spring outlook. The downgrade is primarily attributed to the impact of rising tariffs and increased uncertainty stemming from recent abrupt shifts in US trade policy. On the inflation front, disinflation is now expected to proceed more rapidly than previously anticipated. Inflation in the Eurozone is projected to ease to 2.1% by mid-2025, reaching the ECB's target earlier than previously expected, and to decline further to 1.7% in 2026. And staying in Europe, we should probably note that BNPL giant Klarna, which also operates in New Zealand, is seeing its losses grow. In Q1-2025 they doubled to -US$100 mln as "consumer credit losses" rose sharply, even as revenue grew.Later today (at 4:30pm NZT), the Australian central bank will review its cash rate target, currently at 4.10%. It is widely expected to be cut by -25 bps to 3.85%. That would put it still above the New Zealand OCR at 3.50% and our official rate is also expected to be cut by -25% mid next week to 3.25%, restoring the differential. But although both cuts are expected and priced in, more attention will focus on the next likely shift. Some see the RBA 'done' at one cut with the next move a rise. Background inflation risks are still elevated there, their labour market isn't suffering, and growth prospects are still there even in the current turbulent world.The UST 10yr yield is at 4.47%, up a mere +3 bps from this time yesterday, but curves are steeper.The price of gold will start today at US$3227/oz, and up +US$25 from yesterday.Oil prices are holding again today at just over US$62.50/bbl in the US but the international Brent price is -50 USc lower at US$65/bbl.The Kiwi dollar is now at 58.9 USc, up +10 bps from yesterday at this time. Against the Aussie we are unchanged at 91.8 AUc. Against the euro we are also unchanged at 52.7 euro cents. That all means our TWI-5 starts today still just over 67.5 and up +10 bps from yesterday.The bitcoin price starts today at US$105,393 and essentially unchanged from yesterday. Volatility over the past 24 hours has been moderate however at just under +/-2.2%.You can find links to the articles mentioned today in our show notes.You can get more news affecting the economy in New Zealand from interest.co.nz.Kia ora. I'm David Chaston. And we will do this again tomorrow.

Kia ora,Welcome to Monday's Economy Watch where we follow the economic events and trends that affect Aotearoa/New Zealand.I'm David Chaston and this is the international edition from Interest.co.nz.And today we lead with news analysts and investors are looking at the unfolding trade-war skirmishes through different lenses.The week ahead will be dominated for us by the 2025/26 Government Budget announcements on Thursday and before that the RBA rate decision tomorrow. Important in the background will be the bond vigilantes and their global assessments of risk premiums.While this is going on, the May PMIs will come through for most of the major economies. A number of countries will release their April CPI data too. And we will keep a close eye on Chinese data releases later today including for retail sales, industrial production, house prices and foreign direct investment levels. And Chinese demand will have an influence on the Wednesday full dairy auction as well.But first we should note that equity analysts are changing their tune. But it is not clear yet that investors are following them. Globally, Q1-2025 earnings have been good, with widespread results that beat forecasts. But for an increasing number of analysts, those good recent results are being dismissed because they now want to know how a company will fare in the Q2 and ahead world of trade disruption, sagging sentiment and higher costs. Stagflation offers few places to hide.The separate views between analysts and investors is probably clearest in the world's largest economy.Influential analysts at Moody's credit rating service are worried and have joined S&P and Fitch in a notable downgrade over the weekend of the US sovereign credit rating.That followed news that falling American consumer sentiment is hanging over the global economy. The University of Michigan consumer sentiment index dropped sharply in May from April when analysts expected it to rise. This is the fifth consecutive monthly decline, the lowest reading since June 2022, and the second-lowest on record. Hurting was rising inflation expectations largely around the impact of the tariff taxes. Sentiment is down by a quarter in a year.And retailing giant Walmart is only now starting to roll out tariff price increases, so the pressure on inflation will become even more apparent in the coming monthsCurrent assessments of personal finances sank nearly -10% on the basis of weakening incomes. Tariffs cost fears were spontaneously mentioned by nearly three-quarters of consumers, up from almost 60% in April. Inflation expectations for the year ahead surged to 7.3%, a new all-time high from 6.5% and long-run inflation expectations edged up to 4.6% from 4.4%.US housing starts stayed at a relatively low level and that was lower than expected. Given the impact of the tariff taxes, that won't really be any surprise. This is largely why new building consents fell further.Meanwhile, Bloomberg is reporting that the US Fed will trim 2500 jobs or about 10% of its workforce "over the next several years".And we should probably note that the Trump tax cut bill failed in a key US House of Representatives committee, mainly because conservative Republicans want greater spending cuts, including to Medicaid programs. In Canada, their senior loan officer survey of credit conditions tightened for both home loan lending and other lending. "Price" (the expectations of higher interest rates) was a key factor. But for non-mortgage lending the impact of tariffs was prominent also.In China, later today we get a big data dump for April activity which could be revealing on how they weathered the initial tariff-war impacts.And they may say they are best-buddies with Russia, but Russia can't afford to buy Chinese cars and has moved to block imports. It is hard to imagine China being happy with that because it will kill a trade of over 1 mln vehicles annually.Singapore's non-oil exports surged +12.4% in April from a year ago, far exceeding expectations of a +4.0% increase and accelerating from a +5.4% rise in March. It is the third consecutive month of export growth and the fastest pace since last July. There were sharp rises in exports of both electronics and non-electronic products.Although slightly dated now, we can report the Eurozone's trade surplus surged to a record +€37 bln in March, up from +€23 billion a year earlier, fueled by a sharp rise in exports, particularly to the US as buyers rushed orders ahead of incoming tariffs.The UST 10yr yield is at 4.44%, unchanged from Saturday. The price of gold will start today at US$3201/oz, and up +US$14 from Saturday. But it is down -US$137 from this time last week.Oil prices are holding today at just over US$62.50/bbl in the US and the international Brent price is still just under US$65.50/bbl. But both are up +US$1.50 from a week ago.The Kiwi dollar is now at 58.8 USc, unchanged from Saturday at this time. Against the Aussie we are down -10 bps at 91.8 AUc. Against the euro we are unchanged at 52.7 euro cents. That all means our TWI-5 starts today still just under 67.4 but up +40 bps from a week ago.The bitcoin price starts today at US$105,306 and up +1.3% from Saturday. Volatility over the past 24 hours has been modest at just under +/-1.4%.You can find links to the articles mentioned today in our show notes.You can get more news affecting the economy in New Zealand from interest.co.nz.Kia ora. I'm David Chaston. And we will do this again tomorrow.

Kia ora,Welcome to Friday's Economy Watch where we follow the economic events and trends that affect Aotearoa/New Zealand.I'm David Chaston and this is the international edition from Interest.co.nz.And today we lead with news Trump's back-down on tariffs came as corporate decision-makers concluded reshoring isn't a good idea. There are few moves to bolster US-based production.But first today, Fed boss Powell spoke overnight and he focused on the challenges they face keeping inflation under control. He noted long-term interest rates are now notably higher, driven mainly by risk premiums rather than shifts in inflation expectations, while estimates of the longer-run neutral policy rate have also risen. He noted the US economy has changed a lot since their last review and warned that inflation might become more volatile in future due to more frequent supply shocks, which will make it harder for central banks to achieve price stability. Throughout his remarks, Powell also stressed the critical role of anchored inflation expectations. Meanwhile US initial jobless claims slipped slightly to 205,200 but that was what seasonal factors accounted for and what analysts were expecting. There are now 1.783 mln people on these benefits, a reduction from last week, but it is up almost +100,000 from this time last year.Maybe surprisingly, American producer prices fell by -0.5% in April, following a revised flat reading in March and defying market expectations of a +0.2% increase. This was the first decline in the PPI since October 2023 and the sharpest drop since April 2020, during the early pandemic period. The retreat was largely driven by a -0.7% fall in service costs, the largest since data collection began in December 2009, and that was due to a -1.6% drop in margins for trade services, because businesses are absorbing much of the impact from higher tariffs. PPI is now up +2.4% from a year ago.Industrial production in the US didn't rise as expected in April. In fact factory output fell -0.4%, reversing the increase in March. And the prospects of shifting significant production "back to the US" seem remote in many diverse categories.There were two regional factory surveys released for May overnight, and both declined somewhat. The NY Fed's Empire State survey reported another modest decline. The Philly Fed's survey for their core rust belt region recorded a sharp improvement, better than the improvement expected. But it is still in decline.In a sign of the times a major lithium battery recycler has entered bankruptcy.US retail sales were little-changed in April, following the upwardly revised +1.7% front-loaded pre-tariff surge in March. 2024 gains mean they are +5.2% higher than year-ago levels.The NAHB/Wells Fargo Housing Market Index in the US fell sharply in May to its the lowest since November 2023 and well below what was expected. Home builders are glum. Current sales conditions fell, sales expectations in the next six months edged lower, and they said traffic of prospective buyers has dropped recently.Meanwhile, housing starts in Canada jumped +30% in April from March and that was well above what was expected. It was their most since June 2023. US tariffs on Canadian softwoods is likely making Canadian house building costs lower.Across the Pacific, Japanese machine tool orders rose +7.7% in April from a year ago, but that growth was a slowing from +11.4% growth in March. But it was the seventh consecutive month of rising machine tool orders. Local orders dropped -5.4% from a year earlier while foreign orders jumped +13.3% on the same basis. India's exports were nothing special in April, certainly not reflective of a rising industrial power. They slipped from March but they were up +9.0% from a year ago due to gains in prior months.In Europe, industrial production rose by +2.6% in March from February, marking the strongest increase since November 2020 and rising from a good +1.1% gain in February. The result easily beat market expectations of a +1.8% rise. The surge was driven primarily by a rebound in output of durable consumer goods.In Australia, they added +75,500 jobs in April, almost 47,500 of them full-time positions. Their employed workforce grew +2.75% in the past year. Their jobless rate eased to 4.1% from 4.3% (although staying at 4.1% on a seasonally adjusted basis which is the metric others report). Inflation pressure plus this strong jobs report might have the RBA re-thinking the wisdom of a rate cut.Bulk freight rates fell -7.0% in the last week to be -18.5% lower than year-ago levels. Container freight rates were also -18.0% lower than year ago levels, but they did rise +8% last week with a surge in outbound cargoes from China across the Pacific on the sudden 'pause' in tariff hikes.The UST 10yr yield is at 4.45%, down -8 bps so far today.The price of gold will start today at US$3218/oz, and up +US$43 from yesterday.Oil prices are -US$2 lower today at just over US$61.50/bbl in the US and the international Brent price is just on US$64.50/bbl.The Kiwi dollar is now at 58.7 USc, down -40 bps from yesterday at this time. Against the Aussie we are down -10 bps at 91.7 AUc. Against the euro we are down -30 bps at 52.5 euro cents. That all means our TWI-5 starts today just over 67.2 and down a net -40 bps from this time yesterday.The bitcoin price starts today at US$104,020 and up +0.8% from yesterday. Volatility over the past 24 hours has remained modest at just under +/- 1.2%.You can find links to the articles mentioned today in our show notes.You can get more news affecting the economy in New Zealand from interest.co.nz.Kia ora. I'm David Chaston. And we will do this again on Monday.

Kia ora,Welcome to Thursday's Economy Watch where we follow the economic events and trends that affect Aotearoa/New Zealand.I'm David Chaston and this is the international edition from Interest.co.nz.And today we lead with news the price of gold is falling, long term benchmark interest rates keep on rising with larger risk premiums, and monetary policy regulators are coming round to the idea of rate cuts to bolster flagging economic expansion everywhere.But first in the US, mortgage application volumes rose marginally last week from the prior week for the period and holding on to the +11% jump of the previous period. Benchmark home loan rates were basically stable but at an elevated level averaging 6.86%.Canada building consents fell in March and by more than expected although to be fair it only cancelled the February rise and probably isn't too surprising given their election campaign and overall economic uncertainty around relations with the US.Meanwhile, Canadian vehicle sales took off in March, and to its best month since the pandemic, as buyers rushed to get hold of pickups, utes and light trucks ahead of the threat of sharply higher prices. On the other hand, car sales dived.In China, new yuan loan approvals were unusually weak in the April data released overnight. Banks approved loans at their lowest rate for an April since 2005, and at ¥280 bln, that was less than 10% of the good March level and less than half the year ago level, itself unusually weak. Of course, it reflects the initial impact of the trade war on Chinese businesses.In Australia we should note that large parts of Victoria and South Australia are in a severe drought condition, also even parts of Tasmania. Some say it is the worst "in a lifetime" with zero April rainfall extending into May. If there is any hope for livestock farmers it is that grain production has been high in other areas, enabling grain-fed beef to continue. Lucky for them, grain-fed beef demand is rising in China. Those drought conditions contrast with the endless rain Sydney is having.Next week on Tuesday, the Aussie central bank will be reviewing its 4.10% cash rate target. More analysts now see a -25 bps cut then. Although it is no certainty, financial markets also have it priced in.And staying in Australia, regulator ASIC is tackling Macquarie again. ASIC is suing Macquarie Securities alleging it engaged in misleading conduct by misreporting millions of short sales to the market operator for over 14 years. They allege that between 11 December 2009 and 14 February 2024, Macquarie failed to correctly report the volume of short sales by at least 73 million. ASIC estimates that this could be between 298 million and 1.5 billion short sales. The last ASIC action against Macquarie was just a week ago over compliance failures. Today's action is the fifth by ASIC against Macquarie since April 2024.The UST 10yr yield is at 4.53%, up +3 bps so far today.The price of gold will start today at US$3175/oz, and down -US$67 from yesterday.Oil prices are marginally lower today at just under US$63.50/bbl in the US and the international Brent price is just under US$66.50/bbl.The Kiwi dollar is now at 59.1 USc, down -30 bps from yesterday at this time. Against the Aussie we are up +10 bps at 91.8 AUc. Against the euro we are down -30 bps at 52.8 euro cents. That all means our TWI-5 starts today just under 67.6 and down a net -30 bps from this time yesterday.The bitcoin price starts today at US$103,147 and down almost -1.0% from yesterday. Volatility over the past 24 hours has remained modest at just under +/- 1.1%.You can find links to the articles mentioned today in our show notes.You can get more news affecting the economy in New Zealand from interest.co.nz.Kia ora. I'm David Chaston. And we will do this again tomorrow.

Kia ora,Welcome to Wednesday's Economy Watch where we follow the economic events and trends that affect Aotearoa/New Zealand.I'm David Chaston and this is the international edition from Interest.co.nz.And today we lead with news the relief rally following the US-China trade de-escalation continues, for equities at least. But worries continue about recession and inflation. Investors want higher risk premiums. And it seems China is in no hurry to resume buying from US sources.But first up today, the overnight dairy Pulse auction delivered similar but slightly lower results for both SMP and WMP that were achieved at last week's full auction, basically confirming the recent shifts, especially the up-shift for WMP.The April US CPI inflation rate came in at 2.3%, a touch lower than the 2.4% expected and which applied for March. That was largely due to fuel costs falling more sharply (-11.8%). The costs of food (+2.8%), rents (+4.0%) and transport (+2.5%) were all higher.Last week's Redbook tracking of US retail sales recorded a +5.8% rise from the same week a year ago. We will likely see this fade as the tariff-induced buying eases off now.The NFIB Small Business Optimism Index dropped in April to its lowest level since October 2024. But the retreat wasn't quite as much as was expected.US household debt data updates were a mixed bag. Total household debt rose +$167 bln from the prior quarter to a record high of $18.2 tln in Q1-2025. Delinquency rates rose from the previous quarter, with 4.3% of outstanding debt now in some stage of delinquency.US importers of Chinese goods still face much higher costs. The net position after the tempest and pullback is 'worse' for inflation, and negative for trade. Struggle is all ahead for global trade.In India, CPI inflation fell to 3.2% in April, and that is its lowest rate since before the pandemic. Food prices were up only +1.8% within that. The current overall inflation rate is now well below their central bank's 4% mid-point target. If it stays there, a rate cut in India may be on the cards.In Germany, there was a sharp bounce-back in the ZEW sentiment survey tracking in May, putting the unusual drop in April behind it. The survey indicates growing optimism for the next six months, driven by the formation of a new federal government there, progress in resolving tariff disputes, and signs of stabilising inflation. Nearly all sectors reported improved sentiment in May.In Australia, updated data seems to indicate that Kiwis are losing the desire to visit there. That said there were 104,600 visits by Kiwis in March, -9.3% fewer than in March 2024 and almost -10% fewer than in March 2018 (a pre-pandemic equivalent). For the year to March 2025, we made 1.367 mln visits to Australia, little different (+1.4%) to the same year in 2024. It is a similar story for Aussies visiting New Zealand. In March 2025 it was -1.7% less than the same month a year earlier.Consumer sentiment in Australia has stayed weak in March, according to a widely-watched Westpac-MM survey.We should probably note that good weather and favourable growing conditions in almost all regions has boosted wheat production - and is pushing down prices. They are now back to levels they first achieved ten years ago and are almost -60% lower than their peak in 2022. For similar reasons, corn prices are falling now too.The UST 10yr yield is at 4.50%, up +4 bps so far today.There rate may go higher. A Reuters poll of bond investors shows them increasingly concerned about both a global recession, and rising inflation. That is, stagflation.The price of gold will start today at US$3243/oz, and up +US$20 from yesterday.Oil prices are up +US$1.50 today at just over US$63.50/bbl in the US and the international Brent price is just over US$66.50/bbl.The Kiwi dollar is now at 59.4 USc, up +90 bps from yesterday at this time. Against the Aussie we are down -50 bps at 91.7 AUc. Against the euro we are up +30 bps at 53.1 euro cents. That all means our TWI-5 starts today just under 67.9 and up a net +50 bps from this time yesterday.The bitcoin price starts today at US$104,161 and back up +2.7% from yesterday. Volatility over the past 24 hours has remained modest at just on +/- 1.7%.You can find links to the articles mentioned today in our show notes.You can get more news affecting the economy in New Zealand from interest.co.nz.Kia ora. I'm David Chaston. And we will do this again tomorrow.

Kia ora,Welcome to Tuesday's Economy Watch where we follow the economic events and trends that affect Aotearoa/New Zealand.I'm David Chaston and this is the international edition from Interest.co.nz.And today we lead with news mostly about the China-US Geneva 'agreement' and market reactions.First up, China and the US agreed to cut tariffs on each other by -115%. For the US that means they will go down to 30%. For China, down to 10%. Supposedly the deal is for 90 days to allow further negotiations, but it will likely be endlessly extended. Oddly, China was the only major power to impose reciprocal tariffs and this deal seem to make them a clear winner with the US meeting most of China's demands for de-escalation. Other countries who regarded themselves as friends and who have or are still 'negotiating' with the US are now in a much worse position. That includes neighbours Canada and Mexico, Japan, and of course the EU.Separately, India who made a big effort to deal with Trump, is spurned, and they have other security reasons to feel offended (justifiably or not).US merchants will rush to return to China supply. But it isn't clear that China will be doing the same with US products. The US trade deficit with China, already elevated, is likely to surge after this type of 'Trump negotiation success'.The equity markets liked the retreat and Wall Street took off. The USD strengthened, probably in a way the American's don't want. The bond market sees more risks and increased its risk premium. Gold and bitcoin fell sharply.The size of the tariff taxes became clear in April with the release of the US Budget Statement. These taxes cost US importers $16 bln in the month, an increase of +US$9 bln from a year ago, or +$500 mln/day, far lower than the +US$2 bln/day claimed by Trump. Of course they will now fall from here and it seems will never reach the claimed levels so any budget boost to tackle deficits - a clearly stated policy objective - is likely now in the bin.The May report from the USDA shows that grain production worldwide is rising while consumption isn't. So prices are falling especially in the US in response to their trade policies. More will be used there as feed grains. Oddly, this report noted lower production and export opportunities for beef but overlooked mention of what is presumed to be a surge in beef imports. They did say dairy production will be lower and imports higher.Across the Pacific, Chinese vehicle sales came in for April up +9.8% from the same month in 2024. These sales ran at 2.59 mln units an all-time record high for any April. NEVs took a record 47% share in the month. In all this, foreign brands are struggling to get a share, or even keep their share of this expanding market.The UST 10yr yield is at 4.46%, up +8 bps so far today. Wall Street has taken off today on the China tariff news, up +3.1% in Monday trade. The price of gold will start today at US$3223/oz, and down -US$100 from yesterday.Oil prices are up +US$1 today at just over US$62/bbl in the US and the international Brent price is just over US$65/bbl.The Kiwi dollar is now at 58.5 USc, down -60 bps from yesterday at this time. Against the Aussie we are down -20 bps at 92.2 AUc. Against the euro we are up +30 bps at 52.8 euro cents. That all means our TWI-5 starts today just under 67.4 and down -20 bps from this time yesterday.The bitcoin price starts today at US$101,401 and down -2.5% from yesterday. Volatility over the past 24 hours has been modest at just on +/- 1.5%.You can find links to the articles mentioned today in our show notes.You can get more news affecting the economy in New Zealand from interest.co.nz.Kia ora. I'm David Chaston. And we will do this again tomorrow.

Kia ora,Welcome to Monday's Economy Watch where we follow the economic events and trends that affect Aotearoa/New Zealand.I'm David Chaston and this is the international edition from Interest.co.nz.And today we lead with news with claims of "substantial progress" and "a deal we struck" by the Americans in their Geneva talks with China, but no indications of anything from the Chinese. Bluster from the White House doesn't count for much these days.But first in the coming week, US attention will shift to Wednesday's CPI data for April although no real surprises are anticipated. There will be April data for retail sales too, PPI data, housing starts, and the next sentiment update from the University of Michigan at the end of the week.China will report new loan data, house price data, and updates for industrial production and retail sales. Japan will release its Q1-2025 GDP data, and both South Korea and Australia will release labour market data updates. Locally we will get travel, population, retail and productivity data, not to forget the Q1 ready mixed concrete data (!).In Japan, household spending rose +2.1% in March from a year ago and far better than the expected +0.2% gain. It was the strongest growth since December. Helping was that the previous retreats of spending on food basically stopped, while spending on furniture and on recreation rose a good levels.China's April CPI inflation dipped -0.1% from a year ago, holding the same easing for a second month and that was what was expected. It was the third consecutive month of consumer deflation. Within that result, food prices were up +0.3% but beef prices fell -4.9% from a year ago, lamb prices were down -3.8%. Milk prices fell -1.2%.Deflation was more pronounced for producer prices, down -2.7% from a year ago, the steepest retreat for any month in 2025.Staying in China, April exports came in very much better than the pullback that was expected. In fact their trade surplus was almost as strong as the unusual March trade surplus. Few were expecting this 'good' result. Here are the results by trading partner.New Zealand exported twice what we imported from them. For Australia it was almost the same but the Aussies have a higher dependency on China than we do. For the US, they are still taking more that 10% of all Chinese exports although that is down from nearly 13% usually. But Chinese buying of American goods is now under 6% of all Chinese imports, down from the usual 16%. The Americans may have initiated the tariff war, but the Chinese have reacted far faster.Meanwhile China said its Q1-2025 current account surplus hit a record high, more than treble what it was in the same quarter a year ago. US demand saw their merchandise trade surplus leap, while their services deficit narrowed slightly.Across the Pacific in the US, that foreigners are avoiding travel there has been confirmed by new data that shows an historic drop in inbound travel spending. It has only been a sharper drop in the aftermath of the 9/11 attacks and the early stages of the badly-handled response to Covid. The US as a travel destination is a significant reason they have run services surpluses. The travel boycott may build over fears it is unsafe, amid numerous reports of immigration officers detaining tourists or denying entry even for transit.Further the American spring real estate season is shaping up to be 'a dud'. High unsold inventories, high price expectations, and still-high mortgage rates are putting off buyers during this prime selling period.The US barbeque season is approaching and the cost of beef is rising and rising. Tariffs are raising prices and drought is thinning local cattle supply. That means the Americans are more dependent than ever on imported beef, especially ground beef. They are price takers so are paying both the premium for the supply shortfall, plus the full imported tariffs.Looking north, although the Canadian jobless rate rose a touch more than expected to 6.9% in April (and a 3 year high), and there was only a minor rise in overall payroll employment, there was in fact a strong rise in full-time jobs and an equally notable fall in part-time roles.The Canadian dollar fell on the jobless rise. The overall softness however probably means the Bank of Canada will cut its 2.75% policy rate again at their next meeting on June 5 (NZT).The UST 10yr yield is at 4.38%, unchanged from this time Saturday and up +16 bps for the week. The price of gold will start today at US$3323/oz, and down -US$15 from Saturday.Oil prices are holding today at just on US$61/bbl in the US and the international Brent price is still just under US$64/bbl.The Kiwi dollar is now at 59.1 USc, down -10 bps from Saturday at this time, down -30 bps from a week ago. Against the Aussie we are unchanged at 92.2 AUc. Against the euro we are still at 52½ euro cents. That all means our TWI-5 starts today just under 67.6 and little-changed from Saturday, down -20 bps from this time last week.The bitcoin price starts today at US$104,041and up +0.9% from Saturday. Volatility over the past 24 hours has been modest at just under +/- 1.7%.You can find links to the articles mentioned today in our show notes.You can get more news affecting the economy in New Zealand from interest.co.nz.Kia ora. I'm David Chaston. And we will do this again tomorrow.

Kia ora,Welcome to Friday's Economy Watch where we follow the economic events and trends that affect Aotearoa/New Zealand.I'm David Chaston and this is the international edition from Interest.co.nz.And today we lead with news the US Fed looks more trapped in policy choices than it has for a long time.But first up today, a US-UK trade deal was announced to great fanfare. But in fact it isn't much. Rather it is a small set of carve-outs from the previous base case: Car tariffs on British-made cars would come in at 10% rather than 27.5%, steel tariffs would go to zero and the threat of future pharmaceutical tariffs would recede. The overall headline US tariff of 10% seems to still be in place; the UK has offered more market access to the US and a Boeing airplane order. But the US did not get changes on food standards or the UK's digital services taxation. The whole thing is very underwhelming. All headlines, no substance.But the equity markets liked it, even if the bond markets didn't. The USD rose on the news. Perhaps the equity markets also see progress coming in tomorrow's Swiss meeting between China and US representatives?Meanwhile, US jobless claims fell last week and by a bit more than seasonal factors would have assumed, coming in right at the level expected by analysts. There are now 1.846 mln people on these benefits, whereas a year ago there were 1.743 mln on them, a +5.9% rise.American labour productivity fell -0.8 in the March 2025 quarter as output decreased -0.3% and hours worked increased +0.6%. It is their first decrease in productivity since the volatile pandemic years, and prior to that, the first Trump presidency.March wholesale inventories rose marginally (+0.4%) but so did sales in the pre-tariff rush, so the inventory-to-sales balance was little-changed and not exhibiting any stress.Also not changing much were American inflation expectations in April, which isn't as sanguine as it sounds because they came in at the same elevated 3.6% level they jumped to in March. However, households' perceptions about their current financial situations deteriorated, with the share of consumers reporting that they are somewhat or much worse off compared to one year ago increasing. Similarly, households' expectations about their future financial situations deteriorated, with the share of those believing they will be somewhat or much worse off a year from now also rising.In Malaysia, their central bank held its policy rate at 3% overnight, as was expected. They have low inflation, 1.4%, and a good +4.4% economic expansion but one that is fading. And they are vulnerable to the tariff war. In the meantime, Malaysian industrial production is still expanding at a healthy clip.In Europe, German industrial production is on the come-back up +3.0% in March from February, and for the first time since May 2023, hardly lower than year-ago levels. Of course, this is data that predates the onset of the US tariff war.In England, their central bank cut its policy rate by -25 bps to 4.25%, also as expected. But two of their nine members voted for no change. It is their fourth rate cut since August 2023, when their rate reached 5.25% in the previous cycle. They currently have a 2.6% inflation rate, slowly easing, and a +1.4% economic expansion rate.With the Bank of England following the ECB down, along with Canada, soon Australia, and likely New Zealand, it does point out that the US Fed is now boxed in by US fiscal policy, basically unable to cut rates there because of the immediate inflation risks.In Australia, they changed their laws making it clearer that buy-now-pay-later contracts are covered by their National Credit Code (which is Schedule 1 to their National Credit Act). ASIC has now issued regulatory guidance for the BNPL sector.We should probably note that lithium prices have fallen further, with the bubble well and truly over, and prices back to their pre-bubble 2021 levelsThe reduction impetus is going out of global container freight rate changes, down just -1% last week to be -23% lower than year-ago levels. Bulk cargo rates stopped rising in the past week.The UST 10yr yield is at 4.37%, up +10 bps from this time yesterday.The price of gold will start today at US$3303/oz, and down -US$81 from yesterday.Oil prices are firmer today, up +US$1.50 at just under US$60/bbl in the US and the international Brent price is now just under US$63/bbl.The Kiwi dollar is now at 59.1 USc, down -60 bps from yesterday at this time, down a full -1c from Wednesday. Against the Aussie we are down -20 bps at 92.3 AUc. Against the euro we are unchanged at 52.6 euro cents. That all means our TWI-5 starts today just on 67.6 and down another -20 bps.The bitcoin price starts today at US$101,054 and up +4.6% from yesterday. Volatility over the past 24 hours has been moderate at just under +/- 3.0%.You can find links to the articles mentioned today in our show notes.You can get more news affecting the economy in New Zealand from interest.co.nz.Kia ora. I'm David Chaston. And we will do this again on Monday.

Kia ora,Welcome to Thursday's Economy Watch where we follow the economic events and trends that affect Aotearoa/New Zealand.I'm David Chaston and this is the international edition from Interest.co.nz.And today we lead with news the global economy's track is no clearer today.First up, the US central bank kept it key policy rate unchanged at 4.50% for a third consecutive meeting in line with expectations. They are keeping their wait-and-see approach but watching to see if the tariff taxes drive up inflation and slow economic growth. They say they still see expanded economic activity despite signs net exports are volatile. So far they haven't seen the jobless rate move "and labour market conditions remain solid". But they are seeing elevated inflation, and they foresee risks of higher unemployment and higher inflation.Equity markets dropped on the release, as did benchmark bond yields. The USD hardly moved however.Earlier, it was reported that US mortgage application volumes jumped +11% last week from the previous week, ending the three consecutive slumps from earlier in the month. The rebound came after there was another small drop in benchmark mortgage rates.Across the Pacific, China's FX reserves rose in April to their highest level in more than six months (in USD).And staying in China, their central bank said it will cut the reserve requirement ratio (RRR) by -50 basis points, injecting about ¥1 tln in liquidity into their domestic economy. But the cut won't come until May 15 and will then be the first RRR cut in 2025. They also said they will lower the rate on seven-day reverse repurchase agreements by 10 basis points to 1.40%, effective tomorrow, Thursday, May 8. This is the first cut to this key policy rate since September 2024 and could lead to cuts in market and other regulatory rates.And despite denials on both sides, both China and the US said they will meet in Switzerland to discuss stuff on Saturday. Interestingly, the Chinese side will be represented by their lead person for China-US economic and trade affairs, but the US side won't be led by its USTR, but the more senior Treasury Secretary.In the EU there were no surprises in their March retail sales volume data, holding flat again.However, there was positive data out of Germany, where factory orders rose +3.6% in March from February, well above market expectations of a +1.3% gain and putting behind it February's lackluster result. It was their strongest increase since December, with broad-based gains across sectors.Meanwhile, Poland cut its official interest rate by -50 bps to 5.25%. Falling inflation and weak economic activity prompted the move, but it was unusual because they have elections due on May 18 and they are battling Russian election interference.In Australia, regulator ASIC said it has imposed additional conditions on Macquarie Bank's Australian financial services licence after multiple and significant compliance failures – some going undetected for many years and one for a decade.And it seems Peter Dutton wasn't the only party leader to lose his seat at the weekend election. The Greens leader will too. In fact, like the Liberals, the Greens vote fell rather sharply at that election.Separately, the OECD said the global trade in fake goods reached almost US$½ tln in the latest data they have - which is for 2021, posing risks to consumer safety and compromising intellectual property. The breakdown in trade cooperation since won't have lessened the problem.The UST 10yr yield was at 4.28%, down -3 bps from this time yesterday before the US Fed announcement, then slipped slightly further to 4.27%.The price of gold will start today at US$3384/oz, and down -US30 from yesterday.Oil prices are firmer today, down -50 USc at just on US$58.50/bbl in the US and the international Brent price is now just under US$61.50/bbl.The Kiwi dollar is now at 59.7 USc, down -30 bps from yesterday at this time. Against the Aussie we are unchanged at 92½ AUc. Against the euro we are down -20 bps at 52.6 euro cents. That all means our TWI-5 starts today just on 67.8 and down -20 bps.The bitcoin price starts today at US$96,653 and up +2.2% from yesterday. Volatility over the past 24 hours has been modest at +/- 1.6%.You can find links to the articles mentioned today in our show notes.You can get more news affecting the economy in New Zealand from interest.co.nz.Kia ora. I'm David Chaston. And we will do this again tomorrow.

Kia ora,Welcome to Wednesday's Economy Watch where we follow the economic events and trends that affect Aotearoa/New Zealand.I'm David Chaston and this is the international edition from Interest.co.nz.And today we lead with news we are in for a day of significant announcements, but locally and internationally.But first up today, the overnight full dairy auction brought higher prices, up +4.6% in USD terms and up +3.0% in NZD terms. Of note, the butter price hit a new all-time record high of US$74992/tonne. Also, cheddar cheese rose a very sharp +12.0% from the prior full event, and the dominant WMP price was up a heady +6.2%. This has been a very positive outcome, even if it was on relatively low off-season volumes.There seemed to be two big background drivers. First, EU production is slipping and today's NZ auction prices seem to be equalising with European pricing. And secondly, there was a substantial increase in demand from Southeast Asian buyers, shifting from EU supply. Today's result will bring upside to the payout - if it is maintaintained in future events.Elsewhere, there was a good rise in US retail sales last week, up +6.9% from the same week a year ago in the Redbook survey. But as we have noted previously, it is now hard to separate the inflationary effect of the tariff taxes from volume gains. It is about now that the tariff-tax impact will start happening. All eyes are on Apple, because they won't be able to avoid price hikes much longer now.Retaliatory tariff taxes also juiced up US exports in both goods and services in March but it was minor and similar to February. US imports however shot up to a new all-time record high. So the American trade deficit also hit a new record exceeding -$140 bln for the monthNone of this is helping sentiment. The latest survey, this one the RealClearMarkets/TIPP Economic Optimism Index retreated in May from April when a gain was anticipated. It was at its lowest in seven months.Meanwhile, the US logistics managers index returned to more usual levels, but allowing it to do that were rises in inventory and freight costs, rather than the efficiency components.There was a well-supported US Treasury 10 year bond auction earlier today, and that delivered a median yield of 4.28% which was down -6 bps from the prior equivalent event a month ago.Tomorrow will be dominated by the US Fed's meeting outcome. Changed interest rates are unlikely, but there will be intense interest in how they view the present and future economic landscape.In Canada, the widely-watched local Ivey PMI turned into contraction in April.In China, the Caixin Services PMI expansion eased back in April, down from March's three-month high to be below analyst forecasts. This is now the softest expansion in their services sector in seven months. But this Caixin version reported a slightly faster expansion than the official version.There is a lot going on today, and amongst that we are expecting a significant Chinese briefing by their central bank and other regulators about new moves to respond to their economic pressures triggered by the tariff war.In Europe, their April services PMI didn't fall into contraction as expected. Rather it stayed just on the positive side. But it is an anemic expansion all the same.In Australia, household spending slipped in March from February, to be +3.5% higher than March 2024. Of special note was the very sharp -1.3% dive in Queensland.There was an even sharper retreat in building consents in Australia in March with a big -15% dive in consents for building apartments.The UST 10yr yield is now at 4.31%, down -3 bps from this time yesterday.The price of gold will start today at US$3414/oz, and up +US$101 from yesterday, and heading back towards its April 23 record high.Oil prices are firmer today, up +US$2 at just on US$59/bbl in the US and the international Brent price is now just under US$62.50/bbl.The Kiwi dollar is now at 60 USc, up +40 bps from yesterday at this time. Against the Aussie we are up +0 bps at 92½ AUc. Against the euro we are up +50 bps at 52.8 euro cents. That all means our TWI-5 starts today just under 68 and up +10 bps. The Japanese yen has strengthened to limit the TWI-5 shift.The bitcoin price starts today down a mere -0.3% from yesterday at US$94,563. Volatility over the past 24 hours has been low at +/- 0.9%.Join us at 10:45am for the release of the important March quarter jobs report for New Zealand. We are expecting no rise in employment and a rise in the unemployment rate to 5.3%. Variations from that might be market-moving.And then at 2pm we will be covering the RBNZ's half-yearly Financial Stability Report. This will be Christian Hawkesby's first big set piece presentation as Governor, a role he holds until at least October.You can find links to the articles mentioned today in our show notes.You can get more news affecting the economy in New Zealand from interest.co.nz.Kia ora. I'm David Chaston. And we will do this again tomorrow.

Kia ora,Welcome to Tuesday's Economy Watch where we follow the economic events and trends that affect Aotearoa/New Zealand.I'm David Chaston and this is the international edition from Interest.co.nz.And today we lead with news all eyes are now turning to the US Fed and the results of their meeting about to start.But first up in the US, the widely-watched ISM services PMI for April came in better than expected with a modest expansion, off a nine month low in March. New orders drove the result as did higher inventories. Employment contracted again. Activity was little-changed but still expanding. However price pressures jumped to their highest since February 2023.This contrasts with the globally-benchmarked S&P Global/Markit version which reported its slowest growth for 17 months amid subdued demand and a slump in business confidence and rising costs. Financial markets are preferring to look at the ISM one, however.All eyes now turn to Thursday's (NZT) US Federal Reserve board meeting where most observers think they will hold policy unchanged to see how the price impact of tariffs works out.There was a well supported UST 3yr bond auction this morning and that delivered a median yield of 3.77%, up slightly from 3.70% at the prior equivalent event a month ago.In Washington, there are still no tariff deals. There are negotiations but it seems no-one is rolling over in the way the new US Administration assumed.And as you will already probably know, Warren Buffett has announced his retirement as CEO at the end of this year, when he will be aged 95 years. But he will remain chairman of Berkshire Hathaway.In Canada, things aren't good with their service sector suffering a steep contraction of activity in April.And recession fears are putting a real downer on their real estate markets.Across the Pacific, China is still on holiday. Singapore's April retail sales weakened from March, down a sharpish -2.8% to leave them up just 1.1% from the same month a year ago. Car sales were a significant factor in the month-on-month drop, but not all of it.The results of the weekend's Singaporean general election are in and there was no surprise that they had engineered a dominant win for their ruling PAP party, enough to retain their two-thirds-and-more majority. They won 87 of the 98 seats 'contested' with 67% of the vote. Their courts ensured the opposition could only run weak candidates. They have a 'democracy' in name only.Post-election in Australia, the ASX200 fell -1.0%, and their benchmark 10 year bond rose +10 bps from pre-election levels. Investors think they are facing at least six more years of a Labor-led government, three at least with a majority-Labor government.The key trends in the Aussie election were a stark gender divide with women overwhelmingly repelled by the Liberals, immigrant votes, including Chinese votes, increasingly attracted to Labor, and the rise and rise of Teal candidates (who are social liberals, economic conservatives). The opposition Liberal Party are likely to compound their mistakes by selecting two older socially conservative men to the top leadership.The other notable trend from the Aussie election was the near wipeout of the Greens. Even their leader is having trouble holding his seat.Global food prices rose in April but are only back to the same level they were in 2023 and well below March 2022 levels. But the rise was largely down to rises for meat (up +4.3% from year-ago levels), and especially dairy (up +23% on the same basis).The UST 10yr yield is now at 4.34%, unchanged from this time yesterday.Oil prices are weaker again, down -US$1 at just on US$57/bbl in the US and the international Brent price is now just under US$60/bbl. These are still four year lows, hurt by the combination of easing global demand along with rising output.The Kiwi dollar is now at 59.6 USc, down -20 bps from yesterday at this time. Against the Aussie we are down -20 bps at 92.3 AUc. Against the euro we are little-changed at 52.3 euro cents. That all means our TWI-5 starts today just under 67.9 and up +10 bps.The bitcoin price starts today down -1.0% from yesterday at US$94,803. Volatility over the past 24 hours has been modest at +/- 1.1%.You can find links to the articles mentioned today in our show notes.You can get more news affecting the economy in New Zealand from interest.co.nz.Kia ora. I'm David Chaston. And we will do this again tomorrow.