Economy Watch

Bonds press fiscal cliff warnings, but few are listening

Play Episode Listen Later Sep 30, 2026 6:34

Shutterstock Track 1219389Monetization ID TFGEPGEI0LHEIJAIKia 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.Today we lead with the bond market warnings don't seem to be being taken seriously by policy makers. They are ignoring them at their peril.US mortgage applications fell sharply again last week as their benchmark 30 year home loan rate rose to 7.30% and a three year high.However, after three months of slowdown, the precursor ADP employment report showed a +90,000 gain for private sector jobs. In a longer perspective this level is modest, but it is much better than recent outcomes. Saturday's non-farm payrolls are now expected to deliver a similar gain but that will be sharply less than the August one (one you may recall that was received with deep scepticism).The third and final estimate of Q2-2026 US GDP growth came in at a +2.2% rate, down from the +2.5% rate in Q1-2025. But it was an upward revision from their second Q2-2026 estimate so it has had a positive impact on market views. Higher consumer spending, and more from the data center buildout activity were the main reasons for the upgrade.Meanwhile, the August PCE inflation metric came in at 3.4% which was little-changed from July and lower than expected. Personal disposable incomes rose +4.8% in August from a year ago while personal consumption expenditures rose +6.1%. The bond market seems sceptical of this data as the softer-than-expected inflation number had no effect stopping the US Treasury yields rising.The Chicago PMI bounced back in September after the August disappointment, back to levels it has had for most of 2026.US crude oil stocks rose modestly last week when a small fall was anticipated. (There is no update on their Strategic Reserve holdings.)The US booked a very elevated merchandise trade deficit in August of -US$132.6 bln and far above the high -$115 bln expected. Clearly the Trump tariff strategies are failing to restrain trade. Exports were up almost +14% (mostly aircraft) but imports surged +28% from the same month in 2025 (mostly data center goods). China said both its official factory and services PMI's shifted into a small expansion in September from a modest contraction in both in August. This was a better result than was expected. In addition, the S&P Global factory PMI for China was released. It recorded a modest expansion in August, and that improved in September. The unofficial version for their services sector remained very modest however - but at least it improved as well.In something of a surprise, Korean industrial production came in sharply lower in August than anyone expected. It was expected to rise +4% as it did in July, but it actually fell -2.2%, so a notable miss.German inflation came in at 3.3% in September, its highest since the end of 2023.French sovereign bond risk is rising sharply and investors and analysts are warning of significant trouble if France does not get its fiscal house in order. The key metric being watched is the discount to the equivalent German bond yields which is suddenly at a 14 year extreme, a shift that has burst into the open in just the past few days.Australian inflation rose from 3.5% in July to 4.0% in August in a rise at was basically expected (4.1%) by economists, the financial markets - and presumably the RBA. Their core (trimmed mean) inflation rates was unchanged at 3.6%. Fuel costs were obviously the big mover (+5.6%), but housing costs were up 5.7%, education up 4.7% and education costs up 3.9%. So the rising cost pressures are broadening out. Food was up 3.0%.There was a notable fall-off in Australian building consents in August, down -6.1% and largely due to a retreat in multi-unit approvals.Global air passenger travel fell in August, largely due to pullbacks in both North America and the Middle East. But the gains in the Asia/Pacific region were modest too with international travel in that region barely changed. But domestic air travel in Chin was up an impressive +5.8%The UST 10yr yield is now just on 5.30%, up another +3 bps from yesterday and a new high since June 2007. The 30 year yield is at 5.65%, up +5 bps and its highest since January 2001.The price of gold is at US$4154/oz and up +US$6 from yesterday. Silver is at just over US$60/oz and down -US$1.50.Oil prices have risen +50 USc/bbl from yesterday to just over US$91/bbl in the US, while the international Brent price is down -US$5 to US$98.50/bbl. Iran said it had received a US response to its latest proposal to resurrect the collapsed ceasefire in the Gulf, days after President Donald Trump said he had rejected it.The Kiwi dollar is little-changed from yesterday, still at 56.3 USc and that is still a ten month low. Against the Aussie we are up +30 bps at 81.1 AUc. Against the euro we are holding at just on 49.7 euro cents. That all means our TWI-5 starts today at just on 60.1 and up +10 bps yesterday and still hovering at a 17 year low.The bitcoin price starts today at US$84,277 and up +1.6% from yesterday. Volatility over the past 24 hours has stayed modest, also at just under +/-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'll do this again tomorrow.Track 1219389Monetization ID TFGEPGEI0LHEIJAI Audio soundtrack opening is licensed from Shutterstock, Track 1219389 Monetization ID TFGEPGEI0LHEIJAI

US bond rates rise; China launches new stimulus

Play Episode Listen Later Sep 29, 2026 5:41

Shutterstock Track 1219389Monetization ID TFGEPGEI0LHEIJAIKia 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.Today we lead with news the bond market is shouting louder warnings at US policymakers. And China is rolling out more stimulus and subsidies to counter a growing slowdown there.First today, the overnight Pulse dairy auction delivered mixed results although both the SMP and WMP prices rose from the prior event, up by about +1.6% in USD terms. But as the NZD took a bit of a thrashing overnight, these prices were up more than +3% in local currency terms.Also mixed were the August US JOLTS labour market data. While much of it was little-changed, the number of job openings fell by an outsized -256,000 to just over 7 mln, the lowest in five months. Analysts had expected them to rise to 7.23 mln so this is a notable miss. And the fall was broad-based in most sectors and most regions, although the South did manage to book a small rise.The US Conference Board reported a sharp fall in consumer sentiment in September, in fact taking it to its lowest since 2014. While it isn't as low as the University of Michigan survey yet, it is tracking in the same negative direction, both for its Present, and Expected monitoring of sentiment.Yesterday we reported a positive Dallas Fed factory survey, even if it is suffering high cost challenges. But today's update on the Texas services sector is not so bright with a 'stall' reported and their first decline in four months. They also reported increased strain in input and selling prices.Canada reported that their August economic activity rose, their tenth rise in the past twelve months and through a difficult period. That likely puts their GDP up +1.7% real from a year ago. Their 'resilient economy' may be enough for the Bank of Canada to start hiking rates again to contain the inflation pressures building again. The next rate review there is on October 28 (the same as the RBNZ).In China, businesses there are said to be facing weak demand ahead of their Golden Week holiday. And that has pushed the Chinese central bank to lower a technical interest rate. And Beijing is to start subsidising mortgage interest rates for low income borrowers, aiming to create demand in their housing markets.EU business and consumer sentiment sagged in September, but to be fair the overall level is still sitting close to its long-run average. The movement is basically due to lower confidence by consumers as they look forward to winter and an uncertain energy outlook.In Australia, the RBA delivered the expected +25 bps rate change. That raises this rate to its highest in the developed world. They emphasised their strong commitment to the inflation fight and noted that more hikes may be needed before that is won. They are in an "whatever it takes" mindset now, and their new rate levels are 15 year highs.Meanwhile, global air cargo demand rose +4.4% in August from a year ago, largely on work-arounds from the disrupted seas trade on major routes. International volumes were up +5.3% with Asia/Pacific volumes up +5.5%. But it was the +10.1% jump in North American volumes that is the standout feature, a notable rush to shore up supply lines ahead of more expected policy disruptions.The UST 10yr yield is now just under 5.27%, up another +3 bps from yesterday and a new high since June 2007. The 30 year yield is at 5.60%, up +6 bps and its highest since January 2001.The price of gold is at US$4148/oz and up +US$11 from yesterday. Silver is at just under US$61.50/oz and almost -US$1.Oil prices have fallen -US$2.50/bbl from yesterday to just over US$90.50/bbl in the US, while the international Brent price is just under US$103.50/bbl and also down -US$2.50. This is all due to the US releasing more from their strategic reserves, although Saudi Arabia also confirmed that its pipeline repairs are complete too.The Kiwi dollar is down a sharpish +40 bps from yesterday, now at 56.3 USc and that is now a ten month low. Against the Aussie we are unchanged at 80.8 AUc. Against the euro we are down -20 bps at just on 49.7 euro cents. That all means our TWI-5 starts today at just over 60 and down -40 bps yesterday and that takes us down to a level we last had in 2009, a 17 year low.The bitcoin price starts today at US$82,936 and down -0.8% 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'll do this again tomorrow.Track 1219389Monetization ID TFGEPGEI0LHEIJAI Audio soundtrack opening is licensed from Shutterstock, Track 1219389 Monetization ID TFGEPGEI0LHEIJAI

No appetite for a resolution

Play Episode Listen Later Sep 28, 2026 5:08

Shutterstock Track 1219389Monetization ID TFGEPGEI0LHEIJAIKia 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.Today we lead with news the rejection of the Iranian peace proposal by the US has meant diplomatic efforts to resolve the issue have lost momentum and financial markets have downgraded prospects across the board, even though the release of some recent data has generally been positive.First, the very positive August Dallas Fed factory survey has been repeated in September even if not quite at the same level. The last time they had two successive positive reports at this level was in March 2022, and prior to the pandemic recovery, in 2018. If there is a downside in this report it is that cost pressures are rising fast and faster than prices are rising.Fed Governor Lisa Cook said overnight that future productivity gains from AI may not be enough to offset near-term price pressures, warning this trend could drive up US inflation.Meanwhile the US and China are working on a US$30 bln tariff reduction framework, have agreed to establish an AI dialogue, and agreed to Increase flights between the two countries. But all this just seem window-dressing talk at this stage. No actual deals have been agreed. Remember the Beijing meetings in May where large airplane and ag products were announced, neither of which resulted in contracts or trade.China's industrial profits were up +4.2% in August to just over ¥690 bln from the same month in 2025. For the eight months of 2026 they are up +15.7% so this latest period is recording a notable slowing in their growth. But it is still growth. Most observers had expected the growth rate to pick up to +18% so there is a disappointment in this data, and reflected in today's Shanghai equity markets.Singapore's industrial production rose a sharp +15.4% in August from a year ago and driven by a +28% surge in electronics products.India's industrial production rose +8.0% in August from a year earlier, up from an upwardly revised +7.4% in July and well above market expectations.Later today we will be watching the RBA's monetary policy review which is widely expected to deliver a +25 bps hike to 4.6%. Financial markets have priced that change in at a 92% chance. Note, that isn't 100%. But of course most interest will be in how these policymakers see the track from here. Some observers think it will hit 5.35% before the middle of next year before the RBA is done hiking.Before then we should note the release of the 2026 Global Cities Index from Oxford Economics. They say the top city is New York, followed by London, Paris and then Seattle ahead of San Francisco. Sydney came in at #13 (a fall from 7th), Melbourne at #16 (a fall from 6th) and Brisbane at #36 (a fall from 23rd). Auckland was ranked #60, Wellington ranked #75 and Christchurch at #96. No New Zealand rankings changed from last year. The index claims to assess the strengths, weaknesses and future potential of the world's 1,000 largest cities.The UST 10yr yield is now just on 5.24%, up +7 bps from yesterday and a new high since June 2007. The 30 year yield is at 5.55%, up +5 bps and its highest since January 2001.The price of gold is at US$4137/oz and down -US$148 from yesterday. Silver is at just over US$61.50/oz and down -US$3.Oil prices have risen +50 USc from yesterday to just over US$93/bbl in the US, while the international Brent price is just under US$106/bbl and up +US$1.50.The Kiwi dollar is unchanged from yesterday, still at 56.7 USc. Against the Aussie we are up +20 bps at 80.8 AUc. Against the euro we are also up +20 bps at just on 49.9 euro cents. That all means our TWI-5 starts today at just on 60.4 and up +10 bps yesterday.The bitcoin price starts today at US$83,618 and down -0.9% from yesterday. Volatility over the past 24 hours has been modest at just over +/-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'll do this again tomorrow.Track 1219389Monetization ID TFGEPGEI0LHEIJAI Audio soundtrack opening is licensed from Shutterstock, Track 1219389 Monetization ID TFGEPGEI0LHEIJAI

Trump's deal-making fiascos widen

Play Episode Listen Later Sep 27, 2026 5:42

Shutterstock Track 1219389Monetization ID TFGEPGEI0LHEIJAIKia 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.Today we lead with news nothing was resolved in the Xi-Trump talks, and nothing is resolved in the US-Iran standoff.But first, this week will be dominated by the RBA policy rate decision on Tuesday as the next major set piece review in the midst of the global bond sell-off and inflationary pressures. They are widely expected to raise the rate +25 bps to 4.60%, widening the differential to New Zealand. Australia will also release important household spending data, its August CPI update, and building permit data this week.In New Zealand it will be all about consumer and business sentiment updates, and the usual end of month RBNZ data dump.The week will end with the US September non-farm payrolls report - expect +100,000, although its cred is being undermined from within. And there will be US data on personal income and spending out this week, other labour market data, and a key PMI report.In China, the focus will be on the September PMIs, with data from both the NBS and private S&P Global ones expected to point to a modest improvement in manufacturing and services activity. August industrial profits will also be released. Meanwhile, Chinese markets will be closed from October 1 to October 7 for the National Day holidays.Of course, the global geopolitical mess rolls on chaotically, so we will be watching for either diplomatic agreements or escalatory strikes between the US and Iran.Over the weekend in the US, August durable goods orders were essentially unchanged from July, which was better than the expected -0.4% decline. From a year ago they are +8.4% higher although we should note that PPI inflation ran at 5.4% in the same period. Non-military capital goods orders are up +5.8% on a year-ago basis, but given the huge surge in data center buildouts this is surprisingly weak.Late last week, US petrol prices breached the +50% rise since Trump's war on Iran started in early March. Diesel prices are now up +67% in that market.The University of Michigan September survey of consumer sentiment tracks anxiety of the inflationary pressure these sort of cost increases are bringing and the weekend update is grim reading. Only once since this survey started in 1946 has this reading been as low as it is now - and that was in May. Year-ahead inflation expectations jumped from 4.0% in August to 4.6% this month, the highest reading since June. The current level substantially exceeds the 3.4% seen in February before the Iran conflict began, along with all 2024 levels.Financial markets are betting that rising inflation will be more important to the Fed than falling sentiment and the US Fed will raise rates at its next meeting on October 29, which is just days ahead of their mid-term elections. This market positioning is more than 2:1 now, and is bolstered by recent Fed speakers who are clearly worried that delays could cause them to lose control of the US inflation impetus.Over the weekend China was on holiday for Mid Autumn Festival and their central bank said it injected up to ¥1 tln of liquidity into their banking system for this holiday via reverse repos. (During the same holiday last year it injected ¥735 bln in reverse repo operations, but later it revealed another ¥500 bln in direct repo purchases.) And they have their Golden Week holiday starting this week (October 1 - 7) and much depends on their internal spending impulse during this period. Beijing economy watchers will be nervous.The UST 10yr yield is now just on 5.17%, unchanged from Saturday but up a net +16 bps from this time last week.The price of gold is at US$4285/oz and down a mere -US$4 from Saturday, down -US$96 from this time last week. Silver is at just over US$64.50/oz and unchanged but down -US$2 for the week.Oil prices have held from Saturday to just on US$92.50/bbl in the US, while the international Brent price is still at US$104.50/bbl. The US has rejected Iran's plan to re-open the Strait.The Kiwi dollar is unchanged from Saturday, still at 56.7 USc but down -50 bps for the week. Against the Aussie we are holding at 80.6 AUc. Against the euro we are also holding at just on 49.7 euro cents. That all means our TWI-5 starts today at just on 60.3 and little-changed from Saturday, down -40 bps for the week.The bitcoin price starts today at us$84,386 and down +0.5% from Saturday but up a net +4.1% from a week ago. Volatility over the past 24 hours has been low at just over +/-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'll do this again tomorrow.Track 1219389Monetization ID TFGEPGEI0LHEIJAI Audio soundtrack opening is licensed from Shutterstock, Track 1219389 Monetization ID TFGEPGEI0LHEIJAI

Global bond selloff deepens

Play Episode Listen Later Sep 24, 2026 5:38

Shutterstock Track 1219389Monetization ID TFGEPGEI0LHEIJAIKia 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.Today we lead with news US treasury yields are trading at multi-year highs, as stronger-than-expected economic data and elevated oil prices fuelled bets on another Fed rate hike. The 10-year yield topped 5.18%, its highest level since 2007, while 30-year reached a 2004 peak of 5.47%. The gold price is slipping. Many other asset prices face price risks too, especially commercial property and that also comes with leverage risks being exposed.So far the US-China meetings in Washington DC between Xi and Trump have been all show and no substance.In the US, there were 163,800 initial jobless claims last week, an increase from last week's unusual low but about the increase that can be accounted for by seasonal factors. That puts the continuing claims at 1.55 mln, a new 60 year low. The qualification restrictions are certainly biting hard now. Early estimates of the September US non-farm payrolls change doesn't support the idea that jobs growth is strong, and certainly not among workers who are being stripped from unemployment protections.However there was positive news of expanding recent sales of new-built homes. Even though housing starts are falling, sales of these homes rose in August, up +6.4% from July, but still -2.0% below year-ago levels.The Kansas City Fed factory survey stayed positive in September, holding the expansion level it has had since June. But price pressures intensified, the survey shows.There was a still well-supported US Treasury seven year bond auction overnight (down only -3.2%) that delivered a median yield of 5.02% (high 5.09%) and that was up sharply from the median of 4.46% at the prior equivalent event a month ago. That is near its highest in 20 years.Canada reported some positive economic data overnight. It's August retail sales were up +1.3% (real), and more than making up for the -0.7% monthly fall in July. They are up +1.9% (real) from a year ago. And its manufacturing sales were up +1.1% in August. This extends a string of good monthly gains in 2026, with only one month in the past seven showing a dip.In China, they raised their petrol prices today to ¥8.90/L, up from ¥8.60/L (NZ$2.34/L from NZ$2.26/L).In Australia, June 2026 data released yesterday by the ABS shows household wealth there has reached AU$19.4 tln, driven by superannuation, but now held back by recently falling housing values. That is average per capita wealth of AU$694,500. There are a vast number of Aussie 'super' millionaires now.Meanwhile, the August update of their labour force data shows +39,500 more jobs in the month with 14.827 mln people employed. But their jobless rate rose to 4.6% with 722,900 adults unemployed and a rise of +28,200 in a month. Hours worked and participation both rose and underemployment fell (slightly).Global container freight rates were little-changed overall over the past week. There were some falls in the China-EU trade, but a minor rise in the Chine-USWC trade. Overall prices are now +154% higher than year-ago levels and have topped out for the moment. Bulk cargo rates are +3% higher for the week but also seem topped out. From a year ago, these rates are +55% higher.The UST 10yr yield is now just on 5.18%, up another +5 bps from yesterday. The 30 year yield is at 5.47%, up +7 bps.The price of gold is at US$4264/oz, and down -US$30 from yesterday. Silver is at just over US$63.50/oz and down -US$1.Oil prices have risen +US$4 to just on US$95.50/bbl in the US, while the international Brent price is up +US$4.50 to US$107/bbl. Saudi Arabia says its pipeline repairs will be completed "within days".The Kiwi dollar is down -10 bps from yesterday, now at 56.6 USc. Against the Aussie we are up +10 bps at 80.7 AUc. Against the euro we are little-changed at just on 49.8 euro cents. That all means our TWI-5 starts today at just on 60.3 and down -10 bps.The bitcoin price starts today at US$84,103 and down a minor -0.3% from yesterday. Volatility over the past 24 hours has been modest at just over +/-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'll do this again on Monday.Track 1219389Monetization ID TFGEPGEI0LHEIJAI Audio soundtrack opening is licensed from Shutterstock, Track 1219389 Monetization ID TFGEPGEI0LHEIJAI

US bond yields hit 20 year highs

Play Episode Listen Later Sep 23, 2026 5:10

Shutterstock Track 1219389Monetization ID TFGEPGEI0LHEIJAIKia 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.Today we lead with news stronger American economic data and higher oil prices have built expectations of more rate hikes by the US Federal Reserve. The USD has jumped in response.However, US mortgage applications fell again last week but that is really no surprise because that market saw its benchmark 30 year mortgage rate jump to 7.12% and its highest since May 2024. It was refinance activity that saw the biggest pullback.Meanwhile, US business growth surged to its fastest for over five years and job gains accelerated according to the S&P Global PMI. Both their service sector and their factory sector are sharing in the gains. But at the same time price pressures are also intensifying with a sharp spike in costs. Input costs surged to their highest since October 2022; selling prices jumped too but at a lesser rate.US crude oil stocks were expected to fall again last week, but instead they rose and by much more than expected. However that didn't stop their strategic reserve holdings from falling again, staying at dangerously low levels. Nor has it curtailed retail pump prices. More generally, the world is running down its crude oil buffers - and the price signals seem to be ignoring that risk.There was a fall in support for the US Treasury 5 year bond auction overnight which delivered a 4.95% median yield (5.04% high) which was up sharply from 4.34% at the prior equivalent event a month ago. Bessent's yield management is failing to deliver and restraint.Fed governor Barr was speaking overnight and ho reiterated the view that higher rates will be needed to bring inflation back to target. Without much threat on the jobs front and their labour market mandate, markets see the Fed unconstrained in taking sharper action against inflation. He said "risks to achieving our inflation target have increased, while risks to the labor market have receded."In the US all eyes will now turn to Trump's hosting of Chinese president Xi - who incidentally is coming with no Chinese business leaders.Taiwan's August industrial production (+23.5%) and August retail sales (+6.5%) data both delivered the strong year-on-year gains we have come to expect from them.Singapore's inflation rate came in at 2.3% in August, up marginally from July but the increase expected.Indonesia's central bank reviewed its 5.75% policy rate overnight but left it unchanged.In India, their flash PMI data for September pointed to a better improvement in business conditions. Output growth was higher in both manufacturing and services companies, with goods producers leading the latest upturn. New orders also rose at a quicker pace, prompting a solid expansion in jobs. Meanwhile, inflationary pressures faded and business confidence strengthened.The flash S&P Global factory PMI in Australia saw a shift from a moderate expansion in August (52.0) to a minor contraction in September (49.3). Their services sector eased as well but is still expanding in September. On the prices front, the rate of input price inflation picked up to its highest in three months, but remained weaker than seen through the second quarter. Meanwhile, output charges rose at a strong rate that was more pronounced than in August. The UST 10yr yield is now just on 5.13%, up +16 bp from yesterday. The 30 year yield is at 5.40%, up +11 bps.The price of gold is at US$4294/oz, and down -US$58 from yesterday. Silver is at just over US$64.50/oz and down -US$2.Oil prices have firmed +50 USc to just on US$91.50/bbl in the US, while the international Brent price is up +US$3 to US$102.50/bbl.The Kiwi dollar is down -50 bps from yesterday, now at 56.7 USc. Against the Aussie we are up +10 bps at 80.6 AUc. Against the euro we are down -20 bps at just over 49.8 euro cents. That all means our TWI-5 starts today at just on 60.4 and down -30 bps.The bitcoin price starts today at US$84,343 and down -2.4% from yesterday. Volatility over the past 24 hours has been moderate at just over +/-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'll do this again tomorrow.Track 1219389Monetization ID TFGEPGEI0LHEIJAI Audio soundtrack opening is licensed from Shutterstock, Track 1219389 Monetization ID TFGEPGEI0LHEIJAI

Inflation embeds

Play Episode Listen Later Sep 22, 2026 4:50

Shutterstock Track 1219389Monetization ID TFGEPGEI0LHEIJAIKia 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.Today we lead with news inflation's pressures are building everywhere, even if oil prices took a small dip today.But first, overnight there was a Pulse dairy auction where prices dipped marginally in USD except for SMP, but were all higher in NZD, although this too was only marginal.In the US, the ADP weekly jobs data rose to an average of a +20,000 jobs gain per week over the past four weeks. That recovers it back to late June levels.Meanwhile the Richmond Fed factory survey was expected to rise marginally in September, but it fell and its first retreat in six months. This was essentially driven by retreating new order levels and order backlogs shrank as well. Input and output costs both rose however and at a faster pace in both cases.There were a few Fed speakers out overnight. New York Fed boss Williams defended how they have been handling monetary policy, although he didn't give any guidance on what is coming next. Vice Chair Jefferson also avoided guidance comments although he has been on record recently of supporting their rate hikes. But Richmond Fed boss Barkin did address the recent rising trend and what comes next. More hikes are possible, he said.There was a giant US Treasury two year bond auction overnight and this one did not display the sagging demand of the other recent events. However, it came with much higher yields. This lates one delivered a median yield of 4.74% (high 4.79%), up notably from the 4.16% at the prior equivalent event a month ago. This is a meaningful rise given the 2 year Note has the largest supply of any maturity they offer - US$79 bln. Just for this bond, that has the US Treasury paying +14% more in interest pa than just a month ago. Debt servicing is becoming an ugly problem, and fast.Just when you might have thought Taiwanese export orders couldn't grow much faster, they did in August. They exceeded US$100 bln in the month for the first time, up a staggering +71% from a year ago (which itself was rising and close to a record at the time). In local currency, they were up +82%.After improving since April (that is, betting less negative) EU consumer sentiment hit a setback in September, one that was not expected. Winter is approaching there and with the energy supply issues unresolved there, perhaps it is understandable that concerns are rising again.In Australia, RBA governor Bullock suggested that their labour market is too tight and that is putting upward pressure on inflation. This suggests they will continue raising their benchmark rate until they see the jobless rate rise and labour-cost pressures ease. She is on a track that will create difficult politics. Not helping is the rise and rise of petrol prices, now approaching their pandemic highs again. An RBA rate rise is now almost a certainty next week, taking it to 4.6%. The UST 10yr yield is now just on 4.97%, up +1 bp from yesterday.The price of gold is at US$4352/oz, and up a minor +US$7 from yesterday. Silver is at just over US$66.50/oz and up +50 USc.Oil prices have fallen another -US$4.50 to at just on US$91/bbl in the US, while the international Brent price is down -50 USc to US$99.50/bbl.The Kiwi dollar is unchanged from yesterday, still at 57.2 USc. Against the Aussie we are up +20 bps at 80.5 AUc. Against the euro we are up +10 bps at just over 50 euro cents. That all means our TWI-5 starts today at just over 60.7 and little-changed.The bitcoin price starts today at US$86461 and up +0.8% from yesterday. Volatility over the past 24 hours has been low at just over +/-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'll do this again tomorrow.Track 1219389Monetization ID TFGEPGEI0LHEIJAI Audio soundtrack opening is licensed from Shutterstock, Track 1219389 Monetization ID TFGEPGEI0LHEIJAI

Painful tradeoffs coming

Play Episode Listen Later Sep 21, 2026 4:17

Shutterstock Track 1219389Monetization ID TFGEPGEI0LHEIJAIKia 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.Today we lead with news more policymakers are bracing for dealing with stagflation.But first, in the leadup to the Xi-Trump talks in Washington, there is a focus on AI and its risks. And there is some pre-celebration from both sides of how good it is going to be. We recently noted that the May Beijing version of these talks has seen the announced 200 plane order for Boeing apparently die. It also seems that the May deal to buy US grains has never materialised either. So you should be sceptical of any current claims about the Washington DC meeting outcomes.The Chicago Fed's National Activity Index dipped in August from July, suggesting US economic growth is no longer rising. In four of the last six updates, this measure has decreased. New orders are no longer rising in this data, production is contracting.So that points to increasing stagflation.Meanwhile Chicago Fed President Austan Goolsbee warned that bringing inflation back down to the 2% target may not be painless and could require pushing employment below target. "This is exactly the painful trade-off between employment and inflation that stagflationary shocks always impose on a central bank. Unfortunately, in environments like that, the only way back is the hard way."And staying in the US, California has declared a state of emergency as a strengthening El Niño raises the threat of damaging storms, widespread flooding and mudslides across the state for their upcoming autumn and winter.In Canada, their central bank boss has also been speaking, and warning that their trade difficulties with the US could cut Canadian growth in half to below +1%. It is actually oddly impressive that a dispute this large with an economic adversary as big as it gets can be navigated with any expansion.In Australia, Reserve Bank Assistant Governor Sarah Hunter was on a Nine Network podcast this morning and emphasised that the RBA is worried about inflation and fighting that threat is where their energies currently are focused.The copper price is making another push up towards its record high (reached on September 9), this time driven by growing logistics issues.The UST 10yr yield is now just on 4.96%, down -4 bps from yesterday.The price of gold is at US$4345/oz, and down -US$38 from yesterday. Silver is at just over US$66/oz and little-changed.Oil prices have fallen -US$4.50 to at just on US$95.50/bbl in the US, while the international Brent price is down -US$4 to US$100/bbl. There is a bit of hopium involved here as traders watch diplomatic efforts to end the US-Iran war and watch for signs of oil cargo movements. But they are not significant, yet anyway.The Kiwi dollar is unchanged from yesterday, still at 57.2 USc. Against the Aussie we are holding at 80.3 AUc. Against the euro we are up +10 bps at just under 49.9 euro cents. That all means our TWI-5 starts today at just under 60.7 and little-changed.The bitcoin price starts today at US$88,791 and up a sharp +5.8% from yesterday. (And we should note that it has risen back to NZ$150,000 for the first time since late January.) Volatility over the past 24 hours has been high at just over +/-3.4%.You can get more news affecting the economy in New Zealand from interest.co.nz.Kia ora. I'm David Chaston and we'll do this again tomorrow.Track 1219389Monetization ID TFGEPGEI0LHEIJAI Audio soundtrack opening is licensed from Shutterstock, Track 1219389 Monetization ID TFGEPGEI0LHEIJAI

Weaker data signals but markets stay upbeat

Play Episode Listen Later Sep 20, 2026 6:54

Shutterstock Track 1219389Monetization ID TFGEPGEI0LHEIJAIKia 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.Today we lead with news global financial markets are little-changed at near historic highs even though economic data releases seem to be still giving weaker signals.This week will be dominated by the Fonterra annual result and dairy payout finalisation, a big dump of RBNZ lending data, and some credit card activity data.In Australia, the week will be headlined by the August jobs data release which is expected to show +20,000 jobs growth.Elsewhere, China is heading into its Mid-Autumn Festival which starts on Friday and runs through to Sunday.In Japan it will be Silver Week with markets closed there today through Wednesday.China made no changes to their Loan Prime Rates over the weekend. Ahead this week there will be many such decisions in Switzerland (no change at 0%), Sweden (no change at 1.75%), Norway (no change at 4.25%), Mexico (no change at 6.5%), and Indonesia (no change at 5.75%).And there will be a major diplomatic set piece this week with Chinese President Xi visiting the US on Friday and Saturday (NZT). Don't expect much other than photo opportunities, although with Trump there is always the capacity for something to go badly wrong during or after the meeting. In May, China agreed to buy 200 Boeing jets during Trump's visit to Beijing but no actual deal has been done so far, so anything announced at these summits doesn't mean anything will actually happen.In the US they will release durable goods order data and most observers think they will fall in August from July.From everywhere will will be getting PMI updates. And from Taiwan we will get its export order data.All this, plus whatever happens in the Middle East wars.Over the weekend we learned that, China posted another weak foreign direct investment result for August, down -5.3% on a year-to-date basis. But the incremental flows were tiny in August. up just +US$7 bln from July and virtually unchanged from year ago levels. From two years ago there is a large drop. For all the official propaganda about how well the Chinese economy is doing, it isn't enticing investment in. A key reason these flows are so low is that sovereign wealth funds are now on the sidelines.Japan's CPI inflation rate held at +1.9% in August as it was in July, and their core inflation rate eased to 1.7%. Both results were at the bottom end of expectations, and should have taken pressure off the Bank of Japan who were meeting as this data was released. But they have other issues weighing on them including defending the yen, and facing bullying pressure from the Trump Administration. All the same, inflation this low when the global price pressure is high is an achievement, even if Japan is only one many Asian economies that are managing to replicate that result.As universally anticipated and earlier implied, the Bank of Japan delivered its +25 bps rate hike on Friday, taking its policy rate to 1.25% which is a 31 year high. They said they will "continue to raise the policy interest rate and adjust the degree of monetary accommodation, in response to developments in economic activity and prices as well as financial conditions."Meanwhile, the Bank of Japan made a 'rate check' in currency markets on Friday ahead of their holiday, after the yen fell on the rate hike, and that has strengthened sentiment for the yen, also likely underpinned by geopolitical considerations.Across the Pacific, US industrial production stalled in August from July, a disappointing result because it rose in July and was expected to rise again in August. It is now +1.4% higher than a year ago, not exactly an indicator of a booming economy although that is up from +1.1% in July. Almost all of this is due to data center buildout ("business equipment" was up +7.1%).. In fact, production of consumer goods is now falling at a -1.1% annual rate.Also disappointing was the US Conference Board leading indicator which edged lower in August when a small rise was anticipated and after a bigger rise was booked in July.In Europe, the August ECB inflation expectations survey shows them at 3.0% (median) and 5.0% (average). These levels are little-changed from the June and July survey results.Germany reported their August producer price levels overnight and that came in at +4.6%, higher than July's +3.0% and higher than the expected +4.1% rise. Of course, driving this were energy costs which were up +8.3% from a year ago, up +3.2% from July.In Australia, after testimony to a parliamentary committee yesterday in which Governor Bullock have a hawkish briefing on inflation risks, economists have suddenly realised that the a rate hike is the most likely outcome at the nest monetary policy review there on September 29. That will take their cash rate target up to 4.60%. And it may go higher if inflation isn't restrained at that level.The RBA isn't angling to save the Aussie housing market. It may well become collateral damage in the fight against rising inflation.The UST 10yr yield is now now just under 5.00%, down -1 bp from Saturday up a net +2 bps for the week.The price of gold is at US$4383/oz, and just +US$2 from Saturday, down -US$33 from a week ago. Silver is at just over US$66/oz and down -50 USc but up +US$2 from a week agoOil prices have held at just under US$100/bbl in the US, while the international Brent price is up +50 USc at US$104/bbl. A week ago these prices were US$100.50/bbl and US$104.50/bbl respectively, so little-changed.The Kiwi dollar is unchanged from Saturday, still at 57.2 USc but down -90 bps from a week ago, down -190 bps from the start of the month. Against the Aussie we are holding at 80.3 AUc. Against the euro we are still at just on 49.8 euro cents. That all means our TWI-5 starts today at just under 60.7, unchanged at a six-week low.The bitcoin price starts today at US$81,118 and little-changed from Saturday. 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'll do this again tomorrow.Track 1219389Monetization ID TFGEPGEI0LHEIJAI Audio soundtrack opening is licensed from Shutterstock, Track 1219389 Monetization ID TFGEPGEI0LHEIJAI

Financial market relief

Play Episode Listen Later Sep 17, 2026 6:10

Shutterstock Track 1219389Monetization ID TFGEPGEI0LHEIJAIKia 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.Today we lead with news it seems yesterday's unanimous Fed decision to prioritise the inflation fight has financial markets reassured. The US Treasury yields have pulled back from their highs, although still at Tuesday's high level.One thing millions are watching is whether US mortgage rates will hit 7% again. They haven't quite yet but it is close. Not only are new home and refinance borrowers affected, the house building industry and all that it supports are anxious as well.But first in the US today, their weekly initial jobless claims fell last week and by more than expected and by more than seasonal factors would have indicated. There are now 1.58 mln people on these benefits, also a notable fall as the much tighter qualification rules start to bit hard now.US housing starts fell and to their slowest pace since 2019, with the exceptions of the sharp and unusual May dip, and the pandemic. That was matched by low building consent levels, so the easing off in this homebuilding sector will continue.The regional Philly Fed factory survey for the important Pennsylvanian rust belt region was expected to fall in September from August and it did, but not by as much as expected. New orders and shipments remained elevated, while the employment index declined but stayed positive, signaling continued job growth. Both input and output price indicators moved higher and at a faster pace.US pending home sales were down -4.7% in August from a year ago, but at least they did manager to level-peg from July.There was a US 10 year TIPS bond auction overnight which delivered a median yield of 2.58% (high 2.65%), which is a notable rise from the 2.37% at the prior equivalent event a month ago. Although not as dramatic as the -17% fall off in demand for yesterday's 20 year bond, this auction attracted lower demand as well, -12% less.And we should probably note that Chinese president Xi will be visiting the US next week and there is a frenzy of advanced negotiations underway in preparation so that both he and Trump can announce something 'substantial' and worth the visit. What will be interesting will be the moves after the event glad-handling.In Canada, their producer prices rose sharply again, up +13.5% from a year ago in August, driven of course by high fuel costs. On the same basis their diesel is up +75% and petrol up +42%. Both rose notably from July as well.Singapore's electronics sector had a boom month in August helping power the country's non-exports to a +46% gain from the same month a year earlier. That was up very sharply from a downwardly revised +24.1% rise in July and far above forecasts of +35%. It was the twelfth straight month of expansion and the strongest growth since October 1988. The US was a small customer in August than July. But every other major country was a much larger customer (other than the EU).(Meanwhile their imports rose +39% but that includes oil.)Overnight the Bank of England reviewed their policy rate and left it unchanged at 3.75. Three of their nine voters wanted a rise. That kept their no-change streak of 2026 intact. Taiwan reviewed its 2.0% policy rate, also keeping it unchanged. And later today the more important Bank of Japan review is expected to announce a +25 bps hike to 1.25%.In Australia, they released updated population data yesterday. This is a hot topic politically. Their population grew by +1.4% in the 12 months to March 2026, now 27.9 million people. That's 392,700 more than the same time in 2025. The natural increase was +100,000 and the net migration increase was +292,100 (and down from +309,500 in the previous year). The state with the biggest increase was Victoria (+109,500); the state with the fastest increase was Western Australia (+2.1%).Global container freight rates have stayed very high but are in fact little-changed from last week at this time. From a year ago they are up +135% however. Within the recent no-change, rates from China to Europe were down about -5% while rates from China to the US rose about +5%. Bulk cargo rates fell -8% in the past week, but are also historically high still and up +55% from a year ago.The UST 10yr yield is now just on 4.94%, down -7 bps from yesterday.The price of gold was at US$4360/oz, and recovering +US$111 from yesterday. Silver is at just over US$65.50/oz and up +US$2.50/oz.Oil prices have eased -50 USc to US$102/bbl in the US, while the international Brent price is little-changed at US$104.50/bbl.The Kiwi dollar is down -30 bps from yesterday, now at 57.3 USc. Against the Aussie we are down -20 bps at 80.6 AUc. Against the euro we are unchanged at just on 49.9 euro cents. That all means our TWI-5 starts today at just under 60.8, down -20 bps and still at a six-week low.The bitcoin price starts today at US$76,622 and up +1.5% from yesterday. Volatility over the past 24 hours has been modest again at just over +/-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'll do this again tomorrow.Track 1219389Monetization ID TFGEPGEI0LHEIJAI Audio soundtrack opening is licensed from Shutterstock, Track 1219389 Monetization ID TFGEPGEI0LHEIJAI

US Fed hikes, sees more tightening ahead

Play Episode Listen Later Sep 16, 2026 4:54

Shutterstock Track 1219389Monetization ID TFGEPGEI0LHEIJAIKia 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.Today we lead with news the US is raising interest rates and the Middle East war is spreading.First, as expected and in a very brief Warsh-style statement, the US Fed raised its key policy rate by +25 bps to 4.0% in a unanimous vote. It was its first rise since 2023. It did note that "inflation remains elevated" and they "will deliver price stability". However their forward looking interest rate 'projections' were raised although only to the new 4% levels. A strong majority of members thing another rate rise is possible this year.Immediately after their decision was released, Wall Street held its small pre-decision gains. The UST 10 year yield dipped slightly but has since risen back over 5%. The US dollar rose. That USD rise has been maintained but Wall Street has changed direction sharply lower and the UST 10yr has jumped back over 5%.Trump's reaction to the rate rise, and the prospect of another, has so far been conspicuous silence. He had demanded that rates be cut.US mortgage applications fell last week, essentially driven by refinance applications. They say their 30 year benchmark home loan interest rate has risen to just under 7% and its highest since January 2025.US retail sales rose in August and by more than expected, up the most month-on-month in five months following a fall in July. But the monthly +1.2% rise was essentially driven by higher fuel purchases, up +3.1% in the same period. From a year ago, these retail sales are up +5.3% of which fuel was up +20.5% at petrol stations, US crude oil stocks took another fall last week and by more than the prior week although not as much as was expected. And their strategic reserves fall again, but only marginally this time.The New York Fed's survey of the service sector activity in the New York region shows the July and August improvements have not continued into September, with a notable backslide in the latest survey.Meanwhile the NAHB/Wells Fargo Housing Market Index of house builder sentiment has retreated to its lowest level since December 2022 with higher costs and higher interest rates getting the blame.Canadian housing starts stayed low in August, almost the same as in July and well down on the unusually high year-ago Austr levelEU industrial production fell in July from June, but it is still up marginally from a year ago.The UST 10yr yield is now just on 5.01%, unchanged from yesterday and its highest since 2007.Wall Street was firmish ahead of the Fed decision today, up +0.3% in Wednesday trade on the S&P500, and up +0.8% on the Nasdaq. But then it retreated, now down -0.8% with the Nasdaq down -0.4%.The price of gold was at US$4328/oz, and up +US$34 from yesterday just after the Fed decision. But now it is at US$4249 and a -US$79 reaction. Silver ws at just over US$64/oz and up +50 USc bu has subsequently dropped to US$62.50/oz.Oil prices have eased -US$4 to US$102.50/bbl in the US, while the international Brent price is down -US$4.50 to just on US$104.50/bbl.Saudi Arabia is scrambling to fix or bypass their war-damaged key oil pipeline, one that delivers as much as 4% of global oil supplies. And for Saudi Arabia this is a major economic threat, choking their revenues in a significant way.The Kiwi dollar is little-changed from yesterday, now at 57.6 USc. Against the Aussie we are also holding at 80.8 AUc. Against the euro we are unchanged as well at just on 49.9 euro cents. That all means our TWI-5 starts today at just under 61, little-changed and still at a six-week low.The bitcoin price starts today at US$75,518 and down -1.6% from yesterday. Volatility over the past 24 hours has been modest at just over +/-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'll do this again tomorrow.Track 1219389Monetization ID TFGEPGEI0LHEIJAI Audio soundtrack opening is licensed from Shutterstock, Track 1219389 Monetization ID TFGEPGEI0LHEIJAI

Markets demand rate rises to fight inflation

Play Episode Listen Later Sep 14, 2026 4:09

Shutterstock Track 1219389Monetization ID TFGEPGEI0LHEIJAIKia 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.Today we lead with news the Gulf Cooperation Council meetings with Iran have been 'postponed'. So no progress there.That means we need to prepare for more pain at the pump, and aggressive competition for global fuel supplies.In the US a full +25 bps is now priced in for Thursday's US Fed review which would take their policy rate to 4.0%. In Japan, a full +25 bps is also priced in, taking theirs to 1.25%. If one or both don't deliver these rises where will be strong financial market reactions. And the inflation-fighting cred of both central banks will be in tatters. With no monetary policy resistance to inflation, things would get very messy and rather quickly.And while we are reviewing these chances, we should note that markets are pricing two chances in three (67%) of an RBNZ rise on October 28, a 75% chance of an RBA rate rise on September 29, and a 70% chance of an ECB rise on October 29.Meanwhile, Canada's August CPI inflation rate came in at 3.0%, the expected level and unchanged from July. Markets are currently pricing in a 75% chance of a +25 bps hike at the Bank of Canada's October 28 review.India's CPI inflation rate was reported overnight too, coming in at 4.8% for August and as expected, but notably higher than the 4.4% July rate. Food inflation, which makes up a dominant part of this measure, came in at almost 6%. Their 5.25% policy rate is next reviewed on October 7.China reported its August new yuan loans data overnight and it was weak again, extending the unnerving trend that started with the unexpected April fall, which was followed up with an even larger July fall. This August data was expected to be a very modest +¥400 bln expansion, but it only came in with a +¥60 bln rise. For an economy as large as China's this is very low. For example, August 2025 recorded a +¥590 bln rise and that was considered low. In August 2024 it was +¥900 bln.The UST 10yr yield is now just on 4.96%, down -2 bps from yesterday but essentially holding its new highs. It did top 5% at one point however over the past 24 hours.The price of gold is now at US$4310/oz, and down -US$40 from yesterday at this time. Silver is at just under US$63.50/oz and down -US$1.Oil prices have risen +US$1.50 to US$101.50/bbl in the US, while the international Brent price is up the same to just on US$106/bbl.The Kiwi dollar is down -30 bps from yesterday, now at 57.8 USc. Against the Aussie we are down -10 bps at 81 AUc. Against the euro we are also down -10 bps to just on 50 euro cents. That all means our TWI-5 starts today at just over 61.2, down -20 bps.The bitcoin price starts today at US$78,886 and up +1.9% from yesterday. Volatility over the past 24 hours has been modest at just under +/-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'll do this again tomorrow.Track 1219389Monetization ID TFGEPGEI0LHEIJAI Audio soundtrack opening is licensed from Shutterstock, Track 1219389 Monetization ID TFGEPGEI0LHEIJAI

Higher yields are here to stay

Play Episode Listen Later Sep 13, 2026 6:54

Shutterstock Track 1219389Monetization ID TFGEPGEI0LHEIJAIKia 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.Today we lead with news the price of money just keeps going up. Others have pointed out it is not only US policy management that is causing this trend, but also the generational shift of boomer savings starting to run down as they are used, generating a global imbalance. There are fewer savings for the investment demand in the global economy, so a fundamental supply/demand imbalance is growing. The US administrative incompetence is making this shift faster, however.This week will feature the US Fed's rate decision on Thursday as the key upcoming event. Financial markets are pricing a 75% chance of a +25 bps hike. Economists have the full +25 bps as their central expectation. The reason is clear - inflation isn't under control, not even close.Locally, Thursday will bring our Q2-2025 GDP result, expected to be +2.3% and up from Q1's +1.8%. But such is the disconnect between consumers lived experience, and sectors like farming, that it is likely to be dismissed as electioneering even if it is accurate. We will also get retail (electronic card) and inflation (selected price) updates this week too. And in the middle of this we will likely get the August REINZ data this week as well.In Australia, the key data releases will be minor, mainly for tourism and population, but they will both be grist for their culture war debates.China will report a broad range of data this week, and most of it is expected to deliver minor improvements. We will be especially watching their new lending data to see what has happened after the unexpected July decline.Japan will report inflation (2.1% expected) and its central bank rate review later in the week (+25 bps to 1.25%).On Friday, Japan said its producer prices rose +7.6% in August from a year ago, following an upwardly revised +7.7% increase in the prior month, which had been the fastest pace since February 2023. Although fuel is a big part of these rises it isn't the only part, and the outsized rises have been consistent now in each month since April. Despite that, Japanese business sentiment rose to its highest level since 2021, in a report out Friday.In the coming week, the US will release retail sales, trade terms, and industrial production data. But this is all being overshadowed by the fast-rising fuels costs, even if there is yet another 'hope' that talks can replace fighting in the Persian Gulf.Over the weekend the US released its official CPI for August (from the same agency that brought you the wildly optimistic non-farm payrolls data), and it shows no change at 3.4%. Apparently food prices were up +2.7%, fuel costs up +16.3%, electricity up +4.0%, drugs down -2.7% and rents up +3.0%. From July to August however, the overall rate rose +0.4% which is an accelerating recent rise.However, it is doubtful US consumers believe this sanguine official assessment. The widely-watched University of Michigan consumer sentiment survey for September reported a sharpish and unexpected fall, now to its lowest level since the record low in May. That is a -7.5% retreat since August and a -13.7% drop from a year ago. Year-ahead inflation expectations jumped to 4.6%, the highest since June. Year-ahead expectations for personal finances and business conditions deteriorated, as consumers anticipate greater pressure on household budgets amid rising fuel prices and trade tensions.US petrol prices have risen +4.0% in just the past week and are now up +45% since the start of Trump's war.In some earlier reviews we had noted that the copper price had hit a new record high of US$15,000/tonne. However since then it has pulled back on the prospects for a sharp increase in supply and an easing of demand as the world's two largest economies hesitate. The current price is now US$14,250/tonne so a -5% drop in the past three days.The UST 10yr yield is now just on 4.98%, unchanged from Saturday, up +20 bps for the week.All this sudden rise in benchmark interest rates is going to do extensive and expensive damage to government budgets which depend on high debt levels and more borrowed money. A reckoning is closer.The price of gold is now at US$4350/oz, and up a minor +US$4 from Saturday at this time, down -US$74 for the week. Silver is unchanged at just under US$64.50/oz, down -US$1.50 for the week.The Gulf Cooperation Council is expected to meet their Iranian counterparts later today to discuss a possible temporary arrangement for managing shipping through the strait. Adding to downward pressure, the US EIA raised its 2027 crude production forecast while the IEA sharply cut its global oil demand outlook.Oil prices have eased -50 USc to a still very high US$100/bbl in the US, while the international Brent price is little-changed just over US$104.50/bbl. A week ago these prices were US$91.50 and US$96.50/bbl so a net +9% rise in that time.The Kiwi dollar is unchanged from Saturday, still just over 58.1 USc but down -70 bps for the week. Against the Aussie we are also still just under 81.1 AUc. Against the euro we are holding at 50.1 euro cents. That all means our TWI-5 starts today at just over 61.4, unchanged from Saturday, down -70 bps from a week ago.The bitcoin price starts today at US$77,260 and up just +0.2% from Saturday at this time but down -3.0% from this time last week. Volatility over the past 24 hours has again been low at just under +/-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'll do this again tomorrow.Track 1219389Monetization ID TFGEPGEI0LHEIJAI Audio soundtrack opening is licensed from Shutterstock, Track 1219389 Monetization ID TFGEPGEI0LHEIJAI

The cost of money has just jumped

Play Episode Listen Later Sep 10, 2026 5:46

Shutterstock Track 1219389Monetization ID TFGEPGEI0LHEIJAIKia 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.Today we lead with news bond prices and equity prices are falling as oil prices have jumped, and markets now see a much larger chance the US Fed will have to raise rates when it meets on Thursday next week (NZT). Bond yields have jumped today in an outsized shift. Inflation risks are mounting everywhere now.Copper, silver and gold prices are sliding today.Adding to anxiety, Iran-backed Houthis have seized another Red Sea port is a defeat for Saudi Arabia, putting more pressure on the Red Sea shipping lanes.And in the US, at a sparsely attended 'convention', Trump has added to his cash promises to American voters if they keep a Republican Congress after the November elections that now exceed US$1 tln.In the US, producer prices rose in August more than expected and more than in July. They were up +5.4% from a year ago, faster than the July +4.8% rise. Clearly inflation is embedding in the US economy and is likely to spill out to consumer prices very soon - though the risks of that for their service economy seem much less.US fuel prices have risen sharply too with diesel now almost averaging US$6/bal, petrol up at US$4.27/gal. These are both quite big rises just from yesterday.US initial jobless claims rose last week to 176,500, about what seasonal factors would have indicated. There are now 1.675 mln people on these benefits, much lower than last week as qualification standards bite very much harder now.US crude oil stocks fell again last week but by less than expected and by less than the prior week.US existing home sales fell -2% in August to under a 4 mln annual rate. Unsold inventories rose. These dynamics are unlikely to get better because benchmark mortgage rates are about to jump.After declining for all of 2026, the US inventory-to-sales ratio jumped unexpectedly in July with wholesale inventories up +1.3% from June to be +5.7% higher than year-ago levels.So it will be no surprise to know that the median yield for today's US 30yr bond auction rose to 5.25% (hi 5.31%), from 5.15% at the prior equivalent event a month ago.As expected, the European Central Bank raised its policy rate by +25 bps to 2.65% saying that they expect inflation to be elevated and this required pushback.Australian inflation expectations have remained unchanged at 4.9% in September as they were in August. That is far above the July 3.5% official CPI rate and the August CPI update won't come until the end of this month. And last month's spike in wage expectations appears to have been a temporary blip, with expectations about year-ahead pay growth falling to just +1.2%. The squeeze is on and quite hard now.OPEC's monthly report showed that overall output rose by almost +350,000/bbl/day in the month led by Iraq. But they lowered their demand expectations for 2026 on the trajectory of the global economy. It is not often you see rising out put, lower demand, and a sharp jump in prices. That Trump guy is something 'special'.Global container freight rates were little-changed last week, staying at unusually high levels and up +119% from a year ago. Rises in China-to-US rates were offset by falls in China-to-EU rates. Meanwhile bulk cargo rates rose +12% last week, and are now +175% higher than year-ago levels.The UST 10yr yield is now just on 4.96%, a jump of +12 bps from yesterday at this time.The price of gold is now at US$4337/oz, and down -US$81 from yesterday at this time. Silver is down -US$4 at just under US$64/oz.Oil prices are up +US$6 at a very high US$102/bbl in the US, while the international Brent price has risen +US$6.50 to just over US$107.50/bbl.The Kiwi dollar is down -40 bps from yesterday, now just under 58 USc and a six week low. Against the Aussie we are up +10 bps at just under 81 AUc. Against the euro we are down -30 bps as well at 49.9 euro cents. That all means our TWI-5 starts today at just over 61.3, down -30 bps from yesterday.The bitcoin price starts today at US$77,113 and down -2.1% from yesterday at this time. Volatility over the past 24 hours has again 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'll do this again on Monday.Track 1219389Monetization ID TFGEPGEI0LHEIJAI Audio soundtrack opening is licensed from Shutterstock, Track 1219389 Monetization ID TFGEPGEI0LHEIJAI

The risks of an unravelling rise

Play Episode Listen Later Sep 9, 2026 5:29

Shutterstock Track 1219389Monetization ID TFGEPGEI0LHEIJAIKia 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.Today we lead with news both Iran and the US are targeting oil tankers in the Persian Gulf in the sharpest escalation in their conflict since Trump's war began. The oil price jumped +4% overnight, and other financial risk metrics rose too.Meanwhile, US Treasury Secretary is making moves that make him look desperate. His latest Treasury buy-back plan has been panned by markets after his pre-selling bluster, and US yields have risen. His meddling with the yen is in trouble too, raising expectations the Japanese are unable to meet, and causing its own market reactions.In the real economy US mortgage applications sank sharply last week, mainly on diving refinance applications. Not helping is a sharpish rise in the benchmark 30 year mortgage rate, now at 6.85% and its highest in more than a year.And that is likely to get worse. Today's UST 10yr bond auction brought a median yield of 4.77% (high 4.83%), up sharply from the prior equivalent event a month ago (4.63%).Trump has taken exception to Canada reacting and retaliating to his tariffs on them. He says he will hit Canada with more and higher tariffs. Central to the new American actions will be dairy products.In Japan, machine tool orders jumped sharply in August, up +65% from a year ago and continuing the surge that started in Match.The Japanese business sentiment index for manufacturers known as the Reuters Tankan index rose to its highest reading since December 2021, and before that, 2018, in a show of rising confidence. This survey predates the official Tankan survey which isn't due until October 1, 2026.Taiwanese exports continued their stellar growth in August, but this expansion seem to have become normalised now, which understates how impressive it is. They reported a +41% gain on top of last year's +42% gain in the same month. Of course, it was a new record high for them in one month, US$82.4 bln for the month.China's August CPI inflation rate came in very low again at +0.8% from a year ago, although a bit higher than for July, and marginally higher than expected. Food prices actually fell -0.6% on the same year-on-year basis, but within that beef prices were up +5.3% and lamb prices up +6.3%. Dairy products were -1.4% lower however, along with prices for pork, alcohol, and vegetables. Medical services, communications services, and fuel were all up.Meanwhile, China's August producer prices rose faster, up +3.8% from a year ago - so the July easing was essentially reversed. Industrial prices were up +5.8% with some metals and fuel components up more than +20% from a year ago. So key components of their export-oriented industries are under the cost pump.Meanwhile, Shanghai is rolling out a new policy to eliminate out-of-pocket medical expenses related to childbirth, covering routine medical services from prenatal checkups through hospital delivery. It is a bid to encourage births and make the city more family-friendly as China's birth rate sinks to a new low.Overnight the copper price pushed up to a new all-time record, just shy of US$15,000/tonne (NZ$25.50/kg). It has dipped marginally in the hours that have followed, but that is nothing more than its regular volatility. The trend is still strongly up. (But chartists might sense that it will top out at US$15,500/tonne before establishing a new trend.) The UST 10yr yield is now just on 4.84%, a rise of +3 bps from yesterday at this time.The price of gold is now at US$4418/oz, and up +US$32 from yesterday at this time. Silver is up +US$1.50 at just under US$68/oz.Oil prices are up +US$3.50 at a very high US$96/bbl in the US, while the international Brent price has risen +US$4 to just over US$101/bbl.The Kiwi dollar is down -20 bps from yesterday, now just over 58.4 USc. Against the Aussie we are also down -20 bps at 80.9 AUc at the lowest since April 2013. Against the euro we are down -20 bps as well at 50.2 euro cents. That all means our TWI-5 starts today at just over 61.6, down -20 bps from yesterday.The bitcoin price starts today at US$78,780 and up an insignificant +0.3% from yesterday at this time. Volatility over the past 24 hours has again 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'll do this again tomorrow.Track 1219389Monetization ID TFGEPGEI0LHEIJAI Audio soundtrack opening is licensed from Shutterstock, Track 1219389 Monetization ID TFGEPGEI0LHEIJAI

Central banks realise they have to get more serious in the inflation fight

Play Episode Listen Later Sep 8, 2026 6:08

Shutterstock Track 1219389Monetization ID TFGEPGEI0LHEIJAIKia 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.Today we lead with news inflation is high and rising around the world and central banks are confronting a change in priorities to get it under control. Their slow action is undermining their cred in the communities they serve. And that slow action has them facing some tough choices.But first, the overnight Pulse dairy auction brought slightly softer prices except for WMP which was little-changed. The dips in the other commodities was cushioned by the lower NZD.With the US back from holiday, more data has been released today. Of note is the ADP weekly employment data. The week-over-week change to their four-week moving average is less than +12,000 and that is nowhere near enough to confirm the last strong US non-farm payrolls report.Meanwhile, the New York Fed's August consumer inflation expectations survey held the one year ahead data at 3.6%, basically where it has been since rising to this level in April. Expected price growth for petrol rose to 4.6%, and for food to 5.3%. Worries about the labour market intensified, with those surveyed seeing unemployment will be higher in a year now 44% of the survey, the highest level since April 2020.And that is mirrored in the September update NFIB Business Optimism Index It fell away and by slightly more than expected. Inflation is now tied with taxes as the second top small business issue.Consumer debt rose again in July in the US, up an outsized +4.2% from a year ago. Driving this surge were non-revolving debt borrowings, like car loans, student loans, and personal loans.China has posted a strong trade result for August, with exports and imports up strongly, resulting in a fatter trade surplus. That surplus widened to +US$119 bln from +US$101 bln in July. It's surplus with the US accounted for +US$29 bln of that. Their August exports were up +25% and their imports were up +28.2% from the same month in 2025.Germany also reported a larger July trade surplus, but it did so in a defensive way. Exports fell from June (-0.8%) but imports fell more on that basis (-5.7%) so its surplus widened to €21.3 bln in the month. Year-on-year however, their exports were up +6.1% and their imports were up +3.0%. The key reasons for the July import fall were a -7.5% fall in imports from China, and an -8.3% fall in imports from the US.In Australia, consumer sentiment is retreating. The Westpac-Melbourne Institute August survey shows a raft of negative pressures. Household finances are coming back under pressure from higher fuel and rate rise fears. The housing downturn is starting to weigh on sentiment among homeowners. Nearly two thirds of consumers now expect mortgage rates to rise. And consumer unease about jobs, especially for construction and hospitality workers, is on the rise.And things are little better in the business sector. The August NAB survey of businesses shows business conditions fell 5 points and turned negative for the first time in six years. Business confidence fell 2 points and now 12 points below its January level, and worse, profitability fell 10 points as input costs continued to outpace price recovery increases.Meanwhile, RBA deputy governor Andrew Hauser said overnight that inflation is the major problem for Australia's central bank. He acknowledged Australians are struggling with the continued high cost of living and rising interest rates. But he also indicated those rates could rise higher in the coming months, because of their focus on fixing the key inflation problem. The Australian Government 10 year bond yield rose on the news, now its highest since 2011.Separately, it is also probably worth noting that the price of EU carbon permits is rising again, now at €85.40/tonne (NZ$160/tonne). That is far from the NZ$50/tonne available locally.The UST 10yr yield is now just on 4.81%, a rise of +1 bp from yesterday at this time.The price of gold is now at US$4386/oz, and down -US$21 from yesterday at this time. Silver is little-changed at just under US$66.50/oz.Oil prices are little-changed but still very high at just over US$92.50/bbl in the US, while the international Brent price has dipped -50 USc to just over US$97/bblThe Kiwi dollar is down -20 bps from yesterday, now just on 58.6 USc . Against the Aussie we are down -30 bps at 81.1 AUc. Against the euro we are down -20 bps at 50.4 euro cents. That all means our TWI-5 starts today at just over 61.8, down -20 bps from yesterday.The bitcoin price starts today at US$78,564 and down -0.8% from yesterday at this time. Volatility over the past 24 hours has again been modest at just under +/-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'll do this again tomorrow.Track 1219389Monetization ID TFGEPGEI0LHEIJAI Audio soundtrack opening is licensed from Shutterstock, Track 1219389 Monetization ID TFGEPGEI0LHEIJAI

Commodities higher, global interest rates higher, yen higher

Play Episode Listen Later Sep 7, 2026 5:18

Shutterstock Track 1219389Monetization ID TFGEPGEI0LHEIJAIKia 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.Today we lead with news global interest rates are still moving higher. And that is particularly true for Australian benchmark bonds. Money and commodities are transitioning somewhere, but it is not clear to where, just yet.But first, it is a public holiday in the US (Labor Day) with all their financial markets closed. Given their size, this has meant all other international markets are running at lower levels and in a hesitant mode. But some key shifts are not waiting for the Americans to return.In China, their August foreign exchange reserves were reported overnight and they rose to US$3.44 tln, the second highest level ever but not quite hitting their record May result. That puts them +3.6% higher than year-ago levels. Of note is that they added another +20 tonnes of gold to their reserves in the month, which makes the calendar year increase now almost +80 tonnes. Gold now makes up 10.2% of their overall reserves, although that is down from 11% at the start of 2026.And China announced major funding into eight large SOE institutions to enable them to lend more. It is injecting ¥300 bln (NZ$75 bln) in 'recapitalisation' the most it has done like this in 20 years. The funds will come from Ministry of Finance 'special bonds'. It is the latest and unlikely to be the last of economic support measures to 'reinvigorate' their economy.Japan's July leading index rose to its highest since January 2014 although the June level was revised down. The July level was also slightly below analyst's expectations despite the gain. Rising job offers and consumer sentiment were among the factors behind the rise.Singapore reported that its July retail sales were softer than expected. They were up by +1.5% from a year ago, the softest rise since May 2025 and slowing from a +4% increase in June.The EU reported a better rise in economic activity. The EU economy expanded +1.4% in Q2-2026 in its updated result, up from +1.0% in the previous estimate and much better than the +0.9% growth recorded in Q1-2026. The gain was driven by stronger growth in household spending and gross fixed capital formation, with exports also rebounded sharply. Euro area expansion came in slightly less than the overall EU levels.However German industrial production recorded a sharp and unexpected -1.1% fall in July, to now be -1.6% lower than year ago levels. (The Germans, as usual, report their data on an inflation-adjusted basis unlike many other countries.) The weakness there was from energy-intensive industries, and that includes car manufacturing.In a reaction toe the Saxony state election results, the German stock exchange dipped, and the 10yr German Bund yields rose to their highest since 2010.But they weren't the only bond yields to rise. The Australian 10 year bond yields rose to 5.22% and their highest since 2011. (Of course this has little to do with a German state election.)And the Japanese yen surged against the US dollar overnight, up to the 154 range as growing speculation over faster-than-expected Bank of Japan rate increases combined with renewed possibility of another round of currency intervention by the Japanese authorities drove the moves.We should also probably note that the copper price jumped to US$14,513/tonne on the LME, a record high.The UST 10yr yield is now just on 4.80%, up +2 bps from yesterday at this time.The price of gold is now at US$4407/oz, and down -US$26 from yesterday at this time. Silver is little-changed at just on US$66/oz.Oil prices are up +US$1 at just over US$92.50/bbl in the US, while the international Brent price is just under US$97.50/bbl.The Kiwi dollar is little-changed from yesterday, still just on 58.8 USc . Against the Aussie we are down -20 bps at 81.4 AUc. Against the euro we are holding at 50.6 euro cents. That all means our TWI-5 starts today at just over 62, down -10 bps from yesterday.The bitcoin price starts today at US$79,194and down -0.7 from yesterday at this time. Volatility over the past 24 hours has been modest at just under +/-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'll do this again tomorrow.Track 1219389Monetization ID TFGEPGEI0LHEIJAI Audio soundtrack opening is licensed from Shutterstock, Track 1219389 Monetization ID TFGEPGEI0LHEIJAI

Eyes on global inflation

Play Episode Listen Later Sep 6, 2026 7:54

Shutterstock Track 1219389Monetization ID TFGEPGEI0LHEIJAIKia 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.Today we lead with news we are heading into a week that will deliver a wide set of consumer and producer inflation reports.But locally, the data releases will be light. It is a light data week in Australia too, with only migration updates this week. But we will also get an update on the total value of all houses as at June and that may start to show a leveling off from the March record high AU$12.8 tln. We will also get August consumer and business confidence updates from Australia, and September consumer inflation expectations results.Globally we will be looking for signs of widening cracks in fuel markets as Trump's forever war drags on. In the US they are now on their long Labor Day weekend holiday, ending their summer holiday season. They face petrol prices +40% higher than when Trump started his Persian Gulf war with Iran. Diesel there are almost +80% higher now and that is having broad inflationary impacts in secondary goods costs. That these are rising faster recently is not a sign that Kevin Warsh will be able to ignore, even if he is under renewed pressure from the White House to do so.So of special interest will be the US August CPI update, brought to you by the good folks at the same agency that delivered the strong headline labour market data on Friday (the agency Trump fired the head of a while ago because he didn't like the results they released). A 3.4% headline rate is anticipated, but markets are taking that sceptically. After all, the PCE inflation measure for July was 3.7%. Even if you take both at face value, and the payrolls data at face value, there seems little justification for them not to weigh against inflation at this time. But Warsh & the Fed probably won't, so American inflation is set to be outsized and rising for some time yet.They will also release August PPI data this week, expected to remain elevated at 4.7%. The first September University of Michigan sentiment survey will drop this week too, and this has been very low reflecting unease over unconstrained inflation. And American consumer inflation expectations survey commissioned by the NY Fed will also drop this weekMeanwhile, the ECB will decide on interest rates (expect a +25 bps rise to 2.5%), and Germany will unveil August industrial production data.There will be more trade and inflation data out elsewhere and that includes from China. We expect a larger trade surplus and their low inflation to rise again marginally.From Japan, a raft of economic reports is due, including revised Q2 GDP, July wages and current account data, as well as August PPI, which is expected to show producer inflation accelerating to 7.4%. Their machine tool order update is due too.Over the weekend, the Japanese household spending data that was weak in June got weaker for July, a result that wasn't expected. It was a contraction at the sharpest pace since January 2024. Only the furniture and recreation categories were positive.The US non-farm payrolls was out over the weekend and rose much more than expected in both the headline version and the actual version, up +154,000 in August from July when just a +15,000 rise was expected, up +456,000 from a year ago to 158.9 mln people on payrolls. This result is sharply different to the ADP Employment report which tracks most of this weekly.The broader employed civilian labour force data however isn't so upbeat, showing a -133,000 fall from July, down -621,000 from August a year ago and to 162.7 mln employed people. Take your pick from these two official results, but it does suggest a widening gap where it is substantially harder to sustain employment unless you are on a company payroll.Markets seem sceptical of the strong headline jobs report, suspecting it is something that will be corrected in future. Wall Street is lower, benchmark bond yields are higher, both shifts you may not expect if they did believe the headline data was genuine.Across the border, Canada reported a tougher labour market. Employment there declined by -41,700 in August, missing expectations for a +15,000 increase and following a +75,100 gain in July.In the overall EU, retail sales volume growth slowed to just +1.0% in July from a year ago, from an upwardly revised +1.7% in June. This was slightly lower than market expectations of a +1.1% gain and was the smallest increase in retail trade since April. But at least they have positive volume growth.In Germany they reported a sharp rise in factory orders in July, up +2.5% from June to be more than +13% higher than year-ago levels. This was much better than observers were expecting.In Norway, their gigantic US$2 tln sovereign wealth fund is moving to sharply cut back on its exposure to US Treasury bonds. Yesterday we noted the Dutch move to insulate risks by moving their gold holdings out of the US.Global food prices rose notably in August to their highest since November 2022. All food groups rose including for meat and dairy, although the biggest rises were for cereals, sugar, and vegetable oils.Also globally, perhaps we should note that the value of the top 50 mining companies surged on stock exchanges by a monster +US$350 bln in August alone, taking them back to February levels when the value of gold was US$1000 higher than it is now.The UST 10yr yield is now just on 4.78%, unchanged from Saturday at this time, up +5 bps for the week.The price of gold is now at US$4433/oz, and up +US$9 from Saturday at this time, down -US$29 from a week ago. Silver is little-changed at just on US$66/oz, down -50 USc for the week.Oil prices are holding at just on US$91.50/bbl in the US, while the international Brent price is just under US$96.50/bbl and also little-changed. A week ago these prices were US$83.50 and US$88/bbl respectively.The Kiwi dollar is little-changed from Saturday at just on 58.8 USc but down -30 bps from a week ago. Against the Aussie we are still at 81.6 AUc. Against the euro we are down -10 bps at 50.6 euro cents. That all means our TWI-5 starts today at just over 62.1, unchanged from Saturday, down -50 bps for the week.The bitcoin price starts today at US$79,745 up +0.2% from Saturday at this time, but up +2.7% from last week at this time. Volatility over the past 24 hours has been very low at just under +/-0.4%.You can get more news affecting the economy in New Zealand from interest.co.nz.Kia ora. I'm David Chaston and we'll do this again tomorrow.Track 1219389Monetization ID TFGEPGEI0LHEIJAI Audio soundtrack opening is licensed from Shutterstock, Track 1219389 Monetization ID TFGEPGEI0LHEIJAI

Pretending inflation is under control

Play Episode Listen Later Sep 3, 2026 6:34

Shutterstock Track 1219389Monetization ID TFGEPGEI0LHEIJAIKia 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.Today we lead with news financial markets are in a holding pattern today.First we should note that this coming weekend will be a major long weekend holiday in the US, for Monday's Labor Day. The means US markets will likely be quieter than normal until Tuesday their time, Wednesday ours. But they will still release their August non-farm payrolls report tomorrow and that is expected to show a +56,000 jobs gain and continuing the low expansion that has been usual in 2026.Today, the US initial jobless claims data for last week was released coming in at just over +170,000 and slightly more than seasonal factors would have indicated. There are now 1.74 mln people claiming these benefits, lower than a year ago and two years ago on much tighter eligibility requirements.The widely watched ISM services PMI came in marginally better than expected and better than for July with gains in activity and new business, but falling employment metrics. Twelve industry sectors indicated growth in August, one fewer than the previous month, while five reported contraction, up one compared to July. Price pressures remain very elevated at its highest level since August 2022. The S&P Global services PMI was also out overnight showing a similar expansion even if the details were different; jobs growth hits highest since January 2025, and input costs and selling prices increases were at a slower rate. Take your pick.There was an interesting speech from Fed heavyweight Christopher Waller, someone once floated as a possible Trump pick to replace Powell. Perhaps predictably he lined up with Kevin Warsh on pulling back on forward guidance communication, although he has staked out a full need to communicate of most other aspects of Fed thinking. This speech shows he isn't in the camp worried about current inflation risks because he thinks the peak pressure has passed. That tone took some sting out of the US Treasury bond yields today.The US also released its broader trade result for July, covering both goods and services. This confirmed the trade deficit spike we saw in the earlier merchandise-only data. In this case their services surplus was weak, so had a minimal impact on the large and growing goods deficit. Both exports and imports of services fell, notably for travel and financial services. Overall this deficit is now its largest in sixteen months when the pre-tariff stockpiling was at its peak.Canada also reported trade data for July, and while they still have a surplus, it was much narrower that expected. Exports fell while imports rose. It was their first export decline in six months.The Japanese yen has climbed to the ¥155:USD level, its highest since early August as traders priced in the chance of faster Bank of Japan interest rate hikes. The Bank of Japan next meets in two weeks from today.In China, their private services PMI by S&P Global (RatingDog) came in positive and certainly better than the contracting official version. The rise was soft but better than market forecasts. The increase was from better domestic demand, while foreign sales rose for the fourth straight month, but at a more modest pace than in July.The EU said producer prices there rose more sharply in July than June, but only by what they had in May - although that was a fast pace, and well above what they were expecting. For the whole EU, they were up +5.6% from a year ago and largely driven by the +12.5% rise in fuel costs. They were expecting only a +4.6% rise in overall PPI increases. Of special worry however will be that these costs rose at a very fast +1.4% in July from June.In Australia, they advised that their exports fell in July from June by -3.3% and their imports fell by -2.5%, giving them a reduced merchandise trade surplus of AU$1.9 bln. A year ago, that surplus was +AU$6.2 bln.Global container freight rates were unchanged from last week, and are now +110% higher than year ago levels. Global bulk cargo rates are +8.5% higher than week ago levels, in fact now their highest since May 2022. That puts them up +68% from a year ago.The UST 10yr yield is now just on 4.77%, down -3 bps from yesterday at this time.The price of gold is now at US$4486/oz, and up +US$114 from yesterday at this time. Silver has risen +US$2 to just on US$67/oz. Meanwhile the Dutch central bank has confirmed it has moved it gold holdings out of the US "to improve tradability", but likely also to prevent the Trump Administration from using them as a bargaining chip.Oil prices are -50 USc lower at just on US$91/bbl in the US, while the international Brent price is just over US$95/bbl and down -US$1.The Kiwi dollar is up +40 bps from yesterday at just on 58.9 USc. Against the Aussie we are up +20 bps at 81.7 AUc. Against the euro we are up +10 bps at 50.6 euro cents. That all means our TWI-5 starts today at just on 62.2, up +30 bps from yesterday.The bitcoin price starts today at US$81,011 and up +4.7% from yesterday at this time. Volatility over the past 24 hours has been moderate at just on +/-2.8%.You can get more news affecting the economy in New Zealand from interest.co.nz.Kia ora. I'm David Chaston and we'll do this again on Monday.Track 1219389Monetization ID TFGEPGEI0LHEIJAI Audio soundtrack opening is licensed from Shutterstock, Track 1219389 Monetization ID TFGEPGEI0LHEIJAI

Resilience despite risks & threats

Play Episode Listen Later Sep 2, 2026 5:04

Shutterstock Track 1219389 Monetization ID TFGEPGEI0LHEIJAI 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. Today we lead with news hostilities in the Persian Gulf are still ongoing and still clouding the global economy First in the US, the latest Fed Beige Book survey reveals an American economy where activity increased modestly since early July. Ten of the twelve Federal Reserve Districts reported modest growth; two reported no change. Consumer spending grew slightly on balance; reports reflecting both heightened price sensitivity on the one hand and solid high-end purchases on the other. Car sales were mostly subdued, dampened by downbeat consumer confidence, high fuel prices, and rising financing costs. And that was reinforced by mortgage applications levels that were little-changed and mortgage interest rates that have stayed high and back at early 2025 levels, now 6.79%. Further, the ADP monthly employment report for private payrolls delivered a +38,000 jobs gain in August, lower than for July and lower than the +47,000 expected. It was a seven month low. Saturday will bring the US non-farm payrolls report update for August which is expected to show a gain of +58,000 - which now may be on the high side. US payroll growth has essentially evaporated since early 2025 and the start of the Trump 2 presidency. New factory orders however were reported to have risen +10.4% in July from a year ago. This is an impressive result, but you would have thought that activity and employment data would show that surge. However some of the largest gains are in defense aircraft and computer equipment (data centers) which don't have a lot of jobs attached to them. US crude oil stocks fell again last week and by about double what was expected. And their Strategic Reserves fell too, and by a similar amount. These are dangerously low now. In Canada their central bank reviewed their policy interest rate by kept it at 2.25% as expected. They seemed somewhat surprised at the resilience of the Canadian economy given the economic attacks from the US, but they also now see that resilience continuing despite the substantial adjustments they have to make. Canadian benchmark bond yields are rising, today at a two year high. But this isn't especially high given the threats. The somewhat hawkish tone wasn't expected and the chances of rate hike there have probably increased. In Australia, it is coming to light that their central bank has downgraded the US dollar for its foreign currency holdings. (The RBA is somewhat unusual in that they have revealed that pullback. It is likely happening in many other central banks too, as IMF consolidated data suggests.) And staying in Australia, they released their Q2-2026 economic activity data today, showing a +0.4% expansion for the quarter, to be up +2.1% (real) from a year ago. That was much better than the expected +1.8% expansion. Their per capita growth was only up +0.7% however. The widely expected slowing in 2026 has been much less than observers had expected. And that has significantly boosted the AUD and Australian Government bond yields. The UST 10yr yield is now just on 4.79%, down -1 bp from yesterday at this time. The price of gold is now at US$4372/oz, and upUS$37 from yesterday at this time. Silver has risen +50 USc to just under US$65/oz. Oil prices are up +US$1.50 at just over US$91.50/bbl in the US, while the international Brent price is just under US$96/bbl The Kiwi dollar is down -40 bps from yesterday at just on 58.5 USc. Against the Aussie we are down -90 bps at 881.5 AUc. Against the euro we are also down -30 bps at 50.5 euro cents. That all means our TWI-5 starts today at just on 61.9, down -50 bps from yesterday. The bitcoin price starts today at US$77,353 and essentially unchanged from yesterday at this time. 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'll do this again tomorrow. Track 1219389 Monetization ID TFGEPGEI0LHEIJAI Audio soundtrack opening is licensed from Shutterstock, Track 1219389 Monetization ID TFGEPGEI0LHEIJAI

Investors on edge as global bonds sell off

Play Episode Listen Later Sep 1, 2026 6:16

Shutterstock Track 1219389 Monetization ID TFGEPGEI0LHEIJAI 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. Today we lead with news bond yields worldwide climbing as rising oil prices are raising inflation concerns. Financial markets have raised the chance of widespread interest-rate hikes. US Treasury 10 year yields hit 2025 highs at 4.8%, while Japan's equivalent rate hit 3% for the first time since 1996. German bund yields climbed to 15-year highs and UK gilt yields to 18-year highs. Not helping are a new round of attacks by a trigger-happy US on Iran. But first, there was a full dairy auction overnight and the overall results were modestly positive. Prices in USD were up +0.9% and up +0.6% in NZD. The big mover down was cheddar cheese suffering a -6.6% fall. The big mover up was SMP with a +5.3% gain. WMP was very little-changed. In fact, SMP prices are now higher that WMP prices, the first time like this since July 2022. In between, the WMP premium actually got as high as +US$1550/tonne. In the US, there were two factory PMIs out for August, both essentially holding a moderate expansion there. The widely-watched ISM one came in fractionally lower than for August, with new orders growing at a slightly slower rate and price pressure little-changed. The internationally benchmarked S&P Global one was little changed, noting output and orders both rising at slower rates, with stock building efforts continuing amid supply issues and higher prices. The US Logistics Managers' Index fell for a second consecutive month due to a slowdown in inventory expansion, while logistics costs continued to rise at a high pace. July JOLTS data shows job openings rising while quits fell, but these changes were actually quite minor. The US RCM/TIPP optimism index is still in an easing trend that started in early 2025, but it has held at a modest level in August, similar to the June and July levels. There were offsetting shifts with greater confidence among investors and higher-income households, but a deterioration in sentiment for non-investors and lower-income households. Meanwhile the Dallas Fed services sector activity moderated in August, but is still expanding. The Canadian factory PMI was little changed where their expansion was maintained at solid rate with output, new orders and employment all rising in August. Japanese consumer sentiment rose again in August, something it has been doing consistently since April. As we suspected, the private China factory PMI by S&PGlobal (Rating Dog) came in much more positively that the official version, and expanded at a rate that beat estimates, even if it is modest. How sustainable that improvement is will be interesting to see because input price inflation rose but output prices fell for first time in 2026 so far. And we should probably note that China's government debt is now at ¥100 tln for the first time (NZ$25.3 tln),107% of their GDP. And that is just their central government. (But to be fair, a notable part of that rise involves a shift from old opaque local government debt to a more transparent national treatment.) While that may seem high (and it is), the equivalent US federal debt level is 124% of their GDP. For New Zealand it is 49%, for Australia 34%. EU CPI inflation came in at 3.3% in August, the expected level, but up from 2.9% in July. All this rise was fuel cost related. Their core CPI rate actually dipped slightly to 2.4%. Meanwhile, German retail sales actually fell, and quite hard, down -2.5% in real terms in July from a year ago with the current month drop an outsized -3.4%, so the recent bite has been aggressive. In nominal terms there year-on-year levels are just level-pegging. Australian building consents were expected to fall in July and they did, and by about the expected amount, down -3.6% from June to remain up +9.0% from a year ago. House consents fell -4.2% but multiunit consents held little-changed (-0.4%). Still, that leaves the multiunit sector up almost +20% from a year ago. (Some of those are likely to have been Bathla developments in Western Sydney, so are unlikely to proceed now.) The UST 10yr yield is now just on 4.80%, up another +4 bps from yesterday at this time. The price of gold is now at US$4335/oz, and down -US$97 from yesterday at this time. Silver has fallen -US$1.50 to just under US$64.50/oz. Oil prices are up +US$4.50 at just over US$90/bbl in the US, while the international Brent price is just under US$94.50/bbl. The Kiwi dollar is down -30 bps from yesterday at just on 58.9 USc. Against the Aussie we are down -20 bps at 82.4 AUc. Against the euro we are also down -20 bps at 50.8 euro cents. That all means our TWI-5 starts today at just over 62.4, down -30 bps from yesterday. The bitcoin price starts today at US$77,297 and down -2.0% from yesterday at this time. Volatility over the past 24 hours has remained 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'll do this again tomorrow. Track 1219389 Monetization ID TFGEPGEI0LHEIJAI Audio soundtrack opening is licensed from Shutterstock, Track 1219389 Monetization ID TFGEPGEI0LHEIJAI

A higher rate future has financial market attention

Play Episode Listen Later Aug 31, 2026 6:13

Shutterstock Track 1219389 Monetization ID TFGEPGEI0LHEIJAI 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. Today we lead with news renewed fighting in the Persian Gulf from Trump's 'forever wars' is pushing oil prices up again and sentiment lower on the impending new shot inflation will get. So, the yield on the US 10-yr Treasuries rose again now to 4.76%, its highest since January 2025. with market bets rising for a US Fed rate hike later this month. But all the US news isn't downbeat. A surge in new orders has accelerated the Dallas Fed factory survey up sharply to its most positive level since January 2025 which was its best since the pandemic recovery, even it that was an isolated event. Price pressures were stable but markedly elevated, rising further for prices paid but easing slightly for prices received. Across the Pacific, and after the unexpected fall in June, Japanese retail sales surged back in July to be +4.4% higher than year-ago levels and restoring the strong gains they have been posting since March. In China, their factory PMIs for August improved marginally as expected but not by quite enough to avoid another contraction. Meanwhile their service sector PMIs were also expected to improve, but they didn't, staying with the same contraction they recorded officially in July. We need to note that these official surveys have been running more conservative than the private S&P Global alternatives recently. The S&P Global version is due out tomorrow for the factory sector, and on Thursday for the services sector. India said its Q2-2026 economic activity expanded +7.8% from a year ago, the same as in Q1-2026 and much better than was expected (+7.1%). Germany said it's consumer price inflation rate edged up to 2.9% in August, its highest since April, but below market expectations of 3.0%. In August fuel costs rose more than +10% but food was up only +0.1% from a year ago. In Australia, the Melbourne Institute's survey shows inflation expectations rose by 0.2 percentage points in August to 4.9%. This follows from a three-month period of moderating inflation expectations. Wage expectations also rose in August, after remaining static for a prolonged period. And staying in Australia, Cotality reported that house prices fell -0.9% in August from July, following a -1.2% decline in July. Overall, house prices are now -3.6% below their peak, although still +2.7% higher than a year earlier. The housing downturn has now spread across more capital cities and regional centers, and further policy tightening by the RBA points to tougher conditions ahead. Sydney and Melbourne again led the declines, falling -4.6% and -4.7%, respectively from this time last year, the only capital cities to now be lower on an annual basis. And of course, this comes at the same time NSW Bathla has essentially collapsed, waiting to see it it can get some lifeline loans to finish some in-progress developments. But essentially it is kaput. There is a pre-insolvency scramble underway over the dying carcass. And staying in NSW, they have had their warmest winter in more than 150 year of records. Now the whole east coast is getting ready for a sizzling summer, as strong as Europe is having. Essentially there was no ski season at Threadbo this year, for the first time ever. New Zealand should prepare for an influx of climate refugees. More generally, international air cargo volumes were up +4.7% in July from a year ago, up +5.2% in the Asia Pacific region. Interestingly, air cargo volumes into the giant US market were up more than +7%, but they shrank around their domestic market. Meanwhile international passenger travel actually fell in July, not by a lot to be sure, but a fall is unusual. Both Middle East and US travel shrank. International travel in the Asia Pacific region declined too even if not so pronounced. Australian domestic travel shrank in a similar manner. The UST 10yr yield is now just on 4.76%, up +4 bps from yesterday at this time, down -2 bps for the week. The 30 year yield is at 5.25%, also up +4 bps and almost back to its October 2023 levels again. The price of gold is now at US$4432/oz, and down -US$22 from yesterday at this time. Silver has held at just over US$66/oz. Oil prices are up +US$2 at just over US$85.50/bbl in the US, while the international Brent price is just on US$90.50/bbl. The Kiwi dollar is up +10 bps from yesterday at just on 59.2 USc. Against the Aussie we are holding at 82.6 AUc. Against the euro we are down -10 bps at 51 euro cents. That all means our TWI-5 starts today at just over 62.7, up less than +10 bps from yesterday. The bitcoin price starts today at US$78,879 and down a very minor -0.2% from yesterday at this time. 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'll do this again tomorrow. Track 1219389 Monetization ID TFGEPGEI0LHEIJAI Audio soundtrack opening is licensed from Shutterstock, Track 1219389 Monetization ID TFGEPGEI0LHEIJAI

Key decisions await in a big week ahead

Play Episode Listen Later Aug 30, 2026 7:57

Shutterstock Track 1219389 Monetization ID TFGEPGEI0LHEIJAI 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. Today we lead with news central banks are being forced to acknowledge that their measured approach to inflation control over most of 2026 just hasn't worked and they need a refreashed, tougher approach. Locally this week, the highlight will be Wednesday's full RBNZ Monetary Policy Statement. With inflation running at 4.1% and rising (it has risen every quarter since December 2024), every observer and financial markets are expecting a full +25 bps rise to 2.75%. The next review is on October 28 which is just over a week before the general election. So we will see just how focused the Breman RBNZ really is on weighing against inflation, even in the face of political pressure. We will get the next CPI result on October 22, and that will be a telling indicator. Financial markets currently price in another +25 bps OCR rise then, at a 60% chance. We will also get many updates about the local August residential reals estate market, and we will get July building consent data. In Australia, there will residential real estate updates too, building consent data, and they will reveal their Q2-2026 GDP expansion rate, expected to be up +1.6% from a year ago, much lower than the Q1-2025 expansion of +2.5%. In the US, the developing conflicts between the Fed's desire to rein in inflation, and the Trump Administration's actions to ignore that threat and to try and push down interest rates will increasingly be watched by markets. There will also be PMIs out pointing to economic activity changes, and the week will end with their August non-farm payrolls report which is currently expected to show a very minor +45,000 jobs expansion. In Canada there will be a rate review although no change is expected from the current 2.25%. They have a 3% CPI level, and a major challenge from their obnoxious neighbour to contend with. Japan will release a broad range of economic reports, including the latest industrial production, retail sales, consumer confidence, housing starts and household spending data. India will release GDP data (expect +7.1%). Malaysia will review its policy rate, but no change is expected from the present 2.75% And there will be PMIs everywhere. And that includes China. Over the weekend, Japan reported a 2.4% jobless rate in July, their lowest in more than a year and their second lowest since before the pandemic. And it seems Japan can still surprise. Births from January through June were 342,068, up +0.8% (+2,788 more) from the same period in 2025. It was their first rise for the first half of the year in 11 years. Malaysia said producer prices there rose at a very fast +9.7% rate in July, their fastest since the pandemic and before that since early 2017. India reported that its industrial production eased back from a +9.5% expansion rate in June to +7.3% in July. But this was still a better result than anticipated. Meanwhile, Indian bank loan growth has stayed extraordinarily high, up +18.3% from a year ago. In China, mirroring the Evergrande disaster, China Vanke's first-half loss widened to -¥16 bln as sales slumped and debt pressure built. Upcoming debt maturities may trigger the end of it. And the EU released the August results of its business and consumer sentiment surveys. The net outcome is improving sentiment, especially business sentiment. Only consumer sentiment remains low but it is marginally less so in August. In the US, in his Jackson Hole speech, Fed boss Kevin Warsh flagged that inflation in the American economy is too high but he offered no indication whether he favours keeping interest rates at current levels or pushing them higher. But he did restate that 2% is their inflation target. He gave no indication of rate policy but the inflation warning was enough for financial markets to conclude rate rises are more likely. Especially as he likely doesn't have the votes for a hold or cut. In the real American economy, the Chicago PMI fell sharply in August into a contraction. The fall was driven by declines in New Orders, Order Backlogs, Production and Supplier Deliveries. It was their first fall in four months and discouraging, suggesting the stockpiling trend may be ending as inventories are now well built. Meanwhile, the US non-farms payrolls data has gone through their annual adjustment. That says their previous reports of job growth were overstated by 79,000. And that is an adjustment of weak results in the first place. It is another discouraging signal. And the University of Michigan consumer sentiment August survey was updated too, confirming its early month reading, falling about -6% from last month and landing about -11% below a year ago. They noted continued worries that inflation will remain elevated for the foreseeable future. Current levels are near the post-pandemic lows. In fact they are near the low points this survey got in the pandemic. In Canada, they reported a revised Q2-2026 GDP expansion of +3.3% for the year. They noted that their household saving rate reached 3.7% in the quarter as growth in disposable income (+2.1%) outpaced nominal household spending (+1.7%). But they also flagged that the July expansion has vanished, no expansion in this latest month. Given the problems with their southern neighbour, it is hard to see an expansion continuing. The UST 10yr yield is now just on 4.72%, down -1 bp from Saturday at this time, down -2 bps for the week The price of gold is now at US$4454/oz, and down -US$8 from Saturday at this time, down -US$167/oz for the week. Silver has fallen -50 USc to just over US$66/oz and a -US$3.50 weekly fall. Oil prices are holding from Saturday at just under US$83.50/bbl in the US, while the international Brent price is just on US$88.50/bbl. The Kiwi dollar is unchanged from Saturday at just on 59.1 USc, down -70 bps for the week. Against the Aussie we are holding at 82.6 AUc. Against the euro we are up +10 bps at 51.1 euro cents. That all means our TWI-5 starts today at just over 62.6, essentially unchanged from Saturday, down -70 bps for the week. The bitcoin price starts today at US$79,010 and up +1.7% from Saturday at this time. 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'll do this again tomorrow. Track 1219389 Monetization ID TFGEPGEI0LHEIJAI Audio soundtrack opening is licensed from Shutterstock, Track 1219389 Monetization ID TFGEPGEI0LHEIJAI

What will Warsh say? or do?

Play Episode Listen Later Aug 27, 2026 6:37

Shutterstock Track 1219389 Monetization ID TFGEPGEI0LHEIJAI 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. Today we lead with news financial markets are awaiting a Kevin Warsh speech at the Jackson Hole symposium, specifically about how he sees the Fed's role when the US Treasury seems to be undermining it. What he says about the fight against inflation, if anything, will be revealing. This has markets hesitating today in anticipation. Although, equity markets are bullish off the strong Nvidia results. US initial jobless claims fell marginally last week, and by marginally more than seasonal factors would have anticipated. There are now 1.78 mln people on these benefits, little different to a week ago but -7.5% less than a year ago. The US merchandise trade deficit has come in at -US$119 bln in July, up US$17.4 bln from unusually high -US$101 bln in June and the -US$101 bln in the same month in 2025. Apart from the rush to beat upcoming tariffs just after Trump took office in early 2025, this latest result is a record high. Americans seem happy to pay these tariffs to get the products they need. Exports fell from June while imports rose on the same basis. At the same time, the stockpiling trend seems to be gathering pace. US retail inventories rose in July as did wholesale inventories and both at an unexpectedly faster pace. Both are now at record high levels. Retail inventories are +3.9% higher than year ago levels now, with wholesale inventories up +5.6% on that basis. There could be an unwelcome reckoning if firms come to decide they are over-stocked. History shows their boardrooms are usually unhappy with excessive stocks. Meanwhile the Kansas City Fed factory survey shows this with a little-changed report that is holding its expansion. New order levels are similar to last month but are falling for export orders. Input costs are rising faster than selling prices. There was a US Treasury 7 year bond auction earlier today where the median yield came in at 4.46% (4.51% high). That is more costly that the prior equivalent event a month ago. In Canada, they reported a surprise current account surplus of +C$8.8 bln in Q2-2026 from a deficit of -C$8.3 bln in the prior quarter and an expected -C$2 bln deficit. It is their first quarterly surplus since the 2022 and the largest since 2005. Across the Pacific, China said it's industrial profits rose more than +11% in July from the same month a year earlier. As good as that is, it was the softest pace this year. The Bank of Korea has raised its policy rate by +25 bps today to 3.00% in a second consecutive move up. They target a 2% inflation rate. Korea has inflation at 2.8% although it did dip in July. And the Philippine central bank raised its policy rate by +25 bps to 5%, all as expected. They target a 2-4% range and have current inflation at 6.2%. Taiwanese consumer sentiment was little-changed in August, staying better than it was earlier in the year. But from a long term perspective, it has been relatively low since the pandemic. Locally, after Wednesday's above expectation Australian CPI result - and plenty of evidence in that that non-fuel, less volatile items are rising in price faster now - we noticed an uptick in the pricing for a chance of a late-September rate hike by the RBA. True, it isn't an odds-on chance yet, but a notable one-day reaction. Currency markets rose on the prospects too. NAB is tipping a September rate hike now. And staying in Australia, household spending leapt +7.0% in July from a year ago, the fastest growth in the past ten years (apart from during the pandemic recovery). The +1.1% rise in July from June builds on the June +1.0% monthly rise, and the +1.2% May rise. This is impressive momentum. Financial markets had expected only a +0.4% monthly rise and a +4.4% year-on-year rise. It was a broad-based expansion in every sector other than for "furnishings & household equipment". Likely no one saw a result this positive coming. It will bolster bets the RBA will push through a rate rise sooner. Global container freight rates have stayed high, dipping just -1% over the past week. That puts them +111% higher than a year ago. Bulk cargo rates are up +10% for the week and nearing their yearly high again. From a year ago these rates are up +50%. The UST 10yr yield is now just on 4.67%, unchanged from yesterday at this time. The 30 year yield is at 5.19%, and also unchanged. The price of gold is now at US$4604/oz, and virtually unchanged from yesterday at this time. Silver has risen +US$1 to just over US$69/oz. Oil prices are up +US$1.50 from yesterday at just over US$84/bbl in the US, while the international Brent price is up the same at just over US$90/bbl. The Kiwi dollar is up +10 bps from yesterday at just on 59.5 USc. Against the Aussie we are down -20 bps at 82.7 AUc. Against the euro we are up +10 bps at 51.1 euro cents. That all means our TWI-5 starts today at just over 62.9, and little-changed from this time yesterday. The bitcoin price starts today at US$80,434 and up +2.5% from yesterday at this time. Volatility over the past 24 hours has remained 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'll do this again on Monday. Track 1219389 Monetization ID TFGEPGEI0LHEIJAI Audio soundtrack opening is licensed from Shutterstock, Track 1219389 Monetization ID TFGEPGEI0LHEIJAI

The US leaks momentum on inflation threats

Play Episode Listen Later Aug 26, 2026 5:02

Shutterstock Track 1219389 Monetization ID TFGEPGEI0LHEIJAI 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. Today we lead with news of more data that suggests the US economy is not regaining any momentum, and may be about to be tested by record high diesel prices. US mortgage application levels dipped again last week from the prior week, mainly due to much lower refinancing levels as the high (6.78%) mortgage interest rates stay firm at these levels and a one year high. Meanwhile US PCE inflation stayed up in July at 3.7% when it was expected to show a small dip. The month-on-month rise was much more than expected. Personal spending rose +5.8% while personal disposable incomes were up +4.2%.from a year ago. So the squeeze continues, and although masked by inflation, many households will be feeling it. And US diesel prices are now at record highs. US GDP Q2-2026 second estimate came in at a modest +1.5%, and unchanged from its first estimate. Marginally stronger consumer spending was offset by weaker investment and more imports. The US July durable goods order report came in positively, up +12.9% from the same month a year ago. But without aircraft or defense, it was up +8.7%. Capital goods orders on the same basis were up +13.5%, probably reflecting data center activity. US crude oil stocks were little-changed last week, a bit less than the modest rise expected. Diesel stocks have hit record lows. Meanwhile, Meta has agreed to an US$18 bln penalty to be paid over the next decade to resolve claims it designed its social media platforms to addict children. It will change the way it interacts with children. Four of the states who brought the court claim - California, Colorado, Kentucky and New Jersey - were expected to seek substantial civil penalties as wells. In China, they have China has opened applications for an ¥800 bln policy-based financing tool for local government projects to shore up its slowing economic growth. But there are questions about how much impact this will have in 2026. Singaporean industrial production extended its very positive run in July, up +5.8% from the same month a year ago and gains similar to most month in 2026. In Australia, inflation fell in July as expected but not by as much as expected. Their June 3.8% rate fell to 3.5% in July but still well above the expected 3.2% rate assumed by financial markets. That gave the AUD a bounce, likely on the basis that the RBA's tolerance for still-high inflation may be about to get tested. The next RBA rate review is on September 29 however, and the August CPI data won't actually be known by then (September 30) - by the markets, at least. The RBA's inflation target is "between 2 and 3 percent", but it has been over 3% consistently every month for more than a year now. Global wheat prices are up sharply again today, and to new post-pandemic highs, as Black Sea shipments from both Russia and Ukraine have essentially stopped and prospects for resumption look grim. The UST 10yr yield is now just on 4.67%, up +3 bps from yesterday at this time. The 30 year yield is at 5.19%, up +1 bp. The price of gold is now at US$4603/oz, down -US$45 from yesterday at this time. Silver has fallen -US$1 to just over US$68/oz. Oil prices are up +50 USc from yesterday at just over US$82.50/bbl in the US, while the international Brent price is unchanged at US$88.50/bbl. The Kiwi dollar is down -30 bps from yesterday at just over 59.4 USc. Against the Aussie we are down -50 bps at 82.9 AUc. Against the euro we are down -20 bps at 51 euro cents. That all means our TWI-5 starts today at just under 62.9, down -30 bps from this time yesterday. The bitcoin price starts today at US$78,459 and down -0.5% from yesterday at this time. Volatility over the past 24 hours has remained 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'll do this again tomorrow. Track 1219389 Monetization ID TFGEPGEI0LHEIJAI Audio soundtrack opening is licensed from Shutterstock, Track 1219389 Monetization ID TFGEPGEI0LHEIJAI

Markets see US as just a paper tiger on Iran

Play Episode Listen Later Aug 25, 2026 5:17

Shutterstock Track 1219389 Monetization ID TFGEPGEI0LHEIJAI 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. Today we lead with news the oil price has eased overnight on signs of new negotiations between the US and Iran, and relief that the US sanctions weren't as advertised. They exempted Chinese banks, for example. And China said it will support Iran. But first overnight, the Pulse dairy auction delivered higher prices from last week's full auction event - in USD terms at least. For example WMP was up almost +1%. But the rising NZD turned that into a -0.7% softening. In the US, ADP weekly private jobs update remains very low with less than +12,000 new jobs added over the past four weeks. Sales of new homes in the US were unusually low as well with the July level the lowest for that month since 2017 (apart from the pandemic 2022 drop). That puts them -6.5% lower than year-ago levels. The Richmond Fed's factory survey came in with a positive overall outcome in August, but lower than for July and the lowest since April. Re-shoring isn't a thing in the Mid-Atlantic states. The growth rate of prices paid and prices received rose in the month. Meanwhile their services survey in the region revealed slowing activity, with only slight increases in prices and costs. And that is consistent with the pullback in consumer sentiment as measured by the Conference Board in the US. It is measure that has been falling away since early 2025. There was a less well supported US Treasury 2 year bond sale overnight, but the yield dipped to 4.16% (4.20% high) from the prior equivalent event a month ago of 4.27%. In Canada, they reported lower wholesale sales in July, ending a run of expansions. The decline mainly reflects lower sales of agricultural supplies and minerals and ores. Otherwise little change. In the escalating trade war the US is waging on Canada, Canada has responded with 50% duties on American dairy products, steel, farm equipment, and appliances. And copper has risen to a new record high on the uncertainty surrounding US tariff policies. It isn't the only metal trading in the stratosphere of uncertainty. Tin is another example. Taiwan's July update of industrial production extended its outsized growth reporting (+26.9% from a year ago). And that was matched with high growth of retail sales there (+7.7%) Later today we will be watching the July CPI update from Australia where a fall in the rate from June's 3.8% to 3.2% is anticipated. Meanwhile, they are dealing with some major events. Firstly in NSW, a major home builder has collapsed. The Bathla Group has failed owing AU$3.6 bln in debt supposedly due to soaring construction costs which they can't recover just as a sharp decline in property sales hit them. Construction activity has frozen across approximately 15,000 homes, townhouses, and apartment developments currently underway. The vast majority of the AU$3.6 bln of debt is owed to private credit funds and non-bank lenders. There are sure to be cascading impacts. And bird flu is spreading faster now in Australia. So far more than 300 dead bird events have been confirmed out of 27,000 reports of unexplained dead bird events. The UST 10yr yield is now just on 4.64%, down -6 bps from yesterday at this time. The 30 year yield is at 5.18%, down -5 bps. The price of gold is now at US$4648/oz, up +US$12 from yesterday at this time. Silver has firmed +50 USc to just under US$69/oz. Oil prices are down -US$3 from yesterday at just over US$82/bbl in the US, while the international Brent price is just under US$88.50/bbl and down -US$3.50. The Kiwi dollar is up +20 bps from yesterday at just over 59.7 USc. Against the Aussie we are up +10 bps at 83.4 AUc. Against the euro we are also up +10 bps at 51.2 euro cents. That all means our TWI-5 starts today at just over 63.2, up +20 bps from this time yesterday. The bitcoin price starts today at US$79,195 and up +0.4% from yesterday at this time. Volatility over the past 24 hours has remained modest at just on +/-1.7%. You can get more news affecting the economy in New Zealand from interest.co.nz. Kia ora. I'm David Chaston and we'll do this again tomorrow. Track 1219389 Monetization ID TFGEPGEI0LHEIJAI Audio soundtrack opening is licensed from Shutterstock, Track 1219389 Monetization ID TFGEPGEI0LHEIJAI

US bully tactics widened after prior failures

Play Episode Listen Later Aug 24, 2026 3:40

US makes big economic threats at Iran. Iran blacklists tankers. US economic activity weakens. Canada gets new tariff threat. Singapore inflation up, baby bonus expanded. Audio soundtrack opening is licensed from Shutterstock, Track 1219389 Monetization ID TFGEPGEI0LHEIJAI

canada iran singapore tactics failures bullies shutterstock

Despite tough news, global PMIs mostly positive

Play Episode Listen Later Aug 23, 2026 8:38

Shutterstock Track 1219389 Monetization ID TFGEPGEI0LHEIJAI 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. Today we lead with news we head into the final week of the northern holiday season with financial markets reacting to tough news on multiple fronts. US missteps are catching up with them and that is driving higher interest rates and a lower USD, both a which involve an economic squeeze. Then there is the collapse the US-Canada trade relations which has pushed Canada to matching the new US tariffs. This will hurt both countries, Canada as expected, but the US more than they realise. Carney has brought back the Trudeau response, and this time Canadians have rallied around that reaction. Some significant parts of the US are going to get much higher prices. And as Canada supplies the most of its imported oil and gas, if Canada adds tariffs there, the impact on the US will be magnified. All this will be grist for the Jackson Hole symposium which will be on from Friday to Sunday (NZT). There will be some worried central bankers showing up, and that probably includes Kevin Warsh, likely feeling undermined by Scott Bessent. The outlook on global interest rates and long-term sovereign yields will again be a key focus this week as investors grapple with rising energy prices, increasing deficit spending, and soaring corporate debt. In the US it will be about personal income and spending, PCE inflation, and durable goods data for July, in addition to the key annual revision to nonfarm payrolls. Japan will release consumer confidence survey results and its jobless rate, while rate decisions are due in Korea and Thailand which are widely expected to keep their policy rates unchanged at 1% and 2.75%, respectively, while the Philippine central bank could deliver a +25 bps rate hike to 5% as the country continues to face elevated energy and food prices alongside recent wage increases. Locally it will be about Q2-2026 retail trade outcomes and current employment indicators, some mortgage and KiwiSaver data, and the week will end with the June update to the RBNZ's Dashboard. And in Australia, investors will watch July inflation data where an easing from 3.8% to 3.2% is expected. And Q2 capital expenditure and household spending figures will also drop this week In China, investors will focus on the National People's Congress Standing Committee meeting in Beijing from August 25-28, where authorities could signal additional policy support following a string of weak economic data. They will also release July industrial profit results. Over the weekend, China reported US$11.1 bln in foreign direct investment in July, which was half the US$22.8 bln in July 2025. Year to date, their foreign direct investment is running -8.8% lower than in the same period a year ago. And also over the weekend China said its forklift sales are going gangbusters in 2026, both for internal use and for export. CPI inflation rose to 1.9% in Japan in July, their highest since December 2025. (Food prices were up +3.5%.) While the headline rate and the core rate both remain below the Bank of Japan's 2% inflation target, the rising trend may be enough for them to raise their 1% policy rate at their next review on September 18, 2026. They have other reasons to raise their policy rate (like, defending the yen, yielding to the US, needing to get back to 'normal' at some stage, etc.) so this may swing it. Japanese business activity is expanding at its quickest rate for six months in August, according to the 'flash' PMI data released today. There were good gains for the factory sector, and these were bolstered by modest gains in their services sector. Of not was a steeper rise in new orders. Cost pressures continued to ease from June's recent record, but remained sharp overall, leading to another near-record increase in selling prices. Businesses are finding they can pass on the extra costs. The 'flash' August PMI's for India show rising activity, especially in their services sector. In the US, the August 'flash' PMI survey from S&P Global shows factory activity easing and now at a five month low. But the services sector is rising with a marginally stronger expansion. Input cost pressures have remained elevated but mainly due to rising fuel prices. Diesel is up +8.4% from a month ago, petrol up +2.2%. Consumer price inflation is biting harder now in the US. Trump announced he will temporarily ease beef tariffs to help lower prices. Local beef producers weren't impressed, warning the move would hurt efforts to rebuild herds. And industry observers say the move will have little effect on the high prices. For someone who claims to love free-market capitalism, he acts in a very interventionist, the-government-knows-best manner. Canada posted a good retail increase for the year to June, up +5.2% although this was a slowing from May. But their July result looks like it will fade somewhat. The weekend USMCA trade deal failure won't help of course. The EU consumer sentiment survey retailed its July improvement in August. It is still deeply negative, but less so that at any time since February. And the ECB updated its inflation expectations survey for July and that shows a minor decrease to 2.9% over the next twelve months, from 3.0% in June. Eurozone business activity continues to rise in August amid stronger manufacturing growth, with their factory PMI now at a 51 month high. According to the S&P Global 'flash' PMIs for August, growth in the Australian private sector is softer this month as the cost environment becomes more challenging in both the factory and services sectors. But both are still expanding. They are still getting rising new orders (in both sectors), but cost pressures have picked up in August. However the ability to pass those extra costs on retreated to its weakest of 2026. And in freight news, El Niño is having an impact on Panama Canal traffic volumes. The authority which runs it says it is reducing traffic levels to 32 ships per day from 36 currently, due to the low water levels. That is an -11% reduction. The UST 10yr yield is now just on 4.74%, unchanged from Saturday, up +5 bps for the week. The price of gold is up, now at US$4607/oz, down -US$14 from Saturday at this time, up +US$230 or +5.5% for the week. Silver has dipped -50 USc to just over US$69/oz. Oil prices are unchanged from Saturday at just over US$87/bbl in the US, while the international Brent price is still just under US$94.50/bbl and up +US$1. From a week ago these prices are +7% higher from then. The Kiwi dollar is little-changed from Saturday at just over 59.8 USc, up +90 bps for the week. Against the Aussie we are still at 83.4 AUc. Against the euro we are holding at 51.2 euro cents. That all means our TWI-5 starts today at just over 63.2, down marginally from Saturday on a yen shift, but up +80 bps from this time last week. The bitcoin price starts today at US$77,147 and down a minor -0.3% from Saturday, but up a whopping +23% jump from last week at this time. Volatility over the past 24 hours has also 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'll do this again tomorrow. Track 1219389 Monetization ID TFGEPGEI0LHEIJAI Audio soundtrack opening is licensed from Shutterstock, Track 1219389 Monetization ID TFGEPGEI0LHEIJAI

US debt worries mount

Play Episode Listen Later Aug 20, 2026 8:08

Shutterstock Track 1219389 Monetization ID TFGEPGEI0LHEIJAI 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. Today we lead with news we may be seeing the end of markets regarding US Treasuries as safe-haven assets – although to be fair it isn't clear what would replace it. Long-maturity US Treasury yields rose today to reverse the drop we noted yesterday. The yield on the US 10-year bond rose back towards the earlier 20-month high this week before the Bessent action, and the yield on the 30-year bond rose back too. A couple of points are worth making first before we review today's data updates. The first is that it has been the role of the Fed to do QE activity. Maybe Warsh isn't keen now because he is committed to shrinking the Fed's balance sheet. It grew because the Fed wanted to push down rates, and that came with the consequence of massive bond buying. In fact, they moved the needle with "whatever it takes" to the tune of US$3.5 tln in the GFC and the subsequent stabilisation. And then another US$4.5 tln for the pandemic response that started in 2020. They have only paid down US$2.5 tln since. Warsh wants to get that significatly lower. Now Bessent wants to do his own QE, in his case to avoid the political consequence his boss will face - at least push it off "till later'. But his announcement talks of a 'doubling', and that is only an extra of +$2 bln. The Fed was effective with trillions. But Bessent wants to do the same thing with billions. Wall Street hedge funds will be looking for a Bessent put, and unless he delivers his objective the hole thing might collapse rather quickly. Bessent should know - he was a billionaire hedge fund manager on Wall Street who made his fortune gaming the system. The Bessent initiative hardly lasted one day. And this comes as the US Treasury's latest daily cash and debt balances statement shows public debt now exceeds US$40 tln (Table IIIC). Why is this important for us? Well, the world's economy is still being driven by US middle-class consumer demand, the only economic engine large enough to shift the global needle. And we rely on a healthy upbeat global economy. China says it is making an attempt to duplicate this internal consumer demand, but by all accounts it is not succeeding, in part because Chinese consumers are still very risk averse and prioritising savings over consumption, and more so recently. Meanwhile, initial jobless claims in the US fell to 172,000 last week, a slightly larger dip than seasonal factors would have indicated. There are now 1.8 mln people on these benefits, also marginally lower than the week before. The August Philly Fed factory survey came in much stronger than expected, building on an outsized July expansion. This is all about current activity. Oddly, new order levels fell. But price pressures did moderate this month. The Conference Board said its Leading Index for the US ticked up in July, marking the fourth increase over the past six months. Most components were positive in July except consumer expectations, which continued to be a notable drag. In Canada, their July producer prices index rose from the prior month to be -12.4% higher than year ago levels. Their raw materials index is up more than +18% on the same basis. Across the Pacific, Japan said its exports swelled +23% in July from a year ago and to an all-time record high, boosted by AI-related semiconductors and data center equipment. Meanwhile, imports were up almost +28%, boosted by fuel imports which were up more than +53% in value. and total imports also hit a new record high. The net was a small trade deficit on merchandise. China held its key lending rates at ultra low levels in the regular monthly update. But these very low rates aren't exactly generating a boom, more just holding things together. The People's Bank of China kept its key lending rates at these record lows for a 15th straight month. And that is what analysts were expecting. And remember Evergrande? Well yesterday a Chinese court sentenced its founder and boss to life imprisonment for "massive fraud". Orders for Taiwanese exports soared +62% in July from a year ago to a new record high of US$98 bln. That follows an outstanding +59% jump in June. Booming global demand for AI-related and technology products continued to fuel overseas sales. This is on top of a July 2025 increase of +21% which at the time seemed like an outstanding achievement. Malaysian exportsjumped an outstanding +38% in July from a year ago to a record high. This was led my electronic exports to the US. Meanwhile, their imports rose +36%, with the fastest rises from India, South Korea, and then China. In Europe, German producer prices rose in July too, only at a +3.0% year-on-year rate but that was their fastest since April 2023. Australian inflation expectations rose by 0.2 percentage points in August to 4.9%. This follows a three-month period of moderating inflation expectations. Wage expectations also rose in August, after remaining static for a prolonged period. Staying in Australia, full-time jobs rose +16,300 in July but part-time jobs fell -32,200 in the month for a new decrease in employment levels. So instead of the expected +15,000 rise in jobs, they had a -15,800 net fall. While this may seem like a big movement, in fact the June positive result was quite elevated so a leveling out is probably to be expected. Global container freight rates were up +4% last week from the prior week to be double what they were a year ago. Outbound rates from China to the US drove the increase with those up +9% for the week, up +180% from a year ago. Meanwhile bulk cargo rates fell -7.5% this past week to be +40% higher than year-ago levels. The UST 10yr yield is now just on 4.70%, up +5 bps from this time yesterday. The 30 year yield is at 5.24% and up +4 bps. The price of gold is up sharply, now at US$4520/oz, up +US$17 from yesterday at this time. Silver has risen another +US$2 to just over US$68. Oil prices are up US$1 from yesterday at just over US$86.50/bbl in the US, while the international Brent price is now just over US$93.50/bbl and up +US$2. The Kiwi dollar is up +10 bps from yesterday at just over 59.4 USc. Against the Aussie we have risen +30 bps to 83.6 AUc. Against the euro we are up +10 bps at 50.9 euro cents. That all means our TWI-5 starts today at just over 62.9, up +10 bps from this time yesterday. The bitcoin price starts today at US$72,813 and up another large +6.8% from yesterday. Volatility over the past 24 hours has also been high at just on +/-3.5%. You can get more news affecting the economy in New Zealand from interest.co.nz. Kia ora. I'm David Chaston and we'll do this again on Monday. Track 1219389 Monetization ID TFGEPGEI0LHEIJAI Audio soundtrack opening is licensed from Shutterstock, Track 1219389 Monetization ID TFGEPGEI0LHEIJAI

Bessent tries to screw the scrum

Play Episode Listen Later Aug 19, 2026 4:28

Shutterstock Track 1219389 Monetization ID TFGEPGEI0LHEIJAI 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. Today we lead with news the Trump Administration has been unnerved by the rising yield investors are demanding for their long-dated bonds. Thy have now moved to "provide liquidity support" for the UST 30 year bond, effectively spending deficit dollars to bid the yield down and the price up on secondary markets. They didn't like the free-market signals, so they are using resources to twist them. Bond professionals are sceptical today's move is anything but a short-term salve because they are still raising huge new funds to support their deficit spending, more than US$½ tln in just the past 60 days. It is a move that has seen the USD fall, gold rise, and pushed up the price of commodities including crude oil. Bitcoin sparked back into life with a sharpish rise too. Elsewhere today, the minutes of the July Fed meeting were released today, the one where there were three dissenters all who wanted to raise rates to counter inflation threats. And it also revealed many non-voting members supported hiking rates too. But to be fair subsequent data has shown that their labour market is cooling rather faster than they anticipated, and that inflation has dipped slightly. It is still well above their policy target however. Today's Treasury interventions and the related inflation-inducing market reactions will be being watched by the twelve voting members closely. Meanwhile, US mortgage applications fell slightly last week, staying weak, and back to levels they were at in the first half of 2025. And US commercial crude oil stocks rose sharply last week taking the rising run to three straight weeks. However, their strategic reserves fell again and is now a levels so low that there are concerns about the physical infrastructure. The USMCA renegotiation deadline with Canada has been pushed back a few days. The Americans say it is because a deal is close. The Canadians say there is still details to be agreed although a deal is close and one far different to the "50%" threat. It will be interesting to see how the Canadian dairy sector fares in all this. The exchange rate market reaction to the US Treasury move has taken the pressure right off the Japanese yen. Japanese machinery orders continued their yo-yo pattern in June, now up +16.9% from a year ago (excluding volatile items). Export orders were particularly strong. In Australia, Big Tech is raising bond financing to support their global AI rollout ambitions. Google raised more than AU$5 bln yesterday after being flooded with more than AU$18 bln in market offers. This is a honeypot sure to attract more Big Tech borrowers. The UST 10yr yield is now just on 4.65%, down -6 bps from this time yesterday. The 30 year yield is at 5.20% and down -8 bps. The price of gold is up sharply, now at US$4503/oz, up +US$150 from yesterday at this time. Silver has risen +US$2 to just over US$66. Oil prices are up another +50 USc from yesterday at just over US$85.50/bbl in the US, while the international Brent price is now just over US$91.50/bbl. The Kiwi dollar is up +50 bps from yesterday at just under 59.3 USc. Against the Aussie we have risen +40 bps to 83.3 AUc. Against the euro we are little-changed at 50.8 euro cents. That all means our TWI-5 starts today at just under 62.8, up +50 bps from this time yesterday. The bitcoin price starts today at US$68,163 and up a sharp +5.4% from yesterday. Volatility over the past 24 hours has also been high at just on +/-3.7%. You can get more news affecting the economy in New Zealand from interest.co.nz. Kia ora. I'm David Chaston and we'll do this again tomorrow. Track 1219389 Monetization ID TFGEPGEI0LHEIJAI Audio soundtrack opening is licensed from Shutterstock, Track 1219389 Monetization ID TFGEPGEI0LHEIJAI

US economy losing momentum

Play Episode Listen Later Aug 18, 2026 5:04

Shutterstock Track 1219389 Monetization ID TFGEPGEI0LHEIJAI 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. Today we lead with news global oil prices have risen again with no end to Trump's Hormuz adventure. In something of a gigantic own-goal, the US economy is losing momentum rather quickly now. But first, the overnight full dairy auction came in better than the futures market had signaled, up +2.3% from the prior full event. This was largely driven by the milk powder gains with WMP up +3.0% and SMP up +7.6%. However, most of the milk fats fell. The overall gains in NZD were slightly better, up +2.6%. But despite this recent turn higher, prices are still almost -9% lower than year-ago levels, even if they are up almost +10% from the start of 2026. In the US, the latest weekly jobs update from ADP has stayed low with less than a +10,000 gain over the past four week. In contrast to the positive July factory report in the New York state region we noted yesterday, their services survey in the same region wasn't very good. The business climate index remained deeply negative, with almost half of respondents reporting unfavourable business conditions. US industrial production data for July was modestly positive from June and that has resulted in a +1.1% gain from a year ago, although lower than the June +1.3% expansion. US pending home sales were lower in July, both from June, and from a year ago. There is no spark in evidence in this sector, and perhaps not surprisingly when home loan interest rates are high at 6.8% and likely to rise from here. Every region is posting both month-on-month and year-on-year declines now. US housing starts fell back sharply in July, down -13.5% from year-ago levels. In fact, the last time they had a July this low was in 2019. And in Canada, they also reported a sharp drop in new housing starts in July, their lowest for that month also since 2019. But July housing market sales actually rose and delivered the highest levels they have had in 2026 (even if this isn't a particularly high bar). Meanwhile, negotiations between Canada and the US over Trumps 50% tariff threat seem to be going nowhere, and they are due to come into effect tomorrow. Interestingly, included in the stoush is Canada's aluminium exports and if they are tariffed, the hurt to US businesses will be significant. In China, they have a slowing momentum too. Households are clearly worried because they hare paying down debt faster and prioritising cash reserves in the face of a glum outlook. In Australia, their consumer sentiment has improved from low levels but it is still net-negative and still below last year's level at this time. The improvement was driven by mortgages holders who were relieved that the RBA didn't increase rates at its last decision. The survey also shows house price expectations declined as the housing market weakened. But renters are less likely to expect price falls and are more downbeat about home purchases. The UST 10yr yield is now just on 4.71%, down -2 bps from this time yesterday. The price of gold is falling back, now at US$4353/oz, down -US$30 from yesterday at this time. Silver has fallen -US$ to just under US$64. Oil prices are up another +US$1 from yesterday at just over US$85/bbl in the US, while the international Brent price is now just on US$91/bbl and up +50 USc. Hormuz transits have stayed very low. There has been only one crude tanker and 4 cargo ship exiting over the past 24 hours (2 dark with transponders off) and eight entering for new loads (3 dark), again all Iran-linked. There have been deadly attacks on a few of these ships crossing. The Red Sea activity is still only about 20 exits at the Yemen chokepoint, little-change. The Kiwi dollar is down -25 bps from yesterday at just under 58.8 USc. Against the Aussie we have dropped -20 bps to 82.9 AUc. Against the euro we are down -25 bps at 50.8 euro cents. That all means our TWI-5 starts today at just on 62.3, down -30 bps from this time yesterday. The bitcoin price starts today at US$64,667 and up +0.7% from yesterday. Volatility over the past 24 hours has also 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'll do this again tomorrow. Track 1219389 Monetization ID TFGEPGEI0LHEIJAI Audio soundtrack opening is licensed from Shutterstock, Track 1219389 Monetization ID TFGEPGEI0LHEIJAI

Long-term yield warning signals grow stronger

Play Episode Listen Later Aug 17, 2026 5:36

Shutterstock Track 1219389 Monetization ID TFGEPGEI0LHEIJAI 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. Today we lead with news Iran has decided to shift its policy from defensive to "fully offensive" due to the deadlock in efforts to agree a permanent end to its war with the United States, a senior Iranian official told Reuters overnight. Meanwhile, Trump has threatened to bomb Oman, a Gulf emirate and until recently an ally. All this is unnerving bond markets with the yield on the US Treasury 30 year bond now at a 22 year high. And they aren't the only long bond yields to rise. Its a trend of higher money costs that is probably only getting started. However domestically in the US, there have been two third-tier data items out today, and both somewhat positive. The NAHB home builder sentiment survey increased very slightly in August from its unusual July low. But it still remains lower than foir most of 2026 as the core affordability pressures haven't really gone away. Meanwhile, the NY Fed's regional Empire factory survey was more positive in its August report with reporting strong current activity and new order flows stayed positive. Employment hardly changed however, and input cost increases rose fast again even if prices received eased. Meanwhile, Canadian inflation was reported back at 3.0% for July, a bit higher than the 2.9% expected and possibly bringing a rate hike there back into play. Rising fuel prices are a key driver here. Across the Pacific in Singapore, they reported very strong July export growth, up +24% from a year ago to a new all-time monthly July record of S$76 bln but not quite eclipsing their June levels. This is all based on the export of electronic equipment. Their big export destinations are the US, South Korea, Thailand, Taiwan and India. This exporting strength enabled them to post a very large trade surplus in July. (Imports from China were up, but nowhere near enough to account for the export gains overall. So this isn't a re-export story of the paranoid type.) Japan reported a softer economic activity expansion in Q2-2026 than expected. Analysts had expected their GDP to grow by +2% and up from +1.9% in Q1. But the data released today only shows a +1.1% expansion. But today's data is preliminary and may well be revised higher. Japanese industrial production rose +1.9% in June from May and exceeding the earlier flash indication (which was very good on its own), and far exceeding the May +0.1% rise. This was the third consecutive monthly expansion and the strongest growth since January. And it took the year on year expansion up by an impressive +4.9%. China's industrial production was claimed to be up +4.5% in July from a year ago and basically meeting targets. Within that, they claim hi-tech +16.9% on the same basis. But just like most month before they claim they are doing this with electricity production up only +1.9% in July from the same month in 2025. It seems very implausible, the only country with fast growing industrial output with essentially no growth in electricity used - and over the very long haul. More realistically, China said its retail sales were up only +0.6% in July from a year ago. According to these official sources. China house prices are falling less now. New housing was down -3.2% from a year ago, essentially unchanged from June. In fact many more cities had no change or a small increase especially top-tier cities. Second tier cities aren't getting the same boost however. Existing home sales prices are easing less too. The UST 10yr yield is now just on 4.73%, up +3 bps from this time yesterday. The 30 year yield is at 5.31% and up +4 bps, and that is its highest in more than 20 years. The price of gold is rising, now at US$4413/oz, up +US$37 from yesterday at this time. Silver has risen +US$1.50 to just over US$66. Oil prices are up +US$1.50 from yesterday at just over US$84/bbl in the US, while the international Brent price is now just on US$90.50/bbl and up +US$2. The Kiwi dollar is up +10 bps from yesterday at just on 59 USc. Against the Aussie we have dopped -10 bps to 83.1 AUc. Against the euro we are up +10 bps at 51 euro cents. That all means our TWI-5 starts today at just on 62.6, up +10 bps from this time yesterday. The bitcoin price starts today at US$64,245 and up +1.8% from yesterday. Volatility over the past 24 hours has also 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'll do this again tomorrow. Track 1219389 Monetization ID TFGEPGEI0LHEIJAI Audio soundtrack opening is licensed from Shutterstock, Track 1219389 Monetization ID TFGEPGEI0LHEIJAI

The two top dogs show signs of limping

Play Episode Listen Later Aug 16, 2026 7:41

Shutterstock Track 1219389 Monetization ID TFGEPGEI0LHEIJAI 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. Today we lead with news the US economy is starting to show signs of exhaustion - just as the Chinese economy looks like it can't actually transition to one where internal demand replaces their industrial exports engine, as they were planning. But locally this week it will be all about how July retail sales turned out, and an update on our June population. And there will be a rush of earnings reports out this week from listed companies. In Australia we will get their July labour market update, and both the August Westpac consumer confidence survey results, along with an update of inflation expectations. Globally. te ongoing standstill between Iran and the US should continue to dictate energy prices and influence global interest rates. Rates will also take the spotlight with minutes from the last divisive meeting of the Federal Reserve, which included three dissents. More US data is expected to confirm their slowing economy. In Japan there will be a raft of data updates for the world's fourth largest economy, including for GDP, exports, inflation, machinery orders and flash PMI data. Indonesia and Sweden will review policy rates and settings this week. In China, July data released this week will include industrial production, retail sales, house prices, fixed asset investment and their unemployment rate. The People's Bank of China is also widely expected to leave its one- and five-year loan prime rates unchanged at 3% and 3.5%, respectively This will come even though they have surprised with their bank lending actually contracting in July, only the third time ever this has happened and by far the largest retreat. Net new yuan loans fell by -¥340 bln in July when a weak no-change was expected (actually a minor +¥45 bln). July is often a lowish month for new bank lending but this latest data represents some real weaknesses. A slowing economy and poor consumer sentiment, particularly for housing, limited the demand for loans. About -¥460 bln of this fall was for consumer debt. But the swing also reflects the downturn for the traditional business sectors of the economy. Their tech sector commonly raises cash in the bond market instead of bank loans. So within this result there may be evidence of a structural shift. Taiwan said its economic activity came in +12.9% higher in Q2-2026 from a year ago, lower than the +15.4% rise in Q1-2026.GDP. It was still the second-best growth pace they have recorded in almost 50 years. Malaysia said its economic activity expanded +6.0% in Q2-2026, a rise from the +5.4% in Q1-2026 and better than the expected +5.7%. In India, the bank lending impulse has the taps open fully, with lending up more than +19% at the end of July from the same point a year ago. This is a new modern record rise rate, and to record levels. Across the Pacific, US retail sales took an unexpected dip in July from June. They fell -0.6% on that basis when a +0.1% rise to compliment June's rise was expected. This is a big miss and was the first decline since October 2025 and the largest in over a year. Weaker sales at online retailers, car dealers, petrol stations and electronics stores shifted the needle, so it was a broad based dip. From a year ago, these July sales were still up +5.2% from earlier gains. Also dipping was US consumer sentiment, but this is for August, so the dour mood is extending. The widely-watched University of Michigan survey came in back at levels that followed the US attacks on Iran, so the July rise was an anomaly. A small easing was expected, but not one this big. Year-ahead inflation expectations ticked up from 4.2% in July to 4.3% this month. Inflation and inflation expectations are key for the Fed. The new boss Kevin Warsh may not want to talk about the elevated threats, but other regional governors are, some who vote. The Atlanta Fed's boss isn't one of those but she says inflation is too high and risks staying like that and embedding unless the Middle East situation resolves quickly. The Chicago Fed's boss is worried too. Current CPI is 3.4% officially, but the Cleveland Fed nowcasts the PCE measure of inflation and their latest update has it at over 3.7%. These levels are a long way from the mandated 2% policy rate and Warsh is likely to get out-voted when they next meet in Mid-September. Financial markets currently price in one chance in three of a +25 bps rise then. And for the record, current US petrol prices are now +5.7% higher than month-ago levels. Diesel is +11% higher on that same basis. Their inflation threat is not receding. Meanwhile the EU reported that Q2-2026, economic activity rose +0.4% in the euro area and by +0.5% in the overall EU compared with the previous quarter, up +1.0% and +1.2% respectively from a year ago. So recent activity is picking up, although in a way that was broadly anticipated. The UST 10yr yield is now just on 4.70%, up +1 bp from this time Saturday, up +5 bps for the week. The price of gold is stable, now at US$4376/oz, up just +US$2 from Saturday, up +US$39 from this time last week. Silver has held at just over US$64.50/oz, up a net +US$1 for the week. Oil prices are unchanged from Saturday at just under US$82.50/bbl in the US, while the international Brent price is now just on US$88.50/bbl. A week ago these prices were US$78 and US$83.50/bbl respectively, so a +6% weekly rise. The Kiwi dollar is little-changed from Saturday at just under 58.9 USc and unchanged for the week. Against the Aussie we are holding at 83.2 AUc. Against the euro we are still at 50.9 euro cents. That all means our TWI-5 starts today at just over 62.5, unchanged from this time Saturday and very similar to a week ago. The bitcoin price starts today at US$63,102and up +0.4% from this time Saturday, down -2.6% for the week. Volatility over the past 24 hours has also been very low at just on +/-0.3%. You can get more news affecting the economy in New Zealand from interest.co.nz. Kia ora. I'm David Chaston and we'll do this again tomorrow. Track 1219389 Monetization ID TFGEPGEI0LHEIJAI Audio soundtrack opening is licensed from Shutterstock, Track 1219389 Monetization ID TFGEPGEI0LHEIJAI

Markets & data delivers mixed messages

Play Episode Listen Later Aug 13, 2026 5:56

Shutterstock Track 1219389 Monetization ID TFGEPGEI0LHEIJAI 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. Today we lead with news ship traffic in the Hormuz Strait is now at a complete standstill. But oil prices have eased slightly all the same. So, Wall Street rose and to new record highs. In the US, there were +187,000 initial jobless claims last week, a slightly larger increase than seasonal factors can account for. There are now just over 1.8 mln on these benefits, a fall from last week as the very much tighter qualification requirements keep people off these unemployment programs. US producer prices came in slightly lower than expected for July, up +4.7% from a year ago, down from +5.5% in June and lower than the +4.9% expected. A notable fall in July fuel costs offset all other rises in the month. There was a well supported US Treasury 30 year bond auction earlier today, but investors wanted and got higher yields. They came in at a median 5.16% (high 5.22%) which is a 25 year high and something of a warning to the US Administration. This was up from the prior equivalent event median of 5.01% a month ago. Meanwhile, Cleveland Fed President Hammack restated her view that the ‌US central bank should raise rates immediately to bring down too-high inflation and restrain business growth and investment. She is a current FOMC voting member. She said she "lacks confidence" the current do-nothing policy will get inflation back to its target. Meanwhile the Richmond Fed boss Barkin says he is happy to wait. Barkin is not a current FOMC voting member. In Japan, their central bank wants to raise its 1% policy rate from here, and reports indicate that it has government backing for the move now. It could come at the next review in mid-September. Markets have priced in a 75% chance. Japanese producer prices have been rising fast recently and were up 7.2% in July from a year ago. But there was essentially no rise in July from June, so they are starting to see some heat dissipate. India reported strong exports, its third highest monthly total ever, in July, and up +19% from the same month in 2026. But they also reported record high imports, driven by fuel imports. In the EU. euro area industrial production rose in June, very slightly (+0.1%), when a fall (-0.8%) was expected. In the wider EU region, the gain was even better. Production of consumer goods led the way with a strong June result. Gains in Denmark, Poland and Finland were notable. Germany and France dipped. In Australia, regulators there are warning that online brokers are targeting retail investors with complex or high-risk products without clearly disclosing their risks or conducting proper onboarding, leaving those who respond exposed to risky products that could see them lose their investments within hours. New semi-annual pay data out yesterday in Australia revealed a softening trend in the private sector. Overall average weekly ordinary time earnings for full-time adults were AU$2,084 in May, up just +1.6% overall in the period, up +3.7% for the year. These are the slowest increase rates since 2022. Rises in public sector pay are running at nearly twice the pace of the private sector. Recall, CPI inflation there was at 3.8% in the year to June - so no real gains. Global container freight rates were up a mere +1% last week from the prior week but are +85% higher than year-ago levels. That weekly data masks sharply higher rates to the US from China, offset by lower rates from China to the EU. Bulk cargo rates fell -4.2% in the past week from a cycle high and are now +45% higher than year-ago levels. The UST 10yr yield is now just on 4.63%, down -5 bps from this time yesterday. The price of gold is falling, now at US$4357/oz, down -US$60 from yesterday. Silver has fallen almost -US$1 to just over US$64.50/oz. Oil prices are down -US$1 from yesterday at just under US$82/bbl in the US, while the international Brent price is now just under US$88/bbl. Hormuz transits have virtually vanished. There has been no crude tankers and only 1 cargo ship exiting over the past 24 hours (0 dark with transponders off) and just two entering for new loads (0 dark), again all Iran-linked. The Red Sea activity is now less than 10 exits at the Yemen chokepoint. The Kiwi dollar is down another -10 bps from yesterday at just under 58.5 USc. Against the Aussie we are holding soft at 82.9 AUc. Against the euro we have dipped -10 bps to 50.7 euro cents. That all means our TWI-5 starts today at just under 62.1 which is also down -10 bps from this time yesterday. The bitcoin price starts today at US$63,141 and down -0.4% from this time yesterday. Volatility over the past 24 hours has also 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'll do this again on Monday. Track 1219389 Monetization ID TFGEPGEI0LHEIJAI Audio soundtrack opening is licensed from Shutterstock, Track 1219389 Monetization ID TFGEPGEI0LHEIJAI

US inflation little-changed, taking pressure off the Fed

Play Episode Listen Later Aug 12, 2026 5:22

Shutterstock Track 1219389 Monetization ID TFGEPGEI0LHEIJAI 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. Today we lead with news the pressure is off the US Fed from inflation threats, temporarily at least. First today, and as markets had expected, US CPI inflation came in at 3.4% in July, dipping from 3.5% in June. Food prices were up +3.0% from a year ago, petrol prices up more than +24%. From June petrol prices fell -2.9% however, which was a bit more than expected. (In August, petrol prices dipped slightly in the first week, but have since started rising again.) Rents were up +3.2%. Electricity prices were up +4.2%. US core inflation - without food and energy - was up +2.5% and this is probably the Fed's get-out-of-jail card. US PCE July inflation data is next due August 27. US mortgage applications recovered notably last week, up +3.6% from the prior week after four of the prior six weeks were decreases. The rise was driven by refinance activity, borrowers who could not wait any longer and taking advantage of a very minor dip in mortgage rates to 6.77% (which will seem high to our readers). Last week, the US reported a huge surge in crude oil stocks, the larges weekly rise in more than three years. It wasn't expected - in fact another retreat was expected. It is not clear why, because it wasn't driven by imports, according to this data. Strategic reserves will next be reported at month-end. The August USDA WASDE report has raised its estimates for beef imports in 2026 and 2027, and lowered its expected milk prices marginally. The US Treasury reported a much larger budget deficit for July than expected, and the expected July deficit was outsized to start with. They ended up with almost a -US$½ tln deficit in the month alone. The public mismanagement is now epic. For their fiscal year to September, they will be reporting a deficit of at least US$2 tln (-US$1.95 tln over the past 12 months), easily a new record. Trump's swamp creatures are helping themselves. Meanwhile, a well-supported UST 10yr auction delivered a yield of 4.63% today (high ofg 4.68%), compared to 4.53% at the prior equivalent event a month ago. Canadian building consents jumped notably in June, up +18% from the same month a year ago driven by non-residential construction. Residential construction rose too, just not as sharply as the commercial sector. In Japan, the Reuters Tankan index for manufacturers rose in August to its highest reading since March. Leading the mood improvement was solid semiconductor demand. But the chemicals also rose along with the metal and machinery sector. Non-manufacturers' sentiment also rose, buoyed by strong domestic consumption. This survey likely points to a similar rise in the official Tankan survey that will come later in August. Japanese machine tool orders continued their very strong growth in July, up +50% from a year ago and which the value wasn't a record, it was very close. These orders have taken off since March 2026. Demand was huge from both domestic and export customers. China's vehicle sales slipped below 2.5 mln in July and recorded a year on year dip of -0.3%. But it is the September to December period when their domestic vehicle sales usually peak. The UST 10yr yield is now just on 4.67%, dipping -2 bps from this time yesterday. The price of gold is holding at US$4417/oz, up +US$51 from yesterday. Silver has risen +US$1 to just over US$65.50/oz. Oil prices are down -50 USc from yesterday at just under US$83/bbl in the US, while the international Brent price is now just over US$88.50/bbl. Hormuz transits are still very low. The Kiwi dollar is down -25 bps from yesterday at just under 58.6 USc. Against the Aussie we are down -40 bps at 82.9 AUc. Against the euro we have retreated -20 bps to 50.8 euro cents. That all means our TWI-5 starts today at just on 62.2 which is down -30 bps from this time yesterday. The bitcoin price starts today at US$63,420 and down a -0.2% from this time yesterday. Volatility over the past 24 hours has also 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'll do this again tomorrow. Track 1219389 Monetization ID TFGEPGEI0LHEIJAI Audio soundtrack opening is licensed from Shutterstock, Track 1219389 Monetization ID TFGEPGEI0LHEIJAI

Ignoring Hormuz & hoping for the best

Play Episode Listen Later Aug 11, 2026 5:41

Shutterstock Track 1219389 Monetization ID TFGEPGEI0LHEIJAI 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. Today we lead with news Iran says the Strait of Hormuz will remain closed until the US accepts its conditions. So, stalemate there. However, financial markets are kind of shrugging off these risks. Pakistan claims both sides are still talking however. First up today, the overnight dairy Pulse auction brought a stabilisation in prices with the powders rising about +2% and the milk fats little-changed from last week's full dairy auction. In the US, the ADP weekly jobs monitoring of private payrolls continues to slide, and is under +10,000 and its lowest level since the Christmas holiday season. US existing home sales fell -1.7% in July from June, to be now just +1.7% higher than year-ago levels. US household debt data shows it having topped out with the June quarter lower than the March quarter, which itself was lower than the December 2025 year end level. This is essentially because standard mortgage debt levels fell. But home equity loans rose, as did credit card debt, and car loans. Delinquency rates for credit card debt and car loans remained elevated but didn't get worse in this Q3-2026 data. Sentiment in the US SME sector rose in July, but only back to levels that it had prior to the start of Trump's war on Iran. It is now little different to levels they had from the start of 2025 until March 2026. Eyes are now turning to tomorrow's US inflation data for July. This is expected to stay high at 3.4% and only marginally lower than June's 3.5% and as such it will put pressure on the Warsh-led Fed to move to get inflation back into its policy band around 2%. There seems little likelihood of any progress without some policy action. Across the Pacific, Singapore's economy grew +5.9% in Q2-2026, slowing from a +6.3% expansion in Q1 which was their strongest annual growth since Q3-2024. But this latest updated exceeded advance estimates of a +5.7% expansion. In Malaysia, industrial production slowed again in June and is now 'only' +6.5% higher than year ago levels. It was +8.3% higher on that basis in the month before. But their factory production was up almost +10% on the year-ago basis and that is an accelerating rate. It has been their mining sector that is the one that is falling away. In Australia, the rebound in business confidence as tracked in the influential NAB survey stalled in July as Middle East uncertainty and oil price volatility continued to weigh on sentiment. Meanwhile business conditions showed signs of stabilising after weakening earlier in the year. A Westpac survey for the same period showed the same thing. The RBA has left its cash rate target at 4.35% as widely expected. But is has raised expectations that hikes could come soon if inflation does not retreat in the way they want, but only if market conditions don't move first as they need. One thing they do expect is lower house prices and that will help the affordability crisis. Abd we should probably note that aluminium prices are on the rise again. Although not back to their record high levels in early June, they have shifted sharply up in the past week, perhaps due to their central role in the US-Canada trade discussions. It is a key card Canada holds over the US. Trump's punitive 50% tariffs on Canada are due to kick in on August 20 (NZT). The UST 10yr yield is now just on 4.69%, dipping -1 bp from this time yesterday but essentially holding its new level. The price of gold is holding at US$4366/oz, up merely +US$2 from yesterday. Silver has dipped -50 USc at just over US$64.50/oz. Oil prices are up +US$1.50 from yesterday at just under US$83.50/bbl in the US, while the international Brent price is now just under US$89/bbl. Hormuz transits are still very low. There have been two crude tankers and only 1 cargo ships exiting over the past 24 hours (1 dark with transponders off) and seven entering for new loads (3 dark), again all Iran-linked. The Red Sea activity is where the focus is shifting and still low with less than 20 either way at the Yemen chokepoint. The Kiwi dollar is essentially unchanged from yesterday at just over 58.8 USc. Against the Aussie we are down -10 bps at 83.3 AUc. Against the euro we have held at 51 euro cents. That all means our TWI-5 starts today at just under 62.5 which is unchanged from this time yesterday. The bitcoin price starts today at US$63,563 and down a -0.5% from this time yesterday. Volatility over the past 24 hours has also 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'll do this again tomorrow. Track 1219389 Monetization ID TFGEPGEI0LHEIJAI Audio soundtrack opening is licensed from Shutterstock, Track 1219389 Monetization ID TFGEPGEI0LHEIJAI

Hormuz shut tight

Play Episode Listen Later Aug 10, 2026 4:57

Shutterstock Track 1219389 Monetization ID TFGEPGEI0LHEIJAI 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. Today we lead with news rising oil prices are reigniting inflation concerns and even equity investors have noticed. Bond investors have bid up benchmark bond rates. The Fed next has to deal with this risk in just over a month, but that investors are moving now indicates the heightened concern that Trump's quagmire isn't getting resolved anytime soon. Certainly, his promise of a deal with Iran "very soon", has vanished. Meanwhile, the Yemeni Houthis have struck Saudi related tankers and hit a Saudi oil refinery. So, the conflict is spreading. Markets have reacted as though they expect inflation to rise from here. In Japan, their official 'economy watchers' July survey is signaling continued improvement, especially in their services sector. These survey results took a sharp tumble when the US attacked Iran and the Strait of Hormuz was shuttered. But since then it has climbed back as time has shown that most of the world has adapted effectively, and that includes Japan. Strong exports and a weaker currency have helped. You may recall the recent deadly earthquake in the historic city of Kumamoto. But that hasn't stopped Sony and Taiwan's TSMC announcing yesterday a US$6.3 bln new joint investment into an advanced image sensor plant there. Nikkei has the details. Indonesia's consumer confidence fell in July from June to its lowest level since April 2025 although still in positive territory. The moderation was largely driven by weaker assessments of current economic conditions. And staying in Indonesia, their government has appointed the long-experienced deputy central bank governor to the top position made vacant by the President firing him, foregoing the opportunity to appoint the daughter of the President. This will reassure financial markets that some Turkish-like instability is being avoided. In Australia, bank shares are took a beating yesterday, with Westpac down -5.9%, CBA down -2.1%, ANZ down -1.7% and NAB down -2.4%. The reason is a Westpac Q3 market update that shows their mortgage applications down -11% in the period and are running down -20% following their Federal Budget. Almost all of this fall away is because residential investors are pulling back because the expectation of capital gains is vanishing. Westpac says investor "credit growth" will fall from +9.1% this year to about +4.5% in the next two years. They expect little change in demand by owner occupiers. And don't forget there is an RBA monetary policy review later today. No-one expects any official rate change, but given the high and sticky inflation levels, there will be a lot of interest in their analysis of why they aren't moving to quash it. The UST 10yr yield is now just on 4.70%, up +4 bps from this time yesterday. The price of gold has risen to US$4364/oz, up +US$21 from yesterday. Silver has risen +US$1.50 at just over US$65/oz. Oil prices are up +US$4 from yesterday at just under US$82/bbl in the US, while the international Brent price is now just under US$87.50/bbl, Hormuz transits have dried right up. There have been no crude tankers and only 2 cargo ships exiting over the past 24 hours (0 dark with transponders off) and five entering for new loads (1 dark), again all Iran-linked. The Red Sea activity is where the focus is shifting and still low with less than 20 either way at the Yemen chokepoint. The Kiwi dollar is down -10 bps from yesterday at just over 58.8 USc. Against the Aussie we are little-changed at 83.4 AUc. Against the euro we have held at 51 euro cents. That all means our TWI-5 starts today at 62.5 which is down -10 bps from this time yesterday. The bitcoin price starts today at US$63,860 and down a full -2.0% from this time yesterday. Volatility over the past 24 hours has been modest however 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'll do this again tomorrow. Track 1219389 Monetization ID TFGEPGEI0LHEIJAI Audio soundtrack opening is licensed from Shutterstock, Track 1219389 Monetization ID TFGEPGEI0LHEIJAI

Is inflation about to resume its rise?

Play Episode Listen Later Aug 9, 2026 7:37

Shutterstock Track 1219389 Monetization ID TFGEPGEI0LHEIJAI 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. Today we lead with news we are facing a new burst in inflation as commodity prices rise, oil and gold both are rising, and benchmark interest rates are stuck high waiting to see where these tea leaves settle. Locally this week we will get June migration data, and inflation expectation updates. There also will be the July PMI update and probably the July REINZ results as well. In Australia, look out for their NAB business sentiment update, but the key event will be the RBA's rate review on Tuesday even if no-change is expected or priced in. That is despite their CPI at 3.8% and running way above their target range of 2% to 3%, and showing little sign it will get back within range any time soon. In the US, they will release their July CPI data too (expect 3.4%), their PPI (expect 5.5%) and another consumer sentiment update. In China, we are awaiting their new yuan debt data which should come late this week and be another quite weak result (expect just +¥45 bln). Over the weekend China released their CPI inflation data, revealing an annual inflation rate of just 0.5% in July, down from 1.0% in the previous month. Analysts had expected an 0.8% rate in July so this was their lowest level since January. Food prices dropped 1.5% year-on-year, following a 1.6% decline in the previous month and marking the fourth straight month it fell. But beef prices rose +4.5% and lamb prices by +6.2% in July from a year ago. Dairy product prices were -1.5% lower however. Meanwhile, China's producer prices rose +3.5% in July from a year ago, slowing from a 4.1% rise in June, and that is their steepest rise in nearly four years. The retreating pace is due to weaker commodity prices, softer domestic demand, and continued pressure from overcapacity. There is also intense price competition in some industries. China's exports surged almost +24% to US$398 bln in July in a better than expected result. The gains were driven by strong demand for AI-related technology products and a rush by manufacturers to ship goods to the US ahead of potential new tariffs. Outbound shipments to the US rose +17%, the EU by +16%, and to ASEAN nations by +38%. And while China reported relatively stable foreign exchange reserves as at the end of July, they also reported that their official gold holdings rose +640,000 oz, almost +20 tonnes in one month. That is the most in a 21 month streak of gold buying. Meanwhile Typhoon Dolphin is heading for the China coast after clipping Okinawa, due to strike south of Shanghai. It is a Cat 3 storm and over 1 mln people have been evacuated to safer ground. Taiwanese exports stayed very high at US$75.3 bln, just off record levels, but as time rolls on with these high or record high levels, the year-on-year gains are fading. Still, they managed to report a +33% rise from a year ago, an unusually strong gain. And their trade surplus remained unusually large at +US$17.2 bln, up from +US$14.3 bln in July 2025. Across the Pacific in the US economy, and even with Trump loyalists controlling the data agency, US non-farm payrolls were reported contracting in July, down -23,000 at the headline level when a very modest +80,000 was expected. That is their worst July result in at least a decade. And it get much worse if you look at actual data because payrolls shrank almost -1.1 mln in July from June before seasonal adjustment. This is the real number of people who lost employment in the month. Their participation rate inched down while their jobless rate was little-changed at 4.1%. US inflation expectations for one year ahead edged down to 3.6% in July from 3.7% in June which was the highest since September 2023. The July level is the new baseline since the US attacked Iran. Prior to that, this survey recorded about 3% for the prior two years. Earnings in the same survey are seen to rise +2.8%, so that continues to record an underwater expectation for household finances. US consumer debt levels rose +3.3% in June with revolving credit rising +6.0% on the same basis as both credit card debt and car loans rising sharply. Student loans recorded an unusual fall. A weakening labour market and both stubbornly high inflation and inflation expectations will complicate the discussions in Warsh's Fed meetings. Do they cut, hold or raise. There are probably votes for all three options. Markets currently price in half a chance of a +25 bps hike in September. And Trump is back trying to screw the scrum. There was quite the contrast in Canada with them reporting their employment rose +75,100 in July from June. It will have been a very long time since they had a gain that exceeded their southern neighbour. Their jobless rate fell to 6.4% and a two year low while their participation rate inched up. Bird flu is spreading in Australia, even if the number of reported cases is still quite minor. There is no way to properly track it, and by the time reports are received, infection is well established.... The UST 10yr yield is now just on 4.66%, up +2 bps from this time Saturday but down -8 bps for the week. The price of gold has risen to US$4343/oz, up +US$6 from Saturday, up +US$293 or +7% from a week ago. Silver has held little-changed at just over US$63.50/oz. That is up +US$5.50/oz for the week or a +9.5% gain. Oil prices are unchanged from yesterday and still just over US$78/bbl in the US, while the international Brent price is still just on US$83.50/bbl, A week ago these prices were US$84.50 and US$88/bbl respectively. Hormuz transits are still very constrained. There have been only three crude tanker and 6 cargo ship exiting over the past 24 hours (3 dark with transponders off) and eight entering for new loads (3 dark), again all Iran-linked. The Red Sea activity is still low with just 20 either way at the Yemen chokepoint. The Kiwi dollar is unchanged from Saturday at just over 58.9 USc, making it unchanged for the week. Against the Aussie we are little-changed at 83.4 AUc. Against the euro we have held at 51 euro cents. That all means our TWI-5 starts today at 62.6 which is up a bit less than +10 bps from this time Saturday essentially unchanged for the week. The bitcoin price starts today at US$65,151 and up +0.6% from this time Saturday, up +3.3% from last week. Volatility over the past 24 hours has been very low however at just on +/-0.3%. You can get more news affecting the economy in New Zealand from interest.co.nz. Kia ora. I'm David Chaston and we'll do this again tomorrow. Track 1219389 Monetization ID TFGEPGEI0LHEIJAI Audio soundtrack opening is licensed from Shutterstock, Track 1219389 Monetization ID TFGEPGEI0LHEIJAI

Rates rise with oil prices

Play Episode Listen Later Aug 6, 2026 4:47

Shutterstock Track 1219389 Monetization ID TFGEPGEI0LHEIJAI 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. Today we lead with news oil prices are up today as Iran flexes its diplomatic muscle and threats, one of which is an effort to block US ships transiting the Strait of Hormuz. Meanwhile Trump is backing away from more action in the region, potentially leaving US allies in the lurch. Through all this, crude prices are rising again, and US pump prices never dopped back during the recent fall in crude prices. That has bond markets worried that inflation may be about to turn up again, and yields rose somewhat today. In the US, July job cut announcements were very low. In fact, US-based employers announced 33,429 job cuts in the month, the fewest in two years. But AI led all reasons for job cuts for a fifth straight month and was responsible for almost 11,000 during the month. The tech sector cut the most jobs, followed by the financial sector. Cut is government , and services were almost non-existent. This data comes ahead of tomorrow's July non-farm payrolls report which is expected to show jobs growth a very low +80,000. US jobless claims dipped last week but only by what seasonal factors would have expected. There are now 1.84 mln people on these benefits slightly lower than a year ago, and two years ago. Tough eligibility restrictions are restraining enrollment in conjunction with tougher restrictions on eligibility for SNAP (food stamps). More than 4 mln people have been cleared from these programs and much tougher restrictions are coming. The USDA has restricted access to data recording the numbers of people receiving this assistance. While still elevated, the NY Fed's Global Supply Chain Pressure Index eased low in July. In Europe, retail sales sagged slightly in June, dipping -0.1% from May when a +0.1% rise was expected. That leaves them up +1.2% from a year ago on a real/volume basis. Meanwhile, German factory orders rose +3.1% in June from May to be +6.5% higher than year ago levels, an accelerating pace from May. Apart from a few newsworthy bumps in between, in fact these order levels have been on an upswing since September 2025. Strong export growth in June delivered Australia an unexpected trade surplus, of +AU$1.9 bln when a deficit of -AU$1.1 was expected after May's -AU$2.4 bln deficit. Their exports rose +8.6% from a year ago, boosted by an unusual rise in gold exports, up more than +25% from the same month a year ago. Global container freight rates turned up marginally last week from the prior week to be +77% higher than year-ago levels. Outbound rates from China to the US drove the rise, which rates to and from the EU were lower. Those rates have to compete with the very fast & successful overland rail service out of China. Meanwhile, bulk cargo rates jumped more than +12% in the past week to be +60% higher than year-ago levels. The UST 10yr yield is now just on 4.67%, up +5 bps from this time yesterday. The price of gold has dipped to US$4245/oz, down -US$8 from yesterday. Silver has dipped -50 USc at just over US$61.50/oz. Oil prices are up +US$3 from yesterday and now just under US$77.50/bbl in the US, while the international Brent price is now just under US$82.50/bbl and up +US$3.50. Hormuz transits are still very constrained. There has been no crude tanker and 11 cargo ship exiting over the past 24 hours (5 dark with transponders off) and nine entering for new loads (4 dark), again all Iran-linked. The Red Sea activity is still low with just a few more than than 20 either way at the Yemen chokepoint. Alternative routes are now making a significant, if costly, difference. The Kiwi dollar is down -20 bps from yesterday at just under 58.7 USc. Against the Aussie we are little-changed at 83.4 AUc. Against the euro we have dipped -10 bps to 50.9 euro cents. That all means our TWI-5 starts today at 62.4 which is down -10 bps from this time yesterday. The bitcoin price starts today at US$64,550 and down -0.2% from this time yesterday. 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'll do this again on Monday. Track 1219389 Monetization ID TFGEPGEI0LHEIJAI Audio soundtrack opening is licensed from Shutterstock, Track 1219389 Monetization ID TFGEPGEI0LHEIJAI

US still doesn't have a Hormuz deal

Play Episode Listen Later Aug 5, 2026 4:48

Shutterstock Track 1219389 Monetization ID TFGEPGEI0LHEIJAI 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. Today we lead with news Iran and Oman say they have a deal on the Hormuz Strait, and the US says it is still hoping for a deal to open it up. But the US no longer has any cards, it seems. Away from all that in the US, mortgage applications fell again last week with both new loan and refinance activity falling, probably due to the continued rise in home loan interest rates and pushing them up to year-ago levels of 6.81%. Their ADP jobs report only signaled +44,000 July jobs added to private payrolls, much less than the expected low +70,000 and the low June level of +95,000. This report is the precursor to Saturday's July non-farm payrolls release where analysts expect July payrolls to have expanded +202,000. Those analysts may be in for some disappointment. The ISM services PMI for July came in little-changed at a modest-to-moderate reading, boosted by good new order levels but held back by faster rising costs. Also, jobs in the sector contracted. Meanwhile the S&P Global version of the US services PMI recovered to a similar level, reporting activity rises at their strongest rate since October 2025, job creation at highest for eight months amid an improved outlook, but much steeper rises in both input costs and selling prices. US crude oil stocks recovered somewhat last week with a rare rise. But this may have been because they are still drawing down their strategic reserves at a rate that is worrying many and now at almost an all-time low since 1983. In China, their private S&P Global (RatingDog) services PMI fell back sharply. It is still expanding, but now only just. Total activity and new business both expand more slowly. Employment rose for third month running, the longest sequence since the second half of 2024. And they recorded the weakest rise in average input prices since January. Yes, this survey is better than the contracting official version, but the fall-away was faster in this report. Singapore's retail sales rose sharply in June to be +4.0% higher than year-ago levels. Meanwhile their PMI rose faster and near its best-ever, but largely because firms there built stocks to retain resilience. Japan's services PMI expanded at a slower pace in July as cost pressures remain intense there. And Indonesia said its economic activity was +5.3% higher in June than a year ago with the expected rebound from the Q1 dip coming as expected - but slightly better than anticipated. The copper price has surged again, now at a new all-time high of US$14,825/tonne (NZ$25,000/tonne, and at $25/kg no doubt a new target for thieves.). The UST 10yr yield is now just on 4.62%, down -1 bp from this time yesterday. The price of gold has risen to US$4253/oz, up +US$165 from yesterday. Silver is up +US$2.50 at just over US$62/oz. Oil prices are down another -US$1.50 from yesterday and now just on US$74.50/bbl in the US, while the international Brent price is now just under US$79/bbl and down -50 USc. Hormuz transits are still very constrained. There has been only one crude tanker and 6 cargo ship exiting over the past 24 hours (1 dark with transponders off) and eleven entering for new loads (6 dark), again all Iran-linked. The Red Sea activity is still low with much less than 20 either way. The Kiwi dollar is little-changed from yesterday at just over 58.9 USc. Against the Aussie we are down -30 bps at 83.4 AUc. Against the euro we have dipped -10 bps to 51 euro cents. That all means our TWI-5 starts today at 62.5 which is down -10 bps from this time yesterday. The bitcoin price starts today at US$64,698 and up +1.2% from this time yesterday. Volatility over the past 24 hours has stayed 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'll do this again tomorrow. Track 1219389 Monetization ID TFGEPGEI0LHEIJAI Audio soundtrack opening is licensed from Shutterstock, Track 1219389 Monetization ID TFGEPGEI0LHEIJAI

Oil prices fall on expectation a Hormuz deal is close

Play Episode Listen Later Aug 4, 2026 5:15

Shutterstock Track 1219389 Monetization ID TFGEPGEI0LHEIJAI 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. Today we lead with news the oil price has taken another large retreat today even though the Red Sea and Strait of Hormuz remain essentially closed. Alternative ways to shift crude oil out of the region are gathering pace and effectiveness. But this big price drop is directly related to Scott Bessent saying a deal with Iran to reopen the Streat is imminent, comments that have moved markets. But first up today, there was another full dairy auction earlier this morning and prices in USD were virtually unchanged overall (+0.1%), but they did dip in NZD by -0.9% on the higher currency. Of note is the new season volumes offered, very similar to the same event a year ago. But prices are now a full -10% lower this year than then. In the US, job openings fell in June, coming in slightly less than expected. The number of job openings fell in almost all industries except in the logistics sector and in federal government. Regionally, openings fell in the Northeast (-62,000), the South (-50,000), and the Midwest (-97,000), but rose in the West (+32,000). Also falling were US factory orders. They dipped -0.3% from the previous month in June, extending the revised -1.1% decline in May. This was disappointing because analysts had expected a +0.2% increase. It was the first month of back-to-back declines in nearly one year. Still, they are up more than +10% from June a year ago, reflecting the earlier stockpiling urgency. Meanwhile US exports of both goods and services fell -0.9% in June while their imports of both fell -1.8% on the same basis. That narrowed their trade deficit although not be as much as expected. The US Logistics Managers Index is still very high, but is now slowing as the stockpiling urgency seems 'full' now. July demand for warehouse capacity and transportation both actually retreated in the month. The RealClearMarkets/TIPP Economic Optimism Index edged down in August from July, missing market expectations of an improvement and remaining below the neutral level. The Six-Month Economic Outlook index fell on weaker expectations for the US economy. In Canada's June exports rose as did their imports, both much more than expected and delivering a larger trade surplus than expected, to a four year high. Canada's transition away from dependence on its now-unreliable southern neighbour has been impressive, you have to say. In China, they have set a new target to reach 50% of electricity produced from non-fossil fuels by 2030, up fron 42% now. It is a heady and fast goal. In Australia, household spending rose +0.8% in June from may to be +6.0% higher than year-ago levels. This is a very consistent rising trend from September 2024 when it was at under +1% from the prior year. This high gain was largely due to increased spending on cars, especially EVs, and for travel. And we must note that the H5 bird flu is killing more birds in Australia now. It is getting closer, even in Eastern states. As we noted yesterday, the copper price has risen again and is now over US$14,000/tonne and back at record highs. The UST 10yr yield is now just on 4.63%, down another -6 bps from this time yesterday. The price of gold has risen to US$4088/oz, up +US$55 from yesterday. Silver is up +US$2 at just over US$59.50/oz. Oil prices are down another -US$4 from yesterday and now just under US$76/bbl in the US, while the international Brent price is now just under US$79.50/bbl. Hormuz transits are still very constrained. There have been only three crude tanker and 9 cargo ship exiting over the past 24 hours (7 dark with transponders off) and ten entering for new loads (4 dark), again all Iran-linked. The Red Sea activity is still low with much less than 20 either way. The Kiwi dollar is back up +30 bps from yesterday at just over 58.9 USc. Against the Aussie we are down -10 bps at 83.7 AUc. Against the euro we have firmed +10 bps to 51.1 euro cents. That all means our TWI-5 starts today at 62.6 which is back up +20 bps from this time yesterday. The bitcoin price starts today at US$63,915 and up +0.1% from this time yesterday. Volatility over the past 24 hours has been low at just on +/-0.7%. Join us later this morning for the June update of the New Zealand labour market. You can get more news affecting the economy in New Zealand from interest.co.nz. Kia ora. I'm David Chaston and we'll do this again tomorrow. Track 1219389 Monetization ID TFGEPGEI0LHEIJAI Audio soundtrack opening is licensed from Shutterstock, Track 1219389 Monetization ID TFGEPGEI0LHEIJAI

Despite challenges, global economy still expanding solidly

Play Episode Listen Later Aug 3, 2026 5:42

Shutterstock Track 1219389 Monetization ID TFGEPGEI0LHEIJAI 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. Today we lead with news we are now in the peak vacation season in the northern hemisphere with policy activity relatively low. But US petrol costs are high in this summer driving season. Trump continues to claim he is negotiating with Iran. Iran continues to deny any talks are taking place. Still, this stalemate is a relatively peaceful one, but one that leaves Iran and Oman holding all the cards in the Hormuz Strait. In the US, their widely-watched ISM factory PMI came in slightly better than expected with a good expansion, one marginally stronger than the S&P Global PMI result we noted yesterday. This ISM version recorded stronger new order flows and prices increasing at a slower pace. In China, their top leadership is 'vacationing' as usual at the beach resort of Beidaihe. Oddly, Xi doesn't appear to be there. Over the weekend we noted that China's official factory PMIs all turned down, and into contraction territory. The private S&P Global version has been less gloomy in the past, but yesterday's release also shows a sector slipping in July from June. But at least this alternate version is not yet contracting. And they feature rising new order levels, which is promising. India's July factory PMI is still expanding at a solid pace, but that paces has now slipped to its lowest in five years. New order intakes are rising but slower, and input cost pressures are easing there. And while we are at it, we should note that the factory PMIs for Japan, South Korea, Taiwan and Malaysia all remained quite positive and expansionary. All of these noted that cost pressures are also easing now. The Australian version is rising too, but cost pressures there are still elevated. In Australia, the Cotality Home Value Index dropped -0.7% in July from June, the sharpest monthly decline since December 2022 and accelerating from a -0.4% fall in the prior month. The drop was after higher mortgage rates, affordability pressures, and soft consumer sentiment that all hurt housing demand. Sydney and Melbourne lead the downturn, with home values falling -1.4% and -1.2%, respectively in a month. Staying in Australia, the Melbourne Institute Monthly Inflation Gauge increased materially in July, after falling in the previous two months. The increase was broad-based, with annual headline inflation of 4.0%. The monthly cost of living also increased across a range of household types. Later this week we will jet the June household spending data from the ABS and also their cost of living indicators. This MI data suggests whatever those ABS results in June, things will get worse in July. We should note that the copper price is rising again, making another tilt at the record highs it reached in May and June this year. It is now back up at US$14.330/tonne, just -2% below that record peak. At the rate it moves, it could breach that very soon. AI build-out demand, as supply constraints deepen, are driving this latest rush. Some of it is stockpiling in the expectation Trump will queer the pitch with a tariff move. In any event, the world's big mining firms are shifting away from iron ore to copper mining, chasing these riches. We could probably also note that SpaceX 'listed' at US$135/share but opened at US$160. It is now struggling to hold US$110/share today. Not helping are that 'lockup' investors and staff are now net sellers. Shorting SpaceX seems to be a growth game. We should probably also keep an eye on accounting firm KPMG. The consequences of its horror story in Australia are about to be played out, with maybe global implications. The UST 10yr yield is now just on 4.69%, down -6 bps from this time yesterday. The price of gold has slipped to US$4033/oz, down -US$9 from yesterday. Silver is little-changed at just over US$57.50/oz. Oil prices are down -US$4.50 from yesterday and now just under US$80/bbl in the US, while the international Brent price is now just on US$83.50/bbl. Hormuz transits are still very constrained. There has been only one crude tanker and 6 cargo ship exiting over the past 24 hours (4 dark with transponders off) and five entering for new loads (2 dark), all Iran-linked. The Red Sea activity is still low at about 20 either way. That is kept low because only Chinese-bound vessels are getting Houthi exemptions. The Kiwi dollar is down -30 bps from yesterday at just over 58.6 USc. Against the Aussie we are little-changed at 83.8 AUc. Against the euro we have dipped -10 bps to 51 euro cents. That all means our TWI-5 starts today at 62.4 which is down -20 bps from this time yesterday. The bitcoin price starts today at US$63,851 and up +0.9% from this time 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'll do this again tomorrow. Track 1219389 Monetization ID TFGEPGEI0LHEIJAI Audio soundtrack opening is licensed from Shutterstock, Track 1219389 Monetization ID TFGEPGEI0LHEIJAI

The rise and rise of long-term interest rates

Play Episode Listen Later Aug 2, 2026 8:17

Shutterstock Track 1219389 Monetization ID TFGEPGEI0LHEIJAI 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. Today we lead with news that now we are in August, there are only 100 working days until Christmas, and less than 70 until our 2026 general election! You will need to pull your finger out to ensure your 2026 goals are on track to be accomplished. This week will see the release of a number of updates on how the July real estate market performed. More importantly, we will get the June labour market update and that is expected to show rising joblessness (to 5.4%). To be fair, labour market data are lagging indicators. In Australia, Cotality and Domain will report what they saw in their residential real estate markets. And we will get both household spending and cost of living updates for June this week, neither expected to show improvements. We should also note that their fuel excise tax suspension ended last night. From April to June the discount was 32 AUc/liter, for June and July it was 16c. Now there is no relief discount there. Globally it will be all about July PMIs (other than keeping an eye on the warmongers who all show a distinct lack of any idea on how to end the conflicts they started). In the US, the other important data will be their end of week labour market updates in their non-farm payrolls report. There is little evidence to suggest it will be a strong one and markets currently expect another month of less than +100,000 gains (+91,000) and a rising jobless rate (4.3%). We will be tracking their bond market signals closely too. And that the Trump Organisation is regarded by banks as a money-laundering entity barely raises an eyebrow these days, indicates how low the US has fallen. But also, a key background reason risk premiums are rising. In India, they will get a central bank review but no-change to their policy rate (5.25%) is anticipated. We will be tracking those PMIs too, especially in China to see if the private S&P Global versions continue to be more upbeat than the dour official versions. After four months of minor expansion, those official factory PMIs has slipped back into small contraction with a much sharper shift than was expected. After two months of minor expansion, their official services PMI also slipped back into a small contraction, also a sharper shift lower than expected. China's overall growth targets are looking less likely to be achieved the longer the year goes on. But lets not overstate these pullback signals; most countries would love to have their growth levels even at the reduced impetus. China's key issue is that new order levels are fading and exports are the key driver, not internal consumption (which is their goal). So more induced infrastructure stimulus is on the way. Korean industrial production bounced back sharply in June after the minor but unexpected dip in May. The June level was +5.8% higher than a year ago, up +2.3% from May, a heartening rebound for them. The Korean stock market bounced back sharply on Friday after the earlier dives, but they still ended the week down more than -3%. Japanese industrial production recorded a similar recovery in June, up +4.2% from a year ago, up +1.3% for the month. But that was not matched by retail sales in Japan which took a rather large tumble, down -4.1% from the strong year-ago level, up +0.5% from May. The Japanese central bank intervention support for their currency may have been significantly expensive, even if it has succeeded in halting the devaluation with a 3% recovery. Reports indicate they spent US$45 to US$50 bln on the few-days effort. It happened again on Friday, this time in a joint action with the US. And more may be coming. EU inflation came in at 2.9% in July as expected, up marginally from June's 2.8%. Australian producer prices rose +3.6% in June from a year ago, the most since early 2025 and above the anticipated +2.5% and even the 'high' Q1-2026 3.0% level. Inflation is embedding and it is a result that will focus attention by officials. In the US, even though the US Fed held its policy rate unchanged last Thursday (despite 3 dissenters wanting higher rates), markets have pushed US benchmark rates higher anyway. The UST 10 year is +27 bps higher at the end of July than at the beginning. Their 30 year benchmark is also +27 bps higher. Most of these increases came in the past two weeks, and will resonate soon for American home loan borrowers. The updated July University of Michigan sentiment survey confirmed its better July levels, and confirmed lower inflation expectations. Still, these new levels are -11% lower than year-ago levels with perceptions of current conditions -19% lower. These measures are still in the down-trend that started in 2024 even after these better July results. They noted that US consumers remain focused on pocketbook issues like purchasing power, while political or military developments remain more in the background. Also improving in July were the results of the Chicago PMI, clearly benefiting from stockpiling and reshoring still. In the current Q2-2026 earnings season reporting, 86% of S&P 500 companies have reported a positive EPS surprise and 77% of S&P 500 companies has reported a positive revenue surprise. In Canada, they reported their GDP rose modestly in June, a third consecutive rise and the fifth gain in six months as their economy gathers steam. Q2-2026 results aren't yet available but it is clear they will be quite positive, in contrast to the small dip in Q1-2026, and the weak Q2-2025 result. The UST 10yr yield is now just on 4.75%, up +1 bp from this time Saturday, up +7 bps for the week. We make that its highest since January 2025 (briefly) and prior to that October 2023. The 30 year yield is at 5.28% and a 20+ year high. The price of gold has fallen to US$4042/oz, down -US$8 from Saturday down -US$6 for the week. Silver is down -50 USc at just over US$57.50/oz, down -US$1 for the week. Oil prices are little-changed from Saturday still at now just over US$84.50/bbl in the US, while the international Brent price is still just over US$88/bbl. The Kiwi dollar is unchanged from Saturday at just under 58.9 USc, but up +100 bps for the week and back to early June levels. Against the Aussie we are up +10 bps at 83.8 AUc. Against the euro we unchanged at 51.1 euro cents. That all means our TWI-5 starts today at 62.6 which is also unchanged from this time Saturday, and also up +100 bps for the week. The bitcoin price starts today at US$63,293 and up +0.4% from this time Saturday, down -1.4% for the week. 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'll do this again tomorrow. Track 1219389 Monetization ID TFGEPGEI0LHEIJAI Audio soundtrack opening is licensed from Shutterstock, Track 1219389 Monetization ID TFGEPGEI0LHEIJAI

The air is going out of the global economy

Play Episode Listen Later Jul 30, 2026 6:06

Shutterstock Track 1219389 Monetization ID TFGEPGEI0LHEIJAI 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. Today we lead with news the giant US economy is slowing. It hasn't had three consecutive lackluster quarters in at least a decade, certainly not since the GFC. US jobless claims fell last week but by less than seasonal factors would have suggested. There are now 1.85 mln people on these benefits, less than last year at this time but only marginally less than two years ago. US PCE inflation fell in June to 3.7% from 4.0% in May, as analysts had expected. But that is way higher than the Fed used to say it would tolerate. Personal disposable income rose less than personal spending, and for a fifth consecutive month. Meanwhile, their Q2-2026 GDP update sagged in its first estimate, now up +1.5% and lower than the Q1-2025 final reading of +2.0%. Analysts had expected Q2 to come in at 2.1% so this data is a disappointment. It does mean a Fed rate hike is probably off the table, so equity markets rose. But so did long term bond yields although there was a notable pullback in short term yields and so their rate curve steepened sharply. The USD also took a tumble and is now down -1.6% in just the past two days. As expected, China's top leadership pledged to roll out targeted stimulus measures to support their economy in the second half of the year. The directives, issued at a Politburo meeting yesterday, come as the world's second-largest economy faces weak domestic demand and deepening structural imbalances. Second-quarter growth has been lower than they need to reach their targets. In Japan, observers see a Bank of Japan market intervention to support the yen. The yen rose sharply to the 157 range against the US dollar at one point yesterday, its strongest level since mid-May. Staying in Japan, consumer sentiment picked up in July but that is off a lowish base and it is barely back to its 2023-2024 levels. Sentiment surveys in the EU were out too for July and they rose again to extend their streak for both consumers and business sentiment.. EU GDP results for Q2-2026 were also released overnight, rising to 1.2% from a year ago. For them, that is quite positive. In Germany, CPI inflation rose 2.8% in July, up from 2.3% in June which was below what they had in prior months, so more back at trend. The Bank of England reviewed their monetary policy overnight, but made no changes. In Australia in a briefing released on the ASX, banking major NAB noted that their "total Australian home lending applications were 15% lower than the prior quarter". Staying in Australia, they reported that the number of new dwellings consented rose +7.2% in June from May to 18,328 (up +8.9% from a year ago). Houses were up only +0.4% but other dwellings were up almost +18% from May, although that doesn't quite take them back to year-ago levels despite this recent surge. Yesterday, Ampol (the owner of Z Energy here) reported sharply increased margins. Clearly refiners have been adding much more to retail prices than just the higher cost of crude. Global air travel fell in June, not by a lot, but essentially driven by sharp retreats in Middle East travel. Also unusual is a fall-off in both domestic and international travel in North America, an unexpected shift. Domestic air travel in China was also unusually weak. Container freight rates fell again last week, down -3% but they remain +70% higher than year-ago levels. Bulk cargo rates also fell marginally to be -24% lower than year-ago levels. The UST 10yr yield is now just on 4.67%, up +2 bps from this time yesterday. The 30 year yield is nearly at a 20 year high. The key 2-10 yield curve is now at +44 bps (+13 bps). Their 1-5 curve is now at +36 bps (+8 bps) and the 3 mth-10yr curve is at +100 bps (+6 bps). There has been a sharp steepening of the US rate curve today, a harsh market verdict on the Warsh performance yesterday. The price of gold has risen to US$4105/oz, up +US$30 from yesterday. Silver is now just under US$59/oz, up +50 USc from yesterday. Oil prices have dipped by -50 USc from yesterday at now just under US$84/bbl in the US, while the international Brent price is now just over US$89/bbl and down -US$1.50. Hormuz transits are still constrained. There have been 3 crude tankers and only 7 cargo ship exiting over the past 24 hours (1 dark with transponders off) and ten entering for new loads (4 dark). The Red Sea activity is still low at less than 20 either way. The Kiwi dollar is up +100 bps from yesterday at just under 58.8 USc and suddenly back to early June levels. Against the Aussie we are up +40 bps at 83.3 AUc. Against the euro we have risen +30 bps to 51 euro cents. That all means our TWI-5 starts today at 62.5 which is up +80 bps from this time yesterday. The bitcoin price starts today at US$64,802 and up +1.4% from this time 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'll do this again on Monday. Track 1219389 Monetization ID TFGEPGEI0LHEIJAI Audio soundtrack opening is licensed from Shutterstock, Track 1219389 Monetization ID TFGEPGEI0LHEIJAI

Hot war spread to reignite inflation risks

Play Episode Listen Later Jul 29, 2026 6:11

Shutterstock Track 1219389 Monetization ID TFGEPGEI0LHEIJAI 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. Today we lead with news the US and the world are facing a new jolt of inflation as the hot war activity spread. The US central bank response? ignore the risks and pretend things will return to normal soon. But first, US mortgage applications fell sharply last week, their largest dip since mid-May, and driven by a -10% fall in refinance activity. And that came as their benchmark mortgage interest rate rose yet again, now its highest in a year. Also falling sharply last week were US crude oil stocks, down much more than expected. They have fallen in 12 of the past 14 weeks, and this latest one is one of the larger retreats. Worse perhaps, their strategic oil reserves are now at at levels they last had in 1983 just after they started building these reserves in 1982, and their economy is now nine times as large. These strategic reserves have gone from double the private system holdings, to only 75% of them. It is poublic mismanagement on an epic scale. The US Fed held its policy rate unchanged, even while noting they have high inflation that isn't easing and they have "supply shocks that have driven price increases" well above their 2% goal. But it was a split decision with three members voting to hike +25 bps. One of those was not Jerome Powell; he was in the nine who voted for the hold. Chairman Warsh's style is all over this statement because it was very short with little transparency. And Warsh's inflation fighting vow seems to be just talk. Across the Pacific, Singapore reported that their producer prices rose more than +30% in June from a year ago, maintaining the pace of increase for non-oil goods they have had since March. In South Korea, there has been real drama on their stock exchange with declines so sharp they had to temporarily suspend trading. It is all related to perceptions about tech valuations. Even though these companies are reporting sharp profit increases, investors worry that Chinese chipmakers are about to eat their lunch. At one point yesterday the share market there was down -13%, suddenly wiping out all the prior AI gain euphoria. But it ended down 'only' +6% to cap a five-day retreat of -17%. In Australia, June CPI inflation came in at 3.8%, and less than the 4.0% expected. It was kept up by the expiry of household energy support measures, but the falls in fuel costs more than offset that. More here. Will this deter the RBA from moving their policy rate on August 11? It may do, but inflation expectations remain very high. Some analysts now expect a hawkish hold. The lower CPI hit the AUD hard yesterday, presumably because FX markets no longer see higher interest rates imminently. The global credit risk environment has evolved heading into the second half of 2026 but continues to be driven by two main sources of short-term risk, according to Fitch Ratings; rising vulnerability to an AI-related market correction and persistent geopolitical uncertainty in the Middle East. This is on top of a broader context of slowing US consumer momentum, high inflation risks stemming from the 2Q energy shock and structural public finance pressures limiting the ability to respond to risk events. Credit risk premiums will rise, says Fitch. Iran was annoyed Trump claimed talks were taking place when they weren't, so they reinforced their point. Then the US and Saudi Arabia attacked Iran-linked forces in Iraq. And the Houthis attacked two Saudi tankers off Yemen. This mess isn't going away. June air cargo demand rose in June, at a time of a relative lull in Middle East tensions. It was up +8.5% overall, up +9.6% for international trade. Asia/Pacific activity was up +9.5% from a year ago. There were larger increases in air cargo trade with North America. Meanwhile the China-to-Europe cargo train trade is surging, added to by very fast 15 day transit times for peak demand of air conditioning units, for example. Shipping via the Suez canal chokepoint will probably never recover for consumer goods. The UST 10yr yield is now just on 4.65%, up +5 bps from this time yesterday and with a small push higher after the Fed decision. The price of gold has risen to US$4075/oz, back up +US$45 from yesterday. Silver is now just over US$58.50/oz, back up +US$1.50 from yesterday. Oil prices have risen sharply by +US$5.50 from yesterday at now just over US$84.50/bbl in the US, while the international Brent price is now just under US$90.50/bbl and up +US$5. Hormuz transits are still basically halted. There have been no crude tankers and only 8 cargo ship exiting over the past 24 hours (6 dark with transponders off) and 16 entering for new loads (11 dark). The Red Sea is even less active than the prior day. The Kiwi dollar is down -10 bps from yesterday at just under 57.8 USc. Against the Aussie we are up +30 bps at 83.3 AUc. Against the euro we have dipped -10 bps to 50.7 euro cents. That all means our TWI-5 starts today at 61.7 which is down -10 bps from this time yesterday. The bitcoin price starts today at US$63,890 and up +0.5% from this time 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'll do this again tomorrow. Track 1219389 Monetization ID TFGEPGEI0LHEIJAI Audio soundtrack opening is licensed from Shutterstock, Track 1219389 Monetization ID TFGEPGEI0LHEIJAI

Learning to live with less oil

Play Episode Listen Later Jul 28, 2026 5:15

Shutterstock Track 1219389 Monetization ID TFGEPGEI0LHEIJAI 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. Today we lead with news China's clear need for less oil has pushed its price sharply lower even as both the Gulf of Hormuz and the Red Sea remain effectively shut. As other sources raise their output, global demand is being undermined, essentially by this Chinese transition. But first up today, we should note the overnight dairy Pulse auction. Prices achieved were a bit more than -1% lower than the prior week's full auction in USD, but a bit less than that in NZD. In the US, the ADP weekly private payrolls monitoring recorded another easing, only +15,000 and extending the easing trend that has been in place since early May. The US merchandise trade deficit came in more than -US$100 bln in June, a second straight month of an unusually high negative level. Year-on-year, exports were up, but imports rose faster. Meanwhile both their retail (+3.1%) and wholesale inventories (+4.1%) rose in June, reflecting the stockpiling trend that has been in place for a while now. The expected improvement in the Richmond Fed factory survey didn't eventuate in July from June, but it remains modestly positive. New order flows edged lower while price and cost levels remained elevated. But there was a solid improvement in the Dallas Fed services sector recorded in their July survey. Nationally, the Conference Board's consumer sentiment survey in the US took a step lower in July. This extends its falling trajectory that started in early 2025. The auction for the US Treasury 7yr Note was well supported earlier today but again, investors are getting higher yields for the elevated risk they perceive. This latest one delivered a median yield of 4.41% (high of 4.47%) compared to 4.20% at the prior equivalent event a month ago. In Japan, a major 7.1 earthquake in the south has caused widespread damage and deaths. And Japan's parliament has approved a plan to create a "second capital" capable of keeping the country running if disaster strikes Tokyo. It is likely to be in Osaka. Malaysia said producer prices there were +9.2% higher in June than a year ago. This was an unexpected jump from the anticipated +7.7% which was similar to the May rise. Staying in the region, Singapore reported its birth rate for 2025 and for the first time since its independence, it has fallen below +30,000 in a year. It, like many places, is on a steep trajectory of lower fertility. Industrial production in India rose +7.3% in June from a year ago, more than expected and the sharpest pace of expansion in nearly two years. It seems to be bouncing back from the initial shocks from the Middle East conflict. Later today, we will be getting the June CPI result from Australia and a no-change 4.0% rate is anticipated. But yesterday Governor Michelle Bullock was out speaking and affirming that they are worried that these high levels are embedding, so their 1-3% target range is not likely in the medium term. Some are wondering if this was a signal that an unexpected hike is about to be delivered next week. The UST 10yr yield is now just on 4.60%, down -5 bps from this time yesterday. The price of gold has fallen to US$4030/oz, down -US$48 from yesterday. Silver is now just over US$57/oz, down -US$1.50 from yesterday. Oil prices have fallen another -US$3.50 from yesterday at now just over US$79/bbl in the US, while the international Brent price is now just over US$84.50/bbl and down -US$5. Hormuz transits are still basically halted. There have been no crude tankers and only 3 cargo ship exiting over the past 24 hours (1 dark with transponders off) and three entering for new loads (1 dark). The Red Sea is even less active than the prior day. The Kiwi dollar is up +20 bps from yesterday at just under 57.9 USc. Against the Aussie we are up +40 bps at 83 AUc. Against the euro we are holding at just on 50.8 euro cents. That all means our TWI-5 starts today at 61.8 which is up +20 bps from this time yesterday. The bitcoin price starts today at US$63,568 and down -2.1% from this time yesterday. Volatility over the past 24 hours has been modest at just on +/-1.7%. You can get more news affecting the economy in New Zealand from interest.co.nz. Kia ora. I'm David Chaston and we'll do this again tomorrow. Track 1219389 Monetization ID TFGEPGEI0LHEIJAI Audio soundtrack opening is licensed from Shutterstock, Track 1219389 Monetization ID TFGEPGEI0LHEIJAI

US backs away in Hormuz after achieving nothing

Play Episode Listen Later Jul 27, 2026 6:02

Shutterstock Track 1219389 Monetization ID TFGEPGEI0LHEIJAI 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. Today we lead with news Iran is claiming control of the Strait of Hormuz as the US backs away, unable to exert the pressure it thought it could. The pause in fighting there has calmed markets significantly even if few ships are actually transiting. Elsewhere, the US durable goods order report for June was a strong one, up +8.9% from the same month a year ago, but only up +0.3% from May, so most of the gain was in prior months and the June rise was much less than the expected +2.5%. Capital goods were up +4.1% from a year ago, but excluding defense and aircraft, they were up a good +14%. The Dallas Fed regional factory survey was positive too, even if only marginally. That completes seven consecutive months of only marginal changes, some up, some down. Price and wage pressures remained markedly elevated, they said. There were two large US Treasury bond auctions overnight, both well supported. But both saw sharpish rises in yields from the prior equivalent events a month ago. The two year median yield rose +13 bps, and the five year yield rose +21 bps on the same basis. In Canada, their central bank surveys market participants quarterly and these professionals were less upbeat than at the previous survey. They foresaw no policy rate changes in 2026, but rises in the next two years. They also foresee a 25% chance of recession, although more likely growth in the 1-2% range. This is lower than in the prior survey. Trump's trade tensions are the main risk they see. Singapore has surprised markets with another tightening move, its second consecutive such shift. Singapore regulates its monetary policy via its exchange rate (the S$NEER). It is raising its exchange rate to dampen inflationary pressures. The June CPI inflation rate there rose to 1.9%, its highest since August 2024. Singapore's industrial production growth came in less than expected in June, up +7.2% from a year ago when a +9% rise was expected, down from the almost +18% in May. China reported strong industrial profit growth in June, up +15% from the same month a year ago although this was less than the claimed +18% growth rate for the first half of 2026. They say their factory sector profits rose more than 20% on the year-to-date basis, but companies producing electricity saw theirs fall more than -4%. Local listed companies did well, but foreign companies hardly made any gains. Local private companies came in in-between. Expectations are rising that the current CCP summit in Beijing will deliver new stimulus programs. The Indonesian central bank chief has been pushed out with two years left on his term. The Indonesian government wasn't happy with the standard approach of the experienced governor, and wanted the central bank to support it's all-out drive for economic growth rather than inflation control. It was a sudden change, but one preceded by the President appointing a family member as a deputy governor earlier in the year (remember Turkey?). Indonesia has been suffering a weak currency due to the political interference. In Europe, Spain, France and Italy are all battling out-of-control wildfires. Everywhere is battling intense heat. The UST 10yr yield is now just on 4.65%, down -3 bps from this time yesterday. The price of gold has risen to US$4078/oz, up +US$26 from yesterday. Silver is now just on US$58.50/oz, up +50 USc from yesterday. Oil prices have fallen sharply and by US$8 from yesterday at now just over US$82.50/bbl in the US, while the international Brent price is now just under US$89.50/bbl and down -US$9. Hormuz transits are still basically halted There have been 3 crude tankers and only 2 cargo ship exiting over the past 24 hours (1 dark with transponders off) and two entering for new loads (1 dark). The Red Sea is only marginally more active. The IEA has been reviewing why oil markets have proven more resilient through the current crisis than some had feared and they point out that oil output in countries not directly affected by the Persian Gulf troubles has risen notably and most countries are permitting export flows. They also point o the major release of strategic reserves to cushion the shocks, with 290 mln barrels released so far with more than 1 bln still in reserve. But they note that markets for refined products are considerably tighter than for crude oil. The Kiwi dollar is down -20 bps from yesterday at just on 57.7 USc. Against the Aussie we are down -30 bps at 82.6 AUc. Against the euro we are down -10 bps at just under 50.8 euro cents. That all means our TWI-5 starts today at 61.6 which is down -20 bps from this time yesterday. The bitcoin price starts today at US$64,917 and up +0.4% from this time 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'll do this again tomorrow. Track 1219389 Monetization ID TFGEPGEI0LHEIJAI Audio soundtrack opening is licensed from Shutterstock, Track 1219389 Monetization ID TFGEPGEI0LHEIJAI

Transactional Trump trapped by his own missteps

Play Episode Listen Later Jul 26, 2026 8:11

Shutterstock Track 1219389 Monetization ID TFGEPGEI0LHEIJAI 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. Today we lead with news that after more bellicose threats, Trump has backed off hitting Iran as he had signaled, another TACO twist. The region isn't quiet, but the threatened escalation by the US hasn't happened, not yet anyway. The oil price hasn't really eased back yet on this lull and is holding most of last week run-up towards US$100/bbl again. Trumps policy twerking has everyone unnerved. Away from that and looking ahead locally, this week will feature the big data dump of the June quarter RBNZ series. We will especially be watching household deposit growth, which stalled in May. In Australia, it will be all about Wednesday's CPI release (expect a small rise to 4.1%) and Friday's PPI (expect a rise to 3.5%). In the US, the spotlight will be on the Thursday Fed meeting. Analysts expect no-change at 3.75% even though CPI inflation was at 3.5% for June and rising, remaining well above the Fed's 2% target. Even their PCE inflation was running at 4.1% for May. We will get their June update on Friday. In the meantime, financial markets are pricing in more of a chance of a hike - if not at this meeting then two by the end of the year. There will be a lot of other US data out this week, including a Q2 GDP update, and the Conference Board's sentiment survey. The week will also feature some Big Tech profit results. In Japan, all eyes will be on Friday's central bank decision, especially on how they intend to respond to their currency problems. Not no change from their 1% rate is anticipated. In China, it will be all about a big set-piece Communist Party meeting. There will be a lot of interest to see if big new stimulus is announced there. Their PMI's may signal how urgent that is. Over the weekend in Japan, CPI inflation stayed low in June even if it did rose to a six month high. It came in at 1.7% in June from 1.5% in May, its highest since December. The pickup was largely driven by a slower decline in electricity and fuel prices as government energy subsidies were scaled back. Japan's private sector expanded to a five-month high in July via a sharp rise in manufacturing production and an improvement in their factory PMI which was driven mainly by the sharpest increase in manufacturing orders for five years. The July PMIs for India came in notably lower than for June as private sector growth receded and inflation pressure, especially for fuel, intensified. This is putting them in a tough spot with spreading social unrest. Their factory PMI dipped only marginally but their services PMI registered a notable easing. In the US the first of the July PMIs shows that business activity growth rose modestly but to an eight-month high in July although that isn't an especially high benchmark. However selling prices rose sharply and at their fastest rate for nearly four years. Input cost inflation was at a 14 month high. Their factory sector expansion was little-changed however from June with new orders little-changed. It was their services sector that expanded more, albeit modestly US new home sales were little-changed in June but maintained the modest level they have had all year. That makes then -5.6% lower than year-ago levels. Canadian producer price growth fell back slightly in June from May but are still +12.4% higher than year-ago levels. Raw material input costs by manufacturers were up more than +20% from a year go. Meanwhile, the Russian central bank trimmed -25 bps from its key policy rate, taking it to 14.0%. A year ago, this rate was 21%. They have CPI inflation officially at 6.0%, although this seems an unlikely level. In the EU, eurozone business activity has risen for first time in four months in July amid renewed expansion of new orders. Their factory PMI inched up, and their services PMI inched up too. But to be fair, these higher levels are not significant and the expansion is minor compared to other global regions. But at least it isn't a contraction. The German versions of these PMIs was generally better than the overall set. German consumer sentiment didn't budge however. In Europe, their ugly heat and worrying fire season isn't easing. In fact a new wave of extreme heat is forecast over the next few weeks. It is part of an accelerating trend that will likely extinguish European glaciers far faster than anticipated just ten years ago. Australia also got better new factory order levels in July, the first increase in new business in five months. Improved demand conditions underpinned a stronger expansion in output, led to upgraded recruitment activity and enabled greater protection of profit margins. This data confirms the good labour market data released yesterday. But overall Australian growth is likely to remain sluggish. Sydney, Melbourne and Canberra house prices actually fell in the June quarter, an unusual but necessary shift to make their housing more affordable. It takes serious political bravery to turn a frothy market where gains just fell from the sky. Bitumen prices are surging again on the closed Hormuz and Red Sea shipping lanes. They are back to levels that we had in mid-March and which lasted to mid-June. Interestingly, urea prices are staying low as are potash prices (minor rises) but sulphur prices never fell after the March spike. Naphtha (used for plastics manufacturing) is rising sharply again. The UST 10yr yield is now just on 4.68%, unchanged from this time Saturday but up +13 bps for the week. The price of gold has firmed to US$4052/oz, virtually unchanged from Saturday up +US$49 for the week. Silver is now just on US$58/oz, down -50 USc from Saturday, up +US$2 for the week. Oil prices have risen back +US$1.50 from Saturday at now just over US$90.50/bbl in the US, while the international Brent price is now just on US$98.50/bbl and up +US$2. A week ago these prices were US$82 and US$88/bbl respectively. Hormuz transits have almost halted entirely There have been no crude tankers and only 1 cargo ship exiting over the past 24 hours (0 dark with transponders off) and none entering for new loads (0 dark). The Red Sea is also now effectively blocked at Yemen although a small handful of ships are still getting through (less than 20 each way). Still almost 800 vessels are waiting for things to calm down. The Kiwi dollar is unchanged from Saturday at just on 57.9 USc but down -50 bps for the week. Against the Aussie we are still at 82.9 AUc. Against the euro we are holding at just over 50.9 euro cents. That all means our TWI-5 starts today at 61.8 which is unchanged from this time Saturday but down -50 bps from a week ago. The bitcoin price starts today at US$64,673 and up +0.7% from this time Saturday and up +1.0% from a week ago. 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'll do this again on Tuesday. Track 1219389 Monetization ID TFGEPGEI0LHEIJAI Audio soundtrack opening is licensed from Shutterstock, Track 1219389 Monetization ID TFGEPGEI0LHEIJAI

Oil price surge sees financial markets stagger

Play Episode Listen Later Jul 23, 2026 6:58

Shutterstock Track 1219389 Monetization ID TFGEPGEI0LHEIJAI 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. Today we lead with news tankers in the Red Sea have been hit by missiles fired from Yemen. This is unnerving global markets today, and oil prices have jumped everywhere. Bond yields are surging, pushing up mortgage rates and weighing on equity valuations, especially for tech firms. But first in the US, there were 192,000 initial jobless claims last week, a notable drop and far lower than seasonal factors would have accounted for and lower than expected. There are now 1.85 mln people on these benefits, also lower than a year ago but actually an increase from a week ago as claimants are staying on benefits longer even if it is now much harder to get initially qualified. The Chicago Fed's National Activity Index came in slightly below trend, but enough to suggest the US economic expansion was still in place in June. But if the Atlanta Fed's GDP Now tracking is to be believed, that expansion is at a modest level. Consensus forecasts are being trimmed too. The US Treasury 10 year TIPS yield of inflation-protected bonds jumped about +30 bps today and back to the highs we last saw in the pandemic and prior to that in the GFC. Canadian retail sales expanded in June, extending their positive track to six consecutive months. This was for both value and volume terms, to be +5.9% higher than year ago levels. Canadian CPI is running at 2.8%. Across the Pacific, China's foreign direct investment rose +US$11.1 bln in June, better than expected and better than the -US$7.6 bln fall in the same month in 2025. Meanwhile, China's consumer trade-in subsidy program is losing momentum as appliance and car demand weakens. South Korea said its economic activity expanded an impressive +3.7% in Q2-2026, almost the same as the +3.8% in Q1. This is their fastest expansion since Q4-2021, and came in above market estimates of +3.5%. Strong exports were a key factor in this result. Singapore's June CPI came in at +1.9% in June and although that was its highest since August 2024 it was less than the 2% expected. And that was because there was no change from May. In India, we should keep an eye on youth protests, because they are spready and gaining surprisingly wide support. In Europe and as expected by many, the ECB left its key interest rates unchanged at its July meeting overnight, following the +25 bp hike in June. Since then, policymakers have struck a more cautious tone, adopting a "wait-and-see" approach as softer inflation, wage growth, economic activity, and inflation expectations have reduced the urgency for another move. But that may have changed today with the unexpectedly large spike in oil prices. But who knows how fast that may change again? Markets anticipate another ECB rate hike in September. Staying in the EU, consumer sentiment improved in July. That is to say it got less negative. And in a decision likely to intensify trans-Atlantic trade tensions, European Union regulators overnight hit Google with a €890 mln fine for illegally undercutting competition through its dominance in search. Google will not be hurt by this directly in the short term because it reported almost +US$41 bln in profits in Q2-2026 alone. If it is hurt, it will be from their heavy cash burn for its AI buildout. The Australian labour market grew surprisingly strongly in June, adding +76,300 new jobs, far better than the +15,000 expected. Their jobless rate was stable at +4.4%. More than half the new jobs were in NSW, with good gains also in Queensland and Western Australia. But Victoria shed jobs in the month. This strength will add spine to the RBA's fight against rising inflation (4.0%) because they will be now less worried about a weak economy The RBA next meets on August 11, 2026 - 17 days away. Global container freight rates fell -4% last week to be +74% higher than year ago levels. Outbound rates from China were the basis of the pullback from the prior week. Bulk cargo rates were down -8% for the week, and these are now a third higher than year-ago levels. The UST 10yr yield is now just on 4.70%, up +4 bps from this time yesterday and its highest since January 2025. Wall Street is -1.4% lower today on the S&P500 with the Nasdaq down -2.5%. The price of gold has fallen to US$4042/oz, down -US$98 from yesterday. Silver is now just on US$57.50/oz, down -US$2.50 from yesterday. Oil prices are another +US$6 higher from yesterday at just on US$93/bbl in the US, while the international Brent price is now just on US$101.50/bbl and up +US$7. Hormuz transits are still just a trickle There have been no crude tankers and 5 cargo ships exiting over the past 24 hours (5 dark with transponders off) and 8 entering for new loads (1 dark). The Red Sea is also now effectively blocked at Yemen although a small handful of ships are still getting through (less than 20 each way). More than 700 vessels are waiting for things to calm down. The Kiwi dollar is another -40 bps lower from yesterday at just over 57.7 USc. Against the Aussie we are also down -40 bps at 82.8 AUc. Against the euro we are down -30 bps at just over 50.7 euro cents. That all means our TWI-5 starts today at 61.6 which is down -40 bps from this time yesterday. The bitcoin price starts today at US$64,762 and down -2.1% from this time yesterday. Volatility over the past 24 hours has been extreme at just on +/-7%. You can get more news affecting the economy in New Zealand from interest.co.nz. Kia ora. I'm David Chaston and we'll do this again on Monday. Track 1219389 Monetization ID TFGEPGEI0LHEIJAI Audio soundtrack opening is licensed from Shutterstock, Track 1219389 Monetization ID TFGEPGEI0LHEIJAI

The oil crisis isn't over yet

Play Episode Listen Later Jul 22, 2026 6:29

Shutterstock Track 1219389 Monetization ID TFGEPGEI0LHEIJAI 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. Today we lead with news we may be facing a renewed oil supply shortage and this time reserves are at unusually low levels. The combined impacts of extended closures in the Persian Gulf, the Red Sea, and the Black Sea are mounting, and just as we thought the May-June stresses had faded. US mortgage applications rose slightly last week and that was despite an unexpected fall in refinance activity. But since mid-June this US housing market indicator has essentially been flat. And US mortgage rates are now at an 11 month high. US crude oil stocks rose unexpectedly last week when another fall was anticipated. Yes, it was minor, but still. Maybe it indicates that local production is rising faster than some assume. Or surging imports from Canada or Venezuela? Or maybe that demand is lackluster. Or all three. US Strategic Reserve levels fell again and to their lowest level since 1983. Today's US Treasury 20yr bond auction saw its yield surge through 5%, ending with a median yield of 5.12% and a high of 5.16%. That is up sharply from the prior equivalent event a month ago of 4.88%. And demand was lower too (-4%). It is quite the rate move. Not to be outdone, the overnight German 20 year bund auction rose to 3.60%, up from 3.38% a month ago. Across the Pacific, Japanese exports rose faster than expected in June, up more than +19% from a year earlier. The weak yen helped as did strong demand for electronics and other data center equipment. The June export level was their second highest on record, just a whisker off the March record. At the same time their imports surged as well, up +25% and also more than expected to a new record high, just eclipsing the October 2022 level. Oil prices were high but oil import volumes retreated. The net result was a modest but stable trade deficit in June (from May), but slightly worse than the small trade surplus in June a year ago. None of this helped the yen however because it fell to a 40 year low against the USD. Against the NZD it has only been this low in 2024 and 2007. In case anyone is still confused, or unaware, the Chinese regulator, China Securities Regulatory Commission, has been organising the SOE home team to bolster the Chinese stock markets recently, after they showed some negative indications. This has driven some good rises, but also a creeping state ownership in many listed Chinese companies. The Shanghai Composite closed up +1.8% yesterday, the Shenzhen Component was up +4.8%, while the ChiNext was up +7.1% and the STAR Market index jumped 8.8%. This is not to claim other governments don't manipulate markets; they do (Trump, Japan, etc.). But the Chinese moves don't seem sustainable unless the reasons for the dour conditions that prompted the artificial buying are resolved. In other economies, regulators would get punished by investors if issues aren't resolved. In China it is the other way around. The Philippine-China dispute about who controls the sea off the Philippine coast is taking an ugly turn with China posting racist trope video targeting Filipino's. It is unnecessary and grubby diplomacy. But 'going low' isn't something China invented. Surprising most observers, the Indonesian central bank did not raise its policy rate overnight following its June out-of-cycle shift higher. It judged that that earlier move was all that is needed at this time to defend the rupiah. In Australia, the latest update of the Westpac-Melbourne Institute Leading Index, which indicates the likely pace of economic activity relative to trend three to nine months into the future, suggests growth there is stalling. While the latest growth pulse is still not overly weak it is broadly consistent with stalling activity through the middle of the year. Later today the June labour market report will be released in Australia. It is expected to show tame jobs growth. The UST 10yr yield is now just on 4.66%, up +3 bps from this time yesterday and matching its recent mid-May highs. The price of gold has risen to US$4140/oz, up +US$71 from yesterday. Silver is now just on US$60/oz, up +US$1.50 from yesterday. Oil prices are another +US$2.50 higher from yesterday at just under US$87/bbl in the US, while the international Brent price is now just on US$94/bbl and up +US$2. Hormuz transits are still just a trickle There have been just 2 crude tankers and 3 cargo ships exiting over the past 24 hours (5 dark with transponders off) and 5 entering for new loads (3 dark). Three of these outbound ships were hit by missiles. The Red Sea is also now effectively blocked at Yemen although a small handful of ships are still getting through (less than 20 each way). More than 700 vessels are waiting for things to calm down. The Kiwi dollar is another -20 bps lower from yesterday at just over 58.1 USc. Against the Aussie we are also down -10 bps at 83.2 AUc. Against the euro we are down -10 bps at just under 51 euro cents. That all means our TWI-5 starts today at 62 which is down -20 bps from this time yesterday. The bitcoin price starts today at US$66,141 and down -0.4% from this time yesterday. Volatility over the past 24 hours has again been 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'll do this again tomorrow. Track 1219389 Monetization ID TFGEPGEI0LHEIJAI Audio soundtrack opening is licensed from Shutterstock, Track 1219389 Monetization ID TFGEPGEI0LHEIJAI

canada donald trump australia china japan gold chinese german new zealand track bitcoin venezuela indonesia silver pacific surprising usc aussie oil usd red sea filipino yemen kiwi kia volatility hormuz black sea persian gulf us treasury ust shutterstock aotearoa new zealand soe bond yields twi auc oil crisis nzd star market china securities regulatory commission

New US tariffs awaited - with yawns

Play Episode Listen Later Jul 21, 2026 5:55

Shutterstock Track 1219389 Monetization ID TFGEPGEI0LHEIJAI 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. Today we lead with news many countries are awaiting news of a new barrage of US tariffs, although the fear level is nowhere near as high this time as this weapon has proven relatively limp in the past, and mainly hurts US consumers. First today, the overnight dairy auction surprised somewhat with an end to the recent weakness, rising +1.5% in USD terms although down almost -1.0% in NZD terms on the firmer NZD. Perhaps surprisingly, milk fats did quite well, other than cheddar (-6.5%). Powders were all up. Some say that northern hemisphere heatwaves have buyers nervous that this will soon weigh on production levels there, so stocks are being built in case. In the US, the slower hiring trend that started in early May continued last week with the ADP weekly tracking reporting its lowest level since March, just after this weekly tracking series started. US timber prices are rising and quite sharply recently. That is because of forest fires in the US Pacific Northwest states, and in British Columbia, the main exporting Canadian province to the US. Trump's new tariffs on Canada are making things worse for US housebuilders. The early outcomes for the Q2-2026 earnings reporting season (with 10% of S&P 500 companies reporting actual results), 88% of these companies have reported a positive EPS surprise and 85% have reported a positive revenue surprise. The US summer holiday season is starting to peak now and will stay like this until early August. The season overall ends on their Labor Day on September 7. We note this because commercial activity is different during this period and financial market activity is lighter than usual. The same is true for Canada of course. But US border states are doing it tough because Canadians are choosing to avoid the US for their holidays as the insults and tariff actions from Trump's Washington swamp stay aggressive. In China, new stimulus is being rolled out. Its gigantic "Six Networks" buildout is getting a major boost as part of more infrastructure spending. Those six are: water networks (canals), power grids, data centers, 6G development, undergrounding pipelines, and supply-chain efficiency upgrades. But they are also trying to get their service sector re-energised as well with targeted 'investments'. Meanwhile, China is re-thinking its tax rebates that are driving its export competitiveness. It needs those funds for its domestic projects, and it doesn't need the international alarm their mercantalist export policies are creating. In Europe, the ECB's Q2 lending survey has found banks have tightened credit standards moderately for firms on higher perceived risks and lower risk tolerance. Corporate loan demand rose while demand for housing loans and consumer debt decreased. Interestingly, companies seeking green loans were found to have much better financial profiles. Germany's ZEW sentiment survey recovered notably in July after four months on weakness, and this is mirrored in their wider survey for the EU. The price of copper is rising again, getting near the record highs it posted at the start of the Iran-US conflict. Driving some of this are unusually low copper stocks in China. Meanwhile the FAO is reporting that hunger in the world fell again in 2025 and for a third consecutive year. Around 645 million people, or 7.8% of the world's population, experienced hunger last year, down from 8.1% in 2024 and 8.6% in 2022 The UST 10yr yield is now just on 4.63%, up +3 bps from this time yesterday and approaching its recent mid-May highs. The price of gold has risen to US$4069/oz, up +US$65 from yesterday. Silver is now just over US$58.50/oz, up +US$2 from yesterday. Oil prices are +US$1.50 higher from yesterday at just on US$84.50/bbl in the US, while the international Brent price is now just over US$92/bbl and up +US$3. Hormuz transits are still just a trickle There have been just 1 crude tanker and 3 cargo ships exiting over the past 24 hours (4 dark with transponders off) and 11 entering for new loads (3 dark) and all this traffic is Iran-linked. The Red Sea is also now effectively blocked at Yemen. The Kiwi dollar is -20 bps lower from yesterday at just over 58.3 USc. Against the Aussie we are also down -20 bps at 83.3 AUc. Against the euro we are down -10 bps at just on 51.1 euro cents. That all means our TWI-5 starts today at 62.2 which is down -10 bps from this time yesterday. The bitcoin price starts today at US$66,421 and up +1.3% from this time yesterday. Volatility over the past 24 hours has again been modest at just over +/-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'll do this again tomorrow. Track 1219389 Monetization ID TFGEPGEI0LHEIJAI Audio soundtrack opening is licensed from Shutterstock, Track 1219389 Monetization ID TFGEPGEI0LHEIJAI

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