Chinese investors in bullish mood, US jaded

Kia ora,

Welcome to Tuesday’s Economy Watch where we follow the economic events and trends that affect Aotearoa/New Zealand.

I'm David Chaston and this is the international edition from Interest.co.nz.

And today we lead with news that while much of the northern hemisphere is enjoying the last of their summer holidays, Chinese investors have returned in a bullish mood, and in contrast to the now-jaded US equity markets.

But first in the US, consumer credit bureau VantageScore is reporting that consumers with the best credit scores (superprime) are showing meaningful signs of credit stress. Among this group late payments have more than doubled in a year. For the group below that ('prime') this metric of delinquency rose almost +50%. (VantageScore is a partnership of Equifax, Experian and TransUnion, and competes with the dominant FICO.)

Meanwhile, the widely followed Chicago Fed National Activity Index retreated. This tracking suggested overall American economic growth decreased in July.

The Dalla Fed said that in its region factory activity is still expanding but at a slower pace. Although new orders rose (and for the first time in 2025), production activity eased back noticeably. Price and wage pressures rose faster.

New house sales in the US stayed at an essentially unchanged pace in July, although marginally softer than in June. Prices dipped, likely because they have a continuing glut of new homes for sale, exceeding nine months’ worth at the current sales rate.

The latest estimate from the Atlanta Fed's GDPNow live tracking is due tomorrow and is likely to reflect the overall slowdown reported in these other indicators.

Across the Pacific, Singapore said it basically doesn't have any inflation. Its July survey came in even lower than was anticipated - even food inflation there is very low.

Yesterday, we noticed that the Chinese central bank set its Yuan exchange rate with an outsized shift, now at 7.116 to the USD, a 160 bps strengthening from the prior fix. That makes it its strongest against the greenback since October 2024. It is unclear why this happened because the US dollar index was little-changed in this period. Maybe some of this is related to the recent equities euphoria in the Shanghai stock market - its starting to show the frothy signs that Hong Kong has long displayed.

The UST 10yr yield is now at 4.28%, up +2 bps from yesterday at this time. 

Wall Street has started its week hesitantly, with the S&P500 down -0.3% in Monday trade. Overnight, European markets opened their week mixed with London up +0.1% but Paris down -1.6%. Yesterday Tokyo started its week up +0.4%. Hong King rose a strong +1.9% and Shanghai mirrored that, up +1.5%. Singapore was up a minor +0.1%. That was matched by the ASX200. The NZX50 rose +0.3% in its Monday trade.

The price of gold will start today at US$3,371/oz, little-changed (+US$1) from yesterday.

American oil prices have risen +US$1 to US$65/bbl with the international Brent price now just under US$69/bbl. And we should also note that China has imported no natural gas from the US since March and no crude oil since June. But the US keeps importing from China, despite the border tariff taxes, which the US importers seem to be paying.

The Kiwi dollar is at just on 58.6 USc and down -10 bps from yesterday at this time. Against the Aussie we are down -20 bps at 90.2 AUc. Against the euro we are up +20 bps at 50.3 euro cents. That all means our TWI-5 starts today at just under 66.3, little-changed from yesterday.

The bitcoin price starts today at US$112,427 and down -1.7% from this time yesterday. Volatility over the past 24 hours has been modest also 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 will do this again tomorrow.