Economy Watch

Kia ora,Welcome to Friday’s Economy Watch where we follow the economic events and trends that affect Aotearoa/New Zealand.I'm David Chaston and this is the international edition from Interest.co.nz.And today we lead with news there are more tariff-deals being done, of the free trade type, but just not with the US and their mutually punitive style.In the US, jobless claims dipped last week, mainly on seasonal factors. There are now 2,016,000 people on these benefits, +5.3% more than the 1,914,000 on them this time last year.Sales of new single-family homes rose marginally in June from May’s seven-month low to be well below what market expected. The number of unsold homes on the market rose to 511,000, the highest since October 2007 and now almost ten months of supply at the current sales pace.The July US S&P Markit factory PMI fell back into contraction which was very unexpected because a rise in the expansion was expected. However, this was masked by a strong rise in their service economy in July.The Kansas City Fed factory survey slipped back into contraction in July after its rare expansion in June. They reported increased factory activity but new order growth was weak and order backlogs fell sharply.In Canada, their advance estimate of retail sales suggests that sales increased +1.6% in June. That more than makes up for the -1.1% fall in May and is much better than the -0.3% fall expected.Meanwhile in Japan, the same S&P Global/Markit factory PMI unexpectedly contracted in July from June’s 13-month high but minimal expansion. A small rise was expected.In India, they are starting to see rising international demand in their factory sector, and this pushed up their July factory PMI to a strong expansion.And India has signed a free trade deal with the UK, one touted to bring NZ$10 bln in mutual benefits.Also expected soon is a China-EU trade deal.In Europe, the eurozone PMI for July reported a further increase in business activity during the month, with the pace of expansion quickening to the fastest for almost a year amid a stabilisation of new orders. Output growth was at an 11 month high for them. Cost inflation is easing.Meanwhile, as expected the ECB rate review decision delivered no change. This effectively marks the end of its current easing cycle after eight cuts over the past year that brought borrowing costs to their lowest levels since November 2022. And don't forget, they remain in a tightening phase because they no longer reinvest maturing bonds issued during the pandemic emergency.In Australia, the S&P Global/Markit factory PMI expanded slightly faster in July, on the back of the sharpest overall rise in new business in over three years. This was despite export orders still contracting. The same report shows price pressures intensified, hinting at higher inflation in Australia in the coming months.And staying in Australia, research by the RBA shows that international students play a significant role in the Australian economy. They contribute to demand through their spending on goods and services and are an important source of labour for some Australian businesses. When there are large swings in international student numbers or when the economy has little spare capacity, this means that changing international student numbers can affect macroeconomic outcomes, particularly in sectors of the economy where supply cannot respond quickly. The rapid growth in international student numbers post-pandemic likely contributed to high inflation over this period, but was not a major driver. But they do push up rents.Container freight rates dropped another -3% last week to be -57% lower than year-ago levels, although to be fair the year-ago levels were unusually high. Outbound rates from China to the US are the weakest routes at present. But bulk cargo rates rose another +11% over the past week to be +13% higher than year-ago levelsThe UST 10yr yield is now at 4.41%, up +2 bps from yesterday at this time.The price of gold will start today at US$3,369/oz, down -US$18 from yesterday.American oil prices are marginally firmer at just under US$65.50/bbl but the international Brent price is still at just on US$68.50/bbl.The Kiwi dollar is now at 60.4 USc and unchanged from yesterday. Against the Aussie we have dipped -10 bps to 91.6 AUc. Against the euro we are holding at 51.3 euro cents. That all means our TWI-5 starts today at just on 67.8, up +10 bps from yesterday.The bitcoin price starts today at US$117,232 and up +1.2% from this time yesterday. Volatility over the past 24 hours has been low at just under +/-0.9%.You can get more news affecting the economy in New Zealand from interest.co.nz.Kia ora. I'm David Chaston. And we will do this again on Monday.

Kia ora,Welcome to Thursday’s Economy Watch where we follow the economic events and trends that affect Aotearoa/New Zealand.I'm David Chaston and this is the international edition from Interest.co.nz.And today we lead with news of more big-country tariff negotiation updates.But first, US mortgage applications were little-changed last week as their benchmark 30 year mortgage rate rose.Meanwhile, American home resales fell in June from May to an annualised rate of under 4 mln and down -4.4% from June 2024. This was largely driven by declining sales of single family homes. But median prices inched up, now at US$435,300 (NZ$720,000). High mortgage rates are getting the blame.There was another US Treasury bond auction overnight, this one for their 20 year maturity. It was well supported with a median yield of 4.89%. That was little different to the 4.88% at the prior equivalent event a month ago.The US has said it has agreed a 15% tariff deal with Japan (a notable level lower than the arbitrary 25% previously imposed). The main thing Japan had to do was agree to buy things (like aircraft) that would probably have bought from the US anyway. But it also supposedly requires Japan to water down its standards for rice imports and open their markets to US cars. Both of those requirements show a distinctly naive understanding of Japan. Very likely they will drive an anti-US sentiment by consumers there, mirroring what is happening in Canada. Japanese investors loved the deal - for Japan. boosting the Nikkei225 +2.2% at its market opening yesterday and ending the day up +3.5%.The Japanese bond market - an enormous beast - reacted with Japan’s 10-year government bond yield surging nearly +10 bp to around 1.60% approaching its highest level since 2008.In South Korea, the glow after resolving its presidential issues has seen its Consumer Sentiment Index rise in July from June, the fourth consecutive monthly gain and the highest reading since January 2018. The improvement reflects growing optimism fueled by the newly elected government and expectations for economic stimulus.Taiwanese industrial production continues to expand aggressively, up another +18% in June from a year ago, no surprise given the strong order inflows we reported earlier this week. But Taiwanese retail sales are nowhere near as positive, actually.In Europe, there is growing optimism some sort of tariff deal with the US is imminent. The US-Japan deal is being seen as a benchmark, and the optimism is fuel by the early judgement that Japan will come out on top in that one.In Australia, economic growth momentum is leaking away. At least, that is what the Westpac-Melbourne Institute leading indicator data shows. For them, the main drag coming from commodity prices, consumer and business sentiment, and total hours worked.The UST 10yr yield is now at 4.39%, up +5 bps from yesterday at this time. The price of gold will start today at US$3,387/oz, down -US$40 from yesterday.American oil prices are holding at just over US$65/bbl but the international Brent price is still at just under US$68.50/bbl.The Kiwi dollar is now at 60.4 USc and up +40 bps from yesterday. Against the Aussie we are unchanged at 91.6 AUc. Against the euro we are up +25 bps at 51.3 euro cents. That all means our TWI-5 starts today at just on 67.7, up +20 bps from yesterday.The bitcoin price starts today at US$117,867 and down -1.1% from this time yesterday. Volatility over the past 24 hours has remained modest, at just under +/-1.2%.You can get more news affecting the economy in New Zealand from interest.co.nz.Kia ora. I'm David Chaston. And we will do this again tomorrow.

Kia ora,Welcome to Wednesday’s Economy Watch where we follow the economic events and trends that affect Aotearoa/New Zealand.I'm David Chaston and this is the international edition from Interest.co.nz.And today we lead with news precious metals prices are having a moment - in US dollars at least, largely because the US dollar is extending its retreat. The same impact is affecting commodities like copper. Prices are rising in the US as a consequence of tariff-taxes which are pushing down the value of the greenback.But first, the dairy Pulse auction for SMP and WMP brought better results than the futures markets expected. SMP was up +1.7% and slightly better than the +1.5% expected. But the big mover was WMP which rose +1.5% when a -4% retreat was expected. The continuation of better prices will be something of a quiet relief in this industry.In the US. the retail impulse continued to expand last week, up +5.1% from a year ago. But the suspicion lingers that much of this is the inclusion of tariff taxes, despite what the CPI indicates.And those tariff taxes hurt the results in the latest Richmond Fed factory survey. This was their worst result in ten months and was led by a sharp retreat in new orders. Input cost growth stayed up.The cost of those tariff-taxes on US companies was on full display in US earnings reports. For Stellantis (Chrysler) it was US$300 mln, for GM US$1 bln. Both ate away at reported profits significantly. It is hard to see these type of companies absorbing costs like this for much longer.Across the Pacific, Taiwanese export orders continued their outstanding growth, up almost another +-25% in June from the same month in 2024 which itself led year-ago levels. It is hugely impressive and continues a very strong 2025 monthly set. It is their electronics industry leading the way.Sentiment in Japan bounced back yesterday as it became a clearer bet that Prime Minister Shigeru Ishiba is expected to remain in office despite the embarrassing performance of his party at the recent upper house elections. But holding on, he will be a damaged leader. The upstart ‘Japanese First’ Sanseito party has emerged as powerful force after these elections, and that was despite a 'secret' Russian campaign to support them (and destabilise Japan) that was exposed before voting.In the Europe, the ECB's latest credit survey fund a twist towards housing lending there. While credit standards for company loans remained broadly unchanged, credit standards tightened slightly for housing loans and more markedly for consumer credit. But this was because housing loan demand continued to increase strongly, while demand for company loans remained weak.In Australia, the vultures are out targeting vulnerable borrowers who are debt stressed. It has ASIC worried and they have launched a review into the debt management and credit repair sector in an effort to protect those experiencing financial hardship. Expect the Commerce Commission here to assess whether it needs to do similar work.Staying in Australia, the RBA released the minutes of its July 8 meeting and they revealed little new. They left its cash rate steady at 3.85% at this meeting, defying market forecasts for a -25 bps cut. The move was passed by majority vote, six in favour and three against. These minutes were full of "wait and see" sentiment, "data dependent" notes. Part of the waiting-to-see is because they doubt Trump will actually do what he threatens. They buy the TACO view apparently.The UST 10yr yield is now at 4.34%, down -3 bps from yesterday at this time. The price of gold will start today at US$3,427/oz, up another +US$34 from yesterday. And that almost matched its record high on April 21.And the silver price has pushed on up over US$39/oz It isn't yet threatening its 2011 peaks (US$48) but the recent climb has some people quite excited.American oil prices are -US$2 softer at just on US$65/bbl but the international Brent price is only down -50 USc at just under US$68.50/bbl.The Kiwi dollar is now at 60 USc and up +25 bps from yesterday. Against the Aussie we are unchanged at 91.6 AUc. Against the euro we are also little-changed at 51.1 euro cents. That all means our TWI-5 starts today at just on 67.5, up +10 bps from yesterday.The bitcoin price starts today at US$119,198 and up +1.1% from this time yesterday. Volatility over the past 24 hours has remained modest, at just under +/-1.2%.You can get more news affecting the economy in New Zealand from interest.co.nz.Kia ora. I'm David Chaston. And we will do this again tomorrow.

Kia ora,Welcome to Tuesday’s Economy Watch where we follow the economic events and trends that affect Aotearoa/New Zealand.I'm David Chaston and this is the international edition from Interest.co.nz.And today we lead with news China is having second thoughts about how some industries are operating with their super-competitive impulses.But first, a widely followed American leading index tracker weakened in June. The US Conference Board's LEIcontinued its fall which started in mid 2022 and has picked up its pace of decline somewhat. The LEI fell by -2.8% over the first half of 2025, a substantially faster rate of decline than the -1.3% contraction over the second half of 2024. For a second month in a row, the stock price rally was the main support of the LEI. But this was not enough to offset still very low consumer expectations, weak new orders in manufacturing, and a third consecutive month of rising initial claims for unemployment insurance.And a new attack vector on the US Fed by their Treasury Secretary probably won't help.But investors are happy, pushing the S&P500 up to a new record high, emboldened by tariff protections that will bring short-term gains.North of the border. Canadian producer prices were expected to fall in June continuing an easing that started in February. However they rose moderately to be +1.7% higher than a year ago. But the rise seemed to be caused by a jump in the precious metals corner of this index rather than more generally. So the impact isn't significant.More generally in Canada's economy, a central bank survey shows that tariffs and related uncertainty, along with spillover effects on the Canadian and global economies, continue to have major impacts on businesses’ outlooks. However, the worst-case scenarios that firms envisioned last quarter are now seen as less likely to occur.A parallel survey of Canadian consumers revealed a concerned public, one that saw a tough future. But the US copped almost all the blame, and Canadians said they are prioritising local purchases now at the expense of US sourced goods and services. Travel to the US is off their agenda.Across the Pacific, the People’s Bank of China kept key Loan Prime Rates (LPR) at record lows during the July fixing yesterday, as was expected. The economic resilience in the Chinese economy means they are keeping their powder dry, even though American tariffs and threats remain a concern. But those resonate less at present.China seems to be taking quite broad central policy actions to transform its industrial policies. Using the excuse of the "trade-war crisis" as motivation, it has released a digital transformation plan for their auto industry alongside similar initiatives for machinery and power equipment. Within those they are moving to promote the "orderly exit of outdated production capacity" as part of its broader industrial strategy.Part of the motivation is to rein in the ultra-competitive nature of Chinese commerce at present, a nationwide race to the bottom in terms of pricing while satisfying rising consumer standards. The big fear is that, uncurbed, it will bankrupt whole industries. They already have enough problems with their property sector. They think they don't need the same in the automotive, and machinery manufacturing sectors as well.In Australia, forecasting conducted for car dealerships suggest vehicles manufactured in China will make up almost half of sales within a decade in a major market shift.The UST 10yr yield is now at 4.37%, down -6 bps from yesterday at this time.The price of gold will start today at US$3,393/oz, up +US$45 from yesterday.American oil prices are softer at just over US$67/bbl while the international Brent price is now just on US$69/bbl.The Kiwi dollar is now at 59.8 USc and up +15 bps from yesterday. Against the Aussie we are unchanged at 91.6 AUc. Against the euro we are down -20 bps at 51.1 euro cents. That all means our TWI-5 starts today at just on 67.4, down -10 bps from yesterday.The bitcoin price starts today at US$117,913 and down a minor -0.2% from this time yesterday. Volatility over the past 24 hours has been modest, at just on +/-1.2%.You can get more news affecting the economy in New Zealand from interest.co.nz.Kia ora. I'm David Chaston. And we will do this again tomorrow.

Kia ora,Welcome to Monday’s Economy Watch where we follow the economic events and trends that affect Aotearoa/New Zealand.I'm David Chaston and this is the international edition from Interest.co.nz.And today we lead with US tariff news probably dominating this week as many countries get letters from Trump. That will likely include Australia and New Zealand.While the direct effect on us will probably be as expected, we will be more vulnerable to secondary impacts - although Canada, Japan, China and the EU all seem to be taking things in their stride, better than anticipated. It seems clear and confirmed tariff taxes are paid by the importing country companies, and the lasting damage will be to US companies and their competitiveness. The forced reassessments elsewhere may prove galvanising for resilience.But first, this week will be all about the New Zealand June quarter CPI result which will be released today at 10:45am. We will have full coverage. It is widely expected to come in higher at 2.8% and the RBNZ too has said it will be higher than what they expected in their May MPS review (2.4%).China will also review its Loan Prime rates today, but those are not expected to change from their record low levels.The ECB, Russia and Turkey will review policy rates this week and there will be a range of early July PMI data out for a number of countries. But nothing really major.But crucial will be the results of the Sunday Japanese upper house election. Those results are coming in now and it seems clear the current coalition government has lost significant support - and with it they are in for a period of less stable fiscal policy until things settle down.In the US, eyes will be on more corporate earnings, with more tech and industrial majors reporting this week including Google and Tesla.Eyes will also be on the will-he-won't-he question of whether Trump will try to fire Powell. (One irony in this saga is that Trump accuses Powell of overspending on a Fed building refurbishment - one initiated by Trump in his first term with the exhortation to 'don't be cheap' and to 'use more marble'.)Staying in the US, a surge in multi-unit house building in the Northeast propelled its overall June housing starts to a good rebound after the very weak May result. But starts for single family homes fell -4.6%, and the starts in the South fell -0.7%, in the West they fell -1.4% and in the Midwest the dropped -5.3%. It clearly remains a fragile sector.Stabilising was the sentiment survey from the University of Michigan for July. It ticked up slightly from June but is still almost -7% lower than year-ago levels. But it is off the canvas because it is now higher than any month since February. Inflation expectations eased back a bit too in July from June.Across the Pacific, Japan's annual inflation rate eased to 3.3% in June 2025 from 3.5% in the previous month, marking the lowest reading since last November. Most components eased, but not food, which rose 7.2%, the most since March, a surge due to the doubling of rice prices over the fast year.In Malaysia, their economy expanded by +4.5% year-on-year in Q2-2025, slightly up from +4.4% growth in the previous period. For them domestic demand was robust, but exports were a bit weaker than anticipated.In Australia, it will be a quiet week of economic data releases and there isn't much chance the release of the RBA minutes on Tuesday (tomorrow) will bring any surprises or special insights.The UST 10yr yield is now at 4.43%, up +1 bp from Saturday at this time and back where it was a week ago. The price of gold will start today at US$3,348/oz, down -US$3 from Saturday.American oil prices are unchanged at just under US$67.50/bbl while the international Brent price is now just over US$69/bbl.The Kiwi dollar is still at 59.6 USc and unchanged from Saturday - but down -50 bps from a week ago. Against the Aussie we are also unchanged at 91.6 AUc. Against the euro we are still at 51.3 euro cents. That all means our TWI-5 starts today at just on 67.5, unchanged from Saturday as well.The bitcoin price starts today at US$118,085 and up +0.3% from this time Saturday but essentially unchanged from a week ago. 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 will do this again tomorrow.

Kia ora,Welcome to Friday’s Economy Watch where we follow the economic events and trends that affect Aotearoa/New Zealand.I'm David Chaston and this is the international edition from Interest.co.nz.And today we lead with news Canada has conceded it has lost its dairy dispute with New Zealand.But first in the US, actual initial jobless claims in the US rose sharply to 261,000 from the previous week but that was less than seasonal factors would have suggested. There are now 2,017,000 people on these benefits, +4% more than year ago levels and the most in four months.After three down months, the Philly Fed factory survey recovered in July. New order intakes rose. But also rising was the prices firms paid for their inputs and what they charged their customers. 'Safe' behind a tariff wall, these firms are showing the expected reactions, ones that will make them internationally uncompetitive.Also rising were US retail sales in June. This also came after two retreating months, and was not expected. Year on year these sales are up +3.7% of which car sales rose +5.3%. Other than vehicles, the rise was +3.3% and still quite positive. However 2.7% of that can be accounted for by CPI inflation.US factory activity and retail sales may be rising but business inventories are not. And that is a resilient sign.One sector not showing any resilience is their house-building sector. The NAHB sentiment survey shows it remains at a low ebb, down near its 2022 lows. Affordability issues remain at the heart of the sector's woes, and they are hardly likely to improve as tariff-taxes flow through.In Canada, they have quietly conceded they have lost their dairy access dispute with New Zealand and will now honour the CPTPP treaty agreements. Although the US is not party to this dispute, the MFN clauses in its USMCA Agreement probably mean wider access for others to the Canadian dairy market.Across the Pacific and continuing its yoyo pattern, Singapore's June exports jumped. In fact they rose +14.3% from May to be +13% higher than year-ago levels.In Australia, their June labour market softened. They were expecting a jobs gain of +20,000 but only got +2,000. Their jobless rate ticked up to 4.3%. As a result, financial market pricing for an RBA rate cut on August 12 have risen.And inflation expectations in Australia are staying stubbornly high - although not as high in July as they were in June. The Melbourne Institute's Survey of Consumer Inflationary and Wage Expectations came in with inflation expectations at 4.7% which was down from June's 5.0% but apart from that still its highest since mid 2023. Expected wage growth fell slightly in July and remains relatively weak.A softening labour market but very high inflation expectations (and a frothy real estate market), will all make the RBA's assessments very difficult.More globally, container freight rates fell -2.6% last week from the prior week to be -55% lower than year-ago levels. But those year-ago levels were unusually boosted by Red Sea tensions. Currently, outbound rates from China are the weak spots in this market. Bulk cargo rates rose a sharp +34% last week to be back to year-ago levels. To be fair these current overall levels are basically 'average' over the past 35 years (so in inflation-adjusted terms they are very low).The UST 10yr yield is now at 4.47%, little-changed from yesterday at this time. Wall Street is firmer today with the S&P500 up +0.6%, enough to claim a new record high. Good corporate earnings are driving the mood.The price of gold will start today at US$3,336/oz, down -US$18 from yesterday at this time.American oil prices are up +US$1 at US$67.50/bbl while the international Brent price is now just under US$69.50/bbl.The Kiwi dollar is now at 59.3 USc and down -25 bps from this time yesterday. Against the Aussie we are up +30 bps at 91.4 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 on 67.2, and unchanged.The bitcoin price starts today at US$119,100 and essentially unchanged from this time yesterday. 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 will do this again on Monday.

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

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

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

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