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 tariff-costs seem to be having much more impact on US prices than on global trade.But first, US initial jobless claims rose slightly last week to 199,000 but that was slightly lower than seasonal factors would have accounted for. There are now just over 2 mln people on these benefits, +100,000 more than at the same time last year.However, rising much more were producer prices. They are up +3.3% in July from a year ago, a jump from June's +2.4% and much higher than the expected +2.5%. This ends a period where these costs eased since February with a notable reversal. The month-on-month rise was outsized and we make that the largest non-pandemic jump since 2012. This data is having traders re-think their bets on the September 18 US Fed rate review. Currently they expect a -25 bps cut, despite White House pressures. They have two more -25 bps cuts priced in through to january 2026, so maybe some of those could get reassessed. Today's PPI data may signal the tariff-induced inflation is only just starting.In China, they are wrestling - endlessly it seems - with how to staunch the property development sector's bleeding. The latest idea is that Beijing's SOEs but up the unsold housing overhang.India's exports rose in July, but their imports jumped much more so their trade deficit worsened and is much more negative than it was a year ago for the same month.Meanwhile, S&P have upgraded the Indian sovereign credit rating to 'BBB' from 'BBB-' and changed the outlook to stable from positive. It said the upgrade was based on economic resilience and sustained fiscal consolidation. They noted the strong growth momentum, said monetary policy was credible, and added that the impact of Trump’s tariffs should be manageableIn Australia, one of their largest superannuation funds failed to tell regulator ASIC about investigations into serious member services issues, including incorrect insurance premium refunds for dead members. This is part of what ASIC is alleging in an Australian Federal Court suit launched yesterday.And staying in Australia, their jobless rate eased to 4.2% in July, down from the four year high of 4.3% in June. The decline was driven by a drop of 10,200 in the number of unemployed, bringing the total to 649,600. Meanwhile, employment rose by +24,500 to a record high of 14.6 mln following a downwardly revised gain of +1,000 in June. Full-time employment rose by +60,500 while part-time positions fell by -35,900. Female participation hit a record high of 63.5%.Global container freight rates fell in a broad shift lower to be down -3% last week from the prior week and down -59% from year ago levels. Those year ago levels were an unusually high benchmark due to Red Sea security factors back then. Bulk freight rates were little-changed over the past week, but are +20% above year ago levels.The UST 10yr yield is now at 4.28%, up +5 bps from yesterday at this time. The price of gold will start today at US$3,335/oz, down -US$17 from yesterday.American oil prices have risen +US$1.50 to be just under US$64/bbl with the international Brent price up a bit less at US$66.50/bbl.The Kiwi dollar is at just under 59.1 USc and down -60 bps from yesterday. Against the Aussie we are down -20 bps at 91.1 AUc. Against the euro we are down -20 bps at 50.8 euro cents. That all means our TWI-5 starts today at just on 66.9, down -40 bps from yesterday.The bitcoin price starts today at US$117,741 and down -3.1% from this time yesterday. Volatility over the past 24 hours has been moderate at +/-2.6%.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 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 a rare drop in bank lending in China from weak demand.But first up today, we need to report that "due to a technical issue", yesterday's GDT Pulse Auction was cancelled prior to its completion.Meanwhile in the US, and boosted by a very sharp surge in refinance activity, mortgage applications were up more than +10% last week from the week earlier. Refi clients too advantage of a small -10 bps dip in the benchmark interest rate. But applications to finance a new home purchase actually fell last week from the prior week. Still, that is +16% higher than year-ago levels.The Trump Administration is increasingly worried about the outlook for their economy. Tariff costs are choking off expansion. We will get a GDPNow update of economic activity later this week, but it is likely to be quite soft. Now Treasury Secretary Bessent is calling for a -150 bps rate cut by the Fed to counter the expected decline, and telling them to ignore the building inflation.In Japan, machine tool orders rose +3.6% in July driven by stronger export orders.In China, there has been an unexpected surprise in the release of their bank lending data for July released overnight. It actually fell for the first time in more than twenty years. It fell -¥50 bln in July from the prior month. A +¥300 bln increase was expected. July is often a shadow month after the quarter end, but actual declines are almost unheard of in the modern era. Overall social funding rose, but that is bolstered ny economic support measures. That commercial firms are borrowing less is undoubtedly not a trend Beijing wants to see.The slowdown domestically, and severe overcapacity has seen Chinese steel products dumped in international markets. More countries like Japan and South Korea are considering anti-dumping actions against Chinese steel, while India has several probes underway. Chile has imposed temporary anti-dumping tariffs to protect its steel industry. These moves come after the US and Canada imposed their restrictions. These actions against Chinese steel will no doubt get more strident unless China removes a meaningful proportion of its overcapacity.That makes Australia vulnerable.Australia imports a significant amount of steel from China (more than AU$4 bln/year), with structural steel being a major category. And this is rising and a threat to local steel mills. Australia is in a tough spot dealing with China on the issue because their iron ore exports are the main Australian advantage (about AU$100 bls/year). And quality is another advantage of local steel products. There are rising concerns about the quality and compliance with Australian standards of some imported Chinese steel products.New owner-occupier loan values in Australia were up +7.2% in June from the same quarter in 2024. But the number of new loans was up only +0.2% on the same basis. This reflects the frothy housing markets in many state capital cities. The biggest value increases were for owner-occupiers who weren't first home buyers with these loan values up +9.8%. Volumes for that group were up+1.0%. First home buyers in Australia are the weakest borrowers, largely shut out of their housing markets.The UST 10yr yield is now at 4.24%, down -5 bps from yesterday at this time.The price of gold will start today at US$3,353/oz, up +US$6 from yesterday.American oil prices have fallen another -US$1 to be just under US$62.50/bbl with the international Brent price now at US$65.50/bbl.The Kiwi dollar is at just under 59.7 USc and up +10 bps from yesterday. Against the Aussie we are also up +10 bps at 91.3 AUc. Against the euro we are holding at 51 euro cents. That all means our TWI-5 starts today at just on 67.3, up +10 bps from yesterday.The bitcoin price started today at US$121,559 and up +1.9% from this time yesterday. Volatility over the past 24 hours has been modest at +/-1.3%.You can get more news affecting the economy in New Zealand from interest.co.nz.Kia ora. I'm David Chaston. And we will do this again 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 inflation is staying high in the US but retreating in India and Australia.The US CPI inflation rate remained at 2.7% in July, the same as in June and below forecasts of 2.8%. Still it is worth noting that June's level caused Trump to fire the bearer of that news. But the level has been held anyway. Food prices also were steady at +2.9%. Meanwhile, core inflation, which excludes food and energy, accelerated to a five-month high of 3.1%, compared to 2.9% in June and above forecasts of 3%. The monthly core CPI went up +0.3% as expected, its sharpest rise in six months.Apparently, importers were still absorbing most of the border tariff taxes.The new head of the agency responsible for this data (a Heritage Foundation official) has suggested they stop publishing monthly jobs data, especially for jobs, until "errors can be corrected". (Code for, what the White House wants.)What today's inflation data means for a Fed rate cut is still uncertain - for some. Equity markets are betting this "as expected" result will allow one and their bets are now 90% certain a cut will come on September 18 (NZT). Bond markets are a bit more sceptical. Currency markets remain bearish on the USD.Record expected corn production in the US, and closing international appetites for politicised trade uncertainties brought a swift fall in corn prices. The same USDA WASDE report says beef prices are rising in lower tariff-induced imports from Brazil and lower domestic production. US milk prices are little-changed but they expect to import more SMP.The US NFIB Small Business Optimism Index rose in July from June but it still not back to levels of earlier in the year. This latest rise is all about current outcomes rather than future conditions. The uncertainty subcategory was still high and rising.The US government posted a -US$291 bln budget deficit in July, despite a +US$21 bln boost in border tariff collections from importers, as spending outpaced revenues. The shortfall was US$47 bln larger than a year earlier, with receipts rising +2% to US$338 bln but outlays jumping +10% to a record US$630 bln for the month. The unexpected worsening seems to have been ignored by equity markets who 'liked' the inflation result.But the bond market is bracing for the impact of an additional US$500 bln in Treasury Bond issuance over the next six months. Benchmark yields rose.In Canada, a sharper than expected fall in Vancouver multi-unit house building permits, along with a sharper than expected fall in Toronto commercial building, has seen the Canadian building permit levels in June retreat much more sharply than expected. This retreat comes after an unusually strong gain in May however.In India, CPI inflation is retreating rapidly now, coming in in July at only 1.6% fron a year ago. In June it rose 2.1%. The July level is almost as low as the all-time low of 1.5% in June eight years ago. In the latest data, food prices deflated -1.8% and this was by far the major reason for the overall easing. The result is now well below the RBI inflation tolerance band of 2-6% so official rate cutting may come into play. But arguing against that is the record weakness on the Indian rupee.In Germany, ZEW Indicator of Economic Sentiment fell back for the first time in four months, mainly on the disappointing outcomes in the EU-US tariff 'negotiations'. But overall sentiment remain relatively high there in a long term perspective.In Australia, and in a unanimous decision, the nine member Reserve Bank of Australia Monetary Policy Board has cut its cash rate target by -25 bps to 3.60%, saying a further easing of monetary policy is appropriate after a pause at its last review in July. Most banks announced they would pass it on in full to home loan borrowers. Lower inflation tracks are behind the official rate cut.The UST 10yr yield is now at 4.29%, up +2 bps from yesterday at this time. The price of gold will start today at US$3,347/oz, down -US$7 from yesterday.American oil prices have softened -50 USc to be just under US$63.50/bbl with the international Brent price now at US$66/bbl.The Kiwi dollar is at just under 59.6 USc and up +20 bps from yesterday. Against the Aussie we are up +10 bps at 91.2 AUc. Against the euro we are down -10 bps at 51 euro cents. That all means our TWI-5 starts today at just on 67.2, unchanged from yesterday.The bitcoin price started today at US$119*,329 and down -0.2% from this time yesterday. Volatility over the past 24 hours has been low at +/-0.7%.You can get more news affecting the economy in New Zealand from interest.co.nz.Kia ora. I'm David Chaston. And we will do this again tomorrow.

Kia ora,Welcome to Tuesday’s Economy Watch where we follow the economic events and trends that affect Aotearoa/New Zealand.I'm David Chaston and this is the international edition from Interest.co.nz.And today we lead with news the US is deploying new shakedown tactics on its exporters to give some favoured tech companies tariff and national security export relief - if they pay.However first, China's vehicle sales were up almost 15% in July from a year ago, following a nearly +14% rise in June. That means they sold 2.6 mln units in July. The sales pace is running far higher in 2025 than the record pace in 2024, but the really large sales months don't come until late in the second half of the year. Sales of new energy vehicles surged 27% year-on-year to more than 1.25 mln units in July, accounting for nearly half of all new car sales and marking the fifth consecutive monthly increase.Hong Kong listed Chinese property developer, China South City Holdings, has been suspended after a Hong Kong court ordered its winding up. That ends a years-long process of attempting to survive through reorganisation and emphasises how tough the Chinese property development market is still.In India, there are reports their central bank is in the markets supporting the falling rupee. So far they have spent US$5 bln on the operation to no obvious impact, although it may have helped slow the devaluation.In the US, the Federal Government is finding new ways to tax. First it was tariffs (import taxes), now it is export taxes. It is extracting 15% from chip sales, starting with exports to China. These shakedown of corporate America come with waiving tariffs or national security export restrictions, giving the company advantages over its rivals. Very Soprano. It is a habit sure to spread, ushering in a period of hyper crony-capitalism - one that may be indistinguishable from capitalism-with-Chinese-characteristics. The Chinese at least are trying to wean themselves off the habit, because it led them nowhere.Tomorrow, the US will release its CPI data. And after the firing of its agency head last month because Trump didn't like the result, this will draw special scrutiny, especially as tariff costs are increasingly being passed on. The key reaction to watch will be how TIPS bonds are prices (Treasury Inflation Protected Securities). The CPI rate is the basis for these yields and it they are going to be artificially interfered with, investors may sell down this US$2.1 tln bond market corner. If that happens, we will all notice. Markets expect the 2.7% CPI rate in June (the one Trump didn't like) to rise to 2.8%, and the core rate to hit 3% - for the first time in five months and calling an end to the disinflation cycle and the start of re-inflation.Later today we get the RBA's latest rate decision. It almost certainly will announce a cut of -25 bps to 3.60%. And before that the wide-watched NAB business sentiment survey will be released. It isn't expected to show much change from the modestly positive readings.And as important as today's announcements will be, don't forget tomorrow CBA will release its annual 2025 results to June. And they are widely expected to be a record exceeding AU$10 bln. It is ranked in the mid 40s on an assets basis, but it is one of the worlds most profitable.The UST 10yr yield is now at 4.26%, down -2 bps from yesterday at this time. The price of gold will start today at US$3,354/oz, down -US$44 from yesterday.American oil prices have firmed +50 USc to be just under US$64/bbl with the international Brent price now at US$66.50/bbl.The Kiwi dollar is at 59.3 USc and down -20 bps from yesterday. Against the Aussie we are also down -20 bps at 91.1 AUc. Against the euro we are unchanged at 51.1 euro cents. That all means our TWI-5 starts today at just on 67.2, down -10 bps from yesterday.The bitcoin price started today at US$119,552 and up +0.8% from this time Saturday. Volatility over the past 24 hours has been modest at +/-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.

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 geopolitics will suck up all the headlines this week, but we will focus on how the world's economies are faring.This coming week will have a focus on Australia, and the RBA's Tuesday cash rate target review. "Everyone" expects them to cut by -25 bps to 3.60% - the more so because they skipped the expected cut at their July 9 review. There will be interest in the NAB business sentiment report this week tooIn the US, the economic focus will be on CPI, PPI, retail sales and industrial production data. Market analysts aren't expecting to see much expansion and are expecting to see higher inflation. There will also be another consumer sentiment survey released this week too.In Europe it will be all about GDP and sentiment updates. In Japan, we get to learn their Q2 GDP result. In India the focus will be on inflation updates.In China there will be some big data released including for industrial production, retail sales, and new bank lending.Over the weekend China released its July CPI data. It rose +0.4% from June, to be unchanged from a year ago. They are being suppressed by Beijing's subsidy programs. Food prices fell marginally in the month to be -1.0% lower than a year ago. Beef prices however rose +3.6% on that annual basis, sheepmeat prices fell -1.4%, and milk was down -1.3%.Meanwhile overall producer prices deflated quicker, down -3.6% from a year ago. Producer purchase prices were down -4.5%, taking it to almost three years of continuous monthly declines. That's serious deflation.More globally, the July world food price index inched higher, but that masks record higher prices for meat proteins. And those were driven by beef and sheep prices. Dairy prices eased back from June but only slightly and they remain very near record levels.Canada released its July labour market report over the weekend showing 1.6 mln people unemployed for a jobless rate of 6.9%. That's high even if it is stable, and the number of people employed fell by -40,800, with a drop of -51,000 in full-time jobs and a rise of +10,000 in part-time jobs. The decline was mostly among 15-24 year olds. Markets had expected overall employment to rise by +13,000.In Japan, June data for household spending rose +1.3% from the same month a year ago, down sharply from a +4.7% increase in May. Forecasts were for a +2.6% rise. Households were worried about the impact of US tariffs and persistent inflation on consumer activity. On a monthly basis, spending plunged -5.2% in June from May, reversing May’s +4.6% rise and undershooting expectations of a -3% correction.And staying with Japan, they agreed with the US on a 15% "reciprocal" tariff. But Trump issued an executive order to charge 25% in a pique of retribution for slights no-one can quite understand. The Japanese have called them out on it, insisting they honour the negotiated deal. Now Bessent and Lutnick have agreed to not only correct the "administrative mistake" but refund the capricious tariff charges. The Japanese are back with the same deal as the EU has.Taiwan's export performance continues to astound. Exports from the island nation surged +42% in July from a year ago to a record US$56.7 bln, following the +34% increase in June. They were expecting 'only' a +29% rise on this basis. by any measure this strength is quite remarkable. It is all built on electronics. Taiwanese imports were up +21% on the same basis.In the US the appointment of Stephen Miran to fill a temporary vacancy as a board member of the US Federal Reserve adds in a protectionist sceptic to the voting mix. He is no fan of central bank independence. But oddly he has railed against the 'revolving door' of its members moving between Whitehouse/Treasury positions and the Fed governorships. He has now become exhibit A.An global reinsurer SwissRe says 2025 is shaping up to incur weather and climate losses exceeding US$150 bln, after a record $80 bln in the first half. That would make it its costliest year since 2011 (when the NZ and Japanese earthquakes occurred), but by far the costliest for just climate impacts.We should also note an AFR report that French dairy giant Lactalis, is the leading bidder for Fonterra’s Mainland business after being granted exclusivity to negotiate for a buyout. They got the nod with a price rumoured to be something less than $4 bln.The UST 10yr yield is now at 4.28%, down -1 bp from Saturday and up +6 bps for the week.The price of gold will start today at US$3,398/oz, up US$3 from Saturday. But that has built to a +US$51 gain for the week, or up +1.5%. The uncertainties swirling around the new US tariff ruling are flowing through the New York gold price. Meanwhile the White House called the news 'misinformation' even though their agency had published to tariff ruling.American oil prices have slipped back again, down -50 USc to be just under US$63.50/bbl with the international Brent price down at just over US$66/bbl. These are more than -US$3.50 lower than week-ago levels.The Kiwi dollar is at 59.5 USc and down -10 bps from Saturday, up +½c from a week ago. Against the Aussie we are up +10 bps at 91.3 AUc. Against the euro we are unchanged at 51.1 euro cents. That all means our TWI-5 starts today at just on 67.3, unchanged from Saturday and up +20 bps from this time last week.The bitcoin price started today at US$118,561 and up +1.5% from this time Saturday. Volatility over the past 24 hours has been modest at just on +/-1.1%.You can get more news affecting the economy in New Zealand from interest.co.nz.Kia ora. I'm David Chaston. And we will do this again tomorrow.

Kia ora,Welcome to Friday’s Economy Watch where we follow the economic events and trends that affect Aotearoa/New Zealand.I'm David Chaston and this is the international edition from Interest.co.nz.And today we lead with we are ending the week with Wall Street not finding much to like about future trade prospects, especially as policy shifts seem to be highly chaotic and involve personal retributions.US initial jobless claims rose last week to +195,000 when seasonal factors indicated it would fall. There are now just over 2 mln people claiming these benefits. This time last year there was just over 1.9 mln, a rise of +99,000.American consumer inflation expectations for the year ahead rose to 3.1% in July from 3% in June. This was held back only because of the widespread perception that petrol prices would fall. The median year-ahead expected change in food prices remained unchanged at 5.5%. Looking further ahead inflation expectations in fives rose to 2.9% from 2.6%.Meanwhile Q2 American labour productivity improved in data released today. It rose by 2.4% in the quarter following a revised -1.8% drop in the prior period. Analysts expected a +2% increase. Output increased by 3.7% (vs -0.6% in Q1) and hours worked increased by 1.3% (vs 1.2%).The US agricultural sector used to be a powerhouse export driver. But no more. Data released yesterday shows it has turned into a net importer, a trend that started in 2018 in the first Trump presidency. The first half of 2025 has now recorded its largest deficit on record, mainly on stuttering exports.Meanwhile, American consumer credit rose in June but only modestly. Total consumer credit rose by just +US$7.4 bln in the month, up from a +US$5.1 bln in May. These are minor changes and don't indicate any impending credit stress.Across the Atlantic in a tighter than expected vote, the Bank of England cut its policy rate by -25 bps to 4.0%. They have inflation running at 3.6% with a target of 2%. Five of the nine voting members voted for the cut, four wanted no-change. This was much closer than the 7:2 vote expected.In China, they are not only subsidising trade-in programs to help juice their domestic economy, now they are subsidising interest rates on personal loans. Consumer credit has not been traditionally popular in China, but young people are signing up much more freely. It is a sector that may grow to hold financial stability risks.Standard & Poor’s have affirmed China's sovereign credit rating at A+ Stable. China's government gets a AAA rating from its own domestic ratings agencies, but Beijing was pleased anyway with the S&P result.Container freight rates fell -3% last week from the week before to be -58% lower than year-ago levels, although to be fair those were an unusual peak. Outbound from China was again the main weakness although outbound from the US is now showing up as a weakening trade too - and that starts with very low rates anyway. Bulk cargo rates were essentially unchanged over the past week and are now +18% higher than a year ago.The UST 10yr yield is now at 4.25%, up +3 bps from yesterday. The price of gold will start today at US$3,391/oz, up US$17 from yesterday.American oil prices have slipped back again, down another -US$1 to just on US$64/bbl with the international Brent price down at just over US$66.50/bbl.The Kiwi dollar is at 59.5 USc and up +10 bps from yesterday. Against the Aussie we are up +20 bps at 91.5 AUc. Against the euro we are up +10 bps at 51.1 euro cents. That all means our TWI-5 starts today at just on 67.3, up +20 bps.The bitcoin price started today at US$116,442 and up +0.8% from this time yesterday. 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 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 in search of short-term riches, the Cook Islands is establishing itself as a haven base for deep sea mining, it be used by both great powers.But first, American mortgage applications rose last week with a modest +3.1% gain from the prior week attributed to a small fall in benchmark mortgage interest rates. It was the stronger +5% refinance activity that drove the modest gain rather than new home purchases.Those benchmark rates may keep falling. There was slightly softer demand for the latest overnight US Treasury 10yr Note auction, but the resulting median yield came in at 4.20%, down from 4.31% at the prior equivalent event a month ago. However the yield is up on more recent levels.Separately, the NY Fed monitoring of global supply chain pressure eased again in July.In Canada, they are seeing residential real estate markets operating like we see here. For example Toronto sales transactions are rising (+13% in July from a year ago), but prices falling (-5.4% on the same basis).The Reserve Bank of India kept its key policy rate at 5.50% during its August meeting, now holding a neutral stance, following a larger-than-expected -50 bps decrease in June. There were no surprises here and the rate remains at its lowest level since August 2022. Easing inflation and the recent US tariff challenges were key considerations.Meanwhile, the US has doubled its tariffs on India to 50% as 'punishment' for buying Russian oil. Interestingly it has boosted Modi's standing at home in India and brought bi-partisan support for him in resisting the US.In China, they have brought in a ¥3,600 yuan (NZ$845) per year child care subsidy for under threes, designed to boost household consumption and ease pressure on family budgets. Encouraging childbirth is probably the core motivation for this subsidy. It is just another is a broadening range of consumer subsidies China is rolling out to support its economy and build domestic demand.EU retail sales volumes impressed in an overnight data release for June. They were up +3.1% on a volume basis, the best increase since September 2024. German gains were particularly strong, up +4.8% on the same volume basis.But new German factory orders again disappointed in June, down -1.0% in volume terms. Although this was twisted by some lumpy 'large' orders. Excluding those, the change is a gain of +0.5% in volume terms. (Large-scale items include aircraft, ships, trains, military vehicles).Australia said living costs rose for all type of households in June. Over the past year, all LCIs rose between +1.7% and +3.1%, slowing from annual rises of between +2.4% and +3.5% to the March 2025 quarter. In the South Pacific, the Cook Islands is becoming a renegade state. Its deal with China allows the Chinese to use it as a base for deep sea mining. Now the US is keen to use it in the same way. These great powers see “one of the most promising regions for deep-sea mineral deposits.” These nations are keen to plunder as far away from themselves as possible.The UST 10yr yield is now at 4.22%, up +2 bps from yesterday. The price of gold will start today at US$3,374/oz, down -US$5 from yesterday.American oil prices have slipped back again, down another -50 USc to just under US$65/bbl with the international Brent price holding at just over US$67.50/bbl.The Kiwi dollar is at 59.4 USc and up +40 bps from yesterday. Against the Aussie we are unchanged at 91.3 AUc. Against the euro we are also unchanged at 51 euro cents. That all means our TWI-5 starts today at just on 67.1, up +20 bps.The bitcoin price started today at US$115,465 and up +1.6% 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 tomorrow.

Kia ora,Welcome to Wednesday’s Economy Watch where we follow the economic events and trends that affect Aotearoa/New Zealand.I'm David Chaston and this is the international edition from Interest.co.nz.And today we lead with news the equity markets and the bond markets are flashing quite different signals, and equity markets seem quite out of step with the operating economic data. When these vary, there is usually a reckoning, and that usually (but not always) results in an equity correction.But first up today, the overnight dairy auction brought results similar to what the derivatives market expected, maybe slightly better because of show early season strength in WMP demand and prices. Volumes sold were the highest since October 2024. And helping the tone was the fall in the NZD which boosted the rise in local currency. Overall the event ended up +0.7% in USD and up +1.5% in NZD. The industry will be satisfied the new season is off to a good start.On the butter demand front, there was a noted fall off in demand at these prices - except frim China and Middle East buyers. There is enough there to keep prices elevated, although to be fair the butter price did ease +3.8% at this event.Meanwhile, the widely watched American ISM services PMI unexpectedly fell in July 2025 from June, and the result was lower than expected. The services sector is now nearly stagnant, with seasonal and weather factors having a negative impact on business. A slowdown was most evident in the fall in new orders - activity is still operating faster than new orders are arriving so that is not great for the future. Not slowing are price increases, so all the signs of stagflation here. However, the internationally-benchmarked S&P Global/Markit version told a more upbeat story.US exports fell in June from May but the fall was only minor, and from a year ago there were up +3.3%. US imports fell more sharply in the month to be -1.4% below year-ago levels. But that only results in their trade deficit being back to mif 2024 levels. Or 2023 levels. The needle has moved very little.But the RCM/TIPP sentiment survey rose in July although the move was minor. It mirrored the month's equity markets and this index also hit a 4 year high.American household debt rose by +US$185 bln in the June quarter to a new record high of US$18.4 tln. That is now 60.6% of GDP. The flow of household debt into serious delinquency was mixed across debt types, with credit card and car loans holding steady, student loans continuing to rise, and mortgages edging up slightly.In India, their services PMI tells a booming story. International orders and overall sales rose sharply from the fastest increase in business activity for 11 months. However, price pressures re-accelerated, so this boom comes with inflation consequences. It's a report in sharp contrast to the lackluster American equivalents. "Someone" is quite envious of their success and is threatening sharply higher tariffs.Meanwhile Trump is signaling that their endless 'truce' with China will get another extension.And China delivered a positive data surprise yesterday, with the private Caixin services PMI rising and by more than expected. (Remember the official NBS services PMI eased lower.) The Caixin China General Services PMI rose in July from June’s nine-month low with the fastest expansion in the services sector since May 2024, and with new business growing at the strongest pace in a year.That is in contrast to the EU services PMI which remains weak, although it is still expanding.Quarterly June data out today in Australia shows household spending rose at a good rate, up +5.1% from the same month a year ago - and the rate it rose from March was good too. Discretionary spending was strong. Western Australia was the only jurisdiction where spending fell. On a volume basis (after inflation's impact), it is up +0.7%.Join us at 10:45am for the New Zealand labour market report for June, although it might just confirm the tough operating environment we are in.The UST 10yr yield is now at 4.20%, up +1 bp from yesterday. The price of gold will start today at US$3,379/oz, up +US$7 from yesterday.American oil prices have slipped back again, down another -US$1 to just under US$65.50/bbl with the international Brent price just over US$67.50/bbl.The Kiwi dollar is at 59 USc and little-changed from yesterday. Against the Aussie we are down -30 bps at 91.3 AUc. Against the euro we are unchanged at 51 euro cents. That all means our TWI-5 starts today at just on 66.9, down -10 bps.The bitcoin price started today at US$113,625 and down -1.4% from this time yesterday. Volatility over the past 24 hours has been modest at just under +/-1.2%.You can get more news affecting the economy in New Zealand from interest.co.nz.Kia ora. I'm David Chaston. And we will do this again 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 tough economic news keeps coming, even during this lazy August vacation period in the northern hemisphere.First, in the US factory orders were expected to retreat in June, consistent with the labour market and PMI signals - and they did. They were down -4.8% from May, although they are still up +6.6% from a year ago. The June falls were largely driven by a -22% plunge in transportation equipment orders. This same data confirmed the earlier durable goods order decrease in June of -9.4%.We are awaiting important services PMIs for July and they are expected to be much better than those for their factory sector.American economic uncertainty is now well embedded in consumer behaviour. Some brands are really suffering, and causing large writedowns.Meanwhile, American vehicle sales rose in July to an annualised rate of 16.4 mln, slightly more than expected because they got a boost ahead of expected price increases from the August 1 tariff-taxes. But the boost was relatively minor, just +3.6% ahead of the same level in July 2024.In China, parts of the country are battling heavier-than-usual rainfall. And that includes Beijing itself, a city of 22 mln. Dozens of people have died in flooding already. They are expecting 200 mm of rain to fall over the next 24 hours, on top of what they have had which created their emergency. Beijing's normal annual rainfall is 600 mm.In Australia, the Melbourne Institute's inflation gauge survey result brought an unwelcome surprise. It surged +0.9% in July, the steepest rise since December 2023 and a sharp rebound from June’s modest +0.1% increase. The RBA is unlikely to be impressed because even if inflation is within range it seems to be testing the upper end of that range and a rate cut could well push it up out-of-range. Still, financial markets are pricing in a full -25 bps cut for Tuesday, August 12 when the RBA next meets. And they have priced in two more by the end of 2025. At this time, given inflation is proving harder to lick, that seems unlikely. And in turn there could be many disappointed market traders - and mortgage holders - as the year unfolds.The UST 10yr yield is now at 4.19%, down -3 bps from yesterday.The price of gold will start today at US$3,372/oz, up +US$10 from yesterday.American oil prices have slipped back again, down -US$1 to just under US$66.50/bbl with the international Brent price just over US$68.50/bbl.The Kiwi dollar is at 59 USc and down -20 bps from yesterday. Against the Aussie we are down -10 bps at 91.4 AUc. Against the euro we are also down -10 bps at 51 euro cents. That all means our TWI-5 starts today at just on 67, down -10 bps as well.The bitcoin price started today at US$115,217 and up +0.9% from this time yesterday. Volatility over the past 24 hours has been low again at just under +/-0.7%.You can get more news affecting the economy in New Zealand from interest.co.nz.Kia ora. I'm David Chaston. And we will do this again 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 US President Trump is "making progress" is bending independent agencies (BLS, the US Fed) to respond to what is best for him, rather than the US economy.But the week ahead will all be focused locally on Wednesdays Household Labour Force survey results for July. Our jobless rate is expected to rise to 5.3% from 5.1% in June (and May). That would make it its highest since 2016 and exceeding anything we had in the pandemic period.Elsewhere the week will feature a raft of PMI and factory order releases. Plus, China will release key trade and inflation data.But the big economic driver for the week will be market reactions to Trump's tariff-war moves and his drive to bend both the Fed and the economic data agencies in the US to show fealty to him and avoid any negative reports. On Friday they sensed all this isn't good for the US economy and turned sharply risk averse even though corporate earnings reports have stayed positive.And that was because of Trump's response to official data he didn't like. He moved to fire the head of the data agency who reported it.Then a voting Fed official resigned, giving him a chance to twist more independence out of this crucial institution.The release of the July US labour market report showed the headline jobs gain was only +73,000 when +110,000 was expected. But worse, the June data was revised sharply lower to just +14,000 from the original +147,000. Their jobless rate edged higher to 4.2%. The number of people unemployed for at least 27 weeks has topped 1.8 mln now, the highest since the pandemic. Wage growth for the low-paid was unusually weak. This is a huge miss and there were sharp financial market reactions.Those are the seasonally adjusted numbers. The actual numbers are much worse, down -1,066,000 in July from June. To be fair much of that actual shrinkage is seasonal, but at 159.3 mln people employed, that is lower than in November 2024 when Trump won office.But with this July stumble in their labour market, it will be no surprise to know that the ISM factory PMI shows the same sharp retreat. In June this PMI was contracting with a 49.0 index level. It was expected to improve to a smaller contraction of 49.5. (An index level of 50 is the fulcrum between expansion and contraction.) But it went the other way, deepening its contraction to 48.0. Driving the retreat were new orders and order backlogs contracting, along with input costs increasing and exports falling. Overall, this is reporting their factory sector is contracting faster. (The internationally benchmarked S&P Global/Markit factory PMI version also reported a sharp drop info contraction in July, also largely on stagnating new order levels.)In China, like the official China factory PMIs had signaled, the independent Caixin PMI also signaled that their factory sector went backwards in July too. The Caixin survey isn't as negative as the official survey, but it now shows the overall sector in contraction. The Caixin survey tends to account better for mid-sized private manufacturers whereas the official survey includes the very large state-owned enterprises.China recognises the need to do more to stimulate internal consumption, and they are now committed to using subsidies as a key tool. Essentially they are subsidising trade-in prices to generate sales of new items. The target is to raise this subsidy level to ¥300 bln in 2025. On Friday they announced another ¥69 bln in ultra-long special treasury bonds will be issued for this purpose, the fourth tranche in the program.Another policy action announced on Friday involves their war on "involution", which they take to mean excessive or irresponsible competition involving a general race to the bottom. It was a feature of their housing crisis, and is a big worry for their car manufacturing industry. Top-down pressure to rein in this sort of behaviour is intense now. In fact, BYD is now indicating their production levels will be lower in future.However in Japan, Toyota has told suppliers that it aims to boost 2025 global production to about 10 million vehicles, underpinned by strong sales of hybrids despite concerns over the impact of American tariffs. (In the US, carmaker Ford is noting that tariffs are not helping them.)In Singapore, the latest PMI readings painted a mixed manufacturing outlook with the electronics sector in continued expansion whereas the overall manufacturing sector reverted to a marginal contraction. Declining now order levels caused the shift.In India, the growth of factory orders and production strengthened in July, driving their factory PMI up to an impressive 59.1, although that was a touch less than the result expected. Indian factories are easily the star of the show on a global basis.The EU released its July inflation data on Friday, and there were no surprises there with inflation stable at 2.0% in the Euro area. The overall level is still being restrained by falls in energy costs.Australian producer prices rose 3.4% over the past year to June, down from a 3.7% rate in the year to March, and down from a 4.8% rate in the year to June 2024. Cost pressures are still high, but they are easing, even if slowly.The UST 10yr yield is now at 4.22%, up +1 bps from Saturday, down -18 bps for the week.The price of gold will start today at US$3,362/oz, up +US$14 from Saturday.American oil prices have slipped back again, now just over US$67/bbl with the international Brent price holding at US$69.50/bbl. A week ago these prices were US$65 and US$68.50/bbl. OPEC has agreed a big increase in oil production. And we should probably note another fall in North American oil rigs in action, now down to their lowest level since September 2021.The Kiwi dollar is at 59.2 USc and up +20 bps from Saturday but down nearly -1c from a week ago. Over all of July the fall was -180 bps. Against the Aussie we are unchanged at 91.5 AUc. Against the euro we are down -40 bps at 51.1 euro cents. That all means our TWI-5 starts today at just on 67.1, unchanged from Saturday, down -60 bps for the weekThe bitcoin price started today at US$114,109 and up +0.8% from this time Saturday, but down -2.0% from a week ago. Volatility over the past 24 hours has been low at just under +/-1%.You can get more news affecting the economy in New Zealand from interest.co.nz.Kia ora. I'm David Chaston. And we will do this again tomorrow.