Economy Watch

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 Super Typhoon Ragasa aims for a direct hit on southern China.But first up, we can report that the US National Activity Index as collated by the Chicago Fed, was less negative in August, extending the negative trend to five consecutive months. But the July data was revised lower.There were Fed speakers out overnight. Miran made the lone case in favour of Trump's big slash, whereas Hammack, Barkin, Williams, Musalem, and earlier Daly, all made the case for eyeing inflation risks as well as jobs risks.In Canada, their producer prices rose faster, now up +4.0% from a year ago, largely on the impacts of the US tariff-taxes where Canadian substituted other components than American ones. But beef prices are a notable riser in this latest data.The People’s Bank of China kept its key lending rates unchanged at record lows for the fourth straight month yesterday, as expected. The 1-year loan prime rate remained at 3.0%, while the 5-year benchmark stayed at 3.5%.In China, they said they will limit the steel industry's growth to 4% over the next two years to deal with their severe over-capacity problem and force companies to invest in quality rather than volume gains.And the fast growing rail land-bridge from China to Europe is closing, essentially because the Poland-Belarus border is being sealed to guard against Russian infiltration. It is hard to see Beijing being happy about that.Hong Kong authorities are bracing for “serious threats” posed by the looming Super Typhoon Ragasa, which is expected to bring hurricane-force winds with speeds of up to 220 km/h over the next few days, potentially breaking a record set during Saola in 2023. Their airport is likely to close, along with much else including their stock market. And mass evacuations have started in neighbouring Shenzhen.This is what the Hong Kong official met service warned late last night. "Under the influence of significant storm surge, there will be a rise in water level of about 2 metres over coastal areas of Hong Kong in the morning of Wednesday. The maximum water level can generally reach around 3.5 to 4 metres above chart datum, and the water level at Tolo Harbour may even reach 4 to 5 metres above chart datum. Members of the public should take appropriate precautions." A 5 metre storm surge seems pretty significant.In Europe, and despite political and tariff uncertainties, consumer sentiment 'rose' (that is, got less bad) in September, probably because both inflation and borrowing costs eased in the past month.The UST 10yr yield is now at 4.14%, unchanged from yesterday at this time.The price of gold will start today at US$3736/oz, up +US$52 from yesterday and a new ATH. Silver had another +US$1 spurt overnight, now up over US$44/oz to a 14 year high.American oil prices are little-changed at just under US$62.50/bbl, with the international Brent price still just over US$66.50/bbl.The Kiwi dollar is at just under 58.7 USc and up +10 bps from yesterday. Against the Aussie we are still just under 88.9 AUc. Against the euro we are down -10 bps at 49.8 euro cents. That all means our TWI-5 starts today at just under 65.9, uo +10 bps.The bitcoin price starts today at US$112,448 and down -2.7% from this time yesterday. Volatility over the past 24 hours has been modest at just over +/- 1.4%.You can get more news affecting the economy in New Zealand from interest.co.nz.Kia ora. I'm David Chaston. And we will do this again tomorrow.

Kia ora,Welcome to Monday’s Economy Watch where we follow the economic events and trends that affect Aotearoa/New Zealand.I'm David Chaston and this is the international edition from Interest.co.nz.And today we lead with news we are likely to get a lesson this week reconfirming that equity markets all look for short-term profit hits and are now setting prices on these short-term factors. But bond markets are much more focused on risks 10-30 years ahead and their signals are diverging markedly.This coming week however will largely feature reactions to last week's big events - the US Fed positioning and rate cut, and the awful NZ Q2-2025 GDP data.Here we will be watching for more fallout from that, after the NZD got marked down sharply. Will markets assess that the June result will be repeated in Q3? After all we are now only nine days from the end of Q3 and the appearance of 'better data' has been sparse and perhaps only in the last week or so. And on Thursday we will get an update of household net worth, but it will be year-old data. Much more current will be Thursday's results announcement from Fonterra.In Australia, they will also release household net worth data, on Friday, but for March this year. They will get PMI updates as well.Globally, the focus will briefly turn to New York for what is expected to be a turbulent moment for the UN with the US already barring some leaders from attending. New York time as the home of the General Assembly may be coming to an end.But economically, there will be many PMI updates out this week. The US will release its PCE data and another Q2-GDP update. And Fed speakers will all be out giving context to last week's rate cut decision. Switzerland and Sweden will be among those reviewing their policy interest rates. And later today, China will review its Loan Prime rates, although no change is expected.China released its August year-to-date foreign direct investment data over the weekend. They said they only attracted ¥507 bln in net foreign investment in those eight months. They said they attracted ¥467 bln in the seven months to July. So that means they gained a net +¥39 bln in August alone and that is a very low +US$5.5 bln and that is only one third of the August 2024 gain. Basically foreign direct investment into China from all sources is close to dead in the water.This doesn't mean that China's economic expansion won't be good in 2025 (over +5%). But it does point out how the two big powers are isolating themselves, with cross-border investment and economic connections all retreating.A recent example is that China's new iron ore buying monopoly has moved to shut out a key Australian blend from BHP. They have other options and are using their heft to try and bring BHP and Australia into line.Separately, Japan's inflation eased to 2.7% in August from 3.1% in July, the level since October 2024. There was a notable slowing in the rise in rice prices, enabling food price inflation to ease to 'only' 7.2% in August from a year ago. Overall prices were up +0.8% in the month with food prices up just +0.3% for the month.Japan's central bank announced the results of its policy rate review late on Friday and as expected left it unchanged at 0.5% at Friday's. This came amid the political uncertainty around the resignation of Prime Minister Ishiba. They also said that it will sell its holdings of exchange-traded funds and Japan real estate investment trusts (J-REITs) to the market. Here is their decision.Germany said its producer prices fell an outsized -2.2% in August from a year ago, a deflation sign they will not welcome and extends their deflationary pressure that started in July 2023. But most of that is coming from the lower cost of imported energy with local producer prices basically unchanged.Canada said its August retail sales rose +1%, more than offsetting its July dip. But it isn't clear how much of that is inflation related. But financial markets reacted positively, seeing consumer 'resilience' in the data. (One more -25 bps rate cut is expected in Canada before the end of the year.)The UST 10yr yield is now at 4.14%, up +1 bp from Saturday to be up +7 bps from a week ago. The price of gold will start today at US$3684/oz, up +US$3 from Saturday. That is up +US$36 from a week ago. Silver had another spurt over the weekend, now up over US$43/oz, a weekly gain of +US$1.American oil prices are little-changed at just over US$62.50/bbl and back to where they were a week ago, with the international Brent price still just over US$66.50/bbl.The Kiwi dollar is at just under 58.6 USc and unchanged from Saturday although down a full -1c from a week ago. Against the Aussie we are just under 88.9 AUc. Against the euro we are still at 49.9 euro cents. That all means our TWI-5 starts today at just over 65.8, unchanged from Saturday but down -100 bps for the week.The bitcoin price starts today at US$115,509 and very little-changed from this time Saturday. Volatility over the past 24 hours has been very low at just under +/- 0.3%.You can get more news affecting the economy in New Zealand from interest.co.nz.Kia ora. I'm David Chaston. And we will do this again tomorrow.

Kia ora,Welcome to Friday’s Economy Watch where we follow the economic events and trends that affect Aotearoa/New Zealand.I'm David Chaston and this is the international edition from Interest.co.nz.And today we lead with news the New Zealand dollar has been re-rated sharply lower overnight, although to be fair only back to levels it was at in April. US benchmark interest rates are rising but the new weaker New Zealand economy is expected to drive the OCR lower than earlier expected.But first in the US, initial jobless claims came in lower than expected at +194,500, a decrease of 10,400 from the prior week when an increase of about that was indicated by seasonal factors. There are now 1.75 mln people on these benefits, +81,000 more than at this time last year.Meanwhile, the Conference Board Leading Economic Index (LEI) retreated in August. A retreat was expected but it came in more than twice the expected decline. That means the LEI fell by -2.8% over the six months between February and August, a faster rate of decline than its -0.9% contraction over the previous six-month period. They noted persistently weak manufacturing new order levels and consumer expectations, and warn of increased headwinds ahead.But it is not weak everywhere. The Philly Fed factory survey for September picked up a modest rise in new orders. But firms in the region remain under sharp price pressure unable to pass on the higher prices they are paying.On the farm, the giant American soybean crop is about ready for harvest, and farmers are glum. The Chinese aren't buying and the Washington isn't coming to the rescue with subsidy support. Prices are back to 2016-2018 levels and the rural concern is palpable.In Financial markets, there was a notable less well-supported US Treasury inflation protected (TIPS) bond tender today that resulted in a median yield of 1.65% plus CPI inflation, compared to 1.93% plus CPI at the prior equivalent event three months ago.There were more central bank rate reviews overnight. Taiwan kept its policy rate unchanged at 2.0%. They have an inflation target of 2.0% and their CPI is currently running at 1.6%. Norway cut theirs by -25 bps to 4.0% in what has been called a "hawkish cut". They have inflation at 3.0% with their target at 2.0%. And the Bank of England held theirs at 4% as expected. They have inflation at inflation at 3.8% when their target is 2%. South Africa held at 7%. Inflation there is 3.3% with a preferred rate of 3.0%.China announced that its Boeing and Airbus-competing C919 aircraft has now received more than 1000 orders, mostly domestic but some international orders as well.Australian labour markets stumbled somewhat in August, falling -5,400 when a small +22,000 rise was expected. And the detail is even less positive because full-time employment fell by -40,900 to 10,077,300 people while part-time employment rose by +35,500 to 4,549,200 people. None of these changes were enough to materially change their 4.2% unemployment rate.Container freight rates fell -6% last week from the prior week with all the weakness coming from outbound rates from China. But bulk freight rates rose +3.4% last week to be +14.6% higher than year ago levels.The UST 10yr yield is now at 4.11%, up +4 bps from yesterday at this time in a steady rise. The price of gold will start today at US$3,643/oz, down -US$15 from yesterday's post Fed dip.American oil prices are down -US$1 at just under US$63.50/bbl, with the international Brent price firmish just under US$67.50/bbl.The Kiwi dollar is at just on 58.8 USc and down -90 bps from yesterday. Against the Aussie we are down -70 bps at 88.9 AUc. Against the euro we are down -50 bps at 49.9 euro cents. That all means our TWI-5 starts today at just under 66, down -50 bps from yesterday.The bitcoin price starts today at US$117,553 and up +1.3% from this time yesterday. Volatility over the past 24 hours has again 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 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 financial markets are struggling to make sense of the US Fed's latest rate cut rationale, one that looks infused with new White House politics.First up this morning, the US central bank cut its policy rate by -25 bps to 4.25% as expected, despite noting that American inflation is "somewhat elevated". It is their first reduction in borrowing costs since December 2024.They said they saw economic activity moderating in the first half of the year with job gains slowing and the unemployment rate edging up. But they still called their jobless rate 'low'. At the same time they noted inflation has moved up. But their economic projections showed they expect inflation over the next year to average 3.4%, higher than the latest CPI level of 2.9%.For some reason, this rising inflation, and 'low' unemployment was the basis for cutting their policy rate. Like many core US institutions, partisan politics is now infecting the Fed. Keeping the pressures under cover, the Fed's press release was unusually short this time, likely papering over the pressures being brought to bear. It looks like the only dissenter was the recent White House injected member.Financial markets have reacted however. After being lower ahead of the decisions, the S&P500 went volatile and is back, tracking slightly lower. The bond market also went volatile, and changed its course to push yields higher. The USD fell and the dollar index (DXY) is now at its lowest level since February 2022. Gold pushed up to a new record high - and then fell back. None of these reactions show confidence in the Trump pressures on the Fed.Meanwhile, US mortgage applications jumped sharply last week, a week that included the US Labor Day holiday. Mortgage interest rates dipped -10 bps in the week and borrowers who need to refinance rushed the opportunity. But new borrowing not so much.However, American housing starts tumbled uncomfortably in August, down far more than was anticipated to be -8.5% below July levels, and -6.0% lower than year-ago levels. New house building consents came in -11.1% below year ago levels, so it is unlikely their housebuilding industry will recover any time soon.Overnight, Canada also reviewed its policy interest rate overnight and cut them too, largely as expected. That takes their key rate to 2.5%. They see a weakening in the resilience first shown by Canadian reactions to their bullying from their southern neighbour. They are watching Canadian consumers and businesses becoming more 'cautious'.In Australia later today, we will get the August labour market report where another small gain in jobs is anticipated (+22,000) and their jobless rate is expected to hold at 4.2%.The UST 10yr yield is now at 4.07%, up +4 bps from yesterday at this time after some bumpy volatility.The price of gold will start today at US$3,658/oz, down -US$29 from yesterday post the Fed.American oil prices are little-changed at just under US$64.50/bbl, with the international Brent price firmish just under US$68.50/bbl.The Kiwi dollar is at just on 59.7 USc and down -25 bps from yesterday. Against the Aussie we are unchanged at 89.6 AUc. Against the euro we are down -5 bps at 50.4 euro cents. That all means our TWI-5 starts today at just over 66.5, down -20 bps from yesterday.The bitcoin price starts today at US$115,997 and down -0.4% from this time yesterday. Volatility over the past 24 hours has again been low at just under +/- 0.8%.Join us at 10:45am this morning for full coverage of the New Zealand Q2-2025 GDP result. Financial markets are expecting a -0.3% dip from Q1 and no year-on-year economic expansion.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 markets now universally expect the American central bank to cut rates tomorrow by -25 bps.But today, the overnight dairy auction brought a much better result than expected with the declines for both WMP and SMP nowhere near as sharp as indicated by the earlier derivatives pricing. That will very much ease the pressure on any farm gate payout forecasts. The detail is interesting. There was notably softer demand from China for WMP, but that was countered by stronger SE Asian demand. Cheddar cheese prices rose because of some unexpected demand from North America, But mozzarella prices dived -9.6% on weak Chinese demand. Overall prices slipped just -0.8% in USD, but there were down a sharpish -2.9% in NZD as the greenback took a tumble overnight.Meanwhile, US retail sales rose in August and by a little more than expected. They were up +5.0% after a +4.1% rise in July. But this data is not inflation-adjusted in the way that other countries report. We will have to wait for sales volume data later in the month.And US industrial production rose in August too, but only up +0.1% from the prior month and only after a -0.4% revised fall in July. Year-on-year it is up +0.9%, about average for 2025, but hardly evidence of manufacturing reshoring.Homebuilder sentiment was flat in August as reported by the NAHB survey. It is remaining at the very low levels we have seen since May, and very much lower than this time last year. They are pinning their hopes on Fed rate cut(s) delivering a changed outlook.And staying in the US, crypto giant Binance looks like its lobbying and support of Trump will see the US Justice Department drop a key oversight requirement in its US$4.3 bln settlement of allegations that it didn’t do enough to prevent money laundering. So, pay the money, get no oversight, and go back to enabling money laundering. A real Trump-type deal.Meanwhile, Canadian CPI inflation rose from 1.7% in July to 1.9% in August, a lesser rise than was anticipated. Meanwhile there was a rather sharp fall in housing starts there in August, down -16% from July to 245,791 units from a revised 293,537 in July and well below market expectations of 277,500. But they were still +10% higher than year-ago levels. A rate cut is coming in Canada tomorrow too.In China, there are some signs that Beijing's stimulus could be working. Steel output not only stopped falling, it actually picked up in the first two weeks of September, defying downbeat expectations. And iron ore prices rose too recently.In the EU, industrial production rose more than anticipated in July, although the expectations aren't high.The UST 10yr yield is now at 4.03%, down -1 bp from yesterday at this time. The price of gold will start today at US$3,686/oz, up +US$7 from yesterday.American oil prices are up +US$1 at just over US$64.50/bbl, with the international Brent price firmish just over US$68.50/bbl.The Kiwi dollar is at just on 59.9 USc and up +20 bps from yesterday. Against the Aussie we are up +10 bps at 89.6 AUc. Against the euro we are down -20 bps at 50.5 euro cents. That all means our TWI-5 starts today at just over 66.7, little-changed from yesterday.The bitcoin price starts today at US$116,480 and up +1.3% from this time yesterday. Volatility over the past 24 hours has again been low at just under +/- 0.8%.You can get more news affecting the economy in New Zealand from interest.co.nz.Kia ora. I'm David Chaston. And we will do this again tomorrow.

Kia ora,Welcome to 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 both the US and China are eyeing rate cuts to bolster wavering economies.While all financial market attention is on the US Fed and its Thursday rate review - and market positioning is underway relative to the expected -25 bps cut - there is other economic news being released.The New York Empire factory survey delivered a negative surprise with new order levels falling sharply when they were expected to rise. That drove their overall survey negative when an expansion was anticipated.Across the Pacific, and in an unexpected result, China's retail sales data was released and were expected to have grown faster in August by +3.8%, up from +3.7% in July. Some anticipated a +5% rise. But in the end the rise was only +3.4%, and that was an eight month low.China's August industrial production was up +5.2%, a one year low, good but less than the +5.7% in July and also less than the expected +5.8%. All this was done with only a +1.6% rise in electricity production, and -3.2% fall in the production of fossil fuels, according to these official stats.China's house prices were generally stable in August. There were a few more signs of marginally higher prices in a few more cities for new developments. But the sales prices of pre-owned housing continues its slow droop and the trend is becoming ever more embedded as pressures mount.But probably worse from China was that fixed asset investment hardly rose, up just +0.5% for the eight months from the same period a year ago. It was expected to have risen +1.4% on this ytd basis. August 2025 alone actually came in lower than August 2024, a worrying sign.It is possible that the upcoming review on China's Loan Prime Rates may be cut to bolster their wobbly economic position. These are due for official review at the weekend.In Indonesia, they launched a new US$1 bln economic stimulus package to boost economic growth as a way of stabilising widespread unease about the country's direction.Indian exports softened in August, and their imports did too and by a bit more. That meant the expected -US$30 bln trade deficit for the month was lower than in July and lower than expected.India also had good labour market news with their jobless rate falling to a record low of 5.2% when a small rise was anticipated.In Australia, their National Climate Risk Assessment was released yesterday. They are trying to prioritise and plan how they will adapt and respond. The report says that while the world is already 1.2ºC hotter than during pre-industrial times, because of its sheer land size Australia is warming faster and is 1.5ºC hotter. Australia is experiencing more intense heatwaves on land and sea, rising seas and more frequent coastal flooding. Although the usual suspects remain in denial, a surprising number are now accepting it has become an urgent issue. Insurance premiums, even availability, will be how it will affect most people in Australia.But back with the headline financial market news. Ahead of the US Fed decision, equity markets are buoyant and all-in on optimism, but bond markets are wary, the USD is wavering, and commodity prices are little changed except for precious metals.The UST 10yr yield is now at 4.04%, down -2 bps from yesterday at this time.The price of gold will start today at US$3,679/oz, up +US$38 from yesterday.American oil prices are up +US$1 at just under US$63.50/bbl, with the international Brent price firmish just on US$67.50/bbl.The Kiwi dollar is at just under 59.7 USc and up +10 b ps from yesterday. Against the Aussie we are down -10 bps at 89.5 AUc. Against the euro we are also down -10 bps at 50.7 euro cents. That all means our TWI-5 starts today at just over 66.7, little-changed from yesterday.The bitcoin price starts today at US$114,938 and down -0.6% from this time yesterday. 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.

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 fighting inflation may well be a downgraded objective in the face of political pressure. The consequences could be long-lasting and global.For financial markets, this week will be all about the US Fed's Thursday rate decision where now a -25 bps cut is widely anticipated, to try and weigh against the softening US labour market. The same day the Canadians will review their policy rate too where a similar -25 bps cuts is expected.And there will be central bank reviews in Japan this week (no change), Indonesia (no change), England (no change), and Brazil this week too.China will also review its key rates and no change is expected there either. And China will release a lot of August economic data too, including FDI data.Australia will release its August labour market update and a modest +25,000 rise in employment is anticipated. Our balance of payments data will be released on Wednesday (expect a larger deficit), and Q2-2025 GDP will be released on Thursday (expect a decline). And before that we will get the August REINZ data and a full dairy auction.But back in the US, the pessimistic turn continues. The widely-watched University of Michigan consumer sentiment survey delivered downbeat results in September, sharply lower from August and well below what analysts had expected. They had expected a turn lower but not by this much. Declines were strongest among lower- and middle-income households because concerns grew over business conditions, jobs, and inflation. Both short and long term sentiment fell back. This index is more than -20% lower than year-ago levels.Meanwhile, year-ahead inflation expectations held steady at 4.8% while the five-year expectations moved up for the second straight month to 3.9% from 3.5%.Canadian building consents were unchanged in July from June but down -8.2% from a year ago. But most of this was due to non-residential work; residential consents were up, especially in Toronto.We should probably note that there are trade talks going on in Madrid between the US and China.In China, August data for new yuan loans came in well below what was expected although expectations weren't high. It was the lowest amount of bank debt for an August since 2011, extending the current period of weak credit demand amid the weakening consumer debt demand and the prolonged crisis for housing. The debt appetite dropped despite central bank efforts to loosen monetary conditions and stimulate borrowing.In India, consumer inflation rose, as expected, but only to 2.1% and ending a ten month period where it fell consistently from 6.2% to 1.6% in July. Food prices were little-changed and had no effect on the overall result.In France, Fitch has downgraded their credit rating to A+ from AA- on Friday, citing political turmoil and rising debt.We should probably note that copper prices are basically back to levels they were at five years ago, which is double what they were ten years ago. At current production levels the USGS estimates that existing mines will be able to operate for the next forty years, and proven resources will last about 200 years. (But there are expected to be much larger resources yet to be discovered.) We will look at some aspect core mineral resources weekly, going forward. (H/T PDK)The UST 10yr yield is now at 4.06%, little-changed from Saturday.The price of gold will start today at US$3,641/oz, down -US$7 from Saturday. That is up +US$48 from a week ago. Silver had another spurt, now up over US$42/oz.American oil prices are unchanged at just on US$62.50/bbl, with the international Brent price firmish just under US$67/bbl, both up +US$1 for the week.The Kiwi dollar is at just under 59.6 USc and unchanged from Saturday but up +70 bps from a week ago. Against the Aussie we are also unchanged at 89.6 AUc. Against the euro we are holding at 50.8 euro cents. That all means our TWI-5 starts today at just over 66.7, little-changed from Saturday but up +50 bps for the week.The bitcoin price starts today at US$115,666 and down -0.6% from this time Saturday. Volatility over the past 24 hours has been very low at just on +/- 0.4%.You can get more news affecting the economy in New Zealand from interest.co.nz.Kia ora. I'm David Chaston. And we 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 away from the guns and hatred consuming the US at present. Our challenge is to keep it out of our society.Markets had been waiting for the American August CPI inflation data and it came in higher, although no more than expected. It rose to 2.9% in August, the highest since January, after holding at 2.7% in both June and July. Prices rose at a faster pace for food (3.2%) and energy costs rose for the first time in seven months. On a monthly basis, the CPI went up 0.4%, the most since January, above forecasts of 0.3%. Rents rose 0.4%, the largest upward pressure. On the other hand, core inflation remained steady at 3.1%, the same as in July and at February’s peak, while core CPI rose 0.3% month-on-month, matching July’s pace and market forecasts.In a stable world, this level of inflation would not bring market expectations of a Fed rate cut next week, but there are widespread expectations of one anyway. And that is because their labour market is weakening quite fast now.Initial jobless claims in the US came in sharply higher last week at +263,000 s.a. a four year high and well above the expected high 235,000. In actual terms they rose +204,500 when a solid end-of-summer-holiday seasonal decrease was expected. There are now 1,815,000 on these benefits, +110,000 more that at the same time last year.Also getting much worse much faster is the US Federal government finances. The US Budget Statement was expected to hold at a very high -US$290 bln monthly deficit, but it has blown out to -US$345 bln in August. And this is after collecting US$30 bln in tariff-taxes in the month, US$165 bln so far in the fiscal year.Whatever way you look at it, the US economy is being mismanaged on a massive scale. Too much inflation, too little job creation, too large tax avoidance by the uber-wealthy, and self-imposed tariff-taxes on themselves. And unfortunately their social programs are making things worse at a fundamental level too.New independent analysis shows that the long-held view that American demographics would remain very positive to the end of the century have suddenly turned. Now US deaths will exceed births by 2031, far faster than expected. And the deaths will rise quicker until 2055 when they will match immigration. And these estimates are before the Kennedy/Trump health mistakes which will undoubtedly speed up deaths. And the Trump heavy-handed immigration crackdowns that will likely mean the immigration assumptions are far too optimistic. If demographics are destiny, the destiny of the US looks grim and we can no longer hold the assumption that it will be a major power by 2100. That is a sharp change from the demographic outlook just a few years ago.New data out in Canada shows Canadians are wealthier with an increase of over a quarter of a trillion dollars to C$17.9 tln, the seventh consecutive quarterly increase. This wealth accumulation happened despite headwinds of global trade pressures and a weakening economy. Per capita GDP is now C$76,100 (NZ$92,100).Across the Pacific in Japan’s producer prices there rose +2.7% in the year to August, up from a marginally revised +2.5% increase in the previous month. This data doesn't really add stress or new factors for Japan. A year earlier their PPI rose at a 2.6% rate.In China, new vehicle sales recovered in August, up +10.1% after the unexpected -10.7% fall in July. Total vehicle sales are expected to grow +4.7% in 2025 to almost 33 mln units from 31.4 mln in 2024, with the NEV sector surging +24% to 16 mln units. That will keep it almost twice the size of the US vehicle market. China's car market is a global goliath. (The US vehicle market is running at 16.1% mln annual sales, a dip in August from July.)In Europe, the European Central Bank kept its three key interest rates unchanged, with the deposit facility at 2.00%, the main refinancing rate at 2.15%, and the marginal lending rate at 2.40%, all as expected. Inflation remains close to the 2% medium-term target, and the outlook is broadly unchanged from June. New staff projections see headline inflation averaging 2.1% in 2025, easing to 1.7% in 2026 before rising slightly to 1.9% in 2027.Occasionally we check in with what is happening in Turkey, an authoritarian regime that has made massive mistakes with capricious monetary policy moves, and is paying the price with tough consequences. The Central Bank of Turkey cut its benchmark interest rate overnight by a surprisingly large -250 bps to 40.5% in its September meeting, its lowest since 2023. The move follows signs of slowing underlying inflation in August, though food and services prices continue to pressure inflation. Domestic demand remains weak.In Australia, consumer inflation expectations rose to 4.7% in the September survey by the Melbourne Institute, from August’s five-month low of 3.9%. The increase came as stronger domestic demand raised concerns about renewed inflationary pressures, with household consumption proving resilient in Q2-2025. This is the sort of news the RBA will not welcome. No rate cut is priced in for September 30 but one is for November 4, although that might get reassessed now.Global container freight rates fell -3% last week from the prior week on very much weaker outbound rates from China to Europe. Interestingly, outbound rates from China to the USWC actually rose last week by +6%. (Year-on-year comparisons are still affected by last year's Red Sea stress.) Bulk freight rates roise +8% over the past week to be +8.5% higher than year ago levels.The UST 10yr yield is now on 4.00%, down -3 bps from yesterday at this time.The price of gold will start today at US$3,635/oz, down -US$10 from yesterday.American oil prices are down -US$1 at just over US$62.50/bbl with the international Brent price is similarly lower at just on US$66.50/bbl.The Kiwi dollar is now at just over 59.7 USc and up another +20 bps from yesterday. Against the Aussie we are down -10 bps at 89.7 AUc. Against the euro we are up +10 bps at 50.9 euro cents. That all means our TWI-5 starts today at just over 66.8, unchanged from yesterday.The bitcoin price starts today at US$114,552 and up +0.7% from this time yesterday. Volatility over the past 24 hours has been low, at just over +/- 0.6%.You can get more news affecting the economy in New Zealand from interest.co.nz.Kia ora. I'm David Chaston. And we 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 all eyes are now on tomorrow's US CPI release for August.But first, there was surprising news from the US. August producer prices rose far less than any analyst has forecast. In fact they fell -0.1% in August from July, following a downwardly revised +0.7% gain in July, driven by a sharp decline in margins for machinery and vehicle wholesaling as importers absorbed some of the tariff taxes. On an annual basis, headline producer inflation slowed to 2.6%, while core producer inflation eased to 2.8%. Analysts had expected the year-on-year change to be up +3.5%.Markets took these changes at face value, ignoring the "new management" at the agency compiling the data. It is being seen as "Fed-friendly" for a rate cut next week. Although to be fair far more will depend on tomorrow's CPI release where rates closer to 3% are anticipated.Also unusually positive was last week's data on US mortgage applications. They jumped +9.2% from the prior week to be +11.6% higher than year-ago levels. Driving the turnaround was a -15 bps plunge in benchmark mortgage rates, which fell to their lowest in nearly one year as a wave of pessimistic labour market data drove yields on long-dated Treasury securities to retreat. Applications for a loan to refinance a current mortgage, which are more sensitive to changes in interest rates, surged by +12.2% from the previous week to their highest level in one year. In turn, applications for a mortgage to purchase a new home rose by +6.6%.And there was another US Treasury 10 year bond auction earlier today and that resulted in a median yield of 3.99%, down from 4.20% at the prior equivalent event a month ago. But a feature of this latest event was the declining demand, down -8.5% which is a notable pullback.Across the Pacific, Japanese manufacturers are feeling bullish, especially about export prospects. The Reuters Tankan index rose to a very positive level in September, its highest level since April 2022. Easing trade uncertainties following the Japanese-US tariff deal that sharply eased the tariff rate is behind the shift. Sentiment improved across six of nine manufacturing industries surveyed.In China, they reported that consumer prices dropped -0.4% in August from a year ago, after being unchanged in the prior month and missing market expectations of a -0.2% decline. It was the fifth episode of consumer deflation this year and the sharpest drop since February. China has a similar period of deflation in the second half of 2023, but escaped those pressures in 2024. But they are back again. Food prices fell -1.2%, but beef prices were down -4.3% and lamb prices down -3.6% on that annual basis. Milk prices fell -1.4%.Meanwhile Chinese producer prices dropped -2.9% in the year to August, less than the -3.6% drop in July, which was the steepest decline since July 2023. Producer prices have now deflated for 35 consecutive month although the latest data is the smallest decline since April.Despite growing civil unrest and street demonstrations in Jakarta, Indonesian consumer sentiment was little-changed in August, although it is maintaining its recent low that started in May. However in a longer term perspective, it is +20% higher than it was a decade ago. (The last thing Canberra want to see is an unstable Indonesia as a neighbour.)Fitch Ratings has raised its world growth forecasts for 2025 moderately since the June Global Economic Outlook on better-than-expected incoming data for 2Q-2025. But there is now evidence of an underlying US slowdown in ‘hard’ economic data and positive surprises on eurozone growth have partly reflected US tariff front-running, they say. Fitch still expects world GDP to slow significantly this year.Global growth is now forecast to be 2.4% in 2025, up 0.2pp since June but a sizeable slowdown from 2.9% last year and below trend. China’s forecast has been raised to 4.7% from 4.2%, the Eurozone’s to 1.1% from 0.8% and the US’s to 1.6% from 1.5%. World growth for 2026 is 0.1pp higher at 2.3%.The UST 10yr yield is now over 4.03%, down -4 bps from yesterday at this time.The price of gold will start today at a new high at US$3,645/oz, up +US$4 from yesterday.American oil prices are up +US$1 at just over US$63.50/bbl with the international Brent price is similarly higher at just on US$67.50/bbl. American crude oil stocks jumped, and for a second week in a row, when declines were anticipated, indicating weaker demand than expected.The Kiwi dollar is now at just over 59.5 USc and up +20 bps from yesterday. Against the Aussie we are down -20 bps at 89.8 AUc. Against the euro we are up +20 bps at 50.8 euro cents. That all means our TWI-5 starts today at just over 66.8, down -20 bps from yesterday.The bitcoin price starts today at US$113,721 and up +2.4% from this time yesterday. Volatility over the past 24 hours has been moderate, also at just over +/- 1.4%.You can get more news affecting the economy in New Zealand from interest.co.nz.Kia ora. I'm David Chaston. And we 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 that rather than understating US jobs growth - which got her fired - the stats agency reporting labour market data overstated Trump's jobs growth, and by some margin.But first up today, there was a dairy Pulse auction earlier today for both SMP and WMP, and while prices dipped as expected, they didn't dip as much as the derivatives markets had signaled. WMP was down just -0.2% from the full auction the prior week, SMP was down -0.6%. However the firming NZD resulted in about a -1.5% fall in NZD terms.In the US, small business NFIB sentiment survey for August reported stable conditions with some issues easing, some tightening.There was a US Treasury 3yr bond auction earlier today that was well supported but less well than the prior equivalent event a month ago. It resulted in a median yield of 3.45%, down sharply from the 3.61% at that prior equivalent event. The outsized shift down likely reflects bond investor risk aversion.Although it is just a statistical adjustment, updated data shows the US economy added -911,000 fewer jobs in the 12 months through March than initially reported - the largest downward revision since at least 2000. This is a -0.6% adjustment, far more that the average change of +0.2% in total nonfarm employment over the past decade. Nearly all sectors added fewer jobs than initially estimated.If the US Fed cuts rates next week to bolster their slowing economy, it will likely signal that their are changing their inflation goal from 2% to 3%, and prepared to accept stagflation over stagnation. The risk is they get both.Across the Pacific, Japanese machine tool orders were up +8.1% in August from a year ago, largely due to a +12% surge in export orders. Export orders made up almost three quarters of this industry's order book in August.And Taiwan kept up its amazing record of export growth in August. They jumped more than +34% from a year ago and outperforming market expectations of +22% growth.In Russia, their Federal Treasury reported another deep deficit in August, the second in a row and the first time ever of back-to-back deficits exceeding -1.9% of GDP.In Australia, ANZ Group's new broom CEO Nuno Matos has kicked off a change program at the four-pillar bank with plans to shed 3,500 Australian staff.The Westpac-MI consumer sentiment survey slipped on darker views about the economic outlook and less confidence about getting any more rate cuts from the RBA - because inflation is still 'too high'. Analysts had expected this survey to possibly break into net optimism in September, but it was not to be.Meanwhile the August NAB business confidence report shows it fell a minor 3 points, following four consecutive months of improving sentiment and leaves confidence also close to long run average levelsThe UST 10yr yield is now under 4.07%, up +2 bps from yesterday at this time. The price of gold will start today at a new high at US$3,641/oz, up +US$9 from yesterday.American oil prices are marginally firmer, at just over US$62.50/bbl with the international Brent price is +50 USc firmer at just on US$66.50/bbl.The Kiwi dollar is now at just over 59.3 USc and unchanged from yesterday. Against the Aussie we are down -10 bps at 90 AUc. Against the euro we are up +10 bps at 50.6 euro cents. That all means our TWI-5 starts today at just over 66.6, down -10 bps from yesterday.The bitcoin price starts today at US$111,080 and down -1.1% from this time yesterday. Volatility over the past 24 hours has been moderate, also 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 tomorrow.