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.

Today we lead with news the US and Iran have apparently agreed a 60 day truce, pending Trump's signoff. All the while, both sides traded attacks in the region. The small number of ships transiting the Strait of Hormuz has virtually dried up.

Meanwhile, US jobless claims slipped last week to 185,600 and by about what seasonal factors would have indicated. There are now 1.68 mln people on these benefits, less than one and two years ago.

There was a sharp drop in new home sales reported for April, and they were -11.3% lower than year ago levels. Rising mortgage rates is weighing heavily on this sector.

But they reported a sharp increase in durable goods orders in April, up +19% from a year ago, up notably from March. This is where we see the full effect of stockpiling as buyers try to get ahead of rising inflation. One reason was a +41% jump in capital goods on the same basis. But excluding defense and aircraft orders, the increase was modest.

The second estimate of GDP growth for Q1-2026 is out and it was revised lower, mainly on lower consumer spending and investment levels than in the initial estimate. They now say the US economy expanded +1.6% in the period.

They also released the April data for US personal income and personal spending. This showed that personal disposable income fell from March, up +2.5% from a year ago, while personal consumption expenditures rose, up +5.9% from a year ago. In fact, their April PCE inflation measure rose to 3.8%, its highest since May 2023 and the end of the pandemic effect, and prior to that the highest since this data was collated in 2017. Undoubtedly, this has the Fed's attention, especially the accelerating nature of it.

US crude oil and petrol stocks fell again last week, but 'only' by about the levels expected. that extends the fall to five consecutive weeks, all substantial, and coming after three prior weeks of modest or no-change outcomes. Retail pump prices for petrol are still +48% higher than at the start of the Iran-US conflict and closure of the Strait of Hormuz.

There was a US Treasury 7yr note auction overnight and the yield increase was not as fierce as yesterday's event. This one delivered a median yield of 4.24% (high 4.29%), up from the 4.12% at the prior equivalent event a month ago.

In Canada, their central bank has released and updated Financial Stability Report which found that Canada’s financial system has functioned well through a challenging year. Households and businesses remain in stable financial condition, and banks have strengthened their capacity to absorb shocks.

Meanwhile they reported that average weekly earnings rose +3.5% in March from a year ago, a faster pace of increase. They have CPI inflation of +2.8% at the same time so Canadian employees are generally staying ahead of the cost pressures.

The Korean central bank kept its official rate unchanged yesterday at 2.5%, as expected.

Updated Australian household spending data for April shows it fell -1.1% month-on-month (on a current price, seasonally adjusted basis) to be +4.9% higher than in April 2025. In the same period CPI inflation rose 4.2%. The weak outcome is being attributed to the sharp hike in fuel costs, and compensating pullbacks elsewhere. It is their first fall in household spending in four months.

And staying in Australia, they said private new capital expenditure rose +6.5% in the March quarter to be +14.6% higher than the March 2025 quarter. This strong growth is largely on the back of significant investment in data centers, up +96% and a new record high. Investment in mining was flat.

The Middle East war lead to a -3.4% fall in air passenger demand in April. But Asia/Pacific international demand rose +3.0% from a year ago. For air cargo, demand was up +4.0% despite the turmoil, up +11.3% in the Asia/Pacific region.

Global container shipping freight rates rose +3.2% last week from the prior week to be +12% higher than year-ago levels. This is largely driven by rates from China to the EU. Transpacific rates from China to the US West Coast actually fell last week. As did trade volumes. Meanwhile bulk cargo rates rose +4.4% last week, to be a massive +140% higher than a year ago.

The UST 10yr yield is now just on 4.45%, down -3 bps from this time yesterday.

The price of gold will start today up +US$57 at US$4506/oz. Silver is back up +US$1.50 at just under US$76/oz.

Oil prices have fallen -50 USc to just on US$89/bbl in the US, while the international Brent price is now at US$93.50/bbl and down -US$1.50/bbl.

The Kiwi dollar is up +40 bps from yesterday at this time at 59.3 USc. Against the Aussie we are up +20 bps at 82.8 AUc. Against the euro we are also up +20 bps at just under 50.9 euro cents. That all means our TWI-5 starts today at just under 62.8 which is up +40 bps from yesterday.

The bitcoin price starts today at US$73,455 and down -1.8% from this time yesterday. Volatility over the past 24 hours has been moderate at just under +/- 2.0%.

You can get more news affecting the economy in New Zealand from interest.co.nz.

Kia ora. I'm David Chaston and because Monday is a New Zealand holiday, we’ll do this again on Tuesday.

Kia ora.

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

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

Today we lead with news commodity markets are betting all-in that a deal between the US and Iran will unlock the Strait of Hormuz soon. An Iranian State TV report has triggered the optimism. (And even though the US has denied it.)

More ships are transiting, but it is still only a fraction of 'normal'. However it is enough to drive the price of crude oil lower.

But despite all that, financial markets seem to remain unconvinced, or at least they have turned defensive due to what lies ahead of a resolution. How well any deal will stick between the two parties who have become quite transactional remains to be seen. Certainly the US is unlikely to be trusted to maintain the deal by both Iran, and even its own traditional allies. Iran will be Iran, agreeing but preparing for another attack/fight. The one thing the US/Israeli thing has done is solidify the Iranian regime's position at home. It no longer has internal dissent or street challenges, and it will thank Trump for that.

In the US, mortgage applications fell sharply last week, as US 30 year mortgage rates rose. Most of the fall is from the outsized retreat in refinance activity (-18%), although new purchase activity did dip as well. Those mortgage rates rose to their highest level since August 2025.

Meanwhile, the ADP tracking of private payrolls showed the good levels continued last week, even if there was a small dip posted.

And that is supported by factory survey data out from the Richmond Fed for the mid-Atlantic states area. New order levels rose notable. And firms expected growth in prices paid to moderate slightly over the next 12 months. But there was no improvement in the forward expectations, despite these improvements.

Meanwhile the Dallas Fed services sector survey remained quite negative, even if less so in May than in April. But their uncertainty metric is notably less.

There was a US Treasury 5yr Note auction overnight and that delivered a yield of 4.13% (4.18% high), up sharply from the 3.90% yield at the prior equivalent event a month ago.

In Australia, consumer price inflation came in lower than most analysts were expecting for Aril. It rose 4.2% from a year ago, lower than the March 4.6%, and lower than the expected 4.4%. From March, CPI prices rose +0.4%, also lower in the same way. A key reason is that fuel prices fell -7.0% from March to April, after rising 33% in the previous month. The fall this month includes the halving of the fuel excise on 1 April. Fuel prices are still +23.5% higher than in February and before the impact of the Middle East conflict. Apart from fuel, outsized rises were recorded for 'housing' (+6.3%) and 'clothing' (+5.9%). The main contributors to the annual housing rise were Electricity (+22.5%), New dwellings (+4.7%) and Rents (+3.5%).

And staying in Australia, Westpac has been hit with a AU$26 mln civil penalty for not dealing with clients who were struggling financially in a proper way. Remediation of all costs to those clients was AU$1.7 mln.

The UST 10yr yield is now just on 4.48%, down -1 bp from this time yesterday.

The price of gold will start today down another -US$49 at US$4450/oz. Silver is down -US$1.50 at just under US$74.50/oz.

Oil prices have fallen -US$4.50 to just on US$89.50/bbl in the US, while the international Brent price is now at US$95/bbl.

The Kiwi dollar is up +60 bps from yesterday at this time at 58.9 USc. Against the Aussie we are up +110 bps at 82.6 AUc. Against the euro we are up +50 bps at just under 50.7 euro cents. That all means our TWI-5 starts today at just under 62.4 which is up +60 bps from yesterday.

The bitcoin price starts today at US$74,765 and down -1.5% from this time yesterday. Volatility over the past 24 hours has been modest at just on +/- 1.0%.

Join us later today for full coverage of the 2026 Budget release, an election budget of course.

You can get more news affecting the economy in New Zealand from interest.co.nz.

Kia ora. I'm David Chaston and we’ll do this again tomorrow.

Kia ora.

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

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

Today we lead with news 

traders who claimed to foresee a Trump 'victory' over Iran are getting a lesson in their susceptibility to propaganda.

In the Middle East, US and Israeli struck a number of Iranian vessels in the Strait of Hormuz, hours after President Donald Trump had suggested negotiations with Tehran over an interim deal were progressing. Renewed aggression there and in Lebanon hardly seems to indicate talks are "going nicely". Both sides are in a chronic violent embrace, despite what they say.

Oil prices are rising again; prospects for normalisation have faded significantly.

First we should note there was another dairy Pulse auction overnight. This on saw the butter price recover notably, up +2% from the prior week's full auction, and the SMP price fall back notably, down -5% on that same basis. The WMP price dipped -1%.

In the US, the Conference Board said its survey of consumer confidence edged down in May. But this dip wasn't quite as much as analysts had expected.

Meanwhile the May Dallas Fed factory survey edged up slightly from its languid ("stable") state, a bit less than other similar surveys and less than expected.

And the National Activity Index tracked by the Chicago Fed rose in April to its best reading since March 2025.

The US Treasury's popular 2 year bond auction today brought sharply higher yields. The median yield today was 4.02% (high was 4.07%), a big shift up from the median 3.75% at the equivalent event a month ago.

Across the Pacific, Singapore said its industrial production was up a very healthy +17.6% in April from a year ago, a rising trend and an expansion that is starting to rival Taiwan.

And in Taiwan industrial production rose at a +15% rate in April from the same month a year ago, less than in March but still the third-best month ever. The base has been rising spectacularly for more than a year now so the outsized yeay-on-year growth will ease back from here. Their retail sales were up +5.2% in April, extending the outsized improvements to three consecutive months now.

In Malaysia, it appears that they have instituted a 10% tariff on imported gold bars, surprising dealers and buyers alike.

We should note that the aluminium price pushed up yet again, now very close to the brief pandemic-induced peak. Also tin prices are also near record highs, but this is nothing to do with the Middle East. Rather it relates to an Indonesian crackdown on illegal tin mining there, which has been extensive. They are going after the palm oil industry too, but over financial issues.

The UST 10yr yield is now just on 4.49%, up +2 bps from this time yesterday.

The price of gold will start today down -US$64 at US$4499/oz. Silver is down -US$2at just under US$76/oz.

Oil prices have risen +US$3.50 to just under US$94/bbl in the US, while the international Brent price is up +US$3 to just on US$99.50/bbl.

The Kiwi dollar is down -40 bps from yesterday at this time at 58.3 USc. Against the Aussie we are also down -40 bps at 81.5 AUc. Against the euro we are down -30 bps at just under 50.2 euro cents. That all means our TWI-5 starts today at just under 61.8 which is down -30 bps from yesterday.

The bitcoin price starts today at US$75,906 and down -2.1% from this time yesterday. 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’ll 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.

Today we lead with news oil prices have slid on hopes of a US-Iran deal. But despite US statements saying talks are "going nicely", Iran seems to be saying otherwise even if they are engaged in talks. But they seem to be talks-about-talks. Supposed insider information says the Strait of Hormuz will still be closed for another 60 days "for mine-clearing" (some say 30 days). And the US is adding new conditions each time the sides meet. Meanwhile, two LNG tankers have passed through the Strait in the past 24 hours.

Just a reminder that the US is on a long weekend holiday and we won't be getting data updates from there until tomorrow morning from there. Pre-market activity (futures) is still active however.

So first, like Japan, Singapore reported that their April CPI inflation pressure stayed very low and contained, up just +1.8% from a year ago, down -0.3% from March. Fuel costs are a small part of their index. The big mover was for clothing and that fell sharply.

Singapore also said its Q1-2026 expansion was +6.0% from the same quarter a year ago, bettering the +5.7% expansion in the previous quarter, and better than forecast (+5.1%). But they are much less bullish on how the year will turn out, revising that to "2%-4%" as Trump's Gulf War takes its toll.

But in Malaysia they reported a sharp jump in producer costs. Their producer prices rose +5.4% in April from a year ago, picking up from just a +1.1% rise in March. Prior to that, their PPI had fallen consistently since March 2025. This latest increase was also the most since August 2022, all driven by the mounting disruptions from the war in Iran.

In China, they said foreign direct investment fell -10.3% in the first four months of 2026 compared to the same period in 2025. Things got off to a negative start, but regained some initiative in April. (April 2025 was a particularly weak base.)

And global demand for yuan-denominated financing is rising, with panda and dim sum bond issuance climbing sharply in early 2026 as borrowers look to diversify away from costly US dollar funding. Panda bond issuance - yuan debt sold on the Chinese mainland by overseas institutions - topped US$13 bln in the first quarter, nearly half of last year’s total. Dim sum bonds are those issued outside China, in yuan. They hit US$45 bln in the quarter, also on track to beat the 2025 level. Yuan funding comes with much lower interest rates than US dollar funding.

We should probably also note that the Pope has issued an encyclical on how AI should be managed, by politicians and company managers. Like many previous Papal encyclicals, if is likely to be influential in debates about AI.

The UST 10yr yield is now just on 4.47%, down -10 bps from this time yesterday. 

The price of gold will start today up +US$55 at US$4563/oz. Silver is up +US$2.50at just over US$78/oz.

Oil prices have fallen -US$6.50 to just on US$90.50/bbl in the US, while the international Brent price is down -US$7.50 to just on US$96.50/bbl.

The Kiwi dollar is up +20 bps from yesterday at this time at 58.7 USc. Against the Aussie we are down -20 bps at 81.9 AUc. Against the euro we are up +10 bps at just under 50.5 euro cents. That all means our TWI-5 starts today at just on 62.1 which is up +10 bps from yesterday.

The bitcoin price starts today at US$77,502 and up +1.2% 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’ll 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.

Today we lead with news of an apparent agreement to wind back the crisis levels in the Persian Gulf. But details are not available. One thing is clear however, the US will be in a significantly worse position than if the Obama deal with Iran had not been torn up by Trump.

Follow up statements by Trump that "It isn’t even fully negotiated yet" suggest things aren't quite as close as he earlier suggested. And the headline news that one "Supertanker With Iraq Crude Exits Persian Gulf as Talks Continue" highlights how little progress has actually been made.

But locally this week will be dominated by two big set piece announcements. First, the RBNZ will review its monetary policy settings and while no-one expects them to change, all eyes will on how they view the current inflation pressures. Markets have a +25 bps hike priced in for July 8. Following that, the Government will deliver its election Budget. It will likely be all "jam today" but couched as 'responsible restraint'. Credit rating agencies will be interested readers, especially around the credibility of the forecasting.

And on Friday, there will be the usual month-end data released for April, plus a mountain of March quarter data released. And the RBNZ's Dashboard will also drop on Friday.

In Australia, we will get the April CPI data on Wednesday, and the household spending update on Thursday, both expected to be elevated.

It will be a busy week in Japan where we will get industrial production, retail sales, consumer confidence, and the unemployment rate. Meanwhile, the Bank of Korea will also decide on monetary policy. Data from China will be relatively light, but we will be interested in their FDI update.

We should note that this will be a long weekend holiday in the US, Memorial Day, and their unofficial start of 'summer'. For the record, tradition states that investors should "sell in May and go away" until the end of this period on their Labor Day (September 7). This 'rule' is a warning that their summer financial markets can be volatile. Wall Street will re-open on Wednesday, NZT.

Data from the US this week will limited, although PCE data, and the weekly ADP Employment update will be watched closely. As will the durable goods order data.

Over the weekend the University of Michigan’s Consumer Sentiment Index plunged to a record low in May, revised down sharply from the earlier and preliminary report. This is the third straight monthly decline. Petrol prices are getting the blame and it's cause, the chaotic Middle East adventure. The cost of living remained the top concern in this survey, with 57% of consumers spontaneously citing high prices as eroding their personal finances.

Lower-income consumers and those without college degrees posted the steepest declines, as these groups are more sensitive to rising gas and essentials costs. Critically, consumers grew increasingly worried that inflation would spread beyond fuel prices in the long term. Year-ahead inflation expectations edged up to 4.8% from 4.7%, while long-run expectations climbed to 3.9% from 3.5%.

Things may not get easier, even with slightly lower oil prices. Fed governor Waller said he supports removing the "easing bias" language from the Fed's outlook, and the next change could be a hike, even if it is some way off. He followed that up with remarks that it would be "crazy" to lower rates at this time.

investors are bullish that the Iran-US war will end soon, but consumers are very negative about how all this is hurting them. Profits are remaining high, insulated from the rising costs, but household living costs are making consumers very grumpy.

In Canada, and for a fourth month in a row, retail sales rose in April, but largely because petrol prices are higher. And that is even after the volume of petrol sales fell. In fact, overall sales volumes are trending lower.

Canadian producer prices rose a sharp +2.0% in April from March, to be an uncomfortable +11.4% higher than year-ago levels. These changes are worse than expected.

Despite all the global pressure their business are under, Japanese consumers avoided the impacts in April. Their inflation edged down to 1.4% from 1.5% in March. Food prices rose the least in 18 months amid a further slowdown in rice costs.

After falling sharply in April, South Korean consumer sentiment rebounded in May, although not quite back to levels it was between June 2025 and March 2026. Still, this new level is above every month from December 2021 to May 2025 and was a much stronger bounce-back than was anticipated.

The UST 10yr yield is now just on 4.57%, up +2 bps from this time Saturday.

The price of gold will start today down -US$6 at US$4509/oz to be down -US$42 for the week. Silver is down -50 USc at just under US$75.50/oz.

Oil prices have firmed +50 USc to just on US$97/bbl in the US, while the international Brent price is up at just on US$104/bbl.

The Kiwi dollar is down -10 bps from Saturday at this time at 58.5 USc and up +10 bps from a week ago. Against the Aussie we are holding at 82.1 AUc. Against the euro we are down -10 bps at just on 50.4 euro cents. That all means our TWI-5 starts today at just on 62 which is down -10 bps from Saturday, up +10 bps for the week.

The bitcoin price starts today at US$76,601 and very little-changed, down just -0.1% from this time Saturday, but down -3.2% from this time last week. Volatility over the past 24 hours has been modest at just under +/- 1.4%.

Kia ora. I'm David Chaston and we’ll do this again tomorrow.