Economy Watch

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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

central banks are being forced to acknowledge that their measured approach to inflation control over most of 2026 just hasn't worked and they need a refreashed, tougher approach.

Locally this week, the highlight will be Wednesday's full RBNZ Monetary Policy Statement. With inflation running at 4.1% and rising (it has risen every quarter since December 2024), every observer and financial markets are expecting a full +25 bps rise to 2.75%. The next review is on October 28 which is just over a week before the general election. So we will see just how focused the Breman RBNZ really is on weighing against inflation, even in the face of political pressure. We will get the next CPI result on October 22, and that will be a telling indicator. Financial markets currently price in another +25 bps OCR rise then, at a 60% chance.

We will also get many updates about the local August residential reals estate market, and we will get July building consent data.

In Australia, there will residential real estate updates too, building consent data, and they will reveal their Q2-2026 GDP expansion rate, expected to be up +1.6% from a year ago, much lower than the Q1-2025 expansion of +2.5%.

In the US, the developing conflicts between the Fed's desire to rein in inflation, and the Trump Administration's actions to ignore that threat and to try and push down interest rates will increasingly be watched by markets. There will also be PMIs out pointing to economic activity changes, and the week will end with their August non-farm payrolls report which is currently expected to show a very minor +45,000 jobs expansion.

In Canada there will be a rate review although no change is expected from the current 2.25%. They have a 3% CPI level, and a major challenge from their obnoxious neighbour to contend with.

Japan will release a broad range of economic reports, including the latest industrial production, retail sales, consumer confidence, housing starts and household spending data.

India will release GDP data (expect +7.1%). Malaysia will review its policy rate, but no change is expected from the present 2.75% And there will be PMIs everywhere. And that includes China.

Over the weekend, Japan reported a 2.4% jobless rate in July, their lowest in more than a year and their second lowest since before the pandemic.

And it seems Japan can still surprise. Births from January through June were 342,068, up +0.8% (+2,788 more) from the same period in 2025. It was their first rise for the first half of the year in 11 years.

Malaysia said producer prices there rose at a very fast +9.7% rate in July, their fastest since the pandemic and before that since early 2017.

India reported that its industrial production eased back from a +9.5% expansion rate in June to +7.3% in July. But this was still a better result than anticipated. Meanwhile, Indian bank loan growth has stayed extraordinarily high, up +18.3% from a year ago.

In China, mirroring the Evergrande disaster, China Vanke’s first-half loss widened to -¥16 bln as sales slumped and debt pressure built. Upcoming debt maturities may trigger the end of it.

And the EU released the August results of its business and consumer sentiment surveys. The net outcome is improving sentiment, especially business sentiment. Only consumer sentiment remains low but it is marginally less so in August.

In the US, in his Jackson Hole speech, Fed boss Kevin Warsh flagged that inflation in the American economy is too high but he offered no indication whether he favours keeping interest rates at current levels or pushing them higher. But he did restate that 2% is their inflation target. He gave no indication of rate policy but the inflation warning was enough for financial markets to conclude rate rises are more likely. Especially as he likely doesn't have the votes for a hold or cut.

In the real American economy, the Chicago PMI fell sharply in August into a contraction. The fall was driven by declines in New Orders, Order Backlogs, Production and Supplier Deliveries. It was their first fall in four months and discouraging, suggesting the stockpiling trend may be ending as inventories are now well built.

Meanwhile, the US non-farms payrolls data has gone through their annual adjustment. That says their previous reports of job growth were overstated by 79,000. And that is an adjustment of weak results in the first place. It is another discouraging signal.

And the University of Michigan consumer sentiment August survey was updated too, confirming its early month reading, falling about -6% from last month and landing about -11% below a year ago. They noted continued worries that inflation will remain elevated for the foreseeable future. Current levels are near the post-pandemic lows. In fact they are near the low points this survey got in the pandemic.

In Canada, they reported a revised Q2-2026 GDP expansion of +3.3% for the year. They noted that their household saving rate reached 3.7% in the quarter as growth in disposable income (+2.1%) outpaced nominal household spending (+1.7%). But they also flagged that the July expansion has vanished, no expansion in this latest month. Given the problems with their southern neighbour, it is hard to see an expansion continuing.

The UST 10yr yield is now just on 4.72%, down -1 bp from Saturday at this time, down -2 bps for the week

The price of gold is now at US$4454/oz, and down -US$8 from Saturday at this time, down -US$167/oz for the week. Silver has fallen -50 USc to just over US$66/oz and a -US$3.50 weekly fall.

Oil prices are holding from Saturday at just under US$83.50/bbl in the US, while the international Brent price is just on US$88.50/bbl.

The Kiwi dollar is unchanged from Saturday at just on 59.1 USc, down -70 bps for the week. Against the Aussie we are holding at 82.6 AUc. Against the euro we are up +10 bps at 51.1 euro cents. That all means our TWI-5 starts today at just over 62.6, essentially unchanged from Saturday, down -70 bps for the week.

The bitcoin price starts today at US$79,010 and up +1.7% from Saturday at this time. Volatility over the past 24 hours has been low at just on +/-0.9%.

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

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

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Audio soundtrack opening is licensed from Shutterstock, Track 1219389 Monetization ID TFGEPGEI0LHEIJAI

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Monetization ID TFGEPGEI0LHEIJAI

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 financial markets are awaiting a Kevin Warsh speech at the Jackson Hole symposium, specifically about how he sees the Fed's role when the US Treasury seems to be undermining it. What he says about the fight against inflation, if anything, will be revealing. This has markets hesitating today in anticipation. Although, equity markets are bullish off the strong Nvidia results.

US initial jobless claims fell marginally last week, and by marginally more than seasonal factors would have anticipated. There are now 1.78 mln people on these benefits, little different to a week ago but -7.5% less than a year ago.

The US merchandise trade deficit has come in at -US$119 bln in July, up US$17.4 bln from unusually high -US$101 bln in June and the -US$101 bln in the same month in 2025. Apart from the rush to beat upcoming tariffs just after Trump took office in early 2025, this latest result is a record high. Americans seem happy to pay these tariffs to get the products they need. Exports fell from June while imports rose on the same basis.

At the same time, the stockpiling trend seems to be gathering pace. US retail inventories rose in July as did wholesale inventories and both at an unexpectedly faster pace. Both are now at record high levels. Retail inventories are +3.9% higher than year ago levels now, with wholesale inventories up +5.6% on that basis. There could be an unwelcome reckoning if firms come to decide they are over-stocked. History shows their boardrooms are usually unhappy with excessive stocks.

Meanwhile the Kansas City Fed factory survey shows this with a little-changed report that is holding its expansion. New order levels are similar to last month but are falling for export orders. Input costs are rising faster than selling prices.

There was a US Treasury 7 year bond auction earlier today where the median yield came in at 4.46% (4.51% high). That is more costly that the prior equivalent event a month ago.

In Canada, they reported a surprise current account surplus of +C$8.8 bln in Q2-2026 from a deficit of -C$8.3 bln in the prior quarter and an expected -C$2 bln deficit. It is their first quarterly surplus since the 2022 and the largest since 2005.

Across the Pacific, China said it’s industrial profits rose more than +11% in July from the same month a year earlier. As good as that is, it was the softest pace this year.

The Bank of Korea has raised its policy rate by +25 bps today to 3.00% in a second consecutive move up. They target a 2% inflation rate. Korea has inflation at 2.8% although it did dip in July.

And the Philippine central bank raised its policy rate by +25 bps to 5%, all as expected. They target a 2-4% range and have current inflation at 6.2%.

Taiwanese consumer sentiment was little-changed in August, staying better than it was earlier in the year. But from a long term perspective, it has been relatively low since the pandemic.

Locally, after Wednesday's above expectation Australian CPI result - and plenty of evidence in that that non-fuel, less volatile items are rising in price faster now - we noticed an uptick in the pricing for a chance of a late-September rate hike by the RBA. True, it isn't an odds-on chance yet, but a notable one-day reaction. Currency markets rose on the prospects too. NAB is tipping a September rate hike now.

And staying in Australia, household spending leapt +7.0% in July from a year ago, the fastest growth in the past ten years (apart from during the pandemic recovery). The +1.1% rise in July from June builds on the June +1.0% monthly rise, and the +1.2% May rise. This is impressive momentum. Financial markets had expected only a +0.4% monthly rise and a +4.4% year-on-year rise. It was a broad-based expansion in every sector other than for "furnishings & household equipment". Likely no one saw a result this positive coming. It will bolster bets the RBA will push through a rate rise sooner.

Global container freight rates have stayed high, dipping just -1% over the past week. That puts them +111% higher than a year ago. Bulk cargo rates are up +10% for the week and nearing their yearly high again. From a year ago these rates are up +50%.

The UST 10yr yield is now just on 4.67%, unchanged from yesterday at this time. The 30 year yield is at 5.19%, and also unchanged.

The price of gold is now at US$4604/oz, and virtually unchanged from yesterday at this time. Silver has risen +US$1 to just over US$69/oz.

Oil prices are up +US$1.50 from yesterday at just over US$84/bbl in the US, while the international Brent price is up the same at just over US$90/bbl.

The Kiwi dollar is up +10 bps from yesterday at just on 59.5 USc. Against the Aussie we are down -20 bps at 82.7 AUc. Against the euro we are up +10 bps at 51.1 euro cents. That all means our TWI-5 starts today at just over 62.9, and little-changed from this time yesterday.

The bitcoin price starts today at US$80,434 and up +2.5% from yesterday at this time. Volatility over the past 24 hours has remained modest at just on +/-1.6%.

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 on Monday.

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Audio soundtrack opening is licensed from Shutterstock, Track 1219389 Monetization ID TFGEPGEI0LHEIJAI

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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 of more data that suggests the US economy is not regaining any momentum, and may be about to be tested by record high diesel prices.

US mortgage application levels dipped again last week from the prior week, mainly due to much lower refinancing levels as the high (6.78%) mortgage interest rates stay firm at these levels and a one year high.

Meanwhile US PCE inflation stayed up in July at 3.7% when it was expected to show a small dip. The month-on-month rise was much more than expected. Personal spending rose +5.8% while personal disposable incomes were up +4.2%.from a year ago. So the squeeze continues, and although masked by inflation, many households will be feeling it. And US diesel prices are now at record highs.

US GDP Q2-2026 second estimate came in at a modest +1.5%, and unchanged from its first estimate. Marginally stronger consumer spending was offset by weaker investment and more imports.

The US July durable goods order report came in positively, up +12.9% from the same month a year ago. But without aircraft or defense, it was up +8.7%. Capital goods orders on the same basis were up +13.5%, probably reflecting data center activity.

US crude oil stocks were little-changed last week, a bit less than the modest rise expected. Diesel stocks have hit record lows.

Meanwhile, Meta has agreed to an US$18 bln penalty to be paid over the next decade to resolve claims it designed its social media platforms to addict children. It will change the way it interacts with children. Four of the states who brought the court claim - California, Colorado, Kentucky and New Jersey - were expected to seek substantial civil penalties as wells.

In China, they have China has opened applications for an ¥800 bln policy-based financing tool for local government projects to shore up its slowing economic growth. But there are questions about how much impact this will have in 2026.

Singaporean industrial production extended its very positive run in July, up +5.8% from the same month a year ago and gains similar to most month in 2026.

In Australia, inflation fell in July as expected but not by as much as expected. Their June 3.8% rate fell to 3.5% in July but still well above the expected 3.2% rate assumed by financial markets. That gave the AUD a bounce, likely on the basis that the RBA's tolerance for still-high inflation may be about to get tested. The next RBA rate review is on September 29 however, and the August CPI data won't actually be known by then (September 30) - by the markets, at least. The RBA's inflation target is "between 2 and 3 percent", but it has been over 3% consistently every month for more than a year now.

Global wheat prices are up sharply again today, and to new post-pandemic highs, as Black Sea shipments from both Russia and Ukraine have essentially stopped and prospects for resumption look grim.

The UST 10yr yield is now just on 4.67%, up +3 bps from yesterday at this time. The 30 year yield is at 5.19%, up +1 bp.

The price of gold is now at US$4603/oz, down -US$45 from yesterday at this time. Silver has fallen -US$1 to just over US$68/oz.

Oil prices are up +50 USc from yesterday at just over US$82.50/bbl in the US, while the international Brent price is unchanged at US$88.50/bbl.

The Kiwi dollar is down -30 bps from yesterday at just over 59.4 USc. Against the Aussie we are down -50 bps at 82.9 AUc. Against the euro we are down -20 bps at 51 euro cents. That all means our TWI-5 starts today at just under 62.9, down -30 bps from this time yesterday.

The bitcoin price starts today at US$78,459 and down -0.5% from yesterday at this time. Volatility over the past 24 hours has remained modest at just on +/-1.1%.

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

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

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Audio soundtrack opening is licensed from Shutterstock, Track 1219389 Monetization ID TFGEPGEI0LHEIJAI

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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 the oil price has eased overnight on signs of new negotiations between the US and Iran, and relief that the US sanctions weren't as advertised. They exempted Chinese banks, for example. And China said it will support Iran.

But first overnight, the Pulse dairy auction delivered higher prices from last week's full auction event - in USD terms at least. For example WMP was up almost +1%. But the rising NZD turned that into a -0.7% softening.

In the US, ADP weekly private jobs update remains very low with less than +12,000 new jobs added over the past four weeks.

Sales of new homes in the US were unusually low as well with the July level the lowest for that month since 2017 (apart from the pandemic 2022 drop). That puts them -6.5% lower than year-ago levels.

The Richmond Fed's factory survey came in with a positive overall outcome in August, but lower than for July and the lowest since April. Re-shoring isn't a thing in the Mid-Atlantic states. The growth rate of prices paid and prices received rose in the month. Meanwhile their services survey in the region revealed slowing activity, with only slight increases in prices and costs.

And that is consistent with the pullback in consumer sentiment as measured by the Conference Board in the US. It is measure that has been falling away since early 2025.

There was a less well supported US Treasury 2 year bond sale overnight, but the yield dipped to 4.16% (4.20% high) from the prior equivalent event a month ago of 4.27%.

In Canada, they reported lower wholesale sales in July, ending a run of expansions. The decline mainly reflects lower sales of agricultural supplies and minerals and ores. Otherwise little change.

In the escalating trade war the US is waging on Canada, Canada has responded with 50% duties on American dairy products, steel, farm equipment, and appliances.

And copper has risen to a new record high on the uncertainty surrounding US tariff policies. It isn't the only metal trading in the stratosphere of uncertainty. Tin is another example.

Taiwan's July update of industrial production extended its outsized growth reporting (+26.9% from a year ago). And that was matched with high growth of retail sales there (+7.7%)

Later today we will be watching the July CPI update from Australia where a fall in the rate from June's 3.8% to 3.2% is anticipated.

Meanwhile, they are dealing with some major events. Firstly in NSW, a major home builder has collapsed. The Bathla Group has failed owing AU$3.6 bln in debt supposedly due to soaring construction costs which they can't recover just as a sharp decline in property sales hit them. Construction activity has frozen across approximately 15,000 homes, townhouses, and apartment developments currently underway. The vast majority of the AU$3.6 bln of debt is owed to private credit funds and non-bank lenders. There are sure to be cascading impacts.

And bird flu is spreading faster now in Australia. So far more than 300 dead bird events have been confirmed out of 27,000 reports of unexplained dead bird events.

The UST 10yr yield is now just on 4.64%, down -6 bps from yesterday at this time. The 30 year yield is at 5.18%, down -5 bps. 

The price of gold is now at US$4648/oz, up +US$12 from yesterday at this time. Silver has firmed +50 USc to just under US$69/oz.

Oil prices are down -US$3 from yesterday at just over US$82/bbl in the US, while the international Brent price is just under US$88.50/bbl and down -US$3.50. 

The Kiwi dollar is up +20 bps from yesterday at just over 59.7 USc. Against the Aussie we are up +10 bps at 83.4 AUc. Against the euro we are also up +10 bps at 51.2 euro cents. That all means our TWI-5 starts today at just over 63.2, up +20 bps from this time yesterday.

The bitcoin price starts today at US$79,195 and up +0.4% from yesterday at this time. Volatility over the past 24 hours has remained modest at just on +/-1.7%.

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

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

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US makes big economic threats at Iran. Iran blacklists tankers. US economic activity weakens. Canada gets new tariff threat. Singapore inflation up, baby bonus expanded. Audio soundtrack opening is licensed from Shutterstock, Track 1219389
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