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.

Today we lead with news the Iranians seem to be sucking Trump into a place he can't extract himself from, far from his earlier claims of 'total victory'.

First up today, US existing come sales came in at a modest level again in April, and undershot what analysts were expecting. High mortgage interest rates are probably the reason for the soft demand. Still, they did sell at an annualised rate of just on 4 mln dwellings which is enough to sustain the sector. Unsold inventory is rising however, now at 16 weeks sales, and has been rising for all of 2026 and is now at 1.35 mln units.

There was another US Treasury bond auction earlier today, and it was notable that demand is flagging, down -5% from the prior event. This time this 3 year bond achieved a median yield of 3.92%, up from 3.85% at the prior equivalent event a month ago.

Inflation's impact in the US has officials scrambling. US petrol taxes are said to be on the radar for cutbacks. And the high cost of beef is pushing the US to sharply cut tariffs and quotas on imported beef. Both are effective acknowledgements that tariffs are hurting Americans more than their trading partners. However, given current demand and supply situations, it seems neither move will likely result in lower prices for US consumers.

In Canada, their central bank runs a 'market participants survey' quarterly, and in the latest of these professionals now see geopolitical tensions more of a threat to their economy that the trade tensions with the US. They also saw only a modest +1.6% economic expansion this year.

China's inflation is rising, noticeably now. Today they said their April CPI came in up +1.2% from a year ago, with fuel costs up +4.6% on that year-ago basis. But in April from March, fuel costs rose +3.5% in just one month. Things are hotter for producer costs which were up +3.5% year-on-year, and up +2.1% month-on-month. These are big sifts because it has been negative since October 2022.

China's vehicle sales came in a 2.525 mln in April, about average aver the past three years, but marginally lower than year-ago levels which was an outsized period.

On the commodities front, copper shot up to a record high today, and aluminium, nickel and zinc are also rising at the same time. Sulphur, a key ingredient for all mining and processing activity has shot up to a record high again, and approaching three times its cost of a year ago, up double from the start of Trump's Gulf War. Urea, which also spiked to mid April, has come back quite a bit since then.

Trump is on his way to Beijing for a summit with Xi, but he is going is quite a weakened state - but he probably doesn't realise it.

The UST 10yr yield is now just on 4.41%, up +5 bps from this time yesterday.

The price of gold will start today up +US$8 at US$4722/oz. Silver is up +US$5 at just under US$85.50/oz.

American oil prices are up +US$3 at just under US$98.50/bbl, while the international Brent price is holding at just over US$104.50/bbl, up +US$3.50.

The Kiwi dollar is unchanged from yesterday, at this time at 59.7 USc. Against the Aussie we are down -10 bps at 82.2 AUc. Against the euro we are up +10 bps at just on 50.7 euro cents. That all means our TWI-5 starts today at just under 62.9 which is little-changed from yesterday.

The bitcoin price starts today at US$81,983 and up +0.6% from this time yesterday. Volatility over the past 24 hours has been modest at just under +/- 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’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 that the Strait of Hormuz is still essentially shut with Trump's war on Iran far from resolved. The claims of 'ceasefires' merely propaganda exercises. Rolling skirmishes mean no shipping can get insurance, despite offers of safe passage. No-one respects anyone in a region where trust has evaporated.

Locally this week, the big data insights will come from the RBNZ's survey of inflation expectations on Wednesday, migration and travel activity data on Thursday, and a first look at inflation on Friday via Stats NZ's selected price tracking. We will also get the factory PMI on Friday.

In Australia, the key events will be the Federal Budget on Tuesday preceded by the Commbank profit result. There will also be consumer and business sentiment surveys out this week.

In the US, it will be all about their April CPI and PPI, along with updates for retail sales and industrial production

In India, they will also release CPI data. From Japan look out for household spending and PPI data too, and machine tool order updates.

In China, we are expecting April updates for CPI, PPI and new yuan loan data.

Over the weekend, China released its April export data and it was strong. While the US is turning inward, China is seizing the opportunities of their mistake. China’s exports rose +14% in April to a record high, picking up from March's +2.5% growth despite the disruptions from the Trump Gulf War. And China's imports surged +25% on the same year-on-year basis, a second straight monthly record and confirming resilient domestic demand. It is all very impressive.

China's exports to us were up only +3.8% from a year ago, but their imports from us were up +14.5.

China's exports to Australia were up +36% and their imports were up +20%, but that still left Australia with a very large surplus with China.

China's exports to the US were down -10.4%, and their imports down a similar -10.2%. They seem to have reduced their reliance on goods from the US to now just 9.8% of their total imports. No wonder US exports are faltering.

Over the weekend, the official data from the US showed they added +115,000 payroll jobs in April at the headline level, above expectations of a +62,000 gain and following a +185,000 increase in March. It was the first back-to-back monthly gain in nearly a year, and on an 'actual' payroll basis it was stronger again. Their jobless rate was stable at 4.3%.

But we should remember that all this data comes from an agency where Trump fired its head because he didn't like the results and this latest data is under the 'new management'. An independent professional review has confirmed there are distortions growing from this agency.

Employment rose in health care, logistics, and in the retail trade while it fell in the manufacturing and government sectors.

But if you include those not in payroll employment (self-employed etc.) there was no change on an 'actual' basis, a fall of -226,000 on a seasonally-adjusted basis. Their underclass is really struggling.

And you can see that in the latest University of Michigan consumer sentiment survey for May which fell again and to a record low. The fall from April wasn't large, coming in a scant 1.6 index points below April’s reading but it was comparable to the pandemic trough reached in June 2022. Year-ahead inflation expectations are for 4.5%, a touch less than in April.

In Canada, their employment fell -18,000 in April, but more people entered their job market, raising their jobless rate to 6.9%.

In India, banks are lending freely, with loan growth up +16% from a year ago. For all its growth narrative, India's stock exchanges are reporting serious 2026 declines, unlike most other global markets.

The UST 10yr yield is now just on 4.36%, unchanged from this time Saturday, down -2 bps for the week. 

The price of gold will start today down -US$9 at US$4714/oz, up +US$114 for the week. Silver is little-changed at just under US$80.50/oz, up +US$4.50 for the week.

American oil prices are little-changed at just under US$95.50/bbl, down -US$7 for the week, while the international Brent price is holding at just over US$101/bbl, down -US$7.50 for the week.

The Kiwi dollar is up +10 bps from Saturday, at this time at 59.7 USc, up +70 bps for the week. Against the Aussie we are unchanged at 82.3 AUc. Against the euro we are also unchanged at just on 50.6 euro cents. That all means our TWI-5 starts today at just under 62.9 which is up +10 bps from Saturday but up +40 bps for the week.

The bitcoin price starts today at US$81,392 and up +1.6% from this time Saturday. Volatility over the past 24 hours has been low however at just under +/- 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’ll 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.

Today we lead with news American households are struggling as inflation pressures consume their reserves.

In the US there were 181,000 new initial jobless claims last week, about what seasonal factors would have indicated. There are now 1.735 mln people on these benefits, lower than at this time last year, but still above two year-ago levels.

And there were 83,000 reported job cuts in April, a bit above the average over the past year. For a second month in a row, AI is the key reason for shedding jobs now.

Median one-year-ahead inflation expectations in the US rose in April and for a second month to 3.6% in April which is their highest since October 2023. Inflation uncertainty also increased at the one-year-ahead horizon. Income expectations are up less than 3%, so on average most people there expect inflation will set them back from where they are.

US consumer debt jumped in March by much more than expected, driven by a +9.1% surge in credit card debt. The big end of town is noticing. Executives across retail, restaurants and packaged goods are increasingly worried about American shoppers with tighter budgets amid surging fuel prices caused by Trump's Gulf War. “They’re literally running out of money at the end of the month,” one said.

Across the Pacific, China's FX reserves jumped in April to just over US$3.4 tin after the unexpected March dip, and back up in its rising trend. This is their largest gain in 28 months. But it is still off its US$4 tln level in mid 2014. Gold holdings increased again by another +8 tonnes.

The central bank of Malaysia reviewed its monetary policy late yesterday and kept its official rate unchanged at 2.75%.

And Malaysian discount airline AirAsia said it has ordered 150 Airbus aircraft worth US$19 bln, and said it has an option to order another 150 from Airbus. Orders like this are being driven by the need for fuel efficiency.

The central bank of Norway unexpectedly raised its policy rate by +25 bps to 4.25% at its overnight meeting, defying market expectations for no change. They said inflation remains too high at 3.6% and is likely to stay elevated and action is needed now to keep it closer to its 2% target.

In the EU, the volume of retail sales fell in March from February to be up just 1.9% from year ago levels. The lower volume of fuel sales was the key reason driving the recent reversal. Non-food, non-fuel activity was actually up an impressive +3.0% for the year.

In Germany they posted an impressive factory order intake for March, up +6.3% from the same month a year ago and resuming the upward trend they have had since August 2025.

Australia said its exports fell -2.7% in March from February as rural exports plunged -11.6%. Also, non-monetary gold exports dropped -6.1%. That makes its March merchandise exports -2.2% lower than year-ago levels. Meanwhile, imports rose +14%. That means they recorded a -AU$1.8 bln trade deficit for the month, far larger than the expected +$4.2 bln surplus and the first monthly deficit since 2017. The import surge of "ADP equipment" totaling $4.8 bln in March (likely for data centers), is a key reason.

Meanwhile, the Aussie government has imposed punitive tariffs of up to 82% on Chinese coil steel exports in a major effort to shield local manufacturers from low-cost competition from China that receive 'unfair' Chinese government subsidies.

Global container freight rates rose +3% last week to be +10% higher than year-ago levels. Outbound China rates are rising again. Bulk cargo rates were up +11.5% over the past week to be +112% higher than year-ago levels.

The UST 10yr yield is now just on 4.40%, up +5 bps from this time yesterday.

The price of gold will start today up +US$17 at US$4697/oz. Silver is up +US$2.50 at just over US$79.50/oz.

American oil prices are up +50 USc at just on US$96/bbl, while the international Brent price is little-changed at US$101.50/bbl.

Oil company Shell announced quarterly earnings overnight, more than doubling them to US$6.9 bln in the three months to March, from Q4-2025's US$3.2 bln. Clearly more than 'cost increases' are being passed on at the pump.

The Kiwi dollar is unchanged from yesterday at this time at 59.5 USc. Against the Aussie we are also unchanged at 82.3 AUc. Against the euro we are holding at just on 50.7 euro cents. That all means our TWI-5 starts today at just under 62.8 which is unchanged from yesterday.

The bitcoin price starts today at US$79,843 and down -1.9% from this time yesterday. Volatility over the past 24 hours has been modest at just under +/- 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’ll 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.

Today we lead with news oil prices have tumbled as the US seems to give up on most of its stated objectives, including the promise of safe-passage for shipping, in a u-turn to extract itself from a losing hand. Crude oil prices are down more than -10% on the news, although it needs to be noted that the Strait of Hormuz remains closed. It is just market euphoria. We now need to start worrying about a permanent Iranian transit tax after the US walks away. The Gulf States who supported the US are about to be thrown under the bus. Financial markets don't care of course and like the end of the adventure.

US mortgage applications fell again last week as interest rates rise, both for refinance activity and new home purchases. This takes this activity back to September 2024 levels.

The US ADP employment report said their private labour market added +109,000 jobs in April, marginally more than the +99,000 expected. This sets the official non-farm payrolls report up for an expected +60,000 rise, with upside. Most of the new jobs are coming from aggressive hiring in their healthcare sector.

After the prior week's outsized fall, this week the EIA reports another notable fall in US crude oil stocks. In fact, every metric fell other than US crude oil imports. There is certainly no relief at US petrol pumps yet, with prices now up more than +50% from their pre-Trump Gulf War levels.

We have earlier noted the politicalisation of US official data, especially of the Bureau of Labor Statistics who produce CPI, PPI and labour market data. We weren't the only ones. A new analytical report has been looking at how this has affected the quality of their data and concluded there is a worrying impact from this trend. So we need to be sceptical, and the next of their big set piece reports is the April non-farm payrolls. This means we will need to rely more on other non-Trump Administration high frequency market data.

In Canada, their widely-watched Ivey PMI surged into a strong expansion in April and by more than expected.

In China, new analysis shows Chinese companies are reporting lackluster earnings, with overall net profit declining in 2025 for the third consecutive year as the property slump dragged on and more retailers posted losses, hurting employment and the economy as a whole.

Meanwhile, China's Golden Week holiday has just ended, and reports are that there was less air travel this year - but very much more high-speed rail travel. Overall domestic holiday activity was up +3.5% with air travel falling -5.7% year-on-year to 10.5 million passengers between May 1 and May 5, railway journeys up +4.6% to 1.06 billion.

And staying in China, their non-official S&P Global services PMI reports that their services sector expanded faster as new business picked up in April and the year-ahead outlook improved. Cost pressures remained modest from this giant sector.

In India, their services sector saw new orders and output expand at a quicker pace supporting hiring activity. They also reported a mild reduction in inflationary pressures.

(Things aren't so good in the Russian services sector.)

In the EU, they report rising cost pressure for producers, all related to higher fuel prices. Overall they are up +2.0% in April from a year ago, but up +3.2% from March. There is quite a wide range of impacts depending on the country.

Internationally, a new report tallying global debt found it at US$353 tln, and a strong shift away from US treasuries and toward big new demand for Japanese and European government bonds. They also found the overall debt:GDP ratio remained stable.

The UST 10yr yield is now just on 4.35%, down -7 bps from this time yesterday.

The price of gold will start today up +US$121 at US$4680/oz. Silver is up +US$4 at just over US$77/oz.

American oil prices are down -US$6.50 at just on US$95.50/bbl, while the international Brent price is down -US$8.50 and now at US$101.50/bbl.

The Kiwi dollar is up +60 bps from yesterday at this time at 59.5 USc. Against the Aussie we are up +30 bps at 82.3 AUc. Against the euro we are up +30 bps at just on 50.7 euro cents. That all means our TWI-5 starts today at just under 62.8 which is up +50 bps from yesterday.

The bitcoin price starts today at US$81,399 and up +0.1% from this time yesterday. Volatility over the past 24 hours has been modest at just under +/- 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’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 that although the US claims the ceasefire with Iran is holding and "ships are lining up to transit", in fact, very little is moving in the area between Iran's red lines. And the most high profile transit in the past 24 hours was an Iranian tanker. Still, the US claims resonated on Wall Street, and stocks rose, benchmark rates fell.

But first today, there was another full dairy auction earlier today, a small one where volumes offered and sold were the least in fifteen years, since mid 2011. But prices were up +1.5% in USD, up +1.6% in NZD. Butter prices continued to slide, but there were good gains for SMP, WMP and mozzarella. These gains end two consecutive full events where prices fell.

US job openings fell, although to be fair, but less than expected. But even then, they are back at levels they had in April 2018, which is less than it seems because their labour force is so much larger now.

There were two services PMI reports out for the US overnight (ISM and S&P Global) and both showed that new business intakes fell for first time in two years as war in the Middle East and inflation hit demand. But both were positive even if less so that in the prior two months

The reason for the retreat cam be found in the latest April logistics managers report, where freight costs leapt, taking this index back to pandemic-stress levels.

The US RCM/TIPP economic optimism index fell yet again, down to levels last seen in early 2024. It has retreated steadily since December 2024. It's sponsor's report called it 'steady' but that is gilding it somewhat.

US exports and imports were little-changed in April, but both are in rising trends even if imports rose slightly more than exports (which rose largely on petroleum exports). Their trade deficit was widened.

Canada also reported export data and that came in at a one year high, and unexpectedly good result, largely on the back of high exports of petroleum and gold. Imports fell back in April but from an unusually high March level. The result was a good trade surplus, their first since September 2025.

Singapore reported March retail sales late yesterday and they were better than expected with a good +4.8% rise from a year ago. That represents a real gain because their CPI inflation was 1.8% in March.

As widely anticipated, the RBA raised its cash rate target by +25 bps to 4.35% late yesterday. It was a split decision with one voting member wanting to hold the rate unchanged. But they face sharply higher inflation threats that seem to be growing and prior rate hikes have done little to quell those. However they have restrained their housing market enthusiasm and this latest hike is expected to put the brakes on that further. Traders still believe there is at least one more rate increase this year despite the RBA saying their policy was still only mildly restrictive.

This comes after the March CPI rose +4.6%, and yesterday they reported that household spending remained high over the year in nominal terms, up +6.3% compared to March 2025 (and the highest since January 2023). Most of this is 'price' and much of it relates to a +32.8% increase in monthly fuel prices. But in volume terms, they say fuel purchases are lower, down -1.3% in March from February.

The UST 10yr yield is now just on 4.42%, down -2 bps from this time yesterday. 

The price of gold will start today up +US$37 at US$4559/oz. Silver is unchanged at just over US$73/oz.

American oil prices are down -US$3 at just on US$102/bbl, while the international Brent price is down -US$3.50 and now at US$110/bbl. It is hard to see these prices easing further given the sharp fall in global oil reserves recently. Even the future process of building them back will add to demand and prices.

The Kiwi dollar is up +20 bps from yesterday at this time at 58.9 USc. Against the Aussie we are up +10 bps at 82 AUc. Against the euro we are up +20 bps at just on 50.4 euro cents. That all means our TWI-5 starts today at just under 62.3 which is up +20 bps from yesterday.

The bitcoin price starts today at US$81,300 and up +0.9% from this time yesterday. Volatility over the past 24 hours has been modest at just under +/- 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’ll do this again tomorrow.