Economy Watch

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 the coming week will be largely about the Strait of Hormuz and whether the US-Iran agreements will hold and traffic resumes at scale. But we start the week with a pessimistic outlook. Iran says it has closed the Strait (again) and it will remain closed until the US honours its commitment to get Israel to stop invading Lebanon. The US seems unable to do that and responded with threats. Talks in Geneva sputter along and it is hard to know if they are meaningful. And that likely means ship traffic in the Strait will be tolled by Iran when things settle, as they eventually will.

Away from all that, the local data will focus on May's mortgage and credit card lending.

In Australia we will get important updates for CPI inflation (4.3%), jobs growth (+30,000), and household spending (+4.1%).

In China, their central bank is widely expected to keep its one-year and five-year loan prime rates unchanged in its June review. They will also release FDI data (likely at least -10% lower from a year ago).

Taiwan will update its eye-catching export order data, expected to rise to +50% in May from a year ago.

There will be many early June PMI indicators coming out this week including from the US (expect stable or easing). But the big US data will be their PCE inflation report where analysts expect them to report a May level close to 4%.

Canada will report its CPI and that is expected to come in at 2.9% but with core readings a bit lower.

Over the weekend they reported retail sales rose in April to be +3.7% higher than year-ago levels but unchanged in volume terms. Their May retail sales indicator rose a bit more, but this too may be all about fuel prices more than volume gains.

Staying in Canada, their banking prudential regulator lowered its capital buffers over the weekend with the express intent of allowing their banks to lend more to businesses "in support of Canada's economic adaptation to new opportunities":

Across the Pacific, Malaysia said it's exports rose a startling +45% in May and far better than the outsized +35% expected - and easily an all-time record high. This is all driven by electronic goods (+71%) although LNG exports were very strong too (+112%). Their traditional rural exports (palm oil, natural rubber) took a hammering however.

Meanwhile Malaysia reported May CPI as up just +2.0% in May from a year ago with food prices up just +1.2%.

Germany said its May producer prices rose +2.2% from a year ago, the most since June 2023 when most of that intervening prior saw declines.

And in Europe generally, they are suffering extreme heat, early in their summer, with temperatures 40o plus in many places. It will be a long summer for them.

The UST 10yr yield is now just on 4.49%, unchanged from this time Saturday, up a net +1 bps for the week. 

The price of gold has held at US$4152/oz, down a net -US$66/oz for the week. Silver is at US$65/oz, down -US$3 for the week.

Oil prices are holding from Saturday at just under US$77.50/bbl in the US, while the international Brent price is now just over US$80.50/bbl. A week ago these prices were US$84.50 and US$87/bbl respectively. Hormuz transits are picking up with 15 crude or product tankers exiting over the past 24 hours (3 dark with transponders off) and 17 entering for new loads (8 dark). (Normal is 60 in each direction.)

Australia said it has extended their fuel excise tax relief until the end of July.

The Kiwi dollar is unchanged from this time Saturday at just on 57.4 USc to make it a full -100 bps lower than a week ago. Against the Aussie we are little-changed at 81.9 AUc. Against the euro we are staying lower at just on 50 euro cents. That all means our TWI-5 starts today at just under 61.2 which is unchanged from Saturday, down -80 bps for the week.

The bitcoin price starts today at US$63,124 and up +1.8% from this time Saturday. 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’ll do this again tomorrow.

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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 may be moving on from the US-Iran deal, but commodity markets are noting that Iran will now have the opportunity to charge for transit ('fees' but no 'tolls') after a key US concession. The MOUis signed.

In the US, jobless claims dipped slightly last week to 219,500 but at about the rate expected as what seasonal factors would have indicated. There are now just under 1.7 people on these benefits, marginally less than a year ago.

The Philly Fed factory survey recovered in June after the poor report for May, but only to a level below its 2026 average. These firms said prices paid moved up while the prices they got for their goods dipped.

Meanwhile the US Conference Board's leading index rose marginally in May, and this metric suggests its may be coming to the end of its long term down trend that started in 2022.

In Canada, producer prices were up +13.6% in May from a year earlier with +1.2% of that coming in the latest month. Of course, most of this was energy related. In fact raw materials costs were up +33% from a year ago within the overall result.

There was a lot of central bank action overnight, all timed to follow the US Fed. Taiwan held its policy rate unchanged at 2.0% as expected. Indonesia hike again, up +25 bps to 5.75% quickly following last week's out-of-cycle emergency hike to support their currency.

The central Bank of England held unchanged at 2.75% (with two of their nine members wanting a hike). The Swiss central bank held at 0%. The Norwegian central bank held at 4.25%. And the Swedish central bank held at 1.75% a day ago. All these came after last week's +25 bps rise by the ECB.

Global container freight rates surged another +12% last week to be +21% higher than this time last year. There were increases in all major trades but the China-EU trade got the biggest hit. Meanwhile, bulk cargo rates fell -8% over the past week to be +36% higher than year ago levels.

The UST 10yr yield is now just on 4.44%, down -2 bps from this time yesterday.

The price of gold has retreated another -US$44 from yesterday to US$4229/oz. Silver is down another -US$2 at US$66/oz.

Oil prices are down -US$1 from yesterday at just under US$75.50/bbl in the US, while the international Brent price is now just over US$78.50/bbl and down -50 USc. Hormuz transits are picking up with 13 crude or product tankers exiting over the past 24 hours and 13 entering for new loads. (Normal is 60 in each direction.)

The Kiwi dollar is down -60 bps from this time yesterday at just on 57.6 USc. Against the Aussie we are down -30 bps at 82.0 AUc. Against the euro we are unchanged at just under 50.2 euro cents. That all means our TWI-5 starts today at just over 61.3 which is down -50 bps from yesterday.

The bitcoin price starts today at US$62,623 and down -5.1% from this time yesterday. Volatility over the past 24 hours has been high at just under +/- 3.0%.

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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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 the US-Iran deal temporarily reopens Strait of Hormuz, and offers major concessions to Tehran. Tehran probably can't quite believe its luck here. Trump is battling widespread claims his Iran deal is worse (much worse) than the Obama deal he tore up.

In economic matters in the US, their central ban kept it policy rate range unchanged at 3.50%-3.75% for a fourth consecutive meeting, in a unanimous decision and as expected. But updated dot plot projections show that 9 officials foresee at least one quarter-point hike this year, with 6 anticipating at least two. Another 9 expected no move or a cut. They see core inflation rising from 2.7% at their prior forecast to 3.3% by the end of the year. and removed their easing bias. And the next move will be up. This uncertainty got the market's attention.

Wall Street retreated, bond yields rose, and the USD rose. Gold fell.

But Kevin Warsh's influence can be seen in the fact that the decision announcement had very little detail or context. He is not a fan of central bank transparency.

Separately, US mortgage applications fell last week and across the board even though the benchmark interest rate was unchanged (at 6.60%).

However American retail sales rose in May from April and by more than expected to be +5.2% higher than year-ago levels. But most of this was due to higher fuel prices. Without fuel, these sales were up +3.6% when inflation was up +4.2%.

US pending home sales rose more than expected too, with sales volumes yp +4.8% from May a year ago. That is two months in a row of good gains although on the back of quite weak results a year ago.

US crude oil stocks fell an outsized -8.3 mln barrels last week, the largest weekly fall in eight weeks and the most concentrated drawdown of the strategic reserve levels since the pandemic. In fact, their strategic reserves are at their lowest level now since March 1985. a 40 year low.

Japan said its exports were up +17.0% in May from a year ago to US$59 bln and its imports were up +12.5% over the same period. Export customers were dominated by China (+17.9% growth ), the US (+12.5%), ASEAN (+20.0%), and the EU (+14.5%).

Meanwhile Japan reported its machinery orders were strong too, up +15.6% in April from a year ago, up +8.7% from March. Japan really has its mojo back.

In Singapore, they said their exports rose a whopping +38% in May from a year ago to a record high S$87 bln (US$51 bln) in the month, a far larger increase than anyone saw coming. It is clear that despite the US shenanigans on tariffing trade, global trade is in fine shape without them.

In China, they are tightening their grip on the rare earth minerals sector with new regulations that cover everything from mining rights and production, to stockpiling and environmental restoration. Everything in the sector is now a national security priority.

It might also be worth noting that Russia said its economy shrank in Q1-2026, its first admission of a retreat outside the pandemic period. And the downturn occurred despite sharp rises in the prices of key Russian exports, including oil, natural gas, coal, industrial metals, and grain.

The UST 10yr yield is now just on 4.46%, up +4 bps from this time yesterday immediately after the Fed decision announcement.

The price of gold has has retreated -US$68 from yesterday to US$4273/oz after the Fed decision. Silver is down -US$2 at US$68/oz.

Oil prices are up +US$1 from yesterday at just under US$76.50/bbl in the US, while the international Brent price is now just on US$79/bbl and up +50 USc. Hormuz transits are picking up with eight crude or product tankers exiting over the past 24 hours and 16 entering for new loads. (Normal is 60 in each direction.)

The Kiwi dollar is down -20 bps from this time yesterday at just on 58.2 USc. Against the Aussie we are down -30 bps at 82.3 AUc. Against the euro we are down -10 bps at just under 50.2 euro cents. That all means our TWI-5 starts today at just under 61.8 which is down -20 bps from yesterday.

The bitcoin price starts today at US$66,016 and up +0.2% 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.

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

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 it seems Iran is going to come out of the current 'peace deal' with a very large reconstruction commitment. To end the standoff, the US is offering Iran substantial funding even if via convoluted means so that Trump can claim the US isn't involved.

The overnight dairy auction brought lower prices that at the prior full event, but not as low as at the the prior Pulse event, nor what the derivatives market was expecting. Still, it was a -2.8% retreat in USD terms, down -1.4% in NZD terms and to the lowest overall level since early February. Generally the powders were softer than expected, the milk fats note as soft as expected.

In the US, their weekly ADP employment update signaled a slightly slower pace of hiring, the softest since early March. But this signal is still expanding, just slower.

The New York Fed's regional services sector survey found softer conditions in June than at the prior survey with declining activity and firms not very optimistic.

Meanwhile the US national housing start data for May revealed sharply lower activity, down -8.7% from the same month a year ago. In fact, apart from the pandemic period, this is the lowest level in 17 years and the GFC..

All eves now turn to the US Fed and their meeting tomorrow. Many economists are betting on higher rates as Kevin Warsh takes the reins at the Fed. But it is no certainty as financial markets see no-change in their rates tomorrow, despite the high US inflation measures.

In Canada, their real estate market seems to be recovering led by Toronto and Ontario markets, with national sales rising at a rate in May not seen since 2024.

In China, new home prices were -3.5% lower in May from a year ago, matching April’s pace and that extends their consecutive decline to almost 3 years. Second hand home prices fell at a faster rate in the 70 major cities that their official data tracks. But there are new pockets where increases are starting to show up, even for pre-owned homes.

China said its industrial production expanded +4.5% in May from a year ago, better than the +4.1% in April and better than the expected +4.3%. And their electricity production rose +4.2% in the same period, giving some cred to the industrial production claims (which has been occasionally absent in previous months).

But China's retail sales actually fell -0.6% in May from the same month in 2026, following an easing pattern that started in March, and the first decline in retail sales there since December 2022. But much of this weakness is due to lower car buying which was down -16%. Sales of home appliances and audiovisual equipment was also down -16%, home improvement down -11%, gold and silver jewelry down -9%, and furniture down -8.7%. Turning up sharply were beverages and tobacco, clothing and cosmetics, comfort items popular when things are stressful.

As expected, the Bank of Japan raised its policy rate by +25 bps to 1.0% today in a 7-1 majority decision. This new rate is its highest in 31 years.

In Australia, momentum in their manufacturing sector stalled heading into mid-year, with conditions slipping back neutral after a short-lived recovery. The Middle East conflict is reigniting cost pressures across the industry, according to the latest update of ACCI-Westpac Business Survey for the June quarter.

And late yesterday, the RBA agreed unanimously to hold their cash rate target at 4.35% as was widely expected.

On the commodities front we should note that while urea prices have fallen (with oil), that is not the case for sulphur, not bitumen. Many commodity prices may stay elevated for a long time yet.

The UST 10yr yield is now just on 4.42%, down -4 bps from this time yesterday.

The price of gold has recovered further, up +US$20 from yesterday to US$4341/oz. Silver is unchanged at US$70/oz.

Oil prices are down another -US$5 from yesterday at just over US$75.50/bbl in the US, while the international Brent price is now just over US$78.50/bbl. Hormuz transits are still minimal with only six crude or product tankers exiting over the past 24 hours. Oddly however its seems the US is using an Iranian ship-transfer tactic to get some cargoes through.

And we should note that construction and other costs for electric battery storage stations have fallen below that of gas-fired power plants for the first time, as overproduction in China and a shift away from electric vehicles drove battery prices down -40% in 2025, while a turbine supply crunch is making new gas plants more costly.

The Kiwi dollar is up +10 bps from this time yesterday at just on 58.4 USc. Against the Aussie we are up +20 bps at 82.6 AUc. Against the euro we are unchanged at just under 50.3 euro cents. That all means our TWI-5 starts today at just under 62 which is up +10 bps from yesterday.

The bitcoin price starts today at US$65,878 and down -1.5% from this time yesterday. Volatility over the past 24 hours has been modest at just under +/- 1.1%.

And we should also note that reports suggest Binance is about to lose its licence to operate in the EU. Binance is controlled by Changpeng Zhao (CZ) who was convicted of money laundering in the US (and of course got pardoned there by Trump).

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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Title: Markets jump to conclusions

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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 US-Iran deal is being viewed with relief by financial markets, but commodity markets are less enthusiastic. Commodity prices are expected to remain higher than they were in February, before the US and Israel attacked Iran, even after this latest deal to end the war, as it will take months for risk premiums to retreat and give breathing space to commodity-importing economies.

However first today, American manufacturing output stalled in May from April to be +1.4% higher than year-ago levels and a lower improvement than expected.

Also coming in weaker than expected was the June factory survey for the New York region although they did report a small rise in new orders. The pace of input cost increases remains very elevated however.

Meanwhile NAHB survey of housebuilders was little-changed in June, remaining weak on affordability concerns

In Canada, May housing starts dipped from the prior month but remain high on an historical basis.

Canada also said its April industrial production was strong, with manufacturing sales up +4.2% following a +3.4% rise in March. Sales rose in 17 of the 21 subsectors, led by the fuel products and food subsectors.

India said its exports rose to US$45.2 bln in May, a record high for them and +18% above the May 2025 level

After three months of declines, industrial production rose in April in the EU in a better than expected result (even if the rise was quite minor).

And France is facing US pressure for attempting to get the US tech giant to pay some tax on their French operations. Big Tech has weaponised its support of the US President to try and avoid France's 3% digital services tax. Even that is too much for them. Relying on US tech is risky, and those risks got larger with the US banning key new Anthropic products "from export".

The UST 10yr yield is now just on 4.46%, down -3 bps from this time yesterday. 

The price of gold has recovered further, up +US$99 from yesterday to US$4321/oz. Silver is up +US$2.50 to US$70/oz.

Oil prices are down -US$4.50 from yesterday at just under US$80.50/bbl in the US, while the international Brent price is now just over US$83/bbl. Hormuz transits are still minimal with no significant movements of crude or product tankers overnight.

The US went to war with Iran because they would not "negotiate" their surrender. Now Trump claims peace based on a negotiation with a regime he cannot defeat nor control. Likely the "worst deal ever". What could possibly go wrong?

The Kiwi dollar is unchanged from this time yesterday at just on 58.3 USc. Against the Aussie we are down -40 bps at 82.4 AUc. Against the euro we are down -10 bps at just under 50.3 euro cents. That all means our TWI-5 starts today at just under 61.9 which is down -10 bps from yesterday.

The bitcoin price starts today at US$66,868 and up +5.1% from this time yesterday. Volatility over the past 24 hours has been moderate at just under +/- 2.9%.

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.

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