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 global financial markets are little-changed at near historic highs even though economic data releases seem to be still giving weaker signals.
This week will be dominated by the Fonterra annual result and dairy payout finalisation, a big dump of RBNZ lending data, and some credit card activity data.
In Australia, the week will be headlined by the August jobs data release which is expected to show +20,000 jobs growth.
Elsewhere, China is heading into its Mid-Autumn Festival which starts on Friday and runs through to Sunday.
In Japan it will be Silver Week with markets closed there today through Wednesday.
China made no changes to their Loan Prime Rates over the weekend. Ahead this week there will be many such decisions in Switzerland (no change at 0%), Sweden (no change at 1.75%), Norway (no change at 4.25%), Mexico (no change at 6.5%), and Indonesia (no change at 5.75%).
And there will be a major diplomatic set piece this week with Chinese President Xi visiting the US on Friday and Saturday (NZT). Don't expect much other than photo opportunities, although with Trump there is always the capacity for something to go badly wrong during or after the meeting. In May, China agreed to buy 200 Boeing jets during Trump’s visit to Beijing but no actual deal has been done so far, so anything announced at these summits doesn't mean anything will actually happen.
In the US they will release durable goods order data and most observers think they will fall in August from July.
From everywhere will will be getting PMI updates. And from Taiwan we will get its export order data.
All this, plus whatever happens in the Middle East wars.
Over the weekend we learned that, China posted another weak foreign direct investment result for August, down -5.3% on a year-to-date basis. But the incremental flows were tiny in August. up just +US$7 bln from July and virtually unchanged from year ago levels. From two years ago there is a large drop. For all the official propaganda about how well the Chinese economy is doing, it isn't enticing investment in. A key reason these flows are so low is that sovereign wealth funds are now on the sidelines.
Japan's CPI inflation rate held at +1.9% in August as it was in July, and their core inflation rate eased to 1.7%. Both results were at the bottom end of expectations, and should have taken pressure off the Bank of Japan who were meeting as this data was released. But they have other issues weighing on them including defending the yen, and facing bullying pressure from the Trump Administration. All the same, inflation this low when the global price pressure is high is an achievement, even if Japan is only one many Asian economies that are managing to replicate that result.
As universally anticipated and earlier implied, the Bank of Japan delivered its +25 bps rate hike on Friday, taking its policy rate to 1.25% which is a 31 year high. They said they will "continue to raise the policy interest rate and adjust the degree of monetary accommodation, in response to developments in economic activity and prices as well as financial conditions."
Meanwhile, the Bank of Japan made a 'rate check' in currency markets on Friday ahead of their holiday, after the yen fell on the rate hike, and that has strengthened sentiment for the yen, also likely underpinned by geopolitical considerations.
Across the Pacific, US industrial production stalled in August from July, a disappointing result because it rose in July and was expected to rise again in August. It is now +1.4% higher than a year ago, not exactly an indicator of a booming economy although that is up from +1.1% in July. Almost all of this is due to data center buildout ("business equipment" was up +7.1%).. In fact, production of consumer goods is now falling at a -1.1% annual rate.
Also disappointing was the US Conference Board leading indicator which edged lower in August when a small rise was anticipated and after a bigger rise was booked in July.
In Europe, the August ECB inflation expectations survey shows them at 3.0% (median) and 5.0% (average). These levels are little-changed from the June and July survey results.
Germany reported their August producer price levels overnight and that came in at +4.6%, higher than July's +3.0% and higher than the expected +4.1% rise. Of course, driving this were energy costs which were up +8.3% from a year ago, up +3.2% from July.
In Australia, after testimony to a parliamentary committee yesterday in which Governor Bullock have a hawkish briefing on inflation risks, economists have suddenly realised that the a rate hike is the most likely outcome at the nest monetary policy review there on September 29. That will take their cash rate target up to 4.60%. And it may go higher if inflation isn't restrained at that level.
The RBA isn't angling to save the Aussie housing market. It may well become collateral damage in the fight against rising inflation.
The UST 10yr yield is now now just under 5.00%, down -1 bp from Saturday up a net +2 bps for the week.
The price of gold is at US$4383/oz, and just +US$2 from Saturday, down -US$33 from a week ago. Silver is at just over US$66/oz and down -50 USc but up +US$2 from a week ago
Oil prices have held at just under US$100/bbl in the US, while the international Brent price is up +50 USc at US$104/bbl. A week ago these prices were US$100.50/bbl and US$104.50/bbl respectively, so little-changed.
The Kiwi dollar is unchanged from Saturday, still at 57.2 USc but down -90 bps from a week ago, down -190 bps from the start of the month. Against the Aussie we are holding at 80.3 AUc. Against the euro we are still at just on 49.8 euro cents. That all means our TWI-5 starts today at just under 60.7, unchanged at a six-week low.
The bitcoin price starts today at US$81,118 and little-changed from Saturday. Volatility over the past 24 hours has been low at just over +/-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’ll do this again tomorrow.
Track 1219389
Monetization ID TFGEPGEI0LHEIJAI

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

Shutterstock Track 1219389
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 it seems yesterday's unanimous Fed decision to prioritise the inflation fight has financial markets reassured. The US Treasury yields have pulled back from their highs, although still at Tuesday's high level.
One thing millions are watching is whether US mortgage rates will hit 7% again. They haven't quite yet but it is close. Not only are new home and refinance borrowers affected, the house building industry and all that it supports are anxious as well.
But first in the US today, their weekly initial jobless claims fell last week and by more than expected and by more than seasonal factors would have indicated. There are now 1.58 mln people on these benefits, also a notable fall as the much tighter qualification rules start to bit hard now.
US housing starts fell and to their slowest pace since 2019, with the exceptions of the sharp and unusual May dip, and the pandemic. That was matched by low building consent levels, so the easing off in this homebuilding sector will continue.
The regional Philly Fed factory survey for the important Pennsylvanian rust belt region was expected to fall in September from August and it did, but not by as much as expected. New orders and shipments remained elevated, while the employment index declined but stayed positive, signaling continued job growth. Both input and output price indicators moved higher and at a faster pace.
US pending home sales were down -4.7% in August from a year ago, but at least they did manager to level-peg from July.
There was a US 10 year TIPS bond auction overnight which delivered a median yield of 2.58% (high 2.65%), which is a notable rise from the 2.37% at the prior equivalent event a month ago. Although not as dramatic as the -17% fall off in demand for yesterday's 20 year bond, this auction attracted lower demand as well, -12% less.
And we should probably note that Chinese president Xi will be visiting the US next week and there is a frenzy of advanced negotiations underway in preparation so that both he and Trump can announce something 'substantial' and worth the visit. What will be interesting will be the moves after the event glad-handling.
In Canada, their producer prices rose sharply again, up +13.5% from a year ago in August, driven of course by high fuel costs. On the same basis their diesel is up +75% and petrol up +42%. Both rose notably from July as well.
Singapore's electronics sector had a boom month in August helping power the country's non-exports to a +46% gain from the same month a year earlier. That was up very sharply from a downwardly revised +24.1% rise in July and far above forecasts of +35%. It was the twelfth straight month of expansion and the strongest growth since October 1988. The US was a small customer in August than July. But every other major country was a much larger customer (other than the EU).(Meanwhile their imports rose +39% but that includes oil.)
Overnight the Bank of England reviewed their policy rate and left it unchanged at 3.75. Three of their nine voters wanted a rise. That kept their no-change streak of 2026 intact. Taiwan reviewed its 2.0% policy rate, also keeping it unchanged. And later today the more important Bank of Japan review is expected to announce a +25 bps hike to 1.25%.
In Australia, they released updated population data yesterday. This is a hot topic politically. Their population grew by +1.4% in the 12 months to March 2026, now 27.9 million people. That's 392,700 more than the same time in 2025. The natural increase was +100,000 and the net migration increase was +292,100 (and down from +309,500 in the previous year). The state with the biggest increase was Victoria (+109,500); the state with the fastest increase was Western Australia (+2.1%).
Global container freight rates have stayed very high but are in fact little-changed from last week at this time. From a year ago they are up +135% however. Within the recent no-change, rates from China to Europe were down about -5% while rates from China to the US rose about +5%. Bulk cargo rates fell -8% in the past week, but are also historically high still and up +55% from a year ago.
The UST 10yr yield is now just on 4.94%, down -7 bps from yesterday.
The price of gold was at US$4360/oz, and recovering +US$111 from yesterday. Silver is at just over US$65.50/oz and up +US$2.50/oz.
Oil prices have eased -50 USc to US$102/bbl in the US, while the international Brent price is little-changed at US$104.50/bbl.
The Kiwi dollar is down -30 bps from yesterday, now at 57.3 USc. Against the Aussie we are down -20 bps at 80.6 AUc. Against the euro we are unchanged at just on 49.9 euro cents. That all means our TWI-5 starts today at just under 60.8, down -20 bps and still at a six-week low.
The bitcoin price starts today at US$76,622 and up +1.5% from yesterday. Volatility over the past 24 hours has been modest again at just over +/-1.0%.
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 tomorrow.
Track 1219389
Monetization ID TFGEPGEI0LHEIJAI

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

Shutterstock Track 1219389
Monetization ID TFGEPGEI0LHEIJAI
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 is raising interest rates and the Middle East war is spreading.
First, as expected and in a very brief Warsh-style statement, the US Fed raised its key policy rate by +25 bps to 4.0% in a unanimous vote. It was its first rise since 2023. It did note that "inflation remains elevated" and they "will deliver price stability". However their forward looking interest rate 'projections' were raised although only to the new 4% levels. A strong majority of members thing another rate rise is possible this year.
Immediately after their decision was released, Wall Street held its small pre-decision gains. The UST 10 year yield dipped slightly but has since risen back over 5%. The US dollar rose. That USD rise has been maintained but Wall Street has changed direction sharply lower and the UST 10yr has jumped back over 5%.
Trump's reaction to the rate rise, and the prospect of another, has so far been conspicuous silence. He had demanded that rates be cut.
US mortgage applications fell last week, essentially driven by refinance applications. They say their 30 year benchmark home loan interest rate has risen to just under 7% and its highest since January 2025.
US retail sales rose in August and by more than expected, up the most month-on-month in five months following a fall in July. But the monthly +1.2% rise was essentially driven by higher fuel purchases, up +3.1% in the same period. From a year ago, these retail sales are up +5.3% of which fuel was up +20.5% at petrol stations,
US crude oil stocks took another fall last week and by more than the prior week although not as much as was expected. And their strategic reserves fall again, but only marginally this time.
The New York Fed's survey of the service sector activity in the New York region shows the July and August improvements have not continued into September, with a notable backslide in the latest survey.
Meanwhile the NAHB/Wells Fargo Housing Market Index of house builder sentiment has retreated to its lowest level since December 2022 with higher costs and higher interest rates getting the blame.
Canadian housing starts stayed low in August, almost the same as in July and well down on the unusually high year-ago Austr level
EU industrial production fell in July from June, but it is still up marginally from a year ago.
The UST 10yr yield is now just on 5.01%, unchanged from yesterday and its highest since 2007.
Wall Street was firmish ahead of the Fed decision today, up +0.3% in Wednesday trade on the S&P500, and up +0.8% on the Nasdaq. But then it retreated, now down -0.8% with the Nasdaq down -0.4%.
The price of gold was at US$4328/oz, and up +US$34 from yesterday just after the Fed decision. But now it is at US$4249 and a -US$79 reaction. Silver ws at just over US$64/oz and up +50 USc bu has subsequently dropped to US$62.50/oz.
Oil prices have eased -US$4 to US$102.50/bbl in the US, while the international Brent price is down -US$4.50 to just on US$104.50/bbl.
Saudi Arabia is scrambling to fix or bypass their war-damaged key oil pipeline, one that delivers as much as 4% of global oil supplies. And for Saudi Arabia this is a major economic threat, choking their revenues in a significant way.
The Kiwi dollar is little-changed from yesterday, now at 57.6 USc. Against the Aussie we are also holding at 80.8 AUc. Against the euro we are unchanged as well at just on 49.9 euro cents. That all means our TWI-5 starts today at just under 61, little-changed and still at a six-week low.
The bitcoin price starts today at US$75,518 and down -1.6% from yesterday. Volatility over the past 24 hours has been modest at just over +/-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.
Track 1219389
Monetization ID TFGEPGEI0LHEIJAI

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

Shutterstock Track 1219389
Monetization ID TFGEPGEI0LHEIJAI
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 Gulf Cooperation Council meetings with Iran have been 'postponed'. So no progress there.
That means we need to prepare for more pain at the pump, and aggressive competition for global fuel supplies.
In the US a full +25 bps is now priced in for Thursday's US Fed review which would take their policy rate to 4.0%. In Japan, a full +25 bps is also priced in, taking theirs to 1.25%. If one or both don't deliver these rises where will be strong financial market reactions. And the inflation-fighting cred of both central banks will be in tatters. With no monetary policy resistance to inflation, things would get very messy and rather quickly.
And while we are reviewing these chances, we should note that markets are pricing two chances in three (67%) of an RBNZ rise on October 28, a 75% chance of an RBA rate rise on September 29, and a 70% chance of an ECB rise on October 29.
Meanwhile, Canada's August CPI inflation rate came in at 3.0%, the expected level and unchanged from July. Markets are currently pricing in a 75% chance of a +25 bps hike at the Bank of Canada's October 28 review.
India's CPI inflation rate was reported overnight too, coming in at 4.8% for August and as expected, but notably higher than the 4.4% July rate. Food inflation, which makes up a dominant part of this measure, came in at almost 6%. Their 5.25% policy rate is next reviewed on October 7.
China reported its August new yuan loans data overnight and it was weak again, extending the unnerving trend that started with the unexpected April fall, which was followed up with an even larger July fall. This August data was expected to be a very modest +¥400 bln expansion, but it only came in with a +¥60 bln rise. For an economy as large as China's this is very low. For example, August 2025 recorded a +¥590 bln rise and that was considered low. In August 2024 it was +¥900 bln.
The UST 10yr yield is now just on 4.96%, down -2 bps from yesterday but essentially holding its new highs. It did top 5% at one point however over the past 24 hours.
The price of gold is now at US$4310/oz, and down -US$40 from yesterday at this time. Silver is at just under US$63.50/oz and down -US$1.
Oil prices have risen +US$1.50 to US$101.50/bbl in the US, while the international Brent price is up the same to just on US$106/bbl.
The Kiwi dollar is down -30 bps from yesterday, now at 57.8 USc. Against the Aussie we are down -10 bps at 81 AUc. Against the euro we are also down -10 bps to just on 50 euro cents. That all means our TWI-5 starts today at just over 61.2, down -20 bps.
The bitcoin price starts today at US$78,886 and up +1.9% from yesterday. Volatility over the past 24 hours has been modest at just under +/-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 tomorrow.
Track 1219389
Monetization ID TFGEPGEI0LHEIJAI

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

Shutterstock Track 1219389
Monetization ID TFGEPGEI0LHEIJAI
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 price of money just keeps going up. Others have pointed out it is not only US policy management that is causing this trend, but also the generational shift of boomer savings starting to run down as they are used, generating a global imbalance. There are fewer savings for the investment demand in the global economy, so a fundamental supply/demand imbalance is growing. The US administrative incompetence is making this shift faster, however.
This week will feature the US Fed's rate decision on Thursday as the key upcoming event. Financial markets are pricing a 75% chance of a +25 bps hike. Economists have the full +25 bps as their central expectation. The reason is clear - inflation isn't under control, not even close.
Locally, Thursday will bring our Q2-2025 GDP result, expected to be +2.3% and up from Q1's +1.8%. But such is the disconnect between consumers lived experience, and sectors like farming, that it is likely to be dismissed as electioneering even if it is accurate. We will also get retail (electronic card) and inflation (selected price) updates this week too. And in the middle of this we will likely get the August REINZ data this week as well.
In Australia, the key data releases will be minor, mainly for tourism and population, but they will both be grist for their culture war debates.
China will report a broad range of data this week, and most of it is expected to deliver minor improvements. We will be especially watching their new lending data to see what has happened after the unexpected July decline.
Japan will report inflation (2.1% expected) and its central bank rate review later in the week (+25 bps to 1.25%).
On Friday, Japan said its producer prices rose +7.6% in August from a year ago, following an upwardly revised +7.7% increase in the prior month, which had been the fastest pace since February 2023. Although fuel is a big part of these rises it isn't the only part, and the outsized rises have been consistent now in each month since April. Despite that, Japanese business sentiment rose to its highest level since 2021, in a report out Friday.
In the coming week, the US will release retail sales, trade terms, and industrial production data. But this is all being overshadowed by the fast-rising fuels costs, even if there is yet another 'hope' that talks can replace fighting in the Persian Gulf.
Over the weekend the US released its official CPI for August (from the same agency that brought you the wildly optimistic non-farm payrolls data), and it shows no change at 3.4%. Apparently food prices were up +2.7%, fuel costs up +16.3%, electricity up +4.0%, drugs down -2.7% and rents up +3.0%. From July to August however, the overall rate rose +0.4% which is an accelerating recent rise.
However, it is doubtful US consumers believe this sanguine official assessment. The widely-watched University of Michigan consumer sentiment survey for September reported a sharpish and unexpected fall, now to its lowest level since the record low in May. That is a -7.5% retreat since August and a -13.7% drop from a year ago. Year-ahead inflation expectations jumped to 4.6%, the highest since June. Year-ahead expectations for personal finances and business conditions deteriorated, as consumers anticipate greater pressure on household budgets amid rising fuel prices and trade tensions.
US petrol prices have risen +4.0% in just the past week and are now up +45% since the start of Trump's war.
In some earlier reviews we had noted that the copper price had hit a new record high of US$15,000/tonne. However since then it has pulled back on the prospects for a sharp increase in supply and an easing of demand as the world's two largest economies hesitate. The current price is now US$14,250/tonne so a -5% drop in the past three days.
The UST 10yr yield is now just on 4.98%, unchanged from Saturday, up +20 bps for the week.
All this sudden rise in benchmark interest rates is going to do extensive and expensive damage to government budgets which depend on high debt levels and more borrowed money. A reckoning is closer.
The price of gold is now at US$4350/oz, and up a minor +US$4 from Saturday at this time, down -US$74 for the week. Silver is unchanged at just under US$64.50/oz, down -US$1.50 for the week.
The Gulf Cooperation Council is expected to meet their Iranian counterparts later today to discuss a possible temporary arrangement for managing shipping through the strait. Adding to downward pressure, the US EIA raised its 2027 crude production forecast while the IEA sharply cut its global oil demand outlook.
Oil prices have eased -50 USc to a still very high US$100/bbl in the US, while the international Brent price is little-changed just over US$104.50/bbl. A week ago these prices were US$91.50 and US$96.50/bbl so a net +9% rise in that time.
The Kiwi dollar is unchanged from Saturday, still just over 58.1 USc but down -70 bps for the week. Against the Aussie we are also still just under 81.1 AUc. Against the euro we are holding at 50.1 euro cents. That all means our TWI-5 starts today at just over 61.4, unchanged from Saturday, down -70 bps from a week ago.
The bitcoin price starts today at US$77,260 and up just +0.2% from Saturday at this time but down -3.0% from this time last week. Volatility over the past 24 hours has again been low 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.
Track 1219389
Monetization ID TFGEPGEI0LHEIJAI

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