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 that now we are in August, there are only 100 working days until Christmas, and less than 70 until our 2026 general election! You will need to pull your finger out to ensure your 2026 goals are on track to be accomplished.

This week will see the release of a number of updates on how the July real estate market performed. More importantly, we will get the June labour market update and that is expected to show rising joblessness (to 5.4%). To be fair, labour market data are lagging indicators.

In Australia, Cotality and Domain will report what they saw in their residential real estate markets. And we will get both household spending and cost of living updates for June this week, neither expected to show improvements. We should also note that their fuel excise tax suspension ended last night. From April to June the discount was 32 AUc/liter, for June and July it was 16c. Now there is no relief discount there.

Globally it will be all about July PMIs (other than keeping an eye on the warmongers who all show a distinct lack of any idea on how to end the conflicts they started).

In the US, the other important data will be their end of week labour market updates in their non-farm payrolls report. There is little evidence to suggest it will be a strong one and markets currently expect another month of less than +100,000 gains (+91,000) and a rising jobless rate (4.3%).

We will be tracking their bond market signals closely too. And that the Trump Organisation is regarded by banks as a money-laundering entity barely raises an eyebrow these days, indicates how low the US has fallen. But also, a key background reason risk premiums are rising.

In India, they will get a central bank review but no-change to their policy rate (5.25%) is anticipated.

We will be tracking those PMIs too, especially in China to see if the private S&P Global versions continue to be more upbeat than the dour official versions. After four months of minor expansion, those official factory PMIs has slipped back into small contraction with a much sharper shift than was expected. After two months of minor expansion, their official services PMI also slipped back into a small contraction, also a sharper shift lower than expected.

China's overall growth targets are looking less likely to be achieved the longer the year goes on. But lets not overstate these pullback signals; most countries would love to have their growth levels even at the reduced impetus. China's key issue is that new order levels are fading and exports are the key driver, not internal consumption (which is their goal). So more induced infrastructure stimulus is on the way.

Korean industrial production bounced back sharply in June after the minor but unexpected dip in May. The June level was +5.8% higher than a year ago, up +2.3% from May, a heartening rebound for them.

The Korean stock market bounced back sharply on Friday after the earlier dives, but they still ended the week down more than -3%.

Japanese industrial production recorded a similar recovery in June, up +4.2% from a year ago, up +1.3% for the month. But that was not matched by retail sales in Japan which took a rather large tumble, down -4.1% from the strong year-ago level, up +0.5% from May.

The Japanese central bank intervention support for their currency may have been significantly expensive, even if it has succeeded in halting the devaluation with a 3% recovery. Reports indicate they spent US$45 to US$50 bln on the few-days effort. It happened again on Friday, this time in a joint action with the US. And more may be coming.

EU inflation came in at 2.9% in July as expected, up marginally from June's 2.8%.

Australian producer prices rose +3.6% in June from a year ago, the most since early 2025 and above the anticipated +2.5% and even the 'high' Q1-2026 3.0% level. Inflation is embedding and it is a result that will focus attention by officials.

In the US, even though the US Fed held its policy rate unchanged last Thursday (despite 3 dissenters wanting higher rates), markets have pushed US benchmark rates higher anyway. The UST 10 year is +27 bps higher at the end of July than at the beginning. Their 30 year benchmark is also +27 bps higher. Most of these increases came in the past two weeks, and will resonate soon for American home loan borrowers.

The updated July University of Michigan sentiment survey confirmed its better July levels, and confirmed lower inflation expectations. Still, these new levels are -11% lower than year-ago levels with perceptions of current conditions -19% lower. These measures are still in the down-trend that started in 2024 even after these better July results. They noted that US consumers remain focused on pocketbook issues like purchasing power, while political or military developments remain more in the background.

Also improving in July were the results of the Chicago PMI, clearly benefiting from stockpiling and reshoring still.

In the current Q2-2026 earnings season reporting, 86% of S&P 500 companies have reported a positive EPS surprise and 77% of S&P 500 companies has reported a positive revenue surprise.

In Canada, they reported their GDP rose modestly in June, a third consecutive rise and the fifth gain in six months as their economy gathers steam. Q2-2026 results aren't yet available but it is clear they will be quite positive, in contrast to the small dip in Q1-2026, and the weak Q2-2025 result.

The UST 10yr yield is now just on 4.75%, up +1 bp from this time Saturday, up +7 bps for the week. We make that its highest since January 2025 (briefly) and prior to that October 2023. The 30 year yield is at 5.28% and a 20+ year high. 

The price of gold has fallen to US$4042/oz, down -US$8 from Saturday down -US$6 for the week. Silver is down -50 USc at just over US$57.50/oz, down -US$1 for the week.

Oil prices are little-changed from Saturday still at now just over US$84.50/bbl in the US, while the international Brent price is still just over US$88/bbl. 

The Kiwi dollar is unchanged from Saturday at just under 58.9 USc, but up +100 bps for the week and back to early June levels. Against the Aussie we are up +10 bps at 83.8 AUc. Against the euro we unchanged at 51.1 euro cents. That all means our TWI-5 starts today at 62.6 which is also unchanged from this time Saturday, and also up +100 bps for the week.

The bitcoin price starts today at US$63,293 and up +0.4% from this time Saturday, down -1.4% for the week. Volatility over the past 24 hours has been modest at just on +/-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.

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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 the giant US economy is slowing. It hasn't had three consecutive lackluster quarters in at least a decade, certainly not since the GFC.

US jobless claims fell last week but by less than seasonal factors would have suggested. There are now 1.85 mln people on these benefits, less than last year at this time but only marginally less than two years ago.

US PCE inflation fell in June to 3.7% from 4.0% in May, as analysts had expected. But that is way higher than the Fed used to say it would tolerate. Personal disposable income rose less than personal spending, and for a fifth consecutive month.

Meanwhile, their Q2-2026 GDP update sagged in its first estimate, now up +1.5% and lower than the Q1-2025 final reading of +2.0%. Analysts had expected Q2 to come in at 2.1% so this data is a disappointment. It does mean a Fed rate hike is probably off the table, so equity markets rose. But so did long term bond yields although there was a notable pullback in short term yields and so their rate curve steepened sharply. The USD also took a tumble and is now down -1.6% in just the past two days.

As expected, China’s top leadership pledged to roll out targeted stimulus measures to support their economy in the second half of the year. The directives, issued at a Politburo meeting yesterday, come as the world’s second-largest economy faces weak domestic demand and deepening structural imbalances. Second-quarter growth has been lower than they need to reach their targets.

In Japan, observers see a Bank of Japan market intervention to support the yen. The yen rose sharply to the 157 range against the US dollar at one point yesterday, its strongest level since mid-May.

Staying in Japan, consumer sentiment picked up in July but that is off a lowish base and it is barely back to its 2023-2024 levels.

Sentiment surveys in the EU were out too for July and they rose again to extend their streak for both consumers and business sentiment..

EU GDP results for Q2-2026 were also released overnight, rising to 1.2% from a year ago. For them, that is quite positive.

In Germany, CPI inflation rose 2.8% in July, up from 2.3% in June which was below what they had in prior months, so more back at trend.

The Bank of England reviewed their monetary policy overnight, but made no changes.

In Australia in a briefing released on the ASX, banking major NAB noted that their "total Australian home lending applications were 15% lower than the prior quarter".

Staying in Australia, they reported that the number of new dwellings consented rose +7.2% in June from May to 18,328 (up +8.9% from a year ago). Houses were up only +0.4% but other dwellings were up almost +18% from May, although that doesn't quite take them back to year-ago levels despite this recent surge.

Yesterday, Ampol (the owner of Z Energy here) reported sharply increased margins. Clearly refiners have been adding much more to retail prices than just the higher cost of crude.

Global air travel fell in June, not by a lot, but essentially driven by sharp retreats in Middle East travel. Also unusual is a fall-off in both domestic and international travel in North America, an unexpected shift. Domestic air travel in China was also unusually weak.

Container freight rates fell again last week, down -3% but they remain +70% higher than year-ago levels. Bulk cargo rates also fell marginally to be -24% lower than year-ago levels.

The UST 10yr yield is now just on 4.67%, up +2 bps from this time yesterday. The 30 year yield is nearly at a 20 year high. The key 2-10 yield curve is now at +44 bps (+13 bps). Their 1-5 curve is now at +36 bps (+8 bps) and the 3 mth-10yr curve is at +100 bps (+6 bps). There has been a sharp steepening of the US rate curve today, a harsh market verdict on the Warsh performance yesterday. 

The price of gold has risen to US$4105/oz, up +US$30 from yesterday. Silver is now just under US$59/oz, up +50 USc from yesterday.

Oil prices have dipped by -50 USc from yesterday at now just under US$84/bbl in the US, while the international Brent price is now just over US$89/bbl and down -US$1.50. Hormuz transits are still constrained. There have been 3 crude tankers and only 7 cargo ship exiting over the past 24 hours (1 dark with transponders off) and ten entering for new loads (4 dark). The Red Sea activity is still low at less than 20 either way.

The Kiwi dollar is up +100 bps from yesterday at just under 58.8 USc and suddenly back to early June levels. Against the Aussie we are up +40 bps at 83.3 AUc. Against the euro we have risen +30 bps to 51 euro cents. That all means our TWI-5 starts today at 62.5 which is up +80 bps from this time yesterday.

The bitcoin price starts today at US$64,802 and up +1.4% from this time yesterday. Volatility over the past 24 hours has been modest at just on +/-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.

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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 the US and the world are facing a new jolt of inflation as the hot war activity spread. The US central bank response? ignore the risks and pretend things will return to normal soon.

But first, US mortgage applications fell sharply last week, their largest dip since mid-May, and driven by a -10% fall in refinance activity. And that came as their benchmark mortgage interest rate rose yet again, now its highest in a year.

Also falling sharply last week were US crude oil stocks, down much more than expected. They have fallen in 12 of the past 14 weeks, and this latest one is one of the larger retreats. Worse perhaps, their strategic oil reserves are now at at levels they last had in 1983 just after they started building these reserves in 1982, and their economy is now nine times as large. These strategic reserves have gone from double the private system holdings, to only 75% of them. It is poublic mismanagement on an epic scale.

The US Fed held its policy rate unchanged, even while noting they have high inflation that isn't easing and they have "supply shocks that have driven price increases" well above their 2% goal. But it was a split decision with three members voting to hike +25 bps. One of those was not Jerome Powell; he was in the nine who voted for the hold. Chairman Warsh's style is all over this statement because it was very short with little transparency. And Warsh's inflation fighting vow seems to be just talk.

Across the Pacific, Singapore reported that their producer prices rose more than +30% in June from a year ago, maintaining the pace of increase for non-oil goods they have had since March.

In South Korea, there has been real drama on their stock exchange with declines so sharp they had to temporarily suspend trading. It is all related to perceptions about tech valuations. Even though these companies are reporting sharp profit increases, investors worry that Chinese chipmakers are about to eat their lunch. At one point yesterday the share market there was down -13%, suddenly wiping out all the prior AI gain euphoria. But it ended down 'only' +6% to cap a five-day retreat of -17%.

In Australia, June CPI inflation came in at 3.8%, and less than the 4.0% expected. It was kept up by the expiry of household energy support measures, but the falls in fuel costs more than offset that. More here. Will this deter the RBA from moving their policy rate on August 11? It may do, but inflation expectations remain very high. Some analysts now expect a hawkish hold. The lower CPI hit the AUD hard yesterday, presumably because FX markets no longer see higher interest rates imminently.

The global credit risk environment has evolved heading into the second half of 2026 but continues to be driven by two main sources of short-term risk, according to Fitch Ratings; rising vulnerability to an AI-related market correction and persistent geopolitical uncertainty in the Middle East. This is on top of a broader context of slowing US consumer momentum, high inflation risks stemming from the 2Q energy shock and structural public finance pressures limiting the ability to respond to risk events. Credit risk premiums will rise, says Fitch.

Iran was annoyed Trump claimed talks were taking place when they weren't, so they reinforced their point. Then the US and Saudi Arabia attacked Iran-linked forces in Iraq. And the Houthis attacked two Saudi tankers off Yemen. This mess isn't going away.

June air cargo demand rose in June, at a time of a relative lull in Middle East tensions. It was up +8.5% overall, up +9.6% for international trade. Asia/Pacific activity was up +9.5% from a year ago. There were larger increases in air cargo trade with North America.

Meanwhile the China-to-Europe cargo train trade is surging, added to by very fast 15 day transit times for peak demand of air conditioning units, for example. Shipping via the Suez canal chokepoint will probably never recover for consumer goods.

The UST 10yr yield is now just on 4.65%, up +5 bps from this time yesterday and with a small push higher after the Fed decision.

The price of gold has risen to US$4075/oz, back up +US$45 from yesterday. Silver is now just over US$58.50/oz, back up +US$1.50 from yesterday.

Oil prices have risen sharply by +US$5.50 from yesterday at now just over US$84.50/bbl in the US, while the international Brent price is now just under US$90.50/bbl and up +US$5. Hormuz transits are still basically halted. There have been no crude tankers and only 8 cargo ship exiting over the past 24 hours (6 dark with transponders off) and 16 entering for new loads (11 dark). The Red Sea is even less active than the prior day.

The Kiwi dollar is down -10 bps from yesterday at just under 57.8 USc. Against the Aussie we are up +30 bps at 83.3 AUc. Against the euro we have dipped -10 bps to 50.7 euro cents. That all means our TWI-5 starts today at 61.7 which is down -10 bps from this time yesterday.

The bitcoin price starts today at US$63,890 and up +0.5% from this time yesterday. 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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Monetization ID TFGEPGEI0LHEIJAI

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

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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 China's clear need for less oil has pushed its price sharply lower even as both the Gulf of Hormuz and the Red Sea remain effectively shut. As other sources raise their output, global demand is being undermined, essentially by this Chinese transition.

But first up today, we should note the overnight dairy Pulse auction. Prices achieved were a bit more than -1% lower than the prior week's full auction in USD, but a bit less than that in NZD.

In the US, the ADP weekly private payrolls monitoring recorded another easing, only +15,000 and extending the easing trend that has been in place since early May.

The US merchandise trade deficit came in more than -US$100 bln in June, a second straight month of an unusually high negative level. Year-on-year, exports were up, but imports rose faster.

Meanwhile both their retail (+3.1%) and wholesale inventories (+4.1%) rose in June, reflecting the stockpiling trend that has been in place for a while now.

The expected improvement in the Richmond Fed factory survey didn't eventuate in July from June, but it remains modestly positive. New order flows edged lower while price and cost levels remained elevated.

But there was a solid improvement in the Dallas Fed services sector recorded in their July survey.

Nationally, the Conference Board's consumer sentiment survey in the US took a step lower in July. This extends its falling trajectory that started in early 2025.

The auction for the US Treasury 7yr Note was well supported earlier today but again, investors are getting higher yields for the elevated risk they perceive. This latest one delivered a median yield of 4.41% (high of 4.47%) compared to 4.20% at the prior equivalent event a month ago.

In Japan, a major 7.1 earthquake in the south has caused widespread damage and deaths. And Japan's parliament has approved a plan to create a "second capital" capable of keeping the country running if disaster strikes Tokyo. It is likely to be in Osaka.

Malaysia said producer prices there were +9.2% higher in June than a year ago. This was an unexpected jump from the anticipated +7.7% which was similar to the May rise.

Staying in the region, Singapore reported its birth rate for 2025 and for the first time since its independence, it has fallen below +30,000 in a year. It, like many places, is on a steep trajectory of lower fertility.

Industrial production in India rose +7.3% in June from a year ago, more than expected and the sharpest pace of expansion in nearly two years. It seems to be bouncing back from the initial shocks from the Middle East conflict.

Later today, we will be getting the June CPI result from Australia and a no-change 4.0% rate is anticipated. But yesterday Governor Michelle Bullock was out speaking and affirming that they are worried that these high levels are embedding, so their 1-3% target range is not likely in the medium term. Some are wondering if this was a signal that an unexpected hike is about to be delivered next week.

The UST 10yr yield is now just on 4.60%, down -5 bps from this time yesterday.

The price of gold has fallen to US$4030/oz, down -US$48 from yesterday. Silver is now just over US$57/oz, down -US$1.50 from yesterday.

Oil prices have fallen another -US$3.50 from yesterday at now just over US$79/bbl in the US, while the international Brent price is now just over US$84.50/bbl and down -US$5. Hormuz transits are still basically halted. There have been no crude tankers and only 3 cargo ship exiting over the past 24 hours (1 dark with transponders off) and three entering for new loads (1 dark). The Red Sea is even less active than the prior day.

The Kiwi dollar is up +20 bps from yesterday at just under 57.9 USc. Against the Aussie we are up +40 bps at 83 AUc. Against the euro we are holding at just on 50.8 euro cents. That all means our TWI-5 starts today at 61.8 which is up +20 bps from this time yesterday.

The bitcoin price starts today at US$63,568 and down -2.1% from this time yesterday. Volatility over the past 24 hours has been 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.

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 Iran is claiming control of the Strait of Hormuz as the US backs away, unable to exert the pressure it thought it could. The pause in fighting there has calmed markets significantly even if few ships are actually transiting.

Elsewhere, the US durable goods order report for June was a strong one, up +8.9% from the same month a year ago, but only up +0.3% from May, so most of the gain was in prior months and the June rise was much less than the expected +2.5%. Capital goods were up +4.1% from a year ago, but excluding defense and aircraft, they were up a good +14%.

The Dallas Fed regional factory survey was positive too, even if only marginally. That completes seven consecutive months of only marginal changes, some up, some down. Price and wage pressures remained markedly elevated, they said.

There were two large US Treasury bond auctions overnight, both well supported. But both saw sharpish rises in yields from the prior equivalent events a month ago. The two year median yield rose +13 bps, and the five year yield rose +21 bps on the same basis.

In Canada, their central bank surveys market participants quarterly and these professionals were less upbeat than at the previous survey. They foresaw no policy rate changes in 2026, but rises in the next two years. They also foresee a 25% chance of recession, although more likely growth in the 1-2% range. This is lower than in the prior survey. Trump's trade tensions are the main risk they see.

Singapore has surprised markets with another tightening move, its second consecutive such shift. Singapore regulates its monetary policy via its exchange rate (the S$NEER). It is raising its exchange rate to dampen inflationary pressures. The June CPI inflation rate there rose to 1.9%, its highest since August 2024.

Singapore's industrial production growth came in less than expected in June, up +7.2% from a year ago when a +9% rise was expected, down from the almost +18% in May.

China reported strong industrial profit growth in June, up +15% from the same month a year ago although this was less than the claimed +18% growth rate for the first half of 2026. They say their factory sector profits rose more than 20% on the year-to-date basis, but companies producing electricity saw theirs fall more than -4%. Local listed companies did well, but foreign companies hardly made any gains. Local private companies came in in-between.

Expectations are rising that the current CCP summit in Beijing will deliver new stimulus programs.

The Indonesian central bank chief has been pushed out with two years left on his term. The Indonesian government wasn't happy with the standard approach of the experienced governor, and wanted the central bank to support it's all-out drive for economic growth rather than inflation control. It was a sudden change, but one preceded by the President appointing a family member as a deputy governor earlier in the year (remember Turkey?). Indonesia has been suffering a weak currency due to the political interference.

In Europe, Spain, France and Italy are all battling out-of-control wildfires. Everywhere is battling intense heat.

The UST 10yr yield is now just on 4.65%, down -3 bps from this time yesterday. 

The price of gold has risen to US$4078/oz, up +US$26 from yesterday. Silver is now just on US$58.50/oz, up +50 USc from yesterday.

Oil prices have fallen sharply and by US$8 from yesterday at now just over US$82.50/bbl in the US, while the international Brent price is now just under US$89.50/bbl and down -US$9. Hormuz transits are still basically halted There have been 3 crude tankers and only 2 cargo ship exiting over the past 24 hours (1 dark with transponders off) and two entering for new loads (1 dark). The Red Sea is only marginally more active.

The IEA has been reviewing why oil markets have proven more resilient through the current crisis than some had feared and they point out that oil output in countries not directly affected by the Persian Gulf troubles has risen notably and most countries are permitting export flows. They also point o the major release of strategic reserves to cushion the shocks, with 290 mln barrels released so far with more than 1 bln still in reserve. But they note that markets for refined products are considerably tighter than for crude oil.

The Kiwi dollar is down -20 bps from yesterday at just on 57.7 USc. Against the Aussie we are down -30 bps at 82.6 AUc. Against the euro we are down -10 bps at just under 50.8 euro cents. That all means our TWI-5 starts today at 61.6 which is down -20 bps from this time yesterday.

The bitcoin price starts today at US$64,917 and up +0.4% from this time yesterday. 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.

Track 1219389

Monetization ID TFGEPGEI0LHEIJAI

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