Here's our summary of key economic events overnight that affect New Zealand, 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 China 10 year bond rate is little-changed at 1.72%. The Japanese 10 year bond yield is now at 2.80%, up +4 bps. The Australian 10 year bond yield starts today at 4.95%, down -1 bp from yesterday. The NZ Government 10 year bond rate is at 4.76%, and back up +8 bps from yesterday.
Wall Street is recovering on both the S&P500 (+1.8%) and the Nasdaq (+2.9%) in their Thursday trade. Overnight, European markets were mixed again, down -0.1% in London and up +0.9% in Paris. Yesterday Tokyo ended its Thursday trade up +0.7%. Hong Kong ended up +00.2% but Shanghai fell -0.6%. Singapore fell back -0.7% The ASX200 ended down -0.8%. The NZX50 was down a chunky -1.5%.
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%.
Daily exchange rates
Select chart tabs
The easiest place to stay up with event risk is by following our Economic Calendar here ».
15 Comments
Ripped off by the fuel companies. Who would have guessed....?
Great post Murray. And actually I think we all knew this was happening.
Even Blind Freddy can see a global recession on the horizon.
It's not the air that is going out of the global economy; 20% of the energy is offline, and most of the offline is still under threat. And we've been drawing-down reserves for 5 months...
Air....
In regard to the ME the other day I postulated on the possibility of a coalition of ME countries providing the basis for a ground invasion of Iran. Initially along the lines of earlier discussions this would be to secure the Hormuz strait, but events have pretty much proven that the current regime has to change for the strait to ever be secure. On CNN today they're reporting that the Saudi Defence ministry has indicated that 14 countries have agreed to form an alliance to ensure security of the strait. I'm pretty sure the Iranians won't be a part of that alliance, or will agree to it. Looks like the first steps in the right direction are beginning....
Right?
Interesting take. Nothing to do with the House of Saud would I call 'right'. Remember Khashoggi.
More interesting, is that Jordan is apparently telling the US to leave.
Seems to me that is where it will go - SA the only possible outlier.
You may have been in the western military too long? :)
Most of the leadership in those ME countries, are precarious legitimacy-wise.
And most of the populace - SA included - are more anti-US than they are anti-Iran. Unsurprisingly. and given recent events, that divide is widening. The average local punter wants the Abraham Accords torn up. And the bases gone.
I'm only passing on the media reporting and trying to understand the broader implications.
I agree politically the Saudis are no shining light of virtuosity, not to mention whoever else might be in the alliance. I would note they don't list them. But the prime focus is allowing traffic to travel freely through the strait without interference and how that might be achieved. I suggest we'll see some fumbling and stumbling, possibly even a realignment of political allegiances (away from the US?), but as they realise without Iranian inclusion and cooperation they won't attain their goals then the possible solutions narrow to a very small set of options.
Aye. Looking at it from the Iranian side, they got clobbered in the middle of negotiations a year ago, then this year, then in the middle of negotiations... they fully grasp that they can have no security in the present state of affairs. They also have known this was coming, for most of the last 4+ decades.
The US, in contrast, looks like a blundering, failing, directionless shambles. Ask who the other ME countries will look to, and it ain't the US. Why host bases that are nothing but targets? Why host a country which mucked up the status quo? (and remember, ME people see the US as a serial invader; Iran, Iraq, Iraq, Afghanistan... and a track record trailing through Libya, Vietnam... bombed every one (bar the Shah); failed long-term every time.
They'll look to China. Nothing surer...
The most shocking and convoluted post I have seen for quite some time here on ICNZ.
Its very much aligned with the sort of tripe that Fox News regurgitates to support the AAZ forever-war policy, and the exact sort of attitude that drags humanity closer to a existential nuclear apocalypse every single day.
Murray, you could fit in with this Fox panel, right alongside Sid Rosenberg and his neocon rabid views - see 13:33...
I think he means the US regime doesn't he.
Murray.
Peace will come to the middle east when the USA leaves and Israel stops killing people.
The second will not happen. The first will happen, but all the time pretending victory. Might take 20 years.
We welcome your comments below. If you are not already registered, please register to comment
Remember we welcome robust, respectful and insightful debate. We don't welcome abusive or defamatory comments and will de-register those repeatedly making such comments. Our current comment policy is here.