Here's our summary of key economic events overnight that affect New Zealand, with news that even though the US Fed held its policy rate unchanged on 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.
After four months of minor expansion, the official factory PMI in China 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. Also worth noting is that the private S&P Global PMIs are usually more upbeat than these official ones.
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. 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.
The UST 10yr yield is now just on 4.74%, up +7 bps from this time yesterday, up +6 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 a 20+ year high. The key 2-10 yield curve is now at +45 bps (+1 bp). Their 1-5 curve is now at +40 bps (+4 bps) and the 3 mth-10yr curve is at +105 bps (+5 bps). There has been an extended steepening of the US rate curve today, continuing the harsh market verdict on the Warsh performance midweek. Unintentionally, he has delivered a market rate hike. The China 10 year bond rate is down -1 bp at 1.71%. The Japanese 10 year bond yield is now at 2.79%, down -1 bp. The Australian 10 year bond yield starts today at 4.97%, up +2 bps from yesterday, but down -6 bps for the week. The NZ Government 10 year bond rate is at 4.70%, and down -6 bps from yesterday, down -12 bps for the week.
Wall Street is ending the week on a positive note with both the S&P500 up +0.7% and the Nasdaq up +1.0% in their Friday trade. Overnight, European markets were mixed again, down -0.3% in London and up +0.3% in Paris. Yesterday Tokyo ended its Friday trade up a massive +4.0% but that didn't recover earlier losses so it ended down -1.2% for the week. Hong Kong ended up +0.1% for a +3.6% weekly gain, and Shanghai rose +0.7% on Friday to end its week up +0.6%. Singapore fell back -0.6% The ASX200 ended up a minor +0.1% on Friday, for a weekly +1.3% gain. The NZX50 was down -0.5% on Friday for a similar weekly loss.
The Fear & Greed index is still in the 'fear' zone as it has been all month.
The price of gold has fallen to US$4050/oz, down -US$55 from yesterday but almost unchanged for the week (+US$2). Silver is now just under US$58/oz, down -US$1 from yesterday, down -50 USc for the week.
Oil prices have firmed by +50 USc from yesterday at now just under US$84.50/bbl in the US, while the international Brent price retreated by -US$1 to now just over US$88/bbl. Hormuz transits are still very constrained. There have been no crude tankers and only 4 cargo ship exiting over the past 24 hours (none dark with transponders off) and seven entering for new loads (4 dark), all Iran-linked. The Red Sea activity is still low at about 20 either way. That is kept low because only Chinese vessels are getting Houthi exemptions.
The Kiwi dollar is up +10 bps from yesterday at just under 58.9 USc, up +100 bps for the week and back to early June levels. Against the Aussie we are up +10 bps at 83.7 AUc. Against the euro we have risen +10 bps to 51.1 euro cents. That all means our TWI-5 starts today at 62.6 which is also up +10 bps from this time yesterday, also up +100 bps for the week.
The bitcoin price starts today at US$63,038 and down -2.7% from this time yesterday, down -1.8% for the week. Volatility over the past 24 hours has been moderate at just on +/-2.3%.
Daily exchange rates
Select chart tabs
The easiest place to stay up with event risk is by following our Economic Calendar here ».
41 Comments
Betting on the (Trump led) U.S.?
He was one of Steve Keens students, away back when.
As to parasitism - he is correct. In energy terms, most of us are.
Who was.. Varoufakis? didnt know that , but google tells me they collaborated since meeting back in the eighties in Sydney. Small world.
I first listened to a Keen lecture, back then. Where does it go?
This is worth watching too: Why Trump's Big Gaza Breakthrough Is Not Real | News Round-Up
Where does what go? Time?
The man who made time, made plenty. That is though, until you reach the senior part of the ladder of life.
Yes indeedy & just to illustrate how good that piece is, have a look at Nina DiGregorio’s violin compliment. Apologies I don’t know how to post links from an IPad.
https://www.youtube.com/watch?v=irgQF_eKTqs
Shit...not bad....and she does Frampton!
Not especially...Nina has the advantage of nostalgia
Bryan Ferry.Stockholm. A Hard Rains Gonna Fall.Bob was in the audience. Post show Bryan was asked what he thought Bob would have thought of his adaptation. Something like - don’t know, have never met him but from what I hear he probably didn’t pay much attention as he was mesmerised by my string section. After all she is rather gorgeous.
Here's a stageful of raw talent.
"Rhapsody on the theme of the Paganini-Rachmaninoff" - YouTube
.
Good link, which aligns with what I'm seeing.
The world is dependent on a historically gigantic bubble of unearned wealth in the US, which is teetering on collapse.
China is arming themselves against that risk, while Europeans have no idea it’s happening.
Even among the few European leaders who do recognise the danger, there is no plan on what to do about it. Unfortunately our “leaders” fall into this same camp.
And right there in the room next door to “unearned wealth” is “worthless wealth.” In fact, hotel style, they have connecting doors.
Our leaders were elected within the current System, by people who have been fed the current narrative. It couldn't be any other way...
unless the media had stepped up, perhaps.
But the chosenly didn't. Perhaps because their income is dependent on the current System too...
Which begs the question, why do we keep voting for leaders forged in the old dying system?
They’re bound to the old narrative, and their own financial interests rely entirely on keeping the illusion alive
Because everyone - except those on the bottom rung; the rough sleepers - has some distance to fall within the current System.
I've come across a commercial journalist who hollered: that's YOUR truth, when I suggest he tell same. Trace that outburst, and that person will be some rungs up, not wanting to fall.
What is more interesting, is that something so obvious, obviously isn't obvious. The best explanation I've ever seen for that, is this:
Programmed to Ignore? | Do the Math
'The result is noteworthy. Even if off by a factor of two due to some systematic problem (explored below), the upshot is that we probably don’t have a high enough fraction of people with the disposition to take the cautionary message seriously, in advance of evident crisis. If 5% is too low to be a critical mass (as I suspect it is), then this could spell our doom: human nature is not up to the challenge.'
I reckon everyone should put themselves through it
Long-term thinking competes with immediate survival.
Evolution rewarded responding to today's danger—not necessarily tomorrow's.
...& in the long run, we're all dead
Just for the record, that is a self-excusing comment.
I think traditional capitalism died during the 2008 GFC, when banks, bankers and the financial system were all bailed out. Make no mistake, the bailout came at the common worker's expense. The system should have been allowed to fail. Sure, it would have led to a serious recession, no doubt, but governments and corporations are today so much further in debt, that their failure is not an option anymore, unless, or perhaps rather until is is inevitable. When this will occur is the tough part to forecast, expect a fierce fight of further credit injection to avert collapse at all cost until then.
Some say we haven't learned from the GFC, I tend to think that we have very much learned. The lesson was "take unreasonable risks, leverage to the max, and if it all blows up, it will be someone else's problem". So that's exactly what the elites have been doing since 2008.
The key is the letter G
We have never been so globally connected, a collapse may set humanity back a very long way. The answer to debt is always more debt until it isnt. Imagine NZ if Kiwi savers balances fall 50% in 2027.
Precisely, Yvil.
With the bail-outs of the GFC, the concept of moral hazard promptly flew out of the Wall Street windows.
There are blatant billion dollar examples of institutions literally burning down the house to profit from both the fire and the fire insurance - including conducted in the form of synthetic CDOs (Collateralised Debt Obligations) that became a novel financial instrument during the CFC crash.
... paraphrased from the Seven Pillars Inst. ...
Specifically, the Magnetar Trade and Goldman 'Sucks' (literally) ABACUS 2007-AC1 deal stand as some of the definitive examples of moral hazard morphing from a mere "lack of caution" into an active incentive to trigger a catastrophe for their own massive profit.
In this era of synthetic derivatives, Wall Street weaponised the concept of moral hazard. They didn't just ignore risk, they actively manufactured failure using a two-step mechanism.
Step 1 - Building the Firetrap.
Hedge funds like Magnetar Capital and Paulson & Co. approached investment banks to create CDOs. They pushed the banks to stuff these financial products with the most toxic subprime mortgages available.
Step 2 - Buying the Insurance and betting on the fire.
Because these were synthetic CDOs, they didn't contain actual physical mortgages. They were made entirely of Credit Default Swaps (CDS), which act as insurance policies on whether those mortgages would fail. The hedge funds bought massive amounts of these CDS "insurance policies" against the very products they had just helped design.
In the infamous GS example, hedge fund manager John Paulson helped select a portfolio of incredibly risky mortgage bonds. GS then marketed this portfolio to outside investors, such as European banks and pension funds, as a safe, diversified investment, completely hiding the fact that Paulson had engineered it all to fail.
The Payout - When the U.S. housing market collapsed, the investors in ABACUS lost over $1 billion.
The Profit - Because Paulson held the CDS "insurance" on those exact assets, he walked away with a $1 billion profit on that single deal alone.
He didn't own the underlying housing market, he simply built a faulty structure, bet on its demolition, and then promptly collected the payout.
Historically, moral hazard had acted as a subtle drag on the system where banks took on too much leverage, and assumed the Fed would act as a safety net, in a blatant heads we win, tails you lose, mentality.
The synthetic CDO era shattered this mild handbrake, by introducing asymmetric upside on total systemic destruction. Wall Street realised it could decouple the "insurance" from actual asset ownership.
This allowed institutions to print billions of dollars by actively accelerating a global economic meltdown, knowing that their counterparty risks would ultimately be absorbed by the public via trillions in taxpayer-funded government bailouts.
As long as the Western financial model permits the private banking cartels to create fiat currency out of this air within a moral hazard vacuum, the carnage will continue until the entire Ponzi implodes around our Western-centric ears - and that's a when, not an if.
Didn't it die in 1929? 1920-1921 showed how rapid economic contractions should be dealt with - by doing nothing Cowperthwaite style.
https://fee.org/articles/the-depression-youve-never-heard-of-1920-1921/
I will be frank too... I have scant respect for these eCONomists,, Frank, including Steve Keen.
As usual, they persist in endlessly debating the manifestations of the western-facing debt-based fiat currency system, and yet always remain too chicken-livered to outline the available solutions to the debt doom-loop that our current predestined-to-fail financial/societal model created.
The fact is that anyone who possesses even a modicum of knowledge of money creation knows this - it it is literally staring us all in face.
The fact that the status quo, including the eCONomists are all in bed together on this massive wealth heist, is precisely why they won't talk about it, and instead conduct these endless look-over-here obfuscating discussions.
They are either dumb or dishonest - as far as I am concerned there is no other explanation for them not calling out this endless daylight robbery.
AND SO HOW DID WE GET TO THIS IMPENDING TRAIN-WRECK?
#1 The first of what I see as one of the critical dates was December 24, !913 when the blatantly constitutionally-illegal US Fed was created - NB, there was zero coincidence in the fact that it was less than 7 months later that WW1 broke out.
Had it not been for the fact that the US dollar became the overwhelming reserve and default currency, the Fed creation as a 100% private-bank cartel owned. model, may not have been quite such a big call - the fact that the USD became overwhelmingly both, means that the collapse of this casino will bring down a huge chunk of the global economy along with it.
Hence the preparations of the RoW in building an alternative financial architecture - who could blame them?
#2 The 2nd critical date was August 15, 1971, when all major Western currencies became fiat "money"* as the underlying physical collateral for the dollar literally vanished overnight.
*(this is not money, these fiat currencies are credit that contain counterparty risk - these are two vastly different things)
Both Varoufakis, and Wolfgang Manchau mentioned this date in the discussion, but true to form, they completely missed the real significance of the date, and and needless to say, the solution as well.
Without the gold backing, western nations tried to maintain the system using fixed interest rates, and early in 1973 they abandoned this idea, allowing their currencies to float freely in the pure fiat model.
As soon as there is zero physical tangible asset backing for a currency, the printing of digital or physical "money" can rip, with almost zero effort or resources required - printing becomes the default situation for almost any financial challenge.
This model habitually functions on deficit spending by governments, and debt accumulation causing inevitable inflation from the deliberate debasement, which then results in them paying off these debts with increasingly less valuable currency units.
This is the silent tax on the nations citizens and the real economy, whilst the parasitic financial sector reaps the gains.
After decades of research, the only two solutions for this Western-facing debt doom-loop, that I am aware of, and which 99% of economists will never mention, are...
A - Make money creation from central bank level, right down to community and savings bank level, a public utility - this is often referred to as the PBS (Public Banking Solution).
B - Get rid of the fiat system and return to hard-backed currencies.
C - (if we want to achieve the trifecta) - bring in a very modest tax of around 0.5% on all financial transactions so that the financial casino-economy begins to share more equitably in carrying the overall tax burden.
Deploying all three together, should negate the need for almost all other forms of tax.
Huge revenues would flow into the treasury as a result of the PBS, rather than to overseas plutocrats, and interest rates could reduce to very modest levels.
Capital made available in a credit-based model for infrastructure investment, would not incur financial costs at all - dramatically reducing the end cost, and in some cases the payback could eventually eliminate the costs altogether.
THE ERIE CANAL - a real world example... paraphrased from NYU Stern
The Erie Canal became an instant economic blockbuster upon its completion in 1825. The credit-based investment paid for itself much faster than anticipated.
Rapid Debt Elimination: The canal generated $1 million in toll revenues annually within its first few years of operation. By 1836 (just 11 years after opening), the revenues had completely accumulated enough funds to pay off the entire principal debt and all accrued interest.
Massive Net Profits: After the credit debt was wiped out, the canal continued to generate millions of dollars in pure profit for the State of New York. These surplus revenues were used to fund the state's public school system and eliminate other state taxes.
Economic Multiplier: By reducing the cost of shipping freight from Buffalo to New York City by 90% (from $100 per ton to less than $10 per ton), it cemented New York City as the financial capital of the United States and triggered a massive boom in corporate and property tax revenues.
This is just one of a multitude of examples world-wide, of immediate wealth-producing and cost-slashing physical infrastructures.
The resulting economic efficiency generates more than enough revenue to clear the original debt and leave the entire country with a highly profitable multi-generational asset - a classic example of the PBS in operation - the model that these eCONomists are determined to hide from us.
Furthermore, no one needs to invent anything here, the highly successful historical models/blueprints/maps already exist.... right under our noses.
Solution "A" reminds me a bit of the old Social Credit party (Bruce Beetham etc). Is that a valid comparison or am I missing something?
https://en.wikipedia.org/wiki/Social_Credit_Party_(New_Zealand)
That is precisely what Solution A constitutes KKNZ - and what a profound tragedy it is that NZ lost the model.
Had it persisted in its true form, NZ could have become one of the wealthiest nations on the planet.
It was based on the Scottish engineer* C H Douglas's philosophy, that the fundamental flaw of the financial system was that banks controlled the flow of credit, which starved both local producers and consumers of the medium of exchange.
*(problem solving professions like engineers or even lawyers - IOW's those who haven't been utterly befuddled with the falsehoods of modern day eCONomics, are far more likely to come up with these solutions - simply because they model real world situations as opposed to swallowing the mysticism of academia tripe, which is specifically designed to rob the productive economy and, as such, reward the parasitic economy that Varoufakis was discussing with Manchau)
The ultimate goal of Social Credit in New Zealand was to bridge the gap between total production capacity and total purchasing power, ensuring that the physical, tangible wealth of the "realm economy" could actually function without being choked by private debt.
The RBNZ would act as the ultimate authority, managing the creation of national debt-free credit.
Public utility banks would be introduced to deploy capital directly into infrastructure and societal wealth as a public service.
Private commercial banks could stay, but their monopoly on on credit creation would be broken and they would have to operate competing directly for customerson a level playing field.
There were 3-4 billion people on the planet. in the Beetham era.
There are 8 billion, and we've set the place on fire with our energy-burn. And depleted all the best stocks of everything.
If you want to place further bets on the future delivering, fine. But don't expect them to be physically honoured.
Increasingly.
I think you place too much credibility on the role of gold and currency backed by such (or any other commodity)....credit/debt (and who can obtain it) has always existed alongside currency and it is that which the likes of the gold standard and cenral banks (be they state or private) have sought to control....always ultimately unsuccessfully.
Ultimately all currency are human constructs and subject to the failings of the humans who created them....what truly matters is real resources, be they material, knowledge or labour.
This comment thread is reading like one from 2008 (almost 20 years ago now).
Worried about the election?
Think theirs is a foregone conclusion?
'No President has ever bounced back' | Simon Marks' American Week - YouTube
It goes past the headline...
Eisenhower, finally freed of McCarthy's political intimidation, quipped to his Cabinet that McCarthyism was now "McCarthywasm".
And that was a long time ago...
Just a thought
Reds under the bed is about all these incompetent clowns have left, KKNZ - apart from their signature projectionism*.
*(A psychological concept where a person/government denies their own negative or unacceptable actions by falsely attributing that behaviour to other people/countries)
I wrote a piece on this subject two and a half years ago.
What I found when I researched it back then was... (a copy and paste)...
"My calculations of 0.5% (down from ~30% in the 1980s) of the world population that are governed by true communist regimes is debatable, but my point is that as a threatening political force, communism is no longer the boogeyman (Putin’s words) that the West and NATOstan have always dressed it up to be.
The Chinese economy is an open-market-capitalist/socialist/Confucianist model – and an utterly unique one at that. It is quite unlike any other model in the world, except in some ways Vietnam which personally I don’t classify as communist either.
The only really close remnant China has to pure communism that I can see is their population’s inability to own farmland – this is a legacy of the communist era.
The problems of returning that vast country into private ownership would be insurmountable given the 1.4 billion population – this is a legacy of the era of a pure communist model and I don’t see how the clock could be turned back.
Also, anyone who imagines that the Russian Federation is communist, might as well continue residing under their rock.
Laos, NK and Cuba still exist, but to me, it is simply incalculable just how much their economies and socioeconomics could have flourished organically into hybrid free-market models, if only the West hadn’t made it their mission to try to literally starve them off the planet.
Cooperation from other countries and a friendly cooperative demeanour would have almost guaranteed that they too could have developed more along the lines of Vietnam.
And that was the ultimate irony – the U$ lost the war fighting Communism, and yet this now 99 million strong country transitioned organically into a mixed market economy – no one needed to die!"
.......................
And for pointing out the bleeding obvious, as usual, I await the loud gnashing of teeth and hysterics from the resident russo/sinophobes.
You realise it’s possible for all 3 of them (and others) to be utter bastards all at the same time right Colin?
Colin is too busy getting off on his confirmation bias to notice.
The continual invention of enemies to try to 'justify' the multi-trillion dollar global MIC perpetual war machine created by the Western AAZ alliance, is precisely what has brought humanity to an escalation on two fronts, plus a very real danger of an existential nuclear exchange.
It's sad to see two entities, who cower behind their customary nom de plumes, that still don't get it - and they comment replete with the usual signature dose of projectionism - the very same habit used by the status quo that they defend.
Reds under the bed, McCarthyism, invented adversaries, its all the same play-book - one that I have seen deployed now for more than 60 years.
Anyone that can't/won't make that simple connection, especially at this dangerously late stage, is beyond help.
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.