Here's our summary of key economic events over the weekend that affect New Zealand, 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 this barely raises an eyebrow these days, indicating 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 key 2-10 yield curve is now at +45 bps (unchanged). Their 1-5 curve is now at +41 bps (+1 bp) and the 3 mth-10yr curve is at +105 bps (unchanged). There was an extended steepening of the US rate curve last week, a harsh market verdict on the Warsh performance midweek. Unintentionally, he has delivered a market rate hike. The China 10 year bond rate is little-changed at 1.71%. The Japanese 10 year bond yield is now at 2.80%, up +1 bp. The Australian 10 year bond yield starts today at 4.94%, down -3 bps from Saturday, but down -9 bps for the week. The NZ Government 10 year bond rate is at 4.70%, no-change from Saturday, down -12 bps for the week.
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. Hormuz transits are still very constrained. There have been five crude tankers and 4 cargo ship exiting over the past 24 hours (3 dark with transponders off) and ten entering for new loads (4 dark), all Iran-linked. There is another Trump backflip, holding off more violence. The Red Sea activity is still low at about 20 either way. That is kept low because only Chinese-bound vessels are getting Houthi exemptions.
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%.
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26 Comments
https://www.stuff.co.nz/world-news/361014678/trump-says-mideast-allies-…
The Saudis, according to the person briefed on the substance of the call but not authorized to comment publicly, are concerned that if the US targets Iran’s energy infrastructure or carries out massive strikes on other key infrastructure that Tehran could respond by carrying out attacks on the kingdom’s and other Gulf countries’ energy infrastructure
Is this borderline treason? It certainly weakens your ability to negotiate when someone tells Iran their opponents are worried.
Take a look at the map of the Middle East 1914, WW1. That is what hundreds on hundreds of years had measured out. The map of today is as arbitrary as it is young and measured according to the disposition of oil. The West is too arrogant and ignorant to comprehend that the Arabic people of that region have long memories, connection, and reaction relatively, to their ancient history, cultures and lore of the land, and that failing and compulsion to interfere, on the part of the West has never been better demonstrated than right now.
I was talking to a young Egyptian yesterday. He was adamant Iranians are not Arab. He stated, and we've discussed this before, they're Persian. Plus they're not real Muslims. They don't view Mohammad as the Prophet, but rather his cousin Ali. The way he spoke made it sound like a blasphemy. So there's lots of animosity in the ME towards the Iranians. That's an aspect we is suspect are not necessarily fully aware of.
"Iranians are not Arab."
No shit, Sherlock.
Do you need to practice being a dickhead and derogatory Colin or does it come naturally?
I was talking about the depth of feelings Ahmed communicated when he said that. Do I need to dumb down any comment I make to ensure you're capable of understanding them and their context?
Try dialling back the extremism a little?
I understand Colin's reaction. By writing that the Egyptian was "adamant" implied that you were trying to convince him otherwise. Adamant means refusing to change your mind or unyielding. Rather than adamant he was strongly influenced by this fact.
Murray, I have the highest regard for you, I think you're one of the smartest commenters on Interest. But I have to say that I am too very surprised that you realising that Iranians are not Arabs, is news to you.
No I knew they were not Arabs, and I never said otherwise. I didn't try to convince Ahmed otherwise either. Having just returned here from a trip home to see family, I asked him how the politics was affecting Egypt and his view on it. Got a long and interesting response that portrayed as much about attitudes as the politics.
I had possibly thought that amongst Islamic nations there might have been some empathy, or sympathy for Iran, against the US or maybe the west. But no, none of that come out. They just don't like the Iranians. He gave a whole raft of justifications most of which came down to "They're not Arabs" and "they're not really Muslims". It was fascinating.
OK, I see. I think, if you re-read your original comment, you can see how it could be interpreted as you not being aware that Iranians are not Arabs.
Also, Colin could have been less brutal in his reply.
Go back about a year Yvil, I talked about having dinner with an Iranian couple I knew. She was very interesting in expressing Iranian identity as being Persian then.
But then there is genealogical identity and cultural, and occasionally they differ. In this case clearly that is not the case.
I will admit i was surprised at how strongly Ahmed expressed his opinion, which suggested to me a main stream attitude, not just the opinion of one person. He was also concerned as, and you may remember the news articles, Iran had struck an Egyptian port, apparently targeting a US flagged vessel moored there. He commented that the Egyptians had approached Iran about that and received excuses such as a missile going off course, and other things. He said that no Egyptian believes them.
Colin has a tendency to be an extremist. Not sure why. Perhaps he can't handle disagreement?
"I will admit i was surprised at how strongly Ahmed expressed his opinion, which suggested to me a main stream attitude, not just the opinion of one person."
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Well put.
That western arrogance was because it craved the energy. The western flaw was that if had constructed a growth-requiring System, to account it's colonialism. The latter was geographically-restricted (finite planet) and the growth-imperative appears insatiable.
Hence the stoushes. But resentment at the US will be the dominant feeling in the populations of the Gulf States. With repercussions for NZ.
Edit: Murray, the resentment at the US will outweigh sect vs sect.
Related: Ignorant comments on RNZ from Paul Spoonley. Shows the flaw in tertiary education; he shoud be well aware of the Limits to Growth, and our position on that trajectory.
Sherif Ali’ (Omar Sharif) opening scene, the mirage and the well, depicted all the violence of the inherent complications involved. So even after The Seven Pillars, Lowell Thomas’s chronicle, I read what else I could find. Sir Richard Burton’s accounts, not easy at least for me at the time, but worth it.
The Allenby biography is good too.
Astute fellow
Do you really imagine, JJ, that Iran doesn't already know that "their opponents are incredibly worried" - at least when it comes to those who possess half a brain between them?
For crying out loud, given that a multitude of very wise people are extremely concerned that this 8000km long front could turn nuclear at any time... who would this "treason" be committed against?
Surely any salient warnings that Iran should not to be trifled with, or the war escalated, are a god-sent blessing for humanity - one that could well avoid an existential nuclear apocalypse, given the crazies at the head of the AAZ alliance who have ignited this regional war.
Col. Lawrence Wilkerson... quoted/paraphrased in the link...
https://www.youtube.com/watch?v=Op89EYdd4XY
"We are changing lots with this incredibly incompetent leader we have in Washington, but he is being forced into the defeat by some of these inexorable forces that are clashing right now on the world scene - and they are clashing on a front that is almost 8000 kms and runs all the way from the arctic circle all the way down to where we have our ships,1000 nautical miles off, I am told, our capital ships and carriers, in the Indian ocean.
And that is another indication that this is not a maritime war any longer - they can't go any closer because they will be sunk - destroyed . This is the instrument most noted in the world of America's ability to bring military power into your back yard tomorrow morning - this instrument that was made famous around the world by these little wars we have conducted from these platforms is gone - it is no longer a symbol of American power - its now only worth chump change - it just remains for a couple of them to be sunk, to prove that dramatically and decisively.
That is an indicator of how the American empire has walked itself into a defeat that is not just like Afghanistan and Iraq, Somalia, Libya, and a host of little wars - this is fundamental - this is a defeat of the empire - a massive defeat of the empire, and these symbols are going to go with that defeat.
And we are seeing it right, and we are going to see it even further, and I am really worried as I said before that we are going to see some mushroom clouds in the process too.
Not the least am I worried that, because when the empire understands, and Trump never will, but there are people around him who will understand, that we are going down as it were, literally and figuratively, then we will resort to nuclear weapons.
You know, there are people already talking about in in the group that runs around in between Trump and these oligarchs - they are already talking about why don't we use (nukes) on Iran."
Much easier to negotiate when you know rather than presume.
I think your view is legit Colin, but there is a gap in your thinking. See my comment above. My conversation Ahmed was quite far reaching. He was very clear that Iran is NOT an Arab country, and while not infidels, close to being blasphemers (which I found very interesting). Can the Arab nations afford to turn the US away? They will surely know that Trump is a short term problem and would they just wait him out? There's complexity in the possible options they face, but none of them see Iran as a friend or an ally. Perhaps they view Trump as the lesser devil?
For me your comment simply beggars belief on multiple counts, Murray...
#1Good god, it takes a random meeting with a young Egyptian for you to learn that "Iranians are not Arabs", and that "Iran is NOT an Arab country".
#2 The assumption that this random youngster is somehow an authority as to whether or not Iranians should be designated "infidels or blasphemers".
#3 "Can the Arab nations afford to turn the US away? - many are finding out the hard way, that if they want to save their economies and statehood, that they may not be able to afford NOT to turn them away.
#4 "Trump is a short term problem and would they just wait him out? - the Trump's and various POTUS's will come and go and the AAZ's more than a century old ME blueprint of divide, rape, and thieve will continue as long as they maintain a substantial military presence in the region.
#5 Your last sentence is also very dubious on multiple scores...
(i) Iraq maintains a close relationship with Iran due to its deep religious and political ties, not to mention their huge shared border. They can't wait to oust the US and stop them from thieving there energy revenues.
(ii) So too Syria was a historical ally until the AAZ installed a head-chopping ex-ISIS lunatic as their leader.
(iii) The Ansarullah (AKA Houthis) are the true leaders of Yemen, and their supposed government the PLC, spent a good deal of time holed up in a hotel in Ryadh.
Yemen is an extremely powerful ally of Iran and has a larger population than Saudi Arabia. Ansarullah's territory encompasses ~80% of the total population, including the capital Sana - they also direct the military forces, command the state bureaucracy,administer the courts within their zone of control.
(iv) Non state groups like Hezzbollah in Lebanon enjoy huge organic support from the Shiite community and they back Iran in helping defend their territory which is continually invaded by Israel.
(v) Oman acts as a friendly neutral mediator maintaining friendly stable diplomatic and economic channels with Tehran.
(vi) Over half the Jordanian population are Palestinian refugees - given that their King is a US-installed sock-puppet and that a significant percentage of the population are calling for the US military to be ousted from their military bases, the status quo is incredibly tenuous and could turn on a dime - King Abdullah would do well to reflect on Kissinger's message to US 'friends'/enemies.
Where have I said I didn't understand that Colin? See my response to Yvil above. You are too quick to make assumptions and ridicule people for your interpretation of what they say. Genealogically the Persians are Aryan, clearly not Arab.
The rest of you comment is unworthy of response.
The whole world knows if Israel (and its proxy the USA) bomb Iran's energy infrastructure Iran will scorch earth the whole region. Hardly treason to say something every media outlet and Iran is telling the world.
It was sort of a trolling comment, one would have thought.
I'll wait for JJ to confirm as it's not obvious.
On those lines, one wonders whether Profile withdraws and apologises.
The prevalence of wildfires in the northern hemisphere is interesting, to say the least.
Not only but also...
"Hungary faces a critical five days, Prime Minister Peter Magyar said on Sunday, as the drying out of the Danube forces the country's sole nuclear power plant to shut for the first time in over four decades, with a new heatwave looming."
https://www.rnz.co.nz/news/world/869097/critical-days-ahead-for-hungary…
The PR team in MBIE, that part of our system of government that holds responsibility for AML, standard setting through the FMA, will be getting big bonuses for the superb way they have managed the clusterfxxk of the biometric software at INZ.
They took $30m and lied about that to their Ministers of all stripes. Nothing to see, move along. Then, after somehow their current (possibly competent for a change 😁) Minister asked them hard questions, still fronted the select committee and were “parsimonious with the truth and completeness “ of responses, aka nothing to see, alls well.
But then it turns out that they can’t count. It wasn’t $30m, it seems it may be more, another $6m, but they can’t actually say because of, maybe accounting issues, or maybe they can’t find the bucket they measure money in?
I have never been more satisfied with the value of PR spin doctors.
Yesterday I attended a remembrance gathering for Graeme Shepherd in Palmerston North. I would like, here, to acknowledge the legacy to NZ agriculture that he leaves behind.
He developed and published the Visual Soil Assessment Tool (VSA) https://www.landcareresearch.co.nz/publications/vsa-field-guide
It transformed very complex soil science into a reliable, very easy to use tool that anyone can use with no formal training in soil science. It is graphics driven with descriptions and explanations in plain english (or Spanish, as it was part of a technology transfer to Chile in the early 2000s). It identifies the impacts of land use activity on the physical characteristics of the soil that are critical to soil productivity, irrespective of soil type and geological derivation.
Thank you Graeme.
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