Here's our summary of key economic events overnight that affect New Zealand, with news the oil price has taken another large retreat today even though the Red Sea and Strait of Hormuz remain essentially closed. Alternative ways to shift crude oil out of the region are gathering pace and effectiveness. But this big price drop is directly related to Scott Bessent saying a deal with Iran to reopen the Streat is imminent, comments that have moved markets.
But first up today, there was another full dairy auction earlier this morning and prices in USD were virtually unchanged overall (+0.1%), but they did dip in NZD by -0.9% on the higher currency. Of note is the new season volumes offered, very similar to the same event a year ago. But prices are now a full -10% lower this year than then.
In the US, job openings fell in June, coming in slightly less than expected. The number of job openings fell in almost all industries except in the logistics sector and in federal government. Regionally, openings fell in the Northeast (-62,000), the South (-50,000), and the Midwest (-97,000), but rose in the West (+32,000).
Also falling were US factory orders. They dipped -0.3% from the previous month in June, extending the revised -1.1% decline in May. This was disappointing because analysts had expected a +0.2% increase. It was the first month of back-to-back declines in nearly one year. Still, they are up more than +10% from June a year ago, reflecting the earlier stockpiling urgency.
Meanwhile US exports of both goods and services fell -0.9% in June while their imports of both fell -1.8% on the same basis. That narrowed their trade deficit although not be as much as expected.
The US Logistics Managers Index is still very high, but is now slowing as the stockpiling urgency seems 'full' now. July demand for warehouse capacity and transportation both actually retreated in the month.
The RealClearMarkets/TIPP Economic Optimism Index edged down in August from July, missing market expectations of an improvement and remaining below the neutral level. The Six-Month Economic Outlook index fell on weaker expectations for the US economy.
In Canada's June exports rose as did their imports, both much more than expected and delivering a larger trade surplus than expected, to a four year high. Canada's transition away from dependence on its now-unreliable southern neighbour has been impressive, you have to say.
In China, they have set a new target to reach 50% of electricity produced from non-fossil fuels by 2030, up from 42% now. It is a heady and fast goal.
In Australia, household spending rose +0.8% in June from may to be +6.0% higher than year-ago levels. This is a very consistent rising trend from September 2024 when it was at under +1% from the prior year. This high gain was largely due to increased spending on cars, especially EVs, and for travel.
And we must note that the H5 bird flu is killing more birds in Australia now. It is getting closer, even in Eastern states.
As we noted yesterday, the copper price has risen again and is now over US$14,000/tonne and back at record highs.
The UST 10yr yield is now just on 4.63%, down another -6 bps from this time yesterday. The 30 year yield is at 5.19% and down another -4 bps. The key 2-10 yield curve is now at +43 bps (unchanged). Their 1-5 curve is now at +33 bps (-2 bps) and the 3 mth-10yr curve is at +95 bps (-5 bps). The China 10 year bond rate is little-changed at 1.70%. The Japanese 10 year bond yield is now at 2.85%, up +3 bps. The Australian 10 year bond yield starts today at 4.93%, down -5 bps from yesterday. The NZ Government 10 year bond rate is at 4.76%, down -1 bp from yesterday.
Wall Street is in a good mood today on recovering tech views and the Hormuz retreat, up +2.0% in Tuesday trade with the Nasdaq up +2.9%, both extending yesterdays good gains. SpaceX earnings are due to be released after today's market close. Overnight, European markets were mixed between London's +0.2% dip and Frankfurt's +0.8% rise. Yesterday Tokyo rose +0.3%. Hong Kong was down -0.6% but Shanghai rose +0.3%. The KOSPI recovered +1.6%. Singapore ended unchanged. The ASX200 ended its Tuesday trade up +1.4%. And the NZX50 ended up +0.9%.
The price of gold has risen to US$4088/oz, up +US$55 from yesterday. Silver is up +US$2 at just over US$59.50/oz.
Oil prices are down another -US$4 from yesterday and now just under US$76/bbl in the US, while the international Brent price is now just under US$79.50/bbl. Hormuz transits are still very constrained. There have been only three crude tanker and 9 cargo ship exiting over the past 24 hours (7 dark with transponders off) and ten entering for new loads (4 dark), again all Iran-linked. The Red Sea activity is still low with much less than 20 either way.
The Kiwi dollar is back up +30 bps from yesterday at just over 58.9 USc. Against the Aussie we are down -10 bps at 83.7 AUc. Against the euro we have firmed +10 bps to 51.1 euro cents. That all means our TWI-5 starts today at 62.6 which is back up +20 bps from this time yesterday.
The bitcoin price starts today at US$63,915 and up +0.1% from this time yesterday. Volatility over the past 24 hours has been low at just on +/-0.7%.
Join us later this morning for the June update of the New Zealand labour market.
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40 Comments
“. . . big price drop is directly related to Scott Bessent saying a deal with Iran to reopen the Streat is imminent . . . “
I wouldn’t put any more weight on Bessent’s comments than I would on Trump’s. His performance in the Senate hearings demonstrated that he is a die-hard Trump stooge with as much credibility.
It’s certainly an interesting scenario, ironic actually, in the Trump vs Iran arena. Both sides say as they like and do as they like and if the two don’t agree, don’t give a damn.
Ya gotta worry when the USA with so many bombs lives inside its own fantasy. And believes it.
🚨 U.S. Wildfire Crisis Worsens | 99 Major Fires Burning & 5.25 Million Acres Lost
Hoist with their own petard
"petard" reminds me of my ealry childhood, when we could buy petards in shops, some pretty decent size s too, to scare some poor innocent pedestrians.
Thinking back I'm surprised more fingers (and other bits) wernt lost
Begs the question, why hasn't Trump been out there raking the forests?
No one takes Trump seriously. Iran and Oman are busying making a separate agreement to toll the Strait of Hormuz.
Shipping lines will pay it if it means that the oil and freight can start moving again. These costs will be passed to the customer..consumer.
News item yesterday on 'normal' power prices seems to have jinxed it with power hitting $5000/MWh last night. Despite exceptionaly high hydro storage and excellent gas storage levels, an increasing number of peaker battery plants, as well as the coal stockpile, seems not enough people wanted to supply into the peak. Market failure?
Transpowers CAN advising of a shortfall seems to have done the trick this morning though, prices peaking at 140
Low residuals forcase for
Affected Dates and Times: Wed 05 Aug 2026 07:30 - 08:30
AND Wed 05 Aug 2026 18:00 - 19:30
AND Thu 06 Aug 2026 07:30 - 08:30
and now Friday 07 Aug 2026 07:30 - 08:30
https://www.gasindustry.co.nz/data/resources/gas-storage/
https://www.transpower.co.nz/system-operator/notices-and-reporting/mark…
Price, price, price, price, price, price, price, price
It was our downfall; measuring stocks - real stocks - by trying to examine a 'now' flow while even then avoiding facts.
Bessent moves markets
I guess Trump has lost all credibility, so he's using Bessent to move markets. It doesn't change anything fundamental in the conflict, though.
Exactly, Yvil, and the photo of his pad note to sell billions of dollars of yen was another classic trick.
Bessent is as incompetent as he is crooked.
More and more commentators are seeing the classic signs of fiat destruction gaining momentum and are calling it out, including Gareth Solway yesterday spelling it out on ITM Trading -
https://www.youtube.com/watch?v=8TuzfQxz4CY
"This isn't just about the yen—it's about the beginning of a fiat currency crisis."
My take...
A train wreck waiting to happen.
All the western currencies have lost more than 98% of their purchasing power and many of these economies are already technically insolvent, and carrying massive unrealised losses on the fiat components of their portfolios.
The longer-dated bonds that they hold in their portfolios will be utterly worthless once the hyperinflation of the key western economies kicks in. The players in this giant casino/Ponzi are holding back on selling too many bonds at once, knowing that if they damage other bond markets too much, they will destroy their own as well, which in turn would domino into tipping over the entire western-facing financial system.
Globally the CBs of the world have been net divesting out of USTs since 2014 - they saw the writing on the wall - the trend is clear - any CB with half a brain needs a varied reserve portfolio, and this must include gold, and very soon a variety of gold-backed currencies, and also durable commodities as well. The replacement global reserve currency for trade purposes already has a name... its called GOLD.
Very soon some important currencies will be gold-backed for trade purposes, and these will become increasingly used in trade settlement and as a component of their reserve asset portfolios. Silver will regain its status as a vital monetary metal, and could well become the official backing for the domestic yuan.
What we are witnessing is the huge insolvent economies buying one another's debt in a last ditch attempt to save the shambolic Ponzi-fiat experiment. It was always mathematically pre-destined to fail... spectacularly. It is already 20 years overdue to go up in smoke, given that the historical average lifespan of all fiat currencies that ever existed, is only 35 years.
The US selling of the EUROs to buy the yen, to try to save the flailing US bond market, and by definition the US economy, is just another pathetic attempt to prolong the pantomime. It will be interesting to see how the ECB and the individual EU member CBs react.
When you look strictly at the official public sector the combined ECB and the EU member central banks only hold a modest $120-165 billion in USTs anyway. The massive numbers routinely reported regarding these treasuries, are mostly a product of Europe acting as the global back-office custodian and mutual fund administrator.
Remember that the official numbers only reveal a small part of the true holdings because so many USTs are held by 3rd parties outside of these countries, and that they are tallied according to where they are domiciled, rather than the country of ultimate ownership.
This opaqueness is a deliberate smoke-and-mirrors trick that is used to hide the fact that no one with half a brain would want to hold long-dated USTs, when the US economy and its currency is already toast.
As the US runs out of buyers for treasuries other than very short term bills, the entire charade unravels at increasing velocity. It will be the classic Hemingway quip when asked how he went bankrupt... "Two ways: gradually and then suddenly".
This crash of an empire will be epic - a blend of Roman over-reach and the Weimar republic all rolled into one massive clusterf$$$k.
Bessent, the bumbling George Soros trained crook, plus Lutnick and Sons are the Wall Street connections who will preside over the impending bankruptcy, as they attempt the most monumental wealth heist in the history of our species - Trump won't have the faintest clue about what's happening right under his nose.
Export sales of gold bullion which comprises the biggest US export for most of 2026, along with the the techno-gulag network build, are the only factors that partially mask an utter Dunkirk.This is all a giant coordinated attempt to hide a truly horrendous trade deficit, budget deficit, and Debt:GDP ratio.
This could well end with both a bang and a whimper. These are the modern day Hollow Men, the nouveau riche if you like. They are part of a giant network, intent on entrapping humanity in a novel techno-gulag.
Most of the architecture is already built. America, in reality, is investing the vast majority of its Capex in both the entrapment of its own society, along with a self-inflicted spectacular financial collapse.
Interesting comment.
I've been wondering about the US's Gold reserves "the biggest in the world". The one that Bessent recently "reassured" us about, by saying: "Yep it's all there, every single bullion". The problem is twofold in my humble opinion.
1. The physical Gold the US treasury holds has not been independently audited for 30-40 years, and my trust in the administration's honesty is not that high.
2. The US's biggest export has been bullion Gold. Call me sarcastic, but would that not mean that their Gold reserves are dropping ? How long have they been reducing for and to what level.
3. China has been buying huge amounts of physical Gold. This is not new mined Gold, it needs to come from other vaults which are reducing...
I have a nasty suspicion that Bessent has been dishonest and that there is much, much less Gold in the US's vaults than claimed.
"China has been buying huge amounts of physical Gold. This is not new mined Gold, it needs to come from other vaults which are reducing..."
Russia is hawking it's gold reserve to fund it's genocide in Ukraine. No doubt much of this is ending up in Beijing.
https://www.kitco.com/news/article/2025-12-22/largest-bilateral-gold-tr…
Yvil, you said... "I have a nasty suspicion that Bessent has been dishonest and that there is much, much less Gold in the US's vaults than claimed."
That makes two of us.
Also...
"1. The physical Gold the US treasury holds has not been independently audited for 30-40 years, and my trust in the administration's honesty is not that high."
The last comprehensive physical count and strict assay of the total US gold reserve was in 1953 (73 years ago) under the Eisenhower Admin. Its an easy date for me to remember, as it was the year before I was born. In a proper assay, bars are individually inspected, drilled, and weighed.
The congressional and press visit authorised by the crooked Gerald Ford and a partial audit, were nothing more than a publicity stunts to quell the rumours that a lot of the bullion was missing.
Short of a complete assay and full accounting for leasing, multiple leasing, and re-hypothecation, no one including Bessent himself would have the faintest clue how much of the claimed 8133.5 metric tons can be counted as reserves. My personal guess is only a fraction of that figure.
When China formally revalues its monumental gold reserves in the looming global financial reset, this will become a major scandal for the US. Goodness only knows what their currency backing will be when this occurs?
"2 The US's biggest export has been bullion Gold. Call me sarcastic, but would that not mean that their Gold reserves are dropping ? How long have they been reducing for and to what level?"
I think the real answer is as in the Nait Bargatze comedy skit...
NOBODY KNOWS
https://www.tiktok.com/@binge/video/7423236456593788178?lang=en
The claimed US gold reserve stats remind me of this comedy skit where a poor unfortunate has the audacity ask what US hotdogs are made out of, and for asking he is ordered by George Washington to jump out of the boat into the freezing Delaware River river... after all... a real American would never want to know what's in a hotdog.
"3. China has been buying huge amounts of physical Gold. This is not new mined Gold, it needs to come from other vaults which are reducing..."
China is acquiring gold in multiple ways...
(i) It is the largest global miner - they claim to mine ~370 metric tons per year, but I would be very surprised if this disclosure is not grossly under-reported.
(ii) They import massive quantities of processed and semi-processed gold bars from global trading hubs, including Hong Kong, Switzerland, Canada, South Africa, and Australia. Just in the first half of 2026 alone they imported 864 tons to meet high retail and CB demand.
(iii) A lot of gold is also imported as a secondary by-product within imported copper, lead, and zinc ores sourced from mines in Peru, Mongolia, DRC where Chinese firms hold equity stakes.
(iv) Imported silver dore' is another major vehicle for by-product gold coming into China. These bars are semi-refined alloys that can contain anywhere from 0.5-30% pure gold alongside the silver content. China refines up to 70% of global silver refining capacity.
(iv) A not insignificant amount also comes from domestic scrap recycling and that also flows into the SGE.
But aren't most US treasuries held/owned domestically in the US?
Yep, but a smaller market means less demand, higher interest rates, unhappy plebs with mortgages and less legitimacy for global reserve status, also feeding back into less demand..............
From yesterday....exporting electricity.
Electricity cannot be lumped in with other export commodities. It is a core infrastructure that underpins the function of NZ society as the primary energy source in everyone's lives. It keeps the lights on literally and figuratively.
And in regard to AI data factories, it is inextricably linked to water for cooling. Therefore in that regard, electricity cannot be treated separately from water.
If treated like other commodities there is, in my opinion, a high risk that everyday electricity users will face even greater cost in this vital component to existing. And current industry will face ever greater pressure on energy input cost eating viability margin - as we have seen in timber and fresh vegetable processing in the last couple of years. Eroding employment opportunities and community viability.
Okay I imagine some will be drawing parallels with agriculture in regard to water. Misplaced in my opinion. Because the export earnings from agriculture maintain local, regional and the national economy through direct and indirect employment. Whereas the proposed AI factory will consume 7%(+?) of national generation for the creation of what 100 jobs? Most certainly not 7% of national employment opportunities.
Agree if there is no new generation created. Why wouldn't someone choose to profit from the increase in demand by adding supply? And if not, why wouldn't the government implement rooftop solar etc?
Agree AI won't create many jobs (except for the build of both centre and generation), but it will change our balance of payments by increasing exports.
There are parallels with agriculture. Selling our food overseas means we pay more for it, just like electricity. And agriculture increases the cost of land, core infrastructure that underpins the function of NZ society.
I am more wondering why anyone would put a datacentre here when you could put it somewhere really cold (Alaska?) and build a nuclear power plant next door? We will need data centres for our own use (many businesses and especially government don't want data going overseas), but for export, is NZ really that great?
Maybe a better use for the power captured by Tiwai. After all Rio Tinto own the raw material, own the smelter and own the finished aluminium.Never been sure how exactly NZ has benefited from the operation? Can anyone enlighten me?
Around a thousand direct jobs and an estimated couple of thousand additional, and demand for NZD....but even so your question (or a variation of) is valid, who benefits the most from the arrangement?
How many jobs would an AI data centre support? and how many of them would be required to be based on location and subject to NZ taxation?
They would support construction jobs to get it built and wired in. After that they would require bugger all, just to be remotely supervised and cleaned periodically I would assume. A temporary gain for a longer term thorn in the side of the electricity sector, and end consumer.
"Electricity cannot be lumped in with other export commodities". Yeah, nah. Here is an example of electricity being exported and at the same time stabilising the grid for everyone.
"It is a core infrastructure that underpins the function of NZ society" - why is the same logic not applied to remote, low density windmills and solar parks that destabilise the grid for everyone?
https://cryptocurrency.org.nz/news/southland-spearheads-hydro-bitcoin-m…
The only point of bitcoin speculation is the hope that someone will pay more for it in future. Bitcoin is intrinsically worthless.
Why not use the cheap electricity to do something productive instead, like charging a grid scale battery?
Because a bitcoin miner is 10x cheaper than a battery and gridscale battery is a fantasy? If you are worried about the price of bitcoin in the future sell yours today. In this instance the main event is grid balancing so bitcoin angst can be left at the door.
“Around half managed to catch the first extreme price interval,” says OptiGrid, “but far fewer were able to discharge in the later spikes. A couple of batteries were even charging through dispatch intervals above $10,000/MWh.
“By [Monday] morning, many batteries still had limited energy available after the overnight price event. Despite another period of $20k prices, relatively little battery capacity was able to respond.”
https://reneweconomy.com.au/big-batteries-caught-short-as-worst-wind-dr…
I have no concerns about the future price of bitcoin as I don't own any.
Unlike, I suspect, people who 'invested' at $120K last year and are now sitting on paper losses of around 50%
This project is not buying bitcoin. I suspect you have no idea what their cost of production is. What relevance does your trading scenario have?
I asked gemeni how much to mine one bitcoin...
"
- Global Institutional Average: $130,000 to $147,000 NZD
- Highly Efficient Industrial Operations:
$54,000 to $101,000 NZD
So even at the cheap end of the scale, it's barely breaking even on current btc price
Bitcoin price is not their primary goal though is it. Ask gemima what the main input cost is for bitcoin mining. While you are at it also gemima what is grid balancing?
Lake Onslow if built would be a grid scale battery equivalent with enormous capacity, so no not a fantasy.
Yes, by far the largest pumped hydro project on the planet, the second longest hydro dam on the planet, at the wrong end of the country, in a high evaporation zone. Not fantasy at all.
https://www.stuff.co.nz/business/122319866/4-billion-lake-onslow-pumped…
Enerlytica analyst John Kidd said the “sheer scale” of the proposed scheme had left the industry shell-shocked.
At 5000GWh, Lake Onslow would be capable of storing about the same amount of energy as all the country’s existing hydro schemes combined.
the sheer scale is the whole point. You can't insure dry year risk without matching the scale of a dry year. Why would anyone be shell-shocked? Are they shell shocked by the amount of coal we import in a dry year?
Because the of the dam at the wrong end of the country is 5x bigger than the dry year problem we are trying to resolve? Can be solved for a fraction of the cost by a pile of coal/wood at Huntly. Tekapo and Pukaki were already built and tested for pumped hydro in the 70's so if that is your thing start there by slapping in a few pumps for a fraction of the cost.
Well it depends whoose estimate you believe? MBIE says the dry year shortfall is 3TWh, so onlsow at 5TWh is not too big, on the other hand Rewiring Aotearoa put it at 1.5TWh. If the southland data centre goes ahead, a significant chunk of our energy consumption will be in the lower south island so it's well placed. In addition it could use existing transmission capacity that the hydro lakes are not using due to their low levels. But agreed a stockpile at Huntly could be part of the mix.
"Transpower, which manages New Zealand's power grid, says this morning's peak saw the highest-ever electricity use."
All good though, because... "Nicola Willis says MBIE officials advise her data centres aren't expected to put upward pressure on electricity prices"
https://www.rnz.co.nz/news/weather/888023/live-weather-another-icy-morn…
The data centre will of course close down on chilly mornings when there's a power shortfall...
datagrid press release mentions 50 workers to be employed to run the datacentre, not 100.
Revised to 2 after fast track approval successful...
What deal number are we up to now? I’ve lost count
"Scott Bessent saying deal.....reopen.....imminent"
"Buy the rumour, sell the fact" should be, Buy the BS, sell the BS.
Markets just don't seem to be that discerning. Probably never were?
Meanwhile Trumps nuclear proof Fuhrerbunker under his golden ballroom is progressing nicely. If that's not an indication the orange man intends to torment humanity for as long as possible, I don't know what is?
The worlds richest fascist has begun to splash the cash on his midterms gaslighting for Trumps' campaign.
https://www.nytimes.com/2026/07/30/us/politics/elon-musk-midterms-repub…
Personally I'm hoping the Iranians can hold off this US regime until the mid terms. It needs to be crushed before it becomes a permanant fixture like Putin, or Un!
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