Here's our summary of key economic events overnight that affect New Zealand, with news oil prices are up today as Iran flexes its diplomatic muscle and threats, one of which is an effort to block US ships transiting the Strait of Hormuz. Meanwhile Trump is backing away from more action in the region, potentially leaving US allies in the lurch.
Through all this, crude prices are rising again, and US pump prices never dopped back during the recent fall in crude prices. That has bond markets worried that inflation may be about to turn up again, and yields rose somewhat today.
In the US, July job cut announcements were very low. In fact, US-based employers announced just 33,429 job cuts in the month, the fewest in two years. But AI led all reasons for job cuts for a fifth straight month and was responsible for almost 11,000 during the month. The tech sector cut the most jobs, followed by the financial sector. But cuts in government, and services were almost non-existent.
This data comes ahead of tomorrow's July non-farm payrolls report which is expected to show jobs growth a very low +80,000.
US jobless claims dipped last week but only by what seasonal factors would have expected. There are now 1.84 mln people on these benefits slightly lower than a year ago, and two years ago. Tough eligibility restrictions are restraining enrollment in conjunction with tougher restrictions on eligibility for SNAP (food stamps). More than 4 mln people have been cleared from these programs and much tougher restrictions are coming. The USDA has restricted access to data recording the numbers of people receiving this assistance.
While still elevated, the NY Fed's Global Supply Chain Pressure Index eased low in July.
In Europe, retail sales sagged slightly in June, dipping -0.1% from May when a +0.1% rise was expected. That leaves them up +1.2% from a year ago on a real/volume basis.
Meanwhile, German factory orders rose +3.1% in June from May to be +6.5% higher than year ago levels, an accelerating pace from May. Apart from a few newsworthy bumps in between, in fact these order levels have been on an upswing since September 2025.
Strong export growth in June delivered Australia an unexpected trade surplus of +AU$1.9 bln when a deficit of -AU$1.1 was expected after May's -AU$2.4 bln deficit. Their exports rose +8.6% from a year ago, boosted by an unusual rise in gold exports, up more than +25% from the same month a year ago.
Global container freight rates turned up marginally last week from the prior week to be +77% higher than year-ago levels. Outbound rates from China to the US drove the rise, while rates to and from the EU were lower. Those rates have to compete with the very fast & successful overland rail services out of China. Meanwhile, bulk cargo rates jumped more than +12% in the past week to be +60% higher than year-ago levels.
The UST 10yr yield is now just on 4.67%, up +5 bps from this time yesterday. The 30 year yield is at 5.22% and also up +5 bps. The key 2-10 yield curve is now at +42 bps (down -1 bp). Their 1-5 curve is now at +33 bps (+3 bps) and the 3 mth-10yr curve is at +98 bps (+4 bps). The China 10 year bond rate is little-changed at 1.70%. The Japanese 10 year bond yield is now at 2.77%, down -4 bps. The Australian 10 year bond yield starts today at 4.97%, up +4 bps from yesterday. The NZ Government 10 year bond rate is at 4.71%, up +2 bps from yesterday.
Wall Street is down -0.1% on the S&P500 in Thursday trade with the Nasdaq little-changed. (SpaceX has held at US#110.) Overnight, European markets were mixed between Paris's +0.4% and London's -0.2% dip. Yesterday Tokyo fell -0.9%. Hong Kong was down -1.5% but Shanghai rose +0.6%. The KOSPI fell -4.6%. Singapore ended up +1.0%. The ASX200 ended its Thursday trade up +0.5%. But the NZX50 dell -0.3%.
The price of gold has dipped to US$4245/oz, down -US$8 from yesterday. Silver has dipped -50 USc at just over US$61.50/oz.
Oil prices are up +US$3 from yesterday and now just under US$77.50/bbl in the US, while the international Brent price is now just under US$82.50/bbl and up +US$3.50. Hormuz transits are still very constrained. There has been no crude tanker and 11 cargo ship exiting over the past 24 hours (5 dark with transponders off) and nine entering for new loads (4 dark), again all Iran-linked. The Red Sea activity is still low with just a few more than 20 either way at the Yemen chokepoint. Alternative routes are now making a significant, if costly, difference.
The Kiwi dollar is down -20 bps from yesterday at just under 58.7 USc. Against the Aussie we are little-changed at 83.4 AUc. Against the euro we have dipped -10 bps to 50.9 euro cents. That all means our TWI-5 starts today at 62.4 which is down -10 bps from this time yesterday.
The bitcoin price starts today at US$64,550 and down -0.2% from this time yesterday. Volatility over the past 24 hours has stayed low at just on +/-0.6%.
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18 Comments
And this from Stuff this morning...
https://www.stuff.co.nz/money/361016630/heres-why-everyone-even-high-ea…
The gilded age is over?
'The hope right now is that the geopolitical tension across the Middle East continues to ease and that prices of essentials in New Zealand finally find some solid ground.'
Ask why the geopolitical tensions in the first place?
"The hope right now is that the geopolitical tension across the Middle East continues to ease"
And by which metric is it easing ?!
I think its where Trump lets Iran do what they want while pretending he's got it under control and won the war.
I think we're getting close.
Trump.
But longer term it is oil, but other places have oil too. The ME only provides around 20% of the world's needs. There are other reserves else where. So I'd suggest it is less about resources in the moment and more about creeping corruption. Trump is both a driver and a participant.
The resources are getting scarcer, but not to that degree yet I believe. Corruption and greed are ramping up most places though, being lead by the US. What comes out of their next set of elections may be telling, else just more of the same.
Middle eastern oil is by far the easiest oil to extract. It’s not as simple of an argument to state that the ME is only 20%, let’s source elsewhere. The ME has the best infrastructure for oil extraction and can ramp up to meet demand. Excuse my AI insert below, it sheds more light on the counter argument
Middle East (Saudi, UAE, Kuwait): Oil sits in massive, shallow, high-pressure reservoirs discovered decades ago. It’s cheap and easy to pull out — often under $10/barrel lifting cost. Fields like Ghawar have been producing for 70+ years and still flow easily.
Election issues. The real issue identified is that we have are at the bottom of OECD for wage performance. Both the reds and the blues have done that to us. To those debating who is better at running the economy, the answer is neither. Include their coalition partners, the present Parliament are all underperforming. A fundamental reason to vote Oppotunity is because they are not the proven bumblers that the current mob are. As for the uncivil servants providing the advice!!! My solution, let’s put them all on performance pay. Base salary say = to the unemployment benefit, plus possiblity of top up if they focus their minds, do their job.
Just my opinion....
Prior to Rogernomics, a job in the public service was a job for life. And with recent memories of, or recounted experiences of, the 1930s depression deprivations, that was a valuable status. And remuneration was, typically, below private sector rates, reflecting the relatively lower risk of losing one's employment.
And when you look across the range of those government departments (railways, electricity, works, post and telegraph, forest service, health, etc) they held great competencies across a very wide range of professions and trades, and provided very productive training/apprenticeships to feed well qualified and competent people into the private sector.
Now, those competencies largely do not exist within the government departments/agencies with, often (it seems to me) those competencies contracted out to consultants. All the while, the public servant remuneration has been indexed to a conjured comparison with "private sector equivalence". And I know from experience that a consultancy gig with a government agency while maybe not a licence to print money, was sought after and lucrative, with little if any accountability, particularly if the "client " was provided with what they wanted to hear. And what they wanted to hear was outcomes that did not threaten the well remunerated, gilded positions of higher level staff.
The neoliberal ideological position that shatterd the public service by forcing separation of policy from delivery is largely an experimental failure for the functioning of NZ as a whole. In my opinion it has dummed down the public service and impeded technological advances in the NZ economy, to the cost of every tax payer.
Illustrations: base isolation technology (rubber encased lead baring foundations) that revolutionised earthquake resilience on multiple storey buildings - Te Papa and retrofitted to Parliament buildings, was developed by scientists in the DSIR. Animal health vaccines development and trace element deficiency resolution evolved in the Department of Ag/MAF research arm. Arguably, advances at a fraction of the cost than private sector could/can deliver, with great benefit to the NZ economy.
You're a smart man Lou, I enjoy your posts.
i agree, however if I was to give one compliment to the current establishment, there has been a focus on performance come back in with the current govt after everything went lax and unaccountable for the last. Be it as it may, it takes time for behaviours to change (I give you local govt reluctance to curb spending sensibly), and despite the discovery of the MBIE debacle recently, friends of mine in govt departments advise that their performance criteria have been updated more to align to the old KPI methodologies, and leadership have been getting cracked down on for not enforcing performance adequately.
My personal experience and view is that due to the level of job movement 2020-2023 in Wellington with the money on offer all around, and ease of attaining higher roles due to labour shortages, that those left over got promoted into leadership not from competence, but from being the only ones with the knowledge and skills left. This led to a watering down of competence across all departments, and along with govt telling everyone to stay home, not come to work if having a sniffle, and allow 5 days leave for having COVID (this was heavily abused), bred a culture of low productivity and accountability. Bringing this accountability and performance back is taking time, but slowly getting there.
And this: https://www.stuff.co.nz/politics/361016919/no-more-four-lane-highways-p…
What about all the promised RONs? Steven Joyce may even call that a fiscal hole (well if Labour did it).
Interestingly the main cost increase in that article is mortgage repayments. If mortgage rates were still at 2.5% we wouldn't have a cost of living crisis according to those figures.
I'm not saying they should have kept interest rates that low, in fact I don't think they should have ever been so low. But I also think its a bit shit that the RBNZ are allowed to jack them up so quickly and pretend that a 200% increase in interest repayments is not a form of inflation.
There needs to be a discussion about whether CPI should be the only thing they care about. Is the average NZer better off thanks to the RBNZ, or are they making us worse off just to meet an arbitrary CPI target?
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The (new) Gilded Age is in full flight....the symptoms are described in the piece you linked. The top end have never been wealthier.
"There has been no crude tanker and 11 cargo ship exiting over the past 24 hours (5 dark with transponders off) and nine entering for new loads (4 dark), again all Iran-linked."
So does this mean the US navy blockade is not being particularly effective?
Everytime the US hits a ship the Iranians hit a US base in the region. Seems the lesson has been learnt.
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