Here's our summary of key economic events overnight that affect New Zealand, with news Iran has decided to shift its policy from defensive to "fully offensive" due to the deadlock in efforts to agree a permanent end to its war with the United States, a senior Iranian official told Reuters overnight. Meanwhile, Trump has threatened to bomb Oman, a Gulf emirate and until recently an ally.
All this is unnerving bond markets with the yield on the US Treasury 30 year bond now at a 22 year high. And they aren't the only long bond yields to rise. Its a trend of higher money costs that is probably only getting started.
However domestically in the US, there have been two third-tier data items out today, and both somewhat positive. The NAHB home builder sentiment survey increased very slightly in August from its unusual July low. But it still remains lower than foir most of 2026 as the core affordability pressures haven't really gone away.
Meanwhile, the NY Fed's regional Empire factory survey was more positive in its August report with reporting strong current activity and new order flows stayed positive. Employment hardly changed however, and input cost increases rose fast again even if prices received eased.
Meanwhile, Canadian inflation was reported back at 3.0% for July, a bit higher than the 2.9% expected and possibly bringing a rate hike there back into play. Rising fuel prices are a key driver here.
Across the Pacific in Singapore, they reported very strong July export growth, up +24% from a year ago to a new all-time monthly July record of S$76 bln but not quite eclipsing their June levels. This is all based on the export of electronic equipment. Their big export destinations are the US, South Korea, Thailand, Taiwan and India. This exporting strength enabled them to post a very large trade surplus in July. (Imports from China were up, but nowhere near enough to account for the export gains overall. So this isn't a re-export story of the paranoid type.)
Japan reported a softer economic activity expansion in Q2-2026 than expected. Analysts had expected their GDP to grow by +2% and up from +1.9% in Q1. But the data released yesterday only shows a +1.1% expansion. But yesterday's data is preliminary and may well be revised higher.
Japanese industrial production rose +1.9% in June from May and exceeding the earlier flash indication (which was very good on its own), and far exceeding the May +0.1% rise. This was the third consecutive monthly expansion and the strongest growth since January. And it took the year on year expansion up by an impressive +4.9%.
China's industrial production was claimed to be up +4.5% in July from a year ago and basically meeting targets. Within that, they claim hi-tech +16.9% on the same basis. But just like most month before they claim they are doing this with electricity production up only +1.9% in July from the same month in 2025. It seems very implausible, the only country with fast growing industrial output with essentially no growth in electricity used - and over the very long haul.
More realistically, China said its retail sales were up only +0.6% in July from a year ago.
According to these official sources, China house prices are falling less now. New housing was down -3.2% from a year ago, essentially unchanged from June. In fact many more cities had no change or a small increase especially top-tier cities. Second tier cities aren't getting the same boost however. Existing home sales prices are easing less too.
The UST 10yr yield is now just on 4.73%, up +3 bps from this time yesterday. The 30 year yield is at 5.31% and up +4 bps, and that is its highest in more than 20 years. The key 2-10 yield curve is now at +53 bps (unchanged). Their 1-5 curve is now at +39 bps (unchanged) and the 3 mth-10yr curve is at +100 bps (-1 bp). The China 10 year bond rate is up +1 bp to 1.69%. The Japanese 10 year bond yield is now at 2.88%, unchanged, up +9 bps for the week and its highest since 1996. The Australian 10 year bond yield starts today at 4.98%, down -1 bp from Saturday, up +1 bps for the week. The NZ Government 10 year bond rate is at 4.71%, unchanged from Saturday at this time, and down -3 bps for the week.
Wall Street has started its week slightly on the back foot with the S&P500 down -0.4% and the Nasdaq down -0.2%. Overnight, European markets were all also lower between London's -0.3% and Paris's -0.7% falls. But Tokyo ended its Monday session up +0.7%. Hong Kong was up +1.3%. Shanghai was up +1.4%. Singapore ended up +0.4%. The ASX200 ended its Monday session down -0.5% however. And the NZX50 ended down -1.0%.
The price of gold is rising, now at US$4413/oz, up +US$37 from yesterday at this time. Silver has risen +US$1.50 to just over US$66.
Oil prices are up +US$1.50 from yesterday at just over US$84/bbl in the US, while the international Brent price is now just on US$90.50/bbl and up +US$2. Hormuz transits have stayed very low. There has been only one crude tanker and 3 cargo ship exiting over the past 24 hours (3 dark with transponders off) and eight entering for new loads (4 dark), again all Iran-linked. The Red Sea activity is still only about 20 exits at the Yemen chokepoint, a slight uptick. But pipeline shipments via alternate routes are at record levels.
The Kiwi dollar is up +10 bps from yesterday at just on 59 USc. Against the Aussie we have dropped -10 bps to 83.1 AUc. Against the euro we are up +10 bps at 51 euro cents. That all means our TWI-5 starts today at just on 62.6, up +10 bps from this time yesterday.
The bitcoin price starts today at US$64,245 and up +1.8% from yesterday. Volatility over the past 24 hours has also been modest at just on +/-1.3%.
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22 Comments
It IS a re-export story.
Of the factual type.
Nothing is made of or by, nothing.
Assembly required
Could easily be. How much stuff is actually manufactured in Singapore, or even assembled (taking Slow Learner's point)? Warehouse data would possibly add substance, to see if stocks grew over previous months.
Nothing? As an embedded cynic that has to be contested. Religion has made plenty out of nothing, think the Roman’s Catholic Church for instance. Admittedly though, the plenty has had to have been made by others out of something. That is why atheists are so admirable as they demonstrate that they can go forward in life without any invisible means of support.
Religion - Judaeo-Christian, at least - concocted a virtual story, while taking advantage of a real one (pie in the sky when you die, preached by well-fed bishops/priests).
In that, it is no different to economics; where virtual is (mentally) seamlessly substituted for real, and back again, and back again. Most people swallow it - most believe money is a store of wealth (the fact/fiction argument boils down to that crux-point). Cherry-picking (lauding exports while ignoring both inputs, and sinks (do a search of Singapore's only 'landfill') is the same mental fact/fiction jump.
PDK, you said...
"In that, it is no different to economics; where virtual is (mentally) seamlessly substituted for real, and back again, and back again. Most people swallow it - most believe money is a store of wealth..."
100% agreed - which is why I term it eCONomics - it is nothing more than quaint mythology, based on totally flawed fundamentals in which even the the reality of the mechanism of where and how "money" (sic) creation takes place is totally ignored.
Notice how I denote fiat tokens in single inverted commas and (sic) - that's because these tokens are not money, they are merely credit that carry counterparty risk
The fact that more than 99% of eCONomists still choose peddle these myths is the tragic story of why the fiat experiment has not collapsed already - even though they are more than 20 years overdue to implode n- the avweage lifespan of ALL historical fiatr currencies is a mere 35 years, mening all of the current onesa long overdue.
That said, it is becoming more apparent to me from your comments that you miss one very key item when you argue your case about available resources and growth.
Which is - when measured against a fixed, real world benchmark, as opposed to inflationary fiat metrics, the true productive economy of all Western countries is actually shrinking, due to hyper-financialisation.
The eCONomists obfuscate this decline using nominal GDP figures, which count financial speculation, debt issuance, and asset inflation as "growth".
The financial sector has become an extraction mechanism. I a healthy vibrant model, money and liquidity flows into the real economy to produce goods, infrastructure, and services. In a hyper-financialsed system, capital is trapped in a closed loop of financial engineering, stock buy-backs, and deivative markets.
Governments claim the economy is growing because nominal GDP increases, when this is nothing more than smoke and mirrors, and the eCONomist and talking heads, all parrot this tripe. When a bank creates $10 million in digital fiat token debt to fund a speculative real estate flip, GDP records that as "growth". In reality, no new productive capacity was created, only a new debt obligationthat the real economy must now service.
AS such the parasitic financial layer grows by cannabalising thev purchasing power and cash flows of the productive base of the overall economy.
Furhermore, when you calculate global output using a hard physical deflator as opposed to central bank consumer price indexes, the global standard of living and vtrue productive output per capita are contracting dramatically.
It takes a lot more hours of real physical labour today to secure that same historical basket of goods than it used to.
IOWs, the "growth", heralded by modern day eCONomists, is an artifact of currency devaluation, not an increase in abundance. When the real economy shrinks beneath a growing mountain of exponential debt, the system reaches a point of absolute structural insolvency.
The underlying productive base can no longer generate enough real-world energy and goods to pay thev interest on the financial sector's tokens. This mismatch means that the system cannot be saved by policy tweaks.
There are opnly two choices left now for the fiat experiment...
(i) Inflate the nominal debt away by destroying the currency.
(ii) Suffer a systemic debt deflation collapse that forces a hard reset back to currencies , and an entire financial architecture based on hard physical tangible assets.
"even though they are more than 20 years overdue to implode" - did you switch to gold or similar 20 years ago?
I assume you and PDK own no fiat?
80% of fiat isn't owned.
That goes with the territory.
That said in my comment above, it is becoming more and more apparent to me, PDK, from your comments, that you miss a vital element when you argue your case on available resources and growth.
Which is - when measured against a fixed, real world benchmark, as opposed to inflationary fiat metrics, the true productive economy of all Western countries is actually shrinking, due to hyper-financialisation.
The eCONomists obfuscate this decline using nominal GDP figures, which count financial speculation, debt issuance, and asset inflation as "growth".
The financial sector has become an extraction mechanism. In a healthy vibrant model, money and liquidity flows into the real economy to produce goods, infrastructure, and services. In a hyper-financialsed system, capital is trapped in a closed loop of financial engineering, stock buy-backs, and deivative markets.
Governments claim the economy is growing because nominal GDP increases, when this is nothing more than smoke and mirrors, and the eCONomist and talking heads, all parrot this tripe.
When a bank creates $10 million in digital fiat token debt to fund a speculative real estate flip, GDP records that as "growth". In reality, no new productive capacity was created, only a new debt obligation that the real economy must now service.
As such the parasitic financial layer grows by cannabalising the purchasing power and cash flows of the productive base of the overall economy.
Furthermore, when you calculate global output using a hard physical deflator as opposed to central bank consumer price indexes, the global standard of living and true productive output per capita are contracting dramatically.
It takes a lot more hours of real physical labour today to secure that same historical basket of goods than it used to.
IOWs, the "growth", heralded by modern day eCONomists, is an artifact of currency devaluation, not an increase in abundance. When the real economy shrinks beneath a growing mountain of exponential debt, the system reaches a point of absolute structural insolvency - that is where I believe we are now, and why the global bond markets will implode.
The underlying productive base can no longer generate enough real-world energy and goods to pay the interest on the financial sector's tokens. This mismatch means that the system cannot be saved by policy tweaks.
There are only two choices left now for the fiat experiment...
(i) Inflate the nominal debt away by destroying the currency.
(ii) Suffer a systemic debt deflation collapse that forces a hard reset - back to a model where all currencies, plus the financial architecture, are based upon hard physical tangible assets.
THE TIPPING POINT
When an economy requires exponentially more debt tokens just to produce smaller amounts of real-world value, the parasitic sector has successfully hollowed out the host.
The nominal numbers have to continue to skyrocket to keep the bond and credit markets from either imploding or freezing up, while the ground level economy continues to shrink in real terms.
I've argued for a long time, that we are past peak growth.
It has taken more than $1 of debt, to 'produce' $1 of GDP, for years.
And that's with an accounting system which avoids entropy.
Yes, PDK, and I was pointing out the extraordinary extent of this fictional growth when we introduce valid metrics to benchmark these trends.
It takes a lot more hours of real physical labour today to secure that same historical basket of goods than it used
Can you expand a bit on what you think "a lot" is,10% 25% 100%? Also what your idea of "historical"? 10 years ago,50 years ago, 100 years ago? I'm skeptical about that statement.
Better put:
A barrel of oil is the equivalent of a male human working nonstop for 4.5 years.
It's the equivalent of having billions of slaves.
Temporarily...
Well said, PDK - your comment also explains why it takes 30 hours of labour per week just to afford basic survival essentials.
As you say, we are losing our cheap energy slaves. As traditional energy becomes harder to extract, everything in the real basket of goods (food, heating, transport) costs more actual physical work to produce.
The billionaire class uses the parasitic financial system to pass 100% of this physical energy loss onto the working man, forcing him to trade more hours of his finite life to cover the thermodynamic cost of survival.
Bridging the Energy Crunch and Global Geopolitics
The Eastern corridors are not just preparing for a financial reset - they are preparing for a resource-scarce future. While the Western financial system continues to double down on the "forever wars" and the 'protection' (sic) of an unstable debt-and-dollar architecture, the East is building a parallel system anchored directly into physical commodities.
If Western nations stopped spending trillions of dollars on military dominance, that massive capital pool could be diverted into building next-generation energy networks.
Instead, the current geopolitical layout is accelerating the contraction of the real economy.
Why the East is Anchoring to Commodities (The Real Hedge)
Nations like China, Russia, India, and Saudi Arabia understand that money is ultimately just a claim check on real-world energy and materials.
As the global Energy Return on Investment (EROI) drops during the messy transition away from cheap oil, holding Western paper debt (US Treasuries) becomes a massive risk.
Securing the Input Layer: The East is aggressively buying up physical copper, lithium, uranium, and gold because you cannot build an alternative energy future out of fiat tokens. By controlling the physical supply chains in Africa, South America, and Central Asia, the East ensures it has the raw materials needed to survive the transition.
The Commodity Currency Anchor: Frameworks like Project mBridge and the proposed BRICS trade tokens are being anchored to physical baskets of commodities.
They realise that a digital currency is only trusted if it can be seamlessly converted into tangible value - like a gram of gold or a barrel of oil - bypassing the Western paper derivative markets entirely.
Its really a 50 year timeline, Ahuhyeah, since the fiat system went fully unbacked in 1971.
And a 113 year time-line in terms of when the Fed was handed over to a plate to the private banking cartel, and then subsequently became the most consequential CB on Planet Earth.
And so "a lot more" in terms of the maths means 100-300% more labour required to secure core survival assets such as housing, energy, and education.
Whilst consumer electronics have got much cheaper due to technology advances, the basket of goods prices have actually skyrocketed. Remember you can have inflation and deflation at the same time - inflation on essentials, and deflation on the non-essentials.
Using the 50-year time-line in 1973, the average house cost ~$32,000, with the average earnings of $7,500 it took an average of 4.3 years of gross labour hours to buy the home.
Today the average home cost is ~$420,000, with the average wage at ~$60,000 it now takes 7 years, an increase of ~62%. If you measure it in the 5000 year benchmark, it costs far more hours.
In 1973 at ($97 per oz) the house cost 334 oz of gold. Today (at $4,335) that translates to 97 ounces. And so at first glance the house looks cheaper - until you look at the human labour factor.
Based on these figures, in 1973 it took 26 hours of labour to earn 1 ounce of gold, and buying 334 ounces needed for the house, required 8,667 hours of work.
Today at $35/hour, it now takes 124 hours of work to earn 1 ounce of gold, requiring 12,000 hours of labour which is 38.5% more raw hours to earn the gold units to pay for it.
IOW's even when a physical asset temporarily deflates against gold, the central bank inflation of the currency means that your labour has been devalued even faster than the house shifted. Yo have have to work significantly longer to buy the exact same constant basket of real wealth.
In the century horizon in 1926, gold was fixed at $20.67 ounce, and with an average wage of 55 cents per hour it took 37.6 hours to earn that ounce of gold.
Today, trading at $4335/ounce and the average wage at $35 an hour, it now takes 123.9 hours to buy that exact same ounce - this represents a 229% increase in raw hours to secure the same historical baseline of value.
In the 100 year scenario all that technological progress and automation should have meant that we should have needed to work less hours to secure the same basic standard of living - instead, because un-backed fiat currency as a siphon.
BOTTOMLINE
While consumer goods have cheapened through technology, acquiring the necessities of life demands an extra 38%-230% increase in human hours.
The reason the fiat system hasn't already collapsed is because this massive effect in labour hours doesn't hit everyone the same.
The devaluation of "money" functions as a regressive tax that drains the life and time of the working man, while expanding the wealth of the top 1% and the 0.000035% of the population of the world that makes up the billionaire club.
When the cost of essentials rises in terms of labour hours, it takes a massive bite out of a working-class income, but represents an almost invisible fraction of a percent for the ultra-wealthy.
Assuming a baseline of $900 per week income just to survive, or the average wage earner on say $30/hour he must work 30 hours extra every single week just to stay alive.
For the top 1% it would take 2 hours and 7 minutes per week.
For the billionaire club it takes their portfolio just over 9 minutes to generate that $900.
In reality, he doesn't trade a single second of labour to cover basic human survival, because his wealth generates enough to cover basic survival needs while he brushes his teeth on Monday morning.
For the billionaire club it takes their portfolio just over 9 minutes to generate that $900.
In reality, he doesn't trade a single second of labour to cover basic human survival, because his wealth generates enough to cover basic survival needs while he brushes his teeth on Monday morning.
He does trade labour for it, or other resources, but they are other peoples labour or resources that the billionaire is milking the cream from.
This from CNN last night. US claiming much greater volumes of crude passing through the Straits than other commentators indicate.
Who to believe?
https://www.cnn.com/2026/08/17/business/oil-market-strait-of-hormuz-tru…
It is very good to see Sal has an ever increasing following!
Sal also claims allot more oil is getting through on short runs, then ship to ship transfers in the Gulf of Oman, then back for another run.
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