Here's our summary of key economic events overnight that affect New Zealand, with news hostilities in the Persian Gulf are still ongoing and still clouding the global economy.
First in the US, the latest Fed Beige Book survey reveals an American economy where activity increased modestly since early July. Ten of the twelve Federal Reserve Districts reported modest growth; two reported no change. Consumer spending grew slightly on balance; reports reflecting both heightened price sensitivity on the one hand and solid high-end purchases on the other. Car sales were mostly subdued, dampened by downbeat consumer confidence, high fuel prices, and rising financing costs.
And that was reinforced by mortgage applications levels that were little-changed and mortgage interest rates that have stayed high and back at early 2025 levels, now 6.79%.
Further, the ADP monthly employment report for private payrolls delivered a +38,000 jobs gain in August, lower than for July and lower than the +47,000 expected. It was a seven month low. Saturday will bring the US non-farm payrolls report update for August which is expected to show a gain of +58,000 - which now may be on the high side. US payroll growth has essentially evaporated since early 2025 and the start of the Trump 2 presidency.
New factory orders however were reported to have risen +10.4% in July from a year ago. This is an impressive result, but you would have thought that activity and employment data would show that surge. However some of the largest gains are in defense aircraft and computer equipment (data centers) which don't have a lot of jobs attached to them.
US crude oil stocks fell again last week and by about double what was expected. And their Strategic Reserves fell too, and by a similar amount. These are dangerously low now.
In Canada their central bank reviewed their policy interest rate by kept it at 2.25% as expected. They seemed somewhat surprised at the resilience of the Canadian economy given the economic attacks from the US, but they also now see that resilience continuing despite the substantial adjustments they have to make. Canadian benchmark bond yields are rising, today at a two year high. But this isn't especially high given the threats. The somewhat hawkish tone wasn't expected and the chances of rate hike there have probably increased.
In Australia, it is coming to light that their central bank has downgraded the US dollar for its foreign currency holdings. In their 2024 Annual Report, Table 2.2.4 noted an 55% target allocation for US dollar holdings (page 82). The 2025 report (page 95) shows this as 45%. An unstable White House is undoubtedly the reason. That 2025 report was released on October 8, 2025, so the 2026 report is now only weeks away and this disclosure will be closely watched. (The RBA is somewhat unusual in that they have revealed that pullback. It is likely happening in many other central banks too, as IMF consolidated data suggests.)
And staying in Australia, they released their Q2-2026 economic activity data yesterday, showing a +0.4% expansion for the quarter, to be up +2.1% (real) from a year ago. That was much better than the expected +1.8% expansion. Their per capita growth was only up +0.7% however. The widely expected slowing in 2026 has been much less than observers had expected. And that has significantly boosted the AUD and Australian Government bond yields.
The UST 10yr yield is now just on 4.79%, down -1 bp from yesterday at this time. The 30 year yield is at 5.28%, up +2 bps. The key 2-10 yield curve is still at +41 bps (unchanged). Their 1-5 curve is now at +38 bps (-1 bp) and the 3 mth-10yr curve is at +106 bps (+2 bps). The China 10 year bond rate is up +11 bp at 1.69%. The Japanese 10 year bond yield is now at 3.00%, down -1 bp but still a 30 year high. The Australian 10 year bond yield starts today at 5.22%, up another +6 bps. The NZ Government 10 year bond rate is now at 4.81%, down -1 bp from yesterday.
Wall Street firmer today with the S&P500 recovering +0.5% and the Nasdaq up +0.4%. Overnight, European markets were lower between Paris's -0.3% and Frankfurt's -0.5%. Tokyo ended its Wednesday trade down a large -2.9%. Hong Kong dipped -0.1%. But Shanghai was down a full -1.0%. Singapore was rose +0.6%.The ASX ended its Wednesday down -1.0%. And the NZX50 was up +1.0%.
The price of gold is now at US$4372/oz, and up +US$37 from yesterday at this time. Silver has risen +50 USc to just under US$65/oz.
Oil prices are up +US$1.50 at just over US$91.50/bbl in the US, while the international Brent price is just under US$96/bbl. Hormuz transits have held very low with just three ships exiting over the past 24 hours, none of which are tankers (0 dark with transponders off) and only one entering for new loads (1 dark). The Red Sea activity is marginally higher than yesterday but still with less than 20 each way at the Yemen chokepoint.
The Kiwi dollar is down -40 bps from yesterday at just on 58.5 USc. Against the Aussie we are down -90 bps at 81.5 AUc. Against the euro we are also down -30 bps at 50.5 euro cents. That all means our TWI-5 starts today at just on 61.9, down -50 bps from yesterday.
The bitcoin price starts today at US$77,353 and essentially unchanged from yesterday at this time. Volatility over the past 24 hours has been low at just on +/-0.9%.
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