Here’s our summary of key economic events overnight that affect New Zealand, with news talks are underway in Stockholm between the US and China over a trade/tariff deal. Prospects are not high.

And the recent EU-US deal has the makings of unravelling. Both France and Germany are unhappy about the outcome, made worse by the US claiming verbally pharmaceuticals have been excluded when the EU negotiators said they were not excluded from the 15% written deal.

The big casualty in all of these deals, including the Japanese one, is trust in the US. Smartarse public commenting by the US president – even some of his advisers – means the deals struck are unlikely to be respected by the US or trusted by the others. The result isn’t “a deal”, it is a fluid mess.

New Zealand’s situation in all this will be a footnote, probably sometime on Saturday.

In the US, the Dallas Fed’s factory survey improved sharply in July, but this was all about higher production. New orders are still contracting, even if at a slower rate. Elevated input price pressures continued in July. Improved sentiment is driving the raised output even in the absence of a pickup in new orders.

There were two US Treasury bond auctions earlier today. The 2 year Note was well supported, but investors required a 3.87% median yield, up from 3.73% at the prior equivalent event a month ago. The slightly less popular five year Note had investors winning a 3.92% median yield, up from 3.82% at the prior equivalent event, also a month ago. In the perspective of the past year, these yield levels are average in both cases.

Financial market eyes are now turning to Thursday’s (NZT) US Federal Reserve meeting and decisions. Despite the overt Whitehouse pressure, financial market pricing shows virtually no-one is pricing in a rate cut.

In Canada, wholesale sales came in better than expected, up +0.7% in June from May when a -0.2% retreat was anticipated. But despite that good recent gain, they will still be lower than in June 2024.

Across the Pacific, from 2022 to 2024, Taiwanese consumer confidence rose. But since October 2024 it has been falling. However the July survey rose, the first break in the recent down-trend. It wasn’t a big move from June, but they will take it.

In China, they are taking something they don’t want. Foreign direct investment recorded another net outflow in June, and a worse one than the highly unusual April net outflow. The reasonable start to 2025 is being undone faster now. In the six months to June they have had a net inflow of US$42.3 bln. In 2024 they had more than that in just the first three months and even that was much weaker than in 2023 (US$98 bln) or 2022 (US$112 bln). Fleeing investors isn’t a good look for China.

Indian industrial production expanded a rather weak +1.5% in June from a year ago, held back by surprisingly weak mining (coal) production. In their factories however, the story is much better with manufacturing production up +3.9% from a year ago, a better rise than in May although less than the +4.5% expected.

The UST 10yr yield is now at 4.42%, up +3 bps from yesterday. The key 2-10 yield curve is holding at +49 bps. Their 1-5 curve is still inverted at -13 bps. And their 3 mth-10yr curve is still at just +7 bps positive. The Australian 10 year bond yield starts today at 4.35% and down -1 bp from yesterday. The China 10 year bond rate is holding firm again at 1.74%. The NZ Government 10 year bond rate starts today at just under 4.61% and down -3 bps.

Wall Street has started its week very little-changed from Friday’s record high close. It is down just -0.1% in Monday trade. Overnight European markets were mixed and lower, most down -0.4% although Frankfurt was downa full -1.0%. Tokyo was down a bit more, dropping by -1.1%. However Hong Kong rose +0.7% and Shanghai firmed a minor +0.1%. Singapore dropped -0.5%. The ASX200 rose +0.4% on Monday. And the NZX50 matched that rise.

The price of gold will start today at US$3,309/oz, down -US$27 from yesterday.

American oil prices have risen +US$1.50 at just on US$66.50/bbl with the international Brent price is now at just under US$70/bbl.

The Kiwi dollar is now at 59.7 USc and down -½c from yesterday and back to where it was a week ago. Against the Aussie we are unchanged at 91.6 AUc. Against the euro we are up +30 bps at 51.5 euro cents. That all means our TWI-5 starts today at just on 67.6, down -10 bps from yesterday.

The bitcoin price starts today at US$117,664 and down -1.3% from this time yesterday. Volatility over the past 24 hours has remained low at just on +/-0.9%.

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