Here’s our summary of key economic events overnight that affect New Zealand, with news of a rare drop in bank lending in China from weak demand.

But first up today, we need to report that “due to a technical issue”, yesterday’s GDT dairy Pulse Auction was cancelled prior to its completion.

Meanwhile in the US, and boosted by a very sharp surge in refinance activity, mortgage applications were up more than +10% last week from the week earlier. Refi clients took advantage of a small -10 bps dip in the benchmark interest rate. But applications to finance a new home purchase actually fell last week from the prior week. Still, that is +16% higher than year-ago levels.

The Trump Administration is increasingly worried about the outlook for their economy. Tariff costs are choking off expansion. We will get a GDPNow update of economic activity later this week, but it is likely to be quite soft. Now Treasury Secretary Bessent is calling for a -150 bps rate cut by the Fed to counter the expected decline, and telling them to ignore the building inflation.

In Japan, machine tool orders rose +3.6% in July driven by stronger export orders.

In China, there has been an unexpected surprise in the release of their bank lending data for July released overnight. It actually fell for the first time in more than twenty years. It fell -¥50 bln in July from the prior month. A +¥300 bln increase was expected. July is often a shadow month after the quarter end, but actual declines are almost unheard of in the modern era. Overall social funding rose, but that is bolstered by economic support measures. That commercial firms are borrowing less is undoubtedly not a trend Beijing wants to see.

The slowdown domestically, and severe overcapacity has seen Chinese steel products dumped in international markets. More countries like Japan and South Korea are considering anti-dumping actions against Chinese steel, while India has several probes underway. Chile has imposed temporary anti-dumping tariffs to protect its steel industry. These moves come after the US and Canada imposed their restrictions. These actions against Chinese steel will no doubt get more strident unless China removes a meaningful proportion of its overcapacity.

That makes Australia vulnerable.

Australia imports a significant amount of steel from China (more than AU$4 bln/year), with structural steel being a major category. And this is rising and a threat to local steel mills. Australia is in a tough spot dealing with China on the issue because their iron ore exports are the main Australian advantage (about AU$100 bls/year). And quality is another advantage of local steel products. There are rising concerns about the quality and compliance with Australian standards of some imported Chinese steel products.

New owner-occupier loan values in Australia were up +7.2% in June from the same quarter in 2024. But the number of new loans was up only +0.2% on the same basis. This reflects the frothy housing markets in many state capital cities. The biggest value increases were for owner-occupiers who weren’t first home buyers with these loan values up +9.8%. Volumes for that group were up +1.0%. First home buyers in Australia are the weakest borrowers, largely shut out of their housing markets.

The UST 10yr yield is now at 4.24%, down -5 bps from yesterday at this time. The key 2-10 yield curve is holding at +57 bps. Their 1-5 curve is still inverted at -9 bps. And their 3 mth-10yr curve is more inverted at -6 bps. The Australian 10 year bond yield starts today at 4.20% and down -6 bps. The China 10 year bond rate is unchanged at 1.73%. The NZ Government 10 year bond rate starts today at just on 4.43% and also unchanged.

Wall Street is +0.2% in Wednesday trade but that’s enough for a new closing record, held up by rate cut prospects. Overnight European markets were generally up +0.7%, except London which ended up +0.2%. Tokyo ended its Wednesday session up another strong +1.3% to another new all-time record high. Hong Kong zoomed up +2.6% and Shanghai was up +0.5%. Singapore also zoomed higher, up +1.2%. The ASX200 ended its Wednesday session down -0.6%. But the NZX50 managed to hold to be up +0.1% at the end.

The price of gold will start today at US$3,353/oz, up +US$6 from yesterday.

American oil prices have fallen another -US$1 to be just under US$62.50/bbl with the international Brent price now at US$65.50/bbl.

The Kiwi dollar is at just under 59.7 USc and up +10 bps from yesterday. Against the Aussie we are also up +10 bps at 91.3 AUc. Against the euro we are holding at 51 euro cents. That all means our TWI-5 starts today at just on 67.3, up +10 bps from yesterday.

The bitcoin price started today at US$121,559 and up +1.9% from this time yesterday. Volatility over the past 24 hours has been modest at +/-1.3%.

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