Here’s our summary of key economic events overnight that affect New Zealand, with news we are ending the week with Wall Street not finding much to like about future trade prospects, especially as policy shifts seem to be highly chaotic and involve personal retributions.
US initial jobless claims rose last week to +195,000 when seasonal factors indicated it would fall. There are now just over 2 mln people claiming these benefits. This time last year there was just over 1.9 mln, a rise of +99,000.
American consumer inflation expectations for the year ahead rose to 3.1% in July from 3% in June. This was held back only because of the widespread perception that petrol prices would fall. The median year-ahead expected change in food prices remained unchanged at 5.5%. Looking further ahead inflation expectations in five years rose to 2.9% from 2.6%.
Meanwhile Q2 American labour productivity improved in data released today. It rose by 2.4% in the quarter following a revised -1.8% drop in the prior period. Analysts expected a +2% increase. Output increased by 3.7% (vs -0.6% in Q1) and hours worked increased by 1.3% (vs 1.2%).
The US agricultural sector used to be a powerhouse export driver. But no more. Data released yesterday shows it has turned into a net importer, a trend that started in 2018 in the first Trump presidency. The first half of 2025 has now recorded its largest deficit on record, mainly on stuttering exports.
Meanwhile, American consumer credit rose in June but only modestly. Total consumer credit rose by just +US$7.4 bln in the month, up from a +US$5.1 bln in May. These are minor changes and don’t indicate any impending credit stress.
Across the Atlantic in a tighter than expected vote, the Bank of England cut its policy rate by -25 bps to 4.0%. They have inflation running at 3.6% with a target of 2%. Five of the nine voting members voted for the cut, four wanted no-change. This was much closer than the 7:2 vote expected.
In China, they are not only subsidising trade-in programs to help juice their domestic economy, now they are subsidising interest rates on personal loans. Consumer credit has not been traditionally popular in China, but young people are signing up much more freely. It is a sector that may grow to hold financial stability risks.
Standard & Poors have affirmed China’s sovereign credit rating at A+ Stable. China’s government gets a AAA rating from its own domestic ratings agencies, but Beijing was pleased anyway with the S&P result.
Container freight rates fell -3% last week from the week before to be -58% lower than year-ago levels, although to be fair those were an unusual peak. Outbound from China was again the main weakness although outbound from the US is now showing up as a weakening trade too – and that starts with very low rates anyway. Bulk cargo rates were essentially unchanged over the past week and are now +18% higher than a year ago.
The UST 10yr yield is now at 4.25%, up +3 bps from yesterday. The key 2-10 yield curve is still at +51 bps. Their 1-5 curve is still at -14 bps. And their 3 mth-10yr curve is holding at -11 bps. The Australian 10 year bond yield starts today at 4.25% and down -1 bp from yesterday. The China 10 year bond rate is softer at 1.70%. The NZ Government 10 year bond rate starts today at just over 4.44% and down -3 bps.
Wall Street is soft today, down -0.4% from yesterday on the S&P500. Overnight, European markets were mixed with London down -0.7% but Frankfurt and Paris up more than +1%. Tokyo ended its Thursday session up another +0.6%. Hong Kong was up +0.7%, Shanghai was up +0.2% and Singapore was also up +0.7%. The ASX200 closed its Thursday session down -0.1%. But the NZX50 ended up +0.1%.
The price of gold will start today at US$3,391/oz, up US$17 from yesterday.
American oil prices have slipped back again, down another -US$1 to just on US$64/bbl with the international Brent price down at just over US$66.50/bbl.
The Kiwi dollar is at 59.5 USc and up +10 bps from yesterday. Against the Aussie we are up +20 bps at 91.5 AUc. Against the euro we are up +10 bps at 51.1 euro cents. That all means our TWI-5 starts today at just on 67.3, up +20 bps.
The bitcoin price started today at US$116,442 and up +0.8% from this time yesterday. Volatility over the past 24 hours has been modest at just under +/-1.1%.
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