Here's our summary of key economic events overnight that affect New Zealand, with news the trade chaos and tariff-war skirmishes have markets worldwide watching for inflation signals as much as growth signals.
First, in the US their Redbook retail index was up +6.1% last week from the same week a year ago, driven increasingly by tariff-tax price increases, which is why this metric is diverging so much from the formal retail sales volume data.
American mortgage applications fell last week from the prior week. That is consistent with the benchmark 30 year mortgage rate rising, now almost touching 7% again.
The Richmond Fed's regional factory survey came in negative again in May with activity slowing and new order levels still quite weak. The service sector report for the same mid-Atlantic region was weaker too. In both cases they recorded price pressures over +6%.
The Dallas Fed services survey was just as negative, in fact even more so. Input prices are a real issue here too, over 5%.
The well-supported US Treasury 5 year bond auction continued the trend of bidders wanting and getting higher risk premiums. This one delivered a median yield of 4.01%, up from 3.93% at the prior equivalent event a month ago.
The minutes of the May 8 (NZT) Fed meeting released overnight revealed policymakers are uncertain on how to assess the future risks of inflation and their labour market, and how they can meet their dual mandate when forces are pushing in different directions. They seem to see the inflation risks are the key priority. They are also watching the USD depreciation because that too brings inflation risks. For them, it is a waiting game.
India's April industrial production expansion slowed from March, but not by as much as was expected. It seems to be settling in at an under +3% rate which is far more modest than the overall economic expansion there. India's economic rise isn't really being built on manufacturing prowess. Of course the trade and tariff-war backdrop won't be helping.
Euro area inflation expectations are rising again, and came in at 3.1% in the latest survey (in April) for the ECB, results they won't have liked. These expectations are back to early 2024 levels, unwinding the progress the ECB policymakers had thought they had won.
In Australia, their monthly inflation indicator, also for April, shows it stuck at 2.4%. A small easing was expected but didn't eventuate. But 2.4% isn't a killer level and probably doesn't change expectations that the RBA will keep reducing its cash rate target, currently at 3.85%, by another -25 bps at their next meeting on July 8, 2025. A lot could change in between however, and analysts will be watching for upside risks.
The UST 10yr yield is now at 4.48%, and up +4 bps from yesterday. The key 2-10 yield curve is marginally steeper at +49 bps. Their 1-5 curve is now inverted by -9 bps. And their 3 mth-10yr curve steeper at +21 bps. The Australian 10 year bond yield starts today at 4.33% and up +1 bp from yesterday at this time. The China 10 year bond rate is unchanged at 1.70%. The NZ Government 10 year bond rate is now at 4.62% and up +3 bps.
Wall Street is marginally softer with the S&P500 slipping -0.2% in Wednesday trade. Overnight, European markets were down about -0.6% in most. Tokyo ended its Wednesday trade little-changed. Hong Kong fell -0.5% but Shanghai was unchanged. Singapore ended up +0.4%. The ASX200 was down a minor -0.1% at the end of Wednesday trade while the NZX50 fell a sharpish -1.7%.
The price of gold will start today at US$3,296/oz, and down -US$6 from yesterday.
Oil prices are up +US$1.50 at just on US$62/bbl in the US and the international Brent price is now at US$65/bbl.
The Kiwi dollar is now at 59.6 USc, a small +10 bps rise from yesterday at this time. Against the Aussie we are up +50 bps at just under 92.8 AUc. Against the euro we are up +30 bps at 52.8 euro cents. That all means our TWI-5 starts today at just under 67.9 and back up +30 bps from yesterday.
The bitcoin price starts today at US$107,462 and down -2.6% from yesterday. Volatility over the past 24 hours has been modest at just on +/-1.4%.
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57 Comments
In a follow-up from yesterday I note CNN is carrying an article where Trump is asked about the 'TACO' acronym (Trump Always Chickens Out) by a reporter. The acronym was invented by a reporter for the Financial Times. Trump called it the nastiest question, but admitted it was just a negotiating tactic.
https://edition.cnn.com/2025/05/28/economy/trump-wall-street-taco-trade…
What people don't seem to realise is that the psychology behind this may result in Trump hardening up somewhat and actually doing what he has threatened. Once he realises there is general acknowledgement that his initial stances are not to be taken seriously, and that everyone will call his bluff, he may resolve to go somewhat harder to achieve what he wants. The chaos he has caused so far internationally has been just because of his words, not so much his actions.
Personally with some of the players, playing hard ball with the will to back it up is not a bad thing to dial them back (Russia, Iran, North Korea for example), but it is a dangerous game at that level with potential huge costs. He doesn't seem to be smart enough to know how to selectively apply the tactic and as a result has alienated many of the US' former allies, who are now looking to move forward without the US at their side. The adverse consequences for the US could be significant.
What people don't seem to realise is that the psychology behind this may result in Trump hardening up somewhat and actually doing what he has threatened.
His mind is more than half a century of saying wild shit and "winning" by achieving the middle ground. Words are almost meaningless to him, he'll dine on his wins, and his losses are discarded, never to be reflected on to modify his future behaviour.
The only way to approach someone like him, is to dominate him from a position of leverage, keep a low profile, or stay as far away as you can. Trying to reason, pretty fruitless.
Agreed. He's more like Putin than many would care to admit. Scary. But more people will now understand him and call him on his BS. Over doing the leverage bit doesn't help in in the future. Many republicans are rethinking their support too, but upcoming elections there may change the landscape somewhat, diluting his power and influence.
I repeat: Trump is a symptom, not a cause.
Therefore getting rid of him, changes nothing.
Sigh
Get rid of Trump, he's no good for the whole world. Replacing him will definitely improve things.
I repeat: Trump is a symptom, not a cause.
He's both. He's in power due to the status quo under delivering, but his erratic nature and general incompetence will lead to outcomes over and above what a more intelligent reformist would achieve.
Wrong PDK. True he is a symptom of an overshot system, but it is the politics we are discussing, not the physics. With Trump there will never be a discussion of the physics. He has always denied it and continues to do so. Getting rid of him opens the possibility that someone will come to the top who is more receptive. That though is also unlikely because the republicans and the democrats are so wrapped in the current system. I would consider the current crop of republicans as a part of the Trump problem seeing as how they've blocked every move to challenge what he is doing.
No, it's the physics which is squeezing the politics into a corner.
And nobody - not even AOC - can alter that.
Wrong, innovation can.
How do you enjoy being told "Wrong" like you so often start your posts with ? Do you like people who tell you that you're Wrong?
No it's not the physics doing the squeezing, it's their own greed and lust for power. The physics just is, it is the reality that comes home to bite when you're not paying attention. They haven't been paying attention for a long time. Denial in the face of evidence always results in a fall.
Yvil puts the argument in that technology can save us. I disagree. It can delay the collapse, maybe, but not prevent it. The real problem is too many people and no one is talking about that. There are no solutions being discussed on too many people being on the planet.
The US having so many friends and allies, many willing to commit to the many military adventures the US engages in, is a massive geo-political advantage. US adversaries tend to have few friends. The North Koreans helping the Russians is a notable exception, ones of those exceptions that "proves the rule" making it so newsworthy. For the US to damage their own relationships seems extremely dumb. Many supporters of Trump in the US and abroad were shocked that traditional allies were treated in such a way. I reckon Trump irrecoverably damaged his worldwide support base with his statements and actions. It's all downhill now. We expected much more Western bias.
We?
You mean you.
The US has been the biggest thug this last 70 years, as all dominant hegemonies always are.
Currently it supports the GENOCIDE being perpetrated by the Israelis (not by Israel, that's de-humanising the blame).
It was inevitable that (a) the dominant hegemony ceased to be dominant, and (b) those it had dominated would desert it as it descended.
Bias is an interesting thing - can be quite a filter...
We = Trump's foreign supporters. We didn't share your view that the US is a thug. We were expecting Trump to remain benevolent towards the West and it's allies.
We = Trump's foreign supporters. We didn't share your view that the US is a thug. We were expecting Trump to remain benevolent towards the West and it's allies.
Have you ever had someone in your life who you initially found charming, only to find out the hard way that they were a douche you want nothing to do with, who knew how to tell you what they wanted to hear?
Agreed, NATO is now very much more a European alliance and looking for ways and means to move forward without the US, and planning to make it happen. Ukraine is their back yard and they understand now the threat is real and the opportunity they've missed because they depended too much on US leadership. Elsewhere trade negotiations are beginning that are deliberately leaving out the US. For the US to get back in, they will need to provide some serious guarantees, which Trump has essentially proven will not be worth the paper they're written on. Economically the world landscape has shifted significantly and all because the 'great negotiator' is nowhere near as smart as he thinks he is.
There is no doubt at all that Trump has convinced himself that the world needs the USA more than the USA needs the world. Perhaps or perhaps not he has now committed to proving that?
Agree with all but the last half of the last sentence.
The US (like us) offshored its production to slave-labour sites with lax environmental rules, and tried to 'pay' for that with keystroke-issued debt. The mechanism was the inflation of 'values' of existing items, from houses to GTHO Falcons, to, to... Everything that could be commercialised, was. Programmes for house do-ups and valuing 'valuables', fed the churn. But nothing productive.
You can bluff, from that position, but not negotiate. Your most powerful card is military thuggery (Korea, Vietnam, Iraq, Iraq..) but sooner or later the EROEI of that is so awful (Captain Phillips; all that navy vs a couple of broken-down dories) that you stop doing it. As Rome stopped. As Britain stopped. On the way down, the internal angst increases (hence panem et circenses) and fraught leaders get voted/emerge.
Yeah I agree with you Murray, I find it hard to believe that after 80 years of resisting Russian aggression the Pentagon, CIA etc will turn their back and say Russia can do what they want. Just because one man told them to.
USA has the capacity and the means to stand on Putins neck. Ukraine is the front line, they need munitions and in quantity now. As I have stated several times Trump is coming out as weak. Now he wants to waste time and resources on the "golden dome" idea. It's like "lets just run and hide under a rock", so we don't have to face the consequences of not standing up to the threat.
Russia is Russia and of many sides. In relationship to our mother country, colloquially speaking, with us against Napoleon, against us in Crimea, with us until the Bolsheviks in WW1 and only with us in WW2 courtesy of the Nazi invasion and a Cold War adversary up until Gorbachev. Amongst all of that there have been allegiances short and long lived and centuries of associated warfare. But since Peter the Great Russia has been Russia and only Russians can change Russia. Churchill in his enigma quote and iron curtain speech understood this but Trump has not a clue about any of the history and how and why, it still influences the Europe of today. That ignorance is part of why Putin is disdainful of Trump and is doing little more than gaming him.
We only need to go back a little over 100 years (not much more than a single lifetime) to understand that the 'us' that determined who they were 'with' was common interest (ambitions) between relatives in inter married elites....we have new sets of elites.
Exactly. The USA only really arrived large on the world stage post WW1 and that coincided with realisation of the power of oil. I like to think of it as the start of the oil age. Still however you might regard it, favourably or unfavourably, thousand of young American lives and $ billions crossed the Atlantic never to return. That in itself creates a basket load of caveats.
His negotiating tactic has been obvious " like forever". But too many commentators fall for it ( D.C.?).
The thing to do is not to be too reactive. Not hair trigger at every news titbit. Observe but not be led by it.
You know. " Keep calm and carry on"
Re-fix interest rates don't seem to have gone down very much. I'm being offered a 0.07% better deal for one year compared to a couple of days ago.
OCR announcement was already priced into rates. New OCR forcast not helping nor swap rates increasing. Can't expect much...
https://pce.parliament.nz/publications/resource-use-and-waste-generatio…
Coverage by the NZ media of this - which is the underwrite of money, when we get down to it - ?
Nil so far, and likely nil in total.
And the difference between nil, and lying outright?
Indecipherable...
Stating the obvious really ... "Around 60% of the resources consumed in New Zealand were extracted overseas and imported. Data suggests the share of our resource needs imported from other countries has increased over recent decades."
COVID shutdowns proved that and successive governments sitting on their hands and watching it all happening were the problem. Declining national resilience, decries the other bit of research that suggests we are best placed to survive a world war. Only if we revert to a significant lower level of living standards and technology.....
Where are the analysts who should be advising the government on how all this connects together?
Says they've got a further one in 18 months' time.
I suspect this Govt will attempt to quash that and quash any whistle-blowing about the quashing.
We're being led into the Dark Ages by a mob led (?) by a fundy Christian - what could possibly go wrong?
I thought you wanted us to go back to the "Dark Ages".
Your first two words are an oxymoron.
No, I point out that a dissipative regime being pursued within a Bounded System, is temporary.
You, and others like you, need to skew that to 'want'. Ask yourself why?
I point out that we are an overshot species, essentially lying to ourselves (via fixation on the artificial thing we call 'money', amongst other things) about our predicament. And I suggest less dissipative ways to live, given that inevitability.
It's because no one cares PDK.
Wrong - everyone would care if they were told the truth.
They aren't.
Go well
:)
There is only one agreed absolute...the truth must not be acknowledged.
Everything else is negotiable.
Reminds me of the cult I grew up in. Being "in the truth" meant being an initiated member of the cult.
Good to know that you know "THE TRUTH", almighty PDK.
Do you think you are being told the truth by the establishment Yvil?
I think it's very dangerous and narrow-minded to believe in one singular absolute truth like PDK does.
There are none as blind as those who refuse to contemplate an alternative.
Way back Galileo was onto it - all truths are easy to understand once they have been discovered; the problem is to discover them.
Do you think there's any one source that really knows the truth?
We easily make the mistake of working out concepts or things we are told as absolutes, are actually very nuanced, or even contrary to the advertisement. Then often go too far, in the other direction.
Curious that neither of you answered the question
It should have been inherent that any source should not be taken as gospel
Including gospel
Because we don't believe in one single, absolute truth, we obviously don't believe that we are being "told the truth". I hope me spelling it out is satisfactory to you Frank.
We are a strange animal...happy to be knowingly systemically lied to and self confident enough to think we can overcome the implications of such....and we must push back against any suggestion that it is occurring.
We don't even tell ourselves total truths much of the time, let alone what others tell us.
Can't say I'm happy or not about that, more acceptance?
There's some truths spoken by pdk, or aspects of them.
But absolute truth, going down how he says it is, and most news headlines of the day are proof?
I know too much for it not to be.
What was the statement by PDK that Yvil pushed back against...
"Wrong - everyone would care if they were told the truth.
They aren't. "
Both yourself and Yvil agree that the public are not told the truth....how then can we judge how they would react should they be told it?
By their previous behaviour?
Much of the population has accepted anthropogenic climate change. It's broadcast throughout most media, fairly often also.
Have the population cared enough to substantively change their behaviour? An EV and sustainable bananas isn't moving the needle.
Within what context however...an element of truth conditional upon falsehoods?
We are told for example that a currency issuing state requires taxation (or borrowing) to spend....that has huge implications to our ability to address our current resource (mis)use.
We are also told that to secure our futures we can (must) rely upon accumulated promissory notes that evidence suggests will at best be insufficient if not defunct.
Much like a courtroom truth needs to be complete.... I will speak the truth, the whole truth, and nothing but the truth.
Within what context however...an element of truth conditional upon falsehoods?
The context of "chucking gases in the air will set the world on fire/drown it".
We are also told that to secure our futures we can (must) rely upon accumulated promissory notes that evidence suggests will at best be insufficient if not defunct.
"Must" is your interpretation. "Should". Which does stand up to a reasonable level of scrutiny, over winging it.
You will know in yourself that changing some of your behavior or dropping vices is very hard, in spite of near truths that it's better for you.
Expecting that the population will fundamentally change how they exist even with a rock solid case, pretty fanciful.
Can brackets must is allowing for the probability it will become mandatory.
I would not presume to know how a population in toto would react if they were given all the facts, but I can say with confidence that my preference would to have all the facts available while i decide how I will act.
Then we're back to the troubles establishing the validity of ontogical truths. Of which there are many theories with varying plausibility.
There is no need for ontological truth with regard to government funding.....the evidence is empirical.
The difference is that PDK and Frank believe in a black and white truth, in absolute right or wrong, whereas Pa1nter and I believe in nuances of truths or lies, in shades of grey. Unfortunately Frank and PDK don't seem to understand that there can be an area between an absolute truth and an absolute lie.
Wrong - everyone would care if they were told the truth.
Like that time most everyone found out the truth about basic diets, and we cared enough cure obesity?
21 tonnes per person of resource use is about the same a 1 hectare of pine plantation growth @ 25 tonne ha/yr. Run for the hills we are all doomed. At the end of all that evil resource use as a country with are still a sink to the tune of 39 million tonne C/annum. Sinking an additional 7.8 tonnes/capita per year. Go us!
https://agupubs.onlinelibrary.wiley.com/doi/10.1029/2023GB007845
Perhaps try not using a regenerating process (solar energy driving tree-growth) to belittle the drawing-down of non-renewable resources.
:)
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