Trump loses tariff case; US data weakish; Japanese sentiment recovers; freight rates and demand rise; passenger travel fully recovers with April surge; UST 10yr at 4.43%; gold up and oil down; NZ$1 = 59.9 USc; TWI-5 = 68

Here's our summary of key economic events overnight that affect New Zealand, with news the legality of the US tariff taxes is under court scrutiny.

But first, US initial jobless claims rose +10,000 last week from the prior week to 212,000 when seasonal factors suggested it should have fallen -7,000. (The headline number was +240,000.) There are now 1.78 mln people on these benefits, +120,000 more than this time last year or a +7% rise.

There was an update to the Q1-2025 US GDP growth rate out overnight, and it was little-changed, still showing a stall. Now they say it contracted at an annualised rate of -0.2% in the quarter, a slight improvement from the initial estimate of a -0.3% decline. However, it is still the first quarterly GDP contraction in three years. The slight improvement was driven by stronger-than-expected investment, which partially offset weaker consumer spending and a larger-than-anticipated drag from trade.

The same data showed corporate profits fell sharply in the period and could continue to be squeezed this year by higher costs from tariffs.

Pending home sales retreated an outsized -6.3% in April from March, far more than the -0.9% drop anticipated by analysts and fully erasing the revised +5.5% increase in March. The industry blames "high interest rates".

The US Treasury 7yr bond auction today was supported a bit better than the prior event, resulting in a median yield of 4.14% compared to the 4.07% at the prior equivalent event a month ago.

In a US Federal Court, the Trump Administration lost a key case challenging the imposition of his "Liberation Day" tariffs, where it was claimed the President didn't have the authority to impose them without Congressional approval. [In an ironic reaction (typical of Trump) his minions claimed the court decision amounted to 'a coup'.] The issue will end up in the US Supreme Court soon for 'final' resolution. If it doesn't go Trump's way in his stacked court, things could get 'interesting'.

In Japan, consumer sentiment is still trending down after peaking in March 2024. But the May survey recorded a bounce back from the unusual drop in April.

In Australia, capex investment is not growing, especially for plant and equipment. And that is a hesitation in the rising trend that started in 2014 and continued until September 2024. The recent Q1-2025 data softness seems to be embedding.

Globally, passenger air travel demand was up +8.0% with international travel demand rising almost +11%. In the Asia/Pacific region it was up more than +14%. Wanderlust is back fully after the pandemic period.

Air cargo demand was up +5.8% in April, up +10% in the Asia/Pacific region, no doubt boosted by the rush to beat US tariffs.

Meanwhile, container freight rates rose +10% last week from the week before to be -41% lower than year-ago levels. Trade uncertainty surrounding 'new' tariff-taxes is causing the current scramble to get goods moved. Bulk cargo rates dipped -2.5% in the past week however.

The UST 10yr yield is now at 4.43%, and down -5 bps from yesterday. The key 2-10 yield curve is unchanged at +49 bps. Their 1-5 curve is now more inverted, by -14 bps. And their 3 mth-10yr curve less positive at +13 bps. The Australian 10 year bond yield starts today at 4.33% and unchanged from yesterday at this time. The China 10 year bond rate is up +2 bps at 1.72%. The NZ Government 10 year bond rate is now at 4.65% and up another +3 bps.

Wall Street is marginally firmer with the S&P500 up +0.2% in Thursday trade. Overnight, European markets were down about -0.2% in most. Tokyo ended its Thursday trade up a strong +1.9%. Hong Kong rose +1.4% and Shanghai was up +0.7%. Singapore ended up just +0.1%. The ASX200 was up +0.2% at the end of Thursday trade while the NZX50 fell again by -0.7%.

The price of gold will start today at US$3,322/oz, and up +US$26 from yesterday.

Oil prices are down -US$1 at just under US$61/bbl in the US and the international Brent price is now at US$64/bbl.

The Kiwi dollar is now at 59.9 USc, a +30 bps rise from yesterday at this time. Against the Aussie we are unchanged at just under 92.8 AUc. Against the euro we are down -20 bps at 52.6 euro cents. That all means our TWI-5 starts today at just under 68 and up +10 bps from yesterday.

The bitcoin price starts today at US$106,229 and down -1.1% from yesterday. Volatility over the past 24 hours has been modest at just on +/-1.3%.

The easiest place to stay up with event risk is by following our Economic Calendar here ».