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%.
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24 Comments
Ooh things are going going to get "interesting"?!
U.S. appeals court reinstates Trump’s tariffs.
https://www.ctvnews.ca/world/trumps-tariffs/article/us-appeals-court-re…
Temporarily for now.
The US just has to wait until a democrat is in the Whitehouse to impose tariffs. How silly of trump to think otherwise.
"The Biden administration said Friday that it has finalized tariff hikes on certain Chinese-made products that the president first announced in May.
The tariff rate will go up to 100% on electric vehicles, to 50% on solar cells and to 25% on electrical vehicle batteries, critical minerals, steel, aluminum, face masks and ship-to-shore cranes beginning September 27, according to the US Trade Representative’s Office."
https://edition.cnn.com/2024/09/13/politics/china-tariffs-biden-trump
Do you see any differences between those tariffs targeted at specific items from a specific country, and what Trump has been doing?
Even if you don't, the courts do.
Depends which court?
U.S. appeals court reinstates Trump’s tariffs.
https://www.ctvnews.ca/world/trumps-tariffs/article/us-appeals-court-re…
"The United States Court of Appeals for the Federal Circuit in Washington’s order provided no opinion or reasoning but directed the plaintiffs in the case to respond by June 5 and the administration by June 9."
They haven't actually told us what they think yet. The fact is, Presidential power to tariff is limited to whatever is granted by laws Congress has passed as part of their long-term dereliction of duty. He can't just do what he wants.
"He can't just do what he wants."
Who will stop Trump ?
Well, that's the kicker. I thought about adding "if he wants to act within the law" at the end, because that seems to still be an open question.
Add to that the Supreme Court’s legislation of immunity. Not so much the actual ruling but Trump’s interpretation of it by which he absolves himself of whatever he has done, is doing and yet to do. Even if he’s got that wrong he knows full well it will never catch up with, in his lifetime. No conviction simply translates to no guilt.
Your quoted article ...Wednesday’s surprise ruling by the U.S. Court of International Trade had..........
For the many who understand the constitution this was no surprise at all. And two of the Judges were republican appointed, one by Trump himself..
Profile, you're a bit behind the times, Biden is no longer the US president!
Norm - tautology.
:)
Yeah, I know :)
One part of the US economy is thriving though - Washington law firms who are getting all the business!
that's gotta hurt! They must also be expecting to pick up a lot of other work that will to all extents pay for the work they do for Trump. I wouldn't want to be one of their clients now. But there are lawyers on the other side though and they won't be doing it pro bono.
Interesting to note though that a number of law firms stood up to Trump and didn't let him get away with his bullying. For those who rolled over for him, that has to be embarrassing.
Any Nation that’s judiciary and legal system gets politicised to the point of its independence being compromised is in big big trouble. By way of a barometer, this is becoming the most disturbing and subversive element in this Presidency.
3rd term for Trump on the horizon ?
and the flow on impact internationally is huge. That impact economics, trade, human rights - everything. And for a small country like NZ, there is SFA we can do other than pull back, work to be more resilient and self sufficient. A lot of people seem to focus on hoping things will sort themselves out. The problem is hope has never been an effective risk management strategy.
Foxglove, you are on thin ice if you believe that Trump is the only "rogue" global leader seeking to use the judiciary as a policy tool. In fact, I'd argue the UK and Europe have a much stronger game. Have you seen some of the sentencing irregularities in the UK? The use of Non-Crime Hate Speech laws to visit someone in the night if they don't like their social media posts or book collection? Or the Europeans about to criminalise criticism of illegal immigration.
Be grateful you live in a world where you can criticise Trump, it may not last forever.
Canot disagree TK, the problem is hardly isolated but pointing out worse instances elsewhere does not mitigate the subject issue. The scenario in the USA is entirely modern. As have said here before, there would have been no Watergate downfall for President Nixon had he had the status of immunity Trump now has. The US forefathers installed by means of the Presidential Office, Congress and Senate being founded on the Constitution with the Supreme Court independently overarching, measures designed to stop the ascension of any one individual into unfettered , absolute power. Great Chief Justices such as John Marshall and even the much maligned Aaron Burr when Vice President formulated and implanted legislation that added strength on strength. However today with the Supreme Court being forced to intervene politically, rather than legislatively, all of that carefully constructed forethought, and defence of the constitution, is being steadily eroded.
It is I think because Congress has failed over the years to do its job and pass laws. But let the executive branch amend or interpret the law by who is in charge.
I agree that when the legislative and judicial branches are politicised, it's a very slippery slope.
I have sat back and watched the vilification of Trump with mixed emotions. His tariffs, while seemingly the work of an egomaniac tyrant, are sound in logic. The West is already hostage to China in having outsourced nearly all it's manufacturing capability. Within our lifetime, there will be no European or US car industry left, China's advancement is that impressive. Meanwhile, they are growing their millitary at a rapid pace, sending warships down to our waters unchecked.
We are in a strategically perilous position - it's our standard of living vs China's rising millitary threat. I'm not defending Trump, but this really is the last opportunity to check China's rise. Whether we do so or not remains to be seen.
Did Luxinda support this?
"The Chinese government has welcomed Sir Keir Starmer’s Chagos Islands deal as a “massive achievement”, despite his claim that Beijing had opposed it.
Beijing’s ambassador to Mauritius talked up the deal in a speech on Tuesday, after Sir Keir signed away the Chagos Islands and agreed to pay Mauritius £30 billion over 99 years.
...“In favour are all of our allies: the US, Nato, Five Eyes, India,” he said.
“Against it: Russia, China, Iran. Surprisingly, the leader of the Opposition and Nigel Farage are in that column alongside Russia, China and Iran, rather than the column that has the UK and its allies in it.”
But that argument was contradicted by the Chinese government five days later, when their ambassador welcomed the deal"
https://www.telegraph.co.uk/politics/2025/05/29/china-backs-starmer-cha…
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