Here's our summary of key economic events overnight that affect New Zealand, with news the trade war mess is doing what was predicted, making losers out of everyone.
But first, the US PCE indicator slipped to 2.1% in April, down from 2.3% in March. Real disposable personal incomes were up +2.9% in the month from a year ago, real personal consumption expenditures were up +3.2% on the same basis. Savings fell.
US inventories were little-changed in April, and the level of imports dived in the month after the new tariffs became effective, the expected shift following the rush to beat those tariffs. But the -US$88.4 bln April 2025 trade deficit actually wasn't too different to the -US$99.9 bln deficit in April 2024. And that is decause April 2025 imports - after the new tariffs went into effect - were +1.8% higher than the same 2024 month. It's early days of course but the first-month effect of the tariff policy isn't for fewer imports, only more expensive ones.
The Americans are finding that their trade negotiations with China aren't going as they expected. The Chinese aren't rolling over for a lop-sided deal and Treasury Secretary Bessent described them as "a bit stalled". A central issue is that Chinese consumers are avoiding buying US goods and Trump can't understand why, accusing Beijing of 'violating' some 'agreement' he thought he had. It looks more like Americans are going to have to pay the tariff-taxes Trump is imposing on them without getting any export boost. An own goal looks more likely than ever.
Yesterday's news of the court loss on tariff legality has been stayed while the issues are worked through, presumably at the US Supreme Court.
Meanwhile, the Chicago PMI reported a very downbeat mood in May, erasing all the 2025 gains and back to its post-election lows.
The final University of Michigan consumer sentiment survey recovered its early month drop in the second half of the month, ending similar to the April level. The pause in the tariff war and the hope this would ease inflation pressures during the survey period was said to be behind the mood change. Still, this level is very pessimistic, -24% lower than year-ago levels.
Canada reported an expanding economy in Q1-2025, gaining +0.5% in the quarter to be +2.2% higher for the year. Both these indicators of economic activity are better than analysts had expected. Of course these are only of historical interest because they pre-date the tariff-war actions of the US that started in April.
India also reported Q1-2025 GDP outcomes, claiming a heady expansion of +7.4% from a year earlier, far better than the +6.7% expected and the +6.4% expansion in Q4-2024. This expansion was led by both the construction sector, and consumer spending.
In China, Beijing is spending big to counter the downward pressure on its economy. As a result, the country’s broad fiscal deficit expanded at its quickest clip since 2023 in the first four months of 2025, reaching a -¥2.7 tln (-NZ$630 bln) deficit in the period, almost 60% more than in the same period in 2024.
In South Korea, early voting started on Thursday and ended on Friday, in advance of the official vote on Tuesday in their snap presidential election. And voters rushed the early voting opportunity, with more than a quarter of eligible voters voting early. The final poll had the opposition candidate 43%:37% ahead of the ruling conservative party candidate.
In Australia, April retail sales slipped unexpectedly from March and this was despite a solid expansion in Queensland. The April levels are +3.8% ahead of the same month in 2024, after inflation a 'real' volume gain of +1.4%.
And staying in Australia, the AFR has a revealing story about how the founding shareholders of Chemist Warehouse are rushing the exits, selling their holdings very fast after the company's backdoor listing. More than AU$4.7 bln of stock holdings have been sold, more than a third of the unrestricted holdings, they report.
The UST 10yr yield is now at 4.40%, and down -3 bps from yesterday and down -11 bps from this time last week. The key 2-10 yield curve is now at +50 bps. Their 1-5 curve is still inverted by -15 bps. And their 3 mth-10yr curve positive at +12 bps. The Australian 10 year bond yield starts today at 4.28% and down -5 bps from yesterday at this time, down -11 bps for the week. The China 10 year bond rate is down -2 bps at 1.70%. The NZ Government 10 year bond rate is now at 4.57% and down -8 bps on Friday, down -10 bps for the week.
Wall Street is marginally firmer with the S&P500 up +0.1% in Friday trade. But that is up +2.4% for the week. Here is the latest update of Wall Street earnings reports. Overnight, European markets were mixed between London's +0.6% gain and Paris's -0.4% dip. Tokyo ended its Friday trade down -1.2% for a net rise of +2.0% for the week. Hong Kong also fell -1.2% on Friday to be down -0.9% for the week and Shanghai was down -0.5% on Friday for a weekly no-change. Singapore ended down -0.2%. The ASX200 was up +0.3% at the end of Friday trade for a +0.9% weekly rise while the NZX50 rose +1.1% on Friday for a -1.4% weekly loss.
The Fear & Greed index is still in the 'greed' zone, unchanged from a week ago.
The price of gold will start today at US$3,294/oz, and down -US$28 from yesterday. That makes it -US$68 lower than a week ago.
Oil prices are down -50 USc in the US at just over US$60.50/bbl and the international Brent price is down -US$1.50 at US$62.50/bbl. A week ago these prices were US$61.50 and US$65/bbl. North American rig counts fell again in an extended retreat.
The Kiwi dollar is now at 59.7 USc, a -20 bps slip from yesterday at this time, and the same slip from a week ago. Against the Aussie we are little-changed at just under 92.8 AUc. Against the euro we are also little-changed at 52.6 euro cents. That all means our TWI-5 starts today at just on 67.9 and down -10 bps from yesterday but up +10 bps from a week ago.
The bitcoin price starts today at US$104,760 and down -1.4% from yesterday. And that is down -3.8% from this time last week.Volatility over the past 24 hours has been modest at just on +/-1.3%.
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