Here's our summary of key economic events overnight that affect New Zealand, with news we are still waiting for indications of the China-US trade talks in London.
Meanwhile, the World Bank said global trade expansion is now at its weakest since 2008 as the tariff tit-for-tat undermines it. They say without a swift course correction, "the harm to living standards could be deep". But they still see a global expansion of +2.3%, largely driven by China, Indonesia, Thailand and India. The retreat of growth in the US will be sharp they say halving in 2025 (+1.4%) from 2024 (+2.8%). The EU will be largely unaffected and maintain their low growth. Japan's low growth is expected to rise in the next three years. They don't review Australia or New Zealand.
Elsewhere, the overnight dairy Pulse auction brought downbeat results. The key WMP price fell -1.1% in a retreat expected by the derivatives market. But even at this level it remains in the rising trend that started in mid-2024. However, the SMP price fell a hard -4.8% and much more than expected. In fact, SMP prices have now broken through their weak rising trend, and look quite vulnerable.
Also showing signs of running out of steam were US retail sales growth as measured by their Redbook survey. They were up +4.6% from the same week a year ago, the weakest rise since March 2024. After inflation, this isn't any better.
The US NFIB small business optimism survey turned up in May, the first time it has done that in 2025.
There was a US Treasury 3 year bond auction earlier today and that showed a small fall-off in support, something worth watching. The winning investors got a median yield of 3.92%, up from the 3.77% at the prior equivalent event a month ago.
Across the Pacific, Japanese machine tool orders came in at a similar level in May as April, but that is only a +3.4% gain from the same month a year ago. It was kept positive by export orders, although domestic orders, which had been strong earlier in the year, are now cooling.
In China, concerns persist about overproduction in their car manufacturing sector even though local new-vehicle sales overall, including exports, rose almost +10% in April. Those concerns are rippling through commodities that supply this juggernaut industry. Rubber prices, for example, are being hit hard as buyers lose confidence the China car industry can avoid a crash like the property sector. There are signs the government there is worried too, with Beijing telling carmakers to make sensible commercial decisions.
In Australia, the Westpac-Melbourne Institute consumer sentiment survey wasn't particularly upbeat, coming in little-changed in June from May. But at least it isn't going backwards. Aussie consumers remain relatively averse to real estate as an investment option and to risk in general. Indeed, responses to a question on the ‘wisest place for savings’ suggest that the tariff-related turmoil this year has seen what was already a high level of risk aversion intensify even further.
And staying in Australia, the closely-watched NAB business sentiment survey has improved marginally in May, recording its first positive reading in four months. But, business conditions weakened in this survey and it will be hard for sentiment to improve if business conditions get weaker. Those weaker conditions came from ongoing profitability pressures and soft demand, with signs of a further softening in labour demand.
The UST 10yr yield is now at 4.47%, and down -2 bps from this time yesterday. The key 2-10 yield curve is still at +47 bps. Their 1-5 curve is now inverted by -5 bps. And their 3 mth-10yr curve still positive at +23 bps. The Australian 10 year bond yield starts today at 4.27% and down -5 bps from yesterday at this time. The China 10 year bond rate is holding at 1.69%. The NZ Government 10 year bond rate starts today at 4.64% and down -1 bp.
Wall Street is up +0.5% in its Tuesday session of the S&P500 and rising on trade-talk optimism. European markets rose +0.2% on average, excpt Frankfurt which fell -0.8%. Tokyo ended yesterday up +0.3%, Hong Kong was down -0.1% and Shanghai ended down -0.4%. Singapore ended down -0.1%. The ASX200 was up +0.8% after its holiday. The NZX50 ended its Tuesday session up +0.2%.
The price of gold will start today at US$3,323/oz, and down -US$10 from yesterday.
American oil prices are little-changed at just on US$65/bbl while the international Brent price is now just on US$67/bbl.
The Kiwi dollar is now at 60.4 USc, and dipping -10 bps from yesterday at this time. Against the Aussie we are also down -10 bps at 92.7 AUc. Against the euro we are down -10 bps at 52.9 euro cents. That all means our TWI-5 starts today at under 68.4 and down a bit less than -10 bps from yesterday.
The bitcoin price starts today at US$108,723 and up +0.4% from yesterday. Volatility over the past 24 hours has been low at just on +/-0.9%.
Daily exchange rates
Select chart tabs
The easiest place to stay up with event risk is by following our Economic Calendar here ».
30 Comments
Not just cars - "A staggering $1.9 trillion in extra industrial lending is fueling a continued flood of exports "
“Overcapacity remains a Sword of Damocles hanging over our heads,” said Zhu Gongshan, chairman of GCL Technology Holdings Ltd. Five of the biggest names — JA Solar Technology Co., Jinko Solar Co., Longi Green Energy Technology Co., Tongwei Co. and Trina Solar Co. — reported a combined loss of over 8 billion yuan ($1.1 billion) in the first quarter alone."
https://www.bloomberg.com/news/articles/2025-06-09/china-s-solar-indust…
China swaps a housing bubble for an industrial bubble.
"China’s investments and advances in manufacturing are producing a wave of exports that threatens to cause factory closings and layoffs not just in the United States but also around the globe.
“The tsunami is coming for everyone,” said Katherine Tai, who was the United States Trade Representative for former President Joseph R. Biden Jr.
China’s factory output is bigger than the combined manufacturing of the United States, Germany, Japan, South Korea and Britain."
https://www.nytimes.com/2025/04/07/business/china-manufacturing-exports…
The harm to 'living standards' will indeed get deeper. But that would still happen ex tariffs and ex Trump.
A shout out to WP this morning - he's read the room; this is indeed a genocide (Gaza/West Bank are no different to the Warsaw Ghetto) and needs to be called-out. Well said that man.
My daughter is first year law at Auckland Uni and said the same thing over toast and coffee this morning … young people cannot understand the lack of outrage ?
I have to agree. It seems the Israeli identification criteria of Hamas is "Are they Palestinian?"
Hamas remains a problem, but the Israeli blindness to the harm they are causing is extremely concerning. And their attitude is extending to areas outside of Gaza, like the West Bank. Israel's government seem oblivious to the loss of credibility and support from the rest of the world due to their actions.
But the problem is much bigger and will not go away when this current round settles. This all started with the Balfour Declaration leading to the eventual establishment of Israel, while ignoring the residents of the land. The world powers of the time (UK, France, US) need to recognise the harm they have done, devise an agreeable solution that is both acceptable and enforceable.
World population when the Balfour Declaration was signed?
sub-2 billion, say 1.8. So a 4x increase since then - the ME being no exception.
We are going to see ongoing genocides as too many fight over ever-less.
The Balfour Declaration was a last gasp of European imperialism: the determination to keep secure Western control of oil and the Suez Canal.
Not much oil in Israel
Objection: Irrelevant.
Strategic games - indeed it has been called the Great Game - involve more than one piece.
Read: Adventure in Oil - Longhurst's 1950s-naive history of BP.
Traceable all the way to Halliburton, Bush and Cheney - you don't do anything without energy, even is economists don't factor it in.
No Arabic nation has put a boot on the ground to reinforce Hamas. Hezbollah were involved and that preoccupation undermined Assad’s regime in Syria which in turn strengthened Israel regionally. Little wonder then Netanyahu likely thinks of himself as omnipotent and Israel likewise and thus the extremism plus violence is compounding. Economically though, all the combatants include non regulars who are not employed as normal, plus the $ millions on millions of munitions and armaments being expended, need to be funded and replaced. Israel’s defence budget must be proportionally the highest on the planet per head of population. Going to need a lot of dough from somewhere, the economy can’t generate it all.
Israeli war expenditure paid for by the United States, as it has been for decades
Exactly, and therein, hiding in plain sight, lies the solution. Would just take a turn of the tap, likely even just the threat of that.
When you consider that Israel's population is only around 10M, twice that of NZ, it's a wonder they can deploy such a large military. Stopping the US from funding Israel will be an impossible task as the re-establishment of Israel is one of the founding myths of post war USA, also foundational to the Boomer Truth Regime. It fulfills biblical prophecy. What will happen when the Boomers fade away and the US becomes more secular is uncertain. Christianity is still very strong in the US.
No shortage of contradictions in the States is there. Christianity is undeniably still a force in society at large but so too is anti semitism. Where we lived there were golf, tennis clubs etc catering virtually exclusively to the respective faiths. Quite a few American authors, Mottley, Shaw, Wouk have delved deeply into all of this. But can only agree that to the masses, with neither great knowledge nor thought, Israel is something of a sacred cow.
I don't disagree with your comment on Israel, but linking "Boomers" to it is just weird. Why are you trying to make it an ageist issue?
In the US a high percentage of the Boomers are religious compared to later generations. They were also brought up on post WW2 myths and ideas. They grew up watching films like Exodus starring Paul Newman. They control a lot of the culture, wealth and power. Not weird at all.
Agreed.
And the bought propaganda includes the 'word' 'antisemitism'.
It has become an unchallengeable default - but how many other races can you say that of?
i suggest that is an unspoken fact that the world still struggles with. Post WW2 no one wanted the Jewish refugees from Germany. I think to a degree that remains.
There is a large Jewish population in Russia. Are they remnants of the flight from Germany, or do they predate WW2?
The Russians have their own history. It’s called pogroms. About 2 million Jews fled during the end of the 19th and beginning of the 20th centuries mostly to Nth America. The thing is, and centuries of it proves it, if the will is to discriminate then first there is a need to differentiate and for that function, religion provides a pretty handy vehicle. Protestant versus Catholic is hardly without similar extremes.
FG. Yes, religion a powerful but not exclusive motivation, with envy of jewish material success and business rivalry significant secular drivers. While the word pogrom is Russian the same phenomenon occurred in many European countries over the centuries. Poland for example has a chequered history, including significant hostility towards returning jewish survivors of the nazi holocaust. One of the largest expulsions of jews occurred after 1948 when Arab countries threw out an estimated 1m Jews. Israel's operation magic carpet to extract jews from Yemen during that period is a fascinating tale.
All was relatively harmonious in the region between Muslim, Jew and Christian until the 11th century when the West decided to poke its nose in with the beginning of the crusades. Then not much more than 100 years ago the West decided that in the interests of oil regions should be bordered off thereby cancelling out centuries of traditional nomadic culture and associated conduct of lifestyles and behaviour of a quite diverse set of societies for want of a better word. Well amongst all of that the Jewish people followed the orders of their Jehovah and went forth and multiplied and a good percentage extremely successfully so too in terms of self enrichment. Thus the enveloping stigma internationally, resultant persecution, centuries of it and still ongoing.
ps. Good to hear from you again.
Thanks FG. Weather forcing me indoors stirring up the combative juices ! Sykes Picot are favoured whipping boys on this site. Devious, secretive and energy grabbing imperialists they were, their allied masters similarly treacherous towards the Arabs they had deceptively courted. But their behaviour was consistent with the geo political tactics of the time. It would be abhorrent to us now but revisionists sidestep the reality that at the time the area was viewed as conquered Ottoman territory and as such the victors were considered entitled to carve it up as they saw fit.
All was relatively harmonious in the region between Muslim, Jew and Christian until the 11th century when the West decided to poke its nose in with the beginning of the crusades.
The Crusades were preceded by centuries of Muslim conquest. Doesn't sound very harmonious to me! Do you mean harmonious in the lands they subjugated?
At their height, the territory that was conquered by the Arab Muslims stretched from Iberia (at the Pyrenees) in the west to India (at Sind) in the east; Muslim control spanned Sicily, most of the Middle East and North Africa, and the Caucasus and Central Asia.
In truth I am here relying on my memory. A past read likely about Byzantium history. It’s too cold to go downstairs to look for it, and besides whatever it was, it may no longer be present thanks to most of my old library being lost to a burst water pipe in the EQs. Anyway out of interest I googled based on my recollection “ did Arabs, Jews and Christians have a good relationship in Jerusalem before the crusades?” Some form of AI came up more or less to the affirmative. Be that as it may, apolgies for the lack of a substantive source for my earlier post.
Turning off the tap would just generate a different type of war, and likely a nuclear escalation. I'd suggest that tap is one of the tools that limits that escalation. If any of the Arab powers thought Israel weak and vulnerable and decided to try to exploit it, Israel's self belief that they are "God's Chosen" and therefore have a divine mandate will not hesitate to use all they have to defend it. the problem of mixing religion and politics.
Said a turn of the tap, not a turning off of the tap. Simplistic here admittedly, but say just enough to reconsider the offensive arm and think about reverting to and reprioritising, the defensive arm.
Israel cannot survive ex the USA surviving.
And the latter is moot. More by the day.
FG. No boots for sure but plenty of cash, billions of which were syphoned off by Hamas leaders to create personal fortunes. The disastrous outcome for Jordan and Egypt of accomodating Palestinian militancy serves as a salutary warning to other Arab states against physical involvement. Iran is currently learning the same lesson. Meanwhile Israel must be acutely aware of its rapidly increasing vulnerability as Putin is humiliated by the rapid development of asymmetric warfare capability.
Good news PDK
World fertility rates in 'unprecedented decline', UN says
https://www.bbc.com/news/articles/clynq459wxgo
The UNs hypocritical pearl clutching knows no bounds, they both sniff about people not having kids they can't support & about people unable to support the kids they have.
Indeed, the population hockey stick is loading up for a reverse slapshot
Why the vernacular?
We are already overshot - the 'too many' are already here.
That isn't good news, and the UN aren't unified (some 'get' overshoot', others are blind to reality).
We welcome your comments below. If you are not already registered, please register to comment.
Remember we welcome robust, respectful and insightful debate. We don't welcome abusive or defamatory comments and will de-register those repeatedly making such comments. Our current comment policy is here.