Breakfast briefing: The greenback weakens on policy chaos

Economy / news

US businesses, CBO, investors and Fed push back against Trump; India's inflation falls; Aussie inflation expectations jump; UST 10yr at 4.36%; gold and oil rises; NZ$1 = 60.6 USc; TWI-5 = 68.3

13th Jun 25, 7:25am by David Chaston

Here's our summary of key economic events overnight that affect New Zealand, with news incoherent trade policies have driven the US dollar to its lowest level since 2022 as markets don't see any easing of geopolitical risks driven out of Washington. The US said it will set unilateral tariff rates on most trading partners at the end of the month.

Meanwhile, US initial jobless claims came in at 245,000 last week, little-changed from the prior week. This embeds the recent higher level and extends the 2025 rising trend. We haven't seen two consecutive high-claims weeks since mid 2023. There are now 1.8 mln people on these benefits, +7.1 more than year-ago levels.

The immigration crackdown on undocumented farm and hospitality workers is having ripple impacts on corporate America, with some major brands reporting stuttering sales.

And the Congressional Budget Office has set out how the Trump Budget Bill will hurt middle and poor Americans, and enrich wealthy ones. It is a report sure to annoy the President.

And he is already annoyed by the Fed not cutting interest rates.

Separately, as analysts expected, US producer prices came in +2.6% higher in May than a year ago.

The UST 30yr bond auction today saw a -7.5% fall in investor demand, mirroring the -10% drop in support we noted yesterday in the UST 10yr auction. The median yield came in at 4.80%, up from the 4.75% at the prior equivalent event a month ago.

Elsewhere, India’s CPI inflation fell to 2.8% in May from 3.2% in April and dipping below analyst expectations of 3%. This is their lowest reading since February 2019, so a six year low. It is also getting closer to the bottom of their central bank's inflation target range of 2%-6%. Food price rises fell to the lowest level since October 2021, and drove the easing.

In Australia, the Melbourne Institute survey for June shows inflation expectations there rising to 5.0%, the highest level since July 2023 and up sharply from the 4.1% in May.

International container freight rates were unchanged last week from the prior week to now be -26% lower than year-ago levels. A year ago rates were in a strong rising trend which lasted until July, then they eased steadily until May 2025. Bulk freight rates rose +6.8% last week from the week before to their highest level since early November. They are now -5.2% lower than year ago levels.

The UST 10yr yield is now at 4.36%, and down -6 bps from this time yesterday. The key 2-10 yield curve is now at +44 bps. Their 1-5 curve is now inverted by -10 bps. And their 3 mth-10yr curve still positive at +16 bps. The Australian 10 year bond yield starts today at 4.18% and down -7 bps from yesterday at this time. The China 10 year bond rate is holding at 1.68%. The NZ Government 10 year bond rate starts today at 4.58% and down -5 bps.

Wall Street is again marking time in its Thursday session of the S&P500, now up +0.3%. European markets mixed in overnight trade between London's +0.2% gain and Frankfurt's -0.7% drop. Tokyo ended yesterday down -0.6%, Hong Kong fell -1.4% and Shanghai ended unchanged. Singapore ended up +0.1%. The ASX200 was down a minor -0.3% in its Thursday trade. The NZX50 ended up +0.3%.

The price of gold will start today at US$3,383/oz, and up +US$60 from yesterday.

American oil prices are up another +US$1.50 at just over US$68.50/bbl while the international Brent price is now just over US$69.50/bbl.

The Kiwi dollar is now just over 60.6 USc, up +20 bps from yesterday. Against the Aussie we are also up +20 bps at 92.9 AUc. Against the euro we are down -20 bps at 52.4 euro cents. That all means our TWI-5 starts today at under 68.3 and essentially unchanged from yesterday.

The bitcoin price starts today at US$108,419 and down -0.6% from yesterday. Volatility over the past 24 hours has been modest at just on +/-1.1%.

Daily exchange rates

Select chart tabs

Source: RBNZ

Source: CoinDesk

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

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.

20 Comments

by Colin Maxwell | 13th Jun 25, 10:00am 1749765614

This morning I listened to a podcast that outlines NZ's structural economic crisis - it was horrifying in every metric they looked at.

https://www.youtube.com/watch?v=3-Lo36zBDzE

There was no mention of course of the fact that the Department of 'Health' has spent the last 5 years poisoning the majority of the population. This will cripple our collective productivity even further, and at the same time massively hike the cost of health and social services.

One of the most sobering stats was the fact that our cost of housing, compared to annual income, is almost 300% higher than our peer nations.

None of this will change one jot until we make the fundamental reform into banking and money creation conducted as a public utility. There is no other way out of this debt trap that we have dug for ourselves.

NZ discovered the dream model back in the 1930s, but tragically 'our' politicians promptly sold it back out to The City of London private banking cartel. Had we retained that model, we could have become the wealthiest nation on the planet.

Instead, we chose to impoverish our working class and to perpetually line the pockets of a select bunch of global plutocrats with 100s of billions of dollars of unearned rent. We became the authors of an insidious slow-burn self-inflicted socio-economic wreck.

There is no need to reinvent the wheel - this is a case of "back to the future" - with a RETURN to major public utility reform, along with sound money principles, we could turn this country around within five years.

I would suggest that anyone who would prefer not to go down with the ship, join Iain Parker's NZ Monetary Policy Centric Group, and swat up on precisely how this 112-year wealth heist has placed our country in an odious perpetual debt trap.

https://www.facebook.com/groups/333134689798987/?multi_permalinks=60270…

We also need to reflect on the fact that none of the incumbent political parties will address this debt trap and that we have an election looming next year.

Unless we generate some serious political representation this time around, the next opportunity will be 2029 - exactly one hundred years since the beginning of the Great Depression.

Otherwise, it will take a rerun of that global; tragedy, before we all WTF up and demand fundamental reform. The problem is that the underlying fundamentals and debt levels are exponentially worse today than they were in the roaring 1920s.

Regards to all

Col

by Keynes | 13th Jun 25, 10:40am 1749768057

Good comment. Like the detail. What do you mean by the dream model? Are you talking about a nationalized banking system?

When considering government debt - bonds issued - and government operational deficits - spending minus taxes it's well worth looking into how a fiat currency monetary system works at the mechanical level.

MMT economists explain this with different levels of success. Basically apply doubly entry accounting to macro economics and then:

government deficit = private sector income and surplus.

government debt (outstanding bonds) = private sector savings (term deposits)

by Colin Maxwell | 13th Jun 25, 11:13am 1749770021

"What do you mean by the dream model?"

In essence, Keynes, I mean banking conducted as a public utility, especially at central banking level.

IMO the most stunning example in history, was Ausy's CBA which became their defacto central bank. They too eventually sold out to the City of London private banking cartel.

It is outlined in Section 7 in the link below.

...quoted...

"In essence, Miller understood how the commercial banks thieved from the nation at large and he set about creating this new model that could very rapidly revive a struggling economy and create long-term wealth for the entire Australian society. The first branch opened in Melbourne in July 1912 and Miller was the only employee.

Somehow he had persuaded the Treasury to advance him £10,000 as seeding money – the first and last time this version of the CBA was lent any money. Of course, this money didn’t even exist – it was simply created as a ledger entry.

Miller subsequently promised that the CBA would at all times be the people’s bank. It slowly dawned on the private bankers, who were so intent on having to guard against the socialisation of their own banks, that they completely underestimated the power of an orthodox banker who simply mobilised the resources of the entire country to enable the CBA to quickly grow into one of the greatest banking models the world had ever seen."

https://globalsouth.co/2024/02/29/banking-2-0/

Cheers

Col

by Keynes | 13th Jun 25, 10:39am 1749767987

Another key point from MMT and US Bond Trader Warren Mosler is that taxes do not fund government spending and government debt is private sector term deposits - not loans.

Governments spend first by creating reserves at the Reserve Bank and paying for labor and resources in the private sector directly - after that money has been spent and is circulating in the economy, taxes are collected to remove it and help to control inflation.

Taxes do not fund government spending - taxes destroy money by removing it from circulation to counter the inflationary effects of that money creation. Government Bonds also remove money from circulation by converting money to savings.

by murray86 | 13th Jun 25, 10:58am 1749769100

Points a few of us have been trying to make for a while now.

Problem is the politicians don't get it.

by powerdownkiwi | 13th Jun 25, 11:17am 1749770246

Not the right way to look at it.

Society consumes energy and resources - most of both from finite sources. We APPORTION our access to those flows (from those stocks) via allocation of, and competition for, proxy. Which we call money.

Because our System is based on exponential growth of extraction (from those stocks) we constructed a proxy system which self-allowed growth.

That worked until it began to didn't.

Whether a bank shareholder, a government department or a private individual 'spends' the proxy is irrelevant; it is 'cashed in' for resources and energy, even if there are intermediate moves first. Of course more can be printed (doesn't matter who dies that) but it is the real stocks and maximum flows, which are the curtailers. Don't blame this or that player - the game is the problem.

by powerdownkiwi | 13th Jun 25, 11:09am 1749769748

'we could turn this country around within five years.'

Too late for that - but you steadfastly deny the Limits to Growth.

Which are the background to all that is currently happening - income/housing ratios, wealth disparity and all.

by Colin Maxwell | 13th Jun 25, 12:00pm 1749772849

Yes, yes PDK - your "Limits to Growth" comment was very predictable.

Somehow you always manage to conflate all growth as undesirable.

Advances in technology and investment in sustainable socio-economic projects can be extremely beneficial. They can add huge efficiencies and as such render the exact opposite effect on resource depletion.

As long as the global private banking cartel exists, which is the head of the human food chain, most growth will be in completely the wrong direction, with trillions of dollars being spent annually on discovering ever more resourceful ways of killing one another.

The total annual budget of the US military is now over $1.5 trillion - equal to the next 70 countries combined. This traces back to the incorporation of its 100% privately owned central bank in 1912/13, the Fed.

It is no coincidence whatsoever that WW1 began the following year. That war never stopped - the current hotspots in Ukraine, Palestine, Iran, Pakistan/India, and Taiwan are simply the latest rendition of this orchestrated perpetual bankers war.

All of these tinderboxes are orchestrated and underwritten by the private banking industry. They are holed up in The City of London, Wall Street, the lobby system in War$ington, and the associated European proxies.

The players and their playbook remain the same, they are just two or three generations on in their signature trade - human butchery.

Regards

Col

by murray86 | 13th Jun 25, 1:35pm 1749778512

What PDK tends to lose sight of Colin is a reallocation of resources may appear as "growth", but may instead be just the revitalisation of essential industry. The core of PDK's issue is too many people on the planet. The bankers probably don't want that to be acknowledged as that would kick their wealth growth models into touch pretty quick.

by mfd | 13th Jun 25, 11:56am 1749772560

Fancy still thinking that the Ministry of Health (I assume that's what you mean by Department of Health?) is responsible for the acute and long term sickness that COVID-19 brought to us.

Sometimes the simplest explanation is the correct one.

I agree the NZ response will lead to higher health costs though - if we'd have followed in the footsteps of nations like the UK and USA we'd be saving a bunch of money right now due to fewer pensioners being alive.

by interesting1234 | 13th Jun 25, 12:36pm 1749774979

Unsure about that last bit, but the flow on effect of ceasing all elective surgeries, is still plaguing us today with public waitlists, and with many surgeons having stopped operating under public or lest the country, this adds to the pressure. Mass retirement of older doctors in a short space of time (age, burnout after 2020 onwards) and failure to attract more to primary care in remote locations is also compounding the issue. For example there are not many GP's based on the west coast, so they get many locums coming from the like of Christchurch and Nelson for day clinics to try and manage the demand.

by mfd | 13th Jun 25, 12:58pm 1749776297

Yeah that's fair, not sure which effect would dominate.

There's plenty to criticise about the response and Healthcare management in general, but the OP's implied suggestion that the vaccine is the baddie here and not the disease that caused so many deaths, long lasting side effects and healthcare disruption is bizarre.

by Colin Maxwell | 13th Jun 25, 10:20pm 1749810053

We did "...follow in the footsteps of nations like the UK and USA... " mfd, which is precisely why so many of our pensioners and population were killed off with these highly inflammatory experimental gene-editing mRNA toxins.

https://www.facebook.com/reel/1296978668725512

At the same time, we conducted a multigenerational mass-poisoning of our nation's ovum and mitochondria stock, with an experimental toxin that has provided zero benefits and is now proven to have significantly lowered the life expectancy of recipients.

https://www.garymoller.com/post/we-wouldn-t-dream-of-inflicting-this-on…

The tragedy is that with some basic nutrient supplementation, and added safeguards like Ivermectin, we could have emerged from the plandemic, virtually unscathed, in terms of both health and the effects on the economy.

The so-called Covid-19 pathogen proved to be no more challenging to our immune systems than the common cold, as long as we used these basic and very affordable products - they would have bolstered our immune systems.

The highly inflammatory mRNA toxins have done exactly the opposite - they have severely compromised our immune systems. Luc Montagnier and Geert Vanden Bossche both warned us about this early in 2020, before the disastrous rollout even began.

They predicted this carnage and the fact that the repercussions would be multigenerational.

A few minutes spent using a half-decent search engine like DDG could have located these warnings from two of the most eminent scientists on the planet and we could have avoided 99% of this carnage. They predicted this 100% accurately. This information was readily available and yet our authorities chose to ignore it and to blunder into a mass-poisoning event.

https://www.garymoller.com/post/we-wouldn-t-dream-of-inflicting-this-on…

by mfd | 13th Jun 25, 1:24pm 1749777884

Your position is not consistent with reality.

https://ourworldindata.org/grapher/excess-mortality-p-scores-average-ba…

One of these three is not like the others. Please explain the enormous spikes in mortality seen in the US and UK before the vaccine existed.

by profile | 13th Jun 25, 1:49pm 1749779359

Dry tinder, locking people in rest homes and locking people out of hospitals. It was never more lethal than a bad flu season and this was known very early in the piece.

UK deaths in 2020: how do they compare with previous years?

https://www.bmj.com/content/bmj/373/bmj.n896/F4.large.jpg?width=800&hei…

"Across 32 different locations, the median infection fatality rate was 0.27% (corrected 0.24%)." [July, 2020]

https://www.medrxiv.org/content/10.1101/2020.05.13.20101253v3

https://www.hsj.co.uk/acute-care/nhs-hospitals-have-four-times-more-emp…

by mfd | 13th Jun 25, 3:51pm 1749786678

The question on proportionality of the response is quite different, and it's conceivable that accepting a wave of deaths and taking minor precautions would end up with better results than the relatively extreme response we actually took. It's the idea that Covid didn't cause deaths and the vaccine is the real devil that seems completely inconsistent with the timelines.

It's propagating a falsehood that endangers us all, and our children into the future as vaccine rates fall as a result. Diseases that were virtually eliminated are already coming back to haunt us.

by Colin Maxwell | 13th Jun 25, 3:11pm 1749784318

mfd... you said... "Your position is not consistent with reality."

https://pmc.ncbi.nlm.nih.gov/articles/PMC11868741/

... quoted...

"6. Conclusions... SMR = (Standardised Mortality Ratio) / ONS = (Office for National Statistics)

The English all-cause and non-COVID-19 mortality data by vaccination status, released by the UK ONS for the 26 months from April 2021 to May 2023, were analyzed by age group and vaccination status. Our findings show that all-cause deaths SMRs were increasing in any of the age groups considered.

All-cause death SMRs, initially well below 1 for every age group, due to their increase, since a certain date exceeded the reference value of the unvaccinated people for the age groups 18-39, 80-89 and 90+. For the other age groups, it is possible to predict the date in which the SMR would reach the value 1, intersecting the unvaccinated level, provided that this trend is consistently maintained.

Non-COVID-19 SMR values show a very similar trend: initially they are much lower than 1, but it is not plausible such a vaccine protection from non-COVID-19 deaths. Therefore, this suggests significant biases in the ONS dataset, leading to an underestimation of the risks for the vaccinated. Regardless of the interpretative hypotheses, the fact that all-cause mortality SMRs in vaccinated increase over time compared to those of unvaccinated requires further, urgent investigation.

In any case, we hope that the ONS will resume the publication of the mortality data series by vaccination status, interrupted in May 2023, and that its example will be followed by other countries.

Moreover, the precautionary principle should suggest much greater caution in promoting extensive vaccination campaigns, pending the acquisition of valid explanations of the alarming phenomenon observed."

... end quote...

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

Ask yourself, mfd - why were there significant biases in the ONS data set, and why did they stop the publication of the data?

Because it was so horrendous - that's why.

The fact that the ONS was shown manipulating the true data and then hiding it, was all part of the giant coverup - a national disgrace. This was not only treason but the facilitation of a mass culling event.

by mfd | 13th Jun 25, 4:14pm 1749788048

Interesting paper. I like the implication from the graphs in the main article that vaccine deaths are growing year-on-year, while the supplementary data which normalises to the unvaccinated population shows quite a different picture. Notably, for young groups where Covid is less of a risk, those who had several injections seem to be at lower risk than the unvaccinated. The 2+ dose lines only creep above 1 for 60+. The older age groups are interesting, but then you do run into more serious data issues where the vaccinated population is probably quite different to the unvaccinated population.

I would suggest one explanation for the initial SMR being less than 1 at the start date in April 2021 is mortality displacement. Covid ripped through the vulnerable population in 2020 and brought forward a lot of deaths which would otherwise have occurred in 2021 or 22. This spike is easily visible in the data. After such a dramatic event, all-cause mortality can be expected to fall for a period of time.

https://ourworldindata.org/grapher/excess-mortality-p-scores-average-ba…

by rastus | 13th Jun 25, 12:03pm 1749772998

Closer to home Colin you might be aware of the way the big boys scuttled the AUS Post becoming a bank.

The corrupt politicians doing the big bank boys work and made sure it couldn't happen - framing the CEO with a watch scandal beat up.

Watch explosive new documentary! | Australian Citizens Party

by kiwikidsnz | 13th Jun 25, 11:40am 1749771635

JonnyFoe in 3, 2, 1...

PS: money doesn't grow on trees & there is no free lunch.