Here's our summary of key economic events over the that affect New Zealand, with news the hot-war tensions in the Middle East from Israel's attack on Iran has generated substantial financial market reaction. And a 'hot' war between Israel and Iran could go on for a very long time. The first three days may only be the start
The gold price has jumped. The oil price has soared. Equity prices are falling, although the futures market suggests Wall Street may open tomorrow unchanged. Bond yields are up after an earlier risk-aversion fall. The US dollar has been falling but is now in a wavering phase.
Coming up this shortened week locally are a first look at May inflation with the selected price indexes, and on Thursday, Q1-2025 GDP. Expect a +0.7% expansion from Q4-2024. And there will be a full dairy auction on Wednesday.
Geopolitical tensions in the Middle East will remain in focus next week following Israel’s strike on Iran’s nuclear facilities, heightening fears of a broader regional conflict. Markets will also be closely watching any progress on trade negotiations between the US and its key partners.
Meanwhile, attention shifts to the G7 Summit in Canada, where leaders of the world’s largest economies will meet to discuss major global challenges. But one not on the formal agenda is the US's trade war with these allies. Of course it will be a hot topic in non-official discussions. Of special interest will be the meeting between Australia's Albanese and Trump.
It’s also a busy week for monetary policy decisions. The US Federal Reserve (4.50%), People’s Bank of China (LPR 3.0%), Bank of Japan (0.5%), and Bank of England (4.25%) are all expected to keep interest rates unchanged. Decisions are also due from central banks in Switzerland, Sweden, Norway, Turkey, Brazil, Indonesia, the Philippines, and Taiwan. On the data front, we get China’s industrial production and retail sales, and Japan’s trade data.
Australia's May labour market data will be updated on Thursday. So a lot to absorb this week irrespective of the uncertainties swirling over the hot wars.
Bur first in China, their banks extended ¥620 bln in new yuan loans in May, up from ¥280 bln in April, but that was the lowest level for that month since 2005. Despite the monthly rebound, the May new loan figure was way less than the expected ¥850 bln, and even lower than the ¥950 bln in May 2024. Low interest rates are not encouraging lending. The average rate in May was little-changed at 1.55%.
Japanese industrial production also fell in April from March, down -1.1%, but remained +0.5% higher than a year ago.
Malaysian retail sales were up +4.7% in April from a year ago, but as good as that sounds it is the weakest year-on-year rise since May 2023. And these gains are before inflation, which is running in Malaysia at only +1.4%.
In the US was news American consumer sentiment improved in early June from May in the widely-followed University of Michigan survey which was taken June 2-7, 2025. Although this is the first improvement in the past six months, it is off a record low and is still -11% lower than year-ago levels. This survey pre-dates the current crises. And it predates the widespread (2000+) series of well-attended protest rallies in the US (attended by up to 5 mln people), even in the face of an assassination of one Democrat lawmaker and the attempted assassination of another. Given the Proud Boys Telegram chatter, this isn't so surprising.
A new independent poll, in the same time period, shows that the job approval assessment for the US president has fallen below 40% for the first time, down to just 38% and the lowest of this new term.
On the US West Coast, container traffic at the large Los Angeles shipping terminals fell in May. Import traffic was down -19% from April, down -9% from a year ago. Export loadings were down -5% from a year ago. (The Long Beach May data isn't available yet but it is likely to be similar.)
North of the border, and perhaps somewhat surprisingly, Canadian vehicle purchases rose in April to 195,700, the highest level since June 2019. Perhaps this is boosted by buyers wanting to avoid tariff-related price hikes. The jump was country-wide and was +11% above the year-ago level.
Meanwhile Canadian manufacturing sales fell -2.8% in April, with the tariff impacts starting to be felt. It was down -2.7% from a year ago. Recession risks are rising in Canada.
EU industrial production sagged in April from March after a strong March gain, but managed to stay marginally higher than year-ago levels. The EU publishes this data on a volume basis, so this is a 'real' gain.
Finally we should probably note that the price of lithium carbonate has now crashed -90% from its giddy height in 2022. It is now back to late 2020 levels before the frenzy.
The UST 10yr yield is now at 4.41%, and unchanged from Saturday. The key 2-10 yield curve is now at +46 bps. Their 1-5 curve is now inverted by -7 bps. And their 3 mth-10yr curve still positive at +22 bps. The Australian 10 year bond yield starts today at 4.16% and down -2 bps from Saturday. The China 10 year bond rate is still holding at 1.68%. The NZ Government 10 year bond rate starts today at 4.56% and also unchanged from Saturday.
The price of gold will start today at US$3,430/oz, and down -US$3 from Saturday but up +US$115 from a week ago. In contrast the silver price at US$36.17/oz is little-changed from a week ago.
American oil prices are holding higher, although down -50 USc from Saturday at just on US$73/bbl while the international Brent price is now just under US$74.50/bbl. These are large jumps from a week ago on the war risks. And the full assessment of supply risks are not yet understood, so this price could be volatile this week.
The Kiwi dollar is now just under 60.2 USc, down -10 bps from Saturday. Against the Aussie we are unchanged at 92.7 AUc. Against the euro we are down -10 bps at 52.1 euro cents. That all means our TWI-5 starts today at over 67.9 and down -20 bps from Saturday (shifted a bit by a fall against the British pound).
The bitcoin price starts today at US$105,794 and up +0.6% from Saturday. Volatility over the past 24 hours has been low at just on +/-0.8%.
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17 Comments
Not just genocide - but undeclared belligerent war.
Time to cut all ties with Israel - and by association, the US.
Interesting times...
Sad to see Starmer oxymoron-ing; sending jets while urging de-escalation. But we need to remember that British oil interests and the Balfour Declaration are the reason the Middle East ended up where it is. Let's re-phrase that: The desire for more energy led to the Brits - then others of the First World - accessing the oil under 'other people'. They bought-off local leaders, played for a while, got ousted, organised two coups (the second succeeded) which bought them 25 years, before being re-ousted. The 'repatriation' (actually, deportation to 'away') of European Jews added overpopulation to the local malaise (as with everywhere, it was coming anyway).
Hard to see a way out from here - Starmer made some good comments last week, but when push has come to shove, we haven't moved far from Churchill/Fisher/Anglo-Persian - Israel is an 'ally'. China has been taking Iranian oil, and advantage of the US-led embargo. But need for energy is real, as is the process of depletion; how does China react to this? Can't let it go...
Not that simple.
Iran has been directing and equipping third parties to attack Israel for years. The theocratic government in Iran is a big problem in the ME.
Yes Israel is a big problem, but so is Iran. Not so sure about the stability of some of the others there as well.....
See above.
Pre Anglo-Persian, this was an area with no real borders, much nomadic drift/circulation, local leaderships, and a broad religion denying usury (the only way to fit a landscape that had been depleted longer by human dissipation (Sumer and the Fertile Crescent - now desert) than anywhere. There was inevitably going to be a culture clash - essentially it was colonialism and that is always dominance/repression. If we - the West - hadn't craved the oil under them, this impasse wouldn't have evolved.
T.E.Lawrence saw this coming, not sure if Gertrude Bell did; Allenby did as well as he could - but this is a direct result of all those early machinations. To keep perspective, just dissing 'immediate dratted others' is a tad intellectually sub-par. Good for self-justification, but likely adrift of truth.
Whilst undoubtedly true, we are living in the now, not the 'was'.
I don't see a peaceful way out of the 'now' mess - and as you well know the fighting is all about the last of the energy.
Assumedly, rightly or wrongly, Israel takes the often and overt declarations by a large number of its surrounding Arabic nations, that Israel is to be destroyed and all Jews exterminated rather seriously. That in itself provides reason to fight for one’s survival with whatever you have got. How it got to this point and who may or not be to blame is irrelevant. It is now what it is.
Never irrelevant - unless your cohort wishes to forget.
:)
Colonialism is a sod, eh? We are right, they are wrong, our religion is the one true, theirs is a crock, Ali Khamenei is a dogmatic tyrant, Netanyahu is a civilised person...
Never pays to forget...
:
There is so much of it historically that it can be neither unforgettable nor irrelevant. But history never fails to repeat. Whether it is simply land such as Tito’s attempt on Trieste in the dying stages of WW2 or utter subjugation and slavery as per the Romans or Genghis Khan, the motivation and ambitions continue scarcely abated to seek directions. Can only agree though, if the Allies had simply booted out the Ottomans and let the region just lie as it fell it would be a different world. But then again the region was suddenly a foremost player in global interest, the Oil Age was up and running.
And entirely natural/inevitable as per Richard Dawkins' gene-centered view of evolution, The Selfish Gene and The Extended Phenotype
It's a serious mistake to live anywhere near Israel. If they end up in a difficult situation, Rome, Paris and London would be targets to their nukes.
They are mad enough to do it too. European governments are well aware of this.
Balfour was about Palestine/Israel, they don't have oil
Never said they did; though that was quite clear, re 'European Jews'. But the fighting at that end of the Med during WW1 and in the NA desert during WW2, was ALL about oil access. The strategic foothold(s) is/are part of the Great Game. Some backgrounding:
https://link.springer.com/article/10.1007/s44216-024-00043-3
https://www.tandfonline.com/doi/full/10.1080/19448953.2021.1888251#d1e1…
https://link.springer.com/rwe/10.1007/978-981-99-8001-7_17-1
In a Systems sense, top-down, the US was the dominant (used most energy per head) hegemony but is failing. Israel cannot survive without the marriage. China cannot survive (politically at least) with less energy. Russia is playing chess, being more energy-secure than most. The Middle East is grossly overpopulated ex oil - for instance Egypt traditionally exported but has been an importer since 2004. This process is inevitable for all oil-stocked nations, indeed the planet.
https://www.indexmundi.com/energy/?country=eg&product=oil&graph=imports
The chances of us avoiding war(s) over 'what's left' of the planet - particularly its energy resources - have been 100% since perhaps 1980, and arguably earlier. The trigger-points were always more likely to be the already-troubled ones.
Mostly but not entirely WW2. The Italians were in Ethiopia and initially had some success through to Nth East Africa. The objective was the Suez Canal and choking off of that as a supply line to the UK. The Germans got involved in Nth Africa for the same purpose. Rather a calamitous strategic blunder when instead the Axis could have forced a landing on Spain, taken Gibraltar and sealed off the straits.
British oil interests and the Balfour Declaration are the reason the Middle East ended up where it is. Let's re-phrase that: The desire for more energy led to the Brits - then others of the First World - accessing the oil
A need to shoot the messenger usually denotes a lazy need to shoot the message.
https://warhistory.org/@msw/article/balfour-and-oil-ii
go well
No wonder they hate Musk.
"A federal contracting officer and three businessmen pleaded guilty Thursday to participating in a $550 million bribery scheme involving the embattled US Agency for International Development (USAID).
...The USAID official received “cash, laptops, thousands of dollars in tickets to a suite at an NBA game, a country club wedding, downpayments on two residential mortgages, cellular phones, and jobs for relatives,” from the three businessmen as part of the scheme."
https://nypost.com/2025/06/13/us-news/usaid-official-pleads-guilty-to-t…
Took them long enough.
"Another reality check for Europe has been the realization that offshore wind – once heralded as a potential renewables game changer – simply has lousy economics today."
https://www.reuters.com/business/energy/path-cheap-power-will-be-very-e…
Hard to pick out the truth about things amongst all the noise. What led to this.
"........Finally we should probably note that the price of lithium carbonate has now crashed -90% from its giddy height in 2022. It is now back to late 2020 levels before the frenzy......"
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