Here's our summary of key economic events overnight that affect New Zealand, with news today its all about the US and the sharp weakening of the greenback. It is now at its lowest level since early 2022. And a key part of the reason is worries about the Trump attack on the Fed's independence.
Meanwhile, US initial jobless claims have stayed elevated although they fell from the prior week to +227,000 which is marginally above the same week a year ago. There are now 1.87 mln people on these benefits, +124,000 more than the 1.75 mln a year ago.
US Q1-2025 PCE inflation was revised higher overnight to 3.7% in updated data - and that is up from 2.4% on Q4-2025. Early impacts of tariff-taxes are starting to show through here. Real consumer spending was revised down to just +0.5% growth from the initial estimate of +1.2% and well below the Q4-2024 rise of +4.0%. These revisions don't paint a very good picture about how American consumers fared in early 2025. Final GDP 'growth' fell -0.5% in the quarter, the first decline in three years.
But there was a good rise in durable goods orders in May, up +17.5% from the same month a year ago. But non-defense capital goods orders rose only +2.4% suggesting board rooms remain hesitant, and see the tariff-related order rush as nothing more than temporary.
Certainly the Chicago Fed's National Activity Index doesn't point to any upturn. Nor does the latest regional Fed survey, this one from the Kansas City Fed.
The May US trade balance wasn't great either, coming in with a worse deficit than expected at -US$93.7 bln with exports dipping and imports rising from April. From a year ago the result was little-different.
Globally, policy imbalances cause distortions as you would expect, and in the short term at least, they can juice up trade activity despite their intentions.
Elsewhere in Singapore, industrial production slipped in May to be 'only' +3.9% higher than year-ago levels. In April the gain was +5.6% so a clear easing, even if it wasn't as much as was anticipated.
More generally, we will need to be careful talking about commodity prices when the US dollar is on a downslide. Almost everything is quoted in USD so rising prices now largely reflect that depreciation.
Freight rates are falling after the relatively brief 'Iran crisis' hot war. And they too are quoted in USD so the falls will be magnified in other currencies. Container freight rates were down -9% last week from the week before to be -38% lower than year-ago levels - but a year-ago they were in their own Suez crisis stress. Bulk cargo rates are falling too.
The UST 10yr yield is now at 4.25%, and down -4 bps from this time yesterday. The key 2-10 yield curve is up again at +54 bps. Their 1-5 curve is more inverted, now by -18 bps. And their 3 mth-10yr curve has flattened to +16 bps. The Australian 10 year bond yield starts today at 4.14% and down -2 bps from yesterday. The China 10 year bond rate is little-changed at 1.65%. The NZ Government 10 year bond rate starts today at 4.50%, down -2 bps.
Wall Street is testing its highs with the S&P500 up +0.8%. However European equity markets were mixed between Paris's no-change and Frankfurt's +0.6%. Tokyo ended yesterday up a strong +1.6%. However Hong Kong was down -0.6% and Shanghai down -0.2%. Singapore rose +0.3%. The ASX200 ended its Thursday trade a marginal -0.1% lower while the NZX50 ended up a marginal +0.2%.
The price of gold will start today at US$3,334/oz, and up +US$12 from yesterday.
American oil prices are unchanged from yesterday at just on US$65.50/bbl while the international Brent price is still just on US$68/bbl. Meanwhile Shell confirmed it isn't currently bidding for the underperforming BP, and that it is required to wait six month under UK law to take another look.
The Kiwi dollar is now just on 60.7 USc, up +40 bps from yesterday and that's an eight-month high. However, against the Aussie we are -20 bps softer at 92.5 AUc. Against the euro we are unchanged at 51.8 euro cents. That all means our TWI-5 starts today at 68.1 and +10 bps firmer than yesterday.
The bitcoin price starts today at US$107,338 and up +0.3% from this time yesterday. Volatility over the past 24 hours has been low at just on +/-0.7%.
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6 Comments
Still over 3 years remaining with those Muppets in the Whitehouse. That's plenty of time to destroy the global economy.
There's much more than the economy that could be destroyed...at a recent dinner with friends we briefly contemplated the shape of a world without Putin, Trump, Netanyahu, Xi, Modi & a few others including religious fundamentalists of various denominations.
History would say that such character types repeat, sadly
I'll bet you didn't factor-in gross overshoot (of the human species) or what will happen by way of correction.
And I'll repeat: Trump is a symptom (of that), not a cause.
Economics has a lot to answer for - by relegating unpleasant facts to the 'externalities' bin, it drove the fact that we're now debating blind.
Destroy is quite a topical word p isn’t it. The big question is have they or haven’t they made Iran’s nuke weapon program kaput. Even if they have next time round won’t be so easy. Whatever Iran can either produce and/or source could, once ready, now be being visualised in the category of use it or lose it. A lot of troubled water yet to reach the bridge.
Iran having nukes has been a convenient bogey-man, dragged out for 20 years or more, when needed. Just like WMD.
The fact that the ME is overpopulated even now, let alone beyond fossil energy, is ignored - same comment as my last above; the debate simply ignores the imperatives. More interesting is the EU cowtowing to Trump/US - especially after Nordstream - they must even so feel they need to stay in the US tent. Which is rotting...
Funny to hear the (economics-saturated) mantra crossing into hard reality but inadequately; 5% of GDP spend on defense by 2035 - only a few things wrong with that; by 2035, GDP will be sod-all, indeed it's hard to see us getting that far without the collapse having happened and GDP being a historical footnote.
Secondly, They're (currently) dependent on globalisation for componentry - and even for assembly. Good luck with that. Asymmetrical warfare is ahead, and the centre will not hold (too energy-dependent, too overshot/overhung).
Regime change won’t stop Iran from pursuing nuclear ambitions. All recent Iranian leaders, from royals to mullahs, have sought this capability — future governments will too.
https://archive.is/80S2R
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