US consumers signal recession with affluent consumers now struggling too; US ramps up bullying of Canada, EU; Japan rice imports surge; UST 10yr at 4.27%; gold drops but oil holds; NZ$1 = 60.4 USc; TWI-5 = 68

Here's our summary of key economic events overnight that affect New Zealand, with news Trump is doubling down on trade bullying - and there are signs the "imminent deals" for touted are in a rocky phase.

But first, the squeeze on American household incomes shows up in the latest data for personal incomes and spending, this data for May. Incomes were only +1.7% higher than a year ago. Decreases in income support for struggling households is showing up in this data. And after inflation, they will be going backwards on the income front. On the consumption front, spending was up +2.2% from a year ago, also lower than the May 2.4% CPI inflation.

This is a sure sign of rising economic stress that is spreading.

The final reading of the University of Michigan survey of June consumer sentiment was out overnight and it confirmed the spreading household stress. This survey has been stuck at one of its worst readings on record for two months after plunging almost -30% in the first four months of 2025. Over the 80 years of the survey, a drop this large this fast has almost always predicted a recession. Sentiment readings improved slightly at the start of June but were -18% lower than at the start of the year to indicate Americans expect much higher prices and a much slower economy in the coming year. It should be no surprise this is the outcome of the changed US public policy direction - but the financial markets are ignoring this signal; willfully it seems.

They seem to be overlooking these same survey results that show sentiment has fallen fastest this year for the most well-off consumers, whose post-pandemic spending spree helped insulate the American economy from recession then. They aren't there to do it this time, according to the UofM survey data.

In Canada, they are waking up to the news that Trump is going to use tariffs to punish them for trying to tax US Big Tech companies via its Digital Services Tax initiative. The US wants free access to Canada and tax-free. Earlier the Canadians had confirmed the DST, which had been passed by their Parliament, would go into effect on June 30.

Trump is using similar tactics to try and get US oil majors a tax-free ride in the EU.

Earlier, US Treasury asked Congress to scrap the foreign revenge tax in Trump tax bill. It isn't certain that Trump will go along with that, but it has drawn scorn and concern from Europe, Asia and Australia. The US Treasury sees that it will hurt US investors too, investors like Scott Bessent.

In China, deflationary pressures not helped by the tariff war are keeping China's industrial profits in a low zone. They barely hit ¥600 bln in May and that was their lowest level for a May month since 2019 and -9.1% lower than May 2024. For the five months they were down -1.1% so the pace of decline is unfortunately building.

In Japan, they have a ¥340/kg (NZ$3.90) tariff on rice as a way to protect domestic rice producers. It has been effective in doing that for a very long time. But this year local rice production has wavered and prices have shot up causing much local anxiety. Prices are so high the tariff is ineffective. And suddenly Japan is importing massive amounts of rice. In 2024 they imported about 250 tonnes per month outside their special exemptions. But in May 2025 they imported more than 10,000 tonnes.

The UST 10yr yield is now at 4.27%, and up +2 bps from this time yesterday. A week ago it was at 4.38%.The key 2-10 yield curve is holding up at +54 bps. Their 1-5 curve is less inverted, now by -15 bps. And their 3 mth-10yr curve has flattened to +14 bps. The Australian 10 year bond yield starts today at 4.18% and up +4 bps from yesterday but down -3 bps from a week ago. The China 10 year bond rate is little-changed at 1.65%. The NZ Government 10 year bond rate starts today at 4.52%, up +2 bps. A week ago it was at 4.60%.

Wall Street had been up earlier in its Friday session but faded to a +0.3% daily gain after testing new all-time highs on the S&P500. For the week it ended up +3.2% however. Overnight, European equity markets were strong, up about +1.7% - except London which only gained +0.7% in its Friday session. It was similar for the week with London only up +0.3% whereas Paris was up +1.9% and Frankfurt up +1.6%. Tokyo ended yesterday up a good +1.4% for a great +4.9% weekly rise. However Hong Kong was down -0.2% but that locked in a +4.0% weekly gain. Shanghai down -0.7% in its Friday trade, ending its week up +2.2%. Singapore rose +0.7%. The ASX200 ended its Friday trade down -0.4% lower and level-pegging it for the week (+0.1%). The NZX50 ended up a good +0.8% on Friday but that too only meant getting back to where it started for the week.

The Fear & Greed index is now back in the 'greed' zone from the 'neutral' zone a week ago as the market perception of risk fades.

The price of gold will start today at US$3,272/oz, and down -US$61 from yesterday. A week ago it was at US$3365/oz so a -2.8% fall from then.

American oil prices are unchanged from yesterday at just on US$65.50/bbl while the international Brent price is now just under US$68/bbl. A week ago these prices were US$74 and US$77 respectively so a -12% decline from then. "Low prices" are seeing the North American rig count fall away quicker in the past week, now back to levels last seen in October 2021.

The Kiwi dollar is now just on 60.4 USc, down -30 bps from yesterday. A week ago it was at 59.7 USc so a net +1.2% appreciation. Against the Aussie we are +30 bps firmer at 92.8 AUc. Against the euro we are down -10 bps at 51.7 euro cents. That all means our TWI-5 starts today at 68 and -10 bps softer than yesterday. A week ago it was at 67.7 soa net +30 bps gain.

The bitcoin price starts today at US$106,835 and down -0.5% from this time yesterday. Volatility over the past 24 hours has stayed low at just on +/-0.7%. A week ago it was at US$103,348 so that is a +3.4% gain since then.

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