Here's our summary of key economic events overnight that affect New Zealand, with news of more tariff threats, but markets are over that drama, shoving its impact to the background. If there is news on a US-EU deal, then that will likely change.
First in the US, even though the benchmark 30 year home loan interest rate was little-changed, mortgage applications rose a sharpish +9.3% from the prior week, and that was a rise for a third week in a row, a relatively unusual streak. Both refinance and new home purchases had good gains this week.
One reason they may be more active is that Americans are shunning international travel, kind of like in the pandemic emergency, perhaps fearful of the reception they will get in both Europe, South America and Asia. And the feeling is mutual. EU-US airfares are diving and services are being cut back. But Canada is now a hit, with other-than-the-US destinations much more popular, and Toronto especially is getting a surge. In the world of travel, the US is the only major market suffering declines in visitors.
The US Federal reserve released the minutes of its June 19 (NZT) meeting. And that hinted at a developing divide among members between those who support the Trump view that the tariff-tax impact on inflation will be transitory, and those that think it will be 'persistent' and do long-term and lasting damage to American cost competitiveness. And that divergence affected their view of when to next cut rates. At this meeting at least those with the fear of embedded inflation won out and rates were left unchanged. But financial markets have priced in two more -25 bps rate cuts later this year.
At least one of their number are in a broader Apprentice-style competition for Powell's job - Christopher Waller.
There was another US Treasury bond auction overnight, for their 10 year maturity, and it was normally supported. It delivered an median yield of 4.31% compared to the 4.38% at the prior equivalent event a month ago.
Across the Pacific, Japanese machine tool orders rose in June from May, maintaining their better level in a trend that started in March. And it was demand from domestic manufacturers that were especially strong. Even though in total they were just marginally less than a year ago, that year ago benchmark was unusually strong for a 2024 month.
The heart of the northern hemisphere holiday season is underway and financial market activity is lighter than usual. This period will likely last until the end of August, culminating at the American Labor Day long weekend.
The UST 10yr yield is now at 4.34%, and down -8 bps from yesterday. The key 2-10 yield curve is holding at +49 bps. Their 1-5 curve is inverted by -15 bps and little-changed again. And their 3 mth-10yr curve is flatter, now +5 bps positive. The Australian 10 year bond yield starts today at 4.33% and up +1 bp from yesterday. The China 10 year bond rate is still at 1.65%. The NZ Government 10 year bond rate starts today at just over 4.61%, up +6 bps.
Wall Street is slightly firmer on the S&P500 and up +0.5%. Overnight European markets were all up about +1.4% except London which was essentially unchanged. Tokyo ended its Wednesday session up +0.3%, Hong Kong was down -1.1%, and Shanghai was down -0.1% Singapore rose +0.2%. The ASX200 ended its Wednesday session down -0.6%, whereas the NZX50 was down -0.7%.
And we should note that Nvidia has become the first company to command an equity valuation of US$4 tln.
The price of gold will start today at US$3,308/oz, and up a mere +US$2 from yesterday.
American oil prices are unchanged at US$68.50/bbl while the international Brent price is still just under US$70.50/bbl.
The Kiwi dollar is still just on 60 USc, essentially unchanged from yesterday. Against the Aussie we are down -20 bps at 91.7 AUc. Against the euro we are holding at 51.2 euro cents. That all means our TWI-5 starts today at just on 67.5 and -10 bps lower from yesterday at this time.
The bitcoin price starts today at US$109,140 and virtually unchanged (+0.1%) from this time yesterday. Volatility over the past 24 hours has been low at just on +/-0.6%.
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22 Comments
KiwiKids can you put up the link to the Stuff article you put up late yesterday, again? It's worthy of discussion.
KKNZ hasn't done it so I will;
https://www.stuff.co.nz/nz-news/360751174/look-back-new-zealands-bigges…
My thoughts are this is primarily a story about the failure of deregulation.
Yup, and like I said the other day, the neo liberals will refuse to acknowledge/believe it.
Isn't one of the minor parties in our current government talking about deregulating an industry again?
I've read it and it seems he's just trying to stop the government legislating for legislation's sake. He wants the law to have a clearly defined purpose and outcomes. I don't disagree. I have been surprised at some of the reactions though; "The law is an ass" is a quote well rooted in historical fact.
Americans are shunning international travel, perhaps fearful of the reception they will get in both Europe
I was in Venice a couple of weeks ago, some Americans sitting at a table nearby started loudly lauding Trumps praise. It did not go down well at all, with several other tables countering the pro-Trump comments. (I may have been one of them too).
American's are so insular they likely won't understand the impact Trump is having on the world, or even why American was really so influential before him.
Reading all the stories about ICE's actions and behaviours indicates to me that they are to many extents the 21st century version of the Waffen SS, and I wonder how many Americans feel about what this is doing to their image?
People afraid to visit America due to the reception they might receive,and Americans increasingly afraid to travel because of the impact of Trump making them unwelcome. Is America becoming a new Hermit kingdom (Trumpdom)?
They sowed the seeds long ago. The slaves were the cheap engines to power the cotton gins. That has eventuated in the unsolvable conflict between Caucasian type Americans and their African American fellow citizens. Then the inflow of cheap undocumented labour via the illegals. That has undermined and distorted the entire labour platform from its traditional base and activity and at the same time introduced associated drug driven crime in every form you could think of.
FG. Given illegal migration began really surging only from about 2020 and that rampant drug related crime in the USA has been a major problem for decades, is it reasonable to identify the illegal alien group as a primary cause?
We lived and worked in Sth Jersey twenty or so years ago. Rural community largely but the percentage of illegal workers was high and well known. Agriculture, light and heavy industry Du Pont etc and even at the local nuke plant. One Donald Trump turned a disused ski field into a golf course. The base labour for that construction was mostly illegals and a contingent stayed on for maintenance. Not long before 2016 they all disappeared though once the presidential run became serious. Because we were a foreign based company there was a six monthly audit by the NJ Labour dept. Checked the payroll and other drawings etc. Got to know him, tough but good. By his count the controls on illegals in the region was largely ineffectual and the politicians didn’t want to lose votes by interfering with that. It was a tough, tough scenario. Not long after we arrived a van load, 6 illegals, were shot dead on the Pike by the State Troopers when the van driver probably accidentally started to reverse on to them. We enjoyed our time there. The people were great, courteous, tolerant and cooperative in general life. However each time we have gone back that has worsened. Talking to our old neighbours, seems to be three main reasons. The impact off covid and the aftermath created fear, suspicion and resentment. Trumps presidency introduced unprecedented and deep division politically. Crime always bad but now drug fuelled and crazy. Anyway that’s my take.
FG. Interesting bit of history and great personal story. Thanks. I've not lived in the US but visited fairly extensively over the years on business and holiday. It's my observation too that their society has become progressively more polarised (as has NZ's). But not all of Americas current pronounced tribalism can be attributed to the puzzlingly bizarre phenomenon of Trump. It's a story with many authors.
Aye it’s impossible to generalise. The nation is enormous. Ten states have individually economies larger or similar to Russia. The regional differences are profound. For instance consider a New England fisherman in comparison to a New Mexican cowboy. Recall reading a World War Two account as how much more effective the first echelons of troops and sailors were because initially they were drawn and posted largely from the same geographical areas. Recall another comment that later on as it became clear that the Texans were proving to the most proficient combat servicemen, they were then deliberately allocated, spread out through the various arms.
Murray. ICE comparable to Waffen SS to many extents? You're clearly well read on modern conflict history so I'm assuming this is tongue in cheek.
Disgusting comparison by Murray. Surely he is not that ignorant of the SS atrocities.
It was tongue in cheek, but considering what ICE is doing and ignoring the constitutional protections of the law, unless they are constrained, where do you think this is going?
Trump administration are creating havoc and ignoring all previous claims to 'rule of law' and due process. The racism and xenophobia of todays America is easily comparable to the antisemitism of the 1930s and the beginnings of that regime.
So, it wasn't "tongue in cheek" then?
I wasn't offended by the comparison, I was actually giving it quite a bit of thought . Waffen SS was clearly 'over the top' as that was the combat wing of the SS. The SA didn't have the power to arrest people and the Gestapo were the secret police so perhaps just plain SS would have sufficed
Zach. Suggest any comparison at all between the arms of the Nazi military regime and US ICE agents is well misplaced.
Yes, it's an extremely unfair, even absurd, comparison. Immigration and custom laws do need to be enforced.
Yvil. I spent some time recently with a largish group of yank travellers in Europe and found them consistently cautious about engaging on politics. Some would privately talk about Trump but there was a marked reluctance to do so in front of their fellow countrymen.
Aren't you supposed to avoid subjects like politics with strangers?
Ha. yes, supposedly, but I've had some great times discussing politics with people I've met. But I do approach with great caution.
Unlike the pro-Trump crowd I mentionned, your group were wise Americans, Middleman.
Considering that up to 90% of the globe (on a population basis) has signalled their desire to join BRICS, I am intrigued that although the 2025 Brazil Summit has just concluded this week, I have not seen a single article here on ICNZ covering this event.
This is the most monumental collective reform in history in terms of global financial architecture, trade patterns, geoeconomics, geopolitics, payment systems, sovereign reserve portfolios, and global security - why does NZ continue to ignore this? - are we like ostriches, burying our heads in the sand in the hope that this paradigm change will simply disappear quietly into the night?
Pepe Escobar provides a summary of the proceedings if anyone is interested...
https://globalsouth.co/2025/07/09/let-the-sunshine-in-what-brics-in-rio…
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Re Brian's breakfast briefing and this quote...
"One reason they may be more active is that Americans are shunning international travel kind of like in the pandemic emergency, perhaps fearful of the reception they will get in both Europe, South America and Asia."
Methinks, Trump's damage to the US economy, its currency, the ability to sell mountains of debt, and the tourism implications have only just begun.
At least 14 tariff letters have been sent out by Trump, with up to 20 more potentially in progress as of July 10, 2025.
The letter the Orange Oaf penned to Lula, the Brazilian President, is outrageous on multiple levels - not the least because his crooked buddy Bolsonaro is a Wall Street shill who was trying his level best to sell out most of Brazil's public utilities to overseas corporations before he lost an election that he had tried to rig - now Trump is trying to bludgeon the Brazilian judicial system to try to get his buddy off the hook, and to leverage his position with the threat of grossly inappropiate so-called 'reciprocal' tariffs.
The estimated U.S. trade surplus with Brazil from 2011 to 2024 varies from $224 - $410 billion U.S. surplus over the 14 years - IOW the situation is the complete reverse of what Trump claims - no surprises there.
And my point - the optics are utterly appalling - Trump will only accelerate the rising trend of countries abandoning the status quo and hegemonic mafia-like practices of the US.
Dedollarisation is a natural manifestation, as these countries discover alternative payment systems and a wide new array of assets to choose from as a way of holding sovereign reserves.
The BRICS never had it so good - Trump is a huge bafoonish gift helping them gather momentum - the bestest promoter of their multiopolar alternative that ever walked the Earth - the master-blaster of continuous own-goals - like no one has ever seen before - and not just the world, but the universe!
Cheers
Col
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