US travellers shunned, turn to trading houses; US Fed minutes reveal split; Japanese machine too orders healthy; Nvidia hits a unique valuation; UST 10yr at 4.34%; gold and oil unchanged; NZ$1 = 60 USc; TWI-5 = 67.5

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%.

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