Dairy prices rise; US inflation rises; Canada inflation modest; India exports soft; China growth on target, but house prices still falling; Aussie sentiment firms; UST 10yr at 4.49%; gold and oil lower; NZ$1 = 59.4 USc; TWI-5 = 67.4

Here's our summary of key economic events overnight that affect New Zealand, with news US inflation is rising and tariffs are getting the blame.

But first, the overnight dairy auction brought prices +1.1% higher in USD terms, +3.6% higher in NZD terms. It was the first rise we have had in these full auctions since yearly May. This time, the expected +2.5% rise in SMP was matched by an unexpected rise of +1.7% in WMP prices. Butter prices were unchanged but cheddar cheese prices fell a sharpish -5.6%.

In the US they got the expected rise in CPI inflation for June, up 2.7% when it was rising 2.4% in May. The Fed will have noticed that "core inflation" rose 2.9%. Food prices rose 3.0% and rents up 3.8%. The overall level was restrained by an -8.3% drop in petrol prices. As those year-ago petrol prices normalise in future months, they won't be restraining anything. Just in time for the pass-through of the tariff-taxes. An independent Fed will be concerned about the upward trajectory.

A Fed factory survey in the New York state recorded a rise in July, their first since February. But they are seeing input cost pressure picking up. However they also report it is easier to pass on those costs and seemed relieved about that.

Canada also reported its June CPI inflation rate, coming in at 1.9%, up from 1.7% in May.

India reported declining merchandise exports in June, in fact their lowest level of the year and almost -8% lower than year-ago levels. Imports fell too. But strong services exports (outsourcing services) balanced things out. In contrast to China, India's rise is domestically-driven, not foreign trade driven, making them somewhat insulated from the tariff-wars.

China reported that its Q2-2025 economy expanded +5.2% in inflation-adjusted terms from Q2-2024. This was bang on what Beijing had set as a target, and what observers were expecting them to announce. Strong exports and consumer subsidies helped a lot.

China said its retail sales were up +4.8% in June from a year ago, its industrial production up +6.8%. So that suggests they had the best of both worlds - rising industry and rising internal consumption. That they seem to have done this all with only a modest rise in electricity production (+1.7%) would be impressive if it was believable. They are almost certainly making big strides in energy efficiency but it is unlikely as reported. Despite these cred issues however, it is clear that the Chinese economy is not going backward.

But even if they aren't as steep as they have been over any of the past 15 months, new house prices in China are still falling. Only 12 of the 70 largest cities had prices that held basically unchanged however. But for resales, none were in that category. The lure of housing speculation in China is but a distant memory. For most developers that is trouble. But pockets like in Shenzhen may be seeing a bit of a shine.

In the EU, industrial production surprised with a good +3.4% gain in May, far better than expected and continuing the 2025 expansion. The gains were even stronger in the euro area.

So it will be no surprise to learn that German ZEW sentiment seems to be in full recovery mode; this data for July, so those industrial production gains have likely continued.

In Australia, the Westpac/Melbourne Institute consumer sentiment survey showed a third consecutive rise in July, although a small one. Despite the surprise no-cut by the RBA recently, most consumers still expect interest rates to move lower from here. But they remain uncertain about the outlook for the overall economy and jobs. Housing-related sentiment dipped slightly but price expectations remained high.

And staying in Australia, the RBA has reached the preliminary view that it would be in the public interest to remove surcharging on eftpos, Mastercard and Visa cards. They also want to lower the cap on interchange fees paid by businesses, and require card networks and large acquirers to publish the fees they charge. They are now in the 'consultation' phase, which will no doubt involve fierce pushback. Here the Commerce Commission has been looking at the same issues, and will report on the New Zealand changes they want to see, very soon.

The UST 10yr yield is now at 4.49%, up +6 bps from yesterday at this time. The key 2-10 yield curve is still at +53 bps. But their 1-5 curve is now inverted by -7 bp. And their 3 mth-10yr curve now +17 bps positive. The Australian 10 year bond yield starts today at 4.44% and up +8 bps from yesterday. The China 10 year bond rate is little-changed today at 1.66%. The NZ Government 10 year bond rate starts today at just over 4.60% and up +4 bps.

Watt Street hesitating today with the S&P500 down -0.2%. European markets were all about -0.5% lower. Tokyo ended its Tuesday session up +0.6%. Hong Kong was up +1.6% but Shanghai fell -0.4%. Singapore ended up +0.3%. The ASX200 closed on Tuesday up +0.7% but the NZX50 only managed a +0.1% gain.

The price of gold will start today at US$3,327/oz, down -US$22 from yesterday at this time.

American oil prices are down -50 USc to US$66.50/bbl while the international Brent price is just over US$68.50/bbl.

The Kiwi dollar is now at 59.4 USc and down -30 bps from this time yesterday. Against the Aussie we are unchanged at 91.3 AUc. Against the euro we are also unchanged at 51.3 euro cents. That all means our TWI-5 starts today at just under 67.4, and down -10 bps.

The bitcoin price starts today at US$117,421 and down -2.0% from this time yesterday. And that takes it back below NZ$200,000. Volatility over the past 24 hours has been modest, still just on +/-1.9%.

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