Here's our summary of key economic events overnight that affect New Zealand, with news precious metals prices are having a moment - in US dollars at least, largely because the US dollar is extending its retreat. The same impact is affecting commodities like copper. Prices are rising in the US as a consequence of tariff-taxes which are pushing down the value of the greenback.
But first, the dairy Pulse auction for SMP and WMP brought better results than the futures markets expected. SMP was up +1.7% and slightly better than the +1.5% expected. But the big mover was WMP which rose +1.5% when a -4% retreat was expected. The continuation of better prices will be something of a quiet relief in this industry.
In the US, the retail impulse continued to expand last week, up +5.1% from a year ago. But the suspicion lingers that much of this is the inclusion of tariff taxes, despite what the CPI indicates.
And those tariff taxes hurt the results in the latest Richmond Fed factory survey. This was their worst result in ten months and was led by a sharp retreat in new orders. Input cost growth stayed up.
The cost of those tariff-taxes on US companies was on full display in US earnings reports. For Stellantis (Chrysler) it was US$300 mln, for GM US$1 bln. Both ate away at reported profits significantly. It is hard to see these type of companies absorbing costs like this for much longer.
Across the Pacific, Taiwanese export orders continued their outstanding growth, up almost another +-25% in June from the same month in 2024 which itself led year-ago levels. It is hugely impressive and continues a very strong 2025 monthly set. It is their electronics industry leading the way.
Sentiment in Japan bounced back yesterday as it became a clearer bet that Prime Minister Shigeru Ishiba is expected to remain in office despite the embarrassing performance of his party at the recent upper house elections. But holding on, he will be a damaged leader. The upstart ‘Japanese First’ Sanseito party has emerged as powerful force after these elections, and that was despite a 'secret' Russian campaign to support them (and destabilise Japan) that was exposed before voting.
In the Europe, the ECB's latest credit survey found a twist towards housing lending there. While credit standards for company loans remained broadly unchanged, credit standards tightened slightly for housing loans and more markedly for consumer credit. But this was because housing loan demand continued to increase strongly, while demand for company loans remained weak.
In Australia, the vultures are out targeting vulnerable borrowers who are debt stressed. It has ASIC worried and they have launched a review into the debt management and credit repair sector in an effort to protect those experiencing financial hardship. Expect the Commerce Commission here to assess whether it needs to do similar work.
Staying in Australia, the RBA released the minutes of its July 8 meeting and they revealed little new. They left its cash rate steady at 3.85% at this meeting, defying market forecasts for a -25 bps cut. The move was passed by majority vote, six in favour and three against. These minutes were full of "wait and see" sentiment, "data dependent" notes. Part of the waiting-to-see is because they doubt Trump will actually do what he threatens. They buy the TACO view apparently.
The UST 10yr yield is now at 4.34%, down -3 bps from yesterday at this time. The key 2-10 yield curve is unchanged at +51 bps. Their 1-5 curve is more inverted -19 bps. And their 3 mth-10yr curve a flatter +3 bps positive. The Australian 10 year bond yield starts today at 4.28% and down -1 bp from yesterday. The China 10 year bond rate is firmish again at 1.69%, up +1 bp. The NZ Government 10 year bond rate starts today at just over 4.59% and down -2 bps from yesterday.
Wall Street is little-changed in Tuesday trade on the S&P500 but it is holding near its record high. Overnight European markets were mixed with London up +0.1% but Frankfurt down -1.1%. Yesterday Tokyo ended down -0.1%. Hong Kong was up +0.5% and that was matched in Shanghai. Singapore was unchanged. The ASX200 ended up +0.1%. But the NZX50 fell a sharp -1.0%.
The price of gold will start today at US$3,427/oz, up another +US$34 from yesterday. And that almost matched its record high on April 21.
And the silver price has pushed on up over US$39/oz It isn't yet threatening its 2011 peaks (US$48) but the recent climb has some people quite excited.
American oil prices are -US$2 softer at just on US$65/bbl but the international Brent price is only down -50 USc at just under US$68.50/bbl.
The Kiwi dollar is now at 60 USc and up +25 bps from yesterday. Against the Aussie we are unchanged at 91.6 AUc. Against the euro we are also little-changed at 51.1 euro cents. That all means our TWI-5 starts today at just on 67.5, up +10 bps from yesterday.
The bitcoin price starts today at US$119,198 and up +1.1% from this time yesterday. Volatility over the past 24 hours has remained modest, at just under +/-1.2%.
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15 Comments
RIP Ozzy Osbourne
After less than 20 months, Milei has eliminated the fiscal deficit, cutting it from 5 percent of GDP to zero. He has reduced the number of government ministries from 18 to 8.
...Milei has ended the artificial dual exchange-rate system and restored the central bank’s independence.
...He has overhauled the import system, removing quotas, licenses, and nonessential certifications. And he has launched a long-term program of tax and regulatory reform.
...The result of this shock therapy has been a stunning recovery. Milei has brought monthly inflation down from 13 percent to 2 percent. The economy is now growing at an annual rate of 7 percent. Investors no longer shun Argentine bonds and stocks—indeed, they were among the best investments you could have made over the past two years. After a brief upward jump, the poverty rate has fallen from 42 percent, when Milei was elected, to 31 percent.
...Most governments that cut their fiscal deficit by five percentage points of GDP pay a heavy political price for the resulting pain. ...But the amazing thing is not that it is working economically—Adam Smith would say, “I told you so.” The true miracle is that Milei’s shock therapy is working politically."
https://www.thefp.com/p/niall-ferguson-mileis-manmade-miracle-argentina…
Now wait and see what happens with their energy prices over the next 2-3 years.
Medium term they should be looking pretty sweet.
We’ve proven the quality of Vaca Muerta’s formation is second to none, even greater than the US’s Permian Basin
https://www.ft.com/content/437a3a5f-4064-444a-b6da-7bb5aba5956b
https://www.batimes.com.ar/news/economy/argentine-oil-output-is-poised-…
Just me, but I would treat this glowing article with a degree of caution, Profile.
It is exactly what I would expect from Ferguson, who could be described as not just a 'wind sock', but also a nostalgic defender of the British Empire and, in essence, of European-style neo-colonial empires in general.
He very much strikes me as a continued supporter of neo-colonialism (at least he is consistent on that count), and a cheerleader for the new and continued American empire, which by definition would embrace the predatory Monroe Doctrine of continued control of LatAm, in which both Argentina and Brazil are vital to secure as US backyard/sandpit vassal states.
... quoted Wiki...
"Ferguson supported the Iraq and described himself a month after the invasion of Iraq in 2003, as ‘a fully paid-up member of the neo-imperialist gang’ and he is on record as being not necessarily opposed to future Western incursions around the world.
It's all very well for us to sit here in the West with our high incomes and cushy lives, and say it's immoral to violate the sovereignty of another state.
But if the effect of that is to bring people in that country economic and political freedom, to raise their standard of living, to increase their life expectancy, then don't rule it out."
... nough said...
The Costs of War Project (Brown University) estimates 4.5 - 4.7 million total deaths (direct and indirect) across post-9/11 wars, including Iraq.
I'm sure that Ferguson would have supported the Albright theory that the deaths of half a million Iraqi children, just from the sanctions alone, was a worthwhile investment in ongoing US imperial hegemony
https://www.newsweek.com/watch-madeleine-albright-saying-iraqi-kids-dea…
...Mr Grok...
"Ferguson’s article frames Milei’s reforms as a triumph of classical economics, but it may underplay the social costs and political risks. The "miracle" narrative aligns with a pro-market worldview but glosses over the uneven distribution of benefits.
For example, Reuters highlights that while markets and Milei’s supporters celebrate the fiscal surplus and inflation drop, public sector workers, pensioners, and informal workers face declining living standards. This suggests a selective focus on macroeconomic gains over microeconomic pain, which is a common critique of libertarian reforms.reuters.com
Additionally, Ferguson’s piece does not deeply engage with external factors, such as Argentina’s reliance on global commodity markets or the IMF’s role in enforcing austerity as a condition for debt restructuring.
The IMF’s approval of Milei’s policies may reflect its own bias toward fiscal discipline, but it doesn’t guarantee broad-based prosperity. The article also sidesteps Milei’s controversial governance style, which includes bypassing Congress via decrees, potentially undermining democratic norms."
A cautionary example...
https://www.theguardian.com/business/2023/jun/30/in-charts-how-privatis…
Milei's policies of fire-sale of public utilities and natural resources read more like a chapter of 'Confessions Of An Economic Hitman' and very much fit with neoliberalism and IMF-related policies, creating monopolies for financiers, entrenched compradors, fifth-columnists, and providing deliberate benefits for foreign investors - also austerity used as a tool to extract resources and suppress wages, benefiting foreign capital.
- Historical Precedent: Argentina’s 1990s privatisations under Menem led to very mixed outcomes, with some utilities (e.g., water, electricity) becoming private monopolies, raising costs and reducing service quality, which fuels current fears.
- Ongoing or Announced Privatisations:
IMPSA, a Metallurgical firm, was privatised (January 2025).
Additional assets are in the process, or are announced for intended privatisation...
- Four hydroelectric dams (Alicurá, El Chocón, Cerros Colorados, Piedra del Águila).
- Nucleoeléctrica Argentina (nuclear power).
- Yacimientos Carboníferos de Río Turbio (coal mining).
- Paraguay-Paraná waterway.
- AySA (water and sanitation).
- YPF (oil and gas, on hold).
- State-owned media (Telám, LRA, TVP)
- Aerolíneas Argentinas
- Trenes Argentinos Cargas (railways)
SUMMARY - watch the privatisation space and deteriorating wealth distribution. This is precisely what Bolsonaro (AKA 'Tropical Trump') had in mind for Brazil, until Lula exposed his agenda and won back the Presidency.
Milei, Trump, Bolsonaro, and of course Nutty Yahoo, are joined at the hip buddies - all of this smells to high heaven to me.
Newsflash - Trump's latest is to threaten Brazil with massive tariffs if they don't drop the criminal charges against Bolsonaro for plotting a coup - the plot thickens!
Cheers
Col
"...Milei has ended the artificial dual exchange-rate system and restored the central bank’s independence."
Ferguson is parroting nonsense here, re the bolded part of the quote.
The BCRA remains under the influence of his administration’s economic agenda, with no reported reforms to enhance its autonomy - also, his campaign promise to abolish the central bank has been deferred.
The BCRA continues to operate under the same institutional framework as before, which has historically allowed significant executive influence - e.g., the president’s ability to appoint and remove board members without robust checks.
Javier Milei ran his 2023 presidential campaign on a promise to abolish the Central Bank of Argentina (BCRA) and dollarise the economy, effectively placing Argentina’s monetary policy under the control of the U.S. Federal Reserve - IOW's his platform was a promise to surrender Argentina's monetary sovereignty to the US Fed, which is a 100% privately owned banking cartel.
It beggars belief that he was voted in, when in essence he was telling his country that his intention was to completely dollarise and sell his country out to Wall Street.
This, for me, was an alarming insight into Milei's true essence, and a pointer as to what direction he would be steering his country in (a US/Wall Street vassal).
Obviously, he couldn't go through with this intended agenda, because his LLA party holds only 7/72 seats in the Senate, 40/257 in the Lower House, 0/24 Governorships, 126/1,199 Provincial Legislators, and 3/1,298 Municipalities.
profile,
Fergusson is an interesting man. A Glasgow boy like myself, I have followed his career quite closely. He is first and foremost an historian-and a very good one. I have several of his books, but I am wary of his politics.
I think the jury is still out on Milei's reforms. His very substantial programme of privatisation is, I fear, likely to benefit the wealthy and powerful rather than the average citizen. The UK under Thatcher was a 'good' example of wholesale privatisation done badly-very badly.
I see agent Orange has gone on attack via distract and deny. Today's targets are the NFL for changing the team name to something not racist and Barrack Obama for treason.
Could this Epstein mess actually be our Watergate moment?
If there is any actual incriminating evidence against Trump amongst the government’s, let’s call it a dossier, it won’t come out and the Republican control of both houses will make sure of that. Any investigative publications a la Bernstein & Woodward will be denied and parried and of course Trump has a status of immunity that was not available to Nixon.
Seven & i (owner of the 7 Eleven retail brand) has hit back at Couche-Tard with this cutting statement. If you're unaware, Couche-Tard was looking to take over Seven &i, owner of arguably one of the most successful retail brands in the world.
Rare to see something this spicy from a Japanese corporate.
"Suggestions that our governance was not up to the task or fell back on a conventional “Japan Inc” mentality are simply wrong... ACT’s unhappiness with our engagement demonstrates an unfortunate lack of knowledge of the Japanese market. Understanding how business is conducted in the other party’s country is important for the successful completion of a cross-border transaction. To suggest that our management presentations were scripted is to misunderstand Japanese culture. Sometimes being different isn’t wrong or an act of resistance."
https://www.7andi.com/library/dbps_data/_material_/localhost/en/release…
Aye, there it is. In other words, when in Rome do as the Romans do
World's most expensive bank CBA accused of replacing Australian workers with an Indian workforce, increasing its Indian staff from 2,854 in 2022 to 5,630 in 2024, while firing 2,581 native Australians during the same period.
“These jobs are not required to be done in India; they’re just moving the work there to take advantage of cheaper labour and further line their own pockets.”
QUESTION - I notice that when denoting a quotation in italics as I comment, parts of the text that I italicise are often randomly left as normal text when they are rendered into the actual comment as it appears in the comment string - I wonder if this is a glitch in the system, or something that I am doing wrong?
Might be best addressed to PressPatron. It does seem clunky and hit / miss at times. I understand why you would want to italicize quotes and it's something I like to do as it clearly differentiates my opinion from actual sources.
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