Here's our summary of key economic events overnight that affect New Zealand, with news of more big-country tariff negotiation updates.
But first, US mortgage applications were little-changed last week as their benchmark 30 year mortgage rate rose.
Meanwhile, American home resales fell in June from May to an annualised rate of under 4 mln and down -4.4% from June 2024. This was largely driven by declining sales of single family homes. But median prices inched up, now at US$435,300 (NZ$720,000). High mortgage rates are getting the blame.
There was another US Treasury bond auction overnight, this one for their 20 year maturity. It was well supported with a median yield of 4.89%. That was little different to the 4.88% at the prior equivalent event a month ago.
The US has said it has agreed a 15% tariff deal with Japan (a notable level lower than the arbitrary 25% previously imposed). The main thing Japan had to do was agree to buy things (like aircraft) that would probably have bought from the US anyway. But it also supposedly requires Japan to water down its standards for rice imports and open their markets to US cars. Both of those requirements show a distinctly naive understanding of Japan. Very likely they will drive an anti-US sentiment by consumers there, mirroring what is happening in Canada. Japanese investors loved the deal - for Japan. boosting the Nikkei225 +2.2% at its market opening yesterday and ending the day up +3.5%.
The Japanese bond market - an enormous beast - reacted with Japan’s 10-year government bond yield surging nearly +10 bp to around 1.60% approaching its highest level since 2008.
In South Korea, the glow after resolving its presidential issues has seen its Consumer Sentiment Index rise in July from June, the fourth consecutive monthly gain and the highest reading since January 2018. The improvement reflects growing optimism fueled by the newly elected government and expectations for economic stimulus.
Taiwanese industrial production continues to expand aggressively, up another +18% in June from a year ago, no surprise given the strong order inflows we reported earlier this week. But Taiwanese retail sales are nowhere near as positive, actually.
In Europe, there is growing optimism some sort of tariff deal with the US is imminent. The US-Japan deal is being seen as a benchmark, and the optimism is fuel by the early judgement that Japan will come out on top in that one.
In Australia, economic growth momentum is leaking away. At least, that is what the Westpac-Melbourne Institute leading indicator data shows. For them, the main drag coming from commodity prices, consumer and business sentiment, and total hours worked.
The UST 10yr yield is now at 4.39%, up +5 bps from yesterday at this time. The key 2-10 yield curve is unchanged at +51 bps. Their 1-5 curve is less inverted at -15 bps. And their 3 mth-10yr curve a steeper +10 bps positive. The Australian 10 year bond yield starts today at 4.33% and up +5 bps from yesterday. The China 10 year bond rate is firmish again at 1.70%, up +1 bp. The NZ Government 10 year bond rate starts today at just on 4.56% and down -3 bps from yesterday.
Wall Street is up +50 USc in Wednesday trade on the S&P500 and a new record high. Overnight European markets were mixed with London up +0.4% but Paris up 1.4%. Yesterday Tokyo ended up a very strong +3.5% on the US tariff deal. Hong Kong was up +1.6% but Shanghai was little-changed. Singapore was up +0.5%. The ASX200 ended up +0.7%. But the NZX50 fell -0.3%.
The price of gold will start today at US$3,387/oz, down -US$40 from yesterday.
American oil prices are holding at just over US$65/bbl but the international Brent price is still at just under US$68.50/bbl.
The Kiwi dollar is now at 60.4 USc and up +40 bps from yesterday. Against the Aussie we are unchanged at 91.6 AUc. Against the euro we are up +25 bps at 51.3 euro cents. That all means our TWI-5 starts today at just on 67.7, up +20 bps from yesterday.
The bitcoin price starts today at US$117,867 and down -1.1% from this time yesterday. Volatility over the past 24 hours has remained modest, at just under +/-1.2%.
Daily exchange rates
Select chart tabs
The easiest place to stay up with event risk is by following our Economic Calendar here ».
12 Comments
I lived in Japan for a long time. The roads are different. Parking spaces. Right side steering. Industrial and specialist vehicles are made to fit the small spaces they operate in. There is nothing made in the US that suitable for Japan that Japan doesn't already make at a very high quality. So it's probably going to be just what the writer said, aircraft they will buy anyway, and rice they will import until the current domestic shortage issue drops off and then they will stop.
Japanese people have little interest in American stuff with a couple of exceptions. iPhones are popular as are a few US items like Levi jeans, other than that its the unhealthy end of the food spectrum, like McDonalds, Coke etc. It will be interesting to see if consumer behavior actually shifts because the Japanese are usually apathetic around political matters and dont actually like change much, plus the youth are quite disengaged and probably won't care.
and rice they will import until the current domestic shortage issue drops off and then they will stop.
Hard to say if they'll fix that issue
- average farmer in Japan is 73 years old and getting older
- ironically, for a country that's magnificent at industrial manufacturing, they're running an archaic agricultural sector
- their rice sector in particular is inefficient, heavily subsidized and done at a cottage level
All that makes sense. Imagine though there is a bit of a market for muscle type & sports cars Mustangs etc? Not American but an acquaintance got a Japanese import Jaguar XKR fantastic car, fantastic condition, had only done 10,000k.
They're there, but it's super niche.
Bought an Audi there once, only 7,000ks, like new, 2 grand. Took about 6 months to remember why the Japanese car industry took so much market share from the Europeans.
I'm speculating that in a few years time we might be saying the same about the Japanese cars as we drive around in Chinese EV's?
My two older Japanese look pretty tired but drive as well as they always have. Will def be looking at BYD etc when the time comes. Still to pricey for me.
I'm speculating that in a few years time we might be saying the same about the Japanese cars as we drive around in Chinese EV's?
Super hard to say, we are making cars more and more disposable, and the parts and support network for Chinese cars in NZ is fairly woeful.
VS something like a Toyota, which until recently were over engineered to last almost indefinitely with routine servicing.
Also interesting to see big profit drops coming through from US businesses who have paid the tariffs for a while, probably while they wait for the new normal to become apparent. The biggest shareholders in these companies are US pension and other managed funds. They really are taxing their own, usually older, people.
Japanese investors loved the deal - for Japan. boosting the Nikkei225 +2.2% at its market opening yesterday and ending the day up +3.5%
I'm no Trump supporter but could this not just be because the tariff dropped to 15% from 25 %
I'm no Trump supporter but could this not just be because the tariff dropped to 15% from 25 %
Toyota up 14% in a day. Like a meme coin. Biggest single day rise since 2008.
A little more to Adrian Orr's departure than meets the eye.
https://www.thepost.co.nz/business/360767608/willis-told-today-rbnz-ema…
Rents negative before inflation
Good work if you can get it, explains some of their recent years staffing blowout/bloat
"Reserve Bank or Wellness Retreat? Staff Racking Up 100 Days Out of Office"
https://www.taxpayers.org.nz/reserve_bank_wellness_retreat
We welcome your comments below. If you are not already registered, please register to comment.
Remember we welcome robust, respectful and insightful debate. We don't welcome abusive or defamatory comments and will de-register those repeatedly making such comments. Our current comment policy is here.