Here's our summary of key economic events overnight that affect New Zealand, with news a no-change Fed has brought sharp market reactions, bolstered by an odd tariff twist.
As expected, the US central bank left its key policy rates unchanged at the 4.25%–4.50% target range for a fifth consecutive meeting. They see the data pointing to 'a moderation in economic activity' during the first half of the year, contrasting with earlier assessments that growth was proceeding 'at a solid pace'. They noted that the unemployment rate remains low while inflation remains elevated, and uncertainty about the economic outlook persists. The vote was 9-2 with both dissenters wanting a lower rate and both wanting to be chosen by Trump to replace Powell.
Markets are still digesting the Fed signals, but immediately after the US dollar rose although not significantly, the UST 10yr yield was little-changed initially then rose but only slightly, and the S&P500 rose but then equally quickly gave that bump up to now be lower. Gold kept falling. Bitcoin yawned, holding in the unchanged level it has had for the past three weeks. But then it woke up and fell out of that range, down -1.3%.
Although US home loan interest rates were unchanged last week, mortgage applications fell, both for refinancing and for new purchases. And the June pending home sales report also out today paints a worrying picture for their housing sector with sales -2.8% lower from a year ago. Eight of the last twelve months have recorded year-on-year decreases.
The July labour market report will be released on Saturday (NZT) and is expected to record a modest +110,000 jobs growth. Today the precursor ADP Employment Report was released suggesting private payrolls grew +104,000. (This ADP report is a good tracker of the non-farm payrolls report over the longer term, but not so reliable for any current month.)
The first look at the Q2-2025 US GDP growth rate is out, showing a +3.0% rise, and better than the expected +2.4% result. But almost all of this is due to rising imports (+5%). Consumer spending contributed less than +1%. Investment activity was -3% negative in this result. Public spending and exports both made almost zero contribution. Although +3% is 'good' it is an unhealthy twist although that may not last. Of more concern is the dive in investment.
North of the border, the Canadian central bank also reviewed its monetary policy position overnight, and it too held its rate unchanged at 2.75%.
In the EU, the July sentiment surveys were out for the bloc and while they 'improved' in fact they remain in their long term range. So essentially, no change.
In Singapore, their central bank equivalent, the Monetary Authority of Singapore kept its policy stance unchanged in yesterday's update, maintaining the rate of appreciation of the Singapore dollar nominal effective exchange rate (S$NEER) band after easing in its last two meetings. They expect GDP growth to slow in th erest of this year after a strong first half. Cost pressures are expected to stay contained in the near term, with MAS core inflation projected to rise slightly later in 2025. For the year, both core and headline inflation are forecast at 0.5–1.5%.
In Australia, and led by a fall in services inflation, overall CPI inflation dropped to 2.1% in Q2 2025 from 2.4% in the prior two periods, marking its lowest figure since Q1 2021 and below forecasts of 2.2%. June inflation alone was only +1.9% above year ago levels. Today’s data removes any awkwardness posed by inflation remaining too high for the RBA and they are now very much more likely to cut by -25 bps on August 12 to 3.60%.
On the tariff-war front, the US has imposed a 50% tariff on copper imported into the US - but then made a bewildering exception, for refined copper. Traders had been stockpiling copper ahead of this decision but weren't expecting the exception. So there is far more refined copper in the US than they need at a cost they don't need. It has caused havoc in the copper price overnight with an immediate -20% drop.
The US imposed a 25% tariff on imports from India.
Talks with China have been inconclusive in Stockholm and will no doubt drag on unresolved over the '90 day extension' period. China will count that as a win.
The UST 10yr yield is now at 4.37%, up +4 bps from yesterday. The key 2-10 yield curve is holding at +46 bps. Their 1-5 curve is still inverted at -16 bps. And their 3 mth-10yr curve is still completely flat. The Australian 10 year bond yield starts today at 4.28% and down -3 bps from yesterday. The China 10 year bond rate is holding firm again at 1.74%. The NZ Government 10 year bond rate starts today at just under 4.55% and down -4 bps.
Wall Street was slightly firmer, up +0.3% in Wednesday trade before the Fed decision. But after, it pivoted to a -0.3% loss. Overnight European markets were all little-changed between 0% and +0.2%. Tokyo too was little-changed. Hong Kong fell a sharpish -1.4% but Shanghai firmed +0.2%. Singapore dipped -0.2%. The ASX200 rose +0.6% on Wednesday. But the NZX50 fell -0.6%.
The price of gold will start today at US$3,277/oz, down -US$50 from yesterday with most of it after the US Fed decision.
American oil prices have risen another +US$1.50 at just under US$70.50/bbl with the international Brent price is now at just on US$73.50/bbl.
The Kiwi dollar was at 59.2 USc and down -30 bps from yesterday pre the Fed. Then it fell another -30 bps to 58.9 USc. Against the Aussie we are up +20 bps at 91.6 AUc. Against the euro we are unchanged at 51.6 euro cents. That all means our TWI-5 starts today at just on 67.2, down another -30 bps from yesterday.
The bitcoin price started today at US$117,766 and essentially unchanged again (+US$51) from this time yesterday. But after the US Fed decision, it took a -1.3% tumble. Volatility over the past 24 hours rose to +/-1.2%.
Daily exchange rates
Select chart tabs
The easiest place to stay up with event risk is by following our Economic Calendar here ».
13 Comments
Fed recap: Powell says no decision on September, must wait to see tariff impact on inflation
Interesting dynamics developing. Trump promised effusively to make the people better off. So far not so and indeed the opposite is not unlikely. So Powell and the Fed, in not reducing interest rates, is thus the culprit. Bit like a company where I once worked where the policy to solve any problem was to find someone to blame.
Beef in us
In June, meat prices well outpaced the entire food-at-home category, with steak and ground beef prices rising 12.4% and 10.3%, respectively, compared with a year earlier, according to the Labor Department’s consumer price index (CPI).
Beef prices are now hitting a record $9.26 per pound at retailers as of June, according to the USDA
"New Zealand's economic downturn is proving hard to shake - but economists say when it comes to identifying the cause, it's not as simple as pointing the finger at government spending cutbacks or the Reserve Bank's interest rate hikes."
https://www.rnz.co.nz/news/business/568509/who-s-really-to-blame-for-ou…
"For each public service worker cut, two to three private sector jobs went with it. The cancellation or freezing of so many infrastructure projects saw my industry (engineering) lay off a quarter to a third of the workforce."
The more I read this quote from the article, the more I think our problems are far deeper than many understand.
For balance, the headline story on the front page of The Post (part of Stuff) on 29/07/2025 was "Nearly 6,000 Jobs Lost in the Capital", with the inference being that many of them were in the public sector.
Sorry, no links work when I post them here. I recommend copy and pasting the above into your preferred search engine (make sure you look at the story published in 2025 and not the seemingly similar ones published a year ago).
The more I read this quote from the article, the more I think our problems are far deeper than many understand.
Here's another one for you then. It costs around $5 a kilo to produce beef, that's from a calf to a sausage or steak. Yet it's what $25-$30 a kilo or more on the supermarket shelf. So hundreds of percent of cost is being added to a food item, which is delivering minimal amounts of extra added value.
Or, nearly half of all labour costs in construction isn't for construction labour.
Yes, That is part of the reason why Japanese shoppers pay up to 30% less for Aussie beef than Aussie shoppers, despite tariffs north of 20% and transport costs. Margins in Japan are lower across the supply chain. What's more, the Japanese shopper has a range of different retail options - including being able to buy small volumes direct at wholesale prices.
However, in Aotearoa and Aussie, margins have to be higher across the supply chain because of the relatively high cost of doing business in both countries. This is why Kaufland decided not to scrub plans to build their supermarket business in Aussie and why Aldi will likely never set up shop in Aotearoa.
The retail end is only a small component. You're only talking 10s of a % there, not hundreds. It's all the add ons in between it being a sausage, to it being a sausage you (or a Japanese) can buy.
I'm not sure why people get excited about Aldi. Here, heres a slightly cheaper off brand version of what you'd rather buy. Poopsie-Cola and Tam-Tims for everyone!
I'm talking "supply chain". Costs and margins from farm / factory to fork.
People get excited about Aldi because of the value proposition. Not so long ago, you could join a neighborhood BBQ in an upper middle-class suburb in Aussie and people would crack jokes about Aldi - uncool, not enough nice to haves, for poor people.
However, cost-of-living and inflationary pressures have pushed upper mid-income Aussie shoppers to Aldi, seeking the value proposition. Industry interviews and FMCG experts report more affluent customers choosing Aldi for staples and selective shopping, especially as price sensitivity rises even among higher earners.
https://insidefmcg.com.au/2023/08/16/why-aldi-is-winning-favour-as-cons…
I used to get the most wonderful giant croissants from Lidl supermarkets in the UK for all of 49p ($1NZD). Yes they have a greater economy of scale and access to resources undoubtedly, but having competition drives prices down and NZ needs more of that without a doubt. Another example, the local Pak n' Save in Nelson/Richmond has changed ownership recently and suddenly prices are creeping up faster than prior, Input costs eh.....hmmmmmm.
Great ski gear at the annual Aldi ski sale. Really strong fabric to help with the rock climbing at Whakapapa each winter season.
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.