US data soft, inflation data higher; Canada holds on despite threats; Japan factories busy; China factories less busy; freight data shows mixed fortunes; UST 10yr at 4.36%; gold firms and oil falls; NZ$1 = 58.9 USc; TWI-5 = 67.4

Here's our summary of key economic events overnight that affect New Zealand, with news today is the day the US has promised to levy arbitrary tariffs but still no word about how Australia and New Zealand will fare. It's not the end of August 1 until later tomorrow in the US. In the meantime, Mexico has been the latest country to be granted a 90 day extension.

Meanwhile, initial US jobless claims fell to 193,100 in the fourth week of July, just marginally more than seasonal factors would have accounted for. There are now 2.016 mln people on these benefits, +82,000 more than the 1.934 mln in the same week a year ago.

US-based employers announced 62,075 job cuts in July, up +29% from June’s 47,999 and up +140% from 25,885 announced in the same month last year. July’s job cuts were also well above average for a July month since the pandemic.

The US PCE price index rose +0.3% in June from May, the largest increase in four months, following an upwardly revised +0.2% gain in May. Prices for goods were up +0.4%, and prices for services rose +0.2%. The core PCE index, which excludes food and energy, also went up +0.3%, also its strongest monthly gain in four months. Year on year, the PCE was up +2.6%, the core PCE up +2.8%. With more broad tariffs ahead, plus firms now far less willing to absorb these burdens, the future track of US inflation looks like it has only upside.

Personal disposable incomes rose +1.7% from June a year ago in the US, personal spending was up +2.1%.

In the industrial heartland, the Chicago PMI contracted much less in July, after a good rise in new order levels. But it is still contracting, only slower.

Canada may be being disrespected by its bully southern neighbour via tariff threats and economic pressure, but its economy is showing remarkable resilience. In May, their GDP eased just -0.1% while in June it rose +0.1%. This is a far better result for them than they may have expected given the taunts and penalties they have had to absorb. Unlike Mexico, they aren't getting any delay in US tariff changes.

As expected, the Bank of Japan held its policy rate unchanged yesterday at 0.5%. The decision was unanimous, reflecting the central bank’s cautious approach to policy normalisation.

Japanese industrial production surged in June, and in a quite unexpected way. Year-on-year it was up +4.0%, month-on-month up +1.7%. A small retreat was expected.

The official July PMIs for China were released yesterday, showing their factory sector contracting at a faster rate and their service sector expansion all but evaporating. These results are not disastrous, but they will worry Beijing all the same. The vibrancy they recently re-found isn't lasting.

There were some very positive Australian retail trade data released yesterday. And oddly, this is the final data released for retail sales as they shift to their "Monthly household spending indicator" series. The final data for retail trade brought a +4.9% year-on-year burst in value terms, +1.5% in volume terms. These levels were far better than any analyst was expecting. The contrast with New Zealand is rather stark.

There was a marked slowing in the growth of air travel in June, up +2.6% in June and half the +5.1% rise in the same month a year ago. The North American market was flat, but the Asia Pacific international market rose +7.2% and an outsized gain.

The June air cargo market expanded little overall, up +0.8% from a year ago. But that was because of a sharp retreat in cargo volumes in North America (down -8.3% for domestic cargoes, down -6.1% in international cargoes). Elsewhere international cargo volumes rose +1.6% and Asia Pacific volumes were up +8.3%.

Container freight rates were little changed last week (-1%) with outbound rates from China the weakest segment. From a year ago these rates are now -56% lower although to be fair they were unusually high a year ago on Red Sea security problems. Bulk freight rates fell -5.3% over past week from the prior week to be +13% higher than year-ago levels.

It's probably worth noting that after the large fall in the copper price we noted yesterday, there has been no bounce - it is still falling.

The UST 10yr yield is now at 4.36%, down -1 bp from yesterday. The key 2-10 yield curve is flatter at +40 bps. Their 1-5 curve is now inverted by -18 bps. And their 3 mth-10yr curve is inverted by -2 bps. The Australian 10 year bond yield starts today at 4.27% and down -1 bp 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 over 4.54% and up +1 bp.

Wall Street is slightly softer, down -0.1% in Thursday trade. Overnight European markets were all lower but mixed between London's small easing and Paris's -1.1% drop. Tokyo was up +1.0%. Hong Kong fell another sharpish -1.6% and Shanghai fell -1.2%. Singapore dropped -1.1%. The ASX200 fell -0.2% on Thursday. And the NZX50 fell -0.3%.

The price of gold will start today at US$3,294/oz, up +US$17 from yesterday.

American oil prices have slipped back -US$1.50 at just on US$69/bbl with the international Brent price is now at just on US$71.50/bbl.

The Kiwi dollar was at 58.9 USc and unchanged from yesterday. Against the Aussie we are up +10 bps at 91.7 AUc. Against the euro we are unchanged at 51.6 euro cents. That all means our TWI-5 starts today at just on 67.4, up +20 bps from yesterday helped by a rise against the yen which fell back after their central bank meeting.

The bitcoin price started today at US$117,775 and essentially unchanged again (+US$9) from this time yesterday. Volatility over the past 24 hours has been modest at +/-1.2%.

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