Here's our summary of key economic events overnight that affect New Zealand, with news tough economic news keeps coming, even during this lazy August vacation period in the northern hemisphere.
First, in the US factory orders were expected to retreat in June, consistent with the labour market and PMI signals - and they did. They were down -4.8% from May, although they are still up +6.6% from a year ago. The June falls were largely driven by a -22% plunge in transportation equipment orders. This same data confirmed the earlier durable goods order decrease in June of -9.4%. (This data is collated by another agency, the US Census Bureau, so it will be interesting to note if the head of that agency gets fired also for releasing data that shows the US manufacturing economy weakening.)
We are awaiting important services PMIs for July and they are expected to be much better than those for their factory sector.
American economic uncertainty is now well embedded in consumer behaviour. Some brands are really suffering, and causing large writedowns.
Meanwhile, American vehicle sales rose in July to an annualised rate of 16.4 mln, slightly more than expected because they got a boost ahead of expected price increases from the August 1 tariff-taxes. But the boost was relatively minor, just +3.6% ahead of the same level in July 2024.
In China, parts of the country are battling heavier-than-usual rainfall. And that includes Beijing itself, a city of 22 mln. Dozens of people have died in flooding already. They are expecting 200 mm of rain to fall over the next 24 hours, on top of what they have had which created their emergency. Beijing's normal annual rainfall is 600 mm.
In Australia, the Melbourne Institute's inflation gauge survey result brought an unwelcome surprise. It surged +0.9% in July, the steepest rise since December 2023 and a sharp rebound from June’s modest +0.1% increase. The RBA is unlikely to be impressed because even if inflation is within range it seems to be testing the upper end of that range and a rate cut could well push it up out-of-range. Still, financial markets are pricing in a full -25 bps cut for Tuesday, August 12 when the RBA next meets. And they have priced in two more by the end of 2025. At this time, given inflation is proving harder to lick, that seems unlikely. And in turn there could be many disappointed market traders - and mortgage holders - as the year unfolds.
The UST 10yr yield is now at 4.19%, down -3 bps from yesterday. The key 2-10 yield curve is little-changed at +51 bps. Their 1-5 curve is also holding at -11 bps. And their 3 mth-10yr curve is slightly more inverted at -17 bps. The Australian 10 year bond yield starts today at 4.21% and down -11 bps from yesterday. The China 10 year bond rate is still at 1.71%. The NZ Government 10 year bond rate starts today at just over 4.50% and down -5 bps.
Wall Street has started its week with a partial recovery, up +1.3% from Friday but still down -1.7% from its high a week ago. Overnight, European markets also bounced back, with London up +0.7% and Frankfurt up +1.4%. Paris was up +1.1%. Tokyo ended its Monday session down -1.2% however. But Hong Kong was up +0.9%, Shangair was up +0.7% and Singapore was up a full +1.0%. The ASX200 closed its Monday session virtually unchanged. And the NZX50 fell -0.4%.
The price of gold will start today at US$3,372/oz, up +US$10 from yesterday.
American oil prices have slipped back again, down -US$1 to just under US$66.50/bbl with the international Brent price just over US$68.50/bbl.
The Kiwi dollar is at 59 USc and down -20 bps from yesterday. Against the Aussie we are down -10 bps at 91.4 AUc. Against the euro we are also down -10 bps at 51 euro cents. That all means our TWI-5 starts today at just on 67, down -10 bps as well.
The bitcoin price started today at US$115,217 and up +0.9% from this time yesterday. Volatility over the past 24 hours has been low again at just under +/-0.7%.
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11 Comments
There is no doubt that Trump has tossed a significant challenge to the big US corporations. there is an interesting article on CNN about Motorola trying to manufacture cell phones in the US, which failed; (https://edition.cnn.com/2025/08/04/tech/smartphones-made-in-the-us-moto…)
While reading this I wondered about how far the technology had shifted since then, not just in automation, but also manufacturing that could make such a venture more viable today? It's an interesting challenge that I'd bet many are digging into just to make themselves less reliant on and more competitive with the US. It will take time, and multiple international agreements, but I think it will happen. The shift in politics happening now is a signal that it will happen again in the future. Being able to survive these ructions will be the trick.
Similarly, and on a grander scale, the US military finds itself short of expertise and ability to keep itself up to date. For example, as TK pointed out on here, the nuke subs ordered by Australia now look highly unlikely as the US is struggling with capacity to even produce its own requirements.
Great article on AFR warning that most aussies already own to much of their assets in property and the ASX has 24% allocation to banks who are exposed to a falling property market…..
meanwhile Nz property his ready to launch say nz me
i may watch the launch from a safe distance
What's AFR? Can you provide a link?
Having too much of your assets in property is only a problem if they're carrying too much mortgage and the market falls. Business decisions and they're trying to shift the risk. Happening here too, to a degree. Caveat emptor.
AFR = Australian Financial Review
"China's biggest solar firms shed nearly one-third of their workforces last year, company filings show, as one of the industries hand-picked by Beijing to drive economic growth grapples with falling prices and steep losses.
The job cuts illustrate the pain from the vicious price wars being fought across Chinese industries, including solar and electric vehicles, as they grapple with overcapacity and tepid demand. The world produces twice as many solar panels each year as it uses, with most of them manufactured in China.
..."There's a lot of overcapacity in China, like steel, like cement, but you don't see any industry in the past having industry-wide cash loss for one and a half years already," Lau said.
Company-level losses are on the same scale as in real estate, another crisis-hit sector, even though solar is only about one-tenth the size, he said.
"This is highly unusual and highly abnormal."
https://www.reuters.com/business/world-at-work/chinas-solar-giants-quie…
Long term China is going to have to fight a major problem, and they won't be alone. As populations decline, and become more enlightened, consumption should decline. So how do you save the planet, keep your population happy and obedient while being able to support them and keep the country stable? A war is not the solution to this, but might be seen as an easy distraction. But that can easily backfire.
Over time there has been a lot of research, talk and technology driving towards efficiency. Not really a bad thing, as it pushes the technological leading edge, but there is a cost both near and long term. Keeping people occupied and happy. I don't agree with the Utopian UBI argument. I believe people need to be occupied otherwise they get bored and then trouble arises.....
Post of the day, Murray.
Those of us who can keep ourselves occupied (I've got more projects than life-remaining) are actually a minority; the majority seem to need someone else to tell them how to spend their time (usually 'working'). The problem with a UBI is that it has to have someone else making the stuff it wants to buy; slavery by any other name, just offshored slavery. Few in the woke arena realise this.
I suggest we need to teach history. Not the recent stuff, but stoneage. Population theories are screwing us. People have worked to survive since the dawn of time. If you didn't want to, then you chose to die. Blunt fact! No one could do it for you, because they had to support themselves. If you wanted children, you had to be able to provide for them to keep them alive, and as they grew, teach them to provide for themselves and perhaps create a family or group synergy to get ahead of the seasons. Population theories have buried this blunt fact as group leaders (politicians) bled the people of their spare rewards (and sometimes more) to build their own wealth while they got lazy.
Get back to basics within the modern world.
I'm surprised the world isn't being flooded with cheap solar panels then. Usual behaviour is to dump excess stock to recover what cash you can. Or maybe we are awash with cheap solar panels and it's the local costs that are holding prices.
Awash with cash. How the investment world is feeding upon itself
https://www.abc.net.au/news/2025-08-05/stock-market-how-the-investment-…
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