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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22 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.
It's often said we were domesticated by wheat. The average pre agriculture human averaged about 20hrs work a week.
Since wheat, not only have we screwed up our diets, but food seemingly on demand has led humans to have to divest their time in more productive pursuits, consuming more of their time.
Jared Diamond writes at length on it in Guns, Germs and Steel. Not so much as wheat but the domestication of all sorts of food crops and then animals. PDK often quotes him, but then PDK would suggest we've been going backwards ever since!
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.
The article would suggest the world is awash with below cost solar panels. Though anything is below cost when you use forced labour and jungle woodchip. Need up to 2.5 tonne of woodchip for a tonne of met. grade silicon.
"If 75% of Chinese polysilicon production has been implicated as involved with forced labor, and Chinese polysilicon production accounts for 75% of world production, then over half of the world’s polysilicon is being manufactured by companies using forced labor."
https://www.minespider.com/blog/know-the-source-the-polysilicon-supply-…
https://news.mongabay.com/2017/10/burning-down-the-house-myanmars-destr…
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-…
Great article, thanks for the link.
I'm really enjoying the quality of the comments today !
Unregulated AI officially ended from Aug 1, 2025 and the EU AI Act's major compliance deadline has now passed: the rules for general-purpose AI models like ChatGPT, Gemini, and Claude are now in force across all EU member states. The debate about the EU being "anti-innovation" is another issue. It is what it is.
What has become became mandatory?
- All GPAI providers must register with the EU AI Office
- Detailed documentation of training data required
- Risk assessments for "systemic risk" models
- Copyright compliance reporting
- Transparency obligations for model capabilities
Violation of any rules are severe for non-compliance:
- OpenAI (2025 projected: $10B): $700 million fine
- Google/Alphabet (2024: $350B): $24.5 billion fine
- Meta (2024: $164.5B): $11.5 billion fine
I would like to get my hands on some dirty cheap green solar panels ,anyone know a dealer ?
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The Russian Foreign Ministry statement concerning a moratorium on deploying ground-based intermediate and shorter-range missiles. This is a very serious announcement.
https://globalsouth.co/2025/08/04/foreign-ministry-statement-concerning…
...quoted...
"The long and the short of this is that Russia does not feel itself bound any longer to maintain self-imposed restrictions on the deployment of intermediate and shorter-range missiles. This is what is called an arms race, and the result is that the world will bristle with missiles as Russia feels (rightly) that there is a direct and strategic threat to its security.
This is the correct decision to make for Russia, but unfortunately, it recognises and forces us to recognise that the world has been put back to an earlier state. In 1963, the Partial Test Ban Treaty was signed. One can reasonably argue that this is not an erstwhile nuclear arms race, but it won’t take long.
What can clearly be seen, though, is that it was never a case of being anti-USSR at the time because of communism, which is how the advertising went. It was as it is today, a hatred of Russia and now China, because the western forces cannot control the Russian or Chinese civilizational states, and the civilizational states will not pay fealty to the shining city upon the hill.
The INF treaty was signed between Gorbachef and Reagan in mid-1988, and the Comprehensive Test Ban Treaty in 1996. While some countries joined NATO after World War II, the significant growth started after the fall of the Berlin Wall on 9 November 1989. On the dissolution of the USSR and the Warsaw Pact, NATO was increased at least 10 times, with former Warsaw Pact countries joining.
While Russia needed to recognise the placement of intermediate and shorter-range missiles as a threat to its security and indeed its existence, it is nevertheless a sad day. Where are we? I would argue that humanity has taken a decided step back in the historical trajectory, and it does not paint a picture of Joy to the World."
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
I am not sure how many readers on this site realise yet that the developing global geopolitical tensions have grown into an existential threat to humanity.
Richard Werner has been very much in the news of late. I don't believe this is any coincidence - he knows we have a huge crisis on our hands, and this is why he has become more outspoken than ever.
I am positive that Werner is painfully aware that right now there is an arc of more than 40 countries that begins in Scandanavia and the Baltic, runs down through Ukraine and the Black Sea, to the ME, with a branch into the African Continent, and then proceeds through Iran and the South Caucases, through Pakistan, India, Myanmar, Thailand and Cambodia, and then finally on up to Japan and the Kuril Islands.
IOWs, these are wars and potential hotspots that are being deliberately stirred up by the Western military establishment.
This arc surrounds both Russia and China, and the identical area that Mackinder referred to as ‘The World Island’ – and ‘The Geographical Pivot of History’.
The arc of wars and flashpoints is the same as his map, and it’s the same bunch of thieving warmongers plying their trade, just four generations on – the business of human butchery.
The only thing that has changed is the scale of the carnage.
Not good
Col
Thanks for posting. I feel your concern about the general lack of awareness and apathy among Aotearoans on what's occurring on the 'bigger picture.' We have a sizable groupthink on the Gaza genocide (which is common across the Anglopshere). Everything else is ignored.
What do you suggest NZers could do, if we were more aware of the seriousness of the threats of major wars emerging ?
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