Here's our summary of key economic events overnight that affect New Zealand, with news commodity prices are taking a hit in global markets today as overall economic prospects are under scrutiny in both the US and China. And Wall Street is following them down, in their case led by tech firms.
Prices for both hard and soft commodities are in retreat today, including oil, natural gas, steel, copper, aluminium, wheat, and soybeans. Even bitcoin is falling, down -8.5% over the past week when it hit a recent high note. But not everything.
Today's full dairy auction revealed better demand from a wider range of markets than was expected so the declines anticipated were much less, in fact just -0.3% overall. Good buying of WMP and not only from China saw this rise slightly and that limited any overall downside. But there were lower prices for cheese, butter and SMP - lower, but about what was expected for these categories.
In the US, housing starts rose a bit more than expected. But the gain was accentuated because July 2024 was unusually weak and that was because for some reason the 2024 bump came in August. Still it was encouraging because analysts had expected a small retreat in July. Still, the general level remains well below the general levels over the prior years. And new building permits were unusually low in July and are now running at their lowest level since June 2020. So the future isn't that bright in this sector.
In the rural sector, American farmers are particularly worried about how the Trump Administration is upending their industry, and questions about survivability are arising. Many apparently face bankruptcy.
Canadian CPI inflation fell, and by a bit more than expected. It came in at 1.9% in June in a small blip up. It was expected to slip back to a 1.8% rate but in fact came in at 1.7%, the same level it was in April and May. Fuel prices led the decline, but rents rose +3.0% and grocery prices were up +3.4% This will make it tricky for their central bank when they next meet on September 17.
Across the Pacific, the top leaders in China have been on vacation and are now starting to return to active front-line duty.
Meanwhile, Malaysian exports turned out to be much stronger in July than anticipated. They rose +6.8% in July from the same month a year ago, defying market expectations of a -5% drop. They also revised their June result to be a smaller dip than first reported. Malaysia imports were expected to fall sharply, but in fact held their own.
In Australia, the Westpac-Melbourne Institute Consumer Sentiment Index surged 5.7% in August to its highest since February 2022, after a small rise in July. All components rose: family finances compared to a year ago rose +6.2%, while expectations for the next 12 months climbed +5.4%. Views on the economy improved, with the 12-month outlook up +7.6% and the 5-year outlook rose +5.4%, both above historical norms. The time to buy a major household item index gained +4.2%, while unemployment expectations fell -2.4%, still below the long-run level of 129. Their long spell of consumer pessimism may be ending, though sustaining momentum could require more easing. This survey underscores why the second-term Albanese government is riding ever higher in their polls, and the right-wing opposition parties are in disarray.
The UST 10yr yield is now at 4.30%, down -4 bps from yesterday at this time. The key 2-10 yield curve is now at +55 bps. Their 1-5 curve is still inverted by -10 bps. And their 3 mth-10yr curve is still inverted by -4 bps. The Australian 10 year bond yield starts today at 4.32% and up +2 bps bps from yesterday. The China 10 year bond rate is unchanged at 1.77%. The NZ Government 10 year bond rate starts today at just under 4.53% and up +5 bps.
Wall Street has eased today with the S&P500 down -0.7% in Tuesday trade. Overnight, European markets were firm betweenLondon's +0.3% and Paris's +1.2%. Tokyo ended its Tuesday session down -0.4% and off its record high. Hong Kong was down -0.2% while Shanghai was unchanged. Singapore recovered +0.7% however. The ASX200 fell -0.7%, while the NZX50 was down a lesser -0.3% in Tuesday trade.
The price of gold will start today at US$3,316/oz, down -US$17 from yesterday.
American oil prices have fallen -US$1 to be just under US$62.50/bbl with the international Brent price over US$65.50/bbl.
The Kiwi dollar is at just on 59 USc and down -20 bps from yesterday. Against the Aussie we have firmed +20 bps to 91.4 AUc. Against the euro we are down -20 bps at 50.6 euro cents. That all means our TWI-5 starts today at just under 66.9, and down -10 bps.
The bitcoin price starts today at US$113,512 and down -2.6% from this time yesterday. Volatility over the past 24 hours has been modest at just under +/-1.5%.
Join us from 2pm NZT this afternoon for full coverage of the RBNZ OCR decision and the following press conference.
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26 Comments
"American farmers are particularly worried about how the Trump Administration is upending their industry, and questions about survivability are arising" - you get what you vote for! But bankruptcy is much better than those woke Democrats right?
Sort of amazing that voters all over don't put much thought into who they vote for, and then complain about what they got.
Not an isolated consideration of not knowing what you have voted for though is it. With full knowledge of the pending decommissioning of the Maui gas supply the sixth Labour government abruptly shut off all exploration in search of replacement and in so doing knee capped NZ’s credibility for future resumption. To ensure that this is not to be regarded as a mistake Mr Hipkins assures that a seventh Labour government will repeat the exercise. Now PDK is likely to enter here and strongly attest that any venture of this sort is ultimately self defeating but even so NZ and its people would for the present time be well served by a significant discovery. Which in turn raises the question, given that exploration was said to be tailing off anyway, is there anything actually out there.
Sort of makes PDK's point though doesn't it? The cost of exploring off shore is huge by any measure which must be a significant deterrent. There are shale oil deposits in the SI though, and perhaps also accessible gas. But the full picture is that the resource is at best finite, at worst almost completely used up so alternative sources of energy must be explored for business needing them.
The Labour position though is short sighted in that they are not promoting exploration in alternative approaches or even a forward looking discussion of what NZ will look like or need in the long term. It almost looks like they are trying to continue the old denial mantras while capitulating to green demands to push us back to the stone age without a comprehensive discussion or understanding of what the consequences will be.
Labour's (and Nationals if we're being honest) view is predicated on a 2005 era globe being the status quo in perpetuity. Free and open access to global commodities that are always available, and dominance of a global rules based order where expensive virtuous domestic rules and regulations are both desired and appreciated.
It'd seem like our politicians are just going to watch everything happen and then initiate knee-jerk responses when they do.
Back on the old 2005 track, run by clapped out old Chinese diesel engines, all out for a cup of tea and a pie at Taumarunui
Can we swap out the diesel engine for an old Nissan Leaf with 40ks of range?
Sounds like a great battery bank to go with your solar
But bankruptcy is much better than those woke Democrats right?
Anyone who hates the same things I do, must be a prudent decision maker with my interests at heart.
Texan (trumpster) staying at present. Talking about high beef prices back in US.
I mentioned that I didn't think tariffs on our beef would worry us as we supply to our max quota (as does Aus) and that was unlikely to change due to US beef shortages. End of conversation.
Bit nervous to pursue political conversation as it would have ended in much awkwardness!
Family members heading to the States later this year visiting farming friends they've known for 40 years but haven't seen for years. They know that politics is going to be an absolute no go zone.
Personally think they're nuts even visiting.
They could talk about all the farming subsidies American farmers need to stay farming. That should get a conversation going.
It's mostly still normal there (well, as normal as America is). The politics thing is pretty crazy. Even if I was a staunch supporter of a political party, I wouldn't go stick their flag on my front lawn or on my car.
Its crazy everywhere now, look at the UK and police locking people up for tweets and facebook posts, its gone past nuts in the UK and
they do not even have a trumpster.
Bojo was pretty Trumpy.
They'll get another one. I'd say they'll be rife everywhere come the 2030s.
Personally think they're nuts even visiting.
Yes, I wish someone would report on why that musician/rapper was turned around recently. If it was due to social media posts - I don't think I'll ever attempt to go home again - as I fear the GOP might be in power forever.
I asked AI for a list of the biggest soy producing states and also which way that state voted last election.
LOL
Is there a lack of maturity or a lack of depth in the dairy futures trading market?
There has been a constant and repetitive view before each fortnightly auction of reasonably substantial price declines particularly in WMP. And each auction they are proved wrong.
Market Highlights NZ only market https://www.nzx.com/markets/nzx-dairy-derivatives
>4.0 million lots Traded since launch – March 2025
31,000 lots Record daily volume – March 2025
94,173 lots Record monthly volume – March 2025
193,069 lots Record quarterly volume – Q2 2025
198,751 lots Record single day open interest – 17 June 2025
402 trades Record daily trade count – February 2025
Its a cash settlement market due to the weight and difficulty in delivery so more of a hedging and risk management tool in NZ , there are other international markets as well where the chinese prob prefer to hedge etc I have never seen it traded or know anyone who is active. seems to me that many of the physical buyers stockpile products so maybe they just do not want to signal before auction what they need, if its cheap they buy a bit more to stockpile if thats their want? maybe they get more active in futures if stockpiles are low and they know they need to bid physical.
would like to learn more , anyone else have thoughts
In the rural sector, American farmers are particularly worried about how the Trump Administration is upending their industry, and questions about survivability are arising. Many apparently face bankruptcy.
To my mind, it is being done purposefully. Two examples being the ditching of USAID under the guise of wasteful spending, which used to have many contracts with local producers - and the second is the attack on the farm labour market, under the guise of immigration. It is all planned - family farming is out and the corporate sector will swoop in.
And when they do, guess what - immigrant workers will no longer be a problem.
This is the most anti-American way of life government EVER.
And how long will it take for the people on the street take to realise they've ben shafted and start to fight back?
Federalisation of the National guard might put troops on the ground, but making them fight their own could well be another story. The push back on the unconstitutional stuff that's going on is increasing, and the mid terms are looming. The threat to the GOP and the American right is growing daily.
The threat to the GOP and the American right is growing daily.
Only if elections are fair/not rigged. Can't see that happening as the GOP know they are on a hiding to nothing - hence they'll make sure the authoritarian way remains safe for now.
They seem to be writing the book on 101 ways to defeat democracy.
Yep, Trump and the GOP are trying to use "redistricting" to rewrite their electoral maps and they're using all the currently Republican controlled states to start with, and he wants to have a new census as he claims the old one shouldn't count, and now on Putin's advice apparently he is planning to require that to vote you must do so in person. MSNBC is saying that this will mean ICE will be at every voting site to ensure only citizens vote. That one could back fire on him, but all the check points will stop a lot of people getting to the voting sites on time. The call that he is undermining democracy is getting louder.
Family farming has been dropping for years. Nothing new. Also from what I have seen. They have used very cheap illegal immigrates because it was cheaper than spending money on harvesting equipment, especially on vegetable farms.
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