Here's our summary of key economic events overnight that affect New Zealand, with news of mixed and confusing economic signals from the world's largest economy where scoring own-goals is becoming an embedded feature of their economic management.
But first, there was an overnight Pulse dairy auction for both SMP and WMP and that delivered lower prices with the SMP price dropping -2.0% from the prior week's full dairy auction, and the WMP price down -1.1%
In the US, financial markets are quite hesitant because Trump is attempting to fire a non-loyal Fed governor for made-up 'integrity' reasons (pot-kettle-black). Because she in Black, and a woman, Trump's vengeance is particularly pointed in this case and contrasts starkly with how he treats Powell (which is also personal and isn't good either.) She hasn't been charged with anything let alone convicted, and legal action over the Presidential 'letter' will now follow. She is resisting the bullying. The USD slipped and long dated UST bonds posted losses as market unease spread.
Overnight releases of American economic data was quite mixed. First, durable goods orders fell in July from June, down -2.8% and on top of the -9.4% fall in the June result. That takes the year-on-year July result to just a +3.5% rise, about what current inflation can account for. Non-defense, non-aircraft capital goods orders rose a little more than that, up +4.5% from a year ago, so that was positive. But they fell -8.0% in July from June.
The Richmond Fed factory survey in the mid-Atlantic states remained negative in August, although not as much as the outsized July retreat. Factories in this region have been doing it tough since March 2025. Cost inflation is hitting them hard as a result of having to pay the tariff taxes. The average growth rate of prices paid increased notably, while growth in prices received was nearly unchanged in August.
Yesterday we noted the negative Dallas Fed factory survey for Texas. Today the services survey for the same region was released and it reported a better expansion. But they reported the improvement as 'slight'.
There was also only a slight change in consumer sentiment reported by the Conference Board for August. Rising worries about jobs and income were offset by more optimistic views of current and future business conditions, they said. Overall, consumer confidence dipped slightly in August but remained at a level similar to those of the past three months. Tariff-taxes are a key reason there is no improvement in this survey. Consumers’ average 12-month inflation expectations picked up after three consecutive months of easing and reached 6.2% in August, up from 5.7% in July.
Once rare seven-year car loans are fast becoming the norm in the US. They’re often the only way buyers can afford new vehicles, with the average vehicle sale prices surging +28% in five years to approach NZ$85,000. And tariffs will make than much worse. Bloomberg is reporting that in Q2-2025, seven-year vehicle loans represented 21% of all new-vehicle financing. Six-year loans, at one time considered the upper end of the range, are now the most common, accounting for 36%. Some buyers are even now going for eight-year loans.
There was a large and well supported two year US Treasury bond auction overnight, resulting in a median yield of 3.60%, down from 3.87% at the prior equivalent event a month ago.
North of the border, Canada released some business activity data for July, and both metrics rose and by more than expected. Their wholesale trade was up +1.3% from +0.7% in June, driven by stronger vehicle sales. They manufacturing sales rose +1.8% in July, an improvement from +0.3% in June. Transportation equipment, and the energy sector, provided the key boosts.
Across the Pacific in South Korea, you may recall the huge jump in consumer sentiment in July after the peaceful resolution of the attempted executive coup there earlier in the year. The rule of law won. In August, that confidence level dropped sharply as things returned to normal. But to be fair is is still far higher than at any time in the past ten years - despite their ugly treatment by the Trump Administration.
In Australia, Australia Post has temporarily partially suspended postal services to the US. All such deliveries now require full customs duties and declarations making the trade impractical for small value items and substantial jeopardy for the shipper. The disruption to such courier services is spreading to most Asian countries now.
The UST 10yr yield is now at 4.25%, down -3 bps from yesterday at this time. The key 2-10 yield curve is now steeper at +57 bps. Their 1-5 curve is still inverted and still by -13 bps. And their 3 mth-10yr curve is inverted -7 bps. The Australian 10 year bond yield starts today at 4.32% and up +2 bps from yesterday. The China 10 year bond rate is down -2 bps at 1.76%. The NZ Government 10 year bond rate starts today at just under 4.41% and up +1 bp from yesterday.
Wall Street is little-changed, with the S&P500 up almost +0.2% in Tuesday trade. Overnight, European markets all lower between Frankfurt's -0.5% and Paris's -1.7%. Yesterday Tokyo ended down -1.0%. Hong King was down -1.2% and Shanghai slipped -0.4%. Singapore was down -0.3%. The ASX200 fell -0.4%. And NZX50 fell -0.9% in its Tuesday trade with a sharp fall away at the end of trading.
The price of gold will start today at US$3,381/oz, up +US$10 from yesterday.
American oil prices have fallen -US$1.50 to US$63.50/bbl with the international Brent price now just under US$67.50/bbl.
The Kiwi dollar is at just on 58.6 USc and little-changed from yesterday at this time. Against the Aussie we are up +10 bps at 90.3 AUc. Against the euro we are unchanged at 50.3 euro cents. That all means our TWI-5 starts today at just on 66.3, and also little-changed from yesterday.
The bitcoin price starts today at US$109,747 and down another -2.4% from this time yesterday. Volatility over the past 24 hours has been modest at just on +/- 1.5%.
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28 Comments
It'll be interesting to see what is happening in the US re vehicle prices and how they will impact vehicles imported here. Most if not all our Fords are assembled in Thailand, so the impact could easily be minimal to nil. On the other hand....
It’s a strange old world indeed. Not so long ago an old friend of mine bought new a nice Hyundai sporty coupe thingy. It came in made in the Czech Republic.
the strangest part is Trump. A fair amount of the commentary in the US is beginning to talk about his 'cognitive decline', but he is really just a mean, immature and spiteful, sad little man. Unfortunately he also has an awful lot of power where the limits of which have essentially been removed by a branch of government who are refusing to meet their constitutional obligations.
I note even Joe Rogan is beginning to tell people to change how they vote.
It's going to be an interesting ride......
But the damage has already been done.
The mid terms are going to be telling. If the President loses control of even just one of the houses, the administration will descend into an unimaginable brawl.
Will be rigged by trump and co
My 2000 "NZ new" Suzuki Vitara is made in Hungary.
People in the US seem to insist on buying large, expensive vehicles. They can buy a new Toyota Corolla for around NZD$37,000.
Perhaps because people and car parks are also very large in the USA.
What sane person would drive a Corolla when they can drive a Silverado 2500 duramax? Who wants to be crammed into tiny little seats for a 5 hour drive with the engine reving at 4k RPM?
US GDP per capita is almost twice ours, the poorest US State had higher GDP per capita than the UK. They clearly do something better than we, or most of the rest of the world do.
I find my new Toyota company car very capable of long hauls in comfort. There's also the option in the States of getting a Camry or Rav4. The Rav4 is the third top selling vehicle in the US at around NZD$50,000. If they are so rich why are they taking out these long loans? "Once rare seven-year car loans are fast becoming the norm in the US. They’re often the only way buyers can afford new vehicles". They are obviously buying vehicles they cannot afford.
In the past small Japanese vehicles were very popular in the US and seriously disrupted the local vehicle manufacturing industries. People were probably more sensible when spending money back then.
Crime, poor health, and litigation culture do wonders for GDP. I wouldn't necessarily call that "better" though.
Yes, they pound out deficit spending to keep the economy looking much better than it really is. Ours looked great in 2021 too.
It sounds like you last drove a Toyota Corolla in the 1980s. :-)
I'm 6'6" and can find a very comfortable driving position in a current generation Corolla. And with the CVT transmission, the engine is ticking away at under 2,000rpm at 100km/h.
Would never happen in NZ.
"The financial mechanics are straightforward yet devastating. Technology executives with authority over contractor requisitions and interview processes can direct substantial volume toward "preferred" staffing shops. In exchange, these vendors provide kickbacks that, in Walmart's case, generated what sources estimate as millions in illicit payments over multiple years.
The Walmart incident arrives amid a broader reckoning within the technology staffing industry. Tata Consultancy Services terminated 16 employees and blacklisted six staffing vendors following a comprehensive bribery investigation in 2023. Meanwhile, the Department of Justice has intensified prosecutions targeting visa fraud and kickback schemes within IT consulting firms, signaling federal determination to dismantle these networks."
https://www.ctol.digital/news/walmart-fires-vp-kickbacks-terminates-120…
Will the proposed Business Vsa add more rorts to our system?
"" The Government will today announce a new Business Investor Visa, which will give foreign business people investing $2 million into an existing business here a fast-track to residency in New Zealand. A $1m investment comes with a three-year work-to-residency pathway. There's a list of conditions associated with the visa, such as English language, health, character and experience tests. There are also excluded businesses, including adult entertainment, convenience stores and fast-food outlets.""
Interesting list. In the UK there seemed to be new but empty barbershops in every town.
Fascinating. But quite understandable if you understand India business culture. Kickbacks make the procurement wheels go around. Is it corruption? From a Western POV, quite possibly. Mind you, we bend like bamboo in how we perceive and determine what corruption is.
And don't take this the wrong way. There is a reason why Indians hire other Indians and prefer to work with Indian suppliers. They have an understanding of how these relationships work for their interests that non-Indians may not. There is a reason why MNCs like to hire Indians in senior roles across Asia in particular - they're good at getting things done while ensuring that things look dandy on the surface. Look under the mat and things may not be as they seem in some areas. But hey, if those profit targets are met, that's what matters to the board and the shareholders.
Shareholders probably prefer hires to be made on merit, but yes, the board my have other goals they have set themselves, so let it roll.
Our current CEO of Air NZ was the CEO of Walmart before he came here. This happened on his watch.
I wonder what the trigger was that led them to discovering it/
The allegations of kickbacks in Walmart’s Global Tech division surfaced anonymously on platforms like Blind, Reddit, and X, with some posts attributed to an account calling itself a “H-1B whistleblower”.
Initial reports and amplification came from employee forums and IT consultancies, but as yet, no individual whistleblower has been publicly named or verified; the scandal is still considered unconfirmed and largely circulating as rumor.
The posts claimed a VP received kickbacks for favoring certain contracting agencies supplying H-1B visa holders, sparking investigations and substantial layoffs, but no formal investigation has confirmed these accounts.
https://www.financialexpress.com/world-news/us-news/walmart-h-1b-scanda…
The gold market continues its stealth through the miners. GDX now up 78% year to date. To give that some perspective, GDX is only up 68% since its inception in 2006.
Norway created a sovereign wealth fund to ensure that money made from the country’s non-renewable resources would benefit citizens. The fund is worth $US1.9 trillion.
Last year, the Aussie govt collected more from student debt repayments than from The Petroleum Resources Rent Tax (PRRT) - a special tax designed to ensure that Australia benefits from the high profits generated from extracting gas and oil resources. As the industry has boomed, PRRT has barely grown. Meanwhile student debt repayments continue to trend upwards.
https://australiainstitute.org.au/post/in-2023-24-australians-paid-more…
They have a far greater sense of public good. I feel trying to push that in NZ wouldn't be politically viable on the basis that most wouldn't be willing to wait to reap the rewards. Too many vote based on their immediate wants, and patience is getting worse by the generation.
EU turns Japanese.
For the first time in its history the EU recorded fewer births in 2024 than the US Despite having an extra 120 million inhabitants
...there more people in France born in 1946 (and still alive) than there are people born in 2024
Is society creating this (financially / socially / etc), or is it evolution? Hard to know really.
Remember that Japan has an 'infrastructure surplus'. While their population declines, share of infrastructure per cap increases and qlty of life improves as an extension.
It's true they're still benefitting from previous decades of investment, especially in transport and in the cities. But rural areas are now struggling to maintain, renew and replace existing assets that were made for much larger populations.
Private sector is less sentimental. There's a lot of former Ito Yokados in inaka that are now parking lots. They just raze them to the ground when they leave. Kinda amazing how small some of the building footprints were. Also makes some towns pretty spooky and sad.
Ito Yokado is part of Seven & i Holdings. Nature of the business is that they adapt.
Rural Japan is incredibly self sufficient. Always has been.
At 2pm there's an announcement on food prices.
Anyone else betting on another Review?
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