Here's our summary of key economic events overnight that affect New Zealand, with news markets have brushed off the Nvidia result and chosen to extend their risk appetite. The S&P500 is at another new record high. But bond markets aren't so sure this is justified.
In the real world, US initial jobless claims were little-changed last week from the prior week, both in actual terms and from what seasonal factors would have suggested. There are now 1,945,000 people on these benefits, +101,500 more than at the same time last year.
The American Q2-2025 GDP was revised slightly higher in its second estimate than the first mainly due to a slightly smaller decline in investment.
Pending home sales fell -0.4% in July from June, extending the -0.8% drop in the prior month to mark the first back-to-back contraction since January. They were down -0.7% from a year ago as the American housing market seems in a long-term slow decline having never really recovering from the pandemic period.
The Kansas City Fed factory survey was stable overall but that was despite a fall in export orders and elevated cost pressures. survey. There was a modest rise in August from July, but most metrics are still lower than a year ago.
Earlier today there was a much less supported US Treasury seven year bond auction (-11% less bid value) but the median yield fell to 3.87% from 4.06% at the prior equivalent event a month ago.
In Canada they reported that average weekly earnings were up +3.7% to C$1,302 in June, following a +3.3% increase in May.
In India, industrial production rose in July and the pace picked up by more than expected. The expansion was +3.5% when +2.1% was anticipated, and more than double the pace of June's +1.5%.
In Europe, despite their inflation pressures being modest and on target, settling it at 2.0%, the overnight release of the ECB minutes revealed a split among policy makers on how to assess future risk. They left their policy rate unchanged despite some thinking rates need to go lower to support growth and counter US tariffs, while others thinking the risk of future inflation is rising. Despite that split review, in the end the decision to hold rates unchanged was unanimous.
Global container shipping freight rates fell -6% last week from the week before to be -60% lower than year-ago levels, although that year-ago base reflected unusual stress in the Red Sea shipping lanes. Once again, the recent falls are all to do with outbound trade from China. Interestingly, Chinese shippers are now targeting Australia and New Zealand, along with the Middle East because of the higher rates they can get in these alternative trades. Bulk cargo rates are little changed week-on-week but are up nearly +20% from a year ago.
The UST 10yr yield is now at 4.21%, down -3 bps from yesterday at this time. The key 2-10 yield curve is less steep at +57 bps. Their 1-5 curve is now inverted by -17 bps. And their 3 mth-10yr curve is now inverted -11 bps. The Australian 10 year bond yield starts today at 4.28% and down -4 bps from yesterday. The China 10 year bond rate is up +1 bp at 1.78%. The NZ Government 10 year bond rate starts today at just over 4.36% and also down -4 bps from yesterday.
Wall Street is firmer but enough to claim a new record, with the S&P500 up +0.4% in Thursday trade and despite the Nvidia result and outlook. Overnight, European markets remained mixed between London's -0.4% and Paris's +0.2%. Yesterday Tokyo ended up +0.7%. Hong King was down -0.8% while Shanghai bounced back +1.1%. Singapore ended up +0.2%. The ASX200 rose +0.2%. And NZX50 rose +0.3% in its Thursday trade.
The price of gold will start today at US$3,415/oz, up +US$20 from yesterday.
American oil prices are little-changed at US$64/bbl with the international Brent price is still just under US$68/bbl.
The Kiwi dollar is at just on 58.9 USc and up +30 bps from yesterday at this time. Against the Aussie we are up +10 bps at 90.1 AUc. Against the euro we are unchanged at 50.4 euro cents. That all means our TWI-5 starts today at just on 66.4, and up a net +10 bps from yesterday.
The bitcoin price starts today at US$112,596 and up +0.2% from this time yesterday. Volatility over the past 24 hours has been modest at just under +/- 1.1%.
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17 Comments
Is anyone else out of power in Auckland ?
Wellington has all the power
LOL
Wayne Brown isn't laughing
NATO is reporting that all members are paying 2% of their GDP towards defence, so Trump will take that as a big win. What he may not be impressed with when he realises the implications is that Rheinmetall have commissioned a major new factory producing ammunition that will reduce NATO, Germany and the rest of Europe's reliance on US sources of ammunition. Rheinmetall are also pretty innovative in developing new weapons too, so that area of their business will be being ramped up based on the learning that is coming out of Ukraine.
Would you then be recommending shares in F N Herstal (Fabrique Nationale D’Armes De Guerre) as being a timely investment?
One of the issues I have with some NZ funds -and NZ kiwisaver providers - is that they dont allow investment in arms companies. Sounds great in theory but how does the free world remain so - or Ukraine - if they cannot defend themselves. Govt default provider rules also restrict where investments can be made including not allowing investment in fossil fuel production - which is a very politically driven position
Nailed it. Defence industries build weapons to provide just that - defence. It doesn't in itself imply aggression.
So to Foxy, yes buy Rheinmetall and FN if the price is right.
PS the rifles we had when I joined our military was the SLR (FN L1A1). A damn good weapon, and still rates as one of the best.
FG. No. Less personally arduous to be a principled ethical investor, avoiding the need to confront the unpleasant reality that brutes who would destroy our way of life, abound.
Rheinmetall has become such an effective supporter of Ukraines resistance to Russia's invasion of Ukraine that Putin commissioned an assassination squad to murder the CEO Armin Papperger. Foiled thanks to western intelligence detecting the plot. Artillery shell production across western Europe is now 6 times greater than 2 years ago.
Like it or lump it history scarcely fails to confirm that the only powerand force that autocrats, tyrants, despots and the dictators of today respect and fear is greater power and force and that includes within their own borders hence the great suspicion and control of their own military. One thing Trump has achieved with those precision bomb holes in Iran, delivery and departure undetected, is bust wide open the notion of fortress Iran. Perhaps a similar one of those on the Russian frontlines in the Donetsk region might achieve more attention than anything else to date.
Except that economically degraded and militarily feeble Iran is a world of difference to Russia. Iran was quickly reduced to impotent, irrelevant raging and a rapid bending of the will to the US. America overtly involving itself in physical conflict in Ukraine would bring down armageddon from a degraded and militarily incompetent but still highly dangerous Russia. Trump appears to realise that, with his caution justified.
Can only agree that is what the balancing act is, simply speaking. Be that as it may though, on the other side, is the complexity of an identity that considers himself to be omnipotent but is being made to look decidedly impotent by his opposite.
Murray, yes your last point is highly pertinent. There's nothing like current on the ground experience to spur weapons innovation. It's possible European heavy weapons technological progress is already ahead of the US which has huge ramifications for yankee defence contractors competing with them on world markets. China is well aware of the benefits of real time testing, with its saving of Putins hide in Ukraine motivated to a significant extent by this. Trump validly demands the EU provides for its own defence against imperialist Russia but this consequently reduces his leverage over Ukraine.
Some old heritage still active in there in between the lines isn’t there. For example Rheinmetall absorbing Oerlikon. it is largely overlooked that historically the smaller Continental nations such as Belgium and Czechoslovakia were among the largest developers and producers of weaponry. In terms of the latter Skoda was a must have for Adolf of course.
Yes, especially Czech heavy industry which the Austrian corporal coveted, although the multiplicity of tank models was to have serious implications for the Wehrmacht which struggled to maintain the highly diverse range of parts and logistics required as supply lines became massively extended. It's a curious thing to observe the new Krupp style armament empires arising within Germany, a development that not too long ago would have been a cause for disquiet.
Stumbled over this excellent discussion...well worth the 20 odd minutes
https://www.youtube.com/watch?v=UsgwD3IHZgw
One has to wonder at the (lack of) intellect of the politicians that sign up for these....or is the reason even more disturbing?
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