Here's our summary of key economic events overnight that affect New Zealand, with news markets now universally expect the American central bank to cut rates tomorrow by -25 bps.
But today, the overnight dairy auction brought a much better result than expected with the declines for both WMP and SMP nowhere near as sharp as indicated by the earlier derivatives pricing. That will very much ease the pressure on any farm gate payout forecasts. The detail is interesting. There was notably softer demand from China for WMP, but that was countered by stronger SE Asian demand. Cheddar cheese prices rose because of some unexpected demand from North America, But mozzarella prices dived -9.6% on weak Chinese demand. Overall prices slipped just -0.8% in USD, but there were down a sharpish -2.9% in NZD as the greenback took a tumble overnight.
Meanwhile, US retail sales rose in August and by a little more than expected. They were up +5.0% after a +4.1% rise in July. But this data is not inflation-adjusted in the way that other countries report. We will have to wait for sales volume data later in the month.
And US industrial production rose in August too, but only up +0.1% from the prior month and only after a -0.4% revised fall in July. Year-on-year it is up +0.9%, about average for 2025, but hardly evidence of manufacturing reshoring.
Homebuilder sentiment was flat in August as reported by the NAHB survey. It is remaining at the very low levels we have seen since May, and very much lower than this time last year. They are pinning their hopes on Fed rate cut(s) delivering a changed outlook.
And staying in the US, crypto giant Binance looks like its lobbying and support of Trump will see the US Justice Department drop a key oversight requirement in its US$4.3 bln settlement of allegations that it didn’t do enough to prevent money laundering. So, pay the money, get no oversight, and go back to enabling money laundering. A real Trump-type deal.
Meanwhile, Canadian CPI inflation rose from 1.7% in July to 1.9% in August, a lesser rise than was anticipated. Meanwhile there was a rather sharp fall in housing starts there in August, down -16% from July to 245,791 units from a revised 293,537 in July and well below market expectations of 277,500. But they were still +10% higher than year-ago levels. A rate cut is coming in Canada tomorrow too.
In China, there are some signs that Beijing's stimulus could be working. Steel output not only stopped falling, it actually picked up in the first two weeks of September, defying downbeat expectations. And iron ore prices rose too recently.
In the EU, industrial production rose more than anticipated in July, although the expectations aren't high.
The UST 10yr yield is now at 4.03%, down -1 bp from yesterday at this time. The key 2-10 yield curve is still at +51 bps. Their 1-5 curve is still inverted by -4 bps. And their 3 mth-10yr curve is now inverted -10 bps. The China 10 year bond rate is down -1 bp at 1.86% and off its six month high. The Australian 10 year bond yield starts today at 4.22%, down -3 bps from yesterday. The NZ Government 10 year bond rate starts today at just on 4.31%, down -4 bps from yesterday.
Wall Street is a touch lower today, down -0.1% on the S&P500. Overnight, European markets were lower with Paris and London down -1.0% and Frankfurt down -1.8% in Tuesday trade. Tokyo rose +0.3% in its Tuesday session. Hong Kong and Shanghai were both little-changed, as was Singapore, The ASX200 rose +0.3%. The NZX50 was up +0.2%.
The price of gold will start today at US$3,686/oz, up +US$7 from yesterday.
American oil prices are up +US$1 at just over US$64.50/bbl, with the international Brent price firmish just over US$68.50/bbl.
The Kiwi dollar is at just on 59.9 USc and up +20 bps from yesterday. Against the Aussie we are up +10 bps at 89.6 AUc. Against the euro we are down -20 bps at 50.5 euro cents. That all means our TWI-5 starts today at just over 66.7, little-changed from yesterday.
The bitcoin price starts today at US$116,480 and up +1.3% from this time yesterday. Volatility over the past 24 hours has again been low at just under +/- 0.8%.
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22 Comments
A Listener columnist referenced this:
GARY: The USA's Most Dangerous City? What I Actually Saw - YouTube
It - and their visits to other places - tells us why Trump. And tells us why the 'economics' media is wrong to focus on just him. The 'top'10% of US citizens now account for 50% of consumption; these folk (in the clip) are the bottom 50% of incomes; obviously well below mean average - essentially un-tabulated in GDP. Probably down to gig. barter and cash. So they don't exist. But they do as voters - and they voted 'up yours'.
Well worth an hour or two perusing; his/their laid-back commentary and simple fact-presentation gives us a glimpse of middle America non shown otherwise.
They're a large portion of the swing voters PDK. The bane of all professional politicians.
Trump will be working on a plan to disqualify them from voting next, after he's dealt to the left wing crazies and nutters. You know, the ones who didn't vote for him..
He'd have to have outlawed the Democrats, first.
Because without those 'up yours' votes, he isn't in. Mind you, he theoretically isn't allowed another run.
Vance is smarter. I've got his book (Hillbilly Elegy) alongside Kamala Harris' The Truths we Hold, in my bookshelf.
But the US is disintegrating, not just polarising but decaying. The Brics will dominate, within 10 years. Not that there will be much left to dominate...
There is probably something he hasn't tried; be a member of the Dems too, and then be their presidential nominee too. Could he even do that?
Are there any in the US who are members of both parties?
At the time of his re-election, PDK & I prophesied on here that likely for a variety of reasons Trump himself might not see out his term. It is early days yet though but there is already signs of flagging interest and a blind eye and as the negative outcomes and failures mount, that disinterest and denial will compound. It is largely acknowledged that President Eisenhower in the last part of his last term just couldn’t be bothered anymore and just wanted to be let be on the golf course. Still General Eisenhower had already done quite a bit by then in that capacity. He was seventy years old when he left office.
Eisenhower is interesting. Domestically he did pretty well, but externally his actions are mixed. He could be blamed for some of the international turmoil that exists today, but he did preside in fraught times.
Interesting foresight too. It took a strong man to push aside General Curtis Le May and his beloved Strategic Air Command and order the that the navy would adopt the major nuclear deterrent role, progressively with the deep water nuke powered subs. Interesting too that that decision outplayed recently with Trump’s gambit that a couple of said subs were needing to be relocated in light of comment by the usual Russian mouthpiece.
I would suggest the Make America Great Again is more than a slogan within Trump’s head. It is an idealism going on fixation that somehow America can be reverted to the world of his adolescence and the aftermath he enjoyed. That America is gone except for the ever shrinking percentage of those sufficiently entitled and enriched to avail and insulate themselves as such. We lived twenty years or so ago in a blue collar neighbourhood, predominantly Catholic Italian, Irish. Great people, confident, united and caring community, a very enjoyable experience. Our last return visit, three years ago, just not the same. The experience of covid and its aftermath, the divide in political considerations amplified and exacerbated by Trump and crime, never not far away but now drug fuelled crazy. In short we wouldn’t want to be living there now. That is what is happening to the middle ground in the USA.
It may well be foxy. But as you say the past is gone. We can only ever mover forward as we haven't yet mastered the science around time. But even 20 years ago the cracks in US society were evident, if you went looking for them. Those failing began when the national ideology became capitalism. They lost sight of what democracy means, and even the greatness of some of their leaders, and certainly failed to learn the right lessons from those less than great.
Trump by any measure is a delusional egotist, corrupt and venal. Ultimately he will be his own worst enemy as his failings come back to bite and there are no more enemies to blame. The question is, is he America's worst enemy and when will those with the power and ability to do something about it realise?
There are a lot of very smart people in the US who understand their history, what brought to this and perhaps how to get them out of it. Will they get a chance?
They hold a now-losing hand.
Their real expertise was held in the rust-belt. Muncie gearboxes, Edelbrock cams - there was an era where they were the best at a certain style of engineering (until Jimmy Clark hit the Brickyard..). But that knowledge is all in rest-homes or below head-stones now; the 'service' economy given way to the 'digital' one - real skills nearly nil.
And having made others price-takers (labour offshore, environmental standards ditto) they cannot afford themselves as workers. It no longer stacks up. The elite will attempt to make the US bottom-end become the new price-takers (taking the place of returned migrants) but who buys all the stuff then?
Those are pretty apocalyptic scenes. More murders from 69,000 citizens than the 5 million in nz. (Could be slightly wrong about those numbers, 50 vs 55).
Just investigating that number of murders would cost the entire GDP of the city.
No breakdown here.
Very cheap houses in Gary. This is what interest.co.nz commentators dream of isn't it?
Check out the other places he/they visit.
Many seem to be from the Sears catalogue - or somesuch - of kit houses circa 1920- 50. Long boxes with a verandah or porch on the short end (maybe because of thinner/longer sections than our 1/4 acre format). You could do-up many easily; but socially you'd not choose to go there...
Much less gardening done there than here too; just grass and mature trees.
It wasn’t until we lived there, and the remarkable number of houses that combusted regularly (usually the cause the archaic boilers and wiring therein) that I got to appreciate Heller’s line, in positioning the good Doctor Daneeka’s practice in an old “two family fire trap” in Staten Island.
The US average is very cheap. At least compared with ours.
Largely due to places like this. For example "the median sale price for a home in the city of Los Angeles is approximately $1.1 million" according to Google. That is $1.8 mil NZD.
We need more shitholes, unemployment, and disparity so we can get our average house price down too...
R.I.P. Robert Redford. One of the greats.
Yes, I always enjoyed Butch Cassidy and the Sundance Kid. But he always bought style and grace to his roles.
Sundance took on a lot of what the MSM increasingly avoided doing.
A heavy lifter in social narrative terms.
Not the original but a great parody of sundance... if you remember what really went down in the GFC with TARP
https://www.youtube.com/watch?v=pl12A2CkcUo&authuser=0
'Mozzarella prices dived -9.6% on weak Chinese demand'
Definite quirky headline potential there.
Daily Mail - "Mozzarella loses ample curves and lofty heights in recent operation setback"
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