Here's our summary of key economic events over the holiday weekend that affect New Zealand with news oil prices are rising as 'peace talks' stall. And the German Chancellor has said the US is being 'humiliated' by Iran.
In the US, the Dallas Fed factory survey shows activity continued to rise in April but that their new orders index plummeted sharply into contraction territory. Their shipments index fell into negative territory for the first time this year, while perceptions of broader business conditions continued to worsen notably in April.
There were two large US Treasury bond auctions earlier today and while the yields achieved were little different to those at the prior equivalent events a month ago, there was a notable rise in demand. The 2 year bond brought +8.7% more bid value, and the five year +1.8% more. Together that was +US$18 bln more.
Canada has launched a new sovereign wealth fund, seeding it with an initial C$25 bln funding.
We should note that Moody's has upgraded China's A1 credit rating outlook to 'Stable' from 'Negative' from its last change in December 2023.
Despite the Middle East headwinds, China’s industrial profits were +15.5% in Q1-2026 than in the same period in 2025. This maintained the good expansion in January and February. SOE profits rose +10%, local private forms were up +25%, but foreign firms in China hardly managed any increase. A large part of the result has been the huge profits their metals industry is winning, especially for rare earth minerals.
Taiwanese consumer sentiment edged up in April, but only marginally from its very low level. It is still basically at its lowest since January 2023.
In Malaysia, a sharp rise in oil prices in March turned their overall producer price deflation into inflation. It is sure to get sharper in subsequent months.
Meanwhile in Singapore industrial production rose sharply in March, up +10% from the same month a year ago after the very lackluster February result.
In Germany, the GfK Consumer Climate Indicator dropped in May more than expected and to its weakest level since February 2023. Mounting pressure on households from rising energy prices has pushed inflation higher and sentiment lower.
The UST 10yr yield is now just on 4.34%, up +3 bps from this time yesterday. The key 2-10 yield curve is unchanged at +53 bps. Their 1-5 curve is now at +26 bps (+1 bp) and the 3 mth-10yr curve is at +67 bps (+2 bps). The China 10 year bond rate is now at 1.77%, up +1 bp. The Japanese 10 year bond yield is also up +3 bps at 2.47% and a new high. The Australian 10 year bond yield starts today at 4.97%, down -1 bp from yesterday. The NZ Government 10 year bond rate is unchanged at 4.72%.
Wall Street has opened its week hesitantly with the S&P500 up just +0.1% although that is holding its record highs. Overnight European markets were -0.2% lower, although London fell -0.6%. Yesterday Tokyo rose a sharpish +1.4%. But Hong Kong dopped -0.2% while Shanghai rose +0.2%. Singapore fell -0.6%. The ASX200 traded but slipped -0.2% in limited activity. And of course the NZX50 was on holiday.
The price of gold will start today down -US$28 at US$4681/oz. (If you buy gold, it might just be supporting a criminal supply chain.) Silver is little-changed at just under US$75.50/oz.
American oil prices are up +US$2.50 at just under US$97/bbl, while the international Brent price is up +US$3.50, and now at US$109/bbl. A week ago these prices were US$84.50/bbl and US$91/bbl respectively, so a big net rise. And we should note that the Russian benchmark (Urals) oil price has eased by -US$1.50 to US$106/bbl.
The Kiwi dollar is up +30 bps from yesterday at this time at 59.1 USc. Against the Aussie we are up +10 bps at 82.3 AUc. Against the euro we are up +20 bps at just on 50.4 euro cents. That all means our TWI-5 starts today at just on 62.5 which is up +30 bps from yesterday.
The bitcoin price starts today at US$76,753 and down -1.8% from this time yesterday. Volatility over the past 24 hours has been modest at just under +/- 1.9%.
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25 Comments
Don’t worry everyone, Trump says the straight will be open soon. (Not sure what his definition of soon is)
US Navy has a flotilla mine sweeping. Not sure they know the numbers but initially it was suggested would likely take up to 6 months. So if so that is not a quick fix. Curled up in that is the prospect of Iranian “running interference” with the operation itself and ditto if shipping does start using that passage, that is the UAE territorial waters.
Does one ship constitute a 'Flotilla'? I saw a report this morning identifying the USS Canberra, a Littoral Combat Ship, as the only one mine sweeping in the gulf.
Don't really understand why they haven't stepped this up earlier. Perhaps it's because modern mines are hard to defend against, while being difficult to detect? However Iranian mines have been reported as basic and cheap to manufacture. Who to believe?
I wonder if a part of what we are seeing is the US's difficulty as a high tech military to counter low tech asymmetric warfare?
Over the weekend I did see a report which suggested Iran is hemorrhaging money and cannot sustain the losses. The report indicated that as Iran's oil storage capacity hits it limits, because no tankers are taking it, their wells and process facilities have to be shut down. The consequence will be that they take months if not years to bring on line again. Those limits are expected to be hit this week. In addition it seems military staff, including the IRGC, are not being paid as available funds dry up. So the IRGC's grip and control may be coming into question. Who to believe? Time will tell.
Iran is about to enter their dry season and with water shortages already problematic. The USA may well be strategising that Iranian internal pressures might well be a powerful ally. It would be a fine balance though, and responsibility for a humanitarian crisis would hardly be welcome. The Iranian people were already extremely hard pressed with shortages of essentials, well before the conflict began.
Those internal pressures, including military and IRGC defecting may be telling.
How accepting would the population be of IRGC soldiers defecting because they are not being paid? Won't be easy accepting someone who once had their jackboot on your neck. The weapons they might bring with them might be welcome though.
It's easy to see what the potential processes and consequences will be, less easy to predict the ultimate outcome though. It could easily get very ugly.
Murray. A significant ppn of Iranians learn less than $5 per day. 50% of oil revenues are siphoned off to fund IRGC activities including paying the troops. Deserting IRGC soldiers would be dealt with severely and will struggle to find work. They will stick with the devil they know and from whom they will eventually receive some pay.
Perhaps. But what happens when the IRGC funds dry up? Coercion only goes so far with soldiers when they're not getting paid. And don't forget they give those soldiers guns to do their work controlling the population. The scope for escalation of any collapse is potentially extreme, when things go bad.
M86. Oh yes, for sure. A collapse of the IRGC would see factional splintering, warlordism and untold horrors piled onto an already deeply oppressed and deprived populace. My point is that IRGC 'soldiers' and their Basij thug mates have nowhere to go. Already regarded as pariahs by many of the people they are well aware of their fate if the house falls. My pick is that they'll hang on till the bitter end. This prediction is going against recent ME history of course, where most militias collapsed very quickly once the rot set in. But these people are Persians, not Arabs.
History would indicate populations being attacked by an outside force are prepared to suffer severe deprivation as they circle the wagons. All Iran has to do is nothing.
The 400million barrel release from the Global Strategic Reserve is being burned through. Already 40 odd days into the 120 day release program. You think Iran will suffer pain? Try oil not being availible in some parts of the world at any price!
PT08. For sure the pain rations for both sides are ratcheting up. IEA estimates the reserve to be about 8bn barrels or 80 odd days, so a couple of months before crunch point arrives. Agree siege mentality stiffens spines but as is often the case water is the weak link of the besieged. Iran is particularly vulnerable.
FG. The US has complete control over traffic exiting Hormus so unless they want to transit the strait themselves there would seem little urgency to clear mines. This Iran conflict is looking more like a China containment exercise than the various other motivation/goals that have been stated as justification. As was Venezuela (with a serving of Monroe doctrine thrown in).
There are six Gulf nations presently with their trade blocked by Iran. If the USA can open up and sustain a shipping lane with proximity to the Saudi & UAE coast line then it would obviously double the pressure on Iran with Iran remaining blockaded and those other nations’ trade moving.
FG. Yep, good point. Market forces will open alternative avenues for non oil cargoes. The Saudi Red Sea pipeline has increased its throughput by 3.2m bpd. Global oil demand has dropped by 800K bpd, estimated to increase to around 2m bpd next month. There's no doubt lots of pain ahead, especially for gulf state producers and poorer nations priced out of the oil market, but it'll also be interesting to see what supply line workarounds come out of this.
If you take the opposite of whatever Trump says, you get pretty close to the actual truth.
Let’s apply that logic to his campaign promise of ‘draining the swamp’
Did he intend to purge the government of its ‘swamp creatures’ ?
Or did he simply mean opening the floodgates so the creatures could come out to play...
He's doing both isn't he? Purging the old guard and bringing in his mates. suing his own administration for $10 billion. The level of corruption he has introduced is gobsmacking. Huge settlements to all his friends and obviously expects to get some (MORE, much) himself.
All those who voted for him, should be wondering just what they unleashed.
He ran on an anti-corruption, anti-war, anti-inflation ticket. And for some reason, people believed him despite his incredible track record of lying about even easily verified facts.
Unless of course it was all about the anti-immigration policies and the rest was just an excuse to vote for him.
I agree with both of you. Trump has largely done the opposite of everything he campaigned for.
Those who voted for him and maintain support are doing olympic gymnastics to reconcile his actions thus far. They are crossing their fingers praying the larger plan will make sense in the end.
I watched the Devil’s Advocate over the long weekend, interestingly it features Trump’s apartment and a character based on him. Theres a lot of symbolism in that apartment. Was furnished no different to how Trump maintains it today.
They are crossing their fingers praying the larger plan will make sense in the end.
100%. That's about all they have left to cling to.
His supporters got what they wanted. Abortion bans, promises to restrict contraception, Bibles in schools and physical removal of minorities. All worth a bargain with their Antichrist apparently.
Good one.:-)
Did you hear the one about Trump wanting to add an N to the ICE acronym? Whenever ICE conducts an extra judicial killing it will now be reported as being action from the people of NICE. National Immigration and Customs Enforcement. Has a great feelgood vibe.
Nothing surprises me in 2026! And Trump knows the power of the rebrand. They do love to invert reality where possible. He’s had a few powerful rebrands so far:
- Department of Defence -> Department of War
- Missile Defence -> Golden Dome
- Climate Policy -> Energy Dominance
Just in case readers believe I'm making stuff up?
"President Trump on Sunday endorsed the idea of changing the name of Immigration and Customs Enforcement (ICE) to National Immigration and Customs Enforcement, which would give the agency the acronym NICE"
https://thehill.com/homenews/administration/5850705-rename-ice-nice-tru…
Oil prices may be rising to $97 and $109, but this NOT the price paid to actually buy a "wet" barrel of real oil, which I believe costs between $130-150 per barrel. $97 & $109 is the futures "paper" contract for oil, which is manipulated by the US government.
Correct to some extent. The US govt has the strategic reserve, but IMO this is simply a factor that futures traders monitor to place their bets on buying and selling futures. The oil futures game is only profitable if you are dealing in volumes, and given the current markup by refineries, perhaps short to medium term investment in those companies will prove more profitable.
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