Here's our summary of key economic events overnight that affect New Zealand with news oil prices have tumbled as the US seems to give up on most of its stated objectives, including the promise of safe-passage for shipping, in a u-turn to extract itself from a losing hand. Crude oil prices are down more than -10% on the news, although it needs to be noted that the Strait of Hormuz remains closed. It is just market euphoria. We now need to start worrying about a permanent Iranian transit tax after the US walks away. The Gulf States who supported the US are about to be thrown under the bus. Financial markets don't care of course and like the end of the adventure.
US mortgage applications fell again last week as interest rates rise, both for refinance activity and new home purchases. This takes this activity back to September 2024 levels.
The US ADP employment report said their private labour market added +109,000 jobs in April, marginally more than the +99,000 expected. This sets the official non-farm payrolls report up for an expected +60,000 rise, with upside. Most of the new jobs are coming from aggressive hiring in their healthcare sector.
After the prior week's outsized fall, this week the EIA reports another notable fall in US crude oil stocks. In fact, every metric fell other than US crude oil imports. There is certainly no relief at US petrol pumps yet, with prices now up more than +50% from their pre-Trump Gulf War levels.
We have earlier noted the politicalisation of US official data, especially of the Bureau of Labor Statistics who produce CPI, PPI and labour market data. We weren't the only ones. A new analytical report has been looking at how this has affected the quality of their data and concluded there is a worrying impact from this trend. So we need to be sceptical, and the next of their big set piece reports is the April non-farm payrolls. This means we will need to rely more on other non-Trump Administration high frequency market data.
In Canada, their widely-watched Ivey PMI surged into a strong expansion in April and by more than expected.
In China, new analysis shows Chinese companies are reporting lackluster earnings, with overall net profit declining in 2025 for the third consecutive year as the property slump dragged on and more retailers posted losses, hurting employment and the economy as a whole.
Meanwhile, China's Golden Week holiday has just ended, and reports are that there was less air travel this year - but very much more high-speed rail travel. Overall domestic holiday activity was up +3.5% with air travel falling -5.7% year-on-year to 10.5 million passengers between May 1 and May 5, railway journeys up +4.6% to 1.06 billion.
And staying in China, their non-official S&P Global services PMI reports that their services sector expanded faster as new business picked up in April and the year-ahead outlook improved. Cost pressures remained modest from this giant sector.
In India, their services sector saw new orders and output expand at a quicker pace supporting hiring activity. They also reported a mild reduction in inflationary pressures.
(Things aren't so good in the Russian services sector.)
In the EU, they report rising cost pressure for producers, all related to higher fuel prices. Overall they are up +2.0% in April from a year ago, but up +3.2% from March. There is quite a wide range of impacts depending on the country.
Internationally, a new report tallying global debt found it at US$353 tln, and a strong shift away from US treasuries and toward big new demand for Japanese and European government bonds. They also found the overall debt:GDP ratio remained stable.
The UST 10yr yield is now just on 4.35%, down -7 bps from this time yesterday. The key 2-10 yield curve is now at +48 bps (unchanged). Their 1-5 curve is now at +27 bps (-5 bps) and the 3 mth-10yr curve is at +71 bps (-5 bps). The China 10 year bond rate is now at 1.76%, up +1 bp. The Japanese 10 year bond yield is unchanged at 2.50%. The Australian 10 year bond yield starts today at 4.91%, down -5 bps. The NZ Government 10 year bond rate is up +1 bp at 4.69%.
Wall Street is ending its Wednesday with the S&P500 up +1.4% and a new record high. Overnight, European markets were up between Paris's +2.1% drop and Frankfurt's +2.9% rise. Yesterday Tokyo was closed for a holiday. Hong Kong was open and was up +1.2%. Shanghai also rose +1.2% and Singapore was up +0.1%. The ASX200 ended up +1.3%. And the NZX50 ended up +0.8%.
The price of gold will start today up +US$121 at US$4680/oz. Silver is up +US$4 at just over US$77/oz.
American oil prices are down -US$6.50 at just on US$95.50/bbl, while the international Brent price is down -US$8.50 and now at US$101.50/bbl.
The Kiwi dollar is up +60 bps from yesterday at this time at 59.5 USc. Against the Aussie we are up +30 bps at 82.3 AUc. Against the euro we are up +30 bps at just on 50.7 euro cents. That all means our TWI-5 starts today at just under 62.8 which is up +50 bps from yesterday.
The bitcoin price starts today at US$81,399 and up +0.1% from this time yesterday. Volatility over the past 24 hours has been modest at just under +/- 1.3%.
Daily exchange rates
Select chart tabs
The easiest place to stay up with event risk is by following our Economic Calendar here ».
57 Comments
If Trump does pull out there will be some big winners. Obviously Iran who get to toll the strait, but higher global oil prices sound like a big win for a certain country that produces loads of electric cars.
"US says it has attacked Iranian-flagged ship as Israel launches air strike on Beirut"
https://www.bbc.com/news/live/c152zyj0599t
Breath holding not advised
Firstly, define 'win'.
Secondly, show me a grid not fossil-energy-backed.
But DC mentions the biggie, but not why. The other Gulf states are indeed going to be thrown under the bus - have already. The next taxi along takes a different-format ticket; the most important point of them all. What we have just witnessed, is the last big hooly initiated by a failing hegemony. It's proxy is on the way out - with HUGE implications for NZ (tied to said failing hegemony, think: Kiwisaver, ACC...).
A conflict pitching a modern nation of little over 100 year’s existence as a superpower against an ancient superpower that was in existence centuries before, just about all the world knew the former even existed. The irony, for want of a better word, is that the former is largely what it is because of what it seeks in the latter, ie fuel which was unrealised when the latter was marching on Europe. The Iranians here have demonstrated, whether or not you accept their current regime, that a nation long established in its identity, heritage and region knows full well what to summon up and practise in order to retain its sovereignty. Goes to show a Mexican stand off will always advantage the party that is at home if it remains geographically as a veritable fortress and has sufficient avenues of supply and can continue to retaliate significantly with whatever means it has available.
Iran might not get to toll the strait. Yesterday i saw a report where the USN announced it had cleared one lane for shipping traffic on the strait (notably it didn't say which way, but context suggests for outbound traffic) and are working to clear another. These will be close to the western side, away from Iran, providing a bigger buffer to guard against Iranian fizz boat attacks and provide more depth to enable effective defense. To toll any ships Iran will have to go into UAE waters.
Electric vehicles are coming now anyway. They always were considering the manipulations of OPEC and the likes. Now there's more reason as the uncertainties around fuel are underlined and in bold. But EVs have lots of uncertainties too if a lot of the technology is coming out of China. This is a long way from being over.
Iran just bombed Fujairah which is not even in the Strait and which the UAE were using to bypass the Strait blockade. Iran can take out any oil infrastructure in the GCC as well as pipelines bypassing the Strait. USN is full of it as confirmed by the pause of Project Freedom (really project suicide run).
“Democracy” Was Never Designed to Work — But Something Better Is Emerging
Some folk are thinking ahead...
The idea of a form of 'sortition' appeals....the only concern is whether it can operate at speed when needed.
Appeals, yes, but leaves risk of many getting power that are no equipped to use it for good. However compared to todays career politicians who may go in to politics with the best of intentions, but come up against the back scratching ways that eventually render them no greater than self-servient sheep with skills to manipulate, influence and cajole their peers and the public for their own aspirations.
Random selection would at least provide a polity that only has the manipulative and corruptible at the general population ratio ...as to being equipped the current house speaks for itself.
Excellent article which poses questions.
"Elections also select for the wrong qualities: charisma, wealth, ambition, and connection — a dangerously unrepresentative sample of the population." I suggest the author could delete the word "also". While a few politicians might intend to do the right thing, I suspect most just say what they think the constituency wants to hear, to get them into government and slurp up the trough..
But the author leaves a bigger question unposed and unanswered. Above all of it there still requires some form of government to lead and manage the processes he lays out. That government, i suggest much smaller than now, still needs to be elected if you will, and have a set of rules which restrains them and makes them accountable to the people. How do we stop corruption creeping in insidiously in this governing body and trying to usurp the processes of democracy?
Eternal Vigilance is the price of Liberty
Curran
Its the unelected self appointed "government" embedded in the public service bureaucracies, SOEs, local authorities & quangos etc that are much more the problem than NZs elected representatives. These people will continue to ignore the "will of the people" in whatever form its delivered, as they currently do.
The right solutions depend on asking the right questions.
"....... SOEs, local authorities & quangos etc that are much more the problem than NZs elected representatives." I'd suggest the elected representatives do not know how to manage said bodies and said bodies would fall into line if the elected representative knew the the law pertaining to said bodies. I also have a strong belief that most elected representatives do not know the law (Acts and regulations) that specify how these bodies are to operate. The flip side is does the law give too much control to the said bodies without elected representatives having a say. I also believe that the said bodies are a convenient whipping boy of the elected representatives when it suits the elected representative. This also applies to local government.
Interesting ...
We already use 'sortition' for initial selection of jury pools
So, why not use it for citizen's assemblies, or Parliament, or Cabinet?
Seems the invisible hand gives the thumbs up to alternative facts these days? Perhaps it needs to cut back on it's social media addiction?
These days?
Those peddling the 'invisible hand' (and its offspring, the 'free market') have had to cling to alternative facts, ever since 1972 at the very least (and arguably long before).
When their income depends on the alternative facts, they justify themselves by association with propaganda which fits what they need to be fitted.
Lomborg comes to mind; a well-known peddler of alternative facts (actually, a clever screwer of the scrum).
The invisible hand works fine in it's limited short termist space , i.e. one that totally ignores the natural systems it operates within. In general, historically it has been fed actual information from organisations charged with collecting accurate economic and geopolitical data. Seems it works just as well fed nonsense and propaganda. Perhaps it's time the faithful questioned their blind allegiance, now it appears the hand was giving them the........ all along?
The invisible hand uses a strategy of managed chaos to break the collective will of the masses. Cultural subversion is applied by attacking traditional values, religion, and the family unit to leave individuals isolated and easier to manage.
The UAP + alien files are set to be released to further induce the questioning of reality. Peak social media mind melting is just around the corner
Time Lord. Your first para could be an almost a verbatim lift out from a classic marxist text.
mm - classic put-down.
Associate, then dismiss via same.
Absolute nonsense, intellectually. As a cranial exercise, try asking why Marxism, in the first place?
Observation not put down. Two things can be true at the same time.
Fair enough.
Marx is an interesting study - but he missed the Limits to Growth completely, so at some point has to be challenged. Egalitarianism is only do-able for a limited population within a bounded system. May not have seemed bounded with 1.2 billion people (consuming less per head) at the time...
Drat. I was anticipating a bit of biffo. Yes, Marx could not possibly have anticipated the LTG concept. He lived in an era where the planet was thought boundless.
Power, Overshoot, and Climate with Tad Patzek | TGS 219 - YouTube
See what you think...
You’re right it’s the same revolutionary mechanics. However it references the transition from a New World Order to a One World Government.
It overlaps but I'm talking about globalism rather than marxism. Same tools, different goals.
Globalism requires surplus energy (transport, production).
So in the recent form, it is retreating.
I guess you can have intellectual globalism, sans trade...
I wonder if the UAP + Alien files will mention that they're also using fossil fuels
Well only 100 years or so, around the time of Marx, ago folk weren’t internationallytravelling all that often nor that far and fast. Trains and steamships mainly on set courses and time tables. The arrival of jet aircraft carriage, just take a look at flight radar anytime of the day, strapped all and sundry to a rocket. Covid demonstrated, by that means, it could infest the globe in a matter of days. That feature and function in itself has made the whole world a whole lot smaller with resultant demand and pressure for greater things and, as you often expound on here, an escalating battle to get ahold of the levers and power sources that are necessary for its continuance.
"Well only 100 years or so, around the time of Marx, ago folk weren’t internationallytravelling all that often nor that far and fast. "
Plenty of travel however and for centuries prior as well....remembering there were magnitudes less of us then.
Globalisation in not a modern phenomenom.
Point taken but there has undoubtedly been impact on society and trade when what took 60 days by steamship from NZ to the UK, people, goods and mail, can now be done in under 30 hours and as far as communications just a second if to compare to the limitations of the old telegraph system.
TL. You are probably better informed but I doubt Adam Smith even anticipated the extent of societal evolution you describe and which arose from adoption of his invisible hand theories, let alone wanted this to be the case. Unlike Marxist philosophers such as Antonio Gramsci who did and sought to specifically bring these changes about.
Smith - like Mill - understood Limits.
Economics just picked parts of his treatise which suited their purpose - no different to Hegseth quoting scripture.
True - I’d argue that the invisible hand has undergone a radical transformation since 1776.
The world is fundamentally different now because of how technology acts as a force multiplier for whoever holds the strings. The invisible hand has been weaponised in a world of tech saturation.
We’re seeing societal engineering using tools that Adam Smith could have never dreamt of.
They don't need managed chaos TL. Most populations, anywhere, really don't trust their governments already. What they want is to be left alone to live good lives. Government interference generally prevents that. Too much chaos is likely to stir revolution, not compliance.
Do you believe the elites are willing to just give up their power, by replacing their political puppets with normies?
I’m simply outlining what their plans are - a One World Government. This isn’t just any old revolution, the elites want a specific type of revolution. Part of a long standing plan for the next stage of the New World Order.
I’m with you though, it’s not what I want. But I’m not under estimating what they have in store for us. Exhaustion is their new method of compliance.
Ah, the Singularity.
Don't Look Up took the p out of that, in the last scene.
No they'll fight for it just like the rest. But it is a numbers game and unless the elites can create armies who will suicide for them, they will be seriously out numbered by the masses. And the masses are not illiterate and unskilled. This revolution will be asymmetric as the elites bring all they can to bear because they should understand it is a fight for their survival, but in the end the numbers will tell.
Really though I'm not against a one world government if it is democratic in principle and respects and protect human rights and freedoms. I don't think that fight will be between the masses and the elites. It'll be between the factions of the elites as they squabble over the reins of power.
- Hormuz is not closed to traffic that follows the Iranian/Omani rules of transit, pay the designated tolls, and is not part of the illegal war effort waged against Iran and its allies.
- In 2018/2019, Iran's exports were only around 300,000 barrels per day. Right now, they are sitting at between 1.2 - 1.3 million bpd and expanding. In reality, since the beginning of this war, Iran's energy receipts have skyrocketed 3-400% - another great own goal TOOFOO!
- China's gloves are off, and she is ordering Chinese companies and refineries to receive oil from Iran, and in the process, to give the US and its sanctions the big fat middle finger.
- In some parts of California, petrol prices are over $6 per gallon. Mainstreet Murica is moaning, and the effects of the disruption to global fertiliser supply on food prices have not kicked in... yet.
- During Trump's failed Operation Freedom, there were up to 26 US air refuellers operating, until the recent shootdown of a KC-135... now there are ZERO in operation.
- Trump claims that he decisively won the war against Iran - apparently, his flock is supposed to believe that the fact that he shut down yet another failed debacle immediately after that refueller was lost, is just another coincidence. He is desperately trying to spin yet another defeat as a win.
- Note MIDDLEMAN (in regard to your insistence yesterday that I was illogical) at ~8:00 here is one of many expert geopoliticians on the region who echoes my thoughts...
" Iran has never failed to acknowledge any attack on any ME country when they are responsible for the attack. On the contrary, they wanted to make sure that all the Gulf countries from where the US military attacks took place against Iran are targeted, and for these countries to understand that the Americans cannot protect themselves and cannot their host countries.
In fact, the NYT told us that the damage on the US bases reached $50 billion and that some of the 16 bases are impossible to repair. Therefore, Iran would not deny any attack on the Emirates, if Iran had carried it out."
https://www.youtube.com/watch?v=Ty6KHtkuAFo
Too extremist Colin. The KC 135 wasn't shot down. It had a midair collision with another, which lost half it's vertical tail and did an emergency landing in Israel.
We know Trump's full of it, but that doesn't make everything that happened a lie.
Are you referring to the recent loss of a KC-135, Murray, or to the incident back in March, where one tanker was lost over Western Iraq, and another damaged one made it back to Israel?
I've done two searches this morning one came up with nothing and the last, just now, reports a KC135 "going dark" after setting it's transponder to 7700. Not reported as a 'shoot down' though and no official comment. Could have been a shoot down, could have been a structural failure, could have run into a drone on its way somewhere else, we don't know yet.
That there was no radio call suggests what has occurred was sudden, although resetting of the transponder suggests they had some time... Military rules when something goes wrong though are to focus on flying the aircraft. The crew may have been too busy. At war the crew may only have been three; the pilots and the boom operator. Depends on the mission.
Colin I've done a scan through a bunch of other media sites from around the world and no one, really no one is picking up on it. The loss of another KC135 is a serious issue for the US military. KC135s and the other tankers now the KC46 Pegasus are significant force multipliers, and essential for the USAF aircraft to be able to reach out, otherwise they just do not have the legs. These aircraft are a major strategic asset for the US. That no one is picking up on the loss makes me wonder if the news is real?
Murray. Iranian missiles did destroy a parked E3 Sentry and damage another in an attack on a Saudi base.
They're not 'shoot downs' MM. But it seems Colin is correct. See above.
Colin. Not sure I claimed or implied Iran denies it is currently launching attacks against the territories of gulf states, but if so this was unintentional. Iran clandestinely funds multiple terrorist groups and attacks across the ME all while routinely denying this.
Wheher it was "unintentional" or not, that is exactly what you implied.
by middleman | 6th May 26, 2:59pm
"Colin. It's illogical to insist 'with certainty' that that the UAE missile strikes did not come from Iran. With all parties engaging in a propaganda war about what is really going on there is no way of being 'certain' about any such events. While on the topic of logic, there is around 50K US service personnel deployed. So clearly no substantive land war of the type you discuss is being contemplated. Comparisons with Afghanistan are largely irrelevant."
BTW, you can claim otherwise, but IMO, there is no war that the serial-warmonger US has lost that is "irrelevant" in the context of having started yet another illegal war against Iran. This is the country that has been at war for 96% of its 250 years of existence.
Colin. I fear you missed my point which was that this conflict is saturated with misinformation, including from the white house clown, such that expressing certainty about any claim from either side is a mugs game. Tactically, the Afghanistan ground/air campaign is largely irrelevant when considering the likely trajectory of this very different naval/air conflict. With possibly the exception that a test of endurance may well end up the defining factor.
"With possibly the exception that a test of endurance may well end up the defining factor."
Which is precisely why Afghanistan is relevant - you just said it yourself.
This is making me lose the will to live. I haven't checked back but if I recall correctly your comment was based on a hypothetical large scale ground war in Iran which has elements of the same topography as Afghanistan. You drew a parallel, I don't believe one exists as there will not be a physical invasion. I've been stalling on chopping back some overgrown flaxes which I am now heading outside to do.
How about Infratil's share price rocket powered lift off yesterday on news its subsidiary had contracted 555 megawatts to a large US corp. Been a long time coming but worth the wait for those who took the punt over the last couple of years.
It's an effing data-centre.
Worth the wait?
For what?
Profit, capital gain for shareholders like me. A cruise and update of the SUV. Whats not to like?
Higher electricity bills?
Is it the Rhine by chance?
This will also be a contract into our power grid with guaranteed electrical supply capacity. Kiwis will be required to pay more as they fight over remaining capacity that our tax paid to create. Not winning.
Yep, point is valid although this discussion is about IFT subsidiary CDC's data centre in Aussie.
We welcome your comments below. If you are not already registered, please register to comment
Remember we welcome robust, respectful and insightful debate. We don't welcome abusive or defamatory comments and will de-register those repeatedly making such comments. Our current comment policy is here.