Here's our summary of key economic events over the weekend that affect New Zealand with news that the Strait of Hormuz is still essentially shut with Trump's war on Iran far from resolved. The claims of 'ceasefires' merely propaganda exercises. Rolling skirmishes mean no shipping can get insurance, despite offers of safe passage. No-one respects anyone in a region where trust has evaporated.
Locally this week, the big data insights will come from the RBNZ's survey of inflation expectations on Wednesday, migration and travel activity data on Thursday, and a first look at inflation on Friday via Stats NZ's selected price tracking. We will also get the factory PMI on Friday.
In Australia, the key events will be the Federal Budget on Tuesday preceded by the Commbank profit result. There will also be consumer and business sentiment surveys out this week.
In the US, it will be all about their April CPI and PPI, along with updates for retail sales and industrial production.
In India, they will also release CPI data. From Japan look out for household spending and PPI data too, and machine tool order updates.
In China, we are expecting April updates for CPI, PPI and new yuan loan data.
Over the weekend, China released its April export data and it was strong. While the US is turning inward, China is seizing the opportunities of their mistake. China’s exports rose +14% in April to a record high, picking up from March's +2.5% growth despite the disruptions from the Trump Gulf War. And China's imports surged +25% on the same year-on-year basis, a second straight monthly record and confirming resilient domestic demand. It is all very impressive.
China's exports to us were up only +3.8% from a year ago, but their imports from us were up +14.5%.
China's exports to Australia were up +36% and their imports were up +20%, but that still left Australia with a very large surplus with China.
China's exports to the US were down -10.4%, and their imports down a similar -10.2%. They seem to have reduced their reliance on goods from the US to now just 9.8% of their total imports. No wonder US exports are faltering.
Over the weekend, the official data from the US showed they added +115,000 payroll jobs in April at the headline level, above expectations of a +62,000 gain and following a +185,000 increase in March. It was the first back-to-back monthly gain in nearly a year, and on an 'actual' payroll basis it was stronger again. Their jobless rate was stable at 4.3%.
But we should remember that all this data comes from an agency where Trump fired its head because he didn't like the results and this latest data is under the 'new management'. An independent professional review has confirmed there are distortions growing from this agency.
Employment rose in health care, logistics, and in the retail trade while it fell in the manufacturing and government sectors.
But if you include those not in payroll employment (self-employed etc.) there was no change on an 'actual' basis, a fall of -226,000 on a seasonally-adjusted basis. Their underclass is really struggling.
And you can see that in the latest University of Michigan consumer sentiment survey for May which fell again and to a record low. The fall from April wasn't large, coming in a scant 1.6 index points below April’s reading but it was comparable to the pandemic trough reached in June 2022. Year-ahead inflation expectations are for 4.5%, a touch less than in April.
In Canada, their employment fell -18,000 in April, but more people entered their job market, raising their jobless rate to 6.9%.
In India, banks are lending freely, with loan growth up +16% from a year ago. For all its growth narrative, India's stock exchanges are reporting serious 2026 declines, unlike most other global markets.
The UST 10yr yield is now just on 4.36%, unchanged from this time Saturday, down -2 bps for the week. The key 2-10 yield curve is now at +47 bps (unchanged). Their 1-5 curve is now at +27 bps (-1 bp) and the 3 mth-10yr curve is at +70 bps (unchanged). The China 10 year bond rate is now at 1.77%, up +1 bps from Saturday. The Japanese 10 year bond yield is up +1 bp at 2.48%. The Australian 10 year bond yield starts today at 4.99%, up +2 bps from Saturday. The NZ Government 10 year bond rate is unchanged at 4.72%, unchanged for the week.
The price of gold will start today down -US$9 at US$4714/oz, up +US$114 for the week. Silver is little-changed at just under US$80.50/oz, up +US$4.50 for the week.
American oil prices are little-changed at just under US$95.50/bbl, down -US$7 for the week, while the international Brent price is holding at just over US$101/bbl, down -US$7.50 for the week.
The Kiwi dollar is up +10 bps from Saturday, at this time at 59.7 USc, up +70 bps for the week. Against the Aussie we are unchanged at 82.3 AUc. Against the euro we are also unchanged at just on 50.6 euro cents. That all means our TWI-5 starts today at just under 62.9 which is up +10 bps from Saturday but up +40 bps for the week.
The bitcoin price starts today at US$81,392 and up +1.6% from this time Saturday. Volatility over the past 24 hours has been low however at just under +/- 0.6%.
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9 Comments
Regarding the Strait, the mainstream media is generally covering White House press releases, which generally consist of Trump torturing words until they stop having any real meaning.
The only real sense I can get is from certain lucid commentators on X. Of course there's a lot of disinformation from all sides, but if you pick your accounts well then you can get some good signal.
Netanyahu acknowledges the suspect uranium still exists and thinks somehow it should be located and taken away. Gigantic somehow that is isn’t it. No wonder he is worried because Iran can now only be one heck of lot more vengeful and motivated to strike than it was before this conflict started.
Also Israel doesn't acknowledge their own very real nuclear weapons. They just don't talk about them, or respond to anyone else who talks about them. So that makes negotiation with Iran very challenging from the get-go as Iran would obviously want Israel's nukes to also be part of the conversation.
I really don't know which side would be the most likely to use them to be honest
I don't know, it's hardly a secret that the current Iranian regime has the complete destruction of Israel as a stated goal. I'd be pretty nervous if I lived in Israel and was watching Iran develop nukes.
https://en.wikipedia.org/wiki/Palestine_Square_Countdown_Clock
What would be sensible, and because of that likely impossible, would be a nuclear free, as in weapons, treaty overlaying the Middle East. Israel has reached reasonably amicable accord with Egypt and Jordan and the old Iraqi and Syrian dictatorships have been dismantled. With Israel being backed by the USA & probably France & the UK there is not that much prospect of a full scale invasion of Israel that would amount to the existential threat that Israel sees as a reason to have nukes.
You miss the point Foxy. Whatever treaty is there it has to be enforceable, even against the bad actors. Israel was never supposed to get nukes but did so anyway. I'd guess by any means necessary. That's not effective enforcement action. Israel chooses to never publically discuss it's nukes, but it seem well understood that if you attack Israel and look too much like you're winning, they'll give you one in a way you won't appreciate.
It is accepted that North Korea now has nukes. Here's the question; how do you take nukes of someone who now has them? Good or bad actor? If they're a bad actor, how do you deter them from using them?
No I know the point, just was dabbling with it idealistically. Israel might well argue without the nukes they would have been overrun. Looks like eventually the outcome is going to be one of deterrence as in the uneasy form as it exists between Pakistan and India.
You get them to sign a treaty with the world superpowers where the world powers agree to protect their Sovereignty if they give up nukes. Worked really well for Ukraine, USA and Russia have really forced the world to respect their borders.
You forgot the '#Sarc" tag.
It has been pointed out here that Ukraine had three security treaties with Russia before Russia invaded, and one with the US (?). As you say ' worked really well.
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