Here's our summary of key economic events overnight that affect New Zealand with news oil prices are still rising as the two sides dig in in the Persian Gulf with no obvious off-ramp for this toxic situation.
And hot on the heels of what is being seen as this humiliation of the US in the Middle East, Trump is heading to Beijing where the Chinese are waiting to attempt to get the US separated from Taiwan. Their chances seem better because China seems much less reliant on the inward-looking US.
But first, the overnight dairy Pulse auction brought little-change in prices from last week's full auction event.
In the US, their April CPI inflation rose slightly more than expected, coming in 3.8% higher than year-ago levels and a three year high. Trump's war pushed fuel costs up (+17.9%). But it is pushing non-fuel costs up too with core inflation its highest in 7 months. Electricity prices are up +6.1%. (Remember, this data is from the Trump-friendly 'new management', so we should remain sceptical.)
The weekly ADP Pulse monitoring reports that the private sector added +33,000 jobs in the last week of April, keeping up the pace it has reported for the prior five weeks.
And new monitoring shows it is not a good time to be young in the US.
The NFIB Small Business Optimism Index was little-changed in April and near its 11-month low of 95.8. Analysts had expected a small improvement, but it was not to be with survey respondents concerned about rising inflation, and affordability stress on their customers.
Overall US household debt was basically steady in Q1-2026 according to the latest update.
But their Federal Government debt is increasing in cost and at a faster face. The overnight auction for their ten-year bonds came in at 4.41% median yield, up from 4.23% at the prior equivalent event a month ago.
The May USDA WASDE report exposes the risks to American agriculture from creeping changes to their climate. They now concede that the US wheat crop will be sharply lower this coming season. Reductions from the EU, Argentina, and Australia are being forecast too. Corn production is likely to be lower too, although that is off this year's record harvests.
All this pressure probably means there will be no US Fed rate cuts for the foreseeable future. If there are any movements, rises are the more likely.
Across the Pacific, Japanese household spending turned worryingly lower in March as inflation started to bite and their households turned risk-averse. They are saving more. Household spending there fell -2.9% in March, much more than the -1.8% drop in February and below the expected -1.3% retreat. This is the fourth straight decrease and the largest.
India's CPI inflation rate inched up to 3.5% in April from March's 3.4%, not the big rise (to 3.8%) that was anticipated by market watchers.
In Germany, their ZEW Indicator of Economic Sentiment was expected to get more negative in May that in April, but in fact it got less negative, which was a market surprise. Economic expectations are brightening, they say.
In Australia, they released a fairly ambitious Budget overnight, doing more needed reform than anticipated. But it is still a budget in deficit, even if less so. With some unusual bravery, they are tackling stubborn policy areas and will no doubt have to use some political capital to do so. Redistribution pain will bring howls from the usual suspects at the top end of the wealth spectrum. They have been aided by stronger than expected starting point from tax flows from commodities and corporate good health. Here is one less-partisan analysis.
But accelerating cost pressures are squeezing margins and demand is cooling, with the latest NAB Monthly Business Survey signaling a tougher operating environment for Australian businesses. This April survey shows purchase cost growth lifted sharply to +4.5% in April, outpacing product price growth at +1.8%. Business conditions fell while confidence marginally but it is still deeply negative (in fact, its worst since the pandemic). Those surveyed reported that forward orders fell further in April to be down sharply since February and giving up all the gradual gains achieved over the past year. Only mining orders rose and to be fair these were outsized gains in that sector. (Later today, we expect to get the Westpac consumer sentiment survey results.)
The UST 10yr yield is now just on 4.47%, up another +6 bps from this time yesterday. The key 2-10 yield curve is now at +46 bps (-1 bp). Their 1-5 curve is now at +33 bps (+3 bps) and the 3 mth-10yr curve is at +79 bps (up +4 bps). The China 10 year bond rate is now at 1.75%, down -1 bps from yesterday. The Japanese 10 year bond yield is up +5 bps at 2.56% and a new 29 year high. The Australian 10 year bond yield starts today at 5.08%, up +6 bps from yesterday. The NZ Government 10 year bond rate is up +4 bps at 4.74%.
Wall Street lower today with the S&P500 down -0.3%. Overnight, European markets were mixed between London's no-changed and Frankfurt's -1.6% drop. Tokyo ended its Tuesday session up +0.5%. Hong Kong was down -0.2% with Shanghai down the same. Singapore was up +0.1%. The ASX200 ended down -0.4%. But the NZX50 fell a full -1.0% in its Tuesday trade.
The price of gold will start today down -US$44 at US$4678/oz. Silver is down -50 USc at just under US$85/oz.
American oil prices are up another +US$3 at just over US$101.50/bbl, while the international Brent price is at just over US$107.50/bbl, also up +US$3.
The Kiwi dollar is down -30 bps from yesterday at this time at 59.4 USc. Against the Aussie we are up +10 bps at 82.3 AUc. Against the euro we are unchanged at just under 50.7 euro cents. That all means our TWI-5 starts today at just over 62.7 which is down -20 bps from yesterday.
The bitcoin price starts today at US$80,465 and down -1.9% from this time yesterday. Volatility over the past 24 hours has been modest at just under +/- 1.5%.
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67 Comments
A faint whiff of panic in Government circles.
Anyone note Goldsmith ramming his court-quashing concurrent with the Potaka raid on the Conservation estate? Same media bottleneck, overloaded in the same timeframe. Choreographed, for sure.
But safe - no member of that media will challenge them big-picture. They may challenge re legality and/or morality - and both in their minor way are valid; our grandchildren are going to be pi--ed.
Addressing what is driving the concurrent moves though? Nobody in the NZ MSM, so far. This Government, like all governments in the current era, is attempting yet-another 'doubling time' of growth. An increasingly impossible task. No amount of Conservation estate raiding, speed-increasing, rule-avoiding, LA-instructing (re rates) or mantra-chanting (economic growth) adds up to a doubling. Tinkering at the edges, but not a doubling - and we are witnessing the biggest reduction in global energy-input, ever, so a reversal rather than acceleration.
Time the media stepped up.
Which government?
Great description
Doesn't matter, it's just more, repetitive, depletion nonsense. It's completely false and outdated. PDK is stuck in the seventies. Global energy input isn’t collapsing. It’s at record highs, with renewables adding more new supply each year. GDP growth isn't tied to proportional energy growth. Energy intensity falls almost every year.
While PDK's comment is somewhat obtuse, I agree with him. The Government has changed the law to protect major polluters, while ordinary people will not have the same protections, but they will have to deal with the consequences from the big polluters. This is wrong.
As to Mike Smith tha activist who is highlighting this I agree with him too. I haven't always. I didn't agree with him cutting the Monterrey pine on One Tree Hill, but he made his point. This about all the people of this whenua, not just the wealthy. History tells us that if we are not careful we can poison the land for generations to come. How do we stop that?
Murray don’t you also believe in petrol subsidies?
What petrol subsidies?
After he cut the favourite tree of my childhood I am happy to see Mike Smith to be blocked. From anything. Everything. Repeatedly. Please.
Murray. The ETS is the parliamentary vehicle to address environmental discharges. The action lodged by climate activists sought to have judges create new law that would override the country's democratically mandated parliamentary process. Muscular judicial activism is a growing threat to NZs democratic parliamentary representation system. They need to be reined in.
It can't. be.
With no penalties, who is going to buy credits?
What we are seeing is a usurping of democracy (already weak er future generation's rights) by a small - in many senses, I suggest - cohort.
And muscular is an interesting bit of spin.
Your response looks like a characteristic attempt at a switch or perhaps you missed my point. Which was that parliament not unelected judges create law. Flawed or not the ETS is NZs democratically instituted mechanism. Judicial activism intruding into the creation of laws it wants is a democracy eroding slippery slope. Does your mysterious hint about a usurping cohort refer to those who cynically use the legal process to circumvent the will of parliament or is it perhaps describing other sinister forces at work to establish a Christopher Luxon cult of personality?
So no consequences to pollution? The ETS is voluntary isn't it, as well as being rank BS?
I agree with much of what you say but attempting to use the legal process to circumvent the will of parliament is not the answer.
I'd suggest he was trying to use existing law to hold big companies to account for the pollution they're creating. That's not circumventing the will of parliament. Parliament changing the law to protect big companies from the consequences of their actions - now that's something everybody should be concerned with.
Semantics. Parliament has demonstrated through its response that this legal action is seeking a judgment that contradicts the intention of existing legislation.
Existing legislation is increasingly about scre-ing the planet to support short-term benefit for a reducing cohort.
Do you not think fairness, justice and rights might possibly outrank that?
It is, after all, theft (from EVERY future generation.
Done knowingly, I'd argue it's fraud.
Or are they to be de-legislated too?
you could be right on most counts (except fraud) but you are knowingly or otherwise attempting to reframe my submission away from what it was - the essential need to preserve the supremacy of parliament. Look no further than Israel to see the fractious end result of the judiciary progressively seizing legislative power from the political establishment.
Funny, I'd have said it was an example of the opposite; the political establishment being taken over by narrow-minded zealots.
I reckon I could explain to my 5-year-old grandchild, the difference between a stock and a flow.
Maybe a few years until he could grasp entropy - perhaps with the example of his bike being left out in the rain being a practical example. And of course, EROEI would be an easy explain - he's always hungry after a burst of pedalling.
He's already into addition - so the fact that 'renewables' (really rebuildables, using non-renewables to do the building) are being ADDED to the non-renewable flows, rather than displacing them, should be an easy explain too.
Some, obviously, take longer. Maybe they are who Stanford had in mind when she moved to curtail critical thinking and to knobble problem-solving?
You will be doing your grandchild a disservice then. In the UK, Germany, Spain, Portugal, Denmark and parts of the US renewables have significantly reduced, even annihilated, reliance on coal and gas. The trouble is, you are years out of date.
Ah, that will be why the US is fighting over oil in the Middle East.
Because they're heading for renewables.
Perhaps you could tell Trump - who was voted in by folk becoming energy-poor.
Energy Flow Charts | Lawrence Livermore National Laboratory
Trends of the World Energy System - World Energy Data (chart 5)
note that per-head is decreasing, but that rebuildables haven't reduced fossil consumption one jot. They've been added - and the US is down to fracking a few 'sweet spots'.
Indeed. Annihilating reliance on ffs is easy when you cut an increasing proportion of society adrift!
https://www.reuters.com/business/energy/britain-stalls-energy-debt-reli…
"In the UK, Germany, Spain, Portugal, Denmark and parts of the US renewables have significantly reduced, even annihilated, reliance on coal and gas."
You may wish to check that claim....Spain dosnt appear to have reduced its reliance to any great degree.
https://www.ceicdata.com/en/indicator/spain/coal-consumption
https://www.ceicdata.com/en/indicator/spain/natural-gas-consumption
Spain has been doing really well with electricity production very recently:
Coal closed the year with the lowest electricity generation in its history, falling by 50% compared to the previous year and recording its smallest share of the energy mix at just 0.6% of the total
Total electricity generation | System reports
They may well be doing well with electricity production....they are still using shed loads of coal and gas, both imported.
It looks like only around 5 million tons in 2024 and less than that likely in 2025 as most coal fired generation was phased out by the end of 2025. So it is definitely being replaced by renewables.
You can clearly see renewables are not adding to fossil fuel energy which PDK claimed. Renewables are replacing fossil fuels.
"Renewables are replacing fossil fuels."
Renewables are replacing coal in electricity generation in Spain (shown in the linked data)....the point being made is that this additional energy rather than replacement energy, there is also the issue that FF are required for more than energy generation.
Globally coal and gas extraction is still growing (even with the expansion of renewables) and the use declining in some states while welcome misses that point....many of the products of these fuels has been outsourced to emerging economies and the products then imported...(those solar panels in Spain are imported from China, and they are manufactured using coal and gas and oil).
Our systems have been constructed around FF and we will not replace that necessity without a wholesale restructuring of our systems...that is why we are seeing that renewables are additive rather than replacement (in toto)...growth demands more energy.
Heres some gas data for Spain to last year...
https://www.enagas.es/en/press-room/publications/spanish-gas-system-rep…
2018 data?
For coal yes ....though was labelled to 2025.
This to 2023.
https://www.theglobaleconomy.com/Spain/coal_imports/#:~:text=The%20mini….
Sort the priorities out. Have one or two of the disgraced and outcast British Royals buy some. That will get 90% of our media really interested.
House prices double every ten years I’m told.
That's only 7.18% a year!
At the moment it’s more like 0% a year, so lots of catching up to do. The Church of Ashley must be losing their faithful.
More and more around the world are beginning to realise the degree of Trump's failings. The trip to Beijing will be interesting. What will he have to surrender to get what he wants? I suspect Xi will offer Sweet FA, but Trump might betray Taiwan to gain the concessions he needs in the ME. Xi will make him beg I suspect, revelling in the power that Trump has given him without even asking. Stability and oil flow traded for instability in the Pacific?
Xi is putting his own people at the head of the Chinese military. That raises big questions; hawkish or dovish? What impact will it have on the South China Sea and the countries surrounding it?
In the US MAGA supporters are getting a little upset they haven't received their gold cell phones! Priorities?
When the founder Mao said political power comes from the barrel of a gun that sort of gave reason to any one of his successors to be wary of the military, them that get to have the guns, hence perpetual scrutiny and culling as may be seen to be prudent.
FG. While Mao said this he personally cemented his grip on power at a time when it was being increasingly threatened by his contemporaries including the military, through a cultural revolution that weaponised the idealism of Chinese youth against his ideological enemies, eventually neutralising them.
An aside, if allowed, noted last week, are you doing the Rhine cruise as well as us.?
Danube. Wear a large red rose in your lapel when boarding the plane. I'll have a folded newspaper over my arm. I travel under the pseudonym of Graham Greene.
On the river, be alerted to brown uniforms with red stars on caps on the east bank. Best of luck - Le Carre.
Have had a bit of experience travelling in iron curtain countries. Remember a memorable coaching session from our guide in 'frightened chicken' behaviour when interacting with Stasi and other commo goons ...... imagine your self as a hen confronted by a fox, stand very still, eyes and head down, never argue or disagree, grovel obsequiously. Didn't come naturally for this egalitarian working class lad.
Jawohl Mein Herr - Smiley.
Bit like Spain early 80s still overshadowed by Franco, on being confronted by any Guardia Civil identity, resort to an unrelenting view of your shoes and don’t understand any Spanish.
50 years ago, I naively though we would all recognise our ecological limitations and responsibilities, before the SHTF. I moved in circles who thought so too. We were a minority, and we were wrong about the others coming to the party. This evergreen perhaps explains why:
Programmed to Ignore? | Do the Math
I would be surprised indeed if DC was in the 4%; and would be astounded is ZS was. The non-thinking masses aren't - they're just work/shops/home/scroll/vote for short-term hip-pocket via spin (nanny state; back on track). But the Limits to Growth, at best partially captured in GDP but in reality not, have scr--ed the Third World (we chose us over them, re their resources) and eaten into the First-World bottom-end (sub-prime and pay-as-you) and not the First-World Middle is well into being hollowed-out (wait till house-prices find their REAL floor). It is even carving into the lower-upper; bureaucrats, tertiary education, with implication for those dependent on said affluence (doctors, lawyers etc).
Hence the MSM failed to see Trump2, or the why of MAGA (or that it is an oxymoron in physics terms.
Then China - I'm sure they are very aware. Hence both stockpiling the low-entropy energy, while accelerating the rebuildable fleet, and build capability. Better placed in all regards than the US, better-off in the fact that their infrastructure is up to a century younger than the US (less entropy, yet) and obviously far more intelligently-led (even NZ is - a scary thought in itself). Trump has a habit of agreeing with whatever he is told/has met most recently - plus a mental disintegration, plus his already-quirks, plus an increasing tendency to splurge late at night. Xi will have commissioned psychologist to explain all this - Trump will be like me going in to play chess with Bobby Fischer; doomed before he starts.
Physical Limits? People are wired to survive. They will generally fight for their survival in someway. the more they have, the more their survival is assured. But restraints on populations puts the leadership at risk, so balance is required. The species is struggling to rise beyond base emotions to become better. How do we achieve that?
Nature is a harsh mistress and physics is the tool that sharpens the axe. I saw a counter to the Limits to Growth book, but what was missed is the universe we live in is finite. We can reach out a literally touch the physical limits in almost all things. Even if we estimate those limits incorrectly, it doesn't mean there isn't a limit to them.
China is fighting for it's survival as a nation. It does better than most in learning from it's own history. Trump on the other hand is fighting for his bank balance. He'll die a billionaire, but what legacy will he leave his family and country, or for that matter, the planet?
Agreed.
Nordhaus was the classic rebuttal - that grandchild of mine could spot the problem with his argument re climate/GDP, even now
When Idiot Savants Do Climate Economics
'take food production out completely, and we only reduce GDP by 3%'.
Grandchild: 'who is alive to buy anything?'
Nordhaus: Um
Moved in circles = echo chamber
Xi won't do anything to help Trump over Iran. "When your enemy is making a mistake, don't interupt him"
Xi just needs to stroke Trump's ego, then China will do very well out of their meeting.
Not rocket science.
"This is what it actually takes to reach financial freedom"
https://www.stuff.co.nz/money/360977783/what-it-actually-takes-reach-fi…
classic example.
In a word. "Micawber"
And a good morning to you too... Yields up, oil up, inflation up, confidence down...
Japanese household spending down and saving up.
Depends on how you look at it. My look is that it is a plus for them.
Not so great if you run a business. If we all just spent on necessities and saved our money we wouldn't be richer.
We' would have a planet not being strip mined though. I am ok with having the richness of a healthy functional biosphere, without the home full of depreciating junk I sacrificed the finite hours of my life accumulating.
He has yet to understand that 'having proxy'
isn't richer.
Having that which underwrites the proxy..... is.
(see my grandchild/learning comments upthread)
If you don't value money I'll gladly take it off your hands. Can you forward your NZ super cheque to me?
I bought a nice new car last month with my proxy.
Much of my proxy was taxed to become someone else's proxy. If energy is the real underlying value, I don't own any energy so I shouldn't pay any tax. Maybe I should get PDK to explain this to the IRD.
No, it was still proxy on your behalf.
Government is us. Or was.
And should be.
I agree we should spend less on depreciating junk and spend that money elsewhere (e.g. hospitality etc). But not spending it at all would cause unemployment, lower tax take, more government debt, etc. Ultimately we wouldn't be able to afford NZ super, free healthcare, clean drinking water, roads, etc.
My point above still stands. Societies can't save themselves into being rich (in terms of money), at least not with the economic model we currently use.
Ah
Progress
Not so Jimbo.
I practiced Micawber. The lifetime outcome is that my lifetime spend has been much greater than if I had not. Than if I had worked in debt rather than in ownership.
And I have been able to assist business with that much larger spend.
On an individual level yes, saving can be a good idea. Personally I took out a crap load of debt to buy a house and that worked out much better for me than saving would have, but it can work both ways.
But as a society, if we don't spend we don't have jobs and we don't earn. If we all did a PDK and produced our own energy / food / etc and never spent anything, there wouldn't be healthcare, education, cars, roads, imported energy, etc. Maybe NZ would be a nicer place, for the limited lifespan you'd have.
Jimbo. You might have heard of the one marshmallow / two marshall test.
The two marshmallow kid will have more to spend in their lifetime
And thus provide much more of the support of business that you seek.
It's actually an abundance approach. Austerity is not in it.
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