Here's our summary of key economic events overnight that affect New Zealand with news the US-China summit in Beijing is underway and so far the results have been underwhelming. Xi warned Trump about US support for Taiwan, and a big jet order for Boeing wasn't quite what was expected, causing Boeing's share price to fall today (-3.6%). The travelling CEO's seem to be impressed with China's opportunities, rather than Trump getting China to invest in the US. But it is only day one, so more may come of this visit.
In the US data out overnight shows there were 190,600 initial jobless claims last week, less than seasonal factors would have indicated. There are now 1.7 mln people on these benefits, less than a year ago and about the same as two years ago. Given how this is tracking so different to the US household labour force survey, part of the jobless claims easing can be attributed to tougher qualification standards.
US retail sales rose marginally in April from March to be +4.5% higher than year ago levels. Higher dollar sales at petrol stations were a key factor. The timing of one-off tax refunds probably played a part too. This is a gain that is higher than the 3.8% US CPI.
Business inventories rose as well (the data is for March). Retail inventories did too. But both are up less than the sales gains, so the inventory to sales ratio is improving.
In China, banks haven't been lending at the rate expected. New yuan loans by Chinese banks fell by a net -¥10 bln in April, and much less than the expected +¥300 bln, and less than the +¥285 bln in April 2025. This is quite an unexpectedly variation and turn down in momentum, and only the third time on record this has happened. One reason is that there is a shift to corporate bond financing, away from bank financing.
In Australia, their competition regulator has prevailed in a case it brought against supermarket giant Coles claiming its discount claims were a sham. This judgement is sure to echo in New Zealand. The ACCC has a parallel case pending against Woolworths.
Meanwhile the peak Australian labour union, the ACTU, has amended its claim for a minimum wage rise to +6% before the Fair Work Commission, taking the claimed rate to AU$26.45/hour (NZ$32.25). Obviously the change is in response to rising inflation.
Global container freight rates were up +12% last week to be +14% higher than year-ago levels. Surcharging for fuel is the key reason for the rises although this is also the time the northern hemisphere "peak season surcharges (PSS) start to be applied. Bulk cargo rates shifted higher again last week as well, up +5.4% and are now at levels we had during the pandemic stresses.
The UST 10yr yield is now just on 4.46%, down -1 bp from this time yesterday. The key 2-10 yield curve is now at +47 bps (-1 bp). Their 1-5 curve is now at +32 bps (-2 bps) and the 3 mth-10yr curve is at +80 bps (down -2 bps). The China 10 year bond rate is now at 1.75%, up +1 bps from yesterday. The Japanese 10 year bond yield is up +3 bps at 2.63% and a new 29 year high. The Australian 10 year bond yield starts today at 4.99%, down -8 bps from yesterday. The NZ Government 10 year bond rate is down -2 bps at 4.76%.
Wall Street higher today with the S&P500 up +0.8% and a new record high. Overnight, European markets were all higher between London's +0.5% and Frankfurt's +1.3%. Tokyo ended its Thursday session down -1.0%. Hong Kong was unchanged with Shanghai down -1.5%. Singapore was down -0.2%. But the ASX200 ended up a minor +0.1%. The NZX50 fell -0.3% in its Thursday trade.
The price of gold will start today down -US$12 at US$4678/oz. Silver is down -US$3 at just under US$85/oz.
American oil prices are holding up at just over US$101.50/bbl, while the international Brent price is just under US$106/bbl.
The Kiwi dollar is down -10 bps from yesterday at this time at 59.2 USc. Against the Aussie we are up +20 bps at 81.9 AUc. Against the euro we are unchanged at just under 50.7 euro cents. That all means our TWI-5 starts today at just on 62.5 which is down -10 bps from yesterday.
The bitcoin price starts today at US$81,564 and up +2.7% from this time yesterday. Volatility over the past 24 hours has been moderate at just under +/- 2.1%.
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40 Comments
Is this Xi putting Trump in his place? Might have been a stilted conversation at the state dinner.
".......Since last night, a total of 30 vessels including more Chinese vessels have transited the Strait of Hormuz with Iran’s permission....."
https://www.southfront.press/military-situation-in-iran-on-may-14-2026-…
Probably not as far as Trump would see it himself. You see Trump doesn’t see reality, he sees nothing but himself.
I enjoyed watching the 21 gun salute and marching soldiers. All the soldiers exactly the same height.
https://youtu.be/btg-ppiLH94?t=449
Did they have dancing robots?
Would you trust a marching robot with a bayonet two inches from your back?
There was once a very seriously voiced BBC commentator reviewing some Royal occasion who then uttered the great spoonerism - that the guns will now sound a twenty one son galoot.
Honda's first loss in 70 years is quite big news. The Chinese manufacturers are starting to become a serious worry for Japan, South Korea and Germany. I just bought a new Toyota but found myself comparing the price and features with a plethora of Chinese offerings after the fact. China making big inroads into Australia and the UK. The one good thing is that it may make pricing more competitive for Toyota loyalists.
“Unless things change, we will not survive. I want everyone to acknowledge this sense of crisis," said Sato, according to a report from Automotive News. “Right now, we in the automotive industry are battling for our very survival," he said.
https://insideevs.com/news/791250/toyota-safety-supplier-warning-china/
China making big inroads into Australia and the UK.
We'll have to wait and see how the quality stands up in 10 years or so. Toyota sells consistently as buyers know they are built to last and have a proven history of this, coupled with the greater number of those buying them, the easier it is for second hand parts down the line. Hopefully the Chinese vehicles aren't eventually labelled toasters and needing replacement every couple of years.
if it breaks down parts will be an issue.
An on-to-it think-tank
We are beginning to address the making of strategic (as opposed to 'financial', which were always too remote to be reality-based) decisions. They miss a bit - the blog about food security addresses biofuel for tractors for instance, while failing to address the fragility of modern tractors themselves (you'd keep an old Fergie TEA going forever with a socket-set and a pair of pliers - the modern fleet not so).
But a good heave, and on the right track. Good to see another player in the space.
That's one of the quandaries we face today. Technology has the potential to make machinery significantly more efficient, but in many respects it also makes it less fixable. Many of us will remember playing with cars and motorbikes. I got quite good at tuning twin carbs on a motorbike, but also overhauled a number of engines for cars and hotrods. Basic and tools and a good tuning light (I still have mine) was all that is required. Today you need to throw in a computer and specialist software which isn't cheap. And if the electronics fail they generally need to be replaced because they can't be fixed.
That whole picture reduces consumption of fuels by a little, but increases consumption in other areas by a bit more I suggest. Not sure the net gain is worth it.
Aye. I stopped to ask if I could help a fellow stopped on the highway recently. Me in a 1993 Corolla wagon with 400k on the clock, which I've had the head off only once (turned out I didn't have to) - the stopped vehicle a BMW X5.
Took him to the local country garage - but their diagnostic computer wasn't up to it.
He got a tow-truck to take it into Dunedin, but apparently the immobilisation locks up the rear end, so it has to be dragged onto the truck - and taken to a specialist. Second time, or maybe the third, apparently.
Sheesh - I can clutch-start my Corolla...
It's getting complex indeed, however the savvy know you can get scan tools from the likes of Aliexpress that have numerous manufacturers specs and models loaded so one can simply plug in and find the fault code, then head straight for the issue to fix. Not discounting it isn't a 3 bolt off, 3 bolt on replacement part job these days.
With debt prices moving up strongly this week ---- get the feeling some chunky mortgage rate hikes are coming today or Monday ?? Likely much.
"Westpac said about one in six new home loans taken out so far this year had been for $1 million."
https://www.rnz.co.nz/news/business/595275/the-rise-of-the-million-doll…
It goes boooom, when the actual mortgage rates skip past the previously light "test rates"....
Banks love stuffing big debts, down the people's throats.
But ultimately it was a Ponzi
Which the MSM - particularly the ones claiming 'financial' expertise - studiously failed to point out.
WhileTrump is in China smooshing with Xi, tensions are ramping up in the Hormuz Strait again. Iranian forces are reaching out accross the strait to attack and seize ships on the other side of the strait. They will have been in UAE or Omani territorial waters. One ship has sunk and another taken towards Iran. USN policing efforts either are not happening or are ineffective.
The Iranian fleet of fizz boats are demonstrating another form of asymmetric warfare that is showing that despite being very large and powerful, technologically chokker organisation, the USN is not especially flexible and adaptable.
I hope Marine General Van Riper is feeling more than a little smug. He's the chap who commanded the Red Forces and was accused of cheating when he used extreme low tech to counter the USN in war games.
Scuttlebutt has it that Netanyahu paid a secret visit to UAE. Yet to be ratified, unless I've missed it.
But yes, this is a time to send signals, and they're doing so. The US leadership is looking like a bunch of neanderthals in comparison - but we must remember they were dealt a losing hand (they took the reins of a failing hegemony and just accelerated the process).
"Looking like a bunch of neanderthals"?
Yeah, PDK is being pretty insulting to neanderthals.
I was accused of just that, this week...
It suggests the US military on station have been ordered to stay well clear of getting in harms way. The political lords know full well that even modest damage and/or casualties will sink them like a stone publicly, back home. It’s all become rather pathetic hasn’t it. This is the result of having too much power in one identity who cannot own up to himself anymore than be held accountable.
Very likely Foxy. But the USN has to have the capability to flex and adapt to what is happening and police the strait effectively. Failure here tells everyone of their potential adversaries what and where their weaknesses are. Strategically they're putting their own necks on the chopping block! This is not just incompetence, it's criminal, because when they do send their people into harms way it will cost lives.
The commentariat is excitedly seizing on the sinking of an Indian vessel off Oman and the capture of what appears to be a small floating armoury owned by private marine security providers, as evidence Iran has the upper hand in the strait. Never mind that we don't know who the attackers were nor that 2000 ships remain stuck firm behind the USN blockade, the narrative is that boys in fizz boats are humbling the great satan.
However and whomever doesn't really matter, that the USN, the significant military force with a presence there, cannot police it, create stability and stop Iranian aggression is telling. Not to mention a significant embarrassment for the US. US allies and enemies should be taking note.
It's the lessons from the beginning of the Ukraine war all over again; flashy toys and high technology do not make a competent military against ALL enemies. Lots of chinks in their armour!
Kinda does matter though. If it's the IRGC you'd have to wonder why they'd hit an Indian ship when it is one of the few countries the USN is allowing tankers through the blockade for. The 'ship' in question is an inbound from Somalia so likely already allowed through the USN blockade. Also to provide some perspective - its a small wooden dhow plodding along in Omani waters. Who knows what it was carrying, lots of actors could have been been interested in its capture or destruction. The only thing one can be certain of is that the incident is of very low tactical or strategic significance.
But it may have political significance.
Ah yes. There we agree. It is of course being presented by media as 'a ship' with this being visualised by the masses, exactly as deceptively intended, as a tanker or the like; living proof the mighty US is being humiliated by a few boys in fizz boats. I suspect a bored reaper drone operator in Missouri watched the attackers approaching, probably from the Omani coastline so as to not arouse suspicion, and decided there was nothing to see here.
I see those huge aircraft carriers as coffin ships. Sooner or later someone will find a way to slip a missle through the screens and 5000 Americans will be toast.
Then their politics will get interesting.
No ordinary missile would do it. They're designed to not just defend, but to take damage and stay in the fight. A nuke mine would do it.
The lesson would be very salient though.
Interesting posit though. Years ago there was news the Chinese were looking at (developing?) rocket powered torpedos. Too hard to detect early on as they would travel faster than the speed of sound underwater, virtually impossible to intercept. Range might be an issue though, but there are solutions to that. Put a small nuke tip on them and US carriers are toast.
The Chinese already have 1 or 2
DF-21D
YJ-21
Would be interesting to see one of the carrier's sunk
Be the end of US power projection right there.
Force Z Disaster: The end of the Battleship - YouTube
In-Pirates, Out-Pirates...
Those are missiles not torpedoes. Much easier to detect and counter. And Yes the US systems are worked up to counter hypersonics. Underwater weapons are a completely different kettle of fish (!).
pun of the day - so far
Murray. I imagine you too are watching in fascination the Ukrainian drone swarms operating with impunity far from the front line. One memorable clip showed Russian trucks being hit in Mariupol with the Sea of Azov in the background, 160KM distant. A mother drone triggers a swarm of attack drones earlier flown in to a hidden site near major supply roads, awaiting the approach of targets. No matter how many defences Russia puts up, they are defeated by volume. The same applies to scaled up intercontinental missiles and torpedoes. With carriers on an escalating journey to obsolescence the US's ability to project power will come under serious threat.
Absolutely. Asymmetry and agility seem the name of the game these days.
Yep, especially when married to technological breakthroughs. Mavic drones the modern day equivalent of Hiram Maxims combat redefining invention. Not surprising that Putin is looking increasingly exhausted. If his technicians can't find a counter to the latest Ukrainian drone breakthroughs he could well be a gone burger.
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