Here's our summary of key economic events over the weekend that affect New Zealand with news financial market sentiment deteriorated sharply at the end of trading last week as war-driven inflation is being priced in more aggressively, because it will persist longer than earlier assumptions. Markets are shifting to a much more sceptical position on Trump policies & actions given the extended track record of failures.
Higher long rates tend to feed on themselves when stress (like the Iran War) is elevated. And the US Fed is in no position to cut rates; in fact markets are guessing the chances of a hike are rising. These two pressures are pushing rates up.
But first in the week ahead, locally we will be following updated population data this week, producer prices, credit card data, household and business expectations survey results, and retail sales, all for March.
In Australia, the key data coming is for their April labour market, along with a key consumer sentiment survey and a key inflation expectations survey.
Globally, apart from watching what is or isn't going on in the Persian Gulf, we will be tracking how bond markets are reacting to the Trump turmoil, US regional surveys and PMIs, and the UofM sentiment survey update.
From China, there will be a raft of key data updates this coming week. There will be key industrial data out in Japan. And there will be PMI data out for India too. Indonesia’s central bank will announce its latest monetary policy decision late Wednesday night.
Over the weekend, analysts have been able to assess the results from the China-US summit. Those haven't been very positive. And it says a lot that Russian president Putin is in Beijing this week.
Essentially the takeaways from the Beijing summit meetings between Xi and Trump have been underwhelming. It is notable that the Chinese have made no mention of the trade claims by the US, although there will be some. And they will be hoping Trump throws Taiwan under the bus after they stroked his ego.
Meanwhile, the 'negotiations' between the US and Iran seem to have stalled completely. So no resolution to the Strait of Hormuz blockades. Oil prices are settling in, even rising, on fears of a much broader energy crisis. It has now been two months since Trump said the US would provide transit insurance for the Strait of Hormuz crossing. So far it has done no deals; zero.
In the US, April industrial production jumped +0.7% from March to be +1.4% higher than year ago levels, and much more than expected. But it is all "business equipment" (read: AI data centers). This will be 'good' if it generates lasting increased productivity, but the rest of their factory sector is going backwards, even with 'tariff protections'. Consumer goods manufacturing shrank in April (-0.2%) from a year ago, construction stalled in April.
In the New York region, there is a scramble to stockpile ahead for fast-rising cost increases. Business activity grew strongly there in May. US stockpiling may end up giving their Q2-2026 economic activity data an unexpected boost for the quarter.
In Canada, housing starts jumped an impressive +17% in April from March to an annualised 279,300 units in April from the previous month, well above market forecasts of 240,000 units. But it is just back to year-ago levels (281,800).
In Japan, machine tool orders surged +45% in April from a year ago, far exceeding market expectations. It maintains the much higher level it reached in March which was an all-time record, and by quite a margin. Both domestic and foreign orders leapt the at the same pace.
Japan’s producer prices rose +4.9% in April from a year ago, a surge from an upwardly revised +2.9% increase in March. That is an all-time high in a record that stretches back to 1960. Markets had expected a +3% rise. The usual suspects were the cause.
Indian exports rose sharply in April, and were near their record high levels in March 2025. They had very good increases in both goods and service exports. Imports rose fast too, probably related to the rising cost of oil. Overall, their trade deficit shrank slightly in the month.
The Russian economy is contracting, again. It is giving all the signs it is exhausted by its war on Ukraine, and this is despite its higher oil revenues. Manpower is a serious and probably unsolvable issue now that they have suffered excessive battlefield deaths.
The UST 10yr yield is now just on 4.60%, unchanged from this time Saturday. For the week this is a +24 bps jump, after one of the largest one-day jumps for quite some time on Friday. It is back to early 2024 levels. The key 2-10 yield curve is now at +51 bps (-1 bp). Their 1-5 curve is now at +44 bps (unchanged) and the 3 mth-10yr curve is at +93 bps (-1 bp). The China 10 year bond rate is now at 1.77%, up +2 bps from Saturday and for the week. The Japanese 10 year bond yield is down -1 bp at 2.71% and still a 30 year high. The Australian 10 year bond yield starts today at 5.08%, down -3 bps from Saturday, up +11 bps for the week. The NZ Government 10 year bond rate is unchanged at 4.78%, up +6 bps for the week.
The price of gold will start today down -US$15 at US$4539/oz and down -US$184 for the week. Silver is down -US$1.50 at just over US$75.50/oz, down -US$5 for the week.
American oil prices have stayed up at just over US$105.50/bbl, while the international Brent price is down -50 USc at just over US$109/bbl. A week ago these prices were US$99.50/bbl and US$101/bbl respectively.
The Kiwi dollar is little-changed from Saturday at this time at 58.4 USc, down -120 bps for the week. Against the Aussie we are also unchanged at 81.7 AUc. Against the euro we are down -10 bps at just under 50.2 euro cents. That all means our TWI-5 starts today at just under 61.9 which is unchanged from yesterday, down -90 bps for the week to its lowest since early April.
The bitcoin price starts today at US$78,024 and down -1.5% from this time Saturday, down -4.2% from a week ago. Volatility over the past 24 hours has been low at just under +/- 0.6%.
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