Here's our summary of key economic events overnight that affect New Zealand with news there has been no improvement in the backdrop to the global economy.
To open the new week, oil prices have risen after Trump warned that Tehran is running out of time to reach a deal he likes, while Iranian media reports indicated the two sides remain far apart in negotiations. Shipping flows through the Strait of Hormuz remains effectively shut, keeping supplies tight. Iran has set up its new tolling authority on the Strait.
In the US, the NY Fed's regional Business Leaders Survey shows that the service sector there is continuing to contract, but now at a lesser pace. Activity has been contracting there since late 2024. Inflationary pressures remained persistent, with firms reporting steep increases in input costs and still-elevated selling prices.
Staying in the US, the NAHB/Wells Fargo Housing Market Index, which measures builder confidence in the market for newly built single-family homes, rose in May from April (which was its lowest level since September 2025). They too complain about sharply elevated input costs.
And we should probably note that Elon Musk has lost his case against Sam Altman and OpenAI to claim the company. The jury quickly decided Musk had no case.
In China, new home prices across the 70 cities they reference shrank -3.5% in April from a year earlier, following a -3.4% decline in the previous month. This is the 34th consecutive month of contraction. It is also the sharpest contraction pace since May 2025. The weakness in their property sector goes on and on. The pace of decline in their existing home market is even faster.
Four a fourth month, China's electricity production fell from the previous month. But it was +2.6% higher than the same month a year ago. This is a good reference point to assess their industrial production, which they said rose +4.1% in April from a year ago. But that was the slowest they have reported for an April since 2022. Fixed asset investment fell -1.8% in April on that same basis.
At the same time, they said retail sales fell -0.5% in April after a -0.1% decline in March.
Chinese banks now have an average net interest margin of 1.4%, according to the latest data as at March 2026. That is news because it is a record low. (For perspective, the New Zealand industry NIM is 2.3%.)
Singapore said its non-oil exports rose a fast +24.5% in April from a year ago, up sharply from the +15.3% pace in March. This was the eighth consecutive month of growth and the fastest pace in fourteen years, with electronics the growth leader.
In Australia, Cotality reported that 1,939 capital city homes went to auction last week, an -11% drop from the previous week, but still tracking higher than a year ago (+8.7%) when 1,784 home auctions were held. The preliminary clearance rate rose 1.1 percentage points to 57.5%, still a soft result but with highly mixed outcomes across different cities. This was the fifth time in the past seven weeks that the early clearance rate had held below the 60% mark and the third lowest result for the year-to-date. The Aussie Budget signals may have contributed to the mood. (Be careful comparing Australian and New Zealand clearance rates because they will include sales made after negotiation after the hammer drop. On the other hand, we have a strict hammer-drop criteria.)
The UST 10yr yield is now just on 4.59%, down -1 bp from this time yesterday. The key 2-10 yield curve is now at +52 bps (+1 bp). Their 1-5 curve is now at +45 bps (+1 bp) and the 3 mth-10yr curve is at +95 bps (+2 bps). The China 10 year bond rate is now at 1.75%, down -2 bps from yesterday. The Japanese 10 year bond yield is up +2 bps at 2.73% and still a 30 year high. The Australian 10 year bond yield starts today at 5.08%, unchanged from yesterday. But the NZ Government 10 year bond rate is up +7 bps at 4.85%.
Wall Street has opened its week with the S&P500 down -0.2%. Overnight European markets closed up between Paris's +0.4% and Frankfurt's +1.5%. Yesterday Tokyo ended its Monday trade down -1.0%. Hong Kong fell -1.1%. Shanghai dipped -0.1%, but Singapore was up +0.2%. The ASX200 ended down -1.5%. The NZX50 ended down -1.6%.
The price of gold will start today up +US$8 at US$4547/oz. Silver is up +US$1 at just over US$76.50/oz.
American oil prices have risen +US$1.50 to just over US$107/bbl, while the international Brent price is now at just over US$110.50/bbl.
The Kiwi dollar is up +30 bps from yesterday at this time at 58.7 USc. Against the Aussie we are also up +30 bps at 82 AUc. Against the euro we are up +20 bps at just on 50.4 euro cents. That all means our TWI-5 starts today at just under 62.2 which is up +30 bps from yesterday.
The bitcoin price starts today at US$76,661 and down -1.8% from this time yesterday. Volatility over the past 24 hours has been modest at just under +/- 1.6%.
It turns out Trump's investment partners are enabling Iran to access the global financial system and evade US sanctions. Iran’s Nobitex has processed at least US$2.3 billion through Tron and BNB Chain, blockchain ledgers started by backers of the Trump family’s World Liberty Financial. Of course there will be no Justice Department investigation.
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58 Comments
What is fascinating is the silence following Trump's trip to China. If he had gained anything positive he would have been trumpeting it all over the place. But nothing, effectively silence. The question is; what did he surrender?
In the meantime he has TACO'd again and extended the 'ceasefire'. So not change really.
'What did he surrender?'
Well, he clearly pulled back on the US stance regarding Taiwan to seemingly appease Xi Jinping.
He warned Taiwan against declaring formal independence and that he was not prepared to get dragged into any conflict involving Taiwan. He also left the status of a pending $14 billion U.S. arms package to Taiwan highly uncertain, framing it as a tool for leverage with Beijing.
Following the visit, Taiwan has every reason to be increasingly worried . . . as we all should be also.
However last week Congress passed a package which provided a fast track process for foreign arms sales to select countries. Taiwan was one of those named.
I agree we should all be concerned. Besides swapping body parts and living forever, what else would Putin and Xi be discussing? China training special forces in Ukraine? Would Xi agree? Don't think it has worked too well for North Korea, not that Kim would care.
"what else would Putin and Xi be discussing?"
- supply of Russian oil to China in exchange for... perhaps some arms supply to fight Ukraine ?
- their position regarding their ally Iran, potential supply of weapons via which route to Iran and providing satellite intelligence
- discussing if China and Russia want the Sgtraight of Hormuz re-opened, Russia won't be in a hurry, or if the closure hurts the West more than it does them, especially if a deal is forged to supply China with Russain oil.
Very good points Yvil. Definitely first and last. Middle point is a possibility. China has a track record of playing both sides of a coin (perhaps they're Qbits?) so might seem cautious. But in the end all they have to do is wait.
A report on CNN says that Trump has only one thing he can do to address the fuel crisis in the US, open the strait. But if Xi had agreed to act on that he would have been telling us about it. I suggest Xi offered him nothing except platitudes, while perhaps suggesting he turn his back on Taiwan.
Taiwan's TFR is 0.695, 2/3 below replacement or 24 grandchildren per 100 grandparents. A population reduced to the size of Auckland in three generations.
All China needs to do is wait for the place to empty out. At this rate it will prove quite difficult to support the old folks home, let alone an army.
Sigh.
Lets just keep that honest.
Again.
Fossil energy does orders of magnitude more work than labour - the latter is mere noise. A reduction in available labour is, therefore, mere noise too.
Thus orders of magnitude less work will be done with a population an order of magnitude lower in three generations than it is now. Who in Taiwan is going to consume all of this work, with a fraction of the population, that you speak of?
Less work would be great. Earths biosphere could begin the path to recovery.
Possibly. NZ is a case study in how a tiny amount of people, with no evil "fossil fuels" can can completely root a biophere on the world's 12th largest island.
"Polynesian arrival in the South Island of New Zealand 700–800 y ago was followed by clearance of more than 40% of the native forests. What is remarkable is that this extensive deforestation was accomplished by small, largely transient, nonagricultural populations in places remote from any settlement, and the forest loss occurred throughout the relatively large South Island (151,215 km2) in only a few decades."
Rapid landscape transformation in South Island, New Zealand, following initial Polynesian settlement
Ah well, the first settlers didn't have satellite imagery to tell them the planet was round, or aerial tankers to put out the campfire that blew hot cinders into the bush during a Norwest. Now we know we're rooting the planet, there's still people wanting to accelerate the rooting for a dollar. Not sure what their excuse is?
Oh bless, it wasn't "campfires" that wiped out the moa and the forests - nor "fossil fuels'. These people you speak of - there are plenty of environmental laws you can engage with. If you have identified them then go for it!
"At historically reasonable population growth rates, we show that, starting from a genetically estimated founding population of 400 individuals, the Polynesian population of New Zealand during the period of moa exploitation would not have exceeded 2,000, at a density of ~0.01 km−2. A small population of humans with a basic toolkit of stone tools and fire could, therefore, rapidly eliminate a megafauna by hunting and habitat destruction. Large human populations need not, therefore, necessarily be postulated in the models of megafaunal extinction elsewhere."
An extremely low-density human population exterminated New Zealand moa
Without people fossil energy is useless. Fossil energy won’t just go and build something itself. And if it did it wouldn’t get used.
I agree with profile here, population decline and ageing will probably be much more of a problem than a lack of fossil energy. You could argue that population decline would be a good thing in the long run (you can also make that argument about running out of fossil energy). But for the next few generations there are going to be a lot of problems.
That figures - he's never right.
Think about that.
And a hint - 'per capita'.
Just saying.
Techofuedalists plan to replace every body with a robot and every brain with AI. The only people needed will be Musk clones, and Xi.'s and Putin's tacked together with sacrificed body parts.
All military type targets in Iran likely have already been bombed. Any recommencement will target civil infrastructure. The Iranians will retaliate with like targeting of that of neighbouring Gulf States, saline treatment, power and similar plants.Suggest that is why the recommencement is so far just words.
All military targets are not gone.
Some US intelligence reports indicate that Iran still possess 70% of its pre-war missiles and that it has reoccupied 30 of the 33 missile bases close to the strait.
This conflict is not going to end anytime soon.
Note that Foxy didn't say the military targets were "gone", he simply said that they had been bombed, which does not necessarily mean destroyed, especially if they are underground in bunkers. Re-bombing them might not achieve much more.
You don't end a civilization by only bombing military targets.
Shifting extensively to civil targets will not bring Iran’s downfall but it might well cause a humanitarian crisis and Iran’s retaliation in kind on other Gulf States will be substantial. The argument now appears to be centering on the suspect uranium. Iran might easily say you buried you go and get it then. That in itself would be a very interesting exercise and who would know if it was actually still there in the first place. Great big Gordian Knot isn’t it, getting bigger and tighter by the day.
A nuke each on Iran's 5 largest cities would guarantee surrender or an outcome as good as.
Well yes it just might. Think I’ll just go and play Barry McGuires “Eve of Destruction “ if I can find it.
"we had to destroy the village to save it"
Is that you Bibi?
Don't be antiseptic.
D2O, are you related?
Lol..just anti bastard
Some Media were suggesting Xi might help Trump on Iran. Dreamers interviewing their microphones in my view.
Willis about to attempt the complete destruction of Wellington hospitality and housing markets. Cutting the government workforce by almost 20%
...after Labour increased it by ~40% 2017-2023 - with no significant improvement in public services.
A make work scheme for embedding Labours culturally aligned acolytes in the bureaucracy.
Both Nats and Labour are really useless at economics. Nats seem also destructive of the environment following their Coalition mates ( Central Otago, Fishing Bill,…). We need a new broom, anyone really, for me, Opportunity.
Have to agree they're looking like the best of a bad lot.
If they ditched the land tax I'd vote for them. As PDK says, best of a bad bunch. We've had decades of government deliberately pumping land prices and now the wheels have fallen off the exponential growth fantasy, TOP want those synthetically pumped server digits back.
Land was a piggy bank someone would raid at some point. The casino always wins. I'll tell the guys at TOP how they'll get my vote. Tax individuals retirement savings, KiwiSaver etc, on the unrealised capital gains from their "nest egg". We'll see how that goes down?
Individual savings already are taxed on unrealised capital gains on a similar basis to the proposed land tax, for foreign holdings. This is the FIF scheme and you are almost certainly paying this on your kiwisaver already, it's just well hidden.
Yep. It's more wealth tax than capital gains tax. Nominally 28% x 5% of opening value = 1.4% of your holdings paid every year, regardless of performance. Yes there are other possibilities, but this will be the result for the majority of cases. It's not really hidden, rather that most people don't care to look.
Our annual FIF tax bill has quite a few zeroes on the end, paid (reasonably) happily as the net result is still better than most other investment options.
"You are taxed on money you have not made, using a 25-year-old threshold that inflation has rendered ridiculous."
Noting also that National changed the FIF rules this year to accomodate their high wealth migrants.
FIF Rules NZ: $50,000 Threshold & Overseas Investment Tax Guide | Become Wealth's Blog
You have explained it better than me. The rate paid by your kiwisaver is slightly lower than the TOP proposed land tax, but pretty similar in principle. Holdings outside a PIE scheme could be taxed at a higher rate, 1.65% for many and 1.95% for anyone on the 39% rate.
The TOP land tax would leave me two options. 1) sell the place I love and planned to see me out, because it's personally unaffordable, or 2) rip out all the environmental planting I've done and run another eighty cattle or maybe 300 ewes, which wouldn't add one cent to my personal disposable income.
Needless to say, TOP wouldn't get my vote.
You may already be aware of the details and have taken this into account, but there are lower rates for farmers and proposed exclusions for land set aside for conservation.
"Farmers will benefit from a 0.5% Land Value Tax, be able to exempt privately owned conservation land and defer their tax payments in tough weather or economic seasons."
Sounds generous. Asset grab, but we may give you some back under special circumstances.
As per the discussion above, 0.5% is a very generous tax treatment on farm assets compared to what I and others pay on foreign investments.
Sell them if your tax treatment is an issue. Buy a farm, see if you feel so willing to work physically twice as hard for some polies grand spending plans?
Not in a growth-requiring 'economy', there aren't.
Very quickly, it needs all the land available; Conservation, Covenant; it needs the lot.
And will legislate to override.
And that still won't give the System another doubling.
Individual savings are taxed? Well yes, if they're bank deposits. No individual tax payer feels those KiwiSaver funds disappearing out of their grocery money though do they!
Wellington. Is WFH really "Working from Hospitality" ??
"China is not Japan But its real estate market has been doing a darn good impression
Housing is important to every economy. But to China, it’s extra important. According to the PBoC, 96 per cent of urban households own a home, and 41 per cent own at least two. The average household owns 1.5 properties. And as such, property constitutes around 70 per cent of China’s private wealth. The comparable figure for the US is around 30 per cent.
So when Chinese property prices fall, the authors make a pretty compelling case that this has all sorts of particularly bad economic spillovers. And fall they have:
...And so far, it looks like prices in Chinese cities are falling at around the same pace as they did over the first five-to-10 years of Japan’s bust. Japan’s property crash is associated with a lost decade (or two) of economic growth. In the 10 years leading up to 1991, Japanese real annual GDP growth averaged 4.4 per cent. In the subsequent 10 years it averaged only 0.9 per cent per annum."
https://www.ft.com/content/381fa2a2-cb54-4d2d-bcf0-c05dd493264d
'The average household owns 1.5 properties.'
Think about that, folks. Who are the 33% remainder being rented to?
Or does 'household' not include singles?
Wasn't the Chinese model to buy a place and leave it to appreciate, without taking the risk of having some common renter messing up the place?
Hasn't worked out well for the last few years, I wonder if the model has changed as a cashflow becomes more interesting.
The model hasn't changed. We'd be in the middle of another stratospheric property boom right now if GNats had their way. They did the ground work, but the tide was going out at the same time. Although Lux loves DJT, he must hate him at the same time.
https://axismundi001.substack.com/p/the-metabolic-theory-of-civilisation
That's what stopped it. Not Trump. Or Luxon - they're just representatives of a doomed System.
On to the next format - hopefully before chaos gets too overwhelming.
The same sort of people seem to drive the agenda regardless of format.
That's a great link you provided PDK. Kind of covers the bleeding obvious, or at least you'd think so. Shame human civilisation has been built on pillars of self delusion. Didn't need to be this way. Or did it?
Possibly did.
Sapience starts from single-cell lifeforms. It is therefore a progression, but always dissipative and always living on Bounded Systems (finite planets).
It is therefore reasonable to presume it only becomes aware of its overshoot, too far into overshoot to withdraw. And all genetic attributes will have favoured the faster-dissipators, up to that point - the lesser got out-energised.
So no massed cranial predilection for sustainability. So dieoff. Which is why some posit that we don't hear from other irruptions elsewhere in the cosmos - given that our time from being able to transmit, to collapsing, looks like about 100 years. Even if they sent, they wouldn't still be around to receive.
Evolution favours mindless breeders. Until it doesn't.
Aye. I had a discussion with a child-abstaining (for ecological reasons) Professor. Tole him he was stopping the very strains we needed!
Also, we opined that democracy is in trouble - too many of the bottom end with a vote apiece.
"It was and is a gigantic, unique experiment," Eduard Kögel, urban planner and expert on Chinese cities, told DW. The Chinese government intends to move 100 million people from the rural areas into cities by 2020. For this purpose, "cities and extensions get built purely based on speculation, but not on direct demand. Massive stretches are built, and it is assumed that the future growth and prosperity will somehow fill the space up."
https://www.dw.com/en/what-has-become-of-chinas-ghost-cities/a-36525007
It’s a fascinating economic place, China. A history that proves grounds to not take central government too seriously, besides they are so far away, so remote. And then they have this policy that requires a resident card to enable ownership, so a Hubei born person has a barrier to buy a Shanghai house. Without a house, your kids can’t go to school in Shanghai, only locally. Then there are the exchange controls, so jumping into global investment is another challenge for them. Interest rates are low, but they have a huge amount in Bank TDs. But their innovations are among the best. Consumer protection much better than here. My conclusion is that it is in fact us that has drifted away from good policy, not them. We are still struggling with “what are we good for “.
In Italy a couple of decades ago masses of apartments were empty.
The driver was Mama buying for the kids in the same building or street. So the family remained close.
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