Here's our summary of key economic events overnight that affect New Zealand with news Hezbollah has rejected being part of a US-Iran accommodation, and Israel is continuing to attack it in Beirut and southern Lebanon. Despite this, markets still hope that a ceasefire can be agreed and the Strait of Hormuz opened. They are pricing it will, but it is shut still today.
Elsewhere and in the US, there were 97,000 announced job cuts in May, the most since January and the highest May since 2020 and the pandemic effect - and prior to that the highest since this tracking began in 1999. Most of the current layoffs are in the tech industry, and due to AI displacement.
Markets await the May non-farm payrolls report tomorrow and the expectation is for a modest +85,000 net jobs gain. This is despite the private ADP report indicating a higher level.
US initial jobless claims were little-changed last week at 188,000 although seasonal factors would have expected a solid -10,000 fall from that level. There are now 1.64 mln people on these benefits. lower than year ago levels.
And staying in the US, they have found the flesh-eating screwworm in their Texas cattle herd, another reason their beef industry is unlikely to be able to sustain its output.
The EU said its retail sales volume growth was weak in April, up +0.9%, up +1.0% in the euro area from a year ago. From the prior month, these volumes dipped. But this dip actually doesn't interrupt the rising trend in place since late 2023.
We are ending the week with the price of some key commodities like copper, tin and aluminium holding just off their recent peaks.
China is facing broad pushback at the level of subsidising it gives its steel industry. The OECD singled them out for criticism urging coordinated action against them to save capability around the world. A new round of defensive trade barriers will likely follow. Chinese over-capacity is enabled by these subsidies and it drives down prices everywhere as Chinese companies rush to quit stocks they can't sell at home.
The geopolitical toll on the logistics industry is starting to bite. Global container freight rates surged +23% this week from the prior week to be up basically level with year-ago levels (which were unusually high due to the Houthi attacks in the Red Sea). Most of this is due to the hikes in rates for the outbound China trade routes. Meanwhile bulk cargo freight rates eased back a minor -3% after their recent peak last week.
In Australia, AI is being put to use driving legal claims by amateurs. Courts are being flooded with AI written plaintiff claims, especially for personal injury, unfair dismissal, rent disputes, and 'pain & suffering' claims. New powers are being rushed through the Canberra parliament to try and stem the flood.
The UST 10yr yield is now just on 4.47%, down -2 bps from this time yesterday. The key 2-10 yield curve is now at +42 bps (+1 bp). Their 1-5 curve is now at +39 bps (unchanged) and the 3 mth-10yr curve is at +80 bps (-2 bps). The China 10 year bond rate is holding at just over 1.71%. The Japanese 10 year bond yield is up +3 bps at 2.67%. The Australian 10 year bond yield starts today at 4.91%, down -3 bps from yesterday. And the NZ Government 10 year bond rate is down -1 bp at 4.58%.
Wall Street is firmer today with the S&P500 up +0.5% from yesterday but still below its record high. The Nasdaq is up only +0.1% despite the IPO frenzy. European markets were firmer too between Paris's +1.2% and London's +0.3%. Yesterday Tokyo ended down -1.4%. Hong Kong fell back -1.4%. Shanghai ended down -0.6%, while Singapore fell -1.4%. The ASX200 ended down -1.1%. But the NZX50 was only down -0.1% at its close.
The price of gold will start today up +US$41 at US$4478/oz. Silver is up +50 USc at just under US$74/oz.
Oil prices are down -US$4 just over US$92/bbl in the US, while the international Brent price is now just over US$94.50/bbl and down -US$3.50. Hormuz remains shut however despite the pricing optimism.
The Kiwi dollar is firmer from yesterday at this time at 58.8 USc, up +20 bps. Against the Aussie we are up +10 bps at 82.3 AUc. Against the euro we are unchanged at just under 50.6 euro cents. That all means our TWI-5 starts today at just under 62.3 which is up +10 bps from yesterday.
The bitcoin price starts today at just on US$63,013 and down another -4.3% from this time yesterday and still falling. Volatility over the past 24 hours has been high at just under +/- 3.9%.
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8 Comments
A-Hajji's main argument reveals that the much-discussed decline in inventories is merely an optical illusion. According to the data, 98% of the drop in global stockpiles comes from draws from government strategic reserves, not from commercial inventories. Moreover, nearly all of these draws are limited to just two countries: the United States and Japan. While Japan is drawing oil due to local constraints, the United States is releasing oil from a position of abundance and increasing its exports. The world's regular commercial inventories remain completely stable, and thus the free market is not experiencing a physical shortage of crude oil. Al-Hajji's most important distinction is the separation between crude oil and refined products such as gasoline, diesel, and jet fuel. The real pressure in the market lies solely on the products side, not on the raw material side.
https://x.com/YanivWeissman/status/2062580872696463632
https://x.com/anasalhajji/status/2062403126884229617/photo/1
It keeps getting cheaper at the pump. $2.99 today. Thats about $0.50 higher than where it would be without the war, approx 20%. 20% won’t cause much damage to headline inflation figures.
I think Trump should wait it out. This must be doing much more damage to Iran than the US.
Perhaps but would suggest the most damage is being inflicted on the other Gulf States whose exports depend on the Strait and who happen to be too, within easy range of Iranian offensive material.
Isn’t that their problem? They should have considered this and had an offensive or defensive capability in place. Most of those places are loaded.
my comment below, was replying to his, above.
The Gulf States are indeed the linchpin of the change - by the time the dust has settled they will withdraw from US 'protection'. It turned out that the hegemon which tried to maintain 7-800 bases around the planet (excusing blatant colonialism as some sort of fight-for-right) is collapsing under the load. Inevitable though that was, it seems to have escaped the notice of almost everyone. Everyone benefiting by hanging on its coattails, that is...
Those who were getting conned, were led by puppets. But the masses always have their limits - and alliance with Israel is a step too far for the GS populations.
Atop this, of course and as always - is the elite-to-elite cooperation and also competition. Alle same industrialists/monarchies circa WW2; they transcend and blur the simplistic idea that nations are coherencies.
Australia might need some AI judges to hear those AI claims.
Is AI the problem, or is it a solution to an overly complex legal system that only privileged people can use.
Your posit is incorrect, because you - studiously - keep 'valuing' in $$$$$
In strategic terms, the US was already a failing (in parts already-failed) State. The biggest hegemon emerging out of WW2 (which was a global stoush over access to resources, as always - albeit re-written as a righteous crusade - as always) is declining, succumbing to entropy.
In that context, it has lost, vis-a-vis the rising contenders.
And DC's 'amateur' description fails the journalistic question of: Why? As he consistently has, thus far. The latter-day rulers of Rome were equally idiosyncratic; the lesson there for anyone caring to learn. The US was based on a combined lie - that it was democratic, and that growth was possible forever, lifting all boats on a finite planet. That lie covered up a re-formatting of colonisation; IMF, World Bank; CIA, puppets, coups, wars, and it worked for a (very) few decades.
But some folk seem to need to believe that $$$$ at the pump in a first-world adherent, measures relative hegemony. And others seem to need to believe that the removal of Trump et al, will put the good ship right back on track.
Go figure
"The latter-day rulers of Rome were equally idiosyncratic" Really? ALL of Rome's rulers were like that. While the senate played their games it was regularly acknowledged that the power behind the senate lay in the strength of the legions gathered by various individuals. Yes they looked for senate endorsement and support,as armies consume large sums of money, but the politics were toxic across the board. Rome's fate was written from it's earliest days. Rome's growth and influence came from the power of it's legions and thus the leaders of those legions had to be treated carefully. On more than one occasion Rome effectively went to war with itself.
The whole world values in $$. Get over it. That's why the US is in trouble - the endemic corruption of it's politicians, being too greedy and influencing internal regulation to favour themselves and their cronies.
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