Here's our summary of key economic events overnight that affect New Zealand, with news uncertainty swirls in the Middle East as Iran has shot down an American Apache helicopter (and Trump is looking more like Jimmy Carter by the day). But more ships are transiting (paying Iran's toll), and that extra oil is easing the global price.
But first locally, the overnight dairy Pulse auction delivered lower prices for the four products offered. AMF was down -4.6% from last week's full auction. Butter was down -0.6%. SMP was down -5.5% and WMP was down -3.5%. But an intervening -2% fall in the NZD took some of the sting out of these retreats.
In the US, NFIB Business Optimism Index fell again and to its lowest since October 2024. These businesses are struggling with "significant and unpredictable hikes in fuel prices", which they find harder to pass on to their customers compared to their larger corporate competitors.
The weekly ADP jobs report said new private sector jobs created were lower last week at +29,000, in fact their lowest since the end of March.
American existing home sales actually rose in May to an annualised rate of 4.17 mln, its highest of the year. This was impressive because mortgage interest rates rose in the period and seems not to have been the handbrake sometimes assumed. All the same, unsold inventory rose.
There was a small but notable increase in demand for the overnight and popular US Treasury 3 year bond which delivered a median yield of 4.15% (high of 4.19%), sharply up on the 3.92% median at the prior equivalent event a month ago.
In April, US exports of goods and services rose +2.6% from March, up +12.5% from a year ago, helped by better exports of crude oil, AI computer gear and aircraft, but most offset by a quite sharp fall in tourism receipts. Imports were up +1.9% from March, up +9.1% from a year ago, dominated by capital goods and rising transport and travel cost by Americans. Their trade deficit narrowed slightly, but big trade deficits remained with Taiwan (-$19.3 nln), Vietnam (-$19.3 bln), Mexico (-$14.8 bln), China (-$12.0 bln), the EU (-$7.2 bln), and Canada (-$6.2 bln).
The Texas screwworm outbreak is spreading which will affect their beef trade. The outbreak now includes for a dog.
Meanwhile, Canadian exports rose +1.6% from the previous month to C$75.2 bln in April, the highest on record and up +24.7% from the same month a year ago. Imports rose too, but they still managed to report their best monthly trade surplus since January 2025 and their best April since 2008.
Across the Pacific, China’s exports surged +19.4% in May from a year ago to a record high of US$377 bln, far exceeding forecasts of +15% and accelerating sharply from April’s 14.1% rise. It was the fastest increase since February and gave them a trade surplus of +US$105.4 bln. However, Chinese oil imports hit an eight year low in May.
Across the strait, Taiwan said its exports rose even more impressively, up +52% from a year ago. Their imports were up +55%. That means a trade surplus for them of +US$17.9 bln, middle-range for what they have had since October 2025 and wildly higher than in any prior period.
Japanese machine tool orders fell in May from April after falling in April too. But they remain up +37% from a year ago. The monthly easing was for orders from both domestic and foreign customers.
Staying in Japan, reports are growing that their central bank will raise its policy rate by +25 bps to 1.0% when they meet on Friday week. And they are likely to pause their JGB bond sell-down program that is underway.
And in Indonesia, their central bank held an emergency meeting to assess the economic crisis growing in their financial and fx markets. At that meeting they hikes their policy rate to 5.50%, a hike of +25 bps. They last met only three weeks ago when they raised their rate by +25 bps at that time too. They started 2026 with a 4.75% rate. Their actions are required to stop the Indonesian currency falling sharply, down -7.8% in 2026.
In Europe, the Netherlands blocked an American company from buying a local firm that handles its national ID system, saying it would create a “threat to the public interest.”
The UST 10yr yield is now just on 4.53%, down -2 bps for the day. The key 2-10 yield curve is now at +41 bps (+2 bps). Their 1-5 curve is now at +43 bps (-3 bps) and the 3 mth-10yr curve is at +87 bps (-1 bp). The China 10 year bond rate was up +1 bp to just under 1.74%. The Japanese 10 year bond yield is down -3 bps at 2.69%. The Australian 10 year bond yield starts today at 4.89%, down -7 bps from yesterday. And the NZ Government 10 year bond rate is up at 4.59%, down -4 bps from yesterday.
Wall Street has moved into 'fear' mode with the S&P500 down -0.8% in Tuesday trade. The Nasdaq is down -1.6%. Overnight, European markets were mixed between Paris's +0.1% firming and London's -1.4% drop. Yesterday, Tokyo bounced back +2.2%. Hong Kong was down -0.4% but Shanghai rose +1.3%. Singapore also bounced back +1.2%. The ASX200 closed down -0.2% in Tuesday trade. The NZX50 ended session up +1.3% however.
The price of gold will start today down -US$75 from yesterday at US$4258/oz. Silver is down a sharp -US$3.50 at just under US$65/oz.
Oil prices are down -US$2.50 from yesterday at just under US$88.50/bbl in the US, while the international Brent price is now just on US$91.50/bbl. Hormuz transits are still very low despite the pricing optimism. China’s crude imports dropped to around 7.8 million barrels per day last month, the lowest level in more than eight years and nearly 4 million barrels per day below the 2025 average. Weaker shipments to the world’s largest oil importer even if caused by Hormuz, combined with record US exports and emergency reserve releases, has limited the price impact of the Middle East conflict.
The Kiwi dollar is up +10 bps from this time yesterday at just on 58.2 USc. Against the Aussie we are up +30 bps at 82.8 AUc. Against the euro we are unchanged at just on 50.4 euro cents. That all means our TWI-5 starts today at just on 61.9 which is up +10 bps from yesterday.
The bitcoin price starts today at just on US$61,545 and down -2.95% from this time yesterday. Volatility over the past 24 hours has been moderate at just over +/- 2.6%.
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59 Comments
BP Epsom is $2.90 a litre today
That's impossible! PDK said we would never see these prices again.
Did he? You sound like the standard climate denier troll, putting words in peoples mouths either out of context, or straight out lying about what they said?
Yes, I believe he actually wrote something like that. He's been pushing this narrative for months, that we are in the end times. That there is no going back.
What's with this flak? Sounds like I'm over the target.
Oh well, when you can come up with the actual referenced quote, we can decide whether your target is actually a victim of your friendly fire?
He said "we will never go back to 2025 'prices' for oil". Depending how you measure that but call it US$68?
Right so far
Edit: on 29th of May
According to Copilot:
MBIE’s weekly data for 2025 shows:
-
Early 2025: ~$2.70–$2.85/L
-
Mid‑2025: ~$2.80–$3.00/L
-
Late 2025: ~$2.90–$3.10/L
I'll take the win!
I never think in terms of 'price' and would be surprised if that's what I said.
I think in terms of physics and strategy - and have held the thought that we are not going to return to 2025, ever. But in energy-supply terms, and therefore in entropy terms.
And the longer it goes, the more I'm sure.
Price schmice - in fiat-issued proxy, related top nothing, levered off assertions; why would you?
Not being able to tell the difference between "oil" and "petrol" isn't a win for anything, except st^p1d. Oil is an internationally traded commodity. Petrol is what you buy retail at the service station, subject to numerous variable taxes and margins.
"But more ships are transiting (paying Iran's toll)"
It may be true that the odd ship is paying a secret toll. Who knows? All the sources of this news are hardly reliable. It certainly isn't something that all ships are paying as a matter of course as the above seems to imply. Likely only Chinese‑linked, Russian‑linked, or Iran‑aligned cargoes. None of the major shippers. It wouldn't be in their best interests to set such a precedent anyway. Pretty poor journalism pushing the old deranged anti-Trump agenda.
Zac. Perhaps those shipowners are desperate to get those ships out of there. Not just the cargoes.
Remember that after 67 the Suez was closed for over a decade and many ships stuck inside all that time.
Chief Executive Officer Marco Dunand in April told a conference that Mercuria itself had managed to move ships out of the Persian Gulf. “There’s various ways to do it and I’d rather not comment on that,” he said, adding that more ships were transiting the strait than were shown by tracking data.
https://gcaptain.com/mercuria-lawyers-say-government-deals-got-oil-thro…
They accept Bitcoin and CIPS/Yuan so as to not directly incur the wrath of the USA. More and more ship owners will begin using these payment methods further weakening the petrodollar and USA's global tyranny.
Any ship wanting to exit the strait will pay Iran's toll. Sure there are 2,000 ships stuck in the strait that are refusing to pay the toll but that is a massive amount of capital deriving no income that will eventually decide to pay the toll once they are forced to admit Trump is powerless. More and more ships are transiting the strait and therefore have accepted IRGC's control (and likely toll) in order to do so. An estimated US dollar a barrel paid to IRGC to transit is small change when compared with the losses caused by tankers being stuck indefinetley in the strait.
Even though Mercuria concedes that some vessels have transited Hormuz without paying a toll to Iran
https://gcaptain.com/mercuria-lawyers-say-government-deals-got-oil-thro…
I accept there is some diplomacy going on where IRGC are doing a solid for countries that they will likely class as friendly (obligated) but I assume while they not have paid in cash for passage there will be some form of remuneration from those countries in the future (e.g. Pakistan (e.g. pipeline and port support), India (e.g. nuclear reactor construction), China (e.g. satellite and strategic support)).
And that other possibility that some ships are giving IRGC the bird on the way past?
Sure, a ship moving at 25k/h loaded with oil is flipping off the IRGC with its mines, drones, missiles and attack ships. Not only that, it chooses to pass through the IRGC designated route so if can flip the bird within 100m of the IRGC missile launchers. Tomorrow I am sure the other 2,000 ships stuck in the Persian Gulf will steam past the IRGC also flipping the bird.
Or they're exiting on the UAE/Oman side at night, no lights, through lanes cleared of mines, no transponder and escorted by the US Navy.
Has any one checked for ships whose last position was the Persian Gulf, and their transponder suddenly pops up in the Indian Ocean?
That would make a great movie script. I am sure there will be a USA movie in a few years called something like "Give us free" - the story of the USA underwater railroad.
lot of history is re-written for propaganda purposes.
Rambo turned Vietnam into a winning story...
An interesting metric to discover would be how many ships (cargo/tanker0 are entering the gulf since the conflict began and currently...those trapped there may exit but to access ongoing supply vessels will need to return for cargo
Those who like to think, might like this link.
Compare this to the comments thus far... What may happen as oil supplies dwindle and Strait of Hormuz remains mostly closed - YouTube (The Quest sits alongside Adventure in Oil in my bookcase).
I find the repetitious strawman, short-term, limited aperture stuff a little tedious.
And incorrect - I have posted many time that I though oil prices would see 200/barrel, back in 2008 - and that I was wrong and that I went back and learned why? Which rather invalidates the personally-directed comment above (it isn't me that is myopically fixated on 'price' and 'now' - it is those who need a pre-wished outcome who are choosing that cherry-pick).
The big picture is physical, global, and has many moving parts. It also has a time element - as Yergin points out (remembering that he is an industry schill). How about we keep an eye on the big picture? Price isn't the problem, global energy stocks/flows are the problem.
The worlds just information overload now, with a bit of self serving manipulation of the truth thrown in.
Latest commentary is we are not going to see sky high oil/fuel prices. Poor users will just be priced out of the market, demand will slowly decrease with a natural move away from FF and balance will be restored, simple.
Big-picture, I suggest it is time to have a debate before the elections.
The topic is simple: Should we disengage from the US?
65 Countries Just Named America The World's Biggest Threat — Not China
No
I was calling for a debate
Not a closed-mind box-tick 4 minutes after I linked a 14-minute link.
There is a subtle difference between informed and ingrained.
PDK showing his true colours.
Perhaps you are showing your true colours? Now I understand your position a little better. Alternative reality post truth christian nationalist capitalist Jesus follower, embracing techno utopian authoritarianism/fascism?
More heavy flak. Fairly close with the techno utopian authoritarian though.
People will invariably debate such a question primarily as a choice of lifestyle in a workaday sense. Their stance will be what they know and are comfortable with and on the other side of that, unknown means insecurity and risk. Not saying that’s right or wrong, just as a generalisation population wise, that’s what the masses do and the very large percentage of them have neither much ability nor energy to perceive or enact anything else. As such apathy, is a good word.
What do you mean by disengage?
Now that...
is a thinker's question. :)
I suggest we have a strategic problem unfolding. We have, comfortingly unquestioningly and since 1945, hung on the coattails of the biggest hegemonic thug. We largely avoided uncomfortable associations - Nixon/Allende; WMD (although we did protest association with the US in Vietnam). We did so because we were on the winning side of resource/energy access (and the World Bank and the IMF and the CIA, all implicated).
Now, that hegemony is disintegrating - physically decaying (succumbing to entropy). Enough are getting impacted that they voted for Trump, making him a symptom not a cause, and by implication making 'wait until he goes' an invalid appraisal. We aren't really seeing a replacement either; those who assumed China would displace the US were largely assuming global growth would continue - which it won't.
The US will go down fighting - under either Party and irrespective of persona. So who - if anyone - do we want to be associated with, and how?
First is the 5-eyes question - I rate Australia as a US State in that light (too scared of the yellow peril, too racist and perhaps culturally predetermined (I live with one I met in Queensland, so we watch the attitudes in that State closely). The UK is failing as per the US - politically unstable and physically ditto (nearly 50% fed through the Chunnel). I think we'd be compatible with Canada, but they, like us, are 'silencing science' so ...
Then trade - we, like the US, make almost nothing but used to make almost everything. But we're constructed society in such a way that lower wages are needed to mesh with what we can (are prepared to?) pay. Same with Trump's US - neither of us can bring industry home without slave wages which won't stretch to buying etc etc. Yet self-sufficiency and resilience are the primary goals in a disintegrating, destabilising, de-growing world.
So I was thinking of the TPPA, and the USD. With implications for anything dependent on the US stockmarket.
We surrendered a part of our sovereignty with the TPPA (Aussie didn't have the clause) so I'd suggest that needs to be renegotiated or trashed and a new one put in. Will they play the game. As you indicate the US are the biggest bully on the block, but even bullies need friends.
It is worth considering that public opinion has little impact upon state policy when it comes to this (with the odd exception...i.e nuclear free)...the powers that be have a world view that continues in the background despite public declarations (think 5 eyes)
"I rate Australia as a US State"
The current NZ regime is basically an offshoot of US Trumpism. It would be a toss up who'd be quickest to hop into bed with the orange man. Make no mistake there are plenty in NZ would love to be part of Trumpist America.
While I'd personally like NZ to be politically non aligned, we're currently being joined at the hip by the current Mammon loving Bee Hive mind.
"self-sufficiency and resilience are the primary goals in a disintegrating, destabilising, de-growing world ."
Neoliberarism is a cult. The answer to a disintegrating, destabilising, de-growing world is more neoliberalism. Just ask our resident techno utopian Zac, recently teleported from his Star Trek set at the United Federation of Planets. .
Not that easy PDK. There's layers. At the ordinary people on the street, they are very much like us culturally. Politically the nation is unreliable, even treacherous. If we disengaged and Aussie didn't, where would that leave us?
What would disengagement look like and mean? Are we disengaged from China for example?
Our size and the consequences of decades of political mismanagement leave any such choice fraught at best, very dangerous at worst. Can we cherry pick the engagement based on the quality of their government? Pull back when Trump is in power, push forward when they're good?
See above.
I don't rate the Biden era as 'good'. Even if you got a good person in as President - and you'd have to go back to Carter to find 'good'; it's been a while - the whole System is rigged beyond redemption (military industrial hold over elected members; corporate lobbying and ditto).
I'm a person who has never owned a gun, but I suspect we ought to do the Swiss thing re defense. And yes, we may well end up estranged from Australia - Pauline Hanson would be unlikely to get that kind of traction here...
We are not disengaging from the US. It's fun to rag on the US but let's be realistic.
Is the US realistic? There's a novel thought. Seems US "realism" is only as real as the amount of lead they can fire at a problem?
You'll find it hard to parry a fellow who is fighting the war before the war before the last war...
I notice that as ideas become mainstream (just hear a farmer at the Field Day opining that fossil energy cannot last forever and he's there to investigate solar) the ones left behind - just get left behind.
LOL. I tend to think Zachy boy is fighting the war he saw on Star Trek set in the year 2500 against the Klingons. :-)
True within the USA when they used to say ‘gone West,” that old idiom is now more like the Wild West has moved East. One popular topic that is bandied around there though is freedom and/or the free world. That is actually an important and pertinent consideration if to make a basic, repeat basic, comparison of civil liberties, freedom of thought and expression, movement and opportunity between the citizens of various nations globally. Wonder if such an analysis has ever been collated?
I think it goes alongside 'otherising'. Seems it is easy for our brains to associate 'us' and 'them', then reject 'them'. Soldiers do it all the time.
It's a short step from that, to assuming you are 'free' while 'they' aren't.
Then there's the messy interface where your lot are living via the repression of theirs - so in a way you are absolutely correct, relatively, at least.
True the subtlety and nuances of the variety of circumstances impossible to scale. Personally I feel those that are prone to aligning themselves to comparisons of others are simply on a fool’s errand. Mind you I wouldn’t have been equipped to come to that conclusion until the senior segment of my life. In that vein I return to Joseph Heller, accosted at an upmarket party in New York by a yuppie type saying he could make in a week what Heller had made. Out of three years work on Catch 22, Heller retorted - I have something that you will never have - what’s that then? Enough.
Political engagement means with their administration, not just who their president is. Biden may have been good at heart, but his administration wasn't. He had too many geriatric naps at the wheel. Obama? Maybe intent, but raises the question that Biden also brings up, the president, per their constitution, is one leg of a three legged stool. Where their President doesn't have at least the backing of one of the other legs, can the administration be trusted? And, as Trump has demonstrated, change the administration and can prior agreements be expected to continue? Not a surety.
Agree about their MIC. Their administration does govern at the pleasure of the people, it does so at the pleasure of the MIC.
And an armed population is a basis for an unorthodox defense strategy. Just don't let any Aussies near the guns.
Hell yeah. The family is going on holiday in October and the travel agent asked if we would like a stopover in LA or Hong Kong. Hong Kong was the clear winner with concerns around ICE, social media reviews (will the "free Palestine" likes in Meta, X and Tiktok posts end in refused entry or a detention facility). USA is fascist dictatorship and it is better to leave it to have its impending civil war and stay out of Dodge until it happens.
I sailed into Hilo a few years back, ex Tahiti, having filled out the wrong form prior (it was a common mistake at the time; unclear demarcation being the culprit).
The fellow with the Glock was big, implacable and luckily understanding. We were told not to do that again, but welcomed in.
I don't think that would be the case now...
I don't believe those who say that oil prices will quickly be back to $65/barrel after the SoH reopens. Just put yourself in the shoes of a large oil shipping CEO, how keen are you to send ships back through the SoH ? Problems could re-emerge any time. Then, there is the potential additional cost if Iran's "toll".
The SoH has always been risky. This has been well known for decades.
If the strait is reopened with a toll in place, widely expected to be $1 a barrel (therefore not a major factor if it ensures safe passage), the price of oil will likely come down fairly quickly. This is because the demand destruction (look how electric is replacing fossil fuels at an even faster pace now) caused by the crisis as well as the nail in the coffin in OPEC (with UAE leaving and likely other GCC states soon to follow) will result in a glut of oil bringing down the price. UAE and other GCC producers need to take advantage of their cheap extraction and sell as much oil as they can as soon as possible before the transition away from fossil fuels is complete.
The reason oil remains high but not crazy high is that countries are eating their reserves and if those go before the strait is reopened then $150-$200 barrels will be on the menu.
Be very careful - it's not 'replacing' FF; it's being ADDED.
Or was until this wee hiatus.
And it is intrinsically dependent on FF, still. My PV panels can't make themselves... nor ever will.
I doubt there will ever be 100% replacement of fossil fuels, electric planes seem a long way off. But there is no doubt China is hurting less than a lot of other countries as it increasingly utilises electricity to power its homes and vehicles. Of course its 1.4b barrels of oil reserves is a good backup but having more electric cars and heat pumps then ICE vehicles and kerosene takes the edge off the consumption squeeze.
Timing is also important, manufacturing solar panels and electric cars with oil that cost $40 a barrel and then using them to avoid paying $140 barrel for electricity generation and ICE fuel is a smart move.
EVs are only about 9% of all China's vehicles. The great majority are ICE. New sales are about 50/50 if you include PHEVs with EVs.
China has around 470m cars which would use around 10m barrels of oil a day to fuel. Around 10% are now EVs reducing China's oil consumption by about 1m barrels a day. AI projected growth of EVs in China (likely increasing now since the Hormuz crisis) is:
2024~9%
2027~15–20%
2030~25–30%
2035~45–50%
2040~65–75%
You may be jumping the gun Yvil. The Straight is no nearer returning to normal traffic than when the US originally attacked Iran. Tweets of two more days.... two more days........two more days, may placate the "market" because it's what the super organism wants to hear, but the two more days will ony work until the hoses start sucking air.
The IRGC hates the US and would just love to take it down. They don't need to be doing anything more than they're doing right now. My pick is Iran will run this thing out until the US regime is squealling! The US casino economy and associated hangers on mean nothing to them.
Trump - if that interview with the lady in the rain was anything to go by - is losing his grip on reality.
But he has divested himself of all/most sane brains near the top. Politically that might not matter (the superorganism tends to be amorphous) but militarily that temper and its proximity to the button, are a serous global existential threat.
I think Ivanka, Jarrod, Don jnr and Eric would be really disappointed if daddy terminated their hard won raid on the US state coffers.
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