Here's our summary of key economic events overnight that affect New Zealand, with news the US-Iran deal temporarily reopens the Strait of Hormuz, and offers major concessions to Tehran. Tehran probably can't quite believe its luck here. Trump is battling widespread claims his Iran deal is worse (much worse) than the Obama deal he tore up.
In economic matters in the US, their central bank kept its policy rate range unchanged at 3.50%-3.75% for a fourth consecutive meeting, in a unanimous decision and as expected. But updated dot plot projections show that 9 officials foresee at least one quarter-point hike this year, with 6 anticipating at least two. Another 9 expected no move or a cut. They see core inflation rising from 2.7% at their prior forecast to 3.3% by the end of the year, and removed their easing bias. And the next move will be up. This uncertainty got the market's attention.
Wall Street retreated, bond yields rose, and the USD rose. Gold fell.
But Kevin Warsh's influence can be seen in the fact that the decision announcement had very little detail or context. He is not a fan of central bank transparency.
Separately, US mortgage applications fell last week and across the board even though the benchmark interest rate was unchanged (at 6.60%).
However American retail sales rose in May from April and by more than expected to be +5.2% higher than year-ago levels. But most of this was due to higher fuel prices. Without fuel, these sales were up +3.6% when inflation was up +4.2%.
US pending home sales rose more than expected too, with sales volumes up +4.8% from May a year ago. That is two months in a row of good gains although on the back of quite weak results a year ago.
US crude oil stocks fell an outsized -8.3 mln barrels last week, the largest weekly fall in eight weeks and the most concentrated drawdown of the strategic reserve levels since the pandemic. In fact, their strategic reserves are at their lowest level now since March 1985, a 40 year low.
Japan said its exports were up +17.0% in May from a year ago to US$59 bln and its imports were up +12.5% over the same period. Export customers were dominated by China (+17.9% growth ), the US (+12.5%), ASEAN (+20.0%), and the EU (+14.5%).
Meanwhile Japan reported its machinery orders were strong too, up +15.6% in April from a year ago, up +8.7% from March. Japan really has its mojo back.
In Singapore, they said their exports rose a whopping +38% in May from a year ago to a record high S$87 bln (US$51 bln) in the month, a far larger increase than anyone saw coming. It is clear that despite the US shenanigans on tariffing trade, global trade is in fine shape without them.
In China, they are tightening their grip on the rare earth minerals sector with new regulations that cover everything from mining rights and production, to stockpiling and environmental restoration. Everything in the sector is now a national security priority.
It might also be worth noting that Russia said its economy shrank in Q1-2026, its first admission of a retreat outside the pandemic period. And the downturn occurred despite sharp rises in the prices of key Russian exports, including oil, natural gas, coal, industrial metals, and grain.
The UST 10yr yield is now just on 4.46%, up +4 bps from this time yesterday immediately after the Fed decision announcement. The key 2-10 yield curve is now at +36 bps (-1 bp). Their 1-5 curve is now at +30 bps (-1 bp) and the 3 mth-10yr curve is at +78 bps (unchanged). The China 10 year bond rate down -1 bp at 1.73%. The Japanese 10 year bond yield is down -4 bps at 2.60%. The Australian 10 year bond yield starts today at 4.77%, down -1 bp from yesterday. And the NZ Government 10 year bond rate is down -7 bps at 4.41%.
Wall Street is didn't like the Fed's decision with the S&P500 down -0.5% and the Nasdaq down -0.4% immediately following it's announcement. Overnight, European markets closed between Frankfurt's +0.1% rise and Paris's -0.2%. Tokyo ended its Wednesday session up +0.7%. Hong Kong however fell -0.7% but Shanghai was up +0.4%. Singapore rose +1.2%. The ASX200 ended its Wednesday session up +0.5. But the NZX50 dipped -0.2%.
The price of gold has retreated -US$68 from yesterday to US$4273/oz after the Fed decision. Silver is down -US$2 at US$68/oz.
Oil prices are up +US$1 from yesterday at just under US$76.50/bbl in the US, while the international Brent price is now just on US$79/bbl and up +50 USc. Hormuz transits are picking up with eight crude or product tankers exiting over the past 24 hours and 16 entering for new loads. (Normal is 60 in each direction.)
The Kiwi dollar is down -20 bps from this time yesterday at just on 58.2 USc. Against the Aussie we are down -30 bps at 82.3 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 61.8 which is down -20 bps from yesterday.
The bitcoin price starts today at US$66,016 and up +0.2% from this time yesterday. Volatility over the past 24 hours has been modest at just under +/- 1.3%.
Daily exchange rates
Select chart tabs
The easiest place to stay up with event risk is by following our Economic Calendar here ».
13 Comments
The black gold is flowing again. But I hope our government (and voters) have learnt a lesson and will reduce our reliance on imported energy. LNG could be a big issue this election, surprised the Nats haven't given up on it, obviously it's very important to someone
They won't have learnt anything. Like the way much of the population think, we are on the way "back to normal". Willis uses that term all the time when talking about the energy crisis.
LNG is a band aid, for our rapidly decreasing gas supply, but very little thought has been given to what comes after that? Energy security should be the No.1 election topic but it won't be. There will be BS about growth and GDP etc, but none of it will happen without energy and we are running out.
The question is: Will those strategic reserves ever be re-built to where they were?
At the expense of which flow?
JJ is quite correct; we need to be insulated from external supply-chains. But he needs to understand that roughly 30% of our energy is generated locally, and that still needs imported feedstock to be kept running. Add in the need to mitigate for weather events; add in parrying entropy (Cook Straight cable replacement; ferries, road/water/sewer maintenance) none of which is done with the locally-generated energy.
Then add in the existing fleet of tractors - still being sold new. And trucks. And diggers. The required change is bigger than anything ever attempted. And I'd have said we currently have the least-brave collection of leaders ever assembled. Hamstrung by an ill-informed populace. What could possibly go wrong?
That question, in itself, has no answer that is a solution, does it.
Oh you mean a national resilience plan?
This MOU is a major win for the Iranians. No doubt Trump will still try and put lipstick on that pig.
The phrase 'rearview mirror' was telling. He needs to move on.
The $$$$$ will be the sticking-point. Most such promises seem never to be actually 'paid'; few thieves return their booty.
If he doesn't move on voluntarily, then the voting populace will ensure he does. For such an egotist, I struggle to think if he has the mental capacity to understand, or possibly accept that he doesn't have the country behind him any longer.
It goes back someway further too.The overthrow of Saddam Hussein strengthened Iran by the weakening of Iraq and skewed the balance of power in the region. Iran’s resilience here, demonstrating that neither the present regime nor its sovereignty has been seriously threatened further cements Iran as being in itself, a strategic power with which all its neighbours are now going to need to reset.
Add in the rise of China, vis-a-vis the US (and by inference, us and the rest of the old First World).
Iran is of the future. We are currently shackled to the past.
And we have to note that de-growth is the future, globally. Physically it cannot be any other way. So those with less distance to fall, will be least impacted.
We have a long way to fall, and a narrative which eschews parachutes...
Iran is of the future? Not sure Mrs Foxglove would be enamoured with the prospect of living under the strictures of Iranian governance and undoubtedly that would go for millions globally, male and female. As Yogi Berra said - the future ain’t what it used to be, but certainly that type of livelihood would be repugnant to most folk living in what’s described as the free world.
Don't worry about the Yanks. They will find someone new to pick on and feel good again. American positivism.
Who next? Maybe some small country in the South Pacific nobody cares about.
"No Nukes you say. Well we can fix that" "Maybe Bibi can help"
Cuba next…. Anything to distract from the Epstein skeletons in his closet
We welcome your comments below. If you are not already registered, please register to comment
Remember we welcome robust, respectful and insightful debate. We don't welcome abusive or defamatory comments and will de-register those repeatedly making such comments. Our current comment policy is here.