Here's our summary of key economic events that affect New Zealand, with news markets are betting that the next rate move by the US Fed will be a hike. And that has juiced up the USD today.
But first, the overnight dairy Pulse auction brought sharply lower prices for the three lines offered. AMF took a -7.5% tumble from last week's full auction event. They didn't release the butter price this time. SMP fell -4.5% from last week and WMP fell -1.9%. But given the retreat of the NZD at the same time (-2.8%) the impact in local currency will be much less.
In the US, there was another good weekly jobs indicator from ADP for private payrolls, rising about what was expected.
And the flash US factory PMI for June shows solid growth, in fact its best in 4 years, but it also signals lower employment and elevated price inflation, so a mixed bag. The fall in factory jobs was the fastest since the pandemic. New order growth was good but the hikes in input prices are still next-level. Their service sector rose too but much more modestly and new order growth was tame.
But none of this showed up in the Richmond Fed's factory survey. While it did expand it was very modest and well below its May level and what was expected. They had the same lack-luster result in their service sector.
There was a well-supported US Treasury 2 year bond auction overnight, delivering a median yield of 4.14% (high 4.19%) which was well above the 4.02% median at the same event a month ago.
The Chicago Fed boss said yesterday the US inflation is too high and "going the wrong way". (He is presently an alternate FOMC member, but he will be a full member in 2027.)
Across the Pacific, Japan's factories are expanding solidly and faster. They recorded a stronger rise in business activity in June, but rate of cost inflation has hit a four-year high. New orders rose their fastest since 2022.
Singapore is managing to navigate the current global inflation pressures well. They recorded an inflation rate that held steady at 1.8% in May, unchanged for a third consecutive month and below market expectations of 2%.
In India, their flash June PMI's remained elevated and very expansionary, in both their factory and services sectors. New orders rose at a good pace, but input cost pressures eased, rising at a five month low.
In Taiwan, we are so used to reporting spectacular results but they no longer seem out of the ordinary. But in fact they remain extraordinary. Their May export orders were up +47% from a year ago to almost a new record high.
In Europe, their factory PMI is still expanding in June, but less so. Inflationary pressures show signs of softening there. Holding them back is their services sector.
The latest flash PMI for Australia shows that business activity nears stabilisation in June as the service sector improved, but new orders continue to fall, including for new export orders.
And staying in Australia, their latest quarterly update for rural commodities notes that the gross value of agricultural production is forecast to fall by -5% to AU$98.3 bln in the 2026–27 upcoming year. They expect "average broadacre farm business profit" to fall by -70%, driven by lower revenue and higher input prices.
The UST 10yr yield is now just on 4.46%, down -5 bps from this time yesterday. The key 2-10 yield curve is now at +27 bps (down -2 bps). Their 1-5 curve is now at +26 bps (+1 bp) and the 3 mth-10yr curve is at +84 bps (down -4 bps). The China 10 year bond rate is up +1 bp at 1.74%. The Japanese 10 year bond yield is down -1 bp at 2.67%. The Australian 10 year bond yield starts today at 4.78%, down -4 bps from yesterday. And the NZ Government 10 year bond rate is at 4.45% to be down -2 bps.
Wall Street is in retreat, down -1.4% on the S&P500 while the Nasdaq is down -2.1%. But despite that, SpaceX has recovered some today. Overnight, European markets were mixed between Frankfurt's -1.0% dip and London's +0.1% rise. Yesterday Tokyo closed down -3.5%. Hong Kong closed down -1.8% and Shanghai was down -1.5%. Singapore ended unchanged. The ASX200 ended its Tuesday session down -0.3%. The NZX50 dipped -0.1%.
The price of gold has fallen to US$4130/oz, down a net -US$50/oz from yesterday. Silver is just under US$62/oz, down -US$3.50 from yesterday.
Oil prices are down -50 USc from yesterday at just on US$73/bbl in the US, while the international Brent price is now just on US$77/bbl. Hormuz transits are staying modest up with 16 crude or product tankers exiting over the past 24 hours (7 dark with transponders off) and 20 entering for new loads (2 dark).
The Kiwi dollar is down another -40 bps from this time yesterday at just on 56.7 USc and a seven month low. Against the Aussie we are up +40 bps and back at 82 AUc. Against the euro we are down -20 bps at just on 49.8 euro cents. That all means our TWI-5 starts today at just over 60.6 which is down another -30 bps from yesterday, and near its lowest since the GFC in 2009.
The bitcoin price starts today at US$63,388 and up +0.4% from this time yesterday. Volatility over the past 24 hours has been modest at just over +/- 1.8%.
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7 Comments
'But despite that, SpaceX has recovered some today.'
No, it hasn't. A bunch of wide-eyed optimistic bettors, are trying to out-guess each other in what is the latest irruption of the Ponzi.
They should re-watch Avatar - the message was clear.
And a fiction...
And most only see the fiction but not the connection.
But it remains the vast majority of ordinary people have few options to insulate themselves from the turmoils of the world other than operating within the systems given to them by their politicians. They generally do not have the resources or the capacity to 'opt out'. Elections are the only possibility for people to send the political establishment a message, and look how that turned out. The next round will be interesting, as will it's fall out.
It will come down to change from the bottom up. Personal first, then local clusters. It won't be top-down; the majority will stay on the Titanic until it founders.
Comes down to local food-production in the end - Daniel Quinn was spot-on with 'locking up the food'. Wider, locking up everything - the commodification of the Commons. The sad joke is that the GROWTH lauders are doomed now - sell off ALL the DoC land, and it doesn't create a doubling. Nor can you double any resource-extraction/commandeering henceforth - humans have commandeered more than half of everything.
I think the reconciliation will be fast - a series of ever-increasing betting Ponzis (even making Kiwisaver compulsory, thus removing resource demand NOW in favour of theoretical - but increasingly impossible - resource demand in the future, is on the back of the Ponzi) likely implodes in near-overnight realisation that there isn't enough underwrite.
The election which will count then, is the local group selecting a local leader. At numbers requiring a show of hands, rather than an election. Growth required ever-bigger areas of control - growth reduction will likely induce the reverse.
Jeez Avatar. Now there's a total waste of finite resources.
The energy return of mining a 'distant planet'.
The military - therefore energy - return on repressing those who live atop a resource.
It was a pertinent message
The big news is that the US are preparing to restart a stealth QE, not via the Fed but by removing Basel 3 restrictions from commercial banks allowing them to magically create $ billions of new credit into the economy. For Warsh to not look like a puppet, he had to be seen to be tough on inflation in his first public speech. The more nefarious news is that the Fed will be much less transparent in its data reporting, and that it will change (read manipulate) how inflation will be measured.
As they have had to since at least 2008...
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