Here's our summary of key economic events that affect New Zealand, with news of falls in many metrics across the board today, highlighted by commodity prices, crypto and interest rates. Equities are lower too. But the USD is rising on risk-aversion.
There is now international agreement to open the Strait of Hormuz ("without tolls") and that is expected to see a rush of hundreds of ships and cargoes on the move, flooding refiners with product just as indications are that demand is weakening. Urea prices are now back below pre-war levels although sulphur prices are remaining unusually high. (Key Chinese sulphur inventories are currently at a decade low.)
But first in the US, mortgage applications were little-changed last week as were mortgage interest rates, when refi activity firmed but new purchase activity eased.
And that is consistent with new home sales in the US that fell away in May to levels they had in the late stages of the pandemic in 2022. This was surprise because they were expected to rise from April's level.
There was also a surprise bigger-than-expected fall in US crude oil stocks last week, extending the outsized trend to nine straight weeks. Again, this is the longest streak of weakness since the post-pandemic 2021-2022 period. Petrol stocks rose however, suggesting much lower demand is the new trend.
There was a well-supported US Treasury 5yr bond auction earlier today and the median yield came in at 4.14% (4.20% high), little changed from the 4.12% median at the prior equivalent event a month ago.
Across the Pacific, Taiwanese industrial production was up +11.8% in May from a year ago, easing from an upwardly revised 14.9% rise in April. But this was their slowest expansion since January 2025 even if it was a new all-time record high in value terms.
Going the other way, Taiwanese retail sales are still rising fast, up +4.9% in May to extend their about +5% growth rate to four consecutive months. Clearly their stellar economic expansion is spilling into the wider consumer community.
In Japan, the minutes of the last central bank meeting show its decisionmakers view it appropriate to continue raising its policy interest rate, as underlying inflation has been moving toward the 2% target while financial conditions have remained accommodative. They say that if the economy and prices evolve in line with the Bank's outlook, further rate hikes would become warranted. Some argued Japan's policy rate remains below the estimated neutral interest rate, seen at around 2%, and should be brought closer to that level. It is currently at 1%.
In China, their important grain harvest season is well underway with record output and high yields. This is expected to keep Chinese import demand on the lowish side.
In Australia, a +6.5% rise in housing costs (mainly from a +21% jump in electricity costs) drove their May CPI 4.0% inflation rate, not fuel or food. But that was lower than the expected 4.4% rate and in fact a four month low. The overall trimmed mean was up 3.6% however, a rise from April. So their underlying inflation trend is still firming.
The UST 10yr yield is now just on 4.40%, down another -6 bps from this time yesterday. The key 2-10 yield curve is now at +26 bps (down -1 bp). Their 1-5 curve is now at +20 bps (-6 bps) and the 3 mth-10yr curve is at +78 bps (also down -6 bps). The China 10 year bond rate is unchanged at 1.74%. The Japanese 10 year bond yield is also unchanged at 2.67%. The Australian 10 year bond yield starts today at 4.72%, down another -6 bps from yesterday. And the NZ Government 10 year bond rate is at 4.41% to be down -4 bps.
Wall Street is soft today, down -0.3% on the S&P500 while the Nasdaq is down -0.8%. (Musk is no longer a trillionaire.) Overnight, European markets were mixed between Frankfurt's -0.6% dip and Paris's +0.5% rise. Yesterday Tokyo closed down -0.9%. Hong Kong closed up +0.3% and Shanghai firmed +0.1%. Singapore ended up +0.2%. The ASX200 ended its Wednesday session up +0.2%. The NZX50 dipped another -0.3%.
The price of gold has fallen to US$3978/oz, down a net -US$152/oz from yesterday. Silver is just under US$56.50/oz, down a huge -US$5.50 from yesterday (-9%).
Oil prices are down -US$2.50 from yesterday at just on US$70.50/bbl in the US, while the international Brent price is -US$3 lower and now just on US$74/bbl. Hormuz transits have stayed modest with 13 crude or product tankers exiting over the past 24 hours (1 dark with transponders off) and 12 entering for new loads (2 dark). This is expected to change soon.
The Kiwi dollar is down another -30 bps from this time yesterday at just on 56.4 USc and a seven month low. Against the Aussie we are down -10 bps at 81.9 AUc. Against the euro we are also down -10 bps at just on 49.7 euro cents. That all means our TWI-5 starts today at just under 60.4 which is down another -20 bps from yesterday, and still near its lowest since the GFC in 2009.
The bitcoin price starts today at US$59,403 and down a sharp -4.9% from this time yesterday. Volatility over the past 24 hours has been high at just over +/- 3.1%.
Daily exchange rates
Select chart tabs
The easiest place to stay up with event risk is by following our Economic Calendar here ».
5 Comments
No surprise US stocks are down.
The world will now look past that - but what happened was a reduction of several million barrels of oil, per day, flowing into the global 'economy'. That was diffused by a combination of demand-reduction (by those on a few dollars a day - outcompeted by us) and draw-down of held reserves. Couldn't have been any other way(s). Now we might be flowing (sans damage) but the stocks are down. But nobody will point out the need to replenish, as a competing demand. My guess is that we largely won't refill; that we will just add it to the growing list of deferrals as we attempt 'growth'.
I see Bill Gates is accruing tarnish - pictured with a 'bridge player'.
Don't think I'd want to cross her...
Interesting times indeed. The airlines have now found out what people are prepared to pay, what the market can yield in other words, and that in its own way is quite capable of benchmarking itself as the norm. Happened here with covid. Price of bread went up and didn’t go down when covid was no more.
We're not going back to 2025.
The 'flood the world' headline p-----es me off. Return to a lesser resemblance, would be more accurate. Remembering that we go through 100 million barrels a day; that we use the best, first - and we're down to Venezuela and Alberta (not light/sweet) and fracking already.
The distance between economics-only reporting and the physical truth, is widening. Exponentially, as you'd expect. And the European record temperatures (let's see Profile's regurgitated spin on that one) are a result of the burn TO-DATE, let alone burning the last half.
Rock meet hard place meet cliff.
"super" El Nino clickbait headline context.
"25 years ago Chris Landsea and I published a paper showing that that U.S. hurricane damage varies with ENSO: La Niña years in general have larger U.S. hurricane losses than El Niño years. The update shows that the original 1999 finding holds with almost 30 years of additional data.
...median global losses total $270 billion in La Niña years versus ~$155 billion in El Niño years (2024 dollars). U.S. hurricane losses likely dominate the global aggregate in any year with a major U.S. landfall. Global weather-disaster death rates (annual median) are ~1.3x greater during La Niña than El Niño, dominated by a handful of catastrophic events."
https://rogerpielkejr.substack.com/p/enso-us-hurricanes-and-global-disa…
There it went.
As predicted. The instruction will have gone out: diffuse/obfuscate the record headlines...
Consciences are funny things...
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.