Here's our summary of key economic events overnight that affect New Zealand, with news of new truce agreements in the Middle East, at least as claimed by the US. Iran is conspicuously quiet that there is any agreement however.
But at the year's half-way point, economic prospects are generally far from dire.
In the US, the next regional Fed factory survey for June is out from the Dallas Fed. That shows little-change. Price pressures were mixed, as selling prices and wages rose faster while input cost pressures held steady. Looking ahead, manufacturers remained optimistic, especially as they are able to recover their cost increases. It is a sign inflation is being tolerated and embedding. Despite that, company bosses say inflation is their top concern.
Across the Pacific retail sales in Japan rose +5.3% in May from a year ago, rising from an upwardly revised +2.8% rise in April and higher than the expected +3.2% gain. It was also their strongest growth since November 2023. The strength was broad-based and especially in new car sales. Not driving this increase was fuel costs because they actually fell in the month.
In South Korea, a monumental public-private investment announcement. They have announced an "unprecedented" US$520 bln (NZ$920 bln) plan with Samsung Electronics and SK Hynix to expand chipmaking capacity in the country to stay competitive in the global artificial intelligence race. It will feature the construction of new four production facilities, or "fabs" - two by each of the chipmakers.
The surge that started in March for Singapore's producer prices has only risen from there, coming in +26.8% higher than year-ago levels. This doesn't include fuel, but it does include chemicals (+29%) and machinery (+31%).
Malaysia’s producer prices rose +7.8% in May from a year ago, accelerating from a 5.4% growth in the prior month and marking the third straight month of gain. It was also the fastest increase since June 2022, with producer-level cost pressures mounting amid persistent disruptions linked to the Middle East conflict.
India's industrial production stayed at an expansion rate of +5.1% in May from a year ago, held back by their mining industry, and no doubt by energy conservation issues. But it is still a fast expansion and higher than the 4.8% rate in May 2025.
EU economic sentiment ticked up in June from a low level, mainly because of an improvement in consumer sentiment. But it was not matched by a similar improvement in business sentiment.
Globally, the FAO has been reviewing the outlook for the rural economy. Among many observations, they see China's demand for beef rising sharply so that beef and sheep meat prices will be underpinned. For dairy products, they note that most of the global growth will come from India, but for internal consumption. Only 7% of global production is expected to be exported, and 70% of that will be by just three countries - the EU, the US and New Zealand. Prices are expected to stay high for exported product. Overall, they see rising rural productivity, especially in advanced countries.
And staying global, the latest data for air cargo demand has been released, for May, and that shows a +6% expansion, driven by an +8.0% rise in Asia Pacific international trade, and a +12.9% recovery in trade with North America.
The UST 10yr yield is now just on 4.37%, unchanged from this time yesterday. The key 2-10 yield curve is now at +26 bps (down -2 bps). Their 1-5 curve is now at +18 bps (-2 bps) and the 3 mth-10yr curve is at +69 bps (-1 bp). The China 10 year bond rate is back down -7 bps at 1.72%. The Japanese 10 year bond yield is up +4 bps at 2.64%. The Australian 10 year bond yield starts today at 4.74%, up +1 bp from yesterday. And the NZ Government 10 year bond rate is at 4.40%, also up 1 bp.
Wall Street has started it week up +1.1% on the S&P500, up +1.9% on the Nasdaq. Overnight, European markets were marginally lower, all by -0.2%. Yesterday Tokyo closed up +0.2%. Hong Kong closed up +1.6% however, and Shanghai was up +1.2%. Singapore was up +0.3%. The ASX200 ended up +0.7%. And the NZX50 ended up +0.4%.
The price of gold has retreated to US$4022/oz, down a net -US$66/oz from yesterday. Silver is now under US$58/oz, down -US$1 from a day ago.
Oil prices are up +US$2 from yesterday at just on US$71/bbl in the US, while the international Brent price is now just over US$73/bbl. (Interestingly, while these prices rose, Russian oil prices fell, now down to US$57/bbl ). Hormuz transits have stayed at their lower level after the recent flare up in fighting with just 14 crude or product tankers exiting over the past 24 hours (2 dark with transponders off) but 28 entering for new loads (3 dark). Over the past two days, almost 70% of the exiting vessels were headed to China.
The Kiwi dollar is up +10 bps from this time yesterday at just on 56.5 USc. Against the Aussie we are up +30 bps at 82.1 AUc. Against the euro we are unchanged at just on 49.5 euro cents. That all means our TWI-5 starts today at just on 60.4 which is up +20 bps from this time yesterday.
The bitcoin price starts today at US$60,319 and up +1.4% from this time yesterday. Volatility over the past 24 hours has been modest at just over +/- 1.4%.
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17 Comments
sorry for the pedantry, but the EU is not a country.
It certainly isn’t and when you consider that the unification of Germany & Italy is only about 150 years old and the disquiet internally in those countries, plus such as Spain, it tends to ask a question as to whether or not the EU has made itself too big, complicated and contradictory to function as was originally intended.
I liken it to children. Thy learn and get used to the established norms and rules, then some will eventually try and push the limit or break them for their own advantage (this trait never leaves humans). This breaks the calm and conflict ensues with enforcement, bonds may be broken and others formed until a new equilibrium is found or law and order is restored.
Amazing how little we change through our lives and generations no matter how much we think we do.
The highest levels of output per agricultural worker are found in North America, Western Europe, and Oceania (Australia and New Zealand). Farms in these countries typically cultivate large areas with relatively low labour input, highly mechanised production systems and significant financial commitments. While this boosts productivity, it also exposes these operations to considerable liquidity risks given the inherent volatility of agricultural revenues.
Only an economist could have written that.
But the implications are interesting - given the supposed time-frame.
"But at the year's half-way point, economic prospects are generally far from dire."... really???
"...news of new truce agreements in the Middle East, at least as claimed by the US."... why on Earth would any of us believe any US claims regarding the security/financial own-goal they have created.
https://www.youtube.com/watch?v=B9RrX1Z25TI
Alastair Crooke/JudgeNap, at 15:00 quoted/paraphrased...
"The insurance groups in London are not going to be underwriting these tankers are they, and so how can any of them go through, other than the Iranian ones?
Crooke... "Well of course, and so when Trump claims there are millions of barrels of oil going through, its quite untrue. There were probably about 18 million barrels of oil that have gone through in these preceding days, and all of them have gone to China and India - they are not going to make the slightest difference to the problem the US has - that it inventories are going to zero.
And the answer we get from Bessent (US SOT), is that the main priority of Trump in every single aspect is hegemony, dollar hegemony, oil hegemony - that is what they are trying to achieve, and so all of the emphasis is on trying to keep a strong dollar so that interest rates can be kept lower.
And they point to the oil futures market at $79 - its all bogus - how is that as the inventories get down to sludge at the bottom that the oil price is going down. I am told that there is something like $19 billion in shorts placed on the market to manipulate it.
* (The DOJ and CFTC are looking into potential insider trading. Regulatory bodies are probing multiple suspicious short trades totaling billions of dollars (including one $960 million wager) placed just minutes before major geopolitical de-escalations and peace announcements)
"That is why I am saying everything is chaotic - it is nonsense - nothing of this is going to lead anywhere. Of course, China is going to push back against an attempt by the US to increase the scope of dollar hegemony, in many respects it is already doing that.
Its going to be a currency war, and currency wars are ugly wars - it WILL turn ugly if this is pursued. The plan is no longer about sorting out an arrangement with Iran, and getting the oil out. Now it is about establishing hegemony - dollar hegemony on the world by assertive means, by pressure, and also by manipulation in markets."
JudgeNap... "Does a powerful US military presence in the ME still make sense?"
Crooke... "No, and it is no longer there. I mean most of the bases have been destroyed, and I don't think the military presence is coming back.
If you look at what is being said in Israel, and in the Israeli press by senior Israeli analysts who are experts on Iran, they say that the ME has changed forever - before we, Israel, was the go-to country - now the go-to country increasingly is Iran.
This is a major crossing of the Rubicon. This is said by the Israelis themselves - their plan for Iran has collapsed completely, and cannot be resuscitated.
It would be madness to try it (another full on war with Iran) they say, because they can't do it without the US, and the US is not going to engage in anorther war with Iran, and there won't be another POTUS that will engage in another war on Iran - and so the whole grand strategy lies in ruin."
Alastair Crooke is a funny guy. No U.S. bases have been destroyed in the Gulf region.
Definitely not outright destroyed at all, some took heavy damage including major radar systems
You need to divorce yourself from Whitehouse alternative facts.
https://www.wsj.com/world/middle-east/we-investigated-damage-from-iran-…
'Should' is the word
'Need' is perhaps the problem
People's assessment of war these days is weird. Crooke stated that ALL US bases were destroyed yet the damage is really minor.
They're doing what they always do Colin - talking in extremes. It's Click Bait. The reality, positive or negative, is somewhere in the middle. Accept or disregard it as you will. Tap into as many different sources as you can, which I think you already do.
TLDR
"TLDR"...(Too Long Didn't Read)... 'brilliant'.
Trumps tweets are relatively brief.
Anybody who is still eyebrows deep into normalcy bias, could just continue to follow him.
Pepe Escobar with The Judge. (An interview of just over 10 minutes).
https://www.youtube.com/watch?v=LmgJOc-4QCc
In a recent article written by Pepe, he points out that he had missed the main point, of why it is so vital for the US, that normal flows of oil resume through the Straits of Hormuz.
As it was before this latest debacle, Iran already had the mechanisms in place to control Hormuz and everybody was already paying the tolls that applied.
However, this was not the main point.
Pepe.. "From the point of view of trying to disguise the strategic defeat of the US, there is a much more interesting and pressing issue. Which is, if we get to mid-August and the SOH is totally blocked, or almost totally blocked like it was a few days ago and there is no extra oil to be dumped by the Americans, then the global economy will begin to go down the drain in a matter of days or weeks.
Judge... "Does this tell you about Hegseth and the military planning, and even the Dept of Energy, that they would allow their reserves to get so low, that they came running to the President at the last minute, saying, we have got to stop the war because we run out of oil?"
Pepe... "I think it proves that to the whole planet that there is no planning at all. Its as simple as that. If they had at least foreseen that we can dump our reserves for maybe a month or two, but not like almost indefinitely, which was the case, until Trump took this decision only a few days ago."
7% global dairy production exported. NZ, USA and EU account for 70% of exports.
A quick search indicates NZ accounts for around 35% of dairy exports. Around 60% of WMP exports.
OECD Producer Support Equivalents (PSE) as a % of gross farm receipts for dairy production are indicated as NZ: 1.2%; USA: 7%; and EU: 30-35%.
Despite those significant disparities in direct government support to dairy production, NZ remains competitive and profitable. That says a great deal about the higher relative efficiency of production systems in NZ compared to competing exporting countries.
It also clearly illustrates 2 other important dynamics. First is that our export competitors are exporting domestic supply surplus (one can afford to take a lower price to sell surplus production to get rid of it - think back to butter mountains of the 70s and 80s in Europe). The second is that NZ dairy (agricultural in general) exports are far from competing on a level international trade playing field.
Note: NZ PSEs are derived principally from government funding of science and biosecurity, not direct product/production price support.
Both (NZ and potential competitors) are in the business of turning many calories of fossil oil, into few calories of food.
That is all they do, in a physics sense. They pride themselves on amassing proxy - only redeemable if the energy-supply (and/or quality) continues.
We do have the luxury of falling back on the dairy acreage, to feed ourselves. But the organic types will have to swallow a rat or two - dairy land doesn't certify easily, nor are we likely to be indulging in such frivolities.
"Over the past two days, almost 70% of the exiting vessels were headed to China."
Trumps clever plan to make China greater is running to plan.
"The SPR fell by 5.5 million barrels to 325M barrels"
https://investinglive.com/news/the-us-strategic-petroleum-reserve-spr-f…
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