Eyes on US non-farm payrolls; US crude stocks fall again, reserves at 43 year low; USMCA not renewed; China PMI rises; Korean exports star; UST 10yr at 4.48%; gold firm and oil down even as Hormuz quiet; NZ$1 = 56.8 USc; TWI-5 = 60.7

Here's our summary of key economic events overnight that affect New Zealand, with news the new US Fed boss says price risks have come down in recent weeks, and repeated his determination to bring inflation back to the 2% target. Interestingly, US benchmark interest rates rose after these comments which tells you something about how they feel about the prospects for lower Fed Funds rates and inflation control.

Meanwhile, US mortgage applications were little-changed last week and the 30 year benchmark mortgage rate changed little too. Refi activity was softer.

The June job cut data for the US came in at about half the level of May and much less than expected, although layoffs due top AI remained the top reason.

Meanwhile, the ADP monthly jobs report came in softer than expected, even if it is still expanding. A rise of +113,000 was expected after the prior month's +124,000. But this marker came in at +98,000. We will get the US non-farm payrolls change data tomorrow and markets expect it to rise +110,000, and down from May's +172,000.

Meanwhile the widely-watched ISM factory PMI came in little-changed and moderately positive for June. New orders grew but slower; new export orders fell. Input prices rose again but at a slower pace. Most of this report was quite similar to yesterday's S&P Global US factory PMI.

There was another fall last week in US crude inventories although the least in six week, even as the reduction has now cumulated to ten consecutive seeks. US strategic crude reserves are now as low as they had in 1983. Petrol inventories fell as well last week. American petrol prices remain +28% higher than before the start of the Gulf War.

In its aggressive trade relations, the US has told Canada and Mexico it will not renew the existing USMCA trade pact, one Trump himself negotiated and claimed was one of the 'best deals ever'. In fact the US ended up a net loser. Last year, the US had a -US$46 bln trade deficit ⁠in goods with Canada and a -US$197 bln deficit with Mexico. Of course the US has trade surpluses in services with both which they ignore. The existing USMCA will run another six years if it isn't eventually renewed.

Factories the world over are expanding, although more than others in some places. The global factory PMI is a positive 53. In Australia it is lagging at 51.5. In New Zealand our last BNZ-BusinessNZ factory PMI came in at 49.9. Locally we are not participating in this global expansion.

In China, their manufacturing conditions as measured by the S&P Global/RatingDog factory PMI improved further in June, completing their strongest quarter since 2020. This result was better than the official version but not quite as good as many analysts had expected. Input price inflation slowed to a five-month low while employment rose at its quickest rate since August 2023.

Japan's Tankan industrial sentiment indexes have reached their highest level since 2018 in June. They came in at a level that was better than expected for large manufacturers, but a bit more modestly improved for service sector companies.

South Korea is becoming Taiwanese, at least as regards its export prowess. Korean exports were up +71% in May from a year ago, to a record US$102 bln for the month. (For reference Taiwan exported US$78.5 bln in May, up +52% from a year ago.) However, their June factory PMI shows their softest rise in new orders in 2026 so far which limited production growth. And price and supply pressures remained pronounced.

In Australia, their May building consent data shows that the number of dwelling approved were +5.3% higher than year-ago levels. But they fell -1.1% from April. Private sector house consents rose +2.8%, to the highest level since September 2021. This is the fourth consecutive month with over 10,000 private sector houses approved. This are quite soft for multi-unit dwellings however.

And their June real estate market shows more signs of topping out. The Cotality home value index – covering all of Australia – fell -0.4% in June, following a -0.3% decline in May and a -0.1% dip in April. Annual growth slowed to +7.3%. The quarterly decline is the most significant since the 2022-23 price correction. Corrections in Sydney and Melbourne are becoming more pronounced, led by material declines in 'top tier' segments with turnover also down sharply. Momentum is slowing elsewhere but price and turnover growth are still mostly positive.

The UST 10yr yield is now just on 4.48%, up another +5 bps from this time yesterday, rising mostly after the Warsh comments. The key 2-10 yield curve is now at +30 bps (up +2 bps). Their 1-5 curve is now at +24 bps (+3 bps) and the 3 mth-10yr curve is at +83 bps (+9 bps). The China 10 year bond rate is up +2 bps at 1.75%. The Japanese 10 year bond yield is up +2 bps at 2.71%. The Australian 10 year bond yield starts today at 4.79%, up +3 bps from yesterday. And the NZ Government 10 year bond rate is at 4.44%, up +5 bps.

Wall Street is marking time today, essentially unchanged on the S&P500, down -0.3% on the Nasdaq. Overnight, European markets were mixed between Paris's -0.8% and Frankfurt's +0.2%. Yesterday Tokyo closed up +0.6%. Hong Kong closed down -0.6% although Shanghai was up +0.4%. Singapore was down -0.2%. The ASX200 ended its Wednesday down -0.6%. And the NZX50 ended down -0.1%.

The price of gold has risen to US$4070/oz, up a net +US$44/oz from yesterday. Silver is now under US$60/oz, up +50 USc from a day ago.

Oil prices are down another -US$1.50 from yesterday at just over US$68/bbl in the US, while the international Brent price is down to US$71.50/bbl. Hormuz transits have stayed at their lower level after the recent volatility & uncertainties with just 16 crude or product tankers exiting over the past 24 hours (3 dark with transponders off) and 26 entering for new loads (4 dark). Most exiting vessels are still headed to China.

The Kiwi dollar is unchanged from this time yesterday at just under 56.8 USc. Against the Aussie we are up +20 bps at 82.3 AUc. Against the euro we are up +20 bps at just on 49.9 euro cents. That all means our TWI-5 starts today at just on 60.7 which is up another +10 bps from this time yesterday.

The bitcoin price starts today at US$60,115 and up +3.1% from this time yesterday and recovering most of yesterday's fall. Volatility over the past 24 hours has again been moderate at just under +/- 2.0%.

The easiest place to stay up with event risk is by following our Economic Calendar here ».