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%.
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9 Comments
"...In 2025, global total energy supply rose from 592.2 exajoules to 600.3 exajoules, an increase of about 1.4%. Renewable energy rose much faster in percentage terms, increasing nearly 10%. But in absolute terms, renewables added about 3.2 exajoules, while total energy supply increased by about 8.1 exajoules.
...Oil, natural gas, and coal all increased in 2025. Combined fossil fuel supply rose by about 4.6 exajoules, accounting for more than half of the total increase in global energy supply."
https://www.forbes.com/sites/rrapier/2026/07/01/energy-demand-outpaced-…
SELLING THE FAMILY JEWELS/INSURANCE POLICY TO TRY TO MASK HOW BAD THE TRUE TRADE US DEFICIT IS - a strategy, or just another major fopar?
As bad as the US trade deficit looks for the first 5 months of 2026 (the June data is not out yet and the preliminary data won't be published until July 28), imagine what it would look like if the US hadn't been selling physical gold.
This in turn begs the question - how much longer can they keep the charade/con-game going?
Well, we don't have to imagine anything - the figures are readily available in black and white... or more to the point in large RED numerals.
January 2026
: Without the massive +$4.7 billion
gold selloff, the highly lauded (more like laundered) contraction of the trade deficit to $54.5 billion would have been muted. The deficit would have instantly expanded to $59.2 billion
(an 8.6% increase
in the trade gap).
February and March: Gold remained the single largest goods export for the entire first quarter, wrapping up Q1 at a massive $44.89 billion
cumulative total. Without the gold sales, the trade deficit would have been 13.4% higher.
The Q1 Picture: the total goods trade deficit with the world sat at $245.8 billion. Stripping out the $44.89 billion
of Q1 gold exports would have pushed that deficit to $290.7 billion
, a deterioration of 18.3%.
April 2026: The deficit was $83 billion. Because gold exports had already dropped by $5.8 billion that month, its protective cushion was smaller than in previous months. However, removing the remaining estimated $9.2 billion
in physical gold shipments would still expand the April deficit to $92.2 billion
(an 11.1% increase
).
And all this in a country where...
#1 The largest asset on their balance sheet is student debt.
#2 The main item keeping the economy ticking over is the $1 trillion bet on the AI race, which they will most certainly lose, just because the relative price of energy alone, apart from a host of other reasons.
#3 They are in the final stages of losing two major concurrent wars, and their hegemonic security/financial chokehold on the RoW is being exposed as a sham based on propaganda and not on a tragically stark reality.
WHAT ELSE COULD POSSIBLY GO WRONG - answer, lots...
- For fifty years central banks around the world bought US paper promises. It was generally accepted as the safe thing to do. Besides if you didn't play ball you could end up as a basket case like the Libya model, with the US brand of "freedom" being imposed on your country.
- We now see a stark reversal, with CBs essentially quietly selling off their piles of paper promises. With notable examples like China down from a peak of $1.32 trillion to ~$652 billion, with this capital being re-routed into physical gold.
- We now see physical gold surpass USTs in terms of global central bank reserve assets, the world selling the paper claims, and the US selling gold East to try to mask their appalling trade deficit.
- Xu Luode, the Chair of Shanghai Gold Exchange, warned us back in 2014 in a speech he made at the LBMA - one of the centers of the western paper gold fixing casino...
"Shanghai Gold will change the current gold market which is a 'consumed in the East, but priced in the West', arrangement.
When China has the right to speak in the international gold market, the true price of gold will be revealed."
...end quote...
- We now see the pieces clicking into place as China shuts down its paper markets, and Hong Kong completes a 10x expansion of its gold storage facility from 200 tons up to 2000 tons. You don't need a large vault for a paper casino, but you sure as hell do for bullion.
- China knows that they need an anchor for their currency and they have chosen gold, the 5000yo, and most trusted money on planet Earth fits this role. The fact that they most likely have north of 40,000 tons in reserves makes their strategy even more compelling.
- This is not an official "gold standard" but it does have some major advantages. Given that the world doesn't yet entirely trust the YUAN, in theory they can now, because sitting behind it, as an anchor, is all of that physical bullion.
Gold is the money that cannot be printed, and when it is taken out of the hands of the FIC (Financial Industrial complex), they no longer get to fund the forever-war economic model.
The realisation, just of this one simple fact alone, is a huge call for a new global economic/security paradigm. IMO, humanity is in the middle of this shift right now.
Interesting Colin. Could I request that you cite your sources? Perhaps put a link up?
One issue though; "Given that the world doesn't yet entirely trust the yen, in theory they can now, because sitting behind it, as an anchor, is all of that physical bullion." Acknowledging the criterion you've applied to the statement, I would suggest the Yen still can't be trusted because of the politics of the country. Given that the Chinese are an authoritarian autocracy, the political choices and decisions that have an effect on the value of the Yen internationally means that it's value, outside China, would be at best uncertain. Yes the US$ is under considerable strain thanks to Trump, and taking what you've presented at face value, the actions can only further undermine any value it might retain outside the internal economy. But that doesn't mean the Yen is any more sound.
Yuan rather than Yen?
Yep. I didn't stop to think about what Collin called it, unless he's suggesting the Japanese are doing it too? (Shades of Dean Martin Papa loves Mambo?)
Apologies for any confusion I created - I wrote yen rather than yuan.
It has been corrected.
"Given that the world doesn't yet entirely trust the YUAN..."
Historically, myself and any sources or links that I put up, have been attacked with knee-jerk insults by people on ICNZ, to the stage where I often wondered why I bother to comment at all. On a regular basis they have not even read the piece properly, and are "correcting" something that I never wrote in the first place.
I work with readily verifiable facts on the ground, and avoid racial and civilisational phobias and the happy-clappy biases, which are so heavily cultivated by the Western propaganda machine, and which in turn are funded by the FIC, that so desperately tries to hold on to its old forever-war global economic model, plus the pump and dump financial chaos that they continually recycle.
Its glaringly evident that if you look at any war or chaotic event around the world, more than 90% of the time there is one country that is a common denominator, and most often it is an orchestrated event, not an organic problem. The fact that so much of that country's economy is based on perpetual war is not a coincidence.
too broad Colin, but since WW2 I'd have to agree mostly. But consider this, years ago I read about the Yugoslav world communist summit in the 1950's. The stated aim of the communists at that time was world domination. Given that all 'communist' countries of the time were authoritarian facist states, if the US weren't there with their military capability and willingness to use it, where do you think we would be today?
Don't fret the critics Colin, just be prepared to support your arguments. Just because it is your opinion, that doesn't make it fact. Having the debate is more about learning than winning. If you're all about winning and don't think you have anything to learn, perhaps you shouldn't be contributing?
For crying out loud, Murray, I couldn't care less what the "stated aim" of a bunch communists was some 70 years ago - the fact remains, that the model simply doesn't work - it never has and it never will.
My calculations of 0.5% (down from ~30% in the 1980s) of the world population that I regard as governed by technically pure regimes is debatable, but I make the point that as a threatening political force, communism is not the boogeyman that the West, NATOstan and programmed people like yourself, dress it up to be.
The only pure models, Laos, NK and Cuba, get by in a voracious global reality, but to me, it is simply incalculable just how much their economies and socioeconomics would have flourished into hybrid free-market models, if the West hadn’t made it their mission to try to literally starve them off the planet.
Cooperation from foreign countries and a friendly cooperative demeanor would have almost guaranteed that these stalwarts could have developed more along the lines of Vietnam – that is the ultimate irony – the U$ lost the war fighting Communism, and yet the 99 million strong country transitioned organically into a mixed market economy – no one needed to die!
Neither do I "fret the critics" and I always support my argument with readily verifiable evidence.
And please spare me the lecture on the obvious distinction between opinion and fact - my learning curve remains just as steep, more than 50 years on, as it was when I first studied eCONomics in the early 1970s, and largely because I am a self-confessed voracious information sponge.
And... when it comes to spotting floundering pseudo-intellectuals within the field of geopolitics/geo-economics, I can see them coming a mile off.
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