Here's our summary of key economic events overnight affect New Zealand, with news the oil price, and benchmark interest rates have both risen on the renewed tensions between the US and Iran.
But first today, the IMF has updated its global economic forecasts, and they are virtually unchanged from the main release in April. They note the world economy’s stronger-than-expected resilience to the Iran war and robust AI-related investment. They see global growth coming in at +3.0% in 2026 with the 2027 growth outlook revised up to marginally 3.4% from 3.2%. Despite the slight upgrades, the IMF warned that risks remain tilted to the downside, and the full economic impact of elevated tensions, including renewed US-Iran strikes, are still to be revealed. Global headline inflation is now expected to reach 4.7% in 2026, up from 4.1% in 2025, before easing to 3.9% in 2027.
Australia gets little mention in this update except to note that its 2026 growth is forecast to come in at +1.9% (down -0.1%) and 2027 at +1.7% (unchanged). New Zealand gets no mention at all. For the US it is +2.3% and +2.2% for the same two year, both unchanged. For China it is +4.6% and +4.1% (marginally higher). For Japan it is +0.6% and +0.7% (little-changed). Malaysia was noted as a positive mover where their economy is projected to grow at a rate of +4.7% in 2026, benefiting from data center activity and the upturn in the global technology cycle.
US mortgage applications fell again last week, especially refinance applications.
US crude oil stocks actually rose last week with a modest gain which ended a ten consecutive string of declines. But their strategic oil reserve continued to fall at the same fast pace.
The modest US consumer debt expansion recorded to April shrank to nothing in May, an unexpected weakness, and a significant variation from the continued expansion expected. However a one month hesitation occurs occasionally so we will need to wait for the June release to know if this is a significant indicator. The big mover was a sharp fall in credit cards and other revolving debt, also quite unexpected.
The minutes of the June Fed meeting were released today, revealing that most officials broadly agreed they would need to raise interest rates if inflation remained elevated this year due to the war in the Middle East, tariffs, or strong demand from the AI-driven investment boom. And that included new boss Kevin Warsh.
In Japan, their official sentiment survey of professionals recovered in June after three prior months of downbeat views
In Australia, rents are rising faster, especially house rents. The increase was both stronger than seasonal norms and relatively abrupt in some cities, pointing to a step-change in pricing behaviour rather than a gradual tightening in market conditions.
In a now somewhat dated update due to the renewed Middle East hot conflict, the New York Fed's global supply chain pressure index eased back in June after its April and May spikes. (Of course, with today's resumption by the US of its bombing of Iran, this is likely to flare up again in July.)
The UST 10yr yield is now just on 4.56%, up +8 bps from this time yesterday. The key 2-10 yield curve is now at +36 bps (down -1 bp). Their 1-5 curve is now at +25 bps (-3 bps) and the 3 mth-10yr curve is at +94 bps (+6 bps). The China 10 year bond rate is unchanged at 1.73%. The Japanese 10 year bond yield is now at 2.88%, up +4 bps and at new 30 year-high levels. The Australian 10 year bond yield starts today at 4.94%, up +10 bps from yesterday. And the NZ Government 10 year bond rate is at 4.54%, up +8 bps from yesterday.
Wall Street has been softish again on the S&P500, down -0.4% while on the Nasdaq it is little-changed. Overnight, European markets fell hard between London's -1.7% and Frankfurt and Paris's -2.2% fall. Yesterday Tokyo ended down -2.1% for a second day. Hong Kong rose +3.0% however while Shanghai was down -0.5%. Singapore was up +0.5%. The ASX200 ended its Wednesday down -0.2%. Meanwhile the NZX50 ended down -0.7%.
The price of gold has fallen to US$4067/oz, down -US$78/oz from yesterday. Silver is now under US$58.50/oz, down -US$2.50 from yesterday.
Oil prices are up +US$3 from yesterday at just on US$73.50/bbl in the US, while the international Brent price is now just over US$78/bbl and up +US$4. Hormuz transits have picked up sharply in a rush to get out despite the risks and renewed uncertainties with 35 crude or product tankers exiting over the past 24 hours (8 dark with transponders off) but only 16 entering for new loads (2 dark). Interestingly. All this comes as attacks on ships in transit become daily events, so the rise in oil prices isn't surprising. Red Sea activity near Yemen has fallen again to even lower levels on added risks there too.
The Kiwi dollar is up +10 bps from this time yesterday at just over 57 USc. Against the Aussie we are up +30 bps at 82.3 AUc. Against the euro we are up +10 bps at just on 49.9 euro cents. That all means our TWI-5 starts today at just on 60.9 which is up +20 bps from this time yesterday.
The bitcoin price starts today at US$62,052 and down -3.1% from this time yesterday. Volatility over the past 24 hours has been moderate at just under +/- 2.1%.
Please note there will be no video version today. That feature will resume in August.
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4 Comments
The IMF doesn't count remaining stocks. Or the entropy rate of existing infrastructure.
At best it extrapolates rates of past-year flows, and projects. And it includes in this ignorance, virtual stuff as if it were real stuff.
It is a little like they've been measuring the height of a youngster from age 23 to 24, and assuming continuance. Why do we still worship this approach?
Reminiscent of the twin towers. Too many mezzanine floors and too much aluminium.Bin Laden took both note, and pleasure in that. Mind you in Christchurch, High Street a new high story building post the EQ’s was deficiently designed and EQ susceptible. Believe it took an engineer visiting Christchurch and strolling past to notice that. Best not to repeat here that 1980s English pub slang toast about engineers starting with “cheers.”
The rest of the world seems to be doing OK while NZ is in a real funk. At what point will we decide to go out and spend again? Every green shoot dies off not long after its germinated. Oil prices heading down but now the RBNZ has decided to kill off any hope.
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