Here's our summary of key economic events overnight that affect New Zealand on Bastile Day, with news that at the close of business today in New York, the Q2-2026 earnings season will kick off with major banks JP Morgan, Bank of America and Wells Fargo leading the pack. They will be reporting into a market that is jittery over the rebounding crisis in the Middle East.
Adding to the confusion, Trump said the US is imposing a 20% toll on all ships passing through the Strait of Hormuz. That will close all traffic except Iranian-linked vessels.
Separately, yesterday tech stocks from New York to Shanghai all took a beating.
Meanwhile, US Fed governor Waller spoke today, emphasising he is watching the inflation signals closely and warning that more rate hikes may be necessary. He warned about the impact of "tariffs, energy prices, and spillovers from demand for the AI buildout". But he is wary of recent history, acknowledging that this evolving situation has different risks and "we shouldn't fight the last war" on inflation. We are seeing a long-time dove turning hawkish on the need for action on inflation.
That comes as the US federal government posted a much wider deficit than expected, boosted by tariff refunds. Over the past nine months, that deficit has swelled to -US$1.36 tln on track for another unsustainable record, only one Trump could engineer with his dodgy fiscal strategies.
In India, CPI inflation rose to 4.4% in June, its highest since December 2024 and slightly more than expected. Food prices rose +5.3% with tomato prices up almost a third on this year-on-year basis.
In China, their climate and weather authorities are warning that there is an elevated chance of more serious storms this year. They have just had their first major one, and they say more than six national emergency level storms are expected before the end of their summer.
In Australia, we should probably note that the Xero CEO has sold all her own shares in the company, a somewhat startling signal.
Meanwhile OPEC is also turning glum. Their July Monthly Oil Market Report lowered the 2026 global oil demand growth forecast to 780,000 bpd, citing economic instability from the geopolitical conflict. They see reduced demand in major markets.
The UST 10yr yield is now just on 4.61%, up +5 bps from this time yesterday. The key 2-10 yield curve is now at +35 bps (little-changed). Their 1-5 curve is now at +26 bps (+1 bp) and the 3 mth-10yr curve is at +92 bps (+5 bps). The China 10 year bond rate is unchanged at 1.73%, down -1 bp for the week. The Japanese 10 year bond yield is now at 2.78%, up +1 bp. The Australian 10 year bond yield starts today at 4.89%, up +5 bps from yesterday. And the NZ Government 10 year bond rate is at 4.65%, up +4 bps from yesterday.
Wall Street has started its week on a down note with the S&P500 dropping -0.7% and the Nasdaq down -1.5%. Overnight, European markets were little-changed with London holding while Paris rose +0.3%. Yesterday, Tokyo ended its Monday trade down -1.9%. Hong Kong firmed slightly however, up +0.2%. But Shanghai was down a large -2.1%. Singapore ended essentially unchanged. The ASX200 ended its Monday trade also essentially unchanged. But the NZX50 finished down -0.5%.
The price of gold has fallen to US$3994/oz, down -US$126/oz from yesterday. Silver is now just under US$57.50/oz, down -US$2.50 from yesterday.
Oil prices are up +US$6 from yesterday at just on US$77/bbl in the US, while the international Brent price is now just over US$82/bbl. Hormuz transits have essentially dried up as the hot conflict explodes again and Iran declaring the Strait 'closed'. There have been just 6 crude tankers (1) and 5 cargo ships exiting over the past 24 hours and 5 of those tied to Iran (0 dark with transponders off) but only 5 entering for new loads, all Iran-linked (1 dark).
The Kiwi dollar is little-changed from yesterday at just under 57.6 USc. But against the Aussie we are up +20 bps at 83.1 AUc. Against the euro we are unchanged at just on 50.5 euro cents. That all means our TWI-5 starts today at just on 61.5 which is the same as this time yesterday.
The bitcoin price starts today at US$61,935 and down -3.4% from this time yesterday. Volatility over the past 24 hours has been modest however at just under +/- 1.9%.
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8 Comments
India grew 7.7% with inflation of 4.4%. What muppets, they should have chosen no growth and inflation at 3.1% like good old extra conservative NZ.
That will close all traffic except Iranian-linked vessels. Iranian vessels are blockaded.
Goulot d’etranglement. As often, French provides the more eloquent expression.
Absolument ! Surtout aujourd'hui, "Au nom de la patrie.....aux armes, citoyens... "
Trump said the US is imposing a 20% toll on all ships passing through the Strait of Hormuz
Trump actually said: "The Hormuz Strait is OPEN, and will remain OPEN, with or without Iran", he wants ships to transit and promises them safe passage in exchange for a 20% commission, whilst Iran says the SoH is closed, don't attempt to cross it.
This focuses the war on a singular matter, namely the Straight of Hormuz being open or shut. This point of contention is very measurable, either ships pass, or they don't. It's a lot easier to shoot at ships from a large land mass, than to protect ships form being hit. Therefore I believe that Trump and the USA will lose the war over the SoH, and that they will have to finally and fully give up control of the Straight to Iran. It will be very difficult for Trump to frame this as anything else but a defeat, except to his MAGA supporters, of course.
Except seven nations other than Iran depend on safe passage through the Straits. Should the USA depart and leave the passage under Iranian control then they will have inflicted great and lasting damage on those nations who were not short on warnings of such potential. To paraphrase Caesar then, I came, I saw and I cocked up.
Indeed, and these 7 nations cannot do anything about, apart from building other pipeline routes to circumvent the SoH.
- Oil prices up
- 10yr UST up
- Inflation expectation up
- Expectation for a Fed hike up
Given the immense US debt,Trump cannot afford these metrics to continue on this trajectory, hence he is more likely to give in to Iran about the SoH, than the other way around.
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