Here's our summary of key economic events overnight that affect New Zealand, with news the US is pushing ahead with intensified military strikes on Iran, and Iran is responding against US positions in the region. The net result is higher oil prices, a retreating stock market, and a general risk-off tone in financial markets.
But overnight, there was a very good report out for US housing starts in June which came in +3.6% higher than year ago levels and brushing off their unusually weak May report.
But for all the positives that some Fed district factory surveys have shown, these are not showing up in US industrial production data yet. You might have thought the increased local stockpiling surge would be visible by now. But to June, it isn't. US industrial production rose a paltry +0.1% in June to be +1.1% higher than a year ago. And that is its weakest increase in three months.
Although consumers are still very negative in their sentiment, there was a notable improvement in the latest survey results from the widely-respected and long running University of Michigan consumer sentiment survey. With the second straight month of 10% jumps, consumer sentiment climbed to its least negative reading since February of this year on the basis of easing price pressures at the petrol pump in recent weeks. All five index components improved, led by significant 20% increases in buying conditions for durables as well as year-ahead business conditions. This month’s rise in sentiment was pervasive across the population, seen across groups by age, income, wealth, and political party.
Will it last? If it truly is directly related to pump prices, then today's outsized jump in crude oil prices (below) and the turn up in pump prices in the past few days, suggests not. Today's pump prices are almost back to month-ago levels when the sentiment survey hit its record lows.
Looking backwards over the past month, US data has seen improvements. But these have not been enough to return the Atlanta Fed's GDPNow tracking to where it was in May, so a sharp downshift is still in place. And it is worth noting that 'consensus forecasts' by mainstream economists have not yet reflected that retreat.
The RBNZ also produces a GDP nowcast. After a somewhat unexpected blip up two weeks ago, the latest data has returned our Q2-2026 growth to a minimal level. The same for Q3-2026. (There is no Aussie GDP nowcast from an official institution. The Melbourne Institute version won't be updated until the end of the month.)
In Canada, the spread of their enormous wildfires are becoming an international irritant. Canada is struggling to contain them. In an unusual move, the US is refusing to assist, even though Canada sends crews and support to the US when they have wildfire emergencies. There are major wildfires in many US states as well.
Across the Pacific, Singapore's export growth fell back sharply and unexpectedly in June. Electronics exports remained elevated, but non-electronics exports were unusually weak in the month. Their big decliners were for petrochemicals, food, and non-monetary gold. Trade with the US was especially hard hit.
Here's something we haven't covered so far. Their June trade data for China shows that its crude oil imports are now at a ten year low. In fact their June crude oil imports were -11.4% lower than a year ago in volume terms. It is a shift that will have global implications.
Three Chinese airlines have ordered 95 Airbus commercial jets. This has swelled Airbus's non-US order book over rival Boeing. Airbus (89) delivered more aircraft than Boeing (64) in June. Boeing is losing market share fast for clients outside the US, no doubt a direct consequence of reactions to nativist policies from Washington and risks of trade retaliation.
The UST 10yr yield is now just on 4.55%, down -2 bps from this time yesterday, down a net -2 bps for the week. The key 2-10 yield curve is now at +37 bps (down -3 bps). Their 1-5 curve is now at +28 bps (-2 bps) and the 3 mth-10yr curve is at +83 bps (-4 bps). The China 10 year bond rate is down -1 bp at 1.73%. The Japanese 10 year bond yield is now at 2.70%, down -2 bps, down -1 bp for the week. The Australian 10 year bond yield starts today at 4.92%, up +1 bp from yesterday, up +6 bps for the week. The NZ Government 10 year bond rate is at 4.68%, unchanged from yesterday but up +7 bps for the week.
Wall Street took fright today with the S&P500 down -1.0% and the Nasdaq down -1.4%. That means the S&P500 is down -1.2% for the week and the Nasdaq down -2.2%. The SpaceX share price is now below US$124, down -5.5% on the day, down -14.4% for the week. The 'smart money' hype is vanishing. Overnight, European markets were mixed between Paris's -0.5% while London rose +0.3%. Yesterday, Tokyo ended its Friday trade down a very sharp -4.0% for a -6.2% weekly drop. Hong Kong fell -1.8% to end its week up +1.7%. But Shanghai fell -3.1% on Friday for a -5.1% weekly drop. Singapore ended down -0.5%. The ASX200 ended its Friday trade down -0.5% for an unchanged week. The NZX50 rose +0.6% on Friday to end down -0.7%.
The Fear & Greed index is back in the 'fear' zone from being just in the 'neutral' zone a week ago.
The price of gold has risen to US$4005/oz, up +US$21 from yesterday but down -US$95 from a week ago. Silver is now just under US$56/oz, up +50 USc from yesterday but down -US$3.50 for the week.
Oil prices are +US$3 higher from yesterday at just on US$82/bbl in the US, while the international Brent price is now just under US$88/bbl. A week ago these prices were US$71.50 and US$76 respectively so a +16% rise since then.. Hormuz transits have stayed low overnight There have been just 7 crude tankers and 9 cargo ships exiting over the past 24 hours (8 dark with transponders off) and 10 entering for new loads (3 dark) and almost all Iran-linked.
The Kiwi dollar is unchanged from yesterday at just under 58.4 USc but up +80 bps for the week. Against the Aussie we are up +20 bps at 83.7 AUc. Against the euro we are up +10 bps at just on 51.1 euro cents. That all means our TWI-5 starts today at just on 62.3 which is up +10 bps from this time yesterday, up +80 bps for the week.
The bitcoin price starts today at US$64,010 and down -0.2% from this time yesterday, up +0.4% from a week ago. Volatility over the past 24 hours has been modest at just over +/-1.4%.
Daily exchange rates
Select chart tabs
The easiest place to stay up with event risk is by following our Economic Calendar here ».
38 Comments
That retreating sock market's a worry. 🦶
SpaceX IPO
where IPO means Its Probably Overpriced
This is going to make it much harder for Open AI and Anthropic to list
And how about the truth social low latency feed for the big boys, this is a crock of shit
I think Elon took notes from the Dotcom crash and IPO’d near the AI/tech bubble peak to maximise the capital position of SpaceX (at a time when people are willing to over pay for any tech related stock). If he got the timing right (which is looking quite possible) it’s another transfer of wealth from the common man to him/his companies.
I wonder if they start buying back shares at less than half the IPO price down track giving them billions in gains for doing essentially nothing other than taking advantage of foolish investors.
GDP per capita vs gross GDP
This from stuff this morning: https://www.stuff.co.nz/nz-news/361006309/north-south-economic-divide-c…
This divide between the north and south islands is interesting. And notable is the contribution from the agricultural sector to the South's stellar performance.
Also interesting is the GDP per capita. That speaks of specific productivity increase at the basic productive level. Gross GDP misses that nuance and can be misleading (IMO).
Agriculture produces actual stuff that is processed (mostly) in NZ and exported. And agriculture requires inputs and servicing. That is new, locally generated money, earnt from exports, injected into local economies.
An alarming element of the commentary is identifying comparatively low international migration weighing on Auckland and Wellington, particularly housing values.
My take from that is a lament that the housing market is wallowing because there are not enough migrants to drive competition and demand for housing. Just add more people to bid up rents and property values and consume - locking up capital in non productive assets and cycling consumption spending on the essentials for life. Nothing about what tangible stuff is produced for sale domestically or export.
Sure many migrants may inject new money they carry into NZ on arrival but, I would argue, it is not new money created from the fruits of there labour within NZ. What tangible contribution is generated to maintain or increase GDP per capita? Arguably, Auckland and possibly Wellington (less so because of the need to service central government and it's deliverables) is a stagnating GDP swamp. A delightful city, but not pulling it's weight in productivity per capita.
Clearly South Islanders are working hard, smart and diligent; increasing productivity per capita.
The commentator refers to these ag sector driven gains as an old fashioned recovery. There is nothing old fashioned about this at all. What we are seeing is the continued economic resilience of a specialised sector adopting new technologies rapidly and growing productivity. Doing well what they have always done well.
AND NO ONE HAS COME UP WITH A SUSTAINABLE, PERMANENTLY NZ BASED, ALTERNATIVE, NEW PRODUCTIVE, EXPORT FOCUSED, INITIATIVE, TO GROW BESIDE OR EVEN SURPASS AGRICULTURE IN EXPORT EARNINGS TO DRIVE INCREASED GDP IN NZ.
Great comment Lou - Around Auckland, the Life Style Blocks are sending beef to the works ($9 a kg hanging weight), home kill guys and butchers that process beef are seeing the fall off. A city butcher I know is complaining they are paying $13 a kg hanging weight on good lambs. However the incoming drought and El Nino may throw NZ back into serious recession in 2027
This is what happens when you depend on Housing Ponzi for growth and the bubble pops. We are 5 years into a 10 year lost decade.
"AND NO ONE HAS COME UP WITH A SUSTAINABLE, PERMANENTLY NZ BASED, ALTERNATIVE, NEW PRODUCTIVE, EXPORT FOCUSED, INITIATIVE, TO GROW BESIDE OR EVEN SURPASS AGRICULTURE IN EXPORT EARNINGS TO DRIVE INCREASED GDP IN NZ"
Tourism?
Satellite launching?
May I suggest that if our houses cost 1/2 as much as they do, then people would have huge discretionary spending power, so local tourism, hospitality, sport, hobbies and general recreation spending would rise.
The country is deprived of discretionary spending due to over spending on unproductive housing assets.
Our wages and taxes are fine, its just that so much goes to simple shelter.
Could this be what we see in places like Christchurch?... people just have more money in their pockets so the city feels alive.
Exactly - but it wasn’t hard to see that this was going to be the probable outcome 10+ years ago as house prices rose twice the rate of wages!
And everyone one loved the "My house makes more money then me story"
Well we’ve made our uncomfortable bed, so now we shall sleep in it.
Going back 15 years or more there have been many arguing the inevitability of the current situation. All decried by the even more who really didn't care cause they honestly thought their massive mortgage payments were adding to the countries wealth. Those of us who saw different were and in most places still are considered financially illiterate old conservatives.
Same goes for anyone questioning immigration numbers. Bloody xenophobic.
Therein lies the basic, and nasty, truth of the matter. A nation’s wealth, and consequently its citizens too, cannot be assessed by relying on property value. Property is a fixed asset, immovable and unsaleable outside of the nation itself. It cannot generate foreign earnings. So what to do. Why not then import the market and call that immigration. A process that is not only counterproductive but also self defeating for any nation when that influx takes the population to numbers beyond existing infrastructure, health, education, transport and energy for example.
Wealth is based upon production (of products you can export) not capital gain in assets that are rising based upon debt/leverage/excess private debt creation relative to GDP!
Aye I remember reading the history of the Dutch East Indies, the heyday of the spice trade. Exquisite mansions, beautiful architecture and estates, built and owned by the merchants, worth nothing, abandoned and derelict, when the trade collapsed. Mind you that was before the availability and lucrative resources of oil were recognised hence the Royal Dutch Petroleum Company now more or less Shell.
"Wealth is based upon production (of products you can export) not capital gain in assets that are rising based upon debt/leverage/excess private debt creation relative to GDP! "
Tell that to the USA.
Agree, hence my warning on here for nearly 10 years that the US is heading down the path of a falling world power who is issuing too much debt (ie living far beyond their means). And reference to Dalio’s ‘The Chsnging World Order’
The sweet spot for kiwi farmers may be in the rear view mirror? Surprised interest hasn't covered this yet? https://www.farmersweekly.co.nz/markets/sheep-and-beef-markets/us-light…
I have a suggestion. Our forestry export is by far the highest in weight and volume. We export 20 to 22 million m3 of logs every year (and growing) which is the lowest value added commodity you can think of. High energy pricing has killed off a big chunk of domestic processing into something more valuable. I am still waiting for Todd mcClay to come with a decent Forest Industry Transformation Plan after they killed off Labour's version which had quite some merrit (developed under the direction of Stuart Nash before he was sacked!) New Zealand must stop seeing forestry as exporting logs and see wood as a package of energy (low carbon fuels from wood waste) or a package of industrial sugars (bio chemicals; packaging foams; )
Do you think China is interested in taking finished product? Most of pine is used in formwood for construction. If NZ was interested in "Value add" timber products, it probably wouldn't be growing radiata, which is junk.
Can't even say biofuels are "low carbon. They emit more CO2/unit energy produced than coal. Their only saving grace is the carbon they emit is from the current carbon cycle, not one 100s of millions of years ago. Who would pay the cost of getting the logs from the woodlot? The owner? Because it would cost money to get the zero value product from the skid site to the production facility. There will either be subsidy involved, or it won't happen.
Great comment, Lou.
The country vs city debate. If you look internationally there are some very rich cities and some very poor farming countries, so it's certainly not as simple as farming is export so must be good. Or look at the USA, the farming states have much worse GDP per capita. Auckland and Wellington do pretty well in terms of GDP per capita, they just haven't had the recent growth: https://figure.nz/chart/tHjQuDfZNFsXRMTk
Obviously the ponzi was never going to end well. It was really just a transfer of wealth from young to old. Or maybe from immigrant to Kiwi. Interestingly I think some of the South Islands growth is due to their current ponzi, where their immigrants are coming from the North Island instead of overseas.
Sorry if I gave the impression of country vs urban, absolutely no intention to do that.
My focus was on GDP, particularly gdp per capita.
It is a coincidence, but not surprising that the ag sector is the premier generator of export earnings.
I would dearly love to see another major string (or strings) added to the fiddle that is the NZ economy. Something big and sustainable that is NZ owned.
Some have pointed to tourism. I have serious doubts about that because I cannot see how it can ever be a low carbon emitting sector - think flights, transport, fuel for activities.
Has anyone done a carbon reconciliation/balance sheet of the NZ tourism industry? Subjected it to the same level of scrutiny the the ag sector has been subjected to?
Engineering and IT should be the goal. Rocket Labs for example. But then every country probably has that goal too.
NZ has some great advantages; one of 6 countries that speak English, beautiful natural environment and beaches, miles from war zones, friendly people, a good balance between capitalism and socialism, plenty of renewable energy. We should be able to attract the best people in the world to drive our economy.
I've always thought a great Auckland would lead to a great NZ. Auckland has improved so much in the last few decades, but unfortunately it's been Auckland council thats done the legwork, the government has done bugger all. CRL opening soon, government trying to take the credit, but again it's completely Auckland council that did it. Maybe I'm biassed because I live in Auckland, but if you want to be the best country, you need to attract the best people, and they will probably live in the biggest city.
"If you want the best country, you need to attract the best people, and they will probably live in the biggest city."
But what is happening in Auckland to create the new industry (in the broadest context) that will significantly grow export earnings?
What will they do in Auckland?
Stuff it.
Oh, too late..
"In Canada, the spread of their enormous wildfires are becoming an international irritant. Canada is struggling to contain them. In an unusual move, the US is refusing to assist, even though Canada sends crews and support to the US when they have wildfire emergencies. There are major wildfires in Washington and Oregon as well"
https://www.reuters.com/world/ontario-buy-new-11-new-aircraft-very-diff…
"We are holding Canada responsible for the fact that they are not properly maintaining their Forests ... and the United States is being unnecessarily invaded by filthy, polluted, and unhealthy air," he said in a Truth Social post.
"This is Willful Negligence, and becoming a yearly occurrence, costing the United States Billions of Dollars, which cost of this pollution must of necessity be added to the TARIFFS Canada is currently paying."
I saw the headline......
Sounds like our RMA - do most things but keep it all within your boundary....or else.
Isn't Trump lucky the prevailing winds aren't south to north
Meh.
The time smoke could be observed in Switzerland.
https://www.tandfonline.com/doi/abs/10.1080/00431672.1950.9927067
https://bulletin.cmos.ca/the-great-smoke-pall-of-1950-and-other-dark-da…
"Charles Mackay published Extraordinary Popular Delusions in 1841, and journalists have been recycling his tale ever since: crazed Dutchmen trading mansions for flower bulbs, a whole nation losing its mind, ruin everywhere. Almost none of it survives contact with the archives.
Peter Garber went through the actual price records in the 1980s and found something boring and beautiful: markets doing exactly what markets do. Consider what a Semper Augustus actually was in 1636. A single bulb infected with a mosaic virus that painted flames of crimson across white petals. Nobody could reproduce the pattern on demand. Breeding a broken tulip took seven to twelve years, and one prized bulb yielded only a couple of offsets annually. You were not buying a flower. You were buying the breeding stock for a luxury good with genuinely inelastic supply and roaring demand from the richest merchant class in Europe. Rare hyacinths in the 1730s followed the same price arc: enormous premiums for novelty, steep decline as propagation caught up. Nobody calls that a mania. That is just how prototype pricing works.
The famous February 1637 crash? It hit a thin futures market conducted in Haarlem taverns, where traders signed contracts requiring almost no money down. When Dutch courts later converted those contracts into options settleable at roughly 3.5 percent of face value, the "catastrophic losses" evaporated. No banks failed. No depression followed. The Dutch economy sailed on toward its Golden Age peak."
You need to look at each industry and what would it take to double or triple it.
I suggest you could ramp up the smaller ones easier then the bigger? but then along comes a labour gov that will kneecap the top 2/3rds, you have to create confidence and stability of policy to attract investment.
New Zealand's top 10 export product groups by total annual value include:
- Dairy, Eggs, and Honey: ~30% of total exports (concentrated milk, butter, and cheese)
- Meat: ~13% of total exports (beef, lamb, and venison)
- Fruits and Nuts: ~8% of total exports (predominantly kiwifruit and apples)
- Wood and Wood Articles:
~6% of total exports (logs and sawn timber)
- Cereal and Milk Preparations: ~3.6% of total exports
- Beverages (Spirits and Vinegar): ~3.2% of total exports (largely Sauvignon Blanc wine)
- Modified Starches, Enzymes, and Glues: ~2.7% of total exports
- Fish and Seafood: ~2.5% to 2.7% of total exports (such as rock lobster and hoki)
- Aluminum and Aluminum Articles: ~2.2% of total exports
- Machinery and Equipment: ~2% to 3.2% of total exports (including engines, pumps, and mechanical appliances)
Here is Singapore. Maybe we could try some of these?
- Electrical machinery, equipment: US$206.1 billion (36.4% of total exports)
- Machinery including computers: $126.8 billion (22.4%)
- Mineral fuels including oil: $53.3 billion (9.4%)
- Optical, technical, medical apparatus: $26.6 billion (4.7%)
- Gems, precious metals: $25.6 billion (4.5%)
- Plastics, plastic articles: $12.1 billion (2.1%)
- Organic chemicals: $11.7 billion (2.1%)
- Perfumes, cosmetics: $8.9 billion (1.6%)
- Pharmaceuticals: $7.8 billion (1.4%)
- Other chemical goods: $7.3 billion (1.3%)
While Singapore’s headline corporate tax rate is a flat 17%
, the effective tax rate is often significantly lower. Due to tiered tax exemption schemes
and specific industry incentives, many companies pay an effective rate ranging from 8.5%
to as low as 2% to 4%
during their initial years. [1, 2, 3, 4, 5]
Singapore’s corporate tax obligations are highly dependent on specific exemptions and incentives: [1, 2, 3]
1. The Startup Tax Exemption (SUTE)
For qualifying new companies, the effective tax rate can be reduced to as low as ~4% for their first three consecutive years of assessment (YA): [1]
- 75% exemption on the first $S100,000 of chargeable income.
- 50% exemption
on the next $S100,000 of chargeable income.
[1]
2. Partial Tax Exemption (PTE)
Established companies that do not qualify for SUTE are eligible for the Partial Tax Exemption: [1, 2]
- 75% exemption on the first $S10,000 of chargeable income.
- 50% exemption
on the next $S100,000 of chargeable income.
[1]
3. Concessionary Tax Rates & Schemes
Depending on your industry, Singapore offers specific tax incentives (which can reduce the rate to 5% or 10%) for qualifying activities such as: [1]
- Regional headquarters
- Global trading
- Financial services and fintech
- Shipping and maritime
...& Singapores personal tax maxes at 24% (have to be earning >280k pa to pay 20%)
https://www.iras.gov.sg/taxes/individual-income-tax/basics-of-individua…
Maybe we should ditch our universal superannuation scheme so we can do the same?
If you add Services and Goods together then Tourism and Education combined at $16bn comes second after Dairy.
And Business and Consulting (Incl. Film and TV) is about 7th or 8th on $3bn.
The 20% of Airbus share owners based in the US wont be too worried about the swing from Boeing. Vanguard and blackrock dont mind which we buy as long as we buy
Interesting observation, and perhaps linked to those above. The world doesn't really care about producers, it's consumers that matter.
Why does government exist?
We welcome your comments below. If you are not already registered, please register to comment
Remember we welcome robust, respectful and insightful debate. We don't welcome abusive or defamatory comments and will de-register those repeatedly making such comments. Our current comment policy is here.