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 sock 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 Washington and Oregon 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%.
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4 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
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.
"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."
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