Here's our summary of key economic events over the weekend that affect New Zealand, with news that now we are in August, there are only 100 working days until Christmas, and less than 70 until our 2026 general election! You will need to pull your finger out to ensure your 2026 goals are on track to be accomplished.
This week will see the release of a number of updates on how the July real estate market performed. More importantly, we will get the June labour market update and that is expected to show rising joblessness (to 5.4%). To be fair, labour market data are lagging indicators.
In Australia, Cotality and Domain will report what they saw in their residential real estate markets. And we will get both household spending and cost of living updates for June this week, neither expected to show improvements. We should also note that their fuel excise tax suspension ended last night. From April to June the discount was 32 AUc/liter, for June and July it was 16c. Now there is no relief discount there.
Globally it will be all about July PMIs (other than keeping an eye on the warmongers who all show a distinct lack of any idea on how to end the conflicts they started).
In the US, the other important data will be their end of week labour market updates in their non-farm payrolls report. There is little evidence to suggest it will be a strong one and markets currently expect another month of less than +100,000 gains (+91,000) and a rising jobless rate (4.3%).
We will be tracking their bond market signals closely too. And this barely raises an eyebrow these days, indicating how low the US has fallen. But also a key background reason risk premiums are rising.
In India, they will get a central bank review but no-change to their policy rate (5.25%) is anticipated.
We will be tracking those PMIs too, especially in China to see if the private S&P Global versions continue to be more upbeat than the dour official versions. After four months of minor expansion, those official factory PMIs has slipped back into small contraction with a much sharper shift than was expected. After two months of minor expansion, their official services PMI also slipped back into a small contraction, also a sharper shift lower than expected.
China's overall growth targets are looking less likely to be achieved the longer the year goes on. But lets not overstate these pullback signals; most countries would love to have their growth levels even at the reduced impetus. China's key issue is that new order levels are fading and exports are the key driver, not internal consumption (which is their goal). So more induced infrastructure stimulus is on the way.
Korean industrial production bounced back sharply in June after the minor but unexpected dip in May. The June level was +5.8% higher than a year ago, up +2.3% from May, a heartening rebound for them.
The Korean stock market bounced back sharply on Friday after the earlier dives, but they still ended the week down more than -3%.
Japanese industrial production recorded a similar recovery in June, up +4.2% from a year ago, up +1.3% for the month. But that was not matched by retail sales in Japan which took a rather large tumble, down -4.1% from the strong year-ago level, up +0.5% from May.
The Japanese central bank intervention support for their currency may have been significantly expensive, even if it has succeeded in halting the devaluation with a 3% recovery. Reports indicate they spent US$45 to US$50 bln on the few-days effort. It happened again on Friday, this time in a joint action with the US. And more may be coming.
EU inflation came in at 2.9% in July as expected, up marginally from June's 2.8%.
Australian producer prices rose +3.6% in June from a year ago, the most since early 2025 and above the anticipated +2.5% and even the 'high' Q1-2026 3.0% level. Inflation is embedding and it is a result that will focus attention by officials.
In the US, even though the US Fed held its policy rate unchanged last Thursday (despite 3 dissenters wanting higher rates), markets have pushed US benchmark rates higher anyway. The UST 10 year is +27 bps higher at the end of July than at the beginning. Their 30 year benchmark is also +27 bps higher. Most of these increases came in the past two weeks, and will resonate soon for American home loan borrowers.
The updated July University of Michigan sentiment survey confirmed its better July levels, and confirmed lower inflation expectations. Still, these new levels are -11% lower than year-ago levels with perceptions of current conditions -19% lower. These measures are still in the down-trend that started in 2024 even after these better July results. They noted that US consumers remain focused on pocketbook issues like purchasing power, while political or military developments remain more in the background.
Also improving in July were the results of the Chicago PMI, clearly benefiting from stockpiling and reshoring still.
In the current Q2-2026 earnings season reporting, 86% of S&P 500 companies have reported a positive EPS surprise and 77% of S&P 500 companies has reported a positive revenue surprise.
In Canada, they reported their GDP rose modestly in June, a third consecutive rise and the fifth gain in six months as their economy gathers steam. Q2-2026 results aren't yet available but it is clear they will be quite positive, in contrast to the small dip in Q1-2026, and the weak Q2-2025 result.
The UST 10yr yield is now just on 4.75%, up +1 bp from this time Saturday, up +7 bps for the week. We make that its highest since January 2025 (briefly) and prior to that October 2023. The 30 year yield is at 5.28% and a 20+ year high. The key 2-10 yield curve is now at +45 bps (unchanged). Their 1-5 curve is now at +41 bps (+1 bp) and the 3 mth-10yr curve is at +105 bps (unchanged). There was an extended steepening of the US rate curve last week, a harsh market verdict on the Warsh performance midweek. Unintentionally, he has delivered a market rate hike. The China 10 year bond rate is little-changed at 1.71%. The Japanese 10 year bond yield is now at 2.80%, up +1 bp. The Australian 10 year bond yield starts today at 4.94%, down -3 bps from Saturday, but down -9 bps for the week. The NZ Government 10 year bond rate is at 4.70%, no-change from Saturday, down -12 bps for the week.
The price of gold has fallen to US$4042/oz, down -US$8 from Saturday down -US$6 for the week. Silver is down -50 USc at just over US$57.50/oz, down -US$1 for the week.
Oil prices are little-changed from Saturday still at now just over US$84.50/bbl in the US, while the international Brent price is still just over US$88/bbl. Hormuz transits are still very constrained. There have been five crude tankers and 4 cargo ship exiting over the past 24 hours (3 dark with transponders off) and ten entering for new loads (4 dark), all Iran-linked. There is another Trump backflip, holding off more violence. The Red Sea activity is still low at about 20 either way. That is kept low because only Chinese-bound vessels are getting Houthi exemptions.
The Kiwi dollar is unchanged from Saturday at just under 58.9 USc, but up +100 bps for the week and back to early June levels. Against the Aussie we are up +10 bps at 83.8 AUc. Against the euro we unchanged at 51.1 euro cents. That all means our TWI-5 starts today at 62.6 which is also unchanged from this time Saturday, and also up +100 bps for the week.
The bitcoin price starts today at US$63,293 and up +0.4% from this time Saturday, down -1.4% for the week. Volatility over the past 24 hours has been modest at just on +/-1.0%.
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4 Comments
https://www.stuff.co.nz/world-news/361014678/trump-says-mideast-allies-…
The Saudis, according to the person briefed on the substance of the call but not authorized to comment publicly, are concerned that if the US targets Iran’s energy infrastructure or carries out massive strikes on other key infrastructure that Tehran could respond by carrying out attacks on the kingdom’s and other Gulf countries’ energy infrastructure
Is this borderline treason? It certainly weakens your ability to negotiate when someone tells Iran their opponents are worried.
Take a look at the map of the Middle East 1914, WW1. That is what hundreds on hundreds of years had measured out. The map of today is as arbitrary as it is young and measured according to the disposition of oil. The West is too arrogant and ignorant to comprehend that the Arabic people of that region have long memories, connection, and reaction relatively, to their ancient history, cultures and lore of the land, and that failing and compulsion to interfere, on the part of the West has never been better demonstrated than right now.
I was talking to a young Egyptian yesterday. He was adamant Iranians are not Arab. He stated, and we've discussed this before, they're Persian. Plus they're not real Muslims. They don't view Mohammad as the Prophet, but rather his cousin Ali. The way he spoke made it sound like a blasphemy. So there's lots of animosity in the ME towards the Iranians. That's an aspect we is suspect are not necessarily fully aware of.
Well put.
That western arrogance was because it craved the energy. The western flaw was that if had constructed a growth-requiring System, to account it's colonialism. The latter was geographically-restricted (finite planet) and the growth-imperative appears insatiable.
Hence the stoushes. But resentment at the US will be the dominant feeling in the populations of the Gulf States. With repercussions for NZ.
Related: Ignorant comments on RNZ from Paul Spoonley. Shows the flaw in tertiary education; he shoud be well aware of the Limits to Growth, and our position on that trajectory.
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