Here's our summary of key economic events overnight that affect New Zealand, with news rising oil prices are reigniting inflation concerns and even equity investors have noticed. Bond investors have bid up benchmark bond rates. The Fed next has to deal with this risk in just over a month, but that investors are moving now indicates the heightened concern that Trump's quagmire isn't getting resolved anytime soon. Certainly, his promise of a deal with Iran "very soon", has vanished.
Meanwhile, the Yemeni Houthis have struck Saudi related tankers and hit a Saudi oil refinery. So the conflict is spreading.
Markets have reacted as though they expect inflation to rise from here.
In Japan, their official 'economy watchers' July survey is signaling continued improvement, especially in their services sector. These survey results took a sharp tumble when the US attacked Iran and the Strait of Hormuz was shuttered. But since then it has climbed back as time has shown that most of the world has adapted effectively, and that includes Japan. Strong exports and a weaker currency have helped.
You may recall the recent deadly earthquake in the historic city of Kumamoto. But that hasn't stopped Sony and Taiwan's TSMC announcing yesterday a US$6.3 bln new joint investment into an advanced image sensor plant there. Nikkei has the details.
Indonesia’s consumer confidence fell in July from June to its lowest level since April 2025 although still in positive territory. The moderation was largely driven by weaker assessments of current economic conditions.
And staying in Indonesia, their government has appointed the long-experienced deputy central bank governor to the top position made vacant by the President firing him, foregoing the opportunity to appoint the daughter of the President. This will reassure financial markets that some Turkish-like instability is being avoided.
In Australia, bank shares are took a beating yesterday, with Westpac down -5.9%, CBA down -2.1%, ANZ down -1.7% and NAB down -2.4%. The reason is a Westpac Q3 market update that shows their mortgage applications down -11% in the period and are running down -20% following their Federal Budget. Almost all of this fall away is because residential investors are pulling back because the expectation of capital gains is vanishing. Westpac says investor "credit growth" will fall from +9.1% this year to about +4.5% in the next two years. They expect little change in demand by owner occupiers.
And don't forget there is an RBA monetary policy review later today. No-one expects any official rate change, but given the high and sticky inflation levels, there will be a lot of interest in their analysis of why they aren't moving to quash it.
The UST 10yr yield is now just on 4.70%, up +4 bps from this time yesterday. The 30 year yield is at 5.24% and up +3 bps. The key 2-10 yield curve is now at +46 bps (up +1 bp). Their 1-5 curve is now at +36 bps (unchanged) and the 3 mth-10yr curve is at +101 bps (+5 bps). The China 10 year bond rate is little-changed at 1.70%. The Japanese 10 year bond yield is now at 2.82%, up +2 bps. The Australian 10 year bond yield starts today at 5.00%, up +1 bp. The NZ Government 10 year bond rate is at 4.70%, and down -4 bps from yesterday at this time.
Wall Street has opened its week on a softish note with the S&P500 down -0.1% and the Nasdaq down -0.4%. Overnight, European markets were mixed between London's -0.4% drop and Paris's +0.1% firming. Yesterday Tokyo ended its Monday trade up +2.1%. Hong Kong was up +1.0% and Shanghai was up +.07%. Singapore gained +1.1%. The ASX200 ended down -0.3%. But the NZX50 rose +0.5% in its Monday trade.
The price of gold has risen to US$4364/oz, up +US$21 from yesterday. Silver has risen +US$1.50 at just over US$65/oz.
Oil prices are up +US$4 from yesterday at just under US$82/bbl in the US, while the international Brent price is now just under US$87.50/bbl, Hormuz transits have dried right up. There have been no crude tankers and only 2 cargo ships exiting over the past 24 hours (0 dark with transponders off) and five entering for new loads (1 dark), again all Iran-linked. The Red Sea activity is where the focus is shifting and still low with less than 20 either way at the Yemen chokepoint.
The Kiwi dollar is down -10 bps from yesterday at just over 58.8 USc. Against the Aussie we are little-changed at 83.4 AUc. Against the euro we have held at 51 euro cents. That all means our TWI-5 starts today at 62.5 which is down -10 bps from this time yesterday.
The bitcoin price starts today at US$63,860 and down a full -2.0% from this time yesterday. Volatility over the past 24 hours has been modest however at just on +/-1.2%.
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3 Comments
I wonder how long the stalemate will continue. It isn't exactly a win for Iran either is it?
Silver lining is that the planet will be grateful. If fuel prices stay at current levels it actually seems like a reasonable outcome to me. In addition it will extend the timeframe before we hit peak oil, making it even more likely we hit peak demand before supply.
Election issues: Ideological purity as demonstrated by National Christian Bishop stopping the East Coast council from using the power of the community to change the permissible activities on the very unstable land. Is it acceptable for ideology to override the needs of the community? The answer is no. Voting for the “safe hands” “business friendly “ Coalition perpetuates the insanity. If we insist on putting these people and policies in power, we will continue to fail. Enough, be gone!
This from Stuff this morning
https://www.stuff.co.nz/nz-news/361017034/chris-bishop-blocks-gisborne-…
Arguably Central Government was a prime driver of the vulnerability that exists in the Gisborne region.
First the livestock incentive scheme and cheap land development encouragement loans drove bush/scrub clearance by root raking on very steep erosion prone soils.
Then the reforestation scheme came in after cyclone Bola but permanent retirement was not required = production forestry. And the harvest cycle is well under way.
Then come cyclones Hale and Gabrielle and the region is devastated. And subsequent lesser events have repeated impacts from slash.
There is undeniable urgency to redress the extreme vulnerability in this region. Commendably Gisborne District Council (unitary authority) develops a plan to address this.
And what does government do? Quashes progess on that plan, hanging the region out to dry.
That is beyond belief. Especially against a backdrop where regions devastated by climatic events like this have been given a clear message that government support for recovery costs will be limited compared with Gabrielle.
Chris Bishop, grant the exemption and support Gisborne taking well researched and pragmatic steps to build greater resilience for their people, communities and infrastructure.
Go figure
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