US retail sales take an unexpected dip; US sentiment also dips; China bank lending in record fall; Taiwan & Malaysia expand fast; India bank lending leaps; UST 10yr at 4.69%; gold stable; oil prices firmer; NZ$1 = 58.9 USc; TWI-5 = 62.5

Here's our summary of key economic events overnight that affect New Zealand, with news the world's two largest economies have issues, but those around them seem to be doing very well. (A pity we aren't included.)

US retail sales took an unexpected dip in July from June. They fell -0.6% on that basis when a +0.1% rise to compliment June's rise was expected. This is a big miss and was the first decline since October 2025 and the largest in over a year. Weaker sales at online retailers, car dealers, petrol stations and electronics stores shifted the needle, so it was a broad based dip. From a year ago, these July sales were up +5.2%..

Also dipping was US consumer sentiment, but this is for August, so the dour mood is extending. The widely-watched University of Michigan survey came in back at levels that followed the US attacks on Iran, so the July rise was an anomaly. A small easing was expected, but not one this big. Year-ahead inflation expectations ticked up from 4.2% in July to 4.3% this month.

Inflation and inflation expectations are key for the Fed. The new boss Kevin Warsh may not want to talk about the elevated threats, but other regional governors are, some who vote. The Atlanta Fed's boss isn't one of those but she says inflation is too high and risks staying like that and embedding unless the Middle East situation resolves quickly. The Chicago Fed's boss is worried too. Current CPI is 3.4% officially, but the Cleveland Fed nowcasts the PCE measure of inflation and their latest update has it at over 3.7%. These levels are a long way from the mandated 2% policy rate and Warsh is likely to get out-voted when they next meet in Mid-September. Financial markets currently price in one chance in three of a +25 bps rise then.

And for the record, current US petrol prices are now +5.7% higher than month-ago levels. Diesel is +11% higher on that same basis. Their inflation threat is not receding.

Across the Pacific in Japan, heavy rain has stranded thousands at ‌Tokyo's Narita airport yesterday, bringing floods to the surrounding area that disrupted transport, knocked out power to 20,000 homes and killed eight people.

In China, they have surprised with their bank lending actually contracting in July, only the third time ever that this has happened and by far the largest retreat. Net new yuan loans fell by -¥340 bln in July when a weak no-change was expected (actually a minor +¥45 bln). July is often a lowish month for new bank lending but this represents some real weaknesses. A slowing economy and poor consumer sentiment, particularly for housing, limited the demand for loans. The swing also reflects the downturn for traditional sectors of the economy into tech, which commonly raises cash in the bond market instead of bank loans. So this is also evidence of a structural shift.

Taiwan said its economic activity came in +12.9% higher in Q2-2026 from a year ago, lower than the +15.4% rise in Q1-2026.GDP. It was still the second-best result they have recorded in almost 50 years.

Malaysia said its economic activity expanded +6.0% in Q2-2026, a rise from the +5.4% in Q1-2026 and better than the expected +5.7%.

In India, the bank lending impulse has the taps open fully, with lending up more than +19% at the end of July from the same point a year ago. This is a new modern record rise and to record levels.

Meanwhile the EU reported that Q2-2026, economic activity rose +0.4% in the euro area and by +0.5% in the overall EU, compared with the previous quarter, up +1.0% and +1.2% respectively from a year ago. So recent activity is picking up, although in a way that was widely anticipated.

The UST 10yr yield is now just on 4.69%, up +6 bps from this time yesterday, up +4 bps for the week. The 30 year yield is at 5.26% and up +5 bps for the week. The key 2-10 yield curve is now at +53 bps (up +5 bps). Their 1-5 curve is now at +39 bps (-3 bps) and the 3 mth-10yr curve is at +1001 bps (+5 bps). The China 10 year bond rate is down -2 bps to 1.68%. The Japanese 10 year bond yield is now at 2.88%, up +1 bp, up +9 bps for the week and its highest since 1996. The Australian 10 year bond yield starts today at 4.99%, up +3 bps from yesterday, up +2 bps for the week. The NZ Government 10 year bond rate is at 4.71%, up +3 bps from yesterday at this time, but down -3 bps for the week.

Wall Street is in slightly negative territory today with the S&P500 down -0.2%, up +0.4% for the week, and the Nasdaq down -0.4% today, unchanged for the week. Overnight, European markets were mixed between London's -0.2% dip and Frankfurt's +0.5% rise. Yesterday Tokyo was up +0.6% for a weekly gain of +4.5%. Hong Kong was down -1.1% on Friday to be down -2.7% for the week, and Shanghai ended unchanged for a weekly -0.4% easing. Singapore ended up +0.4%. The ASX200 ended down -0.8% on Friday for a weekly fall of -1.5%. But the NZX50 firmed +0.2% with a late rise to end its week also up +0.2%.

The Fear & Greed index is now in firmly the 'greed' zone and for a second straight week.

The price of gold is stable, now at US$4374/oz, up just +US$17 from yesterday, up +US$37 from this time last week. Silver has held at just over US$64.50/oz, up a net +US$1 for the week.

Oil prices are up +50 USc from yesterday at just under US$82.50/bbl in the US, while the international Brent price is now just on US$88.50/bbl. A week ago these prices were US$78 and US$83.50/bbl respectively, so a +6% weekly rise. Hormuz transits have picked up slightly. There has been five crude tankers and 4 cargo ship exiting over the past 24 hours (4 dark with transponders off) and four entering for new loads (4 dark), again all Iran-linked. The Red Sea activity is still less than 10 exits at the Yemen chokepoint. But pipeline shipments via alternate routes are at record levels.

The Kiwi dollar is up +40 bps from yesterday at just under 58.9 USc but unchanged for the week. Against the Aussie we are up +30 bps at 83.2 AUc. Against the euro we have risen +20 bps to 50.9 euro cents. That all means our TWI-5 starts today at just under 62.5 which is up +40 bps from this time yesterday but very similar to a week ago.

The bitcoin price starts today at US$62,850 and down -0.5% from this time yesterday, down -3.0% for the week. Volatility over the past 24 hours has also been low at just on +/-0.8%.

The easiest place to stay up with event risk is by following our Economic Calendar here ».