US data stable but bond market loses faith it will stay like that; China FDI weak; Japanese inflation rises; Australia PMIs softer; Panama canal traffic restricted; UST 10yr at 4.74%; gold and oil prices up; NZ$1 = 59.8 USc; TWI-5 = 63.3

Here's our summary of key economic events overnight that affect New Zealand, with news the bond market wants to ensure Scott Bessent understands the seriousness of the imbalances the US is facing. They have rejected his version of QE by bidding yields back up to where they were before this UST 30 year buyback announcement. The USD is falling too.

First in the US, we are now just two weeks away from the end of their summer holiday season, which ends on their Labor Day, September 7, 2026. (The UK has a summer Bank Holiday a week earlier, also signaling their end of their summer break. There is no equivalent unified EU marker, but they will be keen to get the dangerously hot weather behind them all the same.)

The August 'flash' PMI survey from S&P Global shows the US factory easing and now at a five month low. But the services sector is rising with a marginally stronger expansion. Input cost pressures have remained elevated but mainly due to rising fuel prices. Diesel is up +8.4% from a month ago, petrol up +2.2%.

Consumer price inflation is biting harder now in the US. Trump announced he will temporarily ease beef tariffs to help lower prices. Local beef producers weren't impressed, warning the move would hurt efforts to rebuild herds. And industry observers say the move will have little effect on the high prices. For someone who claims to love free-market capitalism, he acts in a very interventionist, the-government-knows-best manner.

Canada posted a good retail increase for the year to June, up +5.2% although this was a slowing from May. But their July result looks like it will fade somewhat.

Across the Pacific, China reported US$11.1 bln in foreign direct investment in July, which was down from US$22.8 in July 2025. Year to date, their foreign direct investment is running -8.8% lower than in the same period a year ago.

CPI inflation rose to 1.9% in Japan in July, their highest since December 2025. (Food prices were up +3.5%.) While the headline rate and the core rate both remain below the Bank of Japan's 2% inflation target, the rising trend may be enough for them to raise their 1% policy rate at their next review on September 18, 2026. They have other reasons to raise their policy rate (like, defending the yen, yielding to the US, needing to get back to 'normal' at some stage, etc.) so this may swing it.

Japanese business activity is expanding at its quickest rate for six months in August, according to the 'flash' PMI data released today. There were good gains for the factory sector, and these were bolstered by modest gains in their services sector. Of not was a steeper rise in new orders. Cost pressures continued to ease from June's recent record, but remained sharp overall, leading to another near-record increase in selling prices. Businesses are finding they can pass on the extra costs.

The 'flash' August PMI's for India show rising activity, especially in their services sector.

The EU consumer sentiment survey retailed its July improvement in August. It is still deeply negative, but less so that at any time since February.

And the ECB updated its inflation expectations survey for July and that shows a minor decrease to 2.9% over the next twelve months, from 3.0% in June.

Eurozone business activity continues to rise in August amid stronger manufacturing growth, with their factory PMI now at a 51 month high.

According to the S&P Global 'flash' PMIs for August, growth in the Australian private sector is softer this month as the cost environment becomes more challenging in both the factory and services sectors. But both are still expanding. They are still getting rising new orders (in both sectors), but cost pressures have picked up in August. However the ability to pass those extra costs on retreated to its weakest of 2026.

And in freight news, El Niño is having an impact on Panama Canal traffic volumes. The authority which runs it says it is reducing traffic levels to 32 ships per day from 36 currently, due to the low water levels. That is an -11% reduction.

The UST 10yr yield is now just on 4.74%, up +4 bps from this time yesterday, up +5 bps for the week. The 30 year yield is at 5.28% and also up +4 bps, up +2 bps for the week. The key 2-10 yield curve is now at +50 bps (down -1 bp). Their 1-5 curve is now at +40 bps (-1 bp) and the 3 mth-10yr curve is at +103 bps (+1 bp). The China 10 year bond rate is unchanged at 1.69%. The Japanese 10 year bond yield is now at 2.88%, up +2 bps, unchanged for the week. The Australian 10 year bond yield starts today at 5.03%, up +1 bp from Friday, up +4 bps for the week. The NZ Government 10 year bond rate is now at 4.76%, up +6 bps for a weekly rise of +5 bps.

Wall Street has risen today with the S&P500 now up +0.4% from yesterday but down -1.5% from a week ago. The Nasdaq is also up +0.4% today but down -2.3% for the week. Overnight, European markets were up between Paris's +0.4% and Frankfurt's +0.6%. However Tokyo ended its Friday session down -0.3% for a weekly retreat of +4.2%. Hong Kong was up +1.2% on Friday for a +2.8% weekly gain. Shanghai was unchanged Friday, down -0.6% for the week. Singapore ended up +0.3% on the day to end its week. The ASX200 ended its Friday session down -0.3% for a weekly retreat of -0.2%. But the NZX50 rose +0.4% in its Friday session for a weekly +0.7% gain.

The Fear & Greed index is now back in the 'neutral' zone from 'greed' a week ago.

The price of gold is up, now at US$4621/oz, up +US$101 from yesterday at this time, up +US$247 or +5.6% for the week. Silver has risen another +US$1.50 to just over US$69.50, up +7.7%.

Oil prices are up 50 USc from yesterday at just over US$87/bbl in the US, while the international Brent price is now just under US$94.50/bbl and up +US$1. A week ago these prices were US$82.50 and US$88.50/bbl respectively, so a +7% rise in that time. Hormuz transits have stayed very low with activity down to one crude tankers and 3 cargo ship exiting over the past 24 hours (1 dark with transponders off) and three entering for new loads (1 dark), again most Iran-linked. The Red Sea activity is still only about 20 each way at the Yemen chokepoint.

The Kiwi dollar is up +40 bps from yesterday at just over 59.8 USc, up +90 bps for the week. Against the Aussie we have fallen -20 bps to 83.4 AUc. Against the euro we are up +30 bps at 51.2 euro cents. That all means our TWI-5 starts today at just under 63.3, up a bit lees than +40 bps from this time yesterday, up +80 bps from last week.

The bitcoin price starts today at US$77,363 and up another large +6.2% from yesterday, up a whopping +23% jump from last week at this time. Volatility over the past 24 hours has also been high at just on +/-3.5%.

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