Here's our summary of key economic events overnight that affect New Zealand, with news financial markets are awaiting a Kevin Warsh speech at the Jackson Hole symposium, specifically about how he sees the Fed's role when the US Treasury seems to be undermining it. What he says about the fight against inflation, if anything, will be revealing. This has markets hesitating today in anticipation. Although, equity markets are bullish off the strong Nvidia results.
US initial jobless claims fell marginally last week, and by marginally more than seasonal factors would have anticipated. There are now 1.78 mln people on these benefits, little different to a week ago but -7.5% less than a year ago.
The US merchandise trade deficit has come in at -US$119 bln in July, up US$17.4 bln from unusually high -US$101 bln in June and the -US$101 bln in the same month in 2025. Apart from the rush to beat upcoming tariffs just after Trump took office in early 2025, this latest result is a record high. Americans seem happy to pay these tariffs to get the products they need. Exports fell from June while imports rose on the same basis.
At the same time, the stockpiling trend seems to be gathering pace. US retail inventories rose in July as did wholesale inventories and both at an unexpectedly faster pace. Both are now at record high levels. Retail inventories are +3.9% higher than year ago levels now, with wholesale inventories up +5.6% on that basis. There could be an unwelcome reckoning if firms come to decide they are over-stocked. History shows their boardrooms are usually unhappy with excessive stocks.
Meanwhile the Kansas City Fed factory survey shows this with a little-changed report that is holding its expansion. New order levels are similar to last month but are falling for export orders. Input costs are rising faster than selling prices.
There was a US Treasury 7 year bond auction earlier today where the median yield came in at 4.46% (4.51% high). That is more costly that the prior equivalent event a month ago.
In Canada, they reported a surprise current account surplus of +C$8.8 bln in Q2-2026 from a deficit of -C$8.3 bln in the prior quarter and an expected -C$2 bln deficit. It is their first quarterly surplus since the 2022 and the largest since 2005.
Across the Pacific, China said it’s industrial profits rose more than +11% in July from the same month a year earlier. As good as that is, it was the softest pace this year.
The Bank of Korea has raised its policy rate by +25 bps today to 3.00% in a second consecutive move up. They target a 2% inflation rate. Korea has inflation at 2.8% although it did dip in July.
And the Philippine central bank raised its policy rate by +25 bps to 5%, all as expected. They target a 2-4% range and have current inflation at 6.2%.
Taiwanese consumer sentiment was little-changed in August, staying better than it was earlier in the year. But from a long term perspective, it has been relatively low since the pandemic.
Locally, after Wednesday's above expectation Australian CPI result - and plenty of evidence that the non-fuel, less volatile items are rising in price faster now - we noticed an uptick in the pricing for a chance of a late-September rate hike by the RBA. True, it isn't an odds-on chance yet, but a notable one-day reaction. Currency markets rose on the prospects too. NAB is tipping a September rate hike now.
And staying in Australia, household spending leapt +7.0% in July from a year ago, the fastest growth in the past ten years (apart from during the pandemic recovery). The +1.1% rise in July from June builds on the June +1.0% monthly rise, and the +1.2% May rise. This is impressive momentum. Financial markets had expected only a +0.4% monthly rise and a +4.4% year-on-year rise. It was a broad-based expansion in every sector other than for "furnishings & household equipment". Likely no one saw a result this positive coming. It will bolster bets the RBA will push through a rate rise sooner.
Global container freight rates have stayed high, dipping just -1% over the past week. That puts them +111% higher than a year ago. Bulk cargo rates are up +10% for the week and nearing their yearly high again. From a year ago these rates are up +50%.
The UST 10yr yield is now just on 4.67%, unchanged from yesterday at this time. The 30 year yield is at 5.19%, and also unchanged. The key 2-10 yield curve is now at +44 bps (unchanged). Their 1-5 curve is now at +37 bps (unchanged) and the 3 mth-10yr curve is at +96 bps (-1 bp). The China 10 year bond rate is up +1 bp at 1.70%. The Japanese 10 year bond yield is now at 2.89%, unchanged. The Australian 10 year bond yield starts today at 5.08%, up +3 bps from yesterday. The NZ Government 10 year bond rate is now at 4.76%, up +5 bps.
Wall Street is up +0.6% on the S&P500 while the Nasdaq up +1.3%. European markets were mixed overnight between Frankfurt's +0.3% rise and Paris's -1.7% drop. Yesterday Tokyo ended down -0.2%. Hong Kong was down -0.3% but Shanghai rose +1.1%. Singapore fell -0.7%. The ASX200 ended its Thursday session down -1.0%. The NZX50 ended down -1.0% as well.
The price of gold is now at US$4604/oz, and virtually unchanged from yesterday at this time. Silver has risen +US$1 to just over US$69/oz.
Oil prices are up +US$1.50 from yesterday at just over US$84/bbl in the US, while the international Brent price is up the same at just over US$90/bbl. Hormuz transits have held low with five ships exiting over the past 24 hours (2 dark with transponders off) and seven entering for new loads (2 dark), all Iran linked. The Red Sea activity is still low at about 20 each way at the Yemen chokepoint.
The Kiwi dollar is up +10 bps from yesterday at just on 59.5 USc. Against the Aussie we are down -20 bps at 82.7 AUc. Against the euro we are up +10 bps at 51.1 euro cents. That all means our TWI-5 starts today at just over 62.9, and little-changed from this time yesterday.
The bitcoin price starts today at US$80,434 and up +2.5% from yesterday at this time. Volatility over the past 24 hours has remained modest at just on +/-1.6%.
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