Bond markets shout warnings; dairy prices hold; US data stable on stockpiling; Japanese sentiment firms; China's debt nears US levels; Australian building permits fall; UST 10yr at 4.80%; gold falls and oil jumps; NZ$1 = 58.9 USc; TWI-5 = 62.4

Here's our summary of key economic events overnight that affect New Zealand, with news bond yields worldwide climbing as rising oil prices are raising inflation concerns. Financial markets have raised the chance of widespread interest-rate hikes. US Treasury 10 year yields hit 2025 highs at 4.8%, while Japan’s equivalent rate hit 3% for the first time since 1996. German bund yields climbed to 15-year highs and UK gilt yields to 18-year highs.

Not helping are a new round of attacks by a trigger-happy US on Iran.

But first, there was a full dairy auction overnight and the overall results were modestly positive. Prices in USD were up +0.9% and up +0.6% in NZD. The big mover down was cheddar cheese suffering a -6.6% fall. The big mover up was SMP with a +5.3% gain. WMP was very little-changed. In fact, SMP prices are now higher that WMP prices, the first time like this since July 2022. In between, the WMP premium actually got as high as +US$1550/tonne.

In the US, there were two factory PMIs out for August, both essentially holding a moderate expansion there. The widely-watched ISM one came in fractionally lower than for August, with new orders growing at a slightly slower rate and price pressure little-changed. The internationally benchmarked S&P Global one was little changed, noting output and orders both rising at slower rates, with stock building efforts continuing amid supply issues and higher prices.

The US Logistics Managers’ Index fell for a second consecutive month due to a slowdown in inventory expansion, while logistics costs continued to rise at a high pace.

July JOLTS data shows job openings rising while quits fell, but these changes were actually quite minor.

The US RCM/TIPP optimism index is still in an easing trend that started in early 2025, but it has held at a modest level in August, similar to the June and July levels. There were offsetting shifts with greater confidence among investors and higher-income households, but a deterioration in sentiment for non-investors and lower-income households.

Meanwhile the Dallas Fed services sector activity moderated in August, but is still expanding.

The Canadian factory PMI was little changed where their expansion was maintained at solid rate with output, new orders and employment all rising in August.

Japanese consumer sentiment rose again in August, something it has been doing consistently since April.

As we suspected, the private China factory PMI by S&PGlobal (Rating Dog) came in much more positively that the official version, and expanded at a rate that beat estimates, even if it is modest. How sustainable that improvement is will be interesting to see because input price inflation rose but output prices fell for first time in 2026 so far.

And we should probably note that China's government debt is now at ¥100 tln for the first time (NZ$25.3 tln),107% of their GDP. And that is just their central government. (But to be fair, a notable part of that rise involves a shift from old opaque local government debt to a more transparent national treatment.) While that may seem high (and it is), the equivalent US federal debt level is 124% of their GDP. For New Zealand it is 49%, for Australia 34%.

EU CPI inflation came in at 3.3% in August, the expected level, but up from 2.9% in July. All this rise was fuel cost related. Their core CPI rate actually dipped slightly to 2.4%.

Meanwhile, German retail sales actually fell, and quite hard, down -2.5% in real terms in July from a year ago with the current month drop an outsized -3.4%, so the recent bite has been aggressive. In nominal terms there year-on-year levels are just level-pegging.

Australian building consents were expected to fall in July and they did, and by about the expected amount, down -3.6% from June to remain up +9.0% from a year ago. House consents fell -4.2% but multiunit consents held little-changed (-0.4%). Still, that leaves the multiunit sector up almost +20% from a year ago. (Some of those are likely to have been Bathla developments in Western Sydney, so are unlikely to proceed now.)

The UST 10yr yield is now just on 4.80%, up another +4 bps from yesterday at this time. The 30 year yield is at 5.26%, up +1 bp. The key 2-10 yield curve is now at +41 bps (unchanged). Their 1-5 curve is now at +39 bps (+3 bps) and the 3 mth-10yr curve is at +104 bps (+4 bps). The China 10 year bond rate is down -1 bp at 1.68%. The Japanese 10 year bond yield is now at 3.01%, up +7 bps, and a new 30 year high. The Australian 10 year bond yield starts today at 5.16%, up +6 bps. The NZ Government 10 year bond rate is now at 4.82%, also up +6 bps from yesterday.

Wall Street lower again with the S&P500 down -0.7% and the Nasdaq down -1.0%. Overnight, European markets were lower between London's -0.3% and Frankfurt's -1.1%. Tokyo ended its Tuesday trade down a minor -0.1%. Hong Kong fell -0.9%. But Shanghai only fell -0.2%. Singapore was down -0.8%.The ASX ended its Tuesday down -0.1%. And the NZX50 was down -0.9%.

The price of gold is now at US$4335/oz, and down -US$97 from yesterday at this time. Silver has fallen -US$1.50 to just under US$64.50/oz.

Oil prices are up +US$4.50 at just over US$90/bbl in the US, while the international Brent price is just under US$94.50/bbl. Hormuz transits have held very low with just seven ships exiting over the past 24 hours, three of which are tankers (1 dark with transponders off) and six entering for new loads (2 dark). The Red Sea activity is marginally lower than yesterday with less than 20 each way at the Yemen chokepoint.

The Kiwi dollar is down -30 bps from yesterday at just on 58.9 USc. Against the Aussie we are down -20 bps at 82.4 AUc. Against the euro we are also down -20 bps at 50.8 euro cents. That all means our TWI-5 starts today at just over 62.4, down -30 bps from yesterday.

The bitcoin price starts today at US$77,297 and down -2.0% from yesterday at this time. Volatility over the past 24 hours has remained modest at just on +/-1.2%.

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