US inflation expectations stay high, fear of job loss higher; China posts huge trade surplus; Germany posts surplus too; Australian inflation in focus; UST 10yr at 4.81%; gold dips and oil stays high; NZ$1 = 58.6 USc; TWI-5 = 61.8

Here's our summary of key economic events overnight that affect New Zealand, with news inflation is high and rising around the world and central banks are confronting a change in priorities to get it under control. Their slow action is undermining their cred in the communities they serve. And that slow action has them facing some tough choices.

But first, the overnight Pulse dairy auction brought slightly softer prices except for WMP which was little-changed. The dips in the other commodities was cushioned by the lower NZD.

With the US back from holiday, more data has been released today. Of note is the ADP weekly employment data. The week-over-week change to their four-week moving average is less than +12,000 and that is nowhere near enough to confirm the last strong US non-farm payrolls report.

Meanwhile, the New York Fed's August consumer inflation expectations survey held the one year ahead data at 3.6%, basically where it has been since rising to this level in April. Expected price growth for petrol rose to 4.6%, and for food to 5.3%. Worries about the labour market intensified, with those surveyed seeing unemployment will be higher in a year now 44% of the survey, the highest level since April 2020.

And that is mirrored in the September update NFIB Business Optimism Index It fell away and by slightly more than expected. Inflation is now tied with taxes as the second top small business issue.

Consumer debt rose again in July in the US, up an outsized +4.2% from a year ago. Driving this surge were non-revolving debt borrowings, like car loans, student loans, and personal loans.

China has posted a strong trade result for August, with exports and imports up strongly, resulting in a fatter trade surplus. That surplus widened to +US$119 bln from +US$101 bln in July. It's surplus with the US accounted for +US$29 bln of that. Their August exports were up +25% and their imports were up +28.2% from the same month in 2025.

Germany also reported a larger July trade surplus, but it did so in a defensive way. Exports fell from June (-0.8%) but imports fell more on that basis (-5.7%) so its surplus widened to €21.3 bln in the month. Year-on-year however, their exports were up +6.1% and their imports were up +3.0%. The key reasons for the July import fall were a -7.5% fall in imports from China, and an -8.3% fall in imports from the US.

In Australia, consumer sentiment is retreating. The Westpac-Melbourne Institute August survey shows a raft of negative pressures. Household finances are coming back under pressure from higher fuel and rate rise fears. The housing downturn is starting to weigh on sentiment among homeowners. Nearly two thirds of consumers now expect mortgage rates to rise. And consumer unease about jobs, especially for construction and hospitality workers, is on the rise.

And things are little better in the business sector. The August NAB survey of businesses shows business conditions fell 5 points and turned negative for the first time in six years. Business confidence fell 2 points and now 12 points below its January level, and worse, profitability fell 10 points as input costs continued to outpace price recovery increases.

Meanwhile, RBA deputy governor Andrew Hauser said overnight that inflation is the major problem for Australia's central bank. He acknowledged Australians are struggling with the continued high cost of living and rising interest rates. But he also indicated those rates could rise higher in the coming months, because of their focus on fixing the key inflation problem. The Australian Government 10 year bond yield rose on the news, now its highest since 2011.

Separately, it is also probably worth noting that the price of EU carbon permits is rising again, now at €85.40/tonne (NZ$160/tonne). That is far from the NZ$50/tonne available locally.

The UST 10yr yield is now just on 4.81%, a rise of +1 bp 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 +40 bps (down -2 bps). Their 1-5 curve is now at +43 bps (up +1 bp) and the 3 mth-10yr curve is at +107 bps (-1 bp). The China 10 year bond rate is holding at 1.68%. The Japanese 10 year bond yield is now at 2.91%, unchanged as well. The Australian 10 year bond yield starts today at 5.20%, down -2 bps from yesterday. The NZ Government 10 year bond rate is now at 4.79%, down -2 bps.

Wall street is back from holiday and a bit lower with the S&P500 down -0.5% and the Nasdaq down -0.2%. Overnight European markets were mixed between Frankfurt's +0.1% dip and London's -0.1%. Yesterday Tokyo closed down -1.7%. Hong Kong was down -0.4% while Shanghai firmed a minor +0.2%. Singapore ended up +0.2%. The ASX200 ended its Tuesday trade down a full -1.0%. The NZX50 ended down -1.1%.

The price of gold is now at US$4386/oz, and down -US$21 from yesterday at this time. Silver is little-changed at just under US$66.50/oz.

Oil prices are little-changed but still very high at just over US$92.50/bbl in the US, while the international Brent price has dipped -50 USc to just over US$97/bbl. Hormuz transits still low today with just nine ships exiting over the past 24 hours, and six tankers escorted (2 dark with transponders off) and six entering for new loads (1 dark). The Red Sea activity is marginally higher than yesterday with about 20 each way at the Yemen chokepoint.

The Kiwi dollar is down -20 bps from yesterday, now just on 58.6 USc. Against the Aussie we are down -30 bps at 81.1 AUc. Against the euro we are down -20 bps at 50.4 euro cents. That all means our TWI-5 starts today at just over 61.8, down -20 bps from yesterday.

The bitcoin price starts today at US$78,564 and down -0.8% from yesterday at this time. Volatility over the past 24 hours has again been modest at just under +/-1.1%.

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