Here's our summary of key economic events overnight that affect New Zealand, with news both Iran and the US are targeting oil tankers in the Persian Gulf in the sharpest escalation in their conflict since Trump's war began. The oil price jumped +4% overnight, and other financial risk metrics rose too.
Meanwhile, US Treasury Secretary is making moves that make him look desperate. His latest Treasury buy-back plan has been panned by markets after his pre-selling bluster, and US yields have risen. His meddling with the yen is in trouble too, raising expectations the Japanese are unable to meet, and causing its own market reactions.
In the real economy US mortgage applications sank sharply last week, mainly on diving refinance applications. Not helping is a sharpish rise in the benchmark 30 year mortgage rate, now at 6.85% and its highest in more than a year.
And that is likely to get worse. Today's UST 10yr bond auction brought a median yield of 4.77% (high 4.83%), up sharply from the prior equivalent event a month ago (4.63%).
Trump has taken exception to Canada reacting and retaliating to his tariffs on them. He says he will hit Canada with more and higher tariffs. Central to the new American actions will be dairy products.
In Japan, machine tool orders jumped sharply in August, up +65% from a year ago and continuing the surge that started in Match.
The Japanese business sentiment index for manufacturers known as the Reuters Tankan index rose to its highest reading since December 2021, and before that, 2018, in a show of rising confidence. This survey predates the official Tankan survey which isn't due until October 1, 2026.
Taiwanese exports continued their stellar growth in August, but this expansion seem to have become normalised now, which understates how impressive it is. They reported a +41% gain on top of last year's +42% gain in the same month. Of course, it was a new record high for them in one month, US$82.4 bln for the month.
China's August CPI inflation rate came in very low again at +0.8% from a year ago, although a bit higher than for July, and marginally higher than expected. Food prices actually fell -0.6% on the same year-on-year basis, but within that beef prices were up +5.3% and lamb prices up +6.3%. Dairy products were -1.4% lower however, along with prices for pork, alcohol, and vegetables. Medical services, communications services, and fuel were all up.
Meanwhile, China's August producer prices rose faster, up +3.8% from a year ago - so the July easing was essentially reversed. Industrial prices were up +5.8% with some metals and fuel components up more than +20% from a year ago. So key components of their export-oriented industries are under the cost pump.
Meanwhile, Shanghai is rolling out a new policy to eliminate out-of-pocket medical expenses related to childbirth, covering routine medical services from prenatal checkups through hospital delivery. It is a bid to encourage births and make the city more family-friendly as China’s birth rate sinks to a new low.
Overnight the copper price pushed up to a new all-time record, just shy of US$15,000/tonne (NZ$25.50/kg). It has dipped marginally in the hours that have followed, but that is nothing more than its regular volatility. The trend is still strongly up. (But chartists might sense that it will top out at US$15,500/tonne before establishing a new trend.)
The UST 10yr yield is now just on 4.84%, a rise of +3 bps from yesterday at this time. The 30 year yield is at 5.29%, also up +3 bps. The key 2-10 yield curve is now at +42 bps (up +2 bps). Their 1-5 curve is now at +44 bps (up +1 bp) and the 3 mth-10yr curve is at +111 bps (-4 bps). The China 10 year bond rate is holding at 1.68%. The Japanese 10 year bond yield is now at 2.89%, down -2 bps. The Australian 10 year bond yield starts today at 5.23%, up +3 bps from yesterday. The NZ Government 10 year bond rate is now at 4.82%, up +3 bps.
Wall Street is lower again today with the S&P500 down -0.4% and the Nasdaq down -0.6%. Overnight European markets were much lower between Paris's +1.9% drop and London's -1.3%. Yesterday Tokyo closed down -0.2%. Hong Kong was also down -0.2% while Shanghai firmed +0.3%. Singapore ended down -0.7%. The ASX200 ended its Wednesday trade down a minor -0.1%. The NZX50 ended up +0.2%.
The price of gold is now at US$4418/oz, and up +US$32 from yesterday at this time. Silver is up +US$1.50 at just under US$68/oz.
Oil prices are up +US$3.50 at a very high US$96/bbl in the US, while the international Brent price has risen +US$4 to just over US$101/bbl. Hormuz transits are still very low today with just six ships exiting over the past 24 hours, just one tanker escorted (0 dark with transponders off) and ten entering for new loads (2 dark). The Red Sea activity is little-changed from yesterday with about 20 each way at the Yemen chokepoint.
The Kiwi dollar is down -20 bps from yesterday, now just over 58.4 USc. Against the Aussie we are also down -20 bps at 80.9 AUc at the lowest since April 2013. Against the euro we are down -20 bps as well at 50.2 euro cents. That all means our TWI-5 starts today at just over 61.6, down -20 bps from yesterday.
The bitcoin price starts today at US$78,780 and up an insignificant +0.3% from yesterday at this time. Volatility over the past 24 hours has again been modest at just under +/-1.0%.
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