US factory production stalls; US leading indicator disappoint; China has more weak FDI; the yuan surges; Japan raises rates despite low inflation; Bullock turns hawkish; UST 10yr at 5.01%; gold rises, oil eases; NZ$1 = 57.2 USc; TWI-5 = 60.7

Here's our summary of key economic events overnight that affect New Zealand, with news the RBA isn't angling to save the Aussie housing market. It may well become collateral damage in the fight against rising inflation.

But first, US industrial production stalled in August from July, a disappointing result because it rose in July and was expected to rise again in August. It is now +1.4% higher than a year ago, not exactly an indicator of a booming economy although that is up from +1.1% in July. Almost all of this is due to data center buildout ("business equipment" was up +7.1%).. In fact, production of consumer goods is now falling at a -1.1% annual rate.

Also disappointing was the US Conference Board leading indicator which edged lower in August when a small rise was anticipated and a bigger rise was booked in July.

And we should note that new cases of New World Screwworm are still being reported in the US, even as they open up the border to more Mexican cattle imports.

Across the Pacific more disappointing economic news. China posted another weak foreign direct investment result for August, down -5.3% on a year-to-date basis. But the incremental flows were tiny in August. up just +US$7 bln from July and virtually unchanged from year ago levels. From two years ago the drop is much larger. All the official propaganda about how well the Chinese economy is doing isn't enticing investment in.

We should also note that the Chinese yuan is surging against the USD. It is now at a three year high on that metric, and is now up +9.1% since the start of 2026. (Against the NZD, the yuan has appreciated +5.1% in the same time. It's essentially unchanged against the AUD.) Driving the appreciation against the USD is their strong trade flows obviously. But there may be a hint of official manipulation here to deflect from some criticism that the Americans might make in their upcoming talks. Beijing has also been selling down its US Treasury holdings at the same time, which are now down -11% in the past year and China is now far from the major foreign holder. Of course, China isn't the only country de-risking itself from the US Treasury market.

Japan's CPI inflation rate held at +1.9% in August as it was in July, and their core inflation rate eased to 1.7%. Both results were at the bottom end of expectations, and should have taken pressure off the Bank of Japan who were meeting as this data was released. But they have other issues weighing on them including defending the yen, and facing bullying pressure from the Trump Administration. All the same, inflation this low when the global price pressure is high is an achievement, even if Japan is only one many Asian economies that are managing to replicate that result.

As universally anticipated and earlier implied, the Bank of Japan delivered its +25 bps rate hike yesterday, taking its policy rate to 1.25% which is a 31 year high. They said they will "continue to raise the policy interest rate and adjust the degree of monetary accommodation, in response to developments in economic activity and prices as well as financial conditions."

Meanwhile, the Bank of Japan has made a 'rate check' in currency markets after the yen fell on the rate hike, and that has strengthened sentiment for the yen, also likely underpinned by geopolitical considerations.

In Europe, the August ECB inflation expectations survey shows them at 3.0% (median) and 5.0% (average). These levels are little-changed from the June and July survey results.

Germany reported their August producer price levels overnight and that came in at +4.6%, higher than July's +3.0% and higher than the expected +4.1% rise. Of course, driving this were energy costs which were up +8.3% from a year ago, up +3.2% from July.

In Australia, after testimony to a parliamentary committee yesterday in which Governor Bullock have a hawkish briefing on inflation risks, economists have suddenly realised that the a rate hike is the most likely outcome at the nest monetary policy review there on September 29. That will take their cash rate target up to 4.60%. And it may go higher if inflation isn't restrained at that level.

The UST 10yr yield is now back up to 5.01%, up +7 bps from yesterday up a net +3 bps for the week. The 30 year yield is at 5.33%, up +4 bps but down -2 bps for the week. The key 2-10 yield curve is now at +26 bps (unchanged). Their 1-5 curve is now at +44 bps (+2 bps) and the 3 mth-10yr curve is at +111 bps (+2 bps). The China 10 year bond rate is down -1 bp at 1.68%. The Japanese 10 year bond yield is now at 2.98%, down -2 bps to be down -1 bp for the week. The Australian 10 year bond yield starts today at 5.29%, up +2 bps from yesterday but down -10 bps for the week. The NZ Government 10 year bond rate is now at 4.97%, down -6 bps for a weekly -9 bps retreat.

Wall Street is softer today, down -0.1% in Friday trade on the S&P500, up +0.4% for the week, and up +0.2% on the Nasdaq, up +1.7% for the week. Overnight, European markets were all down about -1.5%. Yesterday Tokyo ended up +1.4%, up +2.1% for the week. Hong Kong was up +0.6% for a weekly +0.2% rise. Shanghai rose +0.9% to end its week +1.2% higher. Singapore was down a minor -0.1%. The ASX200 ended its Friday trade unchanged for a weekly -0.2% dip. And the NZX50 eased -0.1% on Friday to end the week up +1.1%.

The Fear & Greed index is now hard over in the 'fear' zone from being mid- zone a week ago.

The price of gold is at US$4381/oz, and +US$21 from yesterday, down -US$35 from a week ago. Silver is at just over US$66.50/oz and up +US$1/oz and up +US$2 from a week ago

Oil prices have fallen -US$2 to just under US$100/bbl in the US, while the international Brent price is down -US$1 at US$103.50/bbl. A week ago these prices were US$100.50/bbl and US$104.50/bbl respectively, so little-changed. Hormuz transits are choked right off today with just three ships exiting over the past 24 hours, no tankers escorted (0 dark with transponders off) and three entering for new loads (0 dark). The Red Sea activity is now only about 15 each way at the Yemen chokepoint in a sudden shift

The Kiwi dollar is down -10 bps from yesterday, now at 57.2 USc, down -90 bps from a week ago, down -190 bps from the start of the month. Against the Aussie we are down -30 bps at 80.3 AUc. Against the euro we are down -10 bps at just on 49.8 euro cents. That all means our TWI-5 starts today at just under 60.7, down -10 bps and a six-week low.

The bitcoin price starts today at US$81,013 and up +5.7% from yesterday. Volatility over the past 24 hours has been high at just over +/-3.2%.

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