Breakfast briefing: Global bond selloff deepens

Economy / news

US data mixed as bond market flares as risks mount; Xi and Trump meet inconclusively; Canada data positive; China raises petrol prices; Aussie labour force grows; UST 10yr at 5.18%; gold falls but oil rises again; NZ$1 = 56.6 USc; TWI-5 = 60.3

25th Sep 26, 7:20am by David Chaston

Here's our summary of key economic events overnight that affect New Zealand, with news US treasury yields are trading at multi-year highs, as stronger-than-expected economic data and elevated oil prices fueled bets on another Fed rate hike. The 10-year yield topped 5.18%, its highest level since 2007, while 30-year reached a 2004 peak of 5.47%. The gold price is slipping. Many other asset prices face price risks too, especially commercial property and that also comes with leverage risks being exposed.

So far the US-China meetings in Washington DC between Xi and Trump have been all show and no substance.

In the US, there were 163,800 initial jobless claims last week, an increase from last week's unusual low but about the increase that can be accounted for by seasonal factors. That puts the continuing claims at 1.55 mln, a new 60 year low. The qualification restrictions are certainly biting hard now. Early estimates of the September US non-farm payrolls change doesn't support the idea that jobs growth is strong, and certainly not among workers who are being stripped from unemployment protections.

However there was positive news of expanding recent sales of new-built homes. Even though housing starts are falling, sales of these homes rose in August, up +6.4% from July, but still -2.0% below year-ago levels.

The Kansas City Fed factory survey stayed positive in September, holding the expansion level it has had since June. But price pressures intensified, the survey shows.

There was a still well-supported US Treasury seven year bond auction overnight (down only -3.2%) that delivered a median yield of 5.02% (high 5.09%) and that was up sharply from the median of 4.46% at the prior equivalent event a month ago. That is near its highest in 20 years.

Canada reported some positive economic data overnight. It's August retail sales were up +1.3% (real), and more than making up for the -0.7% monthly fall in July. They are up +1.9% (real) from a year ago. And its manufacturing sales were up +1.1% in August. This extends a string of good monthly gains in 2026, with only one month in the past seven showing a dip.

In China, they raised their petrol prices today to ¥8.90/L, up from ¥8.60/L (NZ$2.34/L from NZ$2.26/L).

In Australia, June 2026 data released yesterday by the ABS shows household wealth there has reached AU$19.4 tln, driven by superannuation, but now held back by recently falling housing values. That is average per capita wealth of AU$694,500. There are a vast number of Aussie 'super' millionaires now.

Meanwhile, the August update of their labour force data shows +39,500 more jobs in the month with 14.827 mln people employed. But their jobless rate rose to 4.6% with 722,900 adults unemployed and a rise of +28,200 in a month. Hours worked and participation both rose and underemployment fell (slightly).

Global container freight rates were little-changed overall over the past week. There were some falls in the China-EU trade, but a minor rise in the China-USWC trade. Overall prices are now +154% higher than year-ago levels and have topped out for the moment. Bulk cargo rates are +3% higher for the week but also seem topped out. From a year ago, these rates are +55% higher.

The UST 10yr yield is now just on 5.18%, up another +5 bps from yesterday. The 30 year yield is at 5.47%, up +7 bps. The key 2-10 yield curve is now at +26 bps (up +6 bps). Their 1-5 curve is now at +55 bps (unchanged) and the 3 mth-10yr curve is at +126 bps (up +2 bps). The China 10 year bond rate is little-changed at 1.67%. The Japanese 10 year bond yield is now at 3.08%, up +10 bps and a huge move for them. The Australian 10 year bond yield starts today at 5.36%, up +4 bps and a new 16 year high. The NZ Government 10 year bond rate is now at 5.10%, up +15 bps and also a notable shift higher.

Wall Street is slightly lower today with the S&P500 down -0.1%, and the Nasdaq is also down -0.1%. Overnight European markets were lower between London's -0.2% and Frankfurt's -0.6%. Tokyo was up +0.8%. Hong Kong ended its Thursday down -0.3% while Shanghai was fell -1.2%. Singapore fell -0.5%. The ASX200 ended its Thursday session down -0.7%. But the NZX50 ended little-changed.

The price of gold is at US$4264/oz, and down -US$30 from yesterday. Silver is at just over US$63.50/oz and down -US$1.

Oil prices have risen +US$4 to just on US$95.50/bbl in the US, while the international Brent price is up +US$4.50 to US$107/bbl. Saudi Arabia says its pipeline repairs will be completed "within days". Hormuz transits are still very low today with just two ships exiting over the past 24 hours, no tankers escorted (0 dark with transponders off) but ten entering for new loads (1 dark). The Red Sea activity is holding low at about 20 vessels in both directions at the Yemen chokepoint.

The Kiwi dollar is down -10 bps from yesterday, now at 56.6 USc. Against the Aussie we are up +10 bps at 80.7 AUc. Against the euro we are little-changed at just on 49.8 euro cents. That all means our TWI-5 starts today at just on 60.3 and down -10 bps.

The bitcoin price starts today at US$84,103 and down a minor -0.3% from yesterday. Volatility over the past 24 hours has been modest at just over +/-1.1%.

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36 Comments

by Colin Maxwell | 25th Sep 26, 8:50am 1790283040

Orange Wrecking Ball At Unga

... quoted...

"America’s greatest strategic asset was never really its aircraft carriers, 800+ overseas bases, or nuclear arsenal. It was the extraordinary willingness of foreigners to store an enormous portion of their accumulated wealth inside the American financial system.

That gave Washington something military power alone could never provide – the ability to consume more than it produced, finance enormous fiscal and external deficits, sanction adversaries through control of financial infrastructure, and borrow in a currency it creates itself, all while much of the rest of the world voluntarily recycled its savings back into the same system.

You would imagine that any remotely rational American administration would guard that privilege with a profound almost religious fervor. Instead Washington increasingly appears to believe reserve-currency status was handed down by God.

It sanctions countries, freezes sovereign reserves, weaponises financial infrastructure, runs enormous structural deficits, piles debt upon debt, fights or finances ruinously expensive foreign conflicts, and then off trots its President to the United Nations to threaten other countries with annihilation, while effectively asking those very same countries to continue financing the whole crazed circus."

https://sovereignista.com/2026/09/24/orange-wrecking-ball-at-unga/comme…

by Threecents | 25th Sep 26, 9:05am 1790283948

Trolling from the Iranians today on zerohedge...

Nevertheless, as the chart shows, yields were rising once again today and the Iranians are watching...

Iran's Parliament Speaker Ghalibaf saying: "Happy 5.1% 10Y America, celebrate: it's the floor two years out."

"You wanted Iran dragged back to 1970s? Nobody told you Iran isn't for arrogant amateurs? We'll return you to 1970s rates, plus high gas prices, diesel shortages and bell-bottoms. Enjoy the nostalgia!" he adds.

by redcows | 25th Sep 26, 9:39am 1790285969

One thing I've got from all this destruction is a liking for Iranian humour. They really know how to wind up and put down the US administration.

by Palmtree08 | 25th Sep 26, 9:33am 1790285624

"You would imagine that any remotely rational American administration would guard that privilege with a profound almost religious fervor. Instead Washington increasingly appears to believe reserve-currency status was handed down by God."

Those statements are not mutually exclusive. The brain rot of evangelical christian fundimentalism is evolving, that's all.

by Colin Maxwell | 25th Sep 26, 1:41pm 1790300480

The US imperial hegemony appears to be sticking strictly to its brilliant four stage strategy...

Stage 1... Nothing is going to happen.

Stage 2 ... Something maybe is going to happen, but why bother doing anything about it.

Stage 3.. Maybe we should do something about it, but there is probably nothing we can do.

Stage 4.. Maybe there is something we could have done, but it’s all far too late now.

by Palmtree08 | 25th Sep 26, 1:29pm 1790299786

Wow Colin! You've stumbled on the brilliant anti climate action strategy run by big oil, petrostates, and the useful tools of the right wing astroturfing campaign. A eureka moment perhaps? Nah, thought not.

by Colin Maxwell | 25th Sep 26, 1:50pm 1790301022

Perhaps, Sebastian Palmtree08 Gorka, once you've finished debating the comment you wished I'd written, you might have a crack at the one I actually did.

by Palmtree08 | 25th Sep 26, 2:55pm 1790304957

Just trying to expand your rather limited view of reality Colin Lomborg Monkton (Lord) ;-)

We get you hate one particular hegemony and are expert at poking the bleeding obvious holes in it.

by Colin Maxwell | 25th Sep 26, 3:15pm 1790306157

LOL... Colin Lomborg Monckton — I'll give you points for that one, Palmtree. :-)

But you still haven't actually addressed the comment.

And yes, I profoundly oppose US imperial hegemony. How could I not? In my view, it has been a common denominator in an extraordinary amount of the geopolitical chaos, regime-change warfare, sanctions, proxy conflicts and bloodshed of the past several decades.

But here's the amusing part - you simultaneously accuse me of having a "limited view of reality" while conceding that I'm apparently rather good at poking "bleeding obvious holes" in that hegemony.

If the holes really are that bleeding obvious, perhaps instead of changing the subject yet again, you might care to explain why they don't matter.

by Palmtree08 | 25th Sep 26, 3:50pm 1790308255

Honestly Colin, calling me "Gorka" is quite the insult. The guy is more of a prick than Trump, which is quite an achievement.

"I profoundly oppose US imperial hegemony. How could I not? In my view, it has been a common denominator in an extraordinary amount of the geopolitical chaos, regime-change warfare, sanctions, proxy conflicts and bloodshed of the past several decades."

Thing is Colin, I actually agree with you. The problem I have is your absolute inability to critique other actors, and of course your lack of understanding about existential threats such as Global heating. Physics doesn't care in the least about US deficits, it just responds to whatever forcings are applied to it.

The points you raise are from the playbook of every astroturfing campaign since mass media was a thing. It's known as "Flooding the zone with sh!t", as Steve Bannon so eloquently stated. It's replaced to old outright lying version of propaganda, which is difficult to propagate in the information age, to flooding so much false information into media space, truth can no longer be identified.

by Palmtree08 | 25th Sep 26, 4:05pm 1790309153

I can recommend Naomi Oreskes book "Merchants of doubt" for a deeper look into the swamp of vested interests manufacturing public uncertainty.

by Colin Maxwell | 25th Sep 26, 5:31pm 1790314271

LOL — well, Palmtree, we might have made some minor progress. - chalk that one up.

We apparently agree that US imperial hegemony has caused an extraordinary amount of damage, so perhaps Sebastian Gorka can now be quietly retired. :-)

As for the rest, I think you've just demonstrated precisely the problem with these discussions.

If I've made a factual claim that is wrong, please identify it and show me why it is wrong. I'm perfectly happy to have it challenged. I like being proved wrong, because from that day on I actually have a very real shot at being right.

But labelling contrary arguments "astroturfing", invoking Bannon's "flood the zone" line, and recommending Merchants of Doubt doesn't actually rebut anything I've said.

And Bannon is a particularly curious authority to invoke here. This is the same Steve Bannon who has publicly promoted the idea of Trump serving a third term and talked about constitutional "workarounds" to achieve it.

I regard that sort of thinking as profoundly dangerous, so you'll forgive me if I don't regard Bannon's observations on manipulating the information environment as especially compelling. What's more, invoking him makes your narrative all the more farcically muddled - this clown is the original archetypal forever-Trumpster.

Also, Oreskes and Conway documented genuine campaigns by vested interests to manufacture uncertainty. Fine. That doesn't logically follow through to the proposition that anyone questioning particular climate claims, models, attribution, policy prescriptions or declarations of impending catastrophe is therefore part of the same phenomenon.

And "physics doesn't care" cuts both ways.

Physics doesn't care about political narratives, consensus by proclamation, economic interests, computer-model assumptions or whether somebody questioning a particular conclusion has been labelled a "denier". It cares about evidence.

So let's make it dead simple - pick one substantive claim I've actually made, quote it accurately, present the evidence showing why it is wrong, and I'll happily discuss - otherwise we're back to debating the person rather than the argument.

And BTW, perhaps before firing off another lecture about misinformation and other people's inability to distinguish truth from falsehood, read your own argument back to yourself and check it for the rather glaring contradictions first.

by Palmtree08 | 25th Sep 26, 9:44pm 1790329459

Sorry Colin, I don't pay close attention to every claim you have made and I don't regard it particularly important to prove you are wrong. Readers of "Interest" can make up their own minds about that.

"one substantive claim I've actually made"? Um, global heating isn't a problem? I can't quote you ad verbum and have zero intention of sifting through your previous claims. You can clear your position by simply stating it now?

As for Bannon, his quote was brilliant for it's moment of clarity. It's like when a serial killer leaves little clues in a sea of red herring. He's possibly the person most responsible for training Trumps effective handling of US citizenry, media, in fact, make that global citizenry. This is flooding the zone on steroids to the point it leaves those interacting with him gasping for breath. You should take notice, flooding is standard PR among the worlds fascists, from Putin, to Farage, to Orban. Ultimately the flow of brown stuff begins to lose impact as tolerance and eventually immunity develops. Trump's reached the point the world is losing interest and working around him. Same with Putin, he's painted so many red lines it makes the Aussie outback look small.How does it feel occupying the same ground with such individuals? Climate denial is a common thread among these despicable "humans". I think that's your major shortcoming. Failing to take notice.

It's contradictary the way you criticise the US yet cheerlead worse behavior from your favourite authoritarians.

by Colin Maxwell | 26th Sep 26, 4:52pm 1790398356

Palmtree, I think your opening sentence closes this discussion beautifully.

First you volunteer that you don't pay close attention to my claims. Then you tell me you don't consider it particularly important to demonstrate that they're wrong - and yet, all the while, you remain blissfully comfortable telling me what I supposedly believe.

That is quite a stunning demonstration of both hypocrisy and an absence of self-awareness.

I'll leave the readers to ponder that monumental contradiction. :-)

by Palmtree08 | 25th Sep 26, 8:52am 1790283120

Hard to take the NZ governments "there's no money for ......." seriously when they're prepared to flush cash on this useless bollocks! The US is standing on the precipice of a permanant shift to fascist authoritarianism and the coalition government doesn't see a problem with this?

"The NZDF has long said that "if our satellite communications become unavailable, NZDF's military capability will be severely diminished"

What military capability?

https://www.rnz.co.nz/news/politics/1557034/new-zealand-agrees-to-put-a…

by Zachary Smith | 25th Sep 26, 9:16am 1790284597

Sigh, I can hardly bear to respond to such a tiresome comment. But, anyway, here's our military:

https://www.nzdf.mil.nz/nzdf/

by Palmtree08 | 25th Sep 26, 9:42am 1790286139

So you're all good co-funding the Trumpistan fascist empire? The one whose leader stood at the UN and pledged to wipe a nation off the face of the Earth if they didn't kiss his ring? What other countries has he threatened again? Cuba, Canada, Greenland, Venezuela(actual violence), Panama, Oman.... There's probably others?

by redcows | 25th Sep 26, 9:43am 1790286206

In Venezuela's case he even admitted to war crimes in his UN address no less. Stating the ability to simply take whatever they wanted because they won the war.

Aline me with that. Not.

by Averageman | 25th Sep 26, 9:48am 1790286480

Be happy we dont have accessible oil reserves. There would probably be a carrier of the coast.

by powerdownkiwi | 25th Sep 26, 10:07am 1790287625

Don't worry - it would be away again in 326 days

by Palmtree08 | 25th Sep 26, 10:12am 1790287948

Oh, I'm unbelievably happy about this for numerous reasons.

Somewhat less happy about the mindless drones in parliment determined that NZ should become a petrostate and throwing taxpayers money at this fantasy.

by interesting1234 | 25th Sep 26, 1:42pm 1790300576

That was some breakfast you had this morning wasn't it.

by Palmtree08 | 25th Sep 26, 3:02pm 1790305341

Actually breakfast was a bit lean this morning. You might have hit on something there.

by interesting1234 | 25th Sep 26, 4:17pm 1790309820

A good dose of humour and intellectual discussion on todays articles which is a great end to the week. Happy friday to all.

by Zachary Smith | 25th Sep 26, 3:03pm 1790305434

I'm good with pulling our weight along with Belgium, Canada, the Czech Republic, Denmark, Luxembourg, the Netherlands, Norway, Poland and the UK. Hey, where's Australia?

This is good for Five Eyes credits. We need to keep the alliances. It is a huge advantage the West has.

I mainly didn't like you insulting our military.

by Palmtree08 | 25th Sep 26, 3:28pm 1790306922

Insulting military? I doubt even the military are under the impression they can repell anything more than a fishing boat? The NZ military has my full support for it's humanitarian ability and effort.

The problem with alignment is the the underlying acceptance and sanction given to the larger grouping.

by bulls hit | 25th Sep 26, 11:14am 1790291680

Seems reasonable, actually a bit of a bargain.

Military alliances persist regardless of what imbecile inhabits the WH.

What would your alternative be - throwing in our lot with China? Or no satellite comms at all?

by powerdownkiwi | 25th Sep 26, 1:42pm 1790300565

The world is recoiling from overshoot.

Your comment is both linear and assumptive, failing to take that trajectory into account.

We need to be looking after ourselves, local resilience is the only valid goal, henceforth.

Not throwing in our lot - with anyone.

by Palmtree08 | 25th Sep 26, 3:22pm 1790306525

Problem is, while our government isn't as overtly as crass as Washington (excepting maybe Jones), they are basically the same people. As are many of their voters.

by bulls hit | 25th Sep 26, 4:17pm 1790309821

"...looking after ourselves..."

So you're proposing to increase our defense spending in an attempt at self sufficiency with no need for alliances?

Or eliminating defense spending entirely and remove any pretense of a defense force?

by interesting1234 | 25th Sep 26, 1:43pm 1790300617

The first rule of the GCSB is that you don't talk about the GCSB...

by LouB | 25th Sep 26, 10:24am 1790288640

Noting Oz average wealth of $694k. Thats a point in time measure, not set in stone, i think.

I'm thinking about how the net average wealth in NZ has been affected over the last 6 years by the downward adjustmen in house values.

Thinking too about the concerns in the bond market and potential for a downward financial adjustment, globally, wealth in superannuation investments is notional until liquidated. And, therefore, could lead to significant erosion of perceived wealth at individual levels.

Interesting times.

by Averageman | 25th Sep 26, 11:03am 1790291034

Everyone knows that buying just for future price increase is speculation/gambling and thus has the risk of downward reality. Especially after a stupid interest rate debasment driven bubble of greed. As long as income and yield math have been the focus, why sweat if price drops?

by Palmtree08 | 25th Sep 26, 11:23am 1790292200

"Risk of downward reality"

:-) Nice turn of phrase.

by interesting1234 | 25th Sep 26, 1:45pm 1790300707

could lead to significant erosion of perceived wealth at individual levels.

Fantastic demonstration of the term perceived wealth. If it isn't in real resources, it is just a number on a screen or piece of paper.

by Colin Maxwell | 25th Sep 26, 3:03pm 1790305434

WAR POWERS PARALYSIS

Chris Hedges.... https://www.youtube.com/watch?v=y2q4succ04o

And this is where a massive institutional contradiction becomes genuinely dangerous.

The United States is engaged in a major war with Iran that Congress has never specifically authorised. The House has now voted repeatedly to terminate unauthorised hostilities, yet the political machinery appears incapable of converting those votes into an actual cessation of military operations.

The latest vote Sptember 15, 2026, where 7 Repulicans voted with the Democrats...

220 Yea

204 Nay

9 Not Voting

Democrats: 213–0 in favour

Republicans: 7–203

Independent: 0–1

All of this creates a potentially catastrophic asymmetry - it is considerably easier for the Executive to continue escalating a war than it is for Congress to stop one.

And Iran is hardly Iraq, Libya or Afghanistan. This confrontation sits alongside Israel's undeclared nuclear arsenal, Iran's nuclear programme, US nuclear forces, and other nuclear-armed powers with strategic interests in the region.

Wars also have an unpleasant habit of acquiring their own momentum. One miscalculation, mass-casualty strike, attack on critical infrastructure or perceived existential threat could dramatically shorten the escalation ladder.

That is what makes Washington's constitutional paralysis so disturbing. The machinery designed to prevent an Executive from conducting an unauthorised war appears far better at debating the war than actually stopping it - while the consequences of getting this one badly wrong could extend far beyond Iran.