Kia ora,

Welcome to Monday’s Economy Watch where we follow the economic events and trends that affect Aotearoa/New Zealand.

I'm David Chaston and this is the international edition from Interest.co.nz.

And today we lead with news there was an unexpected turn in the US tariff situation late last week.

In a dramatic ruling, most of Trump’s global tariffs were declared illegal by a US appeals court that found he exceeded his authority in imposing them. He will almost certainly appeal to his Supreme Court.

Then, over the weekend we got the official Chinese PMIs for August and they extended the sluggish environment their manufacturing sector finds itself in. Despite the 90 'extension' before punitive tariffs kick in with the US, orders contracted for a fifth consecutive month. On the services side however, they maintained their small expansion in August, albeit marginally better.

But early data suggests their housing slump is not ending, maybe even getting worse. Sale volumes in August are likely to be more than -17% lower than a year ago.

Although it is a shortened week in the US, it ends with the August jobs data. Markets expect another weak result (just +78,000). You will recall the weak data last month saw Trump fire the agency head who compiled it. So there will be special attention this time on its believability under the BLS agency's deputy. Before that we will get lead-up jobs data, the ISM PMIs for the US.

Canada will also release labour market data. The EU inflation data, and others will release GDP data for Q2-2025, including from Australia on Wednesday.

At the end of last week, July data out in the US shows that disposable personal income was up +2.0% from a year ago, personal consumption expenditure was up +2.1% on the same basis. On a month-on-month basis, the income was up +0.4% and expenditure up +0.5%. These elements are not major but they do indicate a tightening in household financial budgets.

Nested deep within this release was that core PCE index rose 2.9% year-on-year in July, its largest rise since February and above the Fed’s target and comfort zone. Tariff costs are getting the blame. Financial markets noticed.

And that is the same sort of tightening indicated by the widely-watched University of Michigan sentiment survey. Its final August version fell back markedly from its initial readings, a clear indication households are finding it tougher. It is now -14% lower than a year ago. The Biden boom is now just a memory.

On the factory floor, the latest indicators are shifting down too. The August Chicago PMI headed south quite sharply to be -10% below year-ago levels.

And the US seems to be losing the tariff war it started - and Americans are paying the tariff-taxes. The latest trade data for July shows that the US merchandise trade deficit jumped to -US$104 billion in the month, exactly the same as July a year ago, and far above expectations of -US$90 bln deficit. It is their largest in four months. Imports jumped +7.1% from a month earlier, led by industrial supplies, capital goods, food, and consumer goods. Meanwhile, exports slipped -0.1%.

Certainly, American farmers are not happy. And they have a President who probably doesn't even know where Pakistan is, let alone most other simple facts.

In Canada, they got a sharp dose of shock in their Q2-2025 GDP result from the sharp turn on them from their southern neighbour. Their GDP fell -0.4% in the quarter and cancelling out the +0.5% gain in their first quarter. Year-on-year their GDP is still up +0.9% however.

Across the Pacific the economic data is generally much more positive. South Korea’s retail sales surged +2.5% in July from June, a big jump from a revised +0.7% increase in June and marking the fastest growth in over two years. From a year ago it is up +2.4% and that too is the most since January 2022.

South Korean industrial production grew solidly in July as well, up +5.0% from a year ago.

After a good gain in June, Japan’s industrial production fell -1.6% in July, reversing a +2.1% June gain and much more than the -1.0% decline anticipated.

Japanese retail sales only rose by +0.3% in July from a year ago, slowing sharply from a downwardly revised +1.9% gain in June and falling well short of market expectations for a +1.8% increase.

But Japanese consumer confidence actually rose in August to its best level of the year with gains across all surveyed questions.

We should also note that protests in Jakarta on Friday that turned deadly have put Indonesia on edge. They have spread over the weekend. Canberra will be watching nervously.

In Europe, the ECB's survey found that consumer inflation expectations were stable ("well anchored") in July at 2.6% for the year ahead.

Globally, air passenger demand was up +4.0% in July, driven by the Asia/Pacific +5.7% rise and held back by the North American +1.9% rise. Most of this is due to international travel. Meanwhile, air cargo traffic was even stronger in July, up +5.5% from a year ago, up +6.0% for international trade. Asia/Pacific was the strongest region here too, up +11.0% for international cargoes. But North American international cargo volumes only rose +1.5%, the weakest global region.

The UST 10yr yield is now at 4.23%, unchanged from Saturday, but down -3 bps from a week ago. 

The price of gold will start today at US$3,447/oz, up another +US$5 from Saturday, and close to a new record high, but basically a measure of the USD markdown. A week ago it was at US$3,371/oz so a net +US$76 gain

American oil prices are again little-changed at US$64/bbl with the international Brent price holding just under US$67.50/bbl.

The Kiwi dollar is at just under 59 USc and unchanged from Saturday at this time, up +30 bps for the week. Against the Aussie we are holding at 90.1 AUc. Against the euro we are unchanged as well at 50.5 euro cents. That all means our TWI-5 starts today at just under 66.5, and unchanged from Saturday, up +20 bps for the week.

The bitcoin price starts today at US$109,022 and up +0.5% from this time Saturday. But is down -6.7% for the week. Volatility over the past 24 hours has been low at just on +/- 0.5%.

You can get more news affecting the economy in New Zealand from interest.co.nz.

Kia ora. I'm David Chaston. And we will do this again tomorrow.

Kia ora,

Welcome to Friday’s Economy Watch where we follow the economic events and trends that affect Aotearoa/New Zealand.

I'm David Chaston and this is the international edition from Interest.co.nz.

And today we lead with news markets have brushed off the Nvidia result and chosen to extend their risk appetite. The S&P500 is at another new record high. But bond markets aren't so sure this is justified.

In the real world, US initial jobless claims were little-changed last week from the prior week, both in actual terms and from what seasonal factors would have suggested. There are now 1,945,000 people on these benefits, +101,500 more than at the same time last year.

The American GDP Q2-2025 GDP was revised slightly higher in its second estimate than the first mainly due to a slightly smaller decline in investment.

Pending home sales fell -0.4% in July from June, extending the -0.8% drop in the prior month to mark the first back-to-back contraction since January. They were down -0.7% from a year ago as the American housing market seems in a long-term slow decline having never really recovering from the pandemic period.

The Kansas City Fed factory survey was stable overall but that was despite a fall in export orders and elevated cost pressures. survey. There was a modest rise in August from July, but most metrics are still lower than a year ago.

Earlier today there was a much less supported US Treasury seven year bond auction (-11% less bid value) but the median yield fell to 3.87% from 4.06% at the prior equivalent event a month ago.

In Canada they reported that average weekly earnings were up +3.7% to C$1,302 in June, following a +3.3% increase in May.

In India, industrial production rose in July and the pace picked up by more than expected. The expansion was +3.5% when +2.1% was anticipated, and more than double the pace of June's +1.5%.

In Europe, despite their inflation pressures being modest and on target, settling it at 2.0%, the overnight release of the ECB minutes revealed a split among policy makers on how to assess future risk. They left their policy rate unchanged despite some thinking rates need to go lower to support growth and counter US tariffs, while others thinking the risk of future inflation is rising. Despite that split review, in the end the decision to hold rates unchanged was unanimous.

Global container shipping freight rates fell -6% last week from the week before to be -60% lower than year-ago levels, although that year-ago base reflected unusual stress in the Red Sea shipping lanes. Once again, the recent falls are all to do with outbound trade from China. Interestingly, Chinese shippers are now targeting Australia and New Zealand, along with the Middle East because of the higher rates they can get in these alternative trades. Bulk cargo rates are little changed week-on-week but are up nearly +20% from a year ago.

The UST 10yr yield is now at 4.21%, down -3 bps from yesterday at this time.

The price of gold will start today at US$3,415/oz, up +US$20 from yesterday.

American oil prices are little-changed at US$64/bbl with the international Brent price is still just under US$68/bbl.

The Kiwi dollar is at just on 58.9 USc and up +30 bps from yesterday at this time. Against the Aussie we are up +10 bps at 90.1 AUc. Against the euro we are unchanged at 50.4 euro cents. That all means our TWI-5 starts today at just on 66.4, and up a net +10 bps from yesterday.

The bitcoin price starts today at US$112,596 and up +0.2% from this time yesterday. Volatility over the past 24 hours has been modest at just under +/- 1.1%.

You can get more news affecting the economy in New Zealand from interest.co.nz.

Kia ora. I'm David Chaston. And we will do this again on Monday.

Kia ora,

Welcome to Thursday’s Economy Watch where we follow the economic events and trends that affect Aotearoa/New Zealand.

I'm David Chaston and this is the international edition from Interest.co.nz.

And today we lead with news we need to brace for an end to the US Fed's independence. It may not be at risk right now, but the signs aren't promising. And politicians everywhere will seize on the mood to pull that level, to ease their own policies that don't deliver. The juice of monetary stimulus is just too enticing, the risks be damned.

First in the US, investors are expecting Nvidia’s earnings to be reported after the NYSE closing at 8am NZT, seen as a key test for the AI boom driving markets. The S&P 500 and Nasdaq are marginally higher in advance of that, while Nvidia shares are little-changed. But the derivatives market in the stock is set for a -6% swing and if that happens, that will be a -NZ$500 bln fall - probably the biggest movement of any economic metric today anywhere in the world. We will know soon enough.

Some think we should also watch the share price in Costco and Walmart. They both have lofty valuations that raise the risk of serious correction. These three are all enormous companies - Nvidia has a market cap of an eye-watering US$4.4 tln, Costco US$420 bln, and Walmart is US$770 bln. In each case that is way more than New Zealand's GDP. Walmart plus Costco is approaching Australia's GDP.

Staying in the US there was little data out overnight. The volume of mortgage applications softened by -0.5% last week from the previous week, extending the -1.4% trim from the prior month. Applications to refinance an existing mortgage fell by -3.5% offsetting the +2.2% increase in applications for a mortgage to buy a new home.

Separately, American officials are decrying the intelligence efforts by the Chinese Ministry of State Security and their 'Salt Typhoon' operation. But they have been caught running covert operations in Greenland. The Dames are unimpressed. Trump's America is no-one's friend. Even at home, his militarisation of local policing, grabbing shares in companies without paying, are worrying developments. His efforts to subvert the Fed are just part of an effective quiet rolling coup with a much broader agenda. These are stand-over tactics that will undermine the US reputation for generations.

In Taiwan, their industry may be going at full tilt, but consumer sentiment is actually weakening. An August survey there shows it at its weakest level since April 2023, as five of six key indicators deteriorated.

Chinese industrial profits fell again in July, down -1.7% from a year ago in July. They fell -7.5% for SOE's but were up +1.8% for private businesses.

Yesterday, there was a big surprise in data released today in Australia on inflation. Their monthly indicator had fallen consistently to 1.9% in June. The RBA was relieved. But the July level came in at 2.8%, an unexpectedly large jump. There will be head-scratching. Higher electricity prices (+13.1%) are getting the blame.

The UST 10yr yield is now at 4.24%, down -1 bp from yesterday at this time. Long bond yields, especially the 30 year, are rising more quickly now. 

The price of gold will start today at US$3,395/oz, up +US$14 from yesterday.

American oil prices have risen +50 USc to US$64/bbl with the international Brent price now just under US$68/bbl.

The Kiwi dollar is at just on 58.6 USc and little-changed from yesterday at this time. Against the Aussie we are down -30 bps at 90.3 AUc. Against the euro we are up +10 bps at 50.4 euro cents. That all means our TWI-5 starts today at just under 66.3, and little-changed from yesterday.

The bitcoin price starts today at US$112,400 and up +2.4% from this time yesterday. Volatility over the past 24 hours has been modest at just on +/- 1.2%.

You can get more news affecting the economy in New Zealand from interest.co.nz.

Kia ora. I'm David Chaston. And we will do this again tomorrow.

Kia ora,

Welcome to Wednesday’s Economy Watch where we follow the economic events and trends that affect Aotearoa/New Zealand.

I'm David Chaston and this is the international edition from Interest.co.nz.

And today we lead with news of mixed and confusing economic signals from the world's largest economy where scoring own-goals is becoming an embedded feature of their economic management.

But first, there was an overnight Pulse dairy auction for both SMP and WMP and that delivered lower prices with the SMP price dropping -2.0% from the prior week's full dairy auction, and the WMP price down -1.1%

In the US, financial markets are quite hesitant because Trump is attempting to fire a non-loyal Fed governor for made-up 'integrity' reasons (pot-kettle-black). Because she in Black, and a woman, Trump's vengeance is particularly pointed.in this case and contrasts starkly with how he treats Powell (which is also personal and isn't good either.) She hasn't been charged with anything let alone convicted, and legal action over the Presidential 'letter' will now follow. She is resisting the bullying. The USD slipped and long dated UST bonds posted losses as market unease spread.

Overnight releases of American economic data was quite mixed. First, durable goods orders fell in July from June, down -2.8% and on top of the -9.4% fall in the June result. That takes the year-on-year July result to just a +3.5% rise, about what current inflation can account for. Non-defense, non-aircraft capital goods orders rose a little more than that, up +4.5% from a year ago, so that was positive. But they fell -8.0% in July from June.

The Richmond Fed factory survey in the mid-Atlantic states remained negative in August, although not as much as the outsized July retreat. Factories in this region have been doing it tough since March 2025. Cost inflation is hitting them hard as a result of having to pay the tariff taxes. The average growth rate of prices paid increased notably, while growth in prices received was nearly unchanged in August.

Yesterday we noted the negative Dallas Fed factory survey for Texas. Today the services survey for the same region was released and it reported a better expansion. But they reported the improvement as 'slight'.

There was also only a slight change in consumer sentiment reported by the Conference Board for August. Rising worries about jobs and income were offset by more optimistic views of current and future business conditions, they said. Overall, consumer confidence dipped slightly in August but remained at a level similar to those of the past three months. Tariff-taxes are a key reason there is no improvement in this survey. Consumers’ average 12-month inflation expectations picked up after three consecutive months of easing and reached 6.2% in August, up from 5.7% in July.

Once rare seven-year car loans are fast becoming the norm in the US. They’re often the only way buyers can afford new vehicles, with the average vehicle sale prices surging +28% in five years to approach NZ$85,000. And tariffs will make than much worse. Bloomberg is reporting that in Q2-2025, seven-year vehicle loans represented 21% of all new-vehicle financing. Six-year loans, at one time considered the upper end of the range, are now the most common, accounting for 36%. Some buyers are even now going for eight-year loans.

There was a large and well supported two year US Treasury bond auction overnight, resulting in a median yield of 3.60%, down from 3.87% at the prior equivalent event a month ago.

North of the border, Canada released some business activity data for July, and both metrics rose and by more than expected. Their wholesale trade was up +1.3% from +0.7% in June, driven by stronger vehicle sales. They manufacturing sales rose +1.8% in July, an improvement from +0.3% in June. Transportation equipment, and the energy sector, provided the key boosts.

Across the Pacific in South Korea, you may recall the huge jump in consumer sentiment in July after the peaceful resolution of the attempted executive coup there earlier in the year. The rule of law won. In August, that confidence level dropped sharply as things returned to normal. But to be fair is is still far higher than at any time in the past ten years - despite their ugly treatment by the Trump Administration.

In Australia, Australia Post has temporarily partially suspended postal services to the US. All such deliveries now require full customs duties and declarations making the trade impractical for small value items and substantial jeopardy for the shipper. The disruption to such courier services is spreading to most Asian countries now.

The UST 10yr yield is now at 4.25%, down -3 bps from yesterday at this time. 

The price of gold will start today at US$3,381/oz, up +US$10 from yesterday.

American oil prices have fallen -US$1.50 to US$63.50/bbl with the international Brent price now just under US$67.50/bbl.

The Kiwi dollar is at just on 58.6 USc and little-changed from yesterday at this time. Against the Aussie we are up +10 bps at 90.3 AUc. Against the euro we are unchanged at 50.3 euro cents. That all means our TWI-5 starts today at just on 66.3, and also little-changed from yesterday.

The bitcoin price starts today at US$109,747 and down another -2.4% from this time yesterday. Volatility over the past 24 hours has been modest at just on +/- 1.5%.

You can get more news affecting the economy in New Zealand from interest.co.nz.

Kia ora. I'm David Chaston. And we will do this again tomorrow.

Kia ora,

Welcome to Tuesday’s Economy Watch where we follow the economic events and trends that affect Aotearoa/New Zealand.

I'm David Chaston and this is the international edition from Interest.co.nz.

And today we lead with news that while much of the northern hemisphere is enjoying the last of their summer holidays, Chinese investors have returned in a bullish mood, and in contrast to the now-jaded US equity markets.

But first in the US, consumer credit bureau VantageScore is reporting that consumers with the best credit scores (superprime) are showing meaningful signs of credit stress. Among this group late payments have more than doubled in a year. For the group below that ('prime') this metric of delinquency rose almost +50%. (VantageScore is a partnership of Equifax, Experian and TransUnion, and competes with the dominant FICO.)

Meanwhile, the widely followed Chicago Fed National Activity Index retreated. This tracking suggested overall American economic growth decreased in July.

The Dalla Fed said that in its region factory activity is still expanding but at a slower pace. Although new orders rose (and for the first time in 2025), production activity eased back noticeably. Price and wage pressures rose faster.

New house sales in the US stayed at an essentially unchanged pace in July, although marginally softer than in June. Prices dipped, likely because they have a continuing glut of new homes for sale, exceeding nine months’ worth at the current sales rate.

The latest estimate from the Atlanta Fed's GDPNow live tracking is due tomorrow and is likely to reflect the overall slowdown reported in these other indicators.

Across the Pacific, Singapore said it basically doesn't have any inflation. Its July survey came in even lower than was anticipated - even food inflation there is very low.

Yesterday, we noticed that the Chinese central bank set its Yuan exchange rate with an outsized shift, now at 7.116 to the USD, a 160 bps strengthening from the prior fix. That makes it its strongest against the greenback since October 2024. It is unclear why this happened because the US dollar index was little-changed in this period. Maybe some of this is related to the recent equities euphoria in the Shanghai stock market - its starting to show the frothy signs that Hong Kong has long displayed.

The UST 10yr yield is now at 4.28%, up +2 bps from yesterday at this time. 

Wall Street has started its week hesitantly, with the S&P500 down -0.3% in Monday trade. Overnight, European markets opened their week mixed with London up +0.1% but Paris down -1.6%. Yesterday Tokyo started its week up +0.4%. Hong King rose a strong +1.9% and Shanghai mirrored that, up +1.5%. Singapore was up a minor +0.1%. That was matched by the ASX200. The NZX50 rose +0.3% in its Monday trade.

The price of gold will start today at US$3,371/oz, little-changed (+US$1) from yesterday.

American oil prices have risen +US$1 to US$65/bbl with the international Brent price now just under US$69/bbl. And we should also note that China has imported no natural gas from the US since March and no crude oil since June. But the US keeps importing from China, despite the border tariff taxes, which the US importers seem to be paying.

The Kiwi dollar is at just on 58.6 USc and down -10 bps from yesterday at this time. Against the Aussie we are down -20 bps at 90.2 AUc. Against the euro we are up +20 bps at 50.3 euro cents. That all means our TWI-5 starts today at just under 66.3, little-changed from yesterday.

The bitcoin price starts today at US$112,427 and down -1.7% from this time yesterday. Volatility over the past 24 hours has been modest also at just on +/- 1.7%.

You can get more news affecting the economy in New Zealand from interest.co.nz.

Kia ora. I'm David Chaston. And we will do this again tomorrow.

Kia ora,

Welcome to Monday’s Economy Watch where we follow the economic events and trends that affect Aotearoa/New Zealand.

I'm David Chaston and this is the international edition from Interest.co.nz.

And today we lead with news Fed boss Powell gave a hint at Jackson Hole that weaker American labour market conditions may trump inflation risks when they next meet in three weeks - and a rate cut is a live possibility.

Before that, Thursday NZT, the market darling Nvidia is set to report its results, and any variation from what is expected to be a stellar result, or any slackening of their outlook indications, could very well have ripple impacts on how investors judge their overall current sky-high valuations across the whole equities landscape. It's a huge immediate risk-point.

But this coming week, we will be focusing on the New Zealand employment indicators for July to be released later in the week. And later today, the RBNZ will updated it Dashboard to June, so we can see the market winners (and losers) in the banking sector.

Across the ditch, all eyes will be on July's monthly CPI data to be released on Wednesday.

China will be releasing its August PMIs this week. India will updated its Q2-GDP, and its July industrial production data. And Canada will also have a Q2-GDP update too.

But we shouldn't forget that the northern hemisphere has been getting in the last of its summer vacations recently. This is the final week before the US Labor Day national holiday on September 1, 2025, the traditional end of their summer holiday period and when their financial markets build back up to full strength.

They will be coming back after digesting the Fed's latest indicators from Powell's Jackson Hole speech. He noted the core US economy has weathered the "sweeping changes in [US] economic policy" well, but now says "the balance of risks appears to be shifting" - to the negative side. Markets have taken this as a hint a rate cut could come as early as their mid September meeting.

The US equity markets roared back to post a record high in Friday. The USD fell. Benchmark bond yields retreated.

However, in the euphoria of the possibility of a rate cut markets seem to be ignoring this part: "inflation expectations could move up, dragging actual inflation with them. Inflation has been above our target for more than four years and remains a prominent concern for households and businesses". But they are betting on the 'transitory' inflation story again. Inflation embedded for four years, and juiced by tariffs, will be ignored at their peril.

Across the border, Canadian retail sales in June were +6.5% higher than a year ago, the best rise since the pandemic recovery period in 2022. But some of this is just higher prices flowing through from their tariff dispute with the US, and a small correction dip is expected in the July data. And the Canadians are not ignoring the inflation risks of tariffs. To keep a lid on these inflationary effects of that dispute, Canada said it will roll back some of its retaliatory tariffs on the US. The US isn't doing the same, so their consumers will still pay the extra on imports.

Across the Pacific, China reported more ugly foreign direct investment data over the weekend. While it didn't actually shrink like it did in April and June, it is running -13.4% below year ago levels, and it is still less than half the July ytd levels of 2022 or 2023, and down -7.3% from last year. The June to July gain this year, while welcome, isn't anything more than a statistical blip in the context of the fall away over the last four years.

So it is no surprise that Beijing is reorienting to a focus on internal consumption - something they have a chance of still controlling. The international trade environment isn't moving in their favour and even where they do still get gains, they are not enough to move their needle.

There was a surprising dip in Japanese inflation in July. It eased to 3.1% from 3.3% in the previous month, the lowest reading since November 2024. Helping was that electricity prices fell for the first time since April 2024. But food prices jumped +7.6%, the most since February. Again, rice was the big culprit.

New data out from the Australian statistics bureau shows their R&D investment grew by +18% to AU$24 bln in 2023-24. The strongest growth was in IT including spending on Artificial Intelligence, which grew by +142% since 2021-2022.

The UST 10yr yield is now at 4.26%, essentially unchanged from Saturday at this time, down -6 bps for the week.

Wall Street roared back in Friday trade with the S&P500 up +1.5% after the Powell hint of a rate cut next month. That means it is able to claim a +0.4% advance for the week which pushed it to a new record high.

The price of gold will start today at US$3,370/oz, down -US$1 from Saturday, up +US$36 for the week.

American oil prices have held at just under US$64/bbl with the international Brent price now just under US$68/bbl. These levels are more than +US$1 higher than a week ago

The Kiwi dollar is at just on 58.7 USc and unchanged from Saturday at this time. Against the Aussie we also holding at 90.4 AUc. Against the euro we are unchanged too at 50.1 euro cents. That all means our TWI-5 starts today at just under 66.3, little-changed from Saturday but down -60 bps for the week.

The bitcoin price starts today at US$114,366 and down -2.2% from this time Saturday. Volatility over the past 24 hours has been very low at just under +/- 0.6%.

And finally, in Australia, AML regulator Austrac has directed Binance to appoint an external auditor after identifying serious concerns with the crypto exchange’s anti-money laundering and counter terrorism financing controls.

You can get more news affecting the economy in New Zealand from interest.co.nz.

Kia ora. I'm David Chaston. And we will do this again tomorrow.

Kia ora,

Welcome to Friday’s Economy Watch where we follow the economic events and trends that affect Aotearoa/New Zealand.

I'm David Chaston and this is the international edition from Interest.co.nz.

And today we lead with news the financial world is waiting for Fed boss Powell's Jackson Hole scene setting speech.

In the meantime, US initial jobless claims held steady last week from the prior week at +195,000. But in fact seasonal factors should have produced a good fall. So seasonally adjusted, they are reporting an unexpected rise. The number of people on these benefits held at 1.97 mln when they usually retreat at this time of year. Analysts are flagging concerns about the lack of progress. A year ago they fell to 1.86 mln, so they are +110,000 higher now than then.

US existing home sales rose, and by more than expected in July and only the second month-on-month gain of 2025. They ran at the rate of 4 mln per year, the best level since February. However, the stock of unsold homes swelled (to 19 weeks of supply), and the latest sales came with the average selling price dropping, now at US$422,400.

More generally, around their overnight earnings release, the Walmart CEO noted that tariff-tax price pressure is driving up prices on a weekly basis now. However, they reckon they will get a net benefit as shoppers turn to them from others forced into even higher increases.

And the Conference Board's index of leading indicators fell in July, extending its 2025 retreat and at a faster pace in the past six months than the prior six months. Keeping the pressure on this index are the retreats in new orders, and weak consumer sentiment.

The Philly Fed's factory survey certainly shows the new order problem which turned negative in August. And firms report that inflation is embedding at higher levels for their input costs. There is a sense that this heartland manufacturing region is starting to go backwards again. Those in this survey 'expect growth' in the future, but they have been signaling that for all of 2025 and if that aspect turns, things will possibly feel a bit grim there.

But the early August S&P Global/Markit PMIs for the US are not downbeat. On the factory side, they report a good recovery from July. On the services side a slip from a still-expanding base. They also report faster input inflation as they paid the tariff-taxes.

The Canadians also reported rising input costs in their PPI release overnight.

Japanese business is on the rise. Business activity across Japan's private sector expanded at the fastest rate since February midway through the third quarter, according to the August PMI survey data. The upturn was supported by a fresh increase in factory production alongside a further solid rise in activity at service providers. Total new business also expanded at the quickest rate in six months, though this was driven solely by the service sector. New export business fell at a steeper rate, however.

In China, it is becoming clearer that officials are increasingly worried about strained finances at central and local government agencies, and that both firms and employees are suffering from delayed payments. Apparently, the pressures are severe, warranting President's Xi's attention. Special bond issues are underway to juice up the necessary funding.

In Europe, the flash PMI reports indicate an improving situation for both manufacturers, and in the service sector. New orders increased for first time in 15 months in August. The factory PMI rose to expansion and its best in more than three years. Its services sector expanded faster, although like everything in Europe the benchmarks are not high compared to the rest of the world.

Overall EU consumer sentiment held at modest levels in August, although to be direct, they are still substantially negative and remain lower than their long-run average.

In Australia, the S&P Global/Markit August PMIs are quite upbeat. They said Australia's business activity growth accelerated midway through the third quarter, with faster expansions across both the manufacturing and service sectors. This was supported by higher new work inflows, including a renewed expansion in exports. In turn, Australian private sector firms raised their staffing levels at a faster rate to cope with additional workloads. Business sentiment also improved slightly from July.

Australian consumer inflation expectations fell to 3.9% in August from 4.7% in July, easing for the second straight month and marking the lowest level since March.

And energy regulator AEMO says more wind, solar and storage capacity was added over the past year to the electricity grid in Queensland, NSW and Victoria than in any year before. The risk of blackouts and service disruptions is fading, they say.

Globally, container shipping freight rates fell -4% last week from the prior week to be -60% lower than year-ago levels, although year-ago there was extensive stress from tensions in the Red Sea. All the weakness currently is in outbound cargoes from China. Bulk cargo freight rates fell -5% over the past week, but they are still +10% higher than year-ago levels.

The UST 10yr yield is now at 4.33%, up +4 bps from yesterday at this time.

The price of gold will start today at US$3,337/oz, down -US$10 from yesterday.

American oil prices have risen +US$1 to just under US$63.50/bbl with the international Brent price up +US$1 to just over US$67.50/bbl.

The Kiwi dollar is at just on 58.2 USc and down -10 bps from yesterday. Against the Aussie we have held at 90.6 AUc. Against the euro we are up +10 bps at 50.1 euro cents. That all means our TWI-5 starts today at just on 66.2, and up +10 bps helped by a gain against the yen.

The bitcoin price starts today at US$114,270 and essentially unchanged from this time yesterday. Volatility over the past 24 hours has been modest at just under +/-1.1%.

You can get more news affecting the economy in New Zealand from interest.co.nz.

Kia ora. I'm David Chaston. And we will do this again on Monday.

Kia ora,

Welcome to Thursday’s Economy Watch where we follow the economic events and trends that affect Aotearoa/New Zealand.

I'm David Chaston and this is the international edition from Interest.co.nz.

And today we lead with news the US Fed thinks inflation risks outweigh concerns about their labour market.

But first. in its familiar yoyo pattern, US mortgage applications fell last week by -1.4% from the prior week, but that makes then +10% higher than the same week a year ago. The softness over the past week is all related to softer refinance activity, even though benchmark 30 year mortgage rates changed little.

The US Fed released the minutes of its July meeting and that revealed the stances of the two Trump supporters on th nine-member voting panel. "Almost all" officials supported keeping rates unchanged at 4.25%, with those two dissenting in favour of a quarter-point cut to protect a weakening job market. It seems ironic that they should use that reason, because Trump fired the BLS chief for producing results that showed the American labour market weakening. One of the two, Christopher Waller, is considered the front-runner to replace Powell when his term ends. The two dissenters seem isolated in the group at this time.

But that has not stopped Trump supporters making up 'fraud' claims against sitting Fed members in an effort to twist the voting panel.

These minutes had no impact on financial markets.

There was a well-supported US Treasury 20 year bond tender earlier today that delivered a median yield of 4.82%. That was lower than the 4.89% at the prior equivalent event a month ago.

In Canada, a survey of small business owners turned more positive in July - even though their trade association claimed that 38% of them won't last a year without tariff changes.

Across the Pacific, Taiwan turned in another very strong rise in export orders, up +15% in July from a year ago. After the +25% rise in June, this remains impressive but is what analysts have now come to expect.

In Indonesia, they had a central bank review of their 5.25% policy interest rate yesterday and no change was anticipated. But in fact they cut by -25 bps to 5.00%, the fifth cut over the past year. They are confident inflation will remain contained and are moving to support "the need to stimulate economic growth in line with the economy's capacity".

In the UK, their CPI inflation rate rose to 3.8% in July, its highest since January 2024. Driving the rise were cost increases from transport, holidays, food and fuel. These were offset by slower increases in rents (even if they are still rising fast). They have their own twist on the CPI called the CPIH which they emphasise, which adds in owner-occupier housing costs, and that rose 4.2%. That draws in imputed rents, stamp duties, and the cost of maintenance improvements. Either way, they have a sharpish inflation problem.

In Australia, AUSTRAC said real estate agents are one of the key to tackling scams, drug trafficking and organised crime. Along with banks and lawyers, real estate agents are going to get more focus on fighting money laundering.

The UST 10yr yield is now at 4.29%, down -1 bp from yesterday at this time.

The price of gold will start today at US$3,347/oz, up +US$31 from yesterday.

American oil prices have stabilised at just over US$62.50/bbl with the international Brent price up +US$1 to just over US$66.50/bbl.

The Kiwi dollar is at just on 58.3 USc and down -70 bps from yesterday following the dovish RBNZ MPS. Against the Aussie we have fallen -80 bps to 90.6 AUc. Against the euro we are down -60 bps at 50 euro cents. That all means our TWI-5 starts today at just under 66.1, and down -80 bps.

The bitcoin price starts today at US$114,270 and up +0.7% from this time yesterday. Volatility over the past 24 hours has been low at just under +/-0.8%.

You can get more news affecting the economy in New Zealand from interest.co.nz.

Kia ora. I'm David Chaston. And we will do this again tomorrow.

Kia ora,

Welcome to Wednesday’s Economy Watch where we follow the economic events and trends that affect Aotearoa/New Zealand.

I'm David Chaston and this is the international edition from Interest.co.nz.

And today we lead with news commodity prices are taking a hit in global markets today as overall economic prospects are under scrutiny in both the US and China. And Wall Street is following them down, in their case led by tech firms.

Prices for both hard and soft commodities are in retreat today, including oil, natural gas, steel, copper, aluminium, wheat, and soybeans. Even bitcoin is falling, down -8.5% over the past week when it hit a recent high note. But not everything.

Today's full dairy auction revealed better demand from a wider range of markets than was expected so the declines anticipated were much less, in fact just -0.3% overall. Good buying of WMP and not only from China saw this rise slightly and that limited any overall downside. But there were lower prices for cheese, butter and SMP - lower, but about what was expected for these categories.

In the US, housing starts rose a bit more than expected. But the gain was accentuated because July 2024 was unusually weak and that was because for some reason the 2024 bump came in August. Still it was encouraging because analysts had expected a small retreat in July. Still, the general level remains well below the general levels over the prior years. And new building permits were unusually low in July and are now running at their lowest level since June 2020. So the future isn't that bright in this sector.

In the rural sector, American farmers are particularly worried about how the Trump Administration is upending their industry, and questions about survivability are arising. Many apparently face bankruptcy.

Canadian CPI inflation fell, and by a bit more than expected. It came in at 1.9% in June in a small blip up. It was expected to slip back to a 1.8% rate but in fact came in at 1.7%, the same level it was in April and May. Fuel prices led the decline, but rents rose +3.0% and grocery prices were up +3.4% This will make it tricky for their central bank when they next meet on September 17.

Across the Pacific, the top leaders in China have been on vacation and are now starting to return to active front-line duty.

Meanwhile, Malaysian exports turned out to be much stronger in July than anticipated. They rose +6.8% in July from the same month a year ago, defying market expectations of a -5% drop. They also revised their June result to be a smaller dip than first reported. Malaysia imports were expected to fall sharply, but in fact held their own.

In Australia, the Westpac-Melbourne Institute Consumer Sentiment Index surged 5.7% in August to its highest since February 2022, after a small rise in July. All components rose: family finances compared to a year ago rose +6.2%, while expectations for the next 12 months climbed +5.4%. Views on the economy improved, with the 12-month outlook up +7.6% and the 5-year outlook rose +5.4%, both above historical norms. The time to buy a major household item index gained +4.2%, while unemployment expectations fell -2.4%, still below the long-run level of 129. Their long spell of consumer pessimism may be ending, though sustaining momentum could require more easing. This survey underscores why the second-term Albanese government is riding ever higher in their polls, and the right-wing opposition parties are in disarray.

The UST 10yr yield is now at 4.30%, down -4 bps from yesterday at this time.

The price of gold will start today at US$3,316/oz, down -US$17 from yesterday.

American oil prices have fallen -US$1 to be just under US$62.50/bbl with the international Brent price over US$65.50/bbl.

The Kiwi dollar is at just on 59 USc and down -20 bps from yesterday. Against the Aussie we have firmed +20 bps to 91.4 AUc. Against the euro we are down -20 bps at 50.6 euro cents. That all means our TWI-5 starts today at just under 66.9, and down -10 bps.

The bitcoin price starts today at US$113,512 and down -2.6% from this time yesterday. Volatility over the past 24 hours has been modest at just under +/-1.5%.

Join us from 2pm NZT this afternoon for full overage of the RBNZ OCR decision and the following press conference.

You can get more news affecting the economy in New Zealand from interest.co.nz.

Kia ora. I'm David Chaston. And we will do this again tomorrow.

Kia ora,

Welcome to Tuesday’s Economy Watch where we follow the economic events and trends that affect Aotearoa/New Zealand.

I'm David Chaston and this is the international edition from Interest.co.nz.

And today we lead with news that attention will now turn to the annual Fed meeting in Jackson Hole, WO. This year Fed boss Powell is not only trying to balance US monetary policy settings between rising inflation pressures and a basically stable (and good) labour market, he also has to contend with a unstable fiscal policies and political pressure, with two and soon to be three voting members who want to appease the "low rate" President. He is earning his keep at present, and this summer forum will be a way for him to make his case.

Special attention will be on his comments about rate cut prospects, something markets have mostly priced in for the September 18 meetings. Currently, analysts expect Powell to be coy about his signals for a rate cut.

But on the current data front in the US, their housebuilding industry remains quite glum. The NAHB index of sentiment in the sector is near a record low, only worse during one month in the pandemic. And the July retreat was not expected. Builder sentiment has now been in negative territory for 16 consecutive months and their key problem is costs, induced recently by tariff taxes, and keeping new housing basically unaffordable for new buyers.

But north of the border, its quite a different situation. Canadian housing starts hit a three year high in July, up +3.7% from June which was also a very strong month. The Canadians are tackling their housing affordability issue with a strong push for more supply. The key gains are with multi-unit housing in Montreal and the Prairie Provinces.

It is not something we have reported on before, but India is now releasing monthly unemployment data. Previously it was quarterly and the latest release shows this key metric at 4.2% in July, which is a record low since records started in 1995. Nothing like an expanding economy to pull down the jobless rates.

Singapore’s non-oil domestic exports (NODX) fell -4.6% year-on-year in July, reversing a downwardly revised +12.9% surge in June and establishing a yoyo pattern. This marked the third decline so far this year and the steepest contraction since October 2024, due to a fall in non-electronic exports, especially to the US (-48%) but also China -12%). Perhaps more worrying, near neighbours Thailand, Malaysia and Indonesia all bought significantly less in July.

In China, the $2 bln trade in dairy products from the EU to China is under investigation by political authorities as part of pressures China is exerting as countermeasures for EU restrictions on China. Now the Chinese are drawing out the pressure with another extension to the probe, due to "complexity" in the case.

The UST 10yr yield is now at 4.34%, up +2 bps from yesterday at this time.

The price of gold will start today at US$3,333/oz, essentially unchanged from yesterday.

American oil prices have firmed slightly to be just under US$63.50/bbl with the international Brent price under US$66.50/bbl.

The Kiwi dollar is at just on 59.2 USc and unchanged from yesterday. Against the Aussie we have firmed +20 bps to 91.2 AUc. Against the euro we are also up +20 bps at 50.8 euro cents. That all means our TWI-5 starts today at just on 67, and up +20 bps.

The bitcoin price starts today at US$116,576 and down -1.2% from this time yesterday. Volatility over the past 24 hours has been modest at just under +/-1.4%.

You can get more news affecting the economy in New Zealand from interest.co.nz.

Kia ora. I'm David Chaston. And we will do this again tomorrow.