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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.

Today we lead with news many countries are awaiting news of a new barrage of US tariffs, although the fear level is nowhere near as high this time as this weapon has proven relatively limp in the past, and mainly hurts US consumers.

First today, the overnight dairy auction surprised somewhat with an end to the recent weakness, rising +1.5% in USD terms although down almost -1.0% in NZD terms on the firmer NZD. Perhaps surprisingly, milk fats did quite well, other than cheddar (-6.5%). Powders were all up. Some say that northern hemisphere heatwaves have buyers nervous that this will soon weigh on production levels there, so stocks are being built in case.

In the US, the slower hiring trend that started in early May continued last week with the ADP weekly tracking reporting its lowest level since March, just after this weekly tracking series started.

US timber prices are rising and quite sharply recently. That is because of forest fires in the US Pacific Northwest states, and in British Columbia, the main exporting Canadian province to the US. Trump's new tariffs on Canada are making things worse for US housebuilders.

The early outcomes for the Q2-2026 earnings reporting season (with 10% of S&P 500 companies reporting actual results), 88% of these companies have reported a positive EPS surprise and 85% have reported a positive revenue surprise.

The US summer holiday season is starting to peak now and will stay like this until early August. The season overall ends on their Labor Day on September 7. We note this because commercial activity is different during this period and financial market activity is lighter than usual.

The same is true for Canada of course. But US border states are doing it tough because Canadians are choosing to avoid the US for their holidays as the insults and tariff actions from Trump's Washington swamp stay aggressive.

In China, new stimulus is being rolled out. Its gigantic "Six Networks" buildout is getting a major boost as part of more infrastructure spending. Those six are: water networks (canals), power grids, data centers, 6G development, undergrounding pipelines, and supply-chain efficiency upgrades. But they are also trying to get their service sector re-energised as well with targeted 'investments'.

Meanwhile, China is re-thinking its tax rebates that are driving its export competitiveness. It needs those funds for its domestic projects, and it doesn't need the international alarm their mercantalist export policies are creating.

In Europe, the ECB's Q2 lending survey has found banks have tightened credit standards moderately for firms on higher perceived risks and lower risk tolerance. Corporate loan demand rose while demand for housing loans and consumer debt decreased. Interestingly, companies seeking green loans were found to have much better financial profiles.

Germany's ZEW sentiment survey recovered notably in July after four months on weakness, and this is mirrored in their wider survey for the EU.

The price of copper is rising again, getting near the record highs it posted at the start of the Iran-US conflict. Driving some of this are unusually low copper stocks in China.

Meanwhile the FAO is reporting that hunger in the world fell again in 2025 and for a third consecutive year. Around 645 million people, or 7.8% of the world's population, experienced hunger last year, down from 8.1% in 2024 and 8.6% in 2022

The UST 10yr yield is now just on 4.63%, up +3 bps from this time yesterday and approaching its recent mid-May highs. 

The price of gold has risen to US$4069/oz, up +US$65 from yesterday. Silver is now just over US$58.50/oz, up +US$2 from yesterday.

Oil prices are +US$1.50 higher from yesterday at just on US$84.50/bbl in the US, while the international Brent price is now just over US$92/bbl and up +US$3. Hormuz transits are still just a trickle There have been just 1 crude tanker and 3 cargo ships exiting over the past 24 hours (4 dark with transponders off) and 11 entering for new loads (3 dark) and all this traffic is Iran-linked. The Red Sea is also now effectively blocked at Yemen.

The Kiwi dollar is -20 bps lower from yesterday at just over 58.3 USc. Against the Aussie we are also down -20 bps at 83.3 AUc. Against the euro we are down -10 bps at just on 51.1 euro cents. That all means our TWI-5 starts today at 62.2 which is down -10 bps from this time yesterday.

The bitcoin price starts today at US$66,421 and up +1.3% from this time yesterday. Volatility over the past 24 hours has again been modest at just over +/-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’ll do this again tomorrow.

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