Economy Watch

Interest.co.nz / Podcasts NZ, David Chaston, Gareth Vaughan, interest.co.nz
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We follow the economic events and trends that affect New Zealand.

  1. 2d ago

    The cost of money has just jumped

    Shutterstock Track 1219389 Monetization ID TFGEPGEI0LHEIJAI 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. Today we lead with news bond prices and equity prices are falling as oil prices have jumped, and markets now see a much larger chance the US Fed will have to raise rates when it meets on Thursday next week (NZT). Bond yields have jumped today in an outsized shift. Inflation risks are mounting everywhere now. Copper, silver and gold prices are sliding today. Adding to anxiety, Iran-backed Houthis have seized another Red Sea port is a defeat for Saudi Arabia, putting more pressure on the Red Sea shipping lanes. And in the US, at a sparsely attended 'convention', Trump has added to his cash promises to American voters if they keep a Republican Congress after the November elections that now exceed US$1 tln. In the US, producer prices rose in August more than expected and more than in July. They were up +5.4% from a year ago, faster than the July +4.8% rise. Clearly inflation is embedding in the US economy and is likely to spill out to consumer prices very soon - though the risks of that for their service economy seem much less. US fuel prices have risen sharply too with diesel now almost averaging US$6/bal, petrol up at US$4.27/gal. These are both quite big rises just from yesterday. US initial jobless claims rose last week to 176,500, about what seasonal factors would have indicated. There are now 1.675 mln people on these benefits, much lower than last week as qualification standards bite very much harder now. US crude oil stocks fell again last week but by less than expected and by less than the prior week. US existing home sales fell -2% in August to under a 4 mln annual rate. Unsold inventories rose. These dynamics are unlikely to get better because benchmark mortgage rates are about to jump. After declining for all of 2026, the US inventory-to-sales ratio jumped unexpectedly in July with wholesale inventories up +1.3% from June to be +5.7% higher than year-ago levels. So it will be no surprise to know that the median yield for today's US 30yr bond auction rose to 5.25% (hi 5.31%), from 5.15% at the prior equivalent event a month ago. As expected, the European Central Bank raised its policy rate by +25 bps to 2.65% saying that they expect inflation to be elevated and this required pushback. Australian inflation expectations have remained unchanged at 4.9% in September as they were in August. That is far above the July 3.5% official CPI rate and the August CPI update won't come until the end of this month. And last month’s spike in wage expectations appears to have been a temporary blip, with expectations about year-ahead pay growth falling to just +1.2%. The squeeze is on and quite hard now. OPEC's monthly report showed that overall output rose by almost +350,000/bbl/day in the month led by Iraq. But they lowered their demand expectations for 2026 on the trajectory of the global economy. It is not often you see rising out put, lower demand, and a sharp jump in prices. That Trump guy is something 'special'. Global container freight rates were little-changed last week, staying at unusually high levels and up +119% from a year ago. Rises in China-to-US rates were offset by falls in China-to-EU rates. Meanwhile bulk cargo rates rose +12% last week, and are now +175% higher than year-ago levels. The UST 10yr yield is now just on 4.96%, a jump of +12 bps from yesterday at this time. The price of gold is now at US$4337/oz, and down -US$81 from yesterday at this time. Silver is down -US$4 at just under US$64/oz. Oil prices are up +US$6 at a very high US$102/bbl in the US, while the international Brent price has risen +US$6.50 to just over US$107.50/bbl. The Kiwi dollar is down -40 bps from yesterday, now just under 58 USc and a six week low. Against the Aussie we are up +10 bps at just under 81 AUc. Against the euro we are down -30 bps as well at 49.9 euro cents. That all means our TWI-5 starts today at just over 61.3, down -30 bps from yesterday. The bitcoin price starts today at US$77,113 and down -2.1% from yesterday at this time. Volatility over the past 24 hours has again been modest at just under +/-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’ll do this again on Monday. Track 1219389 Monetization ID TFGEPGEI0LHEIJAI Audio soundtrack opening is licensed from Shutterstock, Track 1219389 Monetization ID TFGEPGEI0LHEIJAI

  2. 3d ago

    The risks of an unravelling rise

    Shutterstock Track 1219389 Monetization ID TFGEPGEI0LHEIJAI 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. Today we lead 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 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. 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%. 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. Track 1219389 Monetization ID TFGEPGEI0LHEIJAI Audio soundtrack opening is licensed from Shutterstock, Track 1219389 Monetization ID TFGEPGEI0LHEIJAI

  3. 4d ago

    Central banks realise they have to get more serious in the inflation fight

    Shutterstock Track 1219389 Monetization ID TFGEPGEI0LHEIJAI 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. Today we lead with news inflation is high and rising around the world and central banks are confronting a change in priorities to get it under control. Their slow action is undermining their cred in the communities they serve. And that slow action has them facing some tough choices. But first, the overnight Pulse dairy auction brought slightly softer prices except for WMP which was little-changed. The dips in the other commodities was cushioned by the lower NZD. With the US back from holiday, more data has been released today. Of note is the ADP weekly employment data. The week-over-week change to their four-week moving average is less than +12,000 and that is nowhere near enough to confirm the last strong US non-farm payrolls report. Meanwhile, the New York Fed's August consumer inflation expectations survey held the one year ahead data at 3.6%, basically where it has been since rising to this level in April. Expected price growth for petrol rose to 4.6%, and for food to 5.3%. Worries about the labour market intensified, with those surveyed seeing unemployment will be higher in a year now 44% of the survey, the highest level since April 2020. And that is mirrored in the September update NFIB Business Optimism Index It fell away and by slightly more than expected. Inflation is now tied with taxes as the second top small business issue. Consumer debt rose again in July in the US, up an outsized +4.2% from a year ago. Driving this surge were non-revolving debt borrowings, like car loans, student loans, and personal loans. China has posted a strong trade result for August, with exports and imports up strongly, resulting in a fatter trade surplus. That surplus widened to +US$119 bln from +US$101 bln in July. It's surplus with the US accounted for +US$29 bln of that. Their August exports were up +25% and their imports were up +28.2% from the same month in 2025. Germany also reported a larger July trade surplus, but it did so in a defensive way. Exports fell from June (-0.8%) but imports fell more on that basis (-5.7%) so its surplus widened to €21.3 bln in the month. Year-on-year however, their exports were up +6.1% and their imports were up +3.0%. The key reasons for the July import fall were a -7.5% fall in imports from China, and an -8.3% fall in imports from the US. In Australia, consumer sentiment is retreating. The Westpac-Melbourne Institute August survey shows a raft of negative pressures. Household finances are coming back under pressure from higher fuel and rate rise fears. The housing downturn is starting to weigh on sentiment among homeowners. Nearly two thirds of consumers now expect mortgage rates to rise. And consumer unease about jobs, especially for construction and hospitality workers, is on the rise. And things are little better in the business sector. The August NAB survey of businesses shows business conditions fell 5 points and turned negative for the first time in six years. Business confidence fell 2 points and now 12 points below its January level, and worse, profitability fell 10 points as input costs continued to outpace price recovery increases. Meanwhile, RBA deputy governor Andrew Hauser said overnight that inflation is the major problem for Australia's central bank. He acknowledged Australians are struggling with the continued high cost of living and rising interest rates. But he also indicated those rates could rise higher in the coming months, because of their focus on fixing the key inflation problem. The Australian Government 10 year bond yield rose on the news, now its highest since 2011. Separately, it is also probably worth noting that the price of EU carbon permits is rising again, now at €85.40/tonne (NZ$160/tonne). That is far from the NZ$50/tonne available locally. The UST 10yr yield is now just on 4.81%, a rise of +1 bp from yesterday at this time. The price of gold is now at US$4386/oz, and down -US$21 from yesterday at this time. Silver is little-changed at just under US$66.50/oz. Oil prices are little-changed but still very high at just over US$92.50/bbl in the US, while the international Brent price has dipped -50 USc to just over US$97/bbl The Kiwi dollar is down -20 bps from yesterday, now just on 58.6 USc . Against the Aussie we are down -30 bps at 81.1 AUc. Against the euro we are down -20 bps at 50.4 euro cents. That all means our TWI-5 starts today at just over 61.8, down -20 bps from yesterday. The bitcoin price starts today at US$78,564 and down -0.8% from yesterday at this time. Volatility over the past 24 hours has again 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’ll do this again tomorrow. Track 1219389 Monetization ID TFGEPGEI0LHEIJAI Audio soundtrack opening is licensed from Shutterstock, Track 1219389 Monetization ID TFGEPGEI0LHEIJAI

  4. 5d ago

    Commodities higher, global interest rates higher, yen higher

    Shutterstock Track 1219389 Monetization ID TFGEPGEI0LHEIJAI 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 global interest rates are still moving higher. And that is particularly true for Australian benchmark bonds. Money and commodities are transitioning somewhere, but it is not clear to where, just yet. But first, it is a public holiday in the US (Labor Day) with all their financial markets closed. Given their size, this has meant all other international markets are running at lower levels and in a hesitant mode. But some key shifts are not waiting for the Americans to return. In China, their August foreign exchange reserves were reported overnight and they rose to US$3.44 tln, the second highest level ever but not quite hitting their record May result. That puts them +3.6% higher than year-ago levels. Of note is that they added another +20 tonnes of gold to their reserves in the month, which makes the calendar year increase now almost +80 tonnes. Gold now makes up 10.2% of their overall reserves, although that is down from 11% at the start of  2026. And China announced major funding into eight large SOE institutions to enable them to lend more. It is injecting ¥300 bln (NZ$75 bln) in 'recapitalisation' the most it has done like this in 20 years. The funds will come from Ministry of Finance 'special bonds'. It is the latest and unlikely to be the last of economic support measures to 'reinvigorate' their economy. Japan's July leading index rose to its highest since January 2014 although the June level was revised down. The July level was also slightly below analyst's expectations despite the gain. Rising job offers and consumer sentiment were among the factors behind the rise. Singapore reported that its July retail sales were softer than expected. They were up by +1.5% from a year ago, the softest rise since May 2025 and slowing from a +4% increase in June. The EU reported a better rise in economic activity. The EU economy expanded +1.4% in Q2-2026 in its updated result, up from +1.0% in the previous estimate and much better than the +0.9% growth recorded in Q1-2026. The gain was driven by stronger growth in household spending and gross fixed capital formation, with exports also rebounded sharply. Euro area expansion came in slightly less than the overall EU levels. However German industrial production recorded a sharp and unexpected -1.1% fall in July, to now be -1.6% lower than year ago levels. (The Germans, as usual, report their data on an inflation-adjusted basis unlike many other countries.) The weakness there was from energy-intensive industries, and that includes car manufacturing. In a reaction toe the Saxony state election results, the German stock exchange dipped, and the 10yr German Bund yields rose to their highest since 2010. But they weren't the only bond yields to rise. The Australian 10 year bond yields rose to 5.22% and their highest since 2011. (Of course this has little to do with a German state election.) And the Japanese yen surged against the US dollar overnight, up to the 154 range as growing speculation over faster-than-expected Bank of Japan rate increases combined with renewed possibility of another round of currency intervention by the Japanese authorities drove the moves. We should also probably note that the copper price jumped to US$14,513/tonne on the LME, a record high. The UST 10yr yield is now just on 4.80%, up +2 bps from yesterday at this time. The price of gold is now at US$4407/oz, and down -US$26 from yesterday at this time. Silver is little-changed at just on US$66/oz. Oil prices are up +US$1 at just over US$92.50/bbl in the US, while the international Brent price is just under US$97.50/bbl. The Kiwi dollar is little-changed from yesterday, still just on 58.8 USc . Against the Aussie we are down -20 bps at 81.4 AUc. Against the euro we are holding at 50.6 euro cents. That all means our TWI-5 starts today at just over 62, down -10 bps from yesterday. The bitcoin price starts today at US$79,194and down -0.7 from yesterday at this time. 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’ll do this again tomorrow. Track 1219389 Monetization ID TFGEPGEI0LHEIJAI Audio soundtrack opening is licensed from Shutterstock, Track 1219389 Monetization ID TFGEPGEI0LHEIJAI

  5. 6d ago

    Eyes on global inflation

    Shutterstock Track 1219389 Monetization ID TFGEPGEI0LHEIJAI 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. Today we lead with news we are heading into a week that will deliver a wide set of consumer and producer inflation reports. But locally, the data releases will be light. It is a light data week in Australia too, with only migration updates this week. But we will also get an update on the total value of all houses as at June and that may start to show a leveling off from the March record high AU$12.8 tln. We will also get August consumer and business confidence updates from Australia, and September consumer inflation expectations results. Globally we will be looking for signs of widening cracks in fuel markets as Trump's forever war drags on. In the US they are now on their long Labor Day weekend holiday, ending their summer holiday season. They face petrol prices +40% higher than when Trump started his Persian Gulf war with Iran. Diesel there are almost +80% higher now and that is having broad inflationary impacts in secondary goods costs. That these are rising faster recently is not a sign that Kevin Warsh will be able to ignore, even if he is under renewed pressure from the White House to do so. So of special interest will be the US August CPI update, brought to you by the good folks at the same agency that delivered the strong headline labour market data on Friday (the agency Trump fired the head of a while ago because he didn't like the results they released). A 3.4% headline rate is anticipated, but markets are taking that sceptically. After all, the PCE inflation measure for July was 3.7%. Even if you take both at face value, and the payrolls data at face value, there seems little justification for them not to weigh against inflation at this time. But Warsh & the Fed probably won't, so American inflation is set to be outsized and rising for some time yet. They will also release August PPI data this week, expected to remain elevated at 4.7%. The first September University of Michigan sentiment survey will drop this week too, and this has been very low reflecting unease over unconstrained inflation. And American consumer inflation expectations survey commissioned by the NY Fed will also drop this week Meanwhile, the ECB will decide on interest rates (expect a +25 bps rise to 2.5%), and Germany will unveil August industrial production data. There will be more trade and inflation data out elsewhere and that includes from China. We expect a larger trade surplus and their low inflation to rise again marginally. From Japan, a raft of economic reports is due, including revised Q2 GDP, July wages and current account data, as well as August PPI, which is expected to show producer inflation accelerating to 7.4%. Their machine tool order update is due too. Over the weekend, the Japanese household spending data that was weak in June got weaker for July, a result that wasn't expected. It was a contraction at the sharpest pace since January 2024. Only the furniture and recreation categories were positive. The US non-farm payrolls was out over the weekend and rose much more than expected in both the headline version and the actual version, up +154,000 in August from July when just a +15,000 rise was expected, up +456,000 from a year ago to 158.9 mln people on payrolls. This result is sharply different to the ADP Employment report which tracks most of this weekly. The broader employed civilian labour force data however isn't so upbeat, showing a -133,000 fall from July, down -621,000 from August a year ago and to 162.7 mln employed people. Take your pick from these two official results, but it does suggest a widening gap where it is substantially harder to sustain employment unless you are on a company payroll. Markets seem sceptical of the strong headline jobs report, suspecting it is something that will be corrected in future. Wall Street is lower, benchmark bond yields are higher, both shifts you may not expect if they did believe the headline data was genuine. Across the border, Canada reported a tougher labour market. Employment there declined by -41,700 in August, missing expectations for a +15,000 increase and following a +75,100 gain in July. In the overall EU, retail sales volume growth slowed to just +1.0% in July from a year ago, from an upwardly revised +1.7% in June. This was slightly lower than market expectations of a +1.1% gain and was the smallest increase in retail trade since April. But at least they have positive volume growth. In Germany they reported a sharp rise in factory orders in July, up +2.5% from June to be more than +13% higher than year-ago levels. This was much better than observers were expecting. In Norway, their gigantic US$2 tln sovereign wealth fund is moving to sharply cut back on its exposure to US Treasury bonds. Yesterday we noted the Dutch move to insulate risks by moving their gold holdings out of the US. Global food prices rose notably in August to their highest since November 2022. All food groups rose including for meat and dairy, although the biggest rises were for cereals, sugar, and vegetable oils. Also globally, perhaps we should note that the value of the top 50 mining companies surged on stock exchanges by a monster +US$350 bln in August alone, taking them back to February levels when the value of gold was US$1000 higher than it is now. The UST 10yr yield is now just on 4.78%, unchanged from Saturday at this time, up +5 bps for the week. The price of gold is now at US$4433/oz, and up +US$9 from Saturday at this time, down -US$29 from a week ago. Silver is little-changed at just on US$66/oz, down -50 USc for the week. Oil prices are holding at just on US$91.50/bbl in the US, while the international Brent price is just under US$96.50/bbl and also little-changed. A week ago these prices were US$83.50 and US$88/bbl respectively. The Kiwi dollar is little-changed from Saturday at just on 58.8 USc but down -30 bps from a week ago. Against the Aussie we are still at 81.6 AUc. Against the euro we are down -10 bps at 50.6 euro cents. That all means our TWI-5 starts today at just over 62.1, unchanged from Saturday, down -50 bps for the week. The bitcoin price starts today at US$79,745 up +0.2% from Saturday at this time, but up +2.7% from last week at this time. Volatility over the past 24 hours has been very low at just under +/-0.4%. 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. Track 1219389 Monetization ID TFGEPGEI0LHEIJAI Audio soundtrack opening is licensed from Shutterstock, Track 1219389 Monetization ID TFGEPGEI0LHEIJAI

  6. Sep 3

    Pretending inflation is under control

    Shutterstock Track 1219389 Monetization ID TFGEPGEI0LHEIJAI 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. Today we lead with news financial markets are in a holding pattern today. First we should note that this coming weekend will be a major long weekend holiday in the US, for Monday's Labor Day. The means US markets will likely be quieter than normal until Tuesday their time, Wednesday ours. But they will still release their August non-farm payrolls report tomorrow and that is expected to show a +56,000 jobs gain and continuing the low expansion that has been usual in 2026. Today, the US initial jobless claims data for last week was released coming in at just over +170,000 and slightly more than seasonal factors would have indicated. There are now 1.74 mln people claiming these benefits, lower than a year ago and two years ago on much tighter eligibility requirements. The widely watched ISM services PMI came in marginally better than expected and better than for July with gains in activity and new business, but falling employment metrics. Twelve industry sectors indicated growth in August, one fewer than the previous month, while five reported contraction, up one compared to July. Price pressures remain very elevated at its highest level since August 2022. The S&P Global services PMI was also out overnight showing a similar expansion even if the details were different; jobs growth hits highest since January 2025, and input costs and selling prices increases were at a slower rate. Take your pick. There was an interesting speech from Fed heavyweight Christopher Waller, someone once floated as a possible Trump pick to replace Powell. Perhaps predictably he lined up with Kevin Warsh on pulling back on forward guidance communication, although he has staked out a full need to communicate of most other aspects of Fed thinking. This speech shows he isn't in the camp worried about current inflation risks because he thinks the peak pressure has passed. That tone took some sting out of the US Treasury bond yields today. The US also released its broader trade result for July, covering both goods and services. This confirmed the trade deficit spike we saw in the earlier merchandise-only data. In this case their services surplus was weak, so had a minimal impact on the large and growing goods deficit. Both exports and imports of services fell, notably for travel and financial services. Overall this deficit is now its largest in sixteen months when the pre-tariff stockpiling was at its peak. Canada also reported trade data for July, and while they still have a surplus, it was much narrower that expected. Exports fell while imports rose. It was their first export decline in six months. The Japanese yen has climbed to the ¥155:USD level, its highest since early August as traders priced in the chance of faster Bank of Japan interest rate hikes. The Bank of Japan next meets in two weeks from today. In China, their private services PMI by S&P Global (RatingDog) came in positive and certainly better than the contracting official version. The rise was soft but better than market forecasts. The increase was from better domestic demand, while foreign sales rose for the fourth straight month, but at a more modest pace than in July. The EU said producer prices there rose more sharply in July than June, but only by what they had in May - although that was a fast pace, and well above what they were expecting. For the whole EU, they were up +5.6% from a year ago and largely driven by the +12.5% rise in fuel costs. They were expecting only a +4.6% rise in overall PPI increases. Of special worry however will be that these costs rose at a very fast +1.4% in July from June. In Australia, they advised that their exports fell in July from June by -3.3% and their imports fell by -2.5%, giving them a reduced merchandise trade surplus of AU$1.9 bln. A year ago, that surplus was +AU$6.2 bln. Global container freight rates were unchanged from last week, and are now +110% higher than year ago levels. Global bulk cargo rates are +8.5% higher than week ago levels, in fact now their highest since May 2022. That puts them up +68% from a year ago. The UST 10yr yield is now just on 4.77%, down -3 bps from yesterday at this time. The price of gold is now at US$4486/oz, and up +US$114 from yesterday at this time. Silver has risen +US$2 to just on US$67/oz. Meanwhile the Dutch central bank has confirmed it has moved it gold holdings out of the US "to improve tradability", but likely also to prevent the Trump Administration from using them as a bargaining chip. Oil prices are -50 USc lower at just on US$91/bbl in the US, while the international Brent price is just over US$95/bbl and down -US$1. The Kiwi dollar is up +40 bps from yesterday at just on 58.9 USc. Against the Aussie we are up +20 bps at 81.7 AUc. Against the euro we are up +10 bps at 50.6 euro cents. That all means our TWI-5 starts today at just on 62.2, up +30 bps from yesterday. The bitcoin price starts today at US$81,011 and up +4.7% from yesterday at this time. Volatility over the past 24 hours has been moderate at just on +/-2.8%. 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 on Monday. Track 1219389 Monetization ID TFGEPGEI0LHEIJAI Audio soundtrack opening is licensed from Shutterstock, Track 1219389 Monetization ID TFGEPGEI0LHEIJAI

  7. Sep 2

    Resilience despite risks & threats

    Shutterstock Track 1219389 Monetization ID TFGEPGEI0LHEIJAI 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. Today we lead with news hostilities in the Persian Gulf are still ongoing and still clouding the global economy First in the US, the latest Fed Beige Book survey reveals an American economy where activity increased modestly since early July. Ten of the twelve Federal Reserve Districts reported modest growth; two reported no change. Consumer spending grew slightly on balance; reports reflecting both heightened price sensitivity on the one hand and solid high-end purchases on the other. Car sales were mostly subdued, dampened by downbeat consumer confidence, high fuel prices, and rising financing costs. And that was reinforced by mortgage applications levels that were little-changed and mortgage interest rates that have stayed high and back at early 2025 levels, now 6.79%. Further, the ADP monthly employment report for private payrolls delivered a +38,000 jobs gain in August, lower than for July and lower than the +47,000 expected. It was a seven month low. Saturday will bring the US non-farm payrolls report update for August which is expected to show a gain of +58,000 - which now may be on the high side. US payroll growth has essentially evaporated since early 2025 and the start of the Trump 2 presidency. New factory orders however were reported to have risen +10.4% in July from a year ago. This is an impressive result, but you would have thought that activity and employment data would show that surge. However some of the largest gains are in defense aircraft and computer equipment (data centers) which don't have a lot of jobs attached to them. US crude oil stocks fell again last week and by about double what was expected. And their Strategic Reserves fell too, and by a similar amount. These are dangerously low now. In Canada their central bank reviewed their policy interest rate by kept it at 2.25% as expected. They seemed somewhat surprised at the resilience of the Canadian economy given the economic attacks from the US, but they also now see that resilience continuing despite the substantial adjustments they have to make. Canadian benchmark bond yields are rising, today at a two year high. But this isn't especially high given the threats. The somewhat hawkish tone wasn't expected and the chances of rate hike there have probably increased. In Australia, it is coming to light that their central bank has downgraded the US dollar for its foreign currency holdings. (The RBA is somewhat unusual in that they have revealed that pullback. It is likely happening in many other central banks too, as IMF consolidated data suggests.) And staying in Australia, they released their Q2-2026 economic activity data today, showing a +0.4% expansion for the quarter, to be up +2.1% (real) from a year ago. That was much better than the expected +1.8% expansion. Their per capita growth was only up +0.7% however. The widely expected slowing in 2026 has been much less than observers had expected. And that has significantly boosted the AUD and Australian Government bond yields. The UST 10yr yield is now just on 4.79%, down -1 bp from yesterday at this time. The price of gold is now at US$4372/oz, and upUS$37 from yesterday at this time. Silver has risen +50 USc to just under US$65/oz. Oil prices are up +US$1.50 at just over US$91.50/bbl in the US, while the international Brent price is just under US$96/bbl The Kiwi dollar is down -40 bps from yesterday at just on 58.5 USc. Against the Aussie we are down -90 bps at 881.5 AUc. Against the euro we are also down -30 bps at 50.5 euro cents. That all means our TWI-5 starts today at just on 61.9, down -50 bps from yesterday. The bitcoin price starts today at US$77,353 and essentially unchanged from yesterday at this time. Volatility over the past 24 hours has been low at just on +/-0.9%. 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. Track 1219389 Monetization ID TFGEPGEI0LHEIJAI Audio soundtrack opening is licensed from Shutterstock, Track 1219389 Monetization ID TFGEPGEI0LHEIJAI

  8. Sep 1

    Investors on edge as global bonds sell off

    Shutterstock Track 1219389 Monetization ID TFGEPGEI0LHEIJAI 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. Today we lead with news  bond yields worldwide climbing as rising oil prices are raising inflation concerns. Financial markets have raised the chance of widespread interest-rate hikes. US Treasury 10 year yields hit 2025 highs at 4.8%, while Japan’s equivalent rate hit 3% for the first time since 1996. German bund yields climbed to 15-year highs and UK gilt yields to 18-year highs. Not helping are a new round of attacks by a trigger-happy US on Iran. But first, there was a full dairy auction overnight and the overall results were modestly positive. Prices in USD were up +0.9% and up +0.6% in NZD. The big mover down was cheddar cheese suffering a -6.6% fall. The big mover up was SMP with a +5.3% gain. WMP was very little-changed. In fact, SMP prices are now higher that WMP prices, the first time like this since July 2022. In between, the WMP premium actually got as high as +US$1550/tonne. In the US, there were two factory PMIs out for August, both essentially holding a moderate expansion there. The widely-watched ISM one came in fractionally lower than for August, with new orders growing at a slightly slower rate and price pressure little-changed. The internationally benchmarked S&P Global one was little changed, noting output and orders both rising at slower rates, with stock building efforts continuing amid supply issues and higher prices. The US Logistics Managers’ Index fell for a second consecutive month due to a slowdown in inventory expansion, while logistics costs continued to rise at a high pace. July JOLTS data shows job openings rising while quits fell, but these changes were actually quite minor. The US RCM/TIPP optimism index is still in an easing trend that started in early 2025, but it has held at a modest level in August, similar to the June and July levels. There were offsetting shifts with greater confidence among investors and higher-income households, but a deterioration in sentiment for non-investors and lower-income households. Meanwhile the Dallas Fed services sector activity moderated in August, but is still expanding. The Canadian factory PMI was little changed where their expansion was maintained at solid rate with output, new orders and employment all rising in August. Japanese consumer sentiment rose again in August, something it has been doing consistently since April. As we suspected, the private China factory PMI by S&PGlobal (Rating Dog) came in much more positively that the official version, and expanded at a rate that beat estimates, even if it is modest. How sustainable that improvement is will be interesting to see because input price inflation rose but output prices fell for first time in 2026 so far. And we should probably note that China's government debt is now at ¥100 tln for the first time (NZ$25.3 tln),107% of their GDP. And that is just their central government. (But to be fair, a notable part of that rise involves a shift from old opaque local government debt to a more transparent national treatment.) While that may seem high (and it is), the equivalent US federal debt level is 124% of their GDP. For New Zealand it is 49%, for Australia 34%. EU CPI inflation came in at 3.3% in August, the expected level, but up from 2.9% in July. All this rise was fuel cost related. Their core CPI rate actually dipped slightly to 2.4%. Meanwhile, German retail sales actually fell, and quite hard, down -2.5% in real terms in July from a year ago with the current month drop an outsized -3.4%, so the recent bite has been aggressive. In nominal terms there year-on-year levels are just level-pegging. Australian building consents were expected to fall in July and they did, and by about the expected amount, down -3.6% from June to remain up +9.0% from a year ago. House consents fell -4.2% but multiunit consents held little-changed (-0.4%). Still, that leaves the multiunit sector up almost +20% from a year ago. (Some of those are likely to have been Bathla developments in Western Sydney, so are unlikely to proceed now.) The UST 10yr yield is now just on 4.80%, up another +4 bps from yesterday at this time. The price of gold is now at US$4335/oz, and down -US$97 from yesterday at this time. Silver has fallen -US$1.50 to just under US$64.50/oz. Oil prices are up +US$4.50 at just over US$90/bbl in the US, while the international Brent price is just under US$94.50/bbl. The Kiwi dollar is down -30 bps from yesterday at just on 58.9 USc. Against the Aussie we are down -20 bps at 82.4 AUc. Against the euro we are also down -20 bps at 50.8 euro cents. That all means our TWI-5 starts today at just over 62.4, down -30 bps from yesterday. The bitcoin price starts today at US$77,297 and down -2.0% from yesterday at this time. Volatility over the past 24 hours has remained 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’ll do this again tomorrow. Track 1219389 Monetization ID TFGEPGEI0LHEIJAI Audio soundtrack opening is licensed from Shutterstock, Track 1219389 Monetization ID TFGEPGEI0LHEIJAI

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About

We follow the economic events and trends that affect New Zealand.

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  • Creator
    Interest.co.nz / Podcasts NZ, David Chaston, Gareth Vaughan, interest.co.nz
  • Years Active
    2019 - 2026
  • Episodes
    613
  • Rating
    Clean
  • Copyright
    © 2019-2026 Interest.co.nz
  • Show Website
    Economy Watch

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