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. 21h ago

    Iran extracts Persian Gulf tolls

    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 that yesterday's renewed hostilities between Israel and Iran seem to have been paused. And financial markets are reacting as though this is something permanent, a deluded reading of even recent history. It is more an excuse to bet on higher equity prices again. Away from these irrational markets and after hitting a two and a half year high in April at 3.5%, American inflation expectations for one year ahead slipped back to 3.2% in May, according to the latest national New York Fed survey update. Given that April's actual inflation was recorded at 3.8%, this represents a sanguine view of what lies ahead. More broadly, the same survey shows that households expect their financial situation to deteriorate. It is not only households. In a focus on the SME sector, another national review found them deeply pessimistic about 2026 prospects. Across the Pacific in Japan, some top-line data out yesterday for the March quarter points to improving metrics. GDP came in with a +1.8% growth rate and better than expected (+1.3%). And bank lending data shot up in May, up +5.7% and easily exceeding the expansion of +5.4% in April from a year ago. In China, construction machinery sales were strong in May with excavator sales up +36% from year-ago levels as infrastructure projects gain momentum. Things are not so bright for car sales in China. Sales ‌dropped -22% from a year earlier to 1.53 million vehicles in May, the eighth consecutive monthly fall. Even EV sales fell (-5%). In Germany, they posted some negative factory order data for April. They were down -3.8% on an inflation adjusted basis from the previous month, but that came after a +4.5% rise on the same basis for March. From a year ago, also in real terms, German factory orders were up +1.6% in April. And factory sales didn't decline in April either. In the Persian Gulf, to cross the Strait of Hormuz, the transit trickle is still low but not zero. Only ten ships crossed in the past 24 hours. It has now been 100 days since the crisis began and it seems Iran is successfully tolling the Strait, according to maritime sources. The UST 10yr yield is now just on 4.55%, up just +1 bp for the day.  The price of gold will start today up +US$5 from yesterday at US$4333/oz. Silver is up +US$1 at just under US$68.50/oz. Oil prices are up +50 USc from yesterday at just on US$91/bbl in the US, while the international Brent price is now just on US$94/bbl and up +US$1. Hormuz transits are still very low despite the pricing optimism. The Kiwi dollar is up +10 bps from this time yesterday at this time at just over 58.1 USc. Against the Aussie we are up +20 bps at 82.5 AUc. Against the euro we are also up +10 bps at just on 50.4 euro cents. That all means our TWI-5 starts today at just on 61.8 which is up +20 bps from yesterday. The bitcoin price starts today at just on US$63,416 and up +1.9% from this time yesterday. Volatility over the past 24 hours has been moderate at just over +/- 2.5%. 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.

    4 min

  2. 1d ago

    Market fears of rising inflation push up interest rates

    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 US benchmark interest rates rose notably after their apparently strong labour market report. But first, locally this week it will be about migration and travel data for April, possibly plus the May PMIs. In Australia, we will be watching for the April building permit data, along with updates for May for their consumer and business confidence surveys. In the US, they will release its consumer and producer inflation figures, the final price gauges before this month's Federal Reserve decision at the end of next week, in addition to existing home sales and their trade balance. Likewise, trade data and inflation data is coming from China as well as new yuan lending data. Trade data from Taiwan will drop this week too. And at the end of the week we will get central bank decisions from Canada and the ECB. On the corporate front, SpaceX will release what is likely to be the largest IPO on record. Over the weekend, China said its foreign exchange reserves swelled again and are now at US$3.44 tln and their highest since October 2015. They added a bit more gold but its value eased in the past month, so this wasn't a factor in the expanding reserves. Also, there was data out for Taiwanese inflation (firmish but low at 2.2%), Singapore retail (doing better with a +5.4% rise from a year ago), and an Indian central bank policy rate review (holding at 5.25%). None of these moved markets. Meanwhile, India said its Q1-2026 economic expansion rolled on with a better growth rate (+7.8%) than markets were expecting (+7.2%). In the US, the anticipated non-farm payrolls report delivered a strong result over the weekend, with a +172,000 jobs gain at the headline level and more than double the expected +82,000 gain. From a year ago, that is a rise of +503,000. But this data is the seasonally adjusted result from payroll employment. Looking more broadly, US civilian employment rose +149,000 in May from April but is -504,000 lower than year-ago levels. It is clearly very tough indeed for the unincorporated self employed. Of the headline jobs gain, +70,000 were in their hospitality sector (expecting a soccer World Cup boost?), local government added +55,000 jobs, healthcare +35,000, social assistance +17,000. There we no changes or declines in the manufacturing, IT and administration sectors, and little in the construction sector. Basically, lower paid jobs rose, higher paid ones shrank. The US no longer releases details of full-time, part-time job changes or detail. Total American consumer debt rose by +US$21 in May, following a downwardly revised +US$22 bln gain in April. This was slightly more than expected. Revolving credit, which includes credit card debt, rose +US$14 bln while nonrevolving credit, which includes vehicle and student loans, rose +US$8 bln in the month. This data shows sustained consumer demand for debt despite elevated borrowing costs and the rising interest-rate environment. And that, along with the gritty labour market questions, has driven a pullback in attitudes, to a more risk-off, defensive posture at the end of last week. More investors see the US Fed pushing ahead with rate hikes earlier than anticipated to try and not be blindsided from rising inflation getting embedded. After all, the Strait of Hormuz remains shut, and oil prices have ended the week higher than where they started. In turn that risk-off has driven US benchmark interest rates up, equity markets lower, and the US currency very much higher, Canada also released its May jobs data over the weekend and that was better than expected too. They added +88,000 jobs when a gain of only +10,000 was anticipated. Better, their full-time jobs grew +154,000 in the month, as part-time jobs shrank. Their jobless rates fell notably to 6.6%, from 6.9% in April and continuing the downward trend that started in October 2025. A stronger jobs market may also give the Bank of Canada cover to raise rates to get ahead of their inflation threats, too. In the EU, Ireland has had a stunning reversal of fortune, with their economy contracting more than -12% in Q1-2026. It alone was enough to twist the overall EU GDP lower. Ireland's multinational-dominated sectors contracted by -27% in Q1-2026 with their domestic sectors expanding by +0.4% and more in line with the other EU countries. The UST 10yr yield is now just on 4.54%, unchanged from this time Saturday but up +11 bps for the week.  The price of gold will start today up +US$4 from Saturday at US$4328/oz. That is down -US$227/oz (or -5.1%) from this time last week and about its lowest level of the year. Silver is down -50 USc at just under US$67.50/oz, down -10% for the week. Oil prices are little-changed from Saturday just on US$90.50/bbl in the US, while the international Brent price is now just on US$93/bbl. Hormuz transits are still very low despite the pricing optimism. A week ago these prices were US$87.50/bbl and US$91.50/bbl. The Kiwi dollar has stayed down from Saturday at this time at just under 58 USc. From a week ago it is down -190 bps. Against the Aussie we are unchanged at 82.3 AUc. Against the euro we are also unchanged at just on 50.3 euro cents. That all means our TWI-5 starts today at just under 61.6 which is down -10 bps from Saturday, down -170 bps for the week. The bitcoin price starts today at just on US$62,246 and recovering +3.4% from this time Saturday and still falling. Volatility over the past 24 hours has been moderate at just over +/- 2.1%.  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.

    7 min

  3. 4d ago

    World getting tired of amateur hour

    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 Hezbollah has rejected being part of a US-Iran accommodation, and Israel is continuing to attack it in Beirut and southern Lebanon. Despite this, markets still hope that a ceasefire can be agreed and the Strait of Hormuz opened. They are pricing it will, but it is shut still today. Elsewhere and in the US, there were 97,000 announced job cuts in May, the most since January and the highest May since 2020 and the pandemic effect - and prior to that the highest since this tracking began in 1999. Most of the current layoffs are in the tech industry, and due to AI displacement. Markets await the May non-farm payrolls report tomorrow and the expectation is for a modest +85,000 net jobs gain. This is despite the private ADP report indicating a higher level. US initial jobless claims were little-changed last week at 188,000 although seasonal factors would have expected a solid -10,000 fall from that level. There are now 1.64 mln people on these benefits. lower than year ago levels. And staying in the US, they have found the flesh-eating screwworm in their Texas cattle herd, another reason their beef industry is unlikely to be able to sustain its output. The EU said its retail sales volume growth was weak in April, up +0.9%, up +1.0% in the euro area from a year ago. From the prior month, these volumes dipped. But this dip actually doesn't interrupt the rising trend in place since late 2023 We are ending the week with the price of some key commodities like copper, tin and aluminium hold just off their recent peaks. China is facing broad pushback at the level of subsidising it gives its steel industry. The OECD singled them out for criticism urging coordinated action against them to save capability around the world. A new round of defensive trade barriers will likely follow. Chinese over-capacity is enabled by these subsidies and it drives down prices everywhere as Chinese companies rush to quit stocks they can't sell at home. The geopolitical toll on the logistics industry is starting to bite. Global container freight rates surged +23% this week from the prior week to be up basically level with year-ago levels (which were unusually high due to the Houthi attacks in the Red Sea). Most of this is due to the hikes in rates for the outbound China trade routes. Meanwhile bulk cargo freight rates eased back a minor -3% after their recent peak last week. In Australia, AI is being put to use driving legal claims by amateurs. Courts are being flooded with AI written plaintiff claims, especially for personal injury, unfair dismissal, rent disputes, and 'pain & suffering' claims. New powers are being rushed through the Canberra parliament to try and stem the flood. The UST 10yr yield is now just on 4.47%, down -2 bps from this time yesterday. The price of gold will start today up +US$41 at US$4478/oz. Silver is up +50 USc at just under US$74/oz. Oil prices are down -US$4 just over US$92/bbl in the US, while the international Brent price is now just over US$94.50/bbl and down -US$3.50. Hormuz remains shut however despite the pricing optimism. The Kiwi dollar is firmer from yesterday at this time at 58.8 USc, up +20 bps. Against the Aussie we are up +10 bps at 82.3 AUc. Against the euro we are unchanged at just under 50.6 euro cents. That all means our TWI-5 starts today at just under 62.3 which is up +10 bps from yesterday. The bitcoin price starts today at just on US$63,013 and down another -4.3% from this time yesterday and still falling. Volatility over the past 24 hours has been high at just under +/- 3.9%. 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 on Monday.

    5 min

  4. 5d ago

    Oil up on Persian Gulf fighting

    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 intensified clashes in the Persian Gulf has oil prices rising, little transit activity in the Strait of Hormuz, and significant disconnect from Trump's claim that both sides are still negotiating. Clearly they aren't, In the world economy, and first in the US, mortgage applications fell again last week, a third consecutive weekly easing mostly driven by lower refinance activity. Mortgage interest rates eased back however even if they remain at close to one year highs. Ahead of this weekend's US non-farm payrolls report (expect +85,000), private businesses added +122,000 jobs in May according to the ADP survey, a new high since January 2025, compared to a downwardly revised +105,000 in April and above forecasts of +117,000. Hiring was broad-based they report and say it augers well going into the summer hiring season. But this isn't backed up by the US services PMIs for the US. The May ISM services PMI reported a good expansion, about the average it has been in 2026 and slightly higher than expected. Good new order flows are behind the result. But the same firms reported contracting staffing levels and faster input cost pressures. The parallel S&P Global services PMI was less upbeat, noting a muted increase in business activity, optimism faltering and employment falling solidly. Overall, it is a jobless expansion, these PMIs both say. US factory orders are reflecting some of the stockpiling effects we have noted earlier. In April these orders rose +13.0% in nominal dollar terms above year-ago levels. But without aircraft and defense orders, they were up +5.8% - still a good result but mostly accounted for by inflation. And remember PPI rose +6.0% in the same twelve month period. American crude oil stocks fell again, for the sixth consecutive week and the largest fall in this period. Over the past year, it has fallen more only in three specific weeks but each of those were not in a continuing series. Their strategic oil stocks are now at their lowest in 22 years. The US Fed's Beige Book surveys for May reported most of the 12 Federal Reserve Districts had slight-to-modest increases in growth, though a handful experienced flat or slightly declining activity. Labour markets remained tight but were cooling. Business respondents said rising input costs for nonlabour inputs were largely able to be passed on to consumers. Consumer spending was described as mixed, heavily influenced by affordability concerns and shifts in discretionary income. In Canada key housing markets in Ontario, new listings have fallen, as have prices, and more homes are selling but also, more are selling at a loss. In Japan, their central bank will meet next in a bit over a week and their Governor has indicated that rate hikes will be discussed to weigh against rising inflation, even that pushed by higher energy costs. According to the private S&P Global (RatingDog) services PMI for China, that sector is expanding on a faster basis, much stronger than as reported by their official data. New business is expanding and they are hiring faster. But they also face their highest cost pressure since October 2023. Meanwhile, Australia released its Q1-2026 GDP data today, saying their economy expanded +2.5% in real terms over the past year. But the growth rate slowed in the March quarter from the December 2025 quarter. Rising interest rates and significantly higher fuel costs in the March month likely created an environment for more cautious consumer behaviour. This resulted in reduced spending across a range of household expenditure categories. And exports fell. The unders and overs likely balanced out but the level of spending on equipment for new data centers was so large it might have accounted for all the Q1 gain. The UST 10yr yield is now just on 4.49%, up +3 bps from this time yesterday.  The price of gold will start today down -US$45 at US$4437/oz. Silver is down -US$1.50 at just under US$73.50/oz. Oil prices are up another +US$2.50 just over US$96/bbl in the US, while the international Brent price is now just over US$98/bbl and up +US$2. Hormuz remains shut. The Kiwi dollar is lower from yesterday at this time at 58.6 USc, down -60 bps. Against the Aussie we are down -30 bps at 82.2 AUc. Against the euro we are down -40 bps at just under 50.6 euro cents. That all means our TWI-5 starts today at just under 62.2 which is down -50 bps from yesterday. The bitcoin price starts today at just on US$65,847 and down another -2.4% from this time yesterday and still falling. Volatility over the past 24 hours has been modest however at just under +/- 1.9%. 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.

    6 min

  5. 6d ago

    Gold resurgent at US Treasuries expense

    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 of a changing of the guard. Countries are moving away from US Treasuries as a core reserve asset, replacing it with gold. At the same time, crypto values including for bitcoin, seem to be fading fast. But first up today, there was a full dairy auction overnight, one that brought slightly lower overall prices, with the USD index falling -0.6% mainly on -3% lower SMP prices. Milk fat products like AMF. Butter and Cheddar all rose, offsetting the fall in powder prices. But the NZD has also strengthened, so the result in NZD terms was a -2.0% fall. A pull-back in demand from China is part of this story too. In the US, they reported a surge in April job openings, their most in 18 months, notably in California and other western states. It is a services related thing, with manufacturing jobs not really participating. Meanwhile, the US RCM/TIPP economic sentiment survey fell slightly in June from may, but to its lowest in two years. And the US Logistics Managers Index is showing the full impacts of the current supply-chain disruptions and stockpiling. It held in May at its highest since the pandemic stress period. It is increasing at an increasing rate for inventory costs, warehousing capacity, and freight prices. In China, we should note that it is wheat harvest season and that they expect a bumper result. At the same time, both Australian and US farmers are hesitating in their plans for wheat as high fertiliser and fuel costs threaten to make the prospects very uncertain. In the EU and as expected, CPI inflation firmed up to 3.2% in May from 3.0% in April. Their core inflation rose as well. It seems to be only about rising fuel costs at present with the spread wider quite limited. Will the ECB hike its policy rate on June 11? Markets are betting 100% it will. In Australia, they have slipped into their first trade deficit since 2017 in the March 2026 quarter. Exports of minerals fell (except for gold) while imports of data center equipment surged. Globally, it is worth noting again that aluminium, zinc, copper and tin are all now either at record highs or at post-pandemic highs. The UST 10yr yield is now just on 4.46%, down -1 bp from this time yesterday.  The price of gold will start today down -US$9 at US$4482/oz. Silver is down -50 USc at just over US$75/oz. Interestingly, an ECB analysis released overnight has highlighted that after the run-up in the gold price, at the same time as the value of US Treasuries fell, gold was the largest single asset held for 'foreign reserves'. (see Chart 7) Oil prices are up another +US$2 just under US$93.50/bbl in the US, while the international Brent price is now on US$96/bbl and up +US$1.50. Hormuz remains shut. The Kiwi dollar is lower from yesterday at this time at 59.2 USc, down -30 bps. Against the Aussie we are also down -40 bps at 82.5 AUc. Against the euro we are down -10 bps at just under 51 euro cents. That all means our TWI-5 starts today at just over 62.7 which is down -20 bps from yesterday. The bitcoin price starts today at just on US$67,464 and down a sharp -5.9% from this time yesterday and falling. Crypto funds are getting excess redemptions at present. Volatility over the past 24 hours has been high at just under +/- 3.5%. 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.

    4 min

  6. Jun 1

    Hot mess & strategic failure

    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 the scale of Trump's strategic failure with Iran is becoming clearer. Iran holds the key cards, it seems, and there is little but bluster and renewing its military flailing he can do about it. Even Israel seem to be ignoring Trump's potency, which is another signal of regional chaos. Iranian media reported that Tehran had suspended communications with Washington, following the attacks in Lebanon, and will move to fully close the Strait of Hormuz - and open new fronts in their war pushback. We are just going to have to live with the resulting chronic mess. And that probably means elevated inflation for much longer and all that brings with it - like supply chain disruptions and logistic twists. Stockpiling, itself an indication of economic inefficiency, is the current way the global economy is reacting, in turn an inflation enhancer. First today in the US, that stockpiling is showing up in their two May factory PMI reports. The S&P Global version recorded output growth rose to its strongest level since April 2022 as buyers scramble to beat price rises and supply delays. Input costs rose at their fastest rate since mid-2022. Meanwhile the ISM version reported very similar conditions, even if at a slightly lesser level. In Canada, their factory PMI version reported that growth was sustained in May as output, new orders and employment all rose. But like in the US, this is all trying to beat the cost pressures and supply chain challenges that are intensifying. In Japan, their May factory PMI remained unusually strong. But firms there signaled further strong increases in production with sales Input costs and selling prices rising at some of the steepest rates on record. Stock building efforts are still very much in evidence amid the ongoing and substantial supply chain disruptions. In South Korea, their factory upturn, already strong, gathered more pace amid stockpiling efforts. Output rises are their strongest in five years. Price pressures persist and remain near record highs. Meanwhile jobs growth is now at its highest since March 2013 as the outlook improves. Meanwhile Korean exports surged +53% from a year ago to a record US$88 bln for the month. (For perspective, New Zealand exports run at about US$6 bln per month average. Australia is about US$32 bln/mth.) Their biggest increases were to China, although there were outsized export gains to the US. Their explosive growth is largely around their IT sector. In Taiwan, their factory output expanded at quickest rate since July 2021 in May. New orders continue to rise sharply. Firms report intense cost pressures here too, amid severe supply chain disruption. Stockpiling efforts are driving a quicker upturn in purchasing activity, they say. In China, their non-official S&P Global factory PMI was good, but nothing like their smaller neighbours. Growth rates for new orders and output remain good, although export orders fell. Input price inflation eased for first time in six months. They also have stockpiling effects as factories raised input stocks because supplier delivery times stretched out again. Indian industrial production stayed expanding in April and at a good rate, similar to what they have had since July 2025, and showing none of the slowdown analysts had been expecting to see in their data. EU inflation expectations as tracked by the broad ECB survey shows them unchanged at 4.0% in April. Analysts had expected them to rise to 4.3% but that didn't eventuate. The EU factory PMI is still expanding but at quite a modest rate even as they have the same cost pressures everyone else is reporting. In Australia, and in something of a surprise, the Melbourne Institute Monthly Inflation Gauge recorded a -0.3% fall in May from April, after consecutive rises in the previous two months. The fall was primarily influenced by lower transport-related prices, attributable largely to fuel and the excise tax rollback. For the year to May this gauge reports inflation at 4.4%. The monthly cost of living also declined in May from April, particularly for self-funded retirees. The updated Australian PMI shows little real expansion with the steepest fall in new orders since last October being recorded for May. But prices are being pushed up all the same with selling price inflation at a 45-month high as sharp rises in input costs keep coming. The UST 10yr yield is now just on 4.47%, up +2 bps from this time yesterday.  Wall Street has started its week ignoring the Middle East situation with the S&P500 up +0.4% and enough to claim another new record high. The Nasdaq is up +0.7%. Both markets consumed by the big tech IPOs underway.  The price of gold will start today down -US$48 at US$4491/oz. Silver is up +50 USc at just under US$75.50/oz. Oil prices are up +US$4 just under US$91.50/bbl in the US, while the international Brent price is now on US$94.50/bbl and up +US$3.50. Oil had been starting to trade like Hormuz was open, but no more. The Kiwi dollar is lower from yesterday at this time at 59.5 USc, down -50 bps. Against the Aussie we are also down -50 bps at 82.9 AUc. Against the euro we are down -30 bps at just under 51.1 euro cents. That all means our TWI-5 starts today at just over 62.9 which is down -40 bps from yesterday. The bitcoin price starts today at US$71.684 and down -2.5% from this time yesterday. Volatility over the past 24 hours has been moderate at just under +/- 2.5%. 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.

    7 min

  7. May 28

    Talks & fights, truce awaits approvals

    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 the US and Iran have apparently agreed a 60 day truce, pending Trump's signoff. All the while, both sides traded attacks in the region. The small number of ships transiting the Strait of Hormuz has virtually dried up. Meanwhile, US jobless claims slipped last week to 185,600 and by about what seasonal factors would have indicated. There are now 1.68 mln people on these benefits, less than one and two years ago. There was a sharp drop in new home sales reported for April, and they were -11.3% lower than year ago levels. Rising mortgage rates is weighing heavily on this sector. But they reported a sharp increase in durable goods orders in April, up +19% from a year ago, up notably from March. This is where we see the full effect of stockpiling as buyers try to get ahead of rising inflation. One reason was a +41% jump in capital goods on the same basis. But excluding defense and aircraft orders, the increase was modest. The second estimate of GDP growth for Q1-2026 is out and it was revised lower, mainly on lower consumer spending and investment levels than in the initial estimate. They now say the US economy expanded +1.6% in the period. They also released the April data for US personal income and personal spending. This showed that personal disposable income fell from March, up +2.5% from a year ago, while personal consumption expenditures rose, up +5.9% from a year ago. In fact, their April PCE inflation measure rose to 3.8%, its highest since May 2023 and the end of the pandemic effect, and prior to that the highest since this data was collated in 2017. Undoubtedly, this has the Fed's attention, especially the accelerating nature of it. US crude oil and petrol stocks fell again last week, but 'only' by about the levels expected. that extends the fall to five consecutive weeks, all substantial, and coming after three prior weeks of modest or no-change outcomes. Retail pump prices for petrol are still +48% higher than at the start of the Iran-US conflict and closure of the Strait of Hormuz. There was a US Treasury 7yr note auction overnight and the yield increase was not as fierce as yesterday's event. This one delivered a median yield of 4.24% (high 4.29%), up from the 4.12% at the prior equivalent event a month ago. In Canada, their central bank has released and updated Financial Stability Report which found that Canada’s financial system has functioned well through a challenging year. Households and businesses remain in stable financial condition, and banks have strengthened their capacity to absorb shocks. Meanwhile they reported that average weekly earnings rose +3.5% in March from a year ago, a faster pace of increase. They have CPI inflation of +2.8% at the same time so Canadian employees are generally staying ahead of the cost pressures. The Korean central bank kept its official rate unchanged yesterday at 2.5%, as expected. Updated Australian household spending data for April shows it fell -1.1% month-on-month (on a current price, seasonally adjusted basis) to be +4.9% higher than in April 2025. In the same period CPI inflation rose 4.2%. The weak outcome is being attributed to the sharp hike in fuel costs, and compensating pullbacks elsewhere. It is their first fall in household spending in four months. And staying in Australia, they said private new capital expenditure rose +6.5% in the March quarter to be +14.6% higher than the March 2025 quarter. This strong growth is largely on the back of significant investment in data centers, up +96% and a new record high. Investment in mining was flat. The Middle East war lead to a -3.4% fall in air passenger demand in April. But Asia/Pacific international demand rose +3.0% from a year ago. For air cargo, demand was up +4.0% despite the turmoil, up +11.3% in the Asia/Pacific region. Global container shipping freight rates rose +3.2% last week from the prior week to be +12% higher than year-ago levels. This is largely driven by rates from China to the EU. Transpacific rates from China to the US West Coast actually fell last week. As did trade volumes. Meanwhile bulk cargo rates rose +4.4% last week, to be a massive +140% higher than a year ago. The UST 10yr yield is now just on 4.45%, down -3 bps from this time yesterday. The price of gold will start today up +US$57 at US$4506/oz. Silver is back up +US$1.50 at just under US$76/oz. Oil prices have fallen -50 USc to just on US$89/bbl in the US, while the international Brent price is now at US$93.50/bbl and down -US$1.50/bbl. The Kiwi dollar is up +40 bps from yesterday at this time at 59.3 USc. Against the Aussie we are up +20 bps at 82.8 AUc. Against the euro we are also up +20 bps at just under 50.9 euro cents. That all means our TWI-5 starts today at just under 62.8 which is up +40 bps from yesterday. The bitcoin price starts today at US$73,455 and down -1.8% from this time yesterday. Volatility over the past 24 hours has been moderate at just under +/- 2.0%. You can get more news affecting the economy in New Zealand from interest.co.nz. Kia ora. I'm David Chaston and because Monday is a New Zealand holiday, we’ll do this again on Tuesday.

    7 min

  8. May 27

    Mixed messages on Hormuz progress

    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 commodity markets are betting all-in that a deal between the US and Iran will unlock the Strait of Hormuz soon. An Iranian State TV report has triggered the optimism. (And even though the US has denied it.) More ships are transiting, but it is still only a fraction of 'normal'. However it is enough to drive the price of crude oil lower. But despite all that, financial markets seem to remain unconvinced, or at least they have turned defensive due to what lies ahead of a resolution. How well any deal will stick between the two parties who have become quite transactional remains to be seen. Certainly the US is unlikely to be trusted to maintain the deal by both Iran, and even its own traditional allies. Iran will be Iran, agreeing but preparing for another attack/fight. The one thing the US/Israeli thing has done is solidify the Iranian regime's position at home. It no longer has internal dissent or street challenges, and it will thank Trump for that. In the US, mortgage applications fell sharply last week, as US 30 year mortgage rates rose. Most of the fall is from the outsized retreat in refinance activity (-18%), although new purchase activity did dip as well. Those mortgage rates rose to their highest level since August 2025. Meanwhile, the ADP tracking of private payrolls showed the good levels continued last week, even if there was a small dip posted. And that is supported by factory survey data out from the Richmond Fed for the mid-Atlantic states area. New order levels rose notable. And firms expected growth in prices paid to moderate slightly over the next 12 months. But there was no improvement in the forward expectations, despite these improvements. Meanwhile the Dallas Fed services sector survey remained quite negative, even if less so in May than in April. But their uncertainty metric is notably less. There was a US Treasury 5yr Note auction overnight and that delivered a yield of 4.13% (4.18% high), up sharply from the 3.90% yield at the prior equivalent event a month ago. In Australia, consumer price inflation came in lower than most analysts were expecting for Aril. It rose 4.2% from a year ago, lower than the March 4.6%, and lower than the expected 4.4%. From March, CPI prices rose +0.4%, also lower in the same way. A key reason is that fuel prices fell -7.0% from March to April, after rising 33% in the previous month. The fall this month includes the halving of the fuel excise on 1 April. Fuel prices are still +23.5% higher than in February and before the impact of the Middle East conflict. Apart from fuel, outsized rises were recorded for 'housing' (+6.3%) and 'clothing' (+5.9%). The main contributors to the annual housing rise were Electricity (+22.5%), New dwellings (+4.7%) and Rents (+3.5%). And staying in Australia, Westpac has been hit with a AU$26 mln civil penalty for not dealing with clients who were struggling financially in a proper way. Remediation of all costs to those clients was AU$1.7 mln. The UST 10yr yield is now just on 4.48%, down -1 bp from this time yesterday. The price of gold will start today down another -US$49 at US$4450/oz. Silver is down -US$1.50 at just under US$74.50/oz. Oil prices have fallen -US$4.50 to just on US$89.50/bbl in the US, while the international Brent price is now at US$95/bbl. The Kiwi dollar is up +60 bps from yesterday at this time at 58.9 USc. Against the Aussie we are up +110 bps at 82.6 AUc. Against the euro we are up +50 bps at just under 50.7 euro cents. That all means our TWI-5 starts today at just under 62.4 which is up +60 bps from yesterday. The bitcoin price starts today at US$74,765 and down -1.5% from this time yesterday. Volatility over the past 24 hours has been modest at just on +/- 1.0%. Join us later today for full coverage of the 2026 Budget release, an election budget of course. 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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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
    © 2019-2022 Interest.co.nz
  • Show Website
    Economy Watch

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