Economy Watch

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 markets now universally expect the American central bank to cut rates tomorrow by -25 bps.But today, the overnight dairy auction brought a much better result than expected with the declines for both WMP and SMP nowhere near as sharp as indicated by the earlier derivatives pricing. That will very much ease the pressure on any farm gate payout forecasts. The detail is interesting. There was notably softer demand from China for WMP, but that was countered by stronger SE Asian demand. Cheddar cheese prices rose because of some unexpected demand from North America, But mozzarella prices dived -9.6% on weak Chinese demand. Overall prices slipped just -0.8% in USD, but there were down a sharpish -2.9% in NZD as the greenback took a tumble overnight.Meanwhile, US retail sales rose in August and by a little more than expected. They were up +5.0% after a +4.1% rise in July. But this data is not inflation-adjusted in the way that other countries report. We will have to wait for sales volume data later in the month.And US industrial production rose in August too, but only up +0.1% from the prior month and only after a -0.4% revised fall in July. Year-on-year it is up +0.9%, about average for 2025, but hardly evidence of manufacturing reshoring.Homebuilder sentiment was flat in August as reported by the NAHB survey. It is remaining at the very low levels we have seen since May, and very much lower than this time last year. They are pinning their hopes on Fed rate cut(s) delivering a changed outlook.And staying in the US, crypto giant Binance looks like its lobbying and support of Trump will see the US Justice Department drop a key oversight requirement in its US$4.3 bln settlement of allegations that it didn’t do enough to prevent money laundering. So, pay the money, get no oversight, and go back to enabling money laundering. A real Trump-type deal.Meanwhile, Canadian CPI inflation rose from 1.7% in July to 1.9% in August, a lesser rise than was anticipated. Meanwhile there was a rather sharp fall in housing starts there in August, down -16% from July to 245,791 units from a revised 293,537 in July and well below market expectations of 277,500. But they were still +10% higher than year-ago levels. A rate cut is coming in Canada tomorrow too.In China, there are some signs that Beijing's stimulus could be working. Steel output not only stopped falling, it actually picked up in the first two weeks of September, defying downbeat expectations. And iron ore prices rose too recently.In the EU, industrial production rose more than anticipated in July, although the expectations aren't high.The UST 10yr yield is now at 4.03%, down -1 bp from yesterday at this time. The price of gold will start today at US$3,686/oz, up +US$7 from yesterday.American oil prices are up +US$1 at just over US$64.50/bbl, with the international Brent price firmish just over US$68.50/bbl.The Kiwi dollar is at just on 59.9 USc and up +20 bps from yesterday. Against the Aussie we are up +10 bps at 89.6 AUc. Against the euro we are down -20 bps at 50.5 euro cents. That all means our TWI-5 starts today at just over 66.7, little-changed from yesterday.The bitcoin price starts today at US$116,480 and up +1.3% from this time yesterday. Volatility over the past 24 hours has again 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 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 both the US and China are eyeing rate cuts to bolster wavering economies.While all financial market attention is on the US Fed and its Thursday rate review - and market positioning is underway relative to the expected -25 bps cut - there is other economic news being released.The New York Empire factory survey delivered a negative surprise with new order levels falling sharply when they were expected to rise. That drove their overall survey negative when an expansion was anticipated.Across the Pacific, and in an unexpected result, China's retail sales data was released and were expected to have grown faster in August by +3.8%, up from +3.7% in July. Some anticipated a +5% rise. But in the end the rise was only +3.4%, and that was an eight month low.China's August industrial production was up +5.2%, a one year low, good but less than the +5.7% in July and also less than the expected +5.8%. All this was done with only a +1.6% rise in electricity production, and -3.2% fall in the production of fossil fuels, according to these official stats.China's house prices were generally stable in August. There were a few more signs of marginally higher prices in a few more cities for new developments. But the sales prices of pre-owned housing continues its slow droop and the trend is becoming ever more embedded as pressures mount.But probably worse from China was that fixed asset investment hardly rose, up just +0.5% for the eight months from the same period a year ago. It was expected to have risen +1.4% on this ytd basis. August 2025 alone actually came in lower than August 2024, a worrying sign.It is possible that the upcoming review on China's Loan Prime Rates may be cut to bolster their wobbly economic position. These are due for official review at the weekend.In Indonesia, they launched a new US$1 bln economic stimulus package to boost economic growth as a way of stabilising widespread unease about the country's direction.Indian exports softened in August, and their imports did too and by a bit more. That meant the expected -US$30 bln trade deficit for the month was lower than in July and lower than expected.India also had good labour market news with their jobless rate falling to a record low of 5.2% when a small rise was anticipated.In Australia, their National Climate Risk Assessment was released yesterday. They are trying to prioritise and plan how they will adapt and respond. The report says that while the world is already 1.2ºC hotter than during pre-industrial times, because of its sheer land size Australia is warming faster and is 1.5ºC hotter. Australia is experiencing more intense heatwaves on land and sea, rising seas and more frequent coastal flooding. Although the usual suspects remain in denial, a surprising number are now accepting it has become an urgent issue. Insurance premiums, even availability, will be how it will affect most people in Australia.But back with the headline financial market news. Ahead of the US Fed decision, equity markets are buoyant and all-in on optimism, but bond markets are wary, the USD is wavering, and commodity prices are little changed except for precious metals.The UST 10yr yield is now at 4.04%, down -2 bps from yesterday at this time.The price of gold will start today at US$3,679/oz, up +US$38 from yesterday.American oil prices are up +US$1 at just under US$63.50/bbl, with the international Brent price firmish just on US$67.50/bbl.The Kiwi dollar is at just under 59.7 USc and up +10 b ps from yesterday. Against the Aussie we are down -10 bps at 89.5 AUc. Against the euro we are also down -10 bps at 50.7 euro cents. That all means our TWI-5 starts today at just over 66.7, little-changed from yesterday.The bitcoin price starts today at US$114,938 and down -0.6% from this time yesterday. Volatility over the past 24 hours has been low at just under +/- 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 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 fighting inflation may well be a downgraded objective in the face of political pressure. The consequences could be long-lasting and global.For financial markets, this week will be all about the US Fed's Thursday rate decision where now a -25 bps cut is widely anticipated, to try and weigh against the softening US labour market. The same day the Canadians will review their policy rate too where a similar -25 bps cuts is expected.And there will be central bank reviews in Japan this week (no change), Indonesia (no change), England (no change), and Brazil this week too.China will also review its key rates and no change is expected there either. And China will release a lot of August economic data too, including FDI data.Australia will release its August labour market update and a modest +25,000 rise in employment is anticipated. Our balance of payments data will be released on Wednesday (expect a larger deficit), and Q2-2025 GDP will be released on Thursday (expect a decline). And before that we will get the August REINZ data and a full dairy auction.But back in the US, the pessimistic turn continues. The widely-watched University of Michigan consumer sentiment survey delivered downbeat results in September, sharply lower from August and well below what analysts had expected. They had expected a turn lower but not by this much. Declines were strongest among lower- and middle-income households because concerns grew over business conditions, jobs, and inflation. Both short and long term sentiment fell back. This index is more than -20% lower than year-ago levels.Meanwhile, year-ahead inflation expectations held steady at 4.8% while the five-year expectations moved up for the second straight month to 3.9% from 3.5%.Canadian building consents were unchanged in July from June but down -8.2% from a year ago. But most of this was due to non-residential work; residential consents were up, especially in Toronto.We should probably note that there are trade talks going on in Madrid between the US and China.In China, August data for new yuan loans came in well below what was expected although expectations weren't high. It was the lowest amount of bank debt for an August since 2011, extending the current period of weak credit demand amid the weakening consumer debt demand and the prolonged crisis for housing. The debt appetite dropped despite central bank efforts to loosen monetary conditions and stimulate borrowing.In India, consumer inflation rose, as expected, but only to 2.1% and ending a ten month period where it fell consistently from 6.2% to 1.6% in July. Food prices were little-changed and had no effect on the overall result.In France, Fitch has downgraded their credit rating to A+ from AA- on Friday, citing political turmoil and rising debt.We should probably note that copper prices are basically back to levels they were at five years ago, which is double what they were ten years ago. At current production levels the USGS estimates that existing mines will be able to operate for the next forty years, and proven resources will last about 200 years. (But there are expected to be much larger resources yet to be discovered.) We will look at some aspect core mineral resources weekly, going forward. (H/T PDK)The UST 10yr yield is now at 4.06%, little-changed from Saturday.The price of gold will start today at US$3,641/oz, down -US$7 from Saturday. That is up +US$48 from a week ago. Silver had another spurt, now up over US$42/oz.American oil prices are unchanged at just on US$62.50/bbl, with the international Brent price firmish just under US$67/bbl, both up +US$1 for the week.The Kiwi dollar is at just under 59.6 USc and unchanged from Saturday but up +70 bps from a week ago. Against the Aussie we are also unchanged at 89.6 AUc. Against the euro we are holding at 50.8 euro cents. That all means our TWI-5 starts today at just over 66.7, little-changed from Saturday but up +50 bps for the week.The bitcoin price starts today at US$115,666 and down -0.6% from this time Saturday. Volatility over the past 24 hours has been very low at just on +/- 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 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 away from the guns and hatred consuming the US at present. Our challenge is to keep it out of our society.Markets had been waiting for the American August CPI inflation data and it came in higher, although no more than expected. It rose to 2.9% in August, the highest since January, after holding at 2.7% in both June and July. Prices rose at a faster pace for food (3.2%) and energy costs rose for the first time in seven months. On a monthly basis, the CPI went up 0.4%, the most since January, above forecasts of 0.3%. Rents rose 0.4%, the largest upward pressure. On the other hand, core inflation remained steady at 3.1%, the same as in July and at February’s peak, while core CPI rose 0.3% month-on-month, matching July’s pace and market forecasts.In a stable world, this level of inflation would not bring market expectations of a Fed rate cut next week, but there are widespread expectations of one anyway. And that is because their labour market is weakening quite fast now.Initial jobless claims in the US came in sharply higher last week at +263,000 s.a. a four year high and well above the expected high 235,000. In actual terms they rose +204,500 when a solid end-of-summer-holiday seasonal decrease was expected. There are now 1,815,000 on these benefits, +110,000 more that at the same time last year.Also getting much worse much faster is the US Federal government finances. The US Budget Statement was expected to hold at a very high -US$290 bln monthly deficit, but it has blown out to -US$345 bln in August. And this is after collecting US$30 bln in tariff-taxes in the month, US$165 bln so far in the fiscal year.Whatever way you look at it, the US economy is being mismanaged on a massive scale. Too much inflation, too little job creation, too large tax avoidance by the uber-wealthy, and self-imposed tariff-taxes on themselves. And unfortunately their social programs are making things worse at a fundamental level too.New independent analysis shows that the long-held view that American demographics would remain very positive to the end of the century have suddenly turned. Now US deaths will exceed births by 2031, far faster than expected. And the deaths will rise quicker until 2055 when they will match immigration. And these estimates are before the Kennedy/Trump health mistakes which will undoubtedly speed up deaths. And the Trump heavy-handed immigration crackdowns that will likely mean the immigration assumptions are far too optimistic. If demographics are destiny, the destiny of the US looks grim and we can no longer hold the assumption that it will be a major power by 2100. That is a sharp change from the demographic outlook just a few years ago.New data out in Canada shows Canadians are wealthier with an increase of over a quarter of a trillion dollars to C$17.9 tln, the seventh consecutive quarterly increase. This wealth accumulation happened despite headwinds of global trade pressures and a weakening economy. Per capita GDP is now C$76,100 (NZ$92,100).Across the Pacific in Japan’s producer prices there rose +2.7% in the year to August, up from a marginally revised +2.5% increase in the previous month. This data doesn't really add stress or new factors for Japan. A year earlier their PPI rose at a 2.6% rate.In China, new vehicle sales recovered in August, up +10.1% after the unexpected -10.7% fall in July. Total vehicle sales are expected to grow +4.7% in 2025 to almost 33 mln units from 31.4 mln in 2024, with the NEV sector surging +24% to 16 mln units. That will keep it almost twice the size of the US vehicle market. China's car market is a global goliath. (The US vehicle market is running at 16.1% mln annual sales, a dip in August from July.)In Europe, the European Central Bank kept its three key interest rates unchanged, with the deposit facility at 2.00%, the main refinancing rate at 2.15%, and the marginal lending rate at 2.40%, all as expected. Inflation remains close to the 2% medium-term target, and the outlook is broadly unchanged from June. New staff projections see headline inflation averaging 2.1% in 2025, easing to 1.7% in 2026 before rising slightly to 1.9% in 2027.Occasionally we check in with what is happening in Turkey, an authoritarian regime that has made massive mistakes with capricious monetary policy moves, and is paying the price with tough consequences. The Central Bank of Turkey cut its benchmark interest rate overnight by a surprisingly large -250 bps to 40.5% in its September meeting, its lowest since 2023. The move follows signs of slowing underlying inflation in August, though food and services prices continue to pressure inflation. Domestic demand remains weak.In Australia, consumer inflation expectations rose to 4.7% in the September survey by the Melbourne Institute, from August’s five-month low of 3.9%. The increase came as stronger domestic demand raised concerns about renewed inflationary pressures, with household consumption proving resilient in Q2-2025. This is the sort of news the RBA will not welcome. No rate cut is priced in for September 30 but one is for November 4, although that might get reassessed now.Global container freight rates fell -3% last week from the prior week on very much weaker outbound rates from China to Europe. Interestingly, outbound rates from China to the USWC actually rose last week by +6%. (Year-on-year comparisons are still affected by last year's Red Sea stress.) Bulk freight rates roise +8% over the past week to be +8.5% higher than year ago levels.The UST 10yr yield is now on 4.00%, down -3 bps from yesterday at this time.The price of gold will start today at US$3,635/oz, down -US$10 from yesterday.American oil prices are down -US$1 at just over US$62.50/bbl with the international Brent price is similarly lower at just on US$66.50/bbl.The Kiwi dollar is now at just over 59.7 USc and up another +20 bps from yesterday. Against the Aussie we are down -10 bps at 89.7 AUc. Against the euro we are up +10 bps at 50.9 euro cents. That all means our TWI-5 starts today at just over 66.8, unchanged from yesterday.The bitcoin price starts today at US$114,552 and up +0.7% from this time yesterday. Volatility over the past 24 hours has been low, at just over +/- 0.6%.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 all eyes are now on tomorrow's US CPI release for August.But first, there was surprising news from the US. August producer prices rose far less than any analyst has forecast. In fact they fell -0.1% in August from July, following a downwardly revised +0.7% gain in July, driven by a sharp decline in margins for machinery and vehicle wholesaling as importers absorbed some of the tariff taxes. On an annual basis, headline producer inflation slowed to 2.6%, while core producer inflation eased to 2.8%. Analysts had expected the year-on-year change to be up +3.5%.Markets took these changes at face value, ignoring the "new management" at the agency compiling the data. It is being seen as "Fed-friendly" for a rate cut next week. Although to be fair far more will depend on tomorrow's CPI release where rates closer to 3% are anticipated.Also unusually positive was last week's data on US mortgage applications. They jumped +9.2% from the prior week to be +11.6% higher than year-ago levels. Driving the turnaround was a -15 bps plunge in benchmark mortgage rates, which fell to their lowest in nearly one year as a wave of pessimistic labour market data drove yields on long-dated Treasury securities to retreat. Applications for a loan to refinance a current mortgage, which are more sensitive to changes in interest rates, surged by +12.2% from the previous week to their highest level in one year. In turn, applications for a mortgage to purchase a new home rose by +6.6%.And there was another US Treasury 10 year bond auction earlier today and that resulted in a median yield of 3.99%, down from 4.20% at the prior equivalent event a month ago. But a feature of this latest event was the declining demand, down -8.5% which is a notable pullback.Across the Pacific, Japanese manufacturers are feeling bullish, especially about export prospects. The Reuters Tankan index rose to a very positive level in September, its highest level since April 2022. Easing trade uncertainties following the Japanese-US tariff deal that sharply eased the tariff rate is behind the shift. Sentiment improved across six of nine manufacturing industries surveyed.In China, they reported that consumer prices dropped -0.4% in August from a year ago, after being unchanged in the prior month and missing market expectations of a -0.2% decline. It was the fifth episode of consumer deflation this year and the sharpest drop since February. China has a similar period of deflation in the second half of 2023, but escaped those pressures in 2024. But they are back again. Food prices fell -1.2%, but beef prices were down -4.3% and lamb prices down -3.6% on that annual basis. Milk prices fell -1.4%.Meanwhile Chinese producer prices dropped -2.9% in the year to August, less than the -3.6% drop in July, which was the steepest decline since July 2023. Producer prices have now deflated for 35 consecutive month although the latest data is the smallest decline since April.Despite growing civil unrest and street demonstrations in Jakarta, Indonesian consumer sentiment was little-changed in August, although it is maintaining its recent low that started in May. However in a longer term perspective, it is +20% higher than it was a decade ago. (The last thing Canberra want to see is an unstable Indonesia as a neighbour.)Fitch Ratings has raised its world growth forecasts for 2025 moderately since the June Global Economic Outlook on better-than-expected incoming data for 2Q-2025. But there is now evidence of an underlying US slowdown in ‘hard’ economic data and positive surprises on eurozone growth have partly reflected US tariff front-running, they say. Fitch still expects world GDP to slow significantly this year.Global growth is now forecast to be 2.4% in 2025, up 0.2pp since June but a sizeable slowdown from 2.9% last year and below trend. China’s forecast has been raised to 4.7% from 4.2%, the Eurozone’s to 1.1% from 0.8% and the US’s to 1.6% from 1.5%. World growth for 2026 is 0.1pp higher at 2.3%.The UST 10yr yield is now over 4.03%, down -4 bps from yesterday at this time.The price of gold will start today at a new high at US$3,645/oz, up +US$4 from yesterday.American oil prices are up +US$1 at just over US$63.50/bbl with the international Brent price is similarly higher at just on US$67.50/bbl. American crude oil stocks jumped, and for a second week in a row, when declines were anticipated, indicating weaker demand than expected.The Kiwi dollar is now at just over 59.5 USc and up +20 bps from yesterday. Against the Aussie we are down -20 bps at 89.8 AUc. Against the euro we are up +20 bps at 50.8 euro cents. That all means our TWI-5 starts today at just over 66.8, down -20 bps from yesterday.The bitcoin price starts today at US$113,721 and up +2.4% from this time yesterday. Volatility over the past 24 hours has been moderate, also 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 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 that rather than understating US jobs growth - which got her fired - the stats agency reporting labour market data overstated Trump's jobs growth, and by some margin.But first up today, there was a dairy Pulse auction earlier today for both SMP and WMP, and while prices dipped as expected, they didn't dip as much as the derivatives markets had signaled. WMP was down just -0.2% from the full auction the prior week, SMP was down -0.6%. However the firming NZD resulted in about a -1.5% fall in NZD terms.In the US, small business NFIB sentiment survey for August reported stable conditions with some issues easing, some tightening.There was a US Treasury 3yr bond auction earlier today that was well supported but less well than the prior equivalent event a month ago. It resulted in a median yield of 3.45%, down sharply from the 3.61% at that prior equivalent event. The outsized shift down likely reflects bond investor risk aversion.Although it is just a statistical adjustment, updated data shows the US economy added -911,000 fewer jobs in the 12 months through March than initially reported - the largest downward revision since at least 2000. This is a -0.6% adjustment, far more that the average change of +0.2% in total nonfarm employment over the past decade. Nearly all sectors added fewer jobs than initially estimated.If the US Fed cuts rates next week to bolster their slowing economy, it will likely signal that their are changing their inflation goal from 2% to 3%, and prepared to accept stagflation over stagnation. The risk is they get both.Across the Pacific, Japanese machine tool orders were up +8.1% in August from a year ago, largely due to a +12% surge in export orders. Export orders made up almost three quarters of this industry's order book in August.And Taiwan kept up its amazing record of export growth in August. They jumped more than +34% from a year ago and outperforming market expectations of +22% growth.In Russia, their Federal Treasury reported another deep deficit in August, the second in a row and the first time ever of back-to-back deficits exceeding -1.9% of GDP.In Australia, ANZ Group's new broom CEO Nuno Matos has kicked off a change program at the four-pillar bank with plans to shed 3,500 Australian staff.The Westpac-MI consumer sentiment survey slipped on darker views about the economic outlook and less confidence about getting any more rate cuts from the RBA - because inflation is still 'too high'. Analysts had expected this survey to possibly break into net optimism in September, but it was not to be.Meanwhile the August NAB business confidence report shows it fell a minor 3 points, following four consecutive months of improving sentiment and leaves confidence also close to long run average levelsThe UST 10yr yield is now under 4.07%, up +2 bps from yesterday at this time. The price of gold will start today at a new high at US$3,641/oz, up +US$9 from yesterday.American oil prices are marginally firmer, at just over US$62.50/bbl with the international Brent price is +50 USc firmer at just on US$66.50/bbl.The Kiwi dollar is now at just over 59.3 USc and unchanged from yesterday. Against the Aussie we are down -10 bps at 90 AUc. Against the euro we are up +10 bps at 50.6 euro cents. That all means our TWI-5 starts today at just over 66.6, down -10 bps from yesterday.The bitcoin price starts today at US$111,080 and down -1.1% from this time yesterday. Volatility over the past 24 hours has been moderate, also 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 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 bond markets are increasingly worried about what will transpire from the US CPI data for August later this week, and the US Fed's reaction next week.First today, American inflation expectations seem to be rising. In August they came in at 3.2%, their highest in three months. While that is higher than year ago levels too, some of the detail is a bit of a worry. Those surveyed say rents are expected to rise 6.0%, food by 5.5% and petrol by 3.9%. Also of some note is that job finding expectations have now fallen to a record low in a data series that started in June 2013. More than 14% of those surveyed say they are likely to lose their job in the year ahead. There is a palpable sense of fear and squeeze in these survey results. The fast-tightening labour market has many on edge.Meanwhile, August data for American consumer debt shows it rising, up +3.8% from a year ago with revolving debt up a sharp +9.7% on the same basis. Debt levels at credit unions seem to be leading the rises. These are all three year highs and the sudden shift likely indicates rising debt stress.The USD is falling, heading towards a three year low. Benchmark bond yields are falling and the UST 10 year is near a one year low.Across the Pacific, Chinese exports grew by +4.4% in August from a year ago, a level many others would like to have but it is lower than the expected +5% and July's +7.2% growth. And it is the softest pace of outbound shipment growth since February. Meanwhile their imports were up +1.3% in August on the same basis, less than the expected +3% and July's +4.1% rise. But that meant that their trade balance swelled to +US$102 bln in August, better than the +US$99 expected and higher than July's +US$91 bln.While China's exports and imports to the US eased back in August, they still ran a +US$24.3 bln monthly surplus with this strategic rival and that isn't declining materially. It's the largest surplus they run with anyone, although the combined nations of the EU ran a larger deficit with China at US$28.9 bln in August.In Japan, Prime Minister Shigeru Ishiba resigned over the weekend and new candidates are lining up to replace him. Financial markets are buoyant there on the prospect that a new leaders may chase fiscal expansion.And in France, their prime minister has lost a confidence vote.In Germany, their exports came in slightly weaker than expected in August when a rise was anticipated. But it was still a good gain on a year ago, and helped them maintain a healthy trade surplus. Meanwhile German industrial production came in much better in July than expected, bouncing back from a weak June.The UST 10yr yield is now under 4.05%, down -4 bps from yesterday at this time. The price of gold will start today surging to a new high at US$3,633/oz, up +US$47 from yesterday.American oil prices are a bit firmer, up less than +50 USc at just under US$62.50/bbl with the international Brent price also firmer just on US$66/bbl.The Kiwi dollar is now at just over 59.3 USc and up +40 bps from yesterday. Against the Aussie we are up +20 bps at 91.1 AUc. Against the euro we are also up +20 bps at 50.5 euro cents. That all means our TWI-5 starts today at just under 66.7, up +30 bps from yesterday.The bitcoin price starts today at US$112,282 and up 1.1% from this time yesterday. Volatility over the past 24 hours has been low 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 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 American right-wing swamp populism is driving the world's economy into a blind alley. Other countries are trying to figure out how to separate themselves from that.In the week ahead, financial markets will be assessing the risks of stagflation after the weaker labour market report in the US, and the growing expectation that inflation's new rise will pick up steam. In the US we will get August CPI and PPI data at the end of the week and their core CPI rate could well rise from its July 3.1% rate. That data will be put in context with the next University of Michigan consumer sentiment survey update.Inflation data from both China and India is also due, but little upward pressure is expected to be seen from either of them. In China, new initiatives on support measures to keep their economy from stuttering are expected this week largely to fend of deflationary pressures.The ECB will be reviewing its policy rates this week, but no change is expected. Inflation is no threat there, giving them options.Over the weekend we got a keenly anticipated American update on their labour market. It turned out that analysts were right to think the low forecast of a +75,000 rise in US non-farm jobs was optimistic. In fact they came in at +22,000 for August. June data was revised down by -27,000 and the change for July was revised up by +6,000. With these revisions, employment in June and July combined is 21K lower than previously reported. Trump's firing of the agency that reports this data isn't changing the sharp trend lower. Trump now has to own this trend.In fact, the total jobs added in May, June, July and August in 2025 is about the same as was added in August 2024 alone. For them its a concerning trajectory but it can all be traced to junk public policy.Worse, the data shows that manufacturing jobs fell -12,000 in August with clearly no sign of factory jobs reshoring.If we look at the unadjusted data for civilian employment - which accounts for more than just those on employer payrolls, the July to August change was a -511,000 reduction. It's a time when the self-employed are really struggling.All this downbeat data is reflected in the financial markets on Friday. Wall Street was down -0.3%, bond yields fell sharply again, and the USD weakened. The pall spread to Europe too where they are digesting the latest US strategic insult.The chance of a rate cut by the Fed has now become a certainty in financial market pricing as the central bank is scrambling to contain the growing fiscal mess which looks like it is going to be much larger than feared, and much sooner. A full -25 bps rate cut is priced in for the mid-September meeting, and another before the end of the year. Trump will get his rate cuts because of his actions to tank the US economy. But there are voting members who still insist that inflation should be contained before they cut. The next US CPI data is due in a week and the current +2.7% inflation rate is widely expected to rise to 2.9% and a core rate back over 3.0% which emphasises the risks stagflation’s effects are hurting the world's largest economy.It was no better in Canada where payroll employment fell -65,500 in August from July largely due to a sharp fall in part-time employment (-59,700). The trade shock with the US is getting the blame here too.In Canada they watch the Ivey PMI closely and that shifted from a modest expansion in July to none in August. But at least it wasn't contracting. Consistent with their official jobs data, the employment sub-component of this PMI was contracting.A -25 bps rate cut there is also priced in before the end of 2025. Canadian August inflation is expected to come in little-changed at 1.7% on September 16, 2025.The Canadian government is taking an activist approach to protecting their economy with a major support announcement on Friday.Data out across the Pacific was far more encouraging. Singapore said its retail activity expanded far more than expected in July, and is now up +4.1% from June, up +4.8% from a year ago. It has been on a rising trend for almost all of 2025.And China said its fx reserves rose to US$3.32 tln in August, its highest since late 2015. And it purchased a bit more gold in the month, helped by the rise in the gold price of course, which adds another US$2.5 tln to to reserves which now total US$3.64 tln.In Australia, extended June quarter labour market data showed that the number of total jobs there increased +0.3% to 16.3 million. Filled jobs rose +0.2% to 16.0 million where secondary jobs decreased -1.2% to 1.0 million and multiple job-holders decreased -1.3% to 948,900. Hours worked increased +0.3% to 6.0 billion hours in the quarterThe FAO global food price monitoring shows that in August overall prices were stable and just marginally higher than where they ended 2024. Dairy prices look like they have peaked but meat prices are still rising driven by beef and sheep meats.The UST 10yr yield is now at 4.09%, unchanged from yesterday at this time. That makes the weekly backslide -14 bps and to a five month low. The price of gold will start today at US$3,585/oz, down -US$7 from Saturday and just off its record high. That is up almost +US$150 from a week ago and a sharp +4.4% risk aversion rise for the week.American oil prices are a bit softer at just under US$62/bbl on the struggling US domestic prospects with the international Brent price also softer just on US$65.50/bbl. A big new burst of crude production is on its way too.The Kiwi dollar is at just over 58.9 USc and little-changed from Saturday. Against the Aussie we are also unchanged at 89.9 AUc. Against the euro we are holding at 50.3 euro cents. That all means our TWI-5 starts today at just under 66.4, up +10 bps from Saturday.The bitcoin price starts today at US$111,046 and down a mere +0.1% from this time Saturday. Volatility over the past 24 hours has been low at just on +/- 0.6%.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 financial markets can now taste a US Fed rate cut.Today, all eye are on tomorrow's August non-farm payrolls report for the US. Analysts expect them to rise a minor +75,000 but overnight labour market data suggests that may be optimistic.First, US initial jobless claims rose last week to 197,000 when seasonal factors suggested it should have fallen. There are now more than 1.89 mln people on these benefits, +90,000 more than at the same time last year.Announced August job cuts came in at 86,000 in August, +40% more than in July. So far this year, companies have announced 892,000 job cuts, the highest year-to-date level since 2020 when 1,963,500 were announced. It is up +66% from the same period last year and is now +17% higher in 2025's eight months than all of the 2024 full calendar year total (of 761,500).Maintaining the weakening theme, the ADP Employment Report only reported a jobs gain of +54,000 in August, below the expected low +65,000 and well below July's +106,000. In August 2024 this data showed a +180,000 rise.US labour productivity is improving however, with faster rises in output while labour hours only show a modest increase. Year on year this productivity measure is up +1.1%.And there was better PMI data out for the US services sector with the widely-watched ISM version expanding slightly more than expected, while the S&P Global/Markit version expanded better even if it was adjusted lower than its earlier 'flash' version. Encouragingly, in both versions new order flows kept these metrics positive and they are at similar levels as a year ago.US exports were little-changed in July from a year ago, as were the level of imports. That resulted in a goods & services trade deficit almost identical to a year ago. Still, it is now at a four month high. Tariffs have yet to move the trade needle either way (other than collect much more tax from importers).Financial market reactions to this generally downbeat economic news - was upbeat, on the basis that it makes a Fed rate cut on September 18 (our time) more likely. Equities rose modestly, but bond yields fell quite hard.Meanwhile Canada also said its exports, imports and trade balance was little-different in July from June, although quite a bit worse than year-ago levels. But the deficit is still quite small (-C$4.9 bln) in relation to the Canadian economy, and their smallest deficit in four months.In China, they are rolling out a new policy to try and juice up consumption - State-subsidised personal loans. Like the rest of the world, but more so in China, "moire debt" is the answer to all economic problems.With headline inflation at just 1.4%, the Malaysian central bank kept its policy rate unchanged overnight at 2.75%.EU retail sales slipped in July from June, but remain +2.2% higher than year-ago levels. They report on a volume basis, so these gains are 'real'.In Australia, household spending is strong and rising. It was up +5.1% in July from the same month a year ago, up +0.5% in July from June which is an even faster rate. That's the third month in a row it has risen and it has risen in nine of the past ten months. In July, this spending was concentrated on services, especially health services, hotel accommodation, air travel, and dining out. But they actually cut back on spending on goods.Meanwhile, the Australian trade balance turned up after a series of declines. Markets expected a +AU$5 bln surplus in July after a +AU$5.4 bln surplus they got in June. But in fact the surplus came in as +AU$7.4 bln in July, helped by a +3.3% monthly rise in exports and a -1.3% monthly fall in imports. That means the surplus hit a 21 month high.Global container freight rates were virtually unchanged last week from the prior week, although still down massively from the Red Sea crisi affected year ago levels. Interestingly, outbound rates from China to the US rose a sharpish +8% or more last week, but that was balanced by large falls in the China-to-Europe trade. Bulk cargo rates are still in a narrow band, little-changed from last week.The UST 10yr yield is now at 4.17%, down another -5 bps from yesterday at this time.The price of gold will start today at US$3,543/oz, down -US$30 from yesterday.American oil prices are little-changed at just over US$63.50/bbl with the international Brent price -50 USc softer just on US$67/bbl.The Kiwi dollar is at just under 58.4 USc and down -40 bps from yesterday. Against the Aussie we are down -20 bps 89.6 AUc. Against the euro we are also down -20 bps at 50.2 euro cents. That all means our TWI-5 starts today at just over 66.1, down -20 bps from yesterday.The bitcoin price starts today at US$109,830 and down -2.3% from this time yesterday. Volatility over the past 24 hours has been modest at just on +/- 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 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 world's largest economy is being hit today with a string of pessimistic data reports, despite one of the tech giants avoiding a breakup which saw its shares surge to a record high.American job openings fell by 176,000 to 7.18 mln in July and that was the lowest level since September 2024 and well below market expectations of 7.4 mln. Interestingly, there was wide regional variation with openings dropping most in the South, down -161,000, while they rose in the West, up by +113,000 openings.So it won't be a surprise to learn that mortgage applications fell again last week, the third consecutive weekly retreat. This happened even though mortgage interest rates were little-changed.And it also won't be too much of a surprise to learn that US factory orders declined also in July from June, down an outsized -1.3% - and the June data was revised lower to be down -4.3%. New durable goods orders were down -2.8% in July. These won't be welcome trends, especially as tariffs were supposed to bolster US manufacturing. Year-on-year the July levels are up +1.8% and well below what can be accounted for by inflation. But it will be the recent sharper trends lower that are most concerning.So the Fed's August Beige Book note of "flat to declining consumer spending because, for many households, wages were failing to keep up with rising prices. Contacts frequently cited economic uncertainty and tariffs as negative factors." will come as no surprise.In China, all the news is about its massive military parade in Tiananmen Square. This one follows similar shows of force that started in Pyongyang on April 15, followed in Tehran on April 20, then Moscow on May 9, and Washington DC on June 14. All organised by authoritarians. It's a militarisation trend that is very retrograde. And they are massive propaganda exercises, so it is disappointing that some of our politicians want to be seen at them. But like many others, they follow the money and incentives.Staying in China, the RatingDog (ex-Caixin) services PMI for August expanded faster than July and to a good level, better than expected and the fastest expansion in their services sector since May 2024. New orders grew at the strongest pace since May 2024, supported by a stronger rise in new export business, which increased at the fastest rate in six months. Like yesterday's RatingDog factory PMI, this survey as also better than the official services PMI.And South Korean officials now say they want to join the CPTPP, as insurance against US tariff moves against them. The path won't be easy for them, mainly because they have built up insulations and protections against Japanese investment making inroads into their economy.In Europe, producer prices were only up a modest +0.4% in July from a year ago, confirming they seem to have a good lid on inflation there. But the more recent indications are rises that are slightly above that (at a rate of +0.6%). At least the Europeans don't have the pressure of self-imposed tariff-taxes. Their cost competitive position vs the US is improving sharply.Australian economic activity grew +0.6% in Q2-2025, accelerating from an upwardly revised +0.3% in Q1 and better than analyst expectations of +0.5%. Year on year Australian GDP was up +1.8%, above forecasts of +1.6% and the fastest pace since Q3 2023.The UST 10yr yield is now at 4.22%, down -6 bps from yesterday at this time.The price of gold will start today at US$3,573/oz, up +US$47 from yesterday and surging to yet another new record high. Silver has moved higher too and now over US$41/oz.American oil prices are -US$2 lower at just over US$63.50/bbl with the international Brent price holding just under US$67.50/bbl.The Kiwi dollar is at just under 58.8 USc and up +10 bps from yesterday. Against the Aussie we are down -10 bps 89.8 AUc. Against the euro we are unchanged at 50.4 euro cents. That all means our TWI-5 starts today at just over 66.3, unchanged from yesterday.The bitcoin price starts today at US$112,443 and up +1.4% from this time yesterday. 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 will do this again tomorrow.