Breakfast briefing: US economy losing momentum
Dairy prices rise; US data very underwhelming; USMCA trade deal on the ropes; China households risk averse; Australia sentiment less negative; UST 10yr at 4. 71%; gold down; oil prices up again; NZ$1 = 58. 8 USc; TWI-5 = 62. 3
Dairy prices rise; US data very underwhelming; USMCA trade deal on the ropes; China households risk averse; Australia sentiment less negative; UST 10yr at 4. 71%; gold down; oil prices up again; NZ$1 = 58. 8 USc; TWI-5 = 62. 3Here's our summary of key economic events overnight that affect New Zealand, with news global oil prices have risen again with no end to Trump's Hormuz adventure. In something of a gigantic own-goal, the US economy is losing momentum rather quickly now. But first, the overnightfull dairy auctioncame in better than the futures market had signaled, up +2. 3% from the prior full event. This was largely driven by the milk powder gains with WMP up +3. 0% and SMP up +7. 6%. However most of the milk fats fell. The overall gains in NZD were slightly better, up +2. 6%. But despite this recent turn higher, prices are still almost -9% lower than year-ago levels, even if they are up almost +10% from the start of 2026. In the US, the latestweekly jobs update from ADPhas stayed low with less than a +10,000 gain over the past four week. In contrast to the positiveJuly factory reportin the New York state region we noted yesterday, theirservices surveyin the same region wasn't very good. The business climate index remained deeply negative, with almost half of respondents reporting unfavourable business conditions. USindustrial productiondata for July was modestly positive from June and that has resulted in a +1. 1% gain from a year ago, although lower than the June +1. 3% expansion. USpending home sales were lowerin July, both from June, and from a year ago. There is no spark in evidence in this sector, and perhaps not surprisingly when home loan interest rates are high at 6. 8% and likely to rise from here. Every region is posting both month-on-month and year-on-year declines now. UShousing startsfell back sharply in July, down -13. 5% from year-ago levels. In fact, the last time they had a July this low was in 2019. And in Canada, they also reported a sharp drop in newhousing startsin July, their lowest for that month also since 2019. But Julyhousing market salesactually rose and delivered the highest levels they have had in 2026 (even if this isn't a particularly high bar). Meanwhile, negotiations between Canada and the US over Trumps 50% tariff threat seem to be going nowhere, and they are due to come into effect tomorrow. Interestingly, included in the stoush is Canada's aluminium exports and if they are tariffed, the hurt to US businesses will be significant. In China, they have a slowing momentum too. Households are clearly worried because they hare paying down debt faster and prioritising cash reserves in the face of a glum outlook. In Australia, theirconsumer sentimenthas improved from low levels but it is still net-negative and still below last year's level at this time. The improvement was driven by mortgages holders who were relieved that the RBA didn't increase rates at its last decision. The survey also shows house price expectations declined as the housing market weakened. But renters are less likely to expect price falls and are more downbeat about home purchases. The UST 10yr yieldis now just on 4. 71%, down -2 bps from this time yesterday. The 30 year yield is at 5. 28% and down -3 bps, and off its highest in more than 20 years. The key 2-10 yield curve is now at +53 bps (unchanged). Their 1-5 curve is now at +38 bps (+1 bp) and the 3 mth-10yr curve is at +102 bps (+2 bps). The China 10 year bond rate is down -2 bps to 1. 67%. The Japanese 10 year bond yield is now at 2. 95%, unchanged, up +3 bps. The Australian 10 year bond yield starts today at 5. 05%, up +2 bps. The NZ Government 10 year bond rate is at 4. 77%, up +3 bps. Wall Street has faded again today with the S&P500 down -0. 6% and the Nasdaq down -1. 3%. Overnight, European markets were mixed between London's +0. 1% and Paris's -0. 8% fall. And Tokyo ended its Tuesday session down +2. 5%. Hong Kong was up +0. 1%. Shanghai was up +0. 2%. Singapore ended down -1. 2%. The ASX200 ended its Tuesday session little-changed. But the NZX50 had a good positive session, ending up +1. 1%. The price of goldis falling back, now at US$4353/oz, down -US$30 from yesterday at this time. Silver has fallen -US$1 to just under US$64. Oil prices are up another +US$1 from yesterday at just over US$85/bbl in the US, while the international Brent price is now just on US$91/bbl and up +50 USc. Hormuz transitshave stayed very low. There has been only one crude tanker and 4 cargo ship exiting over the past 24 hours (2 dark with transponders off) and eight entering for new loads (3 dark), again all Iran-linked. There have beendeadly attackson a few of these ships crossing. The Red Sea activity is still only about 20 exits at the Yemen chokepoint, little-change. The Kiwi dollar is down -25 bps from yesterday at just under 58. 8 USc. Against the Aussie we have dropped -20 bps to 82. 9 AUc. Against the euro we are down -25 bps at 50. 8 euro cents. That all means our TWI-5 starts today at just on 62. 3, down -30 bps from this time yesterday. The bitcoin price starts today at US$64,667 and up +0. 7% from yesterday. Volatility over the past 24 hours has also been low at just on +/-0. 7%. The easiest place to stay up with event risk is by following ourEconomic Calendar here ».