Breakfast briefing: The US boxed in by own goals

Here’s our summary of key economic events overnight that affect New Zealand with news the Iranians seem to be sucking Trump into a place he can’t extract himself from, far from his earlier claims of ‘total victory’.

First up today, US existing home sales came in at a modest level again in April, and undershot what analysts were expecting. High mortgage interest rates are probably the reason for the soft demand. Still, they did sell at an annualised rate of just on 4 mln dwellings which is enough to sustain the sector. Unsold inventory is rising however, now at 16 weeks sales, and has been rising for all of 2026 and is now at 1.35 mln units.

There was another US Treasury bond auction earlier today, and it was notable that demand is flagging, down -5% from the prior event. This time this 3 year bond achieved a median yield of 3.92%, up from 3.85% at the prior equivalent event a month ago.

Inflation’s impact in the US has officials scrambling. US petrol taxes are said to be on the radar for cutbacks. And the high cost of beef is pushing the US to sharply cut tariffs and quotas on imported beef. Both are effective acknowledgements that tariffs are hurting Americans more than their trading partners. However, given current demand and supply situations, it seems neither move will likely result in lower prices for US consumers.

In Canada, their central bank runs a ‘market participants survey‘ quarterly, and in the latest of these professionals now see geopolitical tensions more of a threat to their economy than the trade tensions with the US. They also saw only a modest +1.6% economic expansion this year.

China’s inflation is rising, noticeably now. Yesterday they said their April CPI came in up +1.2% from a year ago, with fuel costs up +4.6% on that year-ago basis. But in April from March, fuel costs rose +3.5% in just one month. Things are just as hot for producer costs which were up +3.5% year-on-year, and up +2.1% month-on-month. These are big sifts because they have been negative since October 2022.

China’s vehicle sales came in a 2.525 mln in April, about average aver the past three years, but marginally lower than year-ago levels which was an outsized period.

On the commodities front, copper shot up to a record high today, and aluminium, nickel and zinc are also rising at the same time. Sulphur, a key ingredient for all mining and processing activity has shot up to a record high again, and approaching three times its cost of a year ago, up double from the start of Trump’s Gulf War. But urea, which also spiked to mid April, has come back quite a bit since then.

Trump is on his way to Beijing for a summit with Xi, but he is going in quite a weakened state – but he probably doesn’t realise it.

The UST 10yr yield is now just on 4.41%, up +5 bps from this time yesterday. The key 2-10 yield curve is now at +47 bps (unchanged). Their 1-5 curve is now at +30 bps (-3 bps) and the 3 mth-10yr curve is at +75 bps (up +5 bps). The China 10 year bond rate is now at 1.76%, down -1 bps from yesterday. The Japanese 10 year bond yield is up +3 bps at 2.51%. The Australian 10 year bond yield starts today at 4.02%, also up +3 bps from yesterday. The NZ Government 10 year bond rate is down -2 bps at 4.70%.

Wall Street has started its week with the S&P500 up +0.1%. Overnight, European markets were mixed between London’s +0.4% rise and Frankfurt’s -0.7% retreat. Tokyo ended its Monday session down -0.5%. Hong Kong was unchanged but Shanghai jumped +1.1%, which is a big move for them. Singapore was up +0.4%. The ASX200 ended down -0.5%. But the NZX50 rose +0.3% in its Monday trade.

The price of gold will start today up +US$8 at US$4722/oz. Silver is up +US$5 at just under US$85.50/oz.

American oil prices are up +US$3 at just under US$98.50/bbl, while the international Brent price is at just over US$104.50/bbl, up +US$3.50.

The Kiwi dollar is unchanged from yesterday, at this time at 59.7 USc. Against the Aussie we are down -10 bps at 82.2 AUc. Against the euro we are up +10 bps at just on 50.7 euro cents. That all means our TWI-5 starts today at just under 62.9 which is little-changed from yesterday.

The bitcoin price starts today at US$81,983 and up +0.6% from this time yesterday. Volatility over the past 24 hours has been modest at just under +/- 1.4%.

The easiest place to stay up with event risk is by following our Economic Calendar here ».