The US boxed in by own goals

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 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 come 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 that 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. Today 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 hotter for producer costs which were up +3.5% year-on-year, and up +2.1% month-on-month. These are big sifts because it has 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. 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 is 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 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 holding 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%. 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. Audio soundtrack opening is licensed from Shutterstock, Track 1219389 Monetization ID TFGEPGEI0LHEIJAI