The global economy faces challenges

Kia ora

and welcome to Tuesday's Economy Watch where we follow the economic events and trends that affect New Zealand.

I'm David Chaston and this is the International edition from Interest.co.nz.

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Today this podcast leads with news global equity markets are on hold ahead of the G20 meeting in Japan and the all-important signals that will come from the Trump-Xi meetings.

Meanwhile in the US, a third Federal Reserve regional factory survey weakened in June, First it was New York, then Pennsylvania, and now it is Texas adding to signs of waning momentum in manufacturing amid heightened trade tension. The Dallas Fed’s gauge of manufacturing slumped to a three-year low as more firms saw conditions worsen. Their six month outlook also deteriorated.

The Chicago Fed's national activity index wasn't quite so downbeat however.

In China, meat imports are soaring. Pork imports surged the most, increasing +63% in May from a year earlier. Lamb shipments climbed +53% to 42,036 tonnes, while beef imports rose +41% to 123,720 tons.

And China's urbanisation rate will reach 70% in 15 years. That is up from about 55%. The shift will involve world-shaking investment and help explains why the iron ore price just keeps on rising and rising.

Parts of India are facing a severe water crisis. Not only has rainfall been low, but preparation and investment has been absent, and demand is rising. In Chennai, ten million people now face a real immediate crisis. But other major centres are about to as well. India faces an impossible challenge.

Do you know that we have a full database of key economic data about New Zealand, all charted so you can easily understand the perspectives. You can access that resource at interest.co.nz/charts

In Turkey, following a stunning rebuke of their strongman president in the Istanbul local elections, creditors are worried. Turkey tried to borrow-and-spend its way to prosperity, but the debt is now due in enormous amounts. It is a clear example of an MMT failure. Already their currency is in the pits and inflation is running high. All that internal debt resulted in a foreign liability as it flowed through and out of their economy as fear rose. Turkey's choices now are tough.

The UST 10yr yield is starting today under 2.02% and weaker by -4 bps.

Gold is up strongly again and is now at US$1,415. That is a gain of +US$16 and a new six year high.

US oil prices are little-changed today. Prices are now just over US$58/bbl. The Brent benchmark is now at US$65.

The Kiwi dollar is rising and now at 66.2 USc. On the cross rates we are also firm at 95 AUc. Against the euro we are up at 58.1 euro cents. That all pushes the TWI-5 up to just under 70.7.

Get more news affecting the economy in New Zealand from interest.co.nz and subscribe to receive this podcast in your favourite podcast app - we're on Apple Podcasts, Google Podcasts, Spotify or subscribe on our website.

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I'm David Chaston. We'll do this again tomorrow.