Global Economic Snapshot: Trade Tensions, Travel Trends, and Market Movements
US-China Trade Talks: Seeking an Off-Ramp
All eyes are on the anticipated meeting between high-level Chinese and American officials as they attempt to de-escalate trade and tariff hostilities. Both sides are reportedly looking for an off-ramp
from the ongoing trade war, according to Nikkei asia.
US Tourism hit by Travel Boycott
New data confirms a significant decline in inbound travel spending in the United States. The drop is comparable only to the aftermath of the 9/11 attacks and the early stages of the COVID-19 pandemic. This decline could impact the US service surplus, as tourism is a major contributor. Reports suggest that fears over safety and increased instances of immigration officers detaining or denying entry to tourists might potentially be contributing factors.
Did you know? The US travel industry contributes substantially to the nation’s GDP, and a sustained decline in tourism could have broader economic consequences.
Canadian Job Market: A Mixed Bag
Canada’s jobless rate edged up to 6.9% in April, a three-year high, with only a slight increase in payroll employment. However, the report also revealed a strong rise in full-time jobs coupled with a notable decrease in part-time positions. despite the rise in unemployment, the Canadian dollar weakened, increasing the likelihood that the Bank of Canada will cut its policy rate at its next meeting on June 5 (NZT).
Pro Tip: Keep an eye on the bank of Canada’s upcoming meeting. A rate cut could impact the Canadian dollar and possibly influence othre currencies.
Japan: Household Spending Surprises to the Upside
In Japan, household spending rose by +2.1% in March year-over-year, significantly exceeding expectations of a +0.2% gain. This marks the strongest growth as December, driven by a stabilization in food spending and increased expenditures on furniture and recreation.
China’s Exports Defy Expectations
China’s April exports surpassed expectations, with the trade surplus nearly matching the strong figures from March. This positive result was unexpected by many analysts. New Zealand’s exports to China are double its imports, while Australia’s trade relationship shows a similar pattern, albeit with a higher dependency on China. The United States still receives over 10% of Chinese exports, down from nearly 13%, while Chinese purchases of American goods have fallen to under 6% of all Chinese imports, down from 16%. China’s Q1-2025 current account surplus hit a record high, more than tripling the figure from the same quarter last year, driven by strong US demand and a narrower services deficit.
Bond Market Update
The UST 10-year yield is at 4.38%,up +1 bp from yesterday and +16 bps for the week. The 2-10 yield curve is little-changed at +49 bps. The Australian 10-year bond yield starts today at 4.34%, up +4 bps from yesterday. The china 10-year bond rate is unchanged at 1.64%. The NZ Government 10-year bond rate is up +2 bps at 4.51%, a +5 bps increase for the week.
Global Equity Markets
wall Street saw a slight dip of -0.1% in Friday trade on the S&P 500, remaining unchanged for the week. European markets were mostly up +0.6%, with London managing half that. Tokyo rose +1.6% on Friday, while Hong Kong was up +0.4% and Shanghai was down -0.3%. singapore gained +0.7%.The ASX200 ended Friday up +0.5%, unchanged for the week, while the NZX50 finished up a stronger +1.1% for a +2.3% weekly rise.
Market Sentiment: Greed Takes Over
The Fear & Greed index has shifted into the ‘greed’ zone,a change from last week’s ‘neutral’ sentiment.
Gold and Oil Prices
The price of gold starts today at US$3338/oz, up +US$35 from yesterday and +US$124 from a week ago. Americans now view gold as a better long term ‘investment’
than equities, according to Gallup. Oil prices are firmer today, up +US$1 at just on US$61/bbl in the US, with the international brent price just under US$64/bbl. The Russian price is at a -$9 discount (-14%).
Currency Watch
The kiwi dollar is now at 59.2 USc, up +10 bps from yesterday, but down -30 bps from a week ago. against the Aussie, it is indeed down -10 bps at 92.2 AUc, and against the euro, it is down -10 bps at 52.5 euro cents. The TWI-5 starts today just on 67.6, unchanged from yesterday, but down -20 bps from this time last week.
Bitcoin Update
The bitcoin price starts today at US$103,122, up +2.0% from yesterday and +6.5% from a week ago. Volatility over the past 24 hours has been modest at just under +/- 1.5%.
Currency Charts
Visual representations of currency movements against the US dollar, Australian dollar, TWI, Japanese Yen, Chinese Yuan, Euro, British pound, and Bitcoin are available for further analysis.
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FAQ
Why is tourism declining in the US?
Fears over safety and increased instances of immigration officers detaining or denying entry to tourists may be contributing factors.
What does the Fear & Greed index indicate?
It reflects market sentiment, with ‘greed’ suggesting investors are optimistic and willing to take risks.
What is the importance of the US-China trade talks?
These talks aim to de-escalate trade tensions and potentially reduce tariffs, which could positively impact global trade.
