That's getting to the point where it becomes a real question for investors where they put their money, right?

Yeah, look, I think when we step back, there was a bit of a rally on Friday in anticipation of an Iran-US deal and certainly a bit of suggestion that oil was starting to come out of the Strait of Hormuz a bit more.

And as you say, this Trump-Z, we've got a two-month tariff truce.

So markets like that, and we did see bond yields pull back a couple of points.

But the core reality is there's no deal over the weekend, deal or no deal.

There's definitely no deal.

Negotiations is pushing markets back.

I think there's been about 5% depreciation in the cross rate with the US at the moment, just literally off that.

Shane, are the bond markets positioning through a hiking cycle now?

Yeah, g'day, Gareth.

Yeah, definitely.

So we've assuming factored in.

We've moved to this higher inflation for longer, higher interest rates for longer-type cities.

Ten-year U.S. government bond years, that's kind of a key reference point.

They're sitting around 5%.

I guess a lot of the focus will be on whether there's any clue about whether she now thinks that that October meeting is a live one where they've kind of more or less dampened down expectations of rates rising then.

Their ceiling is a bit higher, isn't it? That is

right.

So there's a 95% chance of a 0.25 increase in interest rates baked in now by markets.

Of course, the key here is on Thursday morning when we get the news from the US Fed in New Zealand time will be the tone.

It's all going to be about whether it's hawkish or dovish.

I think the market may actually quite like it if there's a 0.25% increase.

It's a bit of discipline, and that's something that investors, particularly in this bond market, which has seen a pretty dynamic sell-off on years of increase by 0.2% to 0.25% last week alone, are looking for a bit of, hey, tighten the reins, try and get on top of inflation.

And

Their ceiling is a bit higher, isn't it? That is

right.

So there's a 95% chance of a 0.25 increase in interest rates baked in now by markets.

Of course, the key here is on Thursday morning when we get the news from the US Fed in New Zealand time will be the tone.

It's all going to be about whether it's hawkish or dovish.

I think the market may actually quite like it if there's a 0.25% increase.

It's a bit of discipline, and that's something that investors, particularly in this bond market, which has seen a pretty dynamic sell-off on years of increase by 0.2% to 0.25% last week alone, are looking for a bit of, hey, tighten the reins, try and get on top of inflation.

And

Shane, is the economic data actually stacking up for them to do what the President wants?

Morning Garth.

The short answer is no.

The short answer is that economic data is way too hot.

Last week on Friday we had the US non-farm employment numbers out.

We saw 165,000 jobs added.

The expectation was 55,000.

But we're expecting some stronger numbers this week?

All right, so what did the markets make of Kevin Walsh's comments at Jackson Hole then?

Well, he was pretty hawkish.

So that means he was talking about potential for rate increases in the US.

That's a big change in regime.

The market's been thinking about no Fed increases in the near term.

He came out and said, guess what? The US economy is really strong.

Inflation is not going down as fast as it'd like.

Is that going to influence the Reserve Bank's decision on Wednesday, do you think?

Shane, what did Woosh say, and how have the markets really taken that on board?

Morning, Garth.

Well, he was hawkish, as you say.

What that meant was he was talking about, I can't see a lot of movement in inflation.

The Fed's got this PCE inflation target of 2%, still some way away, at the same time as the economy's quite buoyant.

So he's saying, look, these conditions, they're not exactly tight.

So the market's interpreted that as being the Fed's likely to move towards increasing rates.

Take some of Venezuela's.

It's a tricky, it's a bit of a spiral, a bit of a doom loop though, isn't it? Because if that leads to exactly the same response that we've seen, then do they have to go again and again? I

think, firstly, having interest rates in that 4% to 5% band is not unusual.

It's kind of normal.

It is a time for, as an investor, to be a bit watchful that there is some change going on.

When we think about where some of the risks and opportunities are, we know that the US government and the US Treasury tends to fade policy changes when markets get unstable.

So markets have been programmed to fade the flip, if you like.

So we know that...

Jackson Hole, it's like a big sort of country club summit for US mostly central bankers, isn't it? Are we likely to see them and, you know, Fed Chair Walsh jump into this, or is he going to continue to let the White House do the forward guidance?

It's a tricky, it's a bit of a spiral, a bit of a doom loop though, isn't it? Because if that leads to exactly the same response that we've seen, then do they have to go again and again?

I think, firstly, having interest rates in that 4% to 5% band is not unusual.

It's kind of normal.

It is a time for, as an investor, to be a bit watchful that there is some change going on.

When we think about where some of the risks and opportunities are, we know that the US government and the US Treasury tends to fade policy changes when markets get unstable.

So markets have been programmed to fade the flip, if you like.

So we know that...

Jackson Hole, it's like a big sort of country club summit for US mostly central bankers, isn't it? Are we likely to see them and, you know, Fed Chair Walsh jump into this, or is he going to continue to let the White House do the forward guidance?

Does that suggest that this is a bit of a softer picture for moving stuff around New Zealand and retail sales in general?

I think it's telling it we've got a mixed economy.

Parts of the economy are going incredibly well, other parts just not working at all.

Tough one for the policymakers in terms of that mix.

And this is what we think we're going to see with company reporting is part of the period was pre the Middle East, probably going all right.

Post the Middle East, obviously costs up, volumes down.

So it'll be outlook statements.

I mean, we did start to see, I like to think anyway, some sort of, I don't know if we can quite call it green shoots again, but there was some encouraging news last week, wasn't there, around... from both that um that quarterly um response to inflation expectations uh there was some good card data numbers sort of just some suggestions that maybe the cycle in new zealand's economy was returning to where it was back in february did we think that that's i mean is that a picture that you're seeing when you look around

Mm.

A couple of things driving it.

We've seen quite a dramatic drop in wholesale electricity prices.

A little bit of, uh, political focus on the energy sector starting to weigh on the Contact share price.

And certainly there's a little bit of overhang potentially from Infratil's holding in Contact.

The market's just a bit wary that Infratil will continue to sell down its Contact shareholding.

So what the Contact team say about the financial year '27 forecasts, uh, how they describe this really impressive development pipeline coming through, what their dividend guidance will be, that'll be really key to powering up this Contact share price today.

Mm.

It's all looking pretty rosy in the garden, is it?

Well, look, we're soon going to find out.

We've got 40 companies reporting their June period results over August.

Expectations are actually quite low.

You're right, we've actually had a really strong lead-up into this results season Fletcher Building coming out with a much better result than expected.

Again, predominantly driven by things they're doing.

Main Freight, an absolute ripper of an ASM annual shareholder meeting update, driven by their own strategies.

Are we picking up any kind of feelings? I mean, are we into that period where that starts to dampen down investor expectations or change behaviour?

Is that partly just because of the fundamentals of it or are we starting to see some of that inflation story really, really creeping in?

Look, I think there's two parts to it.

You know, one of the things that we've got to be mindful of is we've had the longest consecutive streak of days of the US 30-year bond above 5%.

Now, most people kind of start, you know, the snoring starts when I start talking about bonds.

But this is the start point for how do we decide where the capital goes and what return to get.

That is, since 2007, and 2007, a bit of an alarm bell for some people.

2008, of course, GFC.

So is that creating a bit of extra uncertainty?

Look, why are we seeing this sort of volatility still in tech?

Yeah, hey guys, look, there's a couple of different interrelated factors that are driving this pullback in technology.

Certainly it's been a really hot sector to start with.

A lot of angry seagulls fighting over that hot chip, if you like.

The core reality, right, there's a couple of things that are triggering it.

We saw last week the release of Kimi K3, which is Moonshot AI's new large language model.

It's triggered another one of these sort of question marks about returns and competition within the large language model sector.

I think we've run out of time to get to that this morning, but broadly we're just expecting a slight lift.

Shane, another bunch of bombings, which is horrific, but I mean, you would have expected that oil price to start heading up a lot higher by now if things were looking seriously compromised.

Yeah, hey, Garth.

Look, I think the key thing here is, well, the attacks are based predominantly on military targets and not on this energy complex.

oil prices can be relatively contained.

We could still see a bit of a creep up from here, that $76 mark.

Remember when we were back at 70 a week or so ago, But your markets have not been shaken by this.

Late last week, we were aware that things were starting to crank up.

What's it done? It's listed some of its stock in the US?

Shane, are you seeing more volatility for this sector there?

Yeah, hey guys, look, I'm not sure we're going to see a chipwreck, but we've certainly seen a lot of heat come out of this space.

There's a really strong debate going on within this AI world.

Some of the models are changing, so certainly things like token costs, different compute models.

So that's a challenge for markets.

But certainly I think as you touched on, we saw a recovery in the Korean share market and the Japanese share markets on Friday.

important because they're very leveraged into this AI trade.

I suppose our own RBNZ is looking at this pretty closely watched, do you imagine? Or here anyway.

Why is that so volatile at this point particularly?

The AI trade, and we're talking about semiconductors, hardware in particular, is very crowded.

So we've got a lot of leverage within those markets.

People are borrowing to put on positions.

Last week we saw a series of events that really shook up and created a question mark around it.

Firstly, we've had a bit of a shake around semiconductors, a number of new pushbacks from regulators about how they can use models, token pricing, so people are cutting pricing, and a bunch of new models that are really challenging the show me the return, show me the money on how I'm making a return on these IO models.

That was early on.

So if we look at the more broad economic picture there, particularly out of the US, are there any kind of signs that they are weathering this particularly well?

Okay, so what do investment markets make of this deal?

Yeah, look, de-escalation, it really reduces the risk on global growth and higher inflation from the energy shock tied to the Middle East conflict.

So it takes pressure off the global economies, the New Zealand economy, and takes some pressure off the central banks.

We could see a period of low energy prices actually seeing us push into a disinflation period.

That's when overall prices are increasing but at a slower rate.

And that generally is quite supportive for low interest rates and a better period of economic activity.

So, look, we've still got the 60-day negotiation period to get through.

Now, what do you think the SpaceX IPO means for investment markets?

Look, what does that enormous lift really mean for the rest of the market?

Yeah, hey Garth.

Well, I think there's a bit of a sigh of relief from many in capital markets that actually got up and went well.

You know, 19% on day one, not to be sneezed at.

Kind of a consistent number we see with initial public offerings, but nonetheless, really important to scale, as you say, is significant.

I think, yeah, there's a couple of key elements we pull out of it.

Firstly, it opens the door for this next tranche of mega IPOs, particularly Anthropic and OpenAI.

This is almost bigger than Elon, isn't it? Tell me why.

Shane, are we worried about that massive sell-off on Friday? What did it tell us?

Yeah, so just to step back, the Philadelphia semiconductor, the SOX index, down 10% last on Friday, dragged the US share market down.

A couple of triggers as you touched on, higher interest rate potential with this non-farm payroll coming at 172,000 people rather than 88,000, so a bigger number increases the risk of rate hikes.

Broadcom last Thursday came out with a great result, didn't guide for an increase and so the market was disappointed not enough and probably the third thing is this people raising a bit of money in advance there's some of these very large new public offerings coming through um semiconductors long term here they're quite a volatile sector uh influenced by things like interest rates but also how much capacity is coming on we're seeing quite a lot of new semiconductor production capacity coming on so market starting to think about that The interesting thing though, Garth, is the non-technology parts of the US market held up pretty well.

So this is about technology taking a bit of a pause, a bit of a breather, perhaps raising some money, as I say, for these new IPOs.

Having said the SOX is down 10% on Friday, it's up 70% year-to-date.

It's pretty stunning.

It's going to drop within about five days or something like that instead of three months.

If an agreement is reached, and it's a big if, how will markets react?

Yeah, hey Katie.

Look, firstly, markets have started to price in the fact that this is going to be a longer event, a longer conflict.

So we've seen particularly bond yields go up.

I think not the most exciting of asset classes, but actually really important.

If we do see some sort of step back, and it is looking like we're inching our way to a conclusion, fair to say that we will see oil prices fall back.

And I think, do we get below back to those $80 a barrel level? Potentially.

We've got, it's a big week, budget data, OCR, plus we've got some big company listings.