Economy Watch

Kia ora,Welcome to Friday’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.And today we lead with news the gold price is tumbling today, ending its recent spectacular rise.But first, American initial jobless claims rose to 223,600 last week, more than expected. There are now 1.907 mln people on these benefits, +153,000 more than at this time last year, a rose of +8.7%.But job cuts announced in April came in less than you might have thought at 105,400, certainly less than for March. But they are +62% higher than year-ago levels.The widely-watched ISM manufacturing PMI for April slipped into a deeper contraction than in March, although slightly less so than expected. Output shrank more sharply and prices rose faster. Meanwhile, new orders declined at a slower pace although new export orders fell steeply. This survey was quite a bit more negative than the S&P Global/Markit version we noted yesterday.One sector that has lost much of its momentum is the US construction industry. It atrophied somewhat in March, again.The expectation is that tomorrow's US non-farm payrolls report will deliver a rise of +130,000, about half the levels they had at the back end of 2024. But there may be downside risks to this estimate. A very weak result will put the Fed in a real bind, having to choose between rescuing jobs in a faltering economy, or pushing back on rising inflation. The last time they had serious stagflation was in the late 1970s, and then the Fed chose fighting inflation over preserving jobs and growth. It caused social unrest, but it beat inflation, and ended stagflation's curse - until now. But fifty years later, few people understand that curse and it's corrosive effects.Across the Pacific, the Bank of Japan held its key interest rate steady yesterday as the new American tariff policy casts a shadow over the Japanese economy. The central bank kept its policy rate at 0.5% during its first board meeting since Washington announced a wave of "reciprocal" tariffs in early April. The yen fell. The BOJ also stood pat at its March meeting following a +25 bps hike in January.And don't forget, China is on holiday, until Tuesday. So data releases there are sparse. It may be a good time for some of them to take a break; outbound export shipments to the US are reportedly down -50%. Despite that, there are signs the US is desperate to get trade talks going but Beijing is playing hard to engage.Australia reported a merchandise trade surplus of +AU$10.8 bln in March. This was a good improvement from the relatively low +AU$8.4 bln in March 2024, but similar to the average March in the prior five years (+AU$10.6 bln). (Australia usually reports seasonally adjusted values, and are much lower than the actual values this year, for some reason.)The Aussie federal election is in its final day now. Pundits seem to think the incumbent government will be returned but with a reduced majority, maybe even requiring a coalition partner. We will know soon enough.Global container freight rates fell -3% last week from the prior week to be -23% lower than year ago levels. Bulk freight rates were little-changed.The UST 10yr yield is now at 4.23%, up +5 bps from this time yesterday.The price of gold will start today at US$3214/oz, and down -US$95 from yesterday.Oil prices are holding lower at just on US$58.50/bbl in the US and the international Brent price is now just under US$61.50/bbl. These remain four year lows, down to level last seen in April 2021.The Kiwi dollar is now at 59 USc, down -40 bps from yesterday at this time. Against the Aussie we are down -20 bps at 92.6 AUc. Against the euro we are little-changed at 52.3 euro cents. That all means our TWI-5 starts today just on 67.4 and down -10 bps.The bitcoin price starts today up +2.8% from yesterday at US$96,810. Volatility over the past 24 hours has been modest at +/- 1.9%.This briefing is taking a few days off for a short break. We will resume on Tuesday, May 5, 2025.You can find links to the articles mentioned today in our show notes.You can get more news affecting the economy in New Zealand from interest.co.nz.Kia ora. I'm David Chaston. And we will do this again on Tuesday.

Kia ora,Welcome to Thursday’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.And today we lead with news the consequences of US policy changes are now starting to show up in the data.The big overnight news is the Q1-2025 US GDP report. The American economy shrank at an annualised rate of -0.3% in the period, the first retreat since Q1-2022. This was a sharp reversal from +2.4% growth in the previous quarter and well below market expectations of +0.3% growth. A surge in imports was one key factor as businesses rushed to stockpile goods in anticipation of higher costs from the tariff announcements. But that didn't include consumers because their spending growth cooled to 1.8%, the slowest pace since Q2-2023. Federal government spending fell -5.1%, the steepest drop since Q1-2022.That 'cooled' consumer spending reversed in March with a tariff-stocking-up rise for them too (especially for cars) ahead of the April cost increases. PCE inflation cooled a little, but not yet back to mid-2024 levels. Personal disposable income rose less than spending in March.Financial markets reacted negatively to the larger than expected GDP shifts.This weekend we get the April non-farm payrolls report and currently markets expect a smallish rise of +130,000. But that may be an over-estimate. The ADP survey of private business only added +62,000 workers to their payrolls in April, less than half of the downwardly revised 147,000 payrolls in March and well below market expectations of +115,000.April data is weaker than for March, so prospects for Q2-2025 economic activity do not look flash for the giant US economy. US mortgage applications sank again last week, and for a third straight week. A pullback in new orders and production levels in April saw the Chicago PMI contract for its 17th consecutive month.But US pending home sales jumped in March from February, ahead of tariffs which are expected to make new home purchases more expensive. But they are -0.6% lower than year-ago levels which itself was a weak base.And still in the US, it is becoming clearer who will be paying the tariffs. Retail giant Walmart has raised the white flag, telling Chinese suppliers to resume shipments suggesting to them it will 'absorb' the new border costs. Of course they will be passed on to consumers.Across the Pacific, we are looking ahead to the Bank of Japan rate decision later today, although the landscape has changed there and they are unlikely to raise their +0.5% policy rate now.Japan's industrial production was weakish in March, coming in lower than expected from the prior month to be little-changed from March a year ago. At the same time they reported retail sales +3.1% ahead of the same month a year ago which was lower than expected, also with current weakness from February.Nearby, Korea said their industrial production came in better than expected in March although not as strong as for February. Korean March retail sales however gave back a small bit of the outsized rise in February.In China, their May Day holiday starts today and runs to May 5, inclusive. (They were required to work on April 27 (Sunday) to give them five consecutive "days of rest". They may not be resting; travel bookings for domestic trips are up through the roof this year. (Don't forget, in China, the standard working week is 8 hours per day, 40 hours per week, which is a five-day work week (Monday-Friday). However, it's important to note that the 996 work culture, where employees work from 9am to 9pm, six days a week, is a common reality, especially in their tech industry.)Once again the official factory PMI for China came in with a small contraction (a definite slowing), while the private Caixin version came in with a small expansion, although a slight slowing. Separately, the official services PMI came in with a slightly better expansion. In all cases, new order levels retreated.In Europe, the German economy expanded slightly in Q1-2025 from Q4-2024. Inflation was steady in April at 2.2%, and retail sales were up +2.2% on a volume basis from March year-ago levels, but little change from February.That all helped the overall EU GDP to expand +1.4% in Q1-2025 from a year ago, up +0.4% from Q4-2024. It is rate that the EU outperforms the US, and this isn't so much because the EU is rising, more that the US is falling.Whichever way you sliced it, Australia's inflation came in at 2.4% in March from a year ago. That was true for the quarterly CPI, and the monthly inflation indicator. Both were little-changed from the respective prior releases. There's now talk of a post-election rate cut from the current 4.10% cash rate target.The pre-tariff shoring up saw air cargo demand spike in March, led by activity in Asia/Pacific, and the US. Come April and May, this spike is expected to reverse quite sharply. Passenger air travel is flattening right out, especial

Kia ora,Welcome to Wednesday’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.And today we lead with news negative data is starting to flow more aggressively in the US as the consequences of dumb policy show through. It been a track to decline for the first 100 days of Trump II.First, the US Redbook index of retail sales rose +6.1% last week from the week before, but the strong suspicion is that much of this is inflation-related.And that is supported by a sharp drop in consumer sentiment reported by the Conference Board, down to a 13 year low in April and confirming the UofM earlier sentiment survey.US job openings fell by -288,000 to 7.192 mln in March, down -901,000 from a year ago to the lowest level in six months and well below market expectations of 7.5 mln. The drop was broad-based. Their quit rate rose to an 8 month high.The US trade deficit in goods widened sharply to -US$162 bln in March, the largest on record, and well above the expected -US$146 bln gap as tariff threats drove US importers to front-load their purchases. Unsurprisingly, that alos generated a spike in wholesale inventories.This bad trade result probably cements a very weak Q1-2025 GDP result. The next AtlantaFed GDP Now update will come tomorrow, and is unlikely to be pretty.The Dallas Fed's services sector survey pointed to weaker conditions and a weaker outlook.The Canadian election has resulted in a narrow win for the center-left (in North American terms) Liberals and the Quebec coalition partner. This is an unusual fourth consecutive win for the Liberals, and an unlikely one, very much aided by Trump trolling. It will be a tough gig because they are clearly facing recession, also flowing from the newly-fractious US relationship.The ECB survey on consumer inflation expectations in the euro-zone rose in March with the year ahead expectation up to 2.9%, its highest in a year.EU consumer sentiment dropped in March and to its lowest since December.And we should probably note that Denmark says it wants the EU to join the CPTPP.In Australia, there are three days left of campaigning in their federal election. Polling is tightening. Despite those polls still showing Labour ahead, much will depend on how voters rank their preferences, which could make it rather close.The overnight dairy Pulse auction came in better than the futures market signaled. The SMP price rose as expected and to its highest in a year, but the WMP price did not fall as expected, rather it showed a small gain and to its highest in three years.The UST 10yr yield is now at 4.17%, down another -4 bps from this time yesterday.The price of gold will start today at US$3319/oz, and down -US$17 from yesterday.Oil prices are down -US$1.50 at just on US$60.50/bbl in the US and the international Brent price is down a bit less, now just under US$64.50/bbl. These are two-week lows as global trade tensions and weak US data dampened the demand outlook.The Kiwi dollar is now at 59.4 USc, down -0.2% from yesterday at this time. Against the Aussie we are up +10 bps at 93 AUc. Against the euro we are unchanged at 52.2 euro cents. That all means our TWI-5 starts today just on 67.6 and down -10 bps.The bitcoin price starts today up +1.3% from yesterday at US$95,401. Volatility over the past 24 hours has been low at +/- 0.9%.You can find links to the articles mentioned today in our show notes.You can get more news affecting the economy in New Zealand from interest.co.nz.Kia ora. I'm David Chaston. And we will do this again tomorrow.

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.And today we lead with news there have been some unusual events overnight. And that's putting it mildly.Canadians are voting in federal elections, ones where the winner will need to tackle a weird US administration. The US president injected himself into the campaign at the last minute with a claim Canadians should vote for him to make Canada the 51st state of the US. There are no exit polls yet, but it is likely to steel Canadians to reject the call in record numbers whatever the result is.The clear instability of the Trump action saw Wall Street fall almost immediately but has recovered slightly since. There are nerves on Wall Street about some impending Big Tech results out soon too.In the real world, Canadian wholesale sales slipped -0.3% in March.In the US, the Dallas Fed factory survey dived to its worst level since the pandemic, and before that its worst level since early 2016. The fall was worst in new orders. Inflation rose. Confidence in the future weakened. The US oil patch isn't a happy place.In Europe, we should probably note that there has been a major electricity grid failure in Spain and Portugal with much of the country blacked out, although service is now being restored.Separately, a key ECB figure said the European Central Bank may cut interest rates below the neutral level that keeps the economy in balance. He said euro zone inflation may come in lower than expected as a result of American tariff actions and require the much looser settings.In Asia, India said its industrial production rose +3.0% in March from a year ago, similar to the slowdown reported in February, a lot more tamer than the expansion rate has been recently although back to its long term average. This is not evidence their economy is booming from manufacturing.In China, their centr5al bank is signaling that both rate cuts and reserve ratio cuts are on their to-do list "at the right time". Both will boost liquidity and shore up any economic wavering.Singapore's unemployment rate ticked up a little, but only from an historically low level and only back to its long-run level.Singapore has a national election on Saturday, May 3. No surprise is expected in a contest closely controlled by the ruling party.Australia's federal election is on the same day and that outcome is a lot more uncertain.Australia is one of very few countries to have a AAA credit rating from Moody's, S&P, and Fitch. Now analysts at S&P are openly concerned about the cost of election promises in light of their budget forecasts that earlier showed long-term deficits rising. Election victory might be a bit of a poisoned chalice if it also comes with a downgrade, higher debt servicing costs and rising deficits. Public policy choices then become very hard, very necessary, and very unpopular.The UST 10yr yield is now at 4.21%, down -4 bps from this time yesterday.The price of gold will start today at US$3336/oz, and up +US$17 from yesterday.Oil prices are down -US$1 at just under US$62/bbl in the US and the international Brent price is down a bit more, now just over US$65.50/bbl.The Kiwi dollar is now at 59.6 USc, unchanged from Saturday at this time. Against the Aussie we are down -30 bps at 92.9 AUc. Against the euro we also down -30 bps at 52.2 euro cents. That all means our TWI-5 starts today still just on 67.7 and down -30 bps as well.The bitcoin price starts today little-changed at US$94,137 and down just -0.1% from this time yesterday. Volatility over the past 24 hours has been modest at +/- 1.4%.You can find links to the articles mentioned today in our show notes.You can get more news affecting the economy in New Zealand from interest.co.nz.Kia ora. I'm David Chaston. And we will do this again tomorrow.

Kia ora,Welcome to Monday’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.And today we lead with news this week we may start to see some hard data from the US and how the Trump insurgency is affecting the world's largest economy. Already sentiment surveys seem pretty negative.For us, the week ahead will be dominated by the March quarter financial system data releases from the RBNZ on Wednesday.Internationally, we will remain trapped watching the chaotic policy changes from Washington and trying to assess how they may impact us. Wall Street's earning season releases will also be a big influence, especially results from Big Tech. And the Americans will release their Q1-2025 GDP results, PCE inflation data, and their ISM PMI survey results. And at the end of the week we will get the April non-farm payroll results for the US labour market.The Bank of Japan is scheduled to review its monetary policy, but they are unlikely to make any changes in the fog of uncertainty around trade policies. Australia will release its Q1-2025 CPI data (expect a dip to 2.2%). China will release its official PMI survey results.Over the weekend, China said its March industrial profits were better than expected, but private sector profits slipped again. However, overall profits rose +0.8% from a year ago. Also better were foreign company profits which were up +2.8% on the same basis.China said they are adding another ¥500 bln in medium-term lending facility funding. This is the second month they have pushed out substantial additional liquidity in this way.And China says more than 120 million people have benefited from their old-for-new consumer goods trade-in subsidy program, driving sales of more than ¥720 bln.And the BS meter is on high after Trump said that “we’re meeting with China” on tariffs, comments aimed at soothing jittery financial markets. But Chinese officials say no talks have taken place.In fact, China cancelled some large pork and soybean orders to US suppliers. American farmers not only have to bear the brunt of trade policy gone rogue, they are also battling rouge weather.Singapore said its industrial production rose in March, a bounce-back from a weak February result. But the recovery wasn't as strong as analysts had expected.Across the Pacific, US initial jobless claims fell last week to +209,700 and to the level expected. But seasonal effects suggested this reduction should have been larger. There are now 1.89 mln people on these benefits, still higher than year ago levels. This is despite Federal pressure on States to deny long term undocumented workers access to benefits.New durable goods orders jumped in March by +10.9%, the largest rise in seven months. Capital goods orders rose +24.1%. But non-defense, non-aircraft capital goods orders were only up +1.8%. This is probably why the March or April PMIs didn't note a general rise in factory orders.US existing-home sales fell -5.9% in March from February to be -2.4% lower than one year ago.Meanwhile the Kansas City Fed factory survey reported lower activity, higher costs, and unchanged order levels.Nationally, the Chicago Fed's National Activity Index reported a small slip in March. This is consistent with the overall Fed Beige Book monitoring.And finally for the US, the UofM sentiment survey for April was -8.4% lower than for March, -32% weaker than a year ago. These are big drops. Year-ahead inflation expectations surged from 5.0% in March, an unusually high level, to 6.5% this month, the highest reading since 1981.North of the border, Canada reported February retail sales and they slipped from January to be +2.1% ahead of year ago levels. This data is volume data, so a real increase.And its election day in Canada (tonight NZ time). There has been a notable surge in early voting. Official data for this was released a week ago, and that showed 7.3 million electors had voted in advance at that stage. This is a +25% increase from the 5.8 million electors who voted in advance in the last federal general election in 2021. They have 27.6 mln eligible voters this time.The UST 10yr yield is now at 4.25%, up +1 bp from this time Saturday.The price of gold will start today at US$3318/oz, and up +US$88 from Saturday.Oil prices have held from Saturday be still just over US$63/bbl in the US and the international Brent price is now just under US$67/bbl.The Kiwi dollar is now at 59.6 USc, down -10 bps from Saturday at this time. Against the Aussie we are down -10 bps at 93.2 AUc. Against the euro we unchanged at 52.5 euro cents. That all means our TWI-5 starts today still just on 68 and unchanged from Thursday, but up +40 bps from a week ago.The bitcoin price starts today at US$94,238 and down -0.8% from this time Saturday. Volatility over the past 24 hours has again been low at +/- 0.7%.You can find links to the articles mentioned today in our show notes

Kia ora,Welcome to Thursday’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.And today we lead with news that as tariffs kick in, the US gets higher prices and lower activity. The White House is signaling it wants to pull back from its bluster (whiff of panic?), although China is yet to respond.But first in the US, mortgage applications fell sharply last week to be just +6% above the weak week a year ago. Benchmark interest rates rose, which seems to have choked off new purchase borrowers, and refinance borrowers.Sales of new single-family homes rose +6.0% in March from a year ago at a seasonally adjusted annualised rate of 724,000 and the highest in six months, and much better than market expectations of 680,000 homes. But to be fair this latest level is still within the range it has been for the past 27 months. They still have unsold inventories of over 8 months of sales at the current rate, which is a lot for builders to carry.The latest US Treasury bond auction, for the key 5yr Note, was well supported but delivered a yield of 3.93%, down from 4.04% at the prior equivalent event a month ago. This is the maturity that foreign institutions prefer so is a good indicator of foreign support of US debt instruments. More than a quarter of all US Treasury debt is owned by foreigners, more than a third in the 2-5 year maturities. If we see a pullback, it will be in these auctions, and evidenced by rising yields.The S&P/Markit US Manufacturing PMI rose marginally in April from March to a small expansion, better than the market expectations of a small contraction. Although growth was modest, this marked the fourth consecutive month of expansion in factory activity. Meanwhile, the equivalent services PMI fell sharply to a two month low. There are warning signs here. Prices charged for goods and services rose in this latest month at the sharpest pace for 13 months, increasing especially steeply in manufacturing (where the rate of inflation hit a 29-month high) but also picking up further pace in services (where the rate of inflation struck a seven-month high). More generally, sentiment fell among the surveyed companies.The US Fed's April Beige Book is out and it is picking up similar themes; lower sentiment, stuttering demand, and rising prices. They are more muted in the Beige Book surveys, but they are still being noted.There were 'flash' PMIs out for other countries overnight too. The EU factory PMI contracted its least in 27 months, but their services PMI retreated a bit more. In India, both of their PMIs stayed very expansionary. In Japan, there was a "return to growth" in April. In Australia, the new order components are rising but most other aspects are not. Election uncertainty may be playing a role here.In China, they said they will issue ¥1.3 tln (NZ$300 bln) in ultra-long-term special government bonds starting today (Thursday). Some of that liquidity will be used to fund consumption incentives as they try to speed their shift away from export dependency.Coal prices hit a four year low yesterday as warm autumn weather in Asia, and lower industrial demand is being swamped by high output. Prices are now back to where they were in 2016. Rising supply and stunted demand is having the same price impact on oil.Global financial stability regulators are increasingly worried about the resilience of the financial sector, and have issued a warning about the consequences of dodgy and capricious public policy.The UST 10yr yield is now at 4.38%, down -2 bps from this time yesterday.The price of gold will start today at US$3282/oz, and down -US$116 from yesterday.Oil prices have fallen -US$2.50 from yesterday to be now just over US$61.50/bbl in the US and the international Brent price is now just on US$65.50/bbl.The Kiwi dollar is now at 59.6 USc, down another -20 bps from yesterday at this time. Against the Aussie we are down -10 bps at 93.6 AUc. Against the euro we up +30 bps at just on 52.6 euro cents. That all means our TWI-5 starts today still just at 68 and unchanged from yesterday.The bitcoin price starts today at US$93,933 and up +2.7% from this time yesterday. Volatility over the past 24 hours has again been modest at +/- 1.8%.You can find links to the articles mentioned today in our show notes.You can get more news affecting the economy in New Zealand from interest.co.nz.Kia ora. I'm David Chaston. And because tomorrow is the Anzac Day holiday, we will do this again on Monday.

Kia ora,Welcome to Wednesday’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.And today we lead with news reality and expectations seem to be diverging.But first up today we can report that the weekly dairy Pulse auction for SMP and WMP brought little-change in the WMP price from the previous full GDT auction in USD, while the SMP price rose +3.0% on that same basis, but basically a recovery. However things are reversed in NZD due to the weaker greenback, with the WMP price falling -1.4% and the SMP price only up +1.7% in our currency.Internationally, the IMF warned that rising US tariffs are marking the start of a new global era of slower growth. Since January, sweeping import duties and retaliation are raising trade barriers to levels not seen since the Great Depression. The IMF cut its global growth forecast for 2025 to +2.8% from +3.3%, and sees continued weakness through 2026. The US will be among the hardest hit, with 2025 growth cut to +1.8% from +2.7%. Others like Mexico, Canada, China, and the EU will feel some effects but are likely to be minor compared to the US.Meanwhile, the US Treasury Secretary has told a private meeting the tariff war is unsustainable and will ease 'soon'. News of these remarks has led to a financial market rally. The problem remains however as neither Trump or China show any signs of backing down, and Bessent himself admitted that talks to de-escalate haven't even started. Markets might be getting ahead of themselves, as is Bessent.In the US, the Redbook retail impulse monitor was up +7.4% last week from the same week a year ago, the highest since the end of 2022. But this is becoming more of a measure of inflation than real sales activity as the tariff-taxes get passed through.The Richmond Fed's factory survey for the mid-Atlantic states reported weak results. It plummeted to -13 in April from -4 in the previous month, and well below market expectations. It is the sharpest decline in factory activity since November. Meanwhile their service sector gauge fell too.The latest and large US Treasury bond auction saw less support, but more than sufficient. However the median yield fell back to 3.74%, compared to the 3.94% at the prior equivalent event a month ago.Canadian producer prices rose +4.7% in the year to March, but they are rising at a quicker pace in recent months. Canada is in its final week of election campaigning.Across the Pacific, Taiwanese export orders rose to the elevated level of US$53 bln in March, but they have been doing this for so long now that the year-on-year gain isn't special for them, 'only' up +12.5%.In the EU, consumer sentiment fell more than expected in April to its lowest level since November 2023.The UST 10yr yield is now at 4.39%, a -1 bp dip from this time yesterday. The price of gold will start today at US$3398/oz, and down -US$19 from yesterday.Oil prices have risen +US$1 from yesterday to be now just under US$64/bbl in the US and the international Brent price is now just on US$67.50/bbl.The Kiwi dollar is now at 59.8 USc, down -20 bps from yesterday at this time. Against the Aussie we are up +10 bps at 93.7 AUc. Against the euro we up +20 bps at just on 52.3 euro cents. That all means our TWI-5 starts today now just on 68 and little-changed from yesterday.The bitcoin price starts today at US$91,488 and up +5.4% from this time yesterday. Volatility over the past 24 hours has again been moderate at +/- 2.6%.You can find links to the articles mentioned today in our show notes.You can get more news affecting the economy in New Zealand from interest.co.nz.Kia ora. I'm David Chaston. And we will do this again tomorrow.

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.And today we lead with news that gold is rising, being the 'last man standing' as a perceived safe-haven asset. And American bond funds are having a moment, a negative one. Outflows are continuing, building selling pressure at the rate of about US$10 bln per week and have done so for the past five weeks now.The position of the US dollar and US Treasuries are being directly undermined by the US president. He and his advisers have been raging about the role of the Fed boss. If he tries to remove him, expect a larger market reaction, especially from the bond market. But so far it is all bluster.But first, it will be a short, truncated week post-Easter with just three business days until Frida's ANZAC Day holiday. Our March export results are one of the few data releases. We will also get an update this week from the RBNZ's six-monthly credit condition survey.Internationally, we will get the start of the March 'flash' PMIs for April. Wall Street will continue with its early earnings season results, dominated this week by big tech. US durable goods orders for March, and confidence survey results for April are also due for release this week.Over the weekend China left its key lending rates unchanged for the sixth consecutive month in April. After that, the yuan rose as did the Hong Kong and Shanghai stock exchanges. Expectations for a reserve ratio cut to boosrt bank liquidity are mounting there.China ramped up its budget spending in the first quarter at the fastest pace since 2022, allocating nearly 22% of planned outlays to counter weakening foreign demand amid an ongoing tariff war. The move is part of a broader strategy to boost domestic demand and support industries hit by trade tensions.Earlier they said foreign direct investment into the country is struggling again. In January it was down -14% from a year ago to ¥13.4 bln in the month. It rose to ¥16.6 bln in February. a +16% year-on-year gain. But it March it was only ¥6.9 bln, a -45% drop from from the same month a year ago. China prefers to look at this data "year-to-date" but that masks the current weakness.Japanese CPI inflation stayed high in March although it did slip to 3.6%, and the second consecutive decrease and the lowest of 2025.Across the Pacific, the US dollar has fallen to a three year low. Sentiment is being undermined by the Trump attacks on the US Fed. And it seems pretty clear that the US in now in a tariff-tax recession. Not only is the Atlanta Fed's GDPNow signaling a -2.2% economic contraction, the blue chip 'consensus' forecasts are now showing up with contraction forecasts too. And the spread into investors funds is happening rather quickly now. 90 of the top 100 best-performing exchange-traded funds of last year are down in 2025, with an average loss of -13%, according to Bloomberg Intelligence.American new housing starts unexpectedly dropped -11.4% in March from February to an annualised rate of 1.324 mln, the lowest level in four months and virtually the same as the same month a year ago. But the expectation is that these will fall from here as new-builds get much more expensive from the tariff-tax effect.US initial jobless claims came in at 220,000 last week, an increase although less of an increase than seasonal factors would have anticipated. But that puts them +5.1% higher than year-ago levels.Diving even more is the Philly Fed's factory survey in the heartland Pennsylvania manufacturing rust belt. This is the icon region the tariff-taxes are supposed to save. But they aren't feeling any benefit - although hardly surprising to everyone but MAGA zealots. New orders dropped to pandemic levels, and apart from the pandemic, the overall sentiment has seen its fastest and steepest drop since these survey records started in the 1970s.In Canada, they are a week away from their federal election (Monday, April 28, 2025 Canadian time). The polls are tightening but the incumbent Liberal Party still holds a comfortable lead over the Conservatives. Likewise in Australia, their federal election is in the week after that. Polls there also show a comfortable lead for the incumbent Labor Party. In both cases, the conservative forces are undermined by the toxic Trump effect. But on the other side, the Labor Party is wavering in some key heartland Sydney seats, hurt by "the Gaza issue".In Europe, they are in a better position to cut interest rates because they also don't have the inflation pressures the US has. And they have. The European Central Bank cut its policy interest rates by -25 bps on Thursday, as expected, marking the sixth consecutive cut since June and bringing the key deposit rate down to 2.25%. They say their disinflation process is progressing well and they have now dropped previous references to a "restrictive" policy stance. They a

Kia ora,Welcome to Thursday’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.And today we lead with news gold has taken off, hitting yet another new all-time record high as fear stalks markets today and risk is definitely 'off'. But the NZD is rising. As we publish, markets are moving quickly so this snapshot will date just as quickly.But first in the US, mortgage applications fell -8.0% last week from the same week a year ago, with the refinance component down a rather sharp -12% on the same basis. These retreats came as benchmark mortgage rates rose +20 bps from a week agoA rush to buy cars ahead of the April tariff taxes delivered a boost to March retail sales that was even more than expected. Without those car sales, March retail was barely improved, and that does not adjust for price inflation so in volume terms, core retail sales are declining now. That trend will have global implications.American industrial production rose +1.3% from a year ago and this does adjust for price changes, so a small improvement. But it did shrink in March compared to February.Sentiment by American house builders was little-changed in March from February, but it is -21% lower than a year ago, and -13% lower than two years ago. In fact, excluding the pandemic, you have to go back to the GFC to find it this poor in a March month. That is not good because it is the start of their Spring selling season. Survey results show that tariff taxes are not being paid by importing countries, rather by the builders at this stage. As profits dive, that will be passed on to buyers next.There was a US Treasury 20 year bond auction earlier today and demand was slightly lower so the median yield rose to 4.75%. That is a rise from the 4.59% at the prior equivalent event a month ago.Fed boss Powell was talking earlier today, saying that tariffs pose a real challenge to meet their dual inflation+jobs mandates. Inflation pressures are here now which argues for rate settings to rise, while economic growth is expected to leak away soon hurting jobs, arguing for a rate cut. He said they will "wait for greater clarity" to see where the dominant pressure comes from.These comments were not the magical thinking equity markets wanted to hear, and the realities of what faces the US economy has seen Wall Street pull back today. The Nasdaq is down -3.9%, the S&P500 down -2.8%. The Dow is down -1.8%. Gold is the safe-haven parking lot.In Canada, they are also waiting. Rather than continue with their rate cut track, the Bank of Canada has paused that track, keeping its policy rate at 2.75% as they too watch inflation rise and economic activity leak away. Interestingly, the TSX is only down -0.3%, hit far less than Wall Street.Across the Pacific, Japan's February machinery orders rebounded sharply, rising well above market expectations for a modest +0.8% increase to its highest level in a year. Manufacturing orders rose +3%, while non-manufacturing orders jumped +11.4%. This rise matches the separate machine tool order data for March which was also up sharply. And these first see prosperity ahead; The Reuters Tankan sentiment index rose sharply in April. But the same firms surveyed were gloomy for the months further out in 2025.China claimed its economy grew at a +5.4% rate in Q1-2025 (real), the same rate as for Q4-2024. They said retail sales were up +5.9% (nominal) in March from a year ago, better than the +4.0% in February and the best rise since December 2023 which benefited from a low base. They also said industrial production was up +7.7% (nominal) in March, far better than the +5.6% expected and far better than the +5.9% February gain. Electricity production was only up +1.8% (real) year on year in March, so either they are making spectacular energy efficiency gains, or something other than electricity powers their industry, or something doesn't add up. Anecdotal reports from many regions don't paint quite the picture these official stats paint.Meanwhile, Chinese new home prices in March edged lower from February, but there are range of changes in the 70 top Chinese cities. Still only Shanghai shows a year-on-year gain. Among the same cities, none show any gain for resales of existing houses and some declines are now as much as -11% (Jinhua, 7 mln population, and Tangshan, 7.7 mln).The UST 10yr yield is now at 4.27%, down another -6 bps from this time yesterday. The price of gold will start today sharply higher at a new record of US$3337/oz, and up +US$108 from yesterday or +3.3%.Oil prices have firmed marginally, up +50 USc from yesterday to be now just over US$62/bbl in the US and the international Brent price is now just over US$65.50/bbl.The Kiwi dollar is now at 59.3 USc, up +20 bps from yesterday at this time and still the highest since mid-December. The fall of the USD embeds. Against the Aussie we are unchanged at 92.9 AUc

Kia ora,Welcome to Wednesday’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.And today we lead with news the gears of the global economy are grinding disconcertingly as the unnecessary trade war is prosecuted with little strategy and no apparent viable end game.But first up today, the latest full dairy auction brought an overall rise of +1.6% in USD. However, the fall and fall of the USD has completely undermined this result, with prices in NZD falling -2.1%. In USD all categories except SMP rose, and demand was strong from "North Asia" (ie China). Milk fats were in demand, while global milk supply is waning in the major producers, underpinning the demand. Pity about the currency effect.Inflation is showing up in the retail trade in the US, with the weekly Redbook index up +6.6% from the same week a year ago. There is no way that reflects a volume riseBusiness activity continued to fall in March in the New York Fed's factory survey in the New York state. New order levels extended their decline/In Canada, their CPI inflation rate eased lower to 2.3% in March. That is after the eight-month high of 2.6% in February. The March result was tamer than expected (2.6%) and below forecasts by the central bank of 2.5%. It comes after some GST and other tax changes earlier have now been flushed through their data. The Bank of Canada next meets to review its official policy rate later today, but it will be the economic impact of their unfriendly neighbour that will dominate policy, rather than current inflation. They will likely hold off making rate changes for now, keeping the 2.75% policy rate. That is a change from the earlier expected cut.Canadian housing starts came in weak in March, down more than -11% from the same month a year ago.India CPI inflation rate fell in March to 3.3%, its lowest since 2019. Food price inflation fell to 2.7%. Both were much lower than expected and well below the central bank's policy rate mid point of 4%.Indian exports rose sharply in March from February in the normal seasonal pattern. Their imports rose even more so their trade deficit grew from the prior month, although only back to its usual level.In China, they are cancelling their orders for Boeing aircraft, a blow to the US aircraft industry.In February, EU industrial production rose, a surprise gain and the best monthly gain in two years.But that wasn't an indicator for economic sentiment. The latest ZEW survey reveals a sharp deterioration as they watched the US turn away from friend to foe, making them feel boxed in between the US and Russia. It was a shift reminiscent of the uncertainty during the pandemic.And it seems that trade talks between the US and the EU are making "litte" (ir no) progress.In Australia, the latest release of the RBA minutes was a dull affair, giving little guidance on how they are going to deal with the trade and inflation challenges. It's all 'wait-and-see' and 'respond-to-data' for them. But they do claim to be in a good position to be able to act decisively if it is needed. A cut on May 20 is still possible however.OPEC's latest monthly review lowered its demand outlook, although some observers thought the smallness of the cutback was brave in the circumstances.And we should also note that there are now three elections due soon. Canada goes to the polls on April 28. Australia votes on May 3. And now a snap election has also been called in Singapore, also for May 3. Being Singapore, that unsurprisingly leaves very little time for campaigning. All these elections will have the Trump shadow hanging over them, and it very much helps campaigning to present an anti-Trump stance. Trump has resurrected the fortunes of the centre-left candidates, enough to cancel the anti-incumbent mood.The UST 10yr yield is now at 4.33%, down another -4 bps from this time yesterday.The price of gold will start today at just on US$3229/oz, and up +US$16 from yesterday.Oil prices have firmed marginally, up +50 USc from yesterday to be now at US$61.50/bbl in the US and the international Brent price is now just over US$64.50/bbl.The Kiwi dollar is now at 59.1 USc, up +30 bps from yesterday at this time and the highest since mid-December. The fall of the USD extends. Against the Aussie we are down -10 bps at 92.9 AUc. Against the euro we up +30 bps from yesterday at just on 52.4 euro cents. That all means our TWI-5 starts today now just under 67.6 and up +30 bps from yesterday.The bitcoin price starts today at US84,616 and holding again, up a mere +0.1% from this time yesterday. Volatility over the past 24 hours has been modest at +/- 1.2%.You can find links to the articles mentioned today in our show notes.You can get more news affecting the economy in New Zealand from interest.co.nz.Kia ora. I'm David Chaston. And we will do this again tomorrow.

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.And today we lead with news the week started with a strong risk-on mood and equities rose on Monday in Asia, and especially in Europe. Wall Street opened with the same vibe, but lost momentum in the middle sessions, although it is returning in the later session. It's volatile.But first in main street US, the New York Fed's consumer expectations survey mirrored the other recent sentiment surveys, noting a defensive turn in the mood. Consumers’ year-ahead expectations about their households’ financial situations deteriorated in March, with the share of households expecting a worse financial situation one year from now rising to 30%, the highest level since October 2023. Those surveyed said they see higher inflation in a year, up to 3.6% from 3.0% in the February survey. The expectations for earnings growth fell, and for joblessness to rise. Of course, this one was taken before the heavy tariff policies hit in early April. The April update will be available on May 9 (NZT).In Washington, the Trump administration is moving swiftly to end enforcement of white collar crime, dismissing federal prosecutors involved in enforcing foreign bribery cases, crypto crime, and money laundering crime. Its open season for white collar criminals. Washington is also apparently open for far-right Russians.It is so risky to visit the US, EU diplomats are now being issued with burner phones for their visits, just like they do when visiting China or Russia.On the tariff front, exemptions are coming for car parts, new tariffs for pharmaceuticals. The common thread is bolstering profits for campaign supporters. Need a favour? Go to Washington with money for Trump.In Canada, their central bank is about to review its monetary policy settings. It was on a rate cutting track, but is now more likely to leave its policy rate unchanged given the inflationary threats from the trade war.In China, their exports surged by +12.4% in March to US$314 bln, far above market forecasts of +4.4% rose and accelerating sharply from a +2.3% rise in the January–February period. It marked the fastest increase in overseas sales since last October, driven by the urgent frontloading before the American tariffs took effect. Since November when talk of tariffs first became a credible risk, the rise of Chinese exports has been exceptional. Meanwhile, March imports fell -4.3%. As a consequence, China's merchandise trade surplus has hit record levels in 2025.We exported +13% more to them in Q1-2025 from a year ago, and imported -5% less. Australia exported -29% less, and imported -5% less, for comparison.The UST 10yr yield is now at 4.37%, down -13 bps from this time yesterday. The price of gold will start today at just on US$3213/oz, and down -US$23 from yesterday.Oil prices have dipped -50 USc from yesterday to be now at US$61/bbl in the US and the international Brent price is now just under US$64.50/bbl.The Kiwi dollar is now at 58.8 USc, up +½c from yesterday at this time and the highest since mid-December. The fall of the USD extends. Against the Aussie we are up another +20 bps at 93 AUc. Against the euro we up +60 bps from yesterday at just on 51.9 euro cents. That all means our TWI-5 starts today now just on 67.3 and up +40 bps from yesterday.The bitcoin price starts today at US$84,546 and holding, and down a mere -0.3% from this time yesterday. Volatility over the past 24 hours has been modest at +/- 1.6%.You can find links to the articles mentioned today in our show notes.You can get more news affecting the economy in New Zealand from interest.co.nz.Kia ora. I'm David Chaston. And we will do this again tomorrow.

Kia ora,Welcome to Monday’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.And today we lead with news things are turning sour in the trenches of the US economy - for consumers, many non-prime corporate borrowers, and even investors in some local manufacturing they did at the behest of Trump.But first in the week ahead our news will be dominated by the March quarter CPI release on Wednesday. Japan, India and the UK will also release inflation updates this week. The central banks of Canada, the ECB, Turkey and Korea will be re-assessing their monetary policy settings, and obviously they will focused on how the global tariff war by the US will affect them, and the role monetary policy can play to mitigate the coming negative influences.China will report its Q1-2025 GDP result, and Germany will report any changes in economic sentiment.On Wall Street, the Q1-2025 earnings season will kick off and reports from the major financial institutions will come in early. There will be a lot of attention on them, especially if they start to report a bumpy ride from the economic uncertainty.However, the big news over the weekend is that China is standing its ground. Beijing raised tariffs on American imports to 125% on Friday, hitting back against Trump's decision to hike duties on Chinese goods to 145%, and raising the stakes in the trade war. They repeated the "fight to the end" rhetoric, also saying they will "counterattack". "Even if the US continues to impose higher tariffs, it will no longer make economic sense and will become a joke in the history of world economy. At the current tariff level, there is no market acceptance for US goods exported to China."On immediate consequence of all this is that investors are turning away from the US dollar as a safe haven. And perhaps turning away from US Treasuries too.Equity markets seem to be ignoring a sharp change in US consumer sentiment. The University of Michigan survey plunged in April to its lowest level since June 2022 and well below what was anticipated. That's the fourth straight month of pullback, and this survey is now more than 30% lower since the November 2024 election. It is signaling growing worries about trade war developments that have oscillated over the course of the year.American consumers report multiple warning signs that raise the risk of recession: expectations for business conditions, personal finances, incomes, inflation, and labour markets all continued to deteriorate this month. The gauge for current economic conditions fell along with the component measuring expectations which is now at its lowest since May 1980. Meanwhile, year-ahead inflation expectations surged to 6.7%, the highest reading since 1981, from 5% in March. The five-year inflation expectations gauge edged up to 4.4% from 4.1%.To mitigate some of that, Trump cancelled his tariffs as they affect mobile phones, their components, computers and other electronics. Even for Trump, this is pretty odd. It is now very much cheaper to import iPhones and the like from China than make them in the US. There will be many investors, especially those who have started building out US manufacturing facilities at the behest of Trump, who are likely to be a touch unhappy with this flip-flop and they still have to pay 145% tariffs on their imported parts. Clearly Trump has zero idea about how tariffs work, although that is not news. Commerce Secretary Lutnick added confusion in a weekend interview saying the tech tariff cancellation will be temporary.Meanwhile, March producer price inflation in the US actually eased to 2.7% its lowest in five months, aided by a sharp drop in energy costs. Without those fuel cost drops, the index would have risen slightly to 3.3%.There are signs that lending activity is tightening sharply in the US. For two weeks, there have been no - zero - high yield leverage loans for corporates in the US. The funds making these loans are having sharp investor outflows, and banks have become quite risk averse. A credit crunch is underway for most non-prime borrowers. If it extends, there will be real trouble.In Canada, not only are they rejecting American products and travel options now, a new trend is that they are net sellers of US real estate they had as holiday homes.India released February industrial production data over the weekend and that showed growth decelerated sharply to +2.9% from a year ago, down from an upwardly revised +5.2% in January. Markets had expected a +4.0% rise in February, so this is a big miss and is the weakest expansion since August.In China, their March new yuan loans came in at +¥3.6 tln, sharply higher than the +¥1.0 tln in February and slightly more than anticipated. New bank debt support is flowing as they intend, but to be fair it isn't overly different to the usual seasonal pattern. It is even less that the record March new-debt

Kia ora,Welcome to Friday’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.And today we lead with news equity markets have cancelled yesterday's relief rally.But first in the US, initial jobless claims rose last week to 215,000, +7.7% higher than the week before, but identical to the same week a year ago. There are now just under 2 mln people on these benefits, up slightly from the 1.93 mln a year ago.US CPI inflation fell to 2.4% in March, its lowest level since February 2021. Because this was data taken before the tariff chaos, it seems this may be the low point for the foreseeable future. Food was up +3.0% and rents were up +4.0%. Medical care was up +3.0%. However petrol prices restrained the overall rises, down -9.8%. Very low oil prices will keep a lid on the total even if other living costs rise much faster.Today's UST 30 yr bond auction was well supported, but the median yield came in at 4.73%, up from 4.56% at the equivalent event a month ago.The US government reported a budget deficit of -US$161 bln in March, a -32% decrease from the previous year, largely due to a calendar shift in benefit payments. Despite this monthly decline, the broader fiscal picture remains concerning, with the US Treasury reporting a -US$1.3 tln deficit for the first half of fiscal 2025, a +23% rise from the previous year. This marks the second highest deficit for the first six months of any fiscal year, trailing only the -US$1.7 tln gap in fiscal 2021. Tax cuts for the rich in this environment looks exceedingly irresponsible, especially if the tax rises on consumers via tariffs don't raise the outlandish sums forecasted.Just how damaged the US government agencies have become, Musk's DOGE fired all the safety regulators that oversaw Tesla.The April USDA WASDE report out overnight shows that US corn inventories are lower than expected. Beef exports are expected to fall on retaliatory tariff actions against the US and beef imports are expected to be lower too for the same tariff reason. The net result seen in lower prices for US producers. Lower prices for US milk producers too as exports shrink. US farmers will be net losers from the tariff hostilities.Across the Pacific, Japanese producer inflation is rising, now its highest since mid-2023. Producer prices there rose +4.2% in March from the same month a year ago, above market estimates of 3.9%. It was their 49th straight month of producer inflation, with cost rising further for most components.Taiwanese exports surged again in March, up +18.6% from a year ago and a record high for any month. A +8.5% rise was expected. That is two consecutive months of outsized expansion. April tariff actions may well affect this impressive result going forward, but if US customers have no alternative sources, the tariff taxes will fall on the buyer.In China, they not only have to fight off the US tariff policies, they have a resurgence of domestic deflation issues. Their March CPI fell -0.1% when a +0.1% was anticipated. Their PPI fell -2.5% when a -2.3% retreat was anticipated. On the consumer price front, food prices are -0.6% lower than a year ago, of which beef prices fell -10.8% and lamb -5.4%. Milk prices fell -1.7% on the same basis. They want to shift to a consumer-based society, but in the meantime their existing export sector is going to take major hits which will affect consumption, and there seems little upside to consumer demand in the current circumstances. Their "over-capacity" is going to expose them. You wonder if they have any more appetite for capitalism's "creative destruction" than Western economies, who have proven to have virtually none.And staying in China, Beijing's drive to turn its economy into a consumption-led one relies of Chinese consumers spending and buying. But the evidence is that they are as spooked by the trade war as anyone and have turned consumption-shy.In March Australian inflation expectations fell to 3.6%, a four year low. But in April they jumped back up to 4.2% underscoring the ongoing uncertainty surrounding their domestic economic outlook and inflation trajectory in the face of fallout from the tariff war. Given they have both a jobs, and an inflation mandate, the RBA is in for a tricky period ahead with its policy choices.Container freight rates rose +3% in the past week to be -23% lower than a year ago. Basically trans-Pacific rates firmed slightly while trans-Atlantic rates eased. Bulk freight rates fell a very sharp -21% in the past week to be -20% lower than year ago levels.The UST 10yr yield is now at 4.40%, unchanged from this time yesterday.Wall Street is currently down -3.4% on the S&P500 in its Thursday trade as the tariff-pause relief rally runs out of puff in the face of realities and reverses. The price of gold will start today at just on US$3162/oz, and up another +US$92 from yesterday.Oil prices have fallen

Kia ora,Welcome to Thursday’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.And today we lead with news that past notions of safe havens have been upended, and now it is the turn of the bond market to be roiled. The cost of long-term money is rising sharply as risk premiums leap.First, China has reacted in equal measure to Trump's capricious 104% tariffs on their goods, with their own extras, a 50% retaliatory tariff. The predictions any junior could see from the known Smoot-Hawley tit-for-tat protectionism are playing out.The first to blink hasn't been the Chinese. Trump has made an about-turn and paused higher reciprocal tariffs "for 90 days" that hit dozens of trade partners just after they became effective, while raising duties on China further to 125%. This u-turn surprised markets which is having an emotional relief reaction. But any gains today will be built on sand.So we are in a period of unmoored 'policy', with all the impacts ahead of us. History tells us this doesn't end well, for anybody including us.American homeowners know what's coming, and are rushing to fix their mortgage rates before they rise unaffordably. There was a sharp +20% rise in mortgage applications last week from the week prior, with the refinance component up an eye-popping +35% and almost double the level of a year ago. Borrowers sense they may not see rates this low again for a long time.Meanwhile, at the other end of the interest rate market, US Treasury yields are leaping, which means prices are dropping and holders are taking large losses. Today's US Treasury 10 year bond auction was well supported but at notably higher yields. Today the median yield was 4.34% whereas at the prior equivalent event a month ago it was 4.27%. This is a market where participants have regulatory obligations to buy.But in the open secondary market, the effects are starker. The UST 10 year yield rose +16 bps just from yesterday. (from a month ago, up +11 bps). Volatility is a new feature of these bond markets too.There was some US wholesale inventory data out overnight, but it was for February, and these were up just +1.1% from a year ago. But of course this was from a period well before the April omnishambles.Also out today were the US Fed minutes from their March 20 (NZT) meeting, but the views in these have all been overtaken by subsequent events, so have little current relevance. But even back then they sensed threats to inflation from Washington's tariffs, with heightened concerns about stagflation.In Japan, machine tool orders jumped sharply in March driven by export orders. They were up +11.4% year-on-year for the sixth consecutive month. Domestic demand remained stableIn India, and as expected, their central bank cut its policy interest rate by -25 bps to 6.00%. They cited easing inflation, slowing economic output, and growing global trade tensions as the reasons why they cut for a second successive time.The UST 10yr yield is now at 4.40%, up +16 bps from this time yesterday. Risk premiums are growing.Wall Street is currently up +7.4% on the S&P500 in its Wednesday trade as the tariff-pause relief rally kicks in. Who knows where it will end today. The price of gold will start today at just under US$3070/oz, and up +US$91 from yesterday. Perhaps this is one commodity exhibiting traditional safe-haven attributes.Oil prices have risen +US$2 from yesterday at just on US$62/bbl in the US and the international Brent price is now just on US$65/bbl.The Kiwi dollar is now at 56.2 USc, up +70 bps from yesterday at this time. Against the Aussie we are down -80 bps at 92.1 AUc. Against the euro we up +30 bps from yesterday at just on 51.1 euro cents. That all means our TWI-5 starts today now just on 65.8 and up +20 bps from yesterday.The bitcoin price starts today at US$81,930 and rising, and up +6.1% from this time yesterday. Volatility over the past 24 hours has been very high at +/- 4.2%.You can find links to the articles mentioned today in our show notes.You can get more news affecting the economy in New Zealand from interest.co.nz.Kia ora. I'm David Chaston. And we will do this again tomorrow.

Kia ora,Welcome to Wednesday’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.And today we lead with news the Wall Street and business titans who supported the 2024 Trump campaign are starting to turn on him, one calling the current situation "a clown show".The show has gotten even more extreme overnight. The US has added another 50% to tariffs on its imports from China, taking the total to 104%.But first up today, the overnight GDT Pulse dairy auction saw SMP prices fall a bit more than expected, down -2.6% from last week's full auction. But the WMP price slipped much less than expected, down just -1.8% on the same basis. The falling currency over the past week means there is no net change in NZD. The floating exchange rate is doing its job as a stabiliser.In the US, nominal retail sales surged last week, up +7.2% from the same week a year ago as consumers rushed to stock up on goods ahead of the tariff-induced hikes. That was its fastest rise since late-2022. Some of that 'gain' will have been from early price hikes, of course.Going the other way, the NFIB Small Business Optimism Index fell sharply in March, by its most since June 2022 and to its lowest level since October 2024. This was a much larger fall than anyone saw coming. They anticipated a fall but not like this. The component 'uncertainty index' stayed at record high levels.Americans' appetite for consumer debt actually fell in February by -US$810 mln, the first drop since November. This followed a downwardly revised increase of +US$8.9 bln in January and came in well below the +US$15 bln rise expected. There were sharp and notable drops in demand for credit card debt, and car loan debt.The latest UST 3 year bond auction was well supported. But there was a notable -8.5% drop in total bids this time, the largest easing of support we have seen. It delivered a median yield of 3.70%, down from 3.85% at the prior equivalent event a month ago.In China, there is a notable fall in the price of iron ore, down -12.5% from the start of April. That has yet to show up in the cash USD price of Australian iron ore, but it will soon. For reference the price of copper is down -18% in the same eight days.In China, the 'home team' is stepping up to buy equities to prevent them crashing further. State funds were reported to be very active yesterday. Separately, China is letting its currency weaken as a counterweight to the American tariffs. The yuan (CNY) isn't moving much but trending from the target 7.2:USD, but this official set rate is moving in the same direction as the offshore yuan (CNH) and heading to 7.35:USD. It is now at a 17 year low to the USD. China said it will "fight to the end" opposing the new US tariffs.Australia's NAB business confidence index ticked lower in March 2025 from a revised negative level in February, and it is now at its lowest level since November 2024.Staying in Australia, the Westpac Melbourne Institute consumer sentiment survey is seeing fear rising after the Trump tariff actions. Sentiment is -10% lower among those surveyed after the earlier April US tariff announcements. Aussies are now less confident on prospect of interest rate cuts by the RBA.Internationally, the IAEA says that while there is enough uranium being mined to support nuclear energy demand for the next 25 years, more will be needed if the current high-growth plans for capacity expansion continue, and the world could run out by 2080.The UST 10yr yield is now at 4.25%, up +10 bps from this time yesterday. Risk premiums are still rising.The price of gold will start today at just under US$2980/oz, and up +US$14 from yesterday.Oil prices have dropped -US$1.50 from yesterday at just over US$60/bbl in the US and the international Brent price is now just under US$63.50/bbl.The Kiwi dollar is now at 55.5 USc, unchanged from yesterday at this time. Against the Aussie we are up +40 bps at 92.9 AUc and that's a ten month high. Against the euro we up +10 bps from yesterday at just on 50.8 euro cents. That all means our TWI-5 starts today now just on 65.6 and up +10 bps from yesterday.The bitcoin price starts today at US$77,213 and falling, and down another -2.1% from this time yesterday. Volatility over the past 24 hours has been moderate at +/- 2.6%.Join us at 2pm later today for the Official Cash Rate review, the first by newly appointed interim Governor Christian Hawkesby. A -25 bps cut to 3.50% is widely anticipated, but given the global turmoil, most of the focus will be on how they see those pressures playing out in New Zealand and how they will respond to them.You can find links to the articles mentioned today in our show notes.You can get more news affecting the economy in New Zealand from interest.co.nz.Kia ora. I'm David Chaston. And we will do this again tomorrow.

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.And today we lead with news US Treasury yields are rising today on growing American recession fears may prompt investors to question the safety of US Treasuries as a haven asset. The risk premium jumped after a weekend to think about last week's yield falls.But Wall Street equities have stopped falling. They are not rising either as investors ponder what to do. But last week's sell-off is baked in. They rose after reports of a tariff pause, but fell when this was denied.Then Trump threatened China with 50% tariffs because they retaliated. Gloom returned.And EU ministers are meeting to coordinate their response, and 25% retaliatory tariffs are likely on "some goods".Everyone, except Trump (and his acolytes), can see that this mob-boss theatre will just produce a combination of recession and inflation. And the US won't be immune. The situation is an "urgent problem" for policymakers worldwide, including central banks. Ours meets tomorrow but because this is a fast developing situation, maybe it is too soon to expect a comprehensive response. It is a situation that will play out over years, but we will still want to see our fiscal and monetary policymakers working to contain the impending fallout as best they can.In Canada, their central bank's Business Outlook Survey is reporting widespread concern. Business conditions have deteriorated due to the trade conflict with the United States. Sales outlooks have softened, particularly for exporters. Firms reported having sufficient capacity, and many are delaying investment and hiring decisions amid uncertainty. Firms expect the widespread tariffs will raise costs and lead to higher selling prices. In this context, expectations for inflation are higher.China' FX reserves rose in March, but their overall reserves rose more mostly because they purchased a little more gold and that took their holdings to just under 2300 tonnes. The March gold price zoomed higher, bolstering other reserves. This may reverse sharply in April if the gold price keeps on tracking down.Away from the economic news, we probably should note that while China's overall population is in decline, not all regions are. The Pearl River Guangdong region in from Hong Kong grew by 740,000 to 127.8 million (+0.6%), and births rose by +100,000 to 1.13 mln (+0.8%) in the 2024 year. If this region was its own country, these demographic changes would be impressive. But it does highlight how fast some other parts of China are shrinking.Overall, the recent Qingming Festival (Tomb Sweeping) holiday saw 790 million cross-regional trips in China, an increase of +7.1, a record high for this holiday period.European retail sales rose +2.3% in February in the euro area on a volume (real) basis, quite a bit better than expected and its best rose since September 2024. In the wider EU it was up +2.0% and still a quite positive shift.German industrial production however was down a sharpish -4.0% in February from the same month a year ago, although to be fair the year-ago benchmark was unusually high. On a seasonally adjusted basis the decline was "only" -1.3%. German export growth is rising however.In Australia yesterday, their pre-election Budget update was released. The underlying cash deficit in the 12 months ending June 30 will be -AU$28 bln, swelling to -AU$42 bln through June 2026, they now say. That's going from -1.0% of GDP to -1.5% of GDP. "[The] escalation in trade hostilities has created significant economic uncertainty and exacerbates the risks to the economic and fiscal outlook", they say.The UST 10yr yield is now at 4.15%, up +15 bps from this time yesterday. Risk premiums are jumping. The price of gold will start today at just on US$2966/oz, and down -US$71 from yesterday, down -2.3% and "just another commodity". Holders are selling to cover margin calls now.Oil prices have dropped another +50 USc from yesterday at just on US$61.50/bbl in the US and the international Brent price is now just under US$65/bbl.The Kiwi dollar is now at 55.5 USc, down -40 bps from yesterday. Against the Aussie we are unchanged at 92.5 AUc. Against the euro we down -40 bps from yesterday at just on 50.7 euro cents. That all means our TWI-5 starts today now just on 65.5 and down -30 bps from yesterday.The bitcoin price starts today at US$78,846 and down -2.8% from this time yesterday. Volatility over the past 24 hours has been very high at +/- 4.1%.You can find links to the articles mentioned today in our show notes.You can get more news affecting the economy in New Zealand from interest.co.nz.Kia ora. I'm David Chaston. And we will do this again tomorrow.

Kia ora,Welcome to Monday’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.And today we lead with news we are now in a 'new world economy' and it will take some getting used to. The roll-out and consequences will develop over days, weeks, months, and years.The immediate past is irrelevant today. Tomorrow will be quite disconnected from the recent past.But first up, we have a busy week ahead. On Wednesday, the RBNZ will release the results of its OCR review, and a -25 bps cut is anticipated, taking it to 3.50%. It has been clearly signaled by the central bank, although we should note that much has happened to change the immediate economic outlook over the rest of 2025 and beyond.The Indian central bank will also review its policy rate, also on Wednesday, and a -25 bps cut is also anticipated there from the current 6.25%.Elsewhere both the US and China will release CPI and PPI inflation data. EU retail sales data and German industrial production data will also come this week.But nothing will be as influential as the tariff war hostilities, punch and counterpunch. Over the weekend China has responded to the US tariffs with its own sweeping restrictions on trade with the US, with more to come. In all, we count eight major announcements on restriction of trade with the US.China placed export restrictions on rare earth elements squeezing supply to the West of minerals. These materials are used in optical lasers, radar devices, high-powered magnets for wind turbines, jet engine coatings, communications and other advanced technologies. That leaves many manufacturers scrambling for fresh supplies of the critical minerals they have relied upon for decades.Late last week we reported that Canada retaliated. But so far, we haven't heard of EU retaliation, although they are huddling to plan a united response. (And oddly, no US tariffs were applied to Cuba, Iran, North Korea or Russia - even though the US runs a large -US$4 bln trade deficit with Russia.)Fed boss Powell was speaking over the weekend and he said the economic impact of new tariffs is likely to be significantly larger than expected, and the central bank must make sure that doesn’t lead to a growing inflation problem. "The same is likely to be true of the economic effects, which will include higher inflation and slower growth."All this will have very large secondary effects on New Zealand, and our currency dived sharply on the news at the end of last week. It was an even larger negative reaction for Australia.Commodity prices have taken outsized hits, all consistent with pricing for a deep recession. Copper is down -16.5% since its late-March peak. It is far from the only one, and the adjusting is still underway. Gold wasn't immune. Nickel, zinc, and aluminium are all also down sharply. So far, food prices haven't really moved much, and the FAO report for March confirmed that.Those secondary reactions will be widespread however. The airfreight market is expected to be thrown into turmoil, up in the immediate scramble to get ordered goods, then a deep drought, as it will be for shipping. Collapses will further hinder the reduced trade expected.The key takeaway from all this is unsettling - this isn't the bottom. It may only be the start of a steep decline. It certainly is a 'Black Swan' event. That tariffs were coming, no surprise. But the size and comprehensiveness were very much larger than anyone, friend or foe, expected. Everyone should be worried, especially savers. Stagflation is the most likely future we face.For the record, there was economic data out over the weekend. The US non-farm March payrolls came in better than anticipated with a +228,000 seasonally adjusted rise in the month. The monthly average gain in 2025 is now the lowest since the 2020 year (and also lower than any year 2016-2019.) Canada reported a -33,000 drop in March employment. Deeper rate cuts are the likely Bank of Canada response, and soon - on April 17, NZT.And across the Pacific, Japanese household income rose more than expected in February from the steep drop in January. But it wasn't enough to show a gain year-on-year.German factory orders remained low in February, and unchanged from January in an under-shoot.But none of this recent-history data really means much anymore.The following changes are outsized, and still moving. But this is what we see now.The UST 10yr yield is now at 4.00%, down -25 bps from a week ago. The VIX volatility index has jumped suddenly, moving up towards an extreme level.Wall Street fell hard in its Friday trade with the S&P500 down -6.0% on the day and the Nasdaq was down -5.8%. The S&P500 futures trade suggests a small part of that (maybe +0.7%) could be recovered when Monday trade resumes.The price of gold will start today at just on US$3037/oz, up +US$17 from Saturday but down a net -US$71 from Friday, a huge move as gold is ju

Kia ora,Welcome to Friday’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.And today we lead with news the all bets are probably off on how 2025 will turn out as the cascading impacts from the Trump tariffs surge around the world.We were anticipating we would be reporting some tariff retaliation news today, and there is some. But the most significant retaliation is from financial markets. It is comprehensive.So far there are no substantive retaliations announced, only threats to do so from China, Japan, South Korea, and the EU. But Canada has hit some US cars with a matching 25% tariff. Some countries - like New Zealand and Australia - have said they won't retaliate, but they tend to be the ones who only got slapped with a 10% rate on their exports. For them it is wise to see how much will be effectively paid by US consumers, and in NZ's case it will likely be most of it. Most of the impact on us will come from second-effect reactions in other trading partners.Perhaps most galling were the 32% tariffs Trump slapped on Taiwan.Back to the economic data releases, US jobless claims were unchanged last week from the week before and only marginally higher than year-ago levels. There are now 2.07 mln people on these benefits, about +7% above year-ago levels. But that is their highest since November 2021.There was a surge in job cuts reported in March, by far the highest since the early pandemic reaction. Although most are public service cuts, it seems unlikely they will be the only ones in the months ahead.The employment component of today's ISM services PMI was unusually weak, and the overall index tumbled to its weakest since July 2024. It was barely expanding in March. The internationally-benchmarked S&P Global/Markit version had its big drop in February, and the latest March version records a small bump up from then. But it reported cost inflation up to an 18-month high.Attention now turns to tomorrow's March non-farm payrolls where a most rise of +135,000 is anticipated.US exports rose in March as part of the repositioning in anticipation of tariffs and retaliation. But an interesting detail is that of the +US$8.3 bln rise to US$278.5 bln for the month, US$3.2 bln of that was the export on gold. US imports held very high for a second month at record levels. (Imports of gold decreased -US$1.3 bln. The market chatter was that gold was flowing into the US, especially from London. Apparently that was just rumour.)Across the Pacific in China, the Caixin services PMI rose in March and to its best level of the year. This was notably stronger than the official services PMI. New orders rose the most in three months, driven by increases in domestic demand, supported by a broad improvement in demand conditions. We see that in improved Chinese buying in the dairy auction.Australia is reporting sharp drops in job vacancies. The latest data is for February, and the levels reported are almost -10% lower than year ago levels, down for that -5% in the prior 90 days alone. Almost all the decreases are in the private sector.Container freight rates slipped -2% last week from the week before, to be -26% lower than year ago levels. However they are still +55% higher than pre-pandemic levels.Bulk freight rates fell -2.5% from last week to be -8% below year-ago levels. Basically, these rates are back to pre-pandemic levels.The UST 10yr yield is now at 4.04%, down -17 bps from yesterday at this time. The VIX volatility index has jumped suddenly, although not yet to an extreme level.Wall Street is in its Thursday session down -4.3% on the S&P500 after the tariff announcements and showing no signs of improving. The price of gold will start today at just on US$3108/oz and down a net -US$24 from yesterday.Oil prices have dropped -US$5 from yesterday at just on US$66.50/bbl in the US and the international Brent price is now just under US$69/bbl. Not only is demand expected to soften as tariffs take their toll, eight OPEC+ countries unexpectedly announced a +411,000-barrel-per-day production increase for May, far exceeding the planned +135,000 bpd. It seems an incredibly naive announcement from their self-interest point of viewThe Kiwi dollar is now at 58.1 USc and up +80 bps from this time yesterday. That is a +1.8% appreciation since the start of the week and a +3.8% appreciation since the start of March. Against the Aussie we are up +40 bps at 91.5 AUc. Against the euro we are down -20 bps at just over 52.6 euro cents. That all means our TWI-5 starts today now just on 67 and up +20 bps.The bitcoin price starts today at US$82,172 and down a sharpish -5.8% from this time yesterday. Volatility over the past 24 hours has been very high at +/- 4.1%.You can find links to the articles mentioned today in our show notes.You can get more news affecting the economy in New Zealand from interest.co.nz.Kia ora. I'm David Chaston.

Kia ora,Welcome to Thursday’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.And today we lead with news the Trump tariff announcement will be just after 4pm New York time today when Wall Street closes. That is 9am New Zealand time. After that, it will be all about the size and nature of the retaliation from its former allies.In the meantime we should note that American vehicle sales surged in March as buyers rushed to get pre-tariff-cost vehicles. March's sales ran at a 17.7 mln annualised rate, the highest since October 2017 (if we ignore a pandemic-affected spike). Bringing forward purchases like this doesn't augur well for subsequent months. Not included in this surge were Tesla sales which fell -13% in the quarter, largely attributed to the anti-Musk factor. Production far exceeded sales which were at their lowest since 2022, and that was after "model changeover" production cutbacks. (Also not doing so well are the shares in Truth Social, which are down -44% so far this year.)US mortgage applications decreased last week from the prior week but are now +9% higher than the low year-ago levels. Refinance activity fell and purchase activity rose. This is the third straight week of overall declines. Benchmark mortgage interest rates changed little over the past week.US factory orders rose in February from January - marginally, but remain -0.5% lower than year-ago levels.This weekend we get the American non-farm payrolls data for March and a modest rise of +128,000 jobs is anticipated. In advance of that, the ADP Employment Report out today said private payrolls rose +155,000 in March which was better than expected. Although low by historical standards, this is a 'good' result.After two strong months, the US Logistics index fell back and quite sharply to a level they last had in August 2024. Every aspect except warehouse capacity slowed.In India, they recorded a notable rise in their factory PMI. New order growth strengthened despite softer a softer rise in exports. This PMI result was their best since June 2024.In the ASEAN countries, their March PMIs together painted a picture of a modest expansion even if it did slip in March from February. Price pressures eased, and sentiment remains solid. Malaysia was perhaps one of the weaker performers in this group.The UST 10yr yield is now at 4.21%, up +5 bps from yesterday at this time.The price of gold will start today at just on US$3132/oz and up a net +US$25 from yesterday and still just off its all-time high.Oil prices are little-changed from yesterday at just under US$71.50/bbl in the US and the international Brent price is now just under US$75/bbl.The Kiwi dollar is now at 57.3 USc and up +40 bps from this time yesterday. Against the Aussie we are up +30 bps at 91.1 AUc. Against the euro we are up +10 bps at just over 52.8 euro cents. That all means our TWI-5 starts today now just under 66.8 and up +30 bps.The bitcoin price starts today at US$87,214 and up another +2.5% from this time yesterday. Volatility over the past 24 hours has been rising but still modest at +/- 1.9%.You can find links to the articles mentioned today in our show notes.You can get more news affecting the economy in New Zealand from interest.co.nz.Kia ora. I'm David Chaston. And we will do this again tomorrow.

Kia ora,Welcome to Wednesday’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.And today we lead with news the world is bracing for the US to start a US$1.4 tln trade war. Tomorrow. The US says it is ready to start hostilities, supposedly with 20% across-the-board levies. Other governments have their retaliation plans ready. Americans are rushing to buy cars they can afford.But first, the overnight dairy auction came in better than the derivatives market had signaled, with an overall rose of +1.1% in USD terms, up +3.2% in NZD terms. WMP prices held steady and avoided the expected dip. SMP prices rose more than expected. But volumes were light, as expected in this part of the dairy season, but actually lower than this time last year. Keeping demand up was bidding from China, while the recent new interest from Europe basically held. Nothing today will change current farmgate milk price forecasts.In the US, retail demand is softening, with their Redbook survey off its peaks and back to average levels since October 2023. That is a notable drop from the November expansion.There were two American factory PMI surveys out overnight. The widely-watched ISM one contracted. This is a turn from an expansion and is not unexpected, but the size of the shift was. New order flows were weak, and the mood is turning even weaker.The internationally benchmarked S&P Global/Markit one fell too, and quite sharply, but not yet into contraction territory. But this one reported a big jump - an outsized jump - in input prices, surely a sign of what is to come. Firms were only able to pass on some of that, but even so it was at a two-year high.American job openings in February fell by -194,000 to 7.57 mln from an upwardly revised 7.76 mln in January and below market expectations of 7.63 mln. Quits fell too as Americans prioritised holding on to the jobs they have.The Dallas Fed services survey reported a notable contraction, with perceptions of broader business conditions worsening in March.And that downshift was also picked up in the RCM/TIPP economic optimism survey which was expected to rise, but in fact fell in April, and to a six month low.In China, although still modest, the Caixin China General Manufacturing PMI rose in March from February’s small positive, with a result that was better than market expectations. This marked the highest reading since last November, with output growth accelerating on the back of a sustained rise in new orders amid better demand conditions.The EU March CPI inflation rate eased slightly to 2.2%, to a marginally lower level than expected. Lower energy costs are restraining this indicator.In Australia, February retail sales were ho-hum, up +0.2% from January. That puts them essentially unchanged from the same month in 2024. So after inflation, that means they are -2.4% lower on a volume basis.And as expected, the RBA sat pat with its cash rate target at 4.1%. But once the Federal election is out of the way, markets expect them to cut the policy rate by -25 bps on May 20, 2025.Global air cargo demand is now coming off the boil as trade uncertainties build. The dip at that point wasn't large and it is still ahead year-on-year but with both US and European demand now negative on the year-ago basis, and the Asia expansion slipping rather quickly, it won't be long before we are reporting air cargo activity shrinking.Global air passenger demand held up in February, with the impetus slowed notably. International demand is holding up better than domestic, and the Asia/Pacific region is the best of these. The main weaknesses are in North American air travel.The UST 10yr yield is now at 4.15%, down -10 bps from yesterday at this time. The price of gold will start today at just on US$3106/oz and down a net -US$12 from yesterday and off its all-time high.Oil prices are little-changed from yesterday at just under US$71.50/bbl in the US and the international Brent price is now just on US$74.50/bbl.The Kiwi dollar is now at 56.9 USc and up +20 bps from this time yesterday. Against the Aussie we are unchanged at 90.8 AUc. Against the euro we are up +20 bps at just over 52.7 euro cents. That all means our TWI-5 starts today now just under 66.5 and up +20 bps.The bitcoin price starts today at US$85,116 and up +2.1% from this time yesterday. Volatility over the past 24 hours has been modest at +/- 1.8%.You can find links to the articles mentioned today in our show notes.You can get more news affecting the economy in New Zealand from interest.co.nz.Kia ora. I'm David Chaston. And we will do this again tomorrow.

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.And today we lead with news the NZD is falling again and sharply, now back to one-month lows as commodity prices suggested shifts to our disadvantage, and global trade flows became more uncertain.The global risk-off trend is building. Wall Street opened weak, although it has pared back some of the losses in its afternoon trade.Elsewhere in the US, a key MidWest factory survey, the Chicago PMI, contracted less in March than expected. The shift itself wasn't large, but it was unexpected because a worsening was expected. So it has gained attention. But more than a third of respondents to this survey said they would respond to tariff pressures by raising prices. Only 18% said they would on-shore supplies. New order growth only got also-ran mentions. Overall, this report is of a slower downturn.The Dallas Fed factory survey was mixed. New order levels improved marginally but remained weak. Production levels rose more. But perceptions of broader business conditions continued to worsen in March. The general business activity index fell to its lowest reading since July 2024.US factories are not gearing up for the 'benefits' of tariffs, yet anyway. And there are no significant signs of plans to do that.In Canada, one party is advancing an election strategy to push back on the tariff impacts on their trade with the US, ramping up home-building sharply to a level that reminds them of the post WWII surge. This campaign pledge is likely to find a receptive audience, because by all accounts Canadians are really, really pissed-off at the US.They will need something significant because all indications are that the impending tariff levels from the US are not being worked lower but in fact are more likely now to be at the upper end of earlier signals when they are announced on Thursday NZT.Across the Pacific in Japan there was a good jump in industrial production reported for February, from January.In South Korea, industrial production there was a rise on the same basis, although smaller.In China, they reported official PMIs for March and the factory one rose marginally as expected to a small expansion. Their services PMI for March rose marginally more. Importantly, in both cases new order levels came in better than the overall indexes.In India, they are moving into summer and all the indications are for extreme temperatures. So high are they being forecast that they could be at a level that causes parts of their economy to shut down, or at least stumble. Heatwaves are being normalised, with more energy consumption the only way to battle it on an individual level, and that means burning more coal.In Germany, retail sales rose more than expected in February (in real terms), which was much better than expected. Meanwhile they said the CPI inflation was running at 2.2% and slightly lower than the February level, and a four month low.Like Canada, Australia is also in an election campaign. US tariff impacts haven't really become an issue there yet although being anti-Trump is helping. But more of an issue is that China has another spy ship circling while at the same time its diplomats are calling for 'trade unity'. It is such an obvious carrot-and-stick play that it is winning China no friends. The trade fallout if Australia doesn't buckle, could be more serious for them than US tariffs.Australian property prices continued to recover from a short-lived dip to hit fresh highs in March as borrowers and prospective home buyers await a decision on interest rates today. Data from CoreLogic showed house prices rose in all cities except Hobart last month, with the national median value of a home now over AU$820,000.The UST 10yr yield is now at 4.25%, unchanged from yesterday at this time.The price of gold will start today at just on US$3118/oz and up another net +US$34 from yesterday and easily a new all-time high.Oil prices are up +US$2 from yesterday at just over US$71.50/bbl in the US and the international Brent price is now just under US$75/bbl.The Kiwi dollar is now at 56.7 USc and and down -½c from this time yesterday. Against the Aussie we are down -10 bps at 90.8 AUc. Against the euro we are also down -½c at just under 52.5 euro cents. That all means our TWI-5 starts today now just on 66.3 and down -40 bps.The bitcoin price starts today at US$83,350 and up +1.3% from this time yesterday. Volatility over the past 24 hours has been modest at +/- 1.5%You can find links to the articles mentioned today in our show notes.You can get more news affecting the economy in New Zealand from interest.co.nz.Kia ora. I'm David Chaston. And we will do this again tomorrow.

Kia ora,Welcome to Monday’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.And today we lead with news commodity prices are falling away across the board, along with crypto, as a risk-off mood builds in financial markets.In the week ahead, the most interesting developments will be close to home. There will be the usual monthly dump of February data from the RBNZ later today, and the real estate industry will start reporting its March results and listing levels. And in Australia, their central bank will be reviewing its monetary policy settings. But because they are in an election campaign it would be surprising indeed if they may any moves either way that might influence voters.The week will end with American labour market data for March. But because the impacts of DOGE cuts or tariff hikes are yet to be felt, little-change is anticipated here either. But more PMI reports will start to reveal new order levels, which will give important early warning signals.There will be PMIs out for China too, Japan business sentiment, EU inflation, and German factory orders, which will all help paint a picture of how the global economy is coping.But first up today, there will be a lot of interest on tomorrow's Wall Street open. It ended its Friday session with the S&P500 down -2.0% and no signs of recovery late in the session. The Nasdaq fell -2.7% on the day. Weekend futures trading has the S&P500 recovering +0.8%, but that basically embeds the Friday retreat. Risk-off sentiment is strong with major investors selling, seeing this as a time to hold cash.The core reason Wall Street is risk-off is that American consumers are increasingly anxious about their jobs, and the inflation pressures ahead. And both of those worries are over what higher tariffs will do to them. Town-hall meetings across the country are giving the message to Congresspeople that they aren't too happy about the self-serving government- by-billionaires either.The final University of Michigan March sentiment survey was revised lower from its already low 'flash' result. Consumers are in full defensive mode, expecting inflation to jump, and job security to worsen. Wall Street can't ignore these signals.Other data out over the weekend didn't help. The core US PCE inflation indicator for February rose its most since January 2024, and of course this doesn't include the effect of the recent policy missteps. This data is a little signal magnified by current policy settings.US consumer spending came in lower than expected. Consumer savings rates rose. This is consistent with consumers shifting to a defensive mood ahead of their expected rough economic weather.It isn't any better in Canada where their monthly GDP indicator for February revealed no net expansion, following a positive January expansion.In China, talk about rate cuts that officials don't like brings prosecution. They say "the local public security organs" have dealt with two such people.In Australia, they are off and running for their May 3, 2025 federal election. Like most elections, it will be fought on "cost of living" issues. The campaign starts with the incumbents in a strong and rising position on their two-party-preferred basis. Expect a sledge-a-thon for the next five weeks.And for the record, when we are thinking of drought and rainfall in Australia, this resource is useful to keep perspective.Commodity prices are under pressure. Worth watching is the price of copper. It is very high at present, but lower economic activity in both China and the US could bring about 'a collapse'. It would not be the only commodity to suffer.We should also possibly note that the US Fed balance sheet shrunk again last week to be -US$745 bln lower than this time last year. So far we haven't seen any slacking in the pace of their tightening.We should also note that in this current risk-off phase, the US dollar has not risen. This is very unusual and may portent a diminished role for the greenback in the global economy.So far, the world has kept buying US Treasury paper, but the more the Federal finances are twisted by Trump, the less likely that demand will hold. But remember less than 24% of total US federal debt is held by foreigners (US$8.512 tln of US$36.218 tln in gross terms), so the impact from foreign demand will be muted. However, markets will notice any substantial pullback by this group, and that will colour its market status and price. The big impacts will come from the locals’ willingness to absorb this debt.The UST 10yr yield is now at 4.25%, unchanged from yesterday at this time. The price of gold will start today at just on US$3085/oz and up another net +US$5 from Saturday. Although off it at the moment, gold keeps challenging it's all-time high levels.Oil prices are little-changed from Saturday at just under US$69.50/bbl in the US and the international Brent price is now just

Kia ora,Welcome to Friday’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.And today we lead with news behind the tariff headlines that shows impacts of recent policy changes are starting to show up in some places, but not everywhere yet.US jobless claims fell slightly last week and about at the level seasonal factors would have expected. There are now 2.08 mln people on these benefits, about the same level as a year ago.That was the first of some marginally better data out overnight. The US merchandise trade balance pulled back in February from its record January deficit but it still came in far higher than what was expected. US exports stagnated but imports were +19% higher than year-ago levels.US wholesale and retail inventories rose with wholesale inventories up +1.2% from a year ago, and retail inventories up +4.6% on the same basis. Supply chain inefficiencies from the new tariff policies are starting to show up nowUS pending home sales came in -3.6% lower in February than year-ago levels, although the industry emphasised the +2% rise from January.The Kansas City Fed factory survey was a touch more positive than expected and better than in some other regions. But they too had lower new order levels, so this positivity probably won't last.In the Washington swamp, overshadowed perhaps by obvious lying by their unqualified Defence Secretary, the Administration has hit carmakers with new 25% tariffs. This will likely have a significant global impact on manufacturing as well as destabilising local supply chains. It is a move that may not play out as they want and will almost certainly mean US-produced cars will cost a lot more. GM's share price is down -7% today which accounts for most of the YTD drop. Ford is down -3.2%. Stellantis is down -4.3% today. The big local producers are expected by investors to do well out of this change.And they are not the only ones being hit. The recoiling of international tourists going to the US has seen substantial drops in the values of major US airlines. Delta is down -21% so far this year, United is down -22%. And American Airlines is down -35%. The whole industry is down -16% since the start of the year with those with extensive international routes worst hit. And this is despite global air travel being up about +10%.The final review of the Q4-2024 economic growth rate came in at +2.4%, which means that for all of 2024 they recorded an economic expansion of +2.5%. Both outcomes were marginally better than expected. 2025 has gotten off to a rocky start for them.In China, after the January -3.3% retreat, industrial profits were expected to be reported up +4.0% in February. But in fact they came in -0.3% lower again, so a market surprise. The SOE group saw profits rise +2.1%, public listed companies saw their profits down -2.0%, Hong Kong/Macao companies reported a +4.9% rise, and other private enterprises suffered a -9.0% drop.In Europe, the Norwegian central bank kept its key policy rate unchanged at 4.5% for the tenth consecutive meeting in its overnight March review, as widely expected.In Australia, household wealth was up +0.9% or +AU$144 bln in the December quarter, the lowest growth since September quarter of 2022. Year-on-year this was up +6.6% at a time inflation accounted for +2.4%. On that annual before-inflation basis their dwelling values only rose +4.4%. Their Super was up +9.3% however, and the value of their bank accounts were up +8.5%.Post their 2025/26 Budget, the Australian Treasury (AOFM) said it has raised its target bond fundraising from AU$100 bln in the coming year to AU$150 bln. Swap spreads then dived, indicating that demand for this debt paper could be hard to find. Expect Aussie Govt bond yields to rise sharply. It is widely expected that there will be an election date announcement later this morning, and most are expecting May 3 to be when the Aussies next go to the polls. Their recent Budget seems to have gone down well with the electorate so they want to capitalise on that.Globally, container freight rates fell -4% last week and are now -31% lower than year ago levels but +53% above pre-pandemic levels. Freight rates for bulk cargoes were essentially unchanged last week from the prior one, to be -19% lower than year-ago levels.The UST 10yr yield is now at 4.36%, up +2 bps from yesterday at this time.The price of gold will start today at just on US$3049/oz and up a net +US$32 from yesterday.Oil prices are down -50 USc from yesterday at just over US$69.50/bbl in the US and the international Brent price is now just over US$73.50/bbl.The Kiwi dollar is now at 57.3 USc and down -10 bps from this time yesterday. Against the Aussie we are also down -10 bps at 91.1 AUc. Against the euro we are up +10 bps at just on 53.3 euro cents. That all means our TWI-5 starts today just on 66.9, and down -10 bps.The bitcoin price starts toda

Kia ora,Welcome to Thursday’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.And today we lead with news financial markets are sensing a turn lower in the giant US economy and a risk-off tone is spreading. Impending new tariff announcements there are casting a pall over everything.First, despite another fall in long term mortgage interest rates, US mortgage applications were weak last week. They fell by -2% in the week following a -6.2% drop in the previous week. Applications to refinance a home loan decreased -5% to the lowest level in a month. But applications for a mortgage to purchase a new home rose +1%.New American durable goods orders in February unexpectedly rose +0.9% from January, following an upwardly revised +3.3% jump that prior month. This February result was much better that the anticipated -1% fall. But year-on-year the gain was just +0.5% and the result was largely ignored by financial markets, partly because it isn't expected to signal any longer improvement. On-off defence aircraft orders (+9.3%) accounted for most of the gains. Non-defence, non-aircraft orders for capital goods were -1.2% lower in February than a year ago. Markets noticed that.They probably also noticed the latest update of the Atlanta Fed's GDPNow tracking showing a current estimate of Q1-2025 economic activity shrinking at a -1.8% rate. This updated real-time estimate is unchanged from last week. It is also worth noting that the benchmark "Blue Chip Consensus" forecasts are starting to waver now too as the quarter comes to an end.Across the Pacific, Singapore's industrial production took quite a tumble in February from January, enough to turn its year-on-year change from a +8% rise in January into a -1.3% decline in February. The month-on-month reversal was a very sharp -7.5%.In Europe, the UK said their inflation rate dipped to 2.8% in February from 3.0% in January, marginally below market expectations of 2.9%, though in line with the Bank of England's forecast.In the EU, facing security threats from Russia, and a US 'ally' that is pulling back and effectively encouraging Moscow, is saying every citizen should stockpile enough food to be self-sufficient for at least 72 hours in case of crisis. Most EU states are sharply raising defence preparedness.Australia is in its post-budget debate period. No announcement yet on an election date but it is widely expected over the next few days.The UST 10yr yield is now at 4.34%, up +4 bps from yesterday at this time. Wall Street has started its Wednesday session and dipping further by -1.2% on the S&P500 on a tech sell-off. The Nasdaq is down -2.1%. The price of gold will start today at just on US$3016/oz and down a net -US$10 from yesterday.Oil prices are up +US$1.50 from yesterday at just und US$70/bbl in the US and the international Brent price is now just on US$74/bbl. The new American tariff threats on using Venezuelan oil are disrupting supply.The Kiwi dollar is now at 57.4 USc and unchanged from this time yesterday. Against the Aussie we are back up +10 bps at 91.1 AUc. Against the euro we are up +10 bps at just over 53.2 euro cents. That all means our TWI-5 starts today just on 67, and up +20 bps.The bitcoin price starts today at US$86,866 and down -1.1% from this time yesterday. Volatility over the past 24 hours has again been modest at +/- 1.1%.You can find links to the articles mentioned today in our show notes.You can get more news affecting the economy in New Zealand from interest.co.nz.Kia ora. I'm David Chaston. And we will do this again tomorrow.

Kia ora,Welcome to Wednesday’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.And today we lead with news the own goals keep coming for the US.But first, the overnight dairy Pulse auction came in with the opposite results signaled by the derivatives market. The SMP price was expected to bounce back after the weakish full auction event the week before, but basically it didn't. And the WMP price was expected to fall sharply. It did fall, but it was minor in the end. So these Pulse signals ended up changing little.Last night's 2025/26 Australian Budget didn't deliver any real surprises in the end, although it is clearly an election budget. But it is one where the dominant challenge has shifted from battling inflation's effects to preparing for global trade instability, and great power rivalry. Australia is facing being abandoned by the US while it also faces rising security challenges from China.Although they are facing budget deficits that could be -1.5% of GDP next year, and probably ongoing deficits for the next ten years, they are accepting that as they announced new spending of about AU$35 bln with much of it focused on cost of living support, some modest tax cuts, and defense. There is a rise in off-budget spending as well. So their funding program there will be growing fast.In the US, last week's Redbook retail survey showed sales held up to be +5.6% higher than year-ago levels. However with inflation rising, and quite quickly now, this isn't as impressive as it was in 2024 when inflation was basically under control.Those fears of returning inflation (from tariffs) are behind a tumble in American consumer sentiment, reversing to lows not seen since the last Trump presidency. The Conference Board survey's expectations index was particularly hard hit, and now sits at a level they say indicates recession ahead. This survey back up the earlier University of Michigan one.And ratings agency Moody's is warning that even in the best scenario, the US's situation is likely to get worse under the current policy direction.But not all sectors are drooping. New dwelling sales are holding at average levels, up +1.8% in February from a year ago, and up +5.1% from year-ago levels. But inflation might be behind this recent small demand rise - buyers getting in before inflation hits existing stock, and before interest rates rise again.But the next regional Fed district to report is saying things in their Mid-Atlantic region are slowing. The Richmond Fed's factory survey has yawed from a small expansion to a moderate contraction in their March survey. Observers had expected the measure to rise to a faster expansion, so the variance is notable. New order levels fell, prices paid for inputs rose faster than expected. The clearest example is the new record-high rise for copper.An interesting phenonium is developing in US equity markets. Retail investors are turning bullish, driven partly by their political bias. At the same time, professional investors are taking advantage of them and are net sellers.Their northern neighbour is talking about retaliatory export taxes as a way to get Trump to talk to them seriously. Their combination with American tariffs isn't going to help anyone.In Indonesia, their currency crisis is deepening, with the rupiah now at its lowest since the GFC.In China, their central bank has adjusted how it raises funds via its Medium Term Lending process. This may be an important change.The UST 10yr yield is now at 4.30%, down -2 bps from yesterday at this time.The price of gold will start today at just on US$3026/oz and up a net +US$17 from yesterday.Oil prices are down -50 USc from yesterday at just over US$68.50/bbl in the US and the international Brent price is still just over US$72.50/bbl.The Kiwi dollar is now at 57.4 USc and up +20 bps from this time yesterday. Against the Aussie we are down -10 bps at 91 AUc. Against the euro we are up +10 bps at just under 53.1 euro cents. That all means our TWI-5 starts today just under 66.8, and little-changed.The bitcoin price starts today at US$87,803 and down -0.3% from this time yesterday. Volatility over the past 24 hours has been modest at +/- 1.2%.You can find links to the articles mentioned today in our show notes.You can get more news affecting the economy in New Zealand from interest.co.nz.Kia ora. I'm David Chaston. And we will do this again tomorrow.

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.And today we lead with newsthe prospect of tariffs already seem to be sapping the rising expansion of the American manufacturing sector over the past few years.The first look at PMIs for March are starting to come through with early 'flash' results. In the US, the S&P Global composite PMI rose in March from February's 10-month low. The service sector led the upturn with a better than expected gain. But the factory sector fell into contraction as a tariff-driven boost earlier in the year ran out of puff. Employment grew only marginally. New order growth for factories evaporated in March, but rose for services.They are facing significant cost challenges. For example, with the new Administration calling 'copper' a national security issue, prices for this key metal have now hit a record all-time high there, and rising. This type of policy mistake is going to make US factories far less competitive on the global stage.The Chicago Fed's National Activity Index rose in February, consistent with the PMIs, and the hesitation in new orders showed up here too with this category dropping below its long term average and one of the weaker components although better than in prior months.In Japan, their March 'flash' PMI wasn't great for them. The factory PMI contracted in March and by more than expected, the ninth consecutive month of contraction. It was a reversal in factory activity since March 2024, with sharper declines in both production and new orders, despite foreign sales growing. In the services sector there was an even larger decline, but only to just below a steady state from February's solid expansion.In India, their PMIs continued to register a strong expansion, consistent with what they have had. Even though the services expansion was slightly less, it is still strong. Factory activity is still very strong and rising new orders suggest real capacity problems, but also that the gains will continue.In China, there are official central bank indications that they are getting ready to cut their policy rates and banks' reserve requirements, at the “right time.”And staying in China, they are starting to deploy robot police.Singapore's inflation rate rose in February from January, but due to base effects, fell from a year ago and is now only up +0.9%. That is the first time it has been under 1% in four years. Since September 2022 when it hit 7.5%, it has steadily fallen from there.In the EU, their March 'flash' PMIs record expansions in both their services and factory sectors. True, they are both minor, but because they are rising from contractions they are notable. New order growth is behind the rise.The latest internationally-benchmarked factory PMI for Australia for March is recording a strong gain and an expansion that is its strongest since late 2022. Their 'flash' services PMI also rose but it is recording a more modest expansion.We are standing by for a May election in Australia. Probably May 3, or May 10, both Thursdays. We won't know what they actually decide until after their 2025/26 Federal Budget is released later today. Because it is an election Budget, its forecasts will be looked at dubiously. Current polling has the opposition parties ahead, but now falling rather sharply in support. Here is a recent outlier poll. It's basically too close to call.The UST 10yr yield is now at 4.33%, up +7 bps from yesterday at this time.The price of gold will start today at just on US$3009/oz and down a net -US$14 from yesterday.Oil prices are up +50 USc from yesterday at just on US$69/bbl in the US and the international Brent price is still just under US$73/bbl.The Kiwi dollar is now at 57.2 USc and down another -10 bps from this time yesterday. Against the Aussie we are down -30 bps at 91.1 AUc. Against the euro we are holding at just under 53 euro cents. That all means our TWI-5 starts today just under 66.8, and down -10 bps.The bitcoin price starts today at US$88,026 and up +3.2% from this time yesterday. Volatility over the past 24 hours has been moderate at +/- 2.2%.You can find links to the articles mentioned today in our show notes.You can get more news affecting the economy in New Zealand from interest.co.nz.Kia ora. I'm David Chaston. And we will do this again tomorrow.

Kia ora,Welcome to Monday’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.And today we lead with news we are heading into a week where the data won't be as important as the policy decisions made and about to be made. And we do seem to be seeing a shift in great-power economic fortunes; the US fading while China get up off its knees.Although there are only a few key data releases in New Zealand, Australia will release its monthly inflation indicator for February this week on Wednesday and its monthly household spending indicator on Thursday. These will both feed into their election campaign narratives. And later today we will get a first look at their March PMI tracking.There will be similar 'flash' PMIs from Japan, India, the EU and the US out this week too. South Korea will release business and consumer confidence data while Singapore will release its February inflation rate.And in the US it will be all about personal income and spending, consumer sentiment, durable goods orders, pending home sales, and the final estimate of Q4-2024 GDP.In the US this week all eyes will be on how the threatened 'reciprocal tariffs' play out. Those around Trump seem to be starting to realise that tariffs are a tax on yourself, so are growing less certain they are a good idea. The talk now is a scaling back of the 'promised' action threatened to take effect on April 1 (US time), just nine days from now.No doubt they are very aware of the signals the widely-respected Atlanta Fed's GDPNow is giving.In Canada, retreating car sales, especially of American brands, has seen their February retail sales take an unexpected dip. They fell by -0.4% from the previous month and January was revised lower, so that is back-to-back falls in retail sales for the first time since June 2024. A +0.3% rise was anticipated in February. Year on year, February retail sales were up +4.2%.And in Canada, the Liberal government has called an election on April 28 (Saturday NZT). The race is set to revolve around who is best placed to fend off Trump. Trump pettiness is sure to be an issue.The Japanese inflation rate dipped to 3.7% in February from a 2-year high of 4.0% in January. Helping was a sharp pullback in price of electricity, up +9.0% in February from a year ago, back from +18.0% in January on the same basis. New utility bill subsidies are behind that shift. So this isn't likely to shift the Bank of Japan from its rate rising path.As expected, Malaysia's CPI inflation rate came in at +1.5%, but that was its lowest since February 2021. Their food prices were stable, housing costs fell.In China, they are piling on the pressure to try and stop the Hong Kong company who owns the Panama port facilities from completing the deal to sell it to America's Blackrock. CK Hutchison is in an impossible situation now, a pawn between great powers. How this one falls will likely tell us a lot.Meanwhile, their retail sales activity is on the rise. (At +4.0% year on year and rising from +3.7% in December, and that now bests the US's +3.1% and a fall from +4.4% in December, on the same basis.)In a bit of a surprise to many analysts, EU consumer sentiment did not improve in March as it has done previously in 2025, rather it dipped lower. To be fair, it has been deeply negative since mid-2021 and running below its long term average for the past two years.Here's something you don't see every day. A ratings agency putting a whole sector on 'watch' - in advance of failures. This is from Australia's SQM Research who now say the private credit sector (aka, the private debt sector, or 'private equity') is facing a wave of bad loans. It has a list of 14 issues that the sector is deficient with. Companies owned/funded by this sector are at heightened risk of short-term cut-and-run strategies, making matters worse.The UST 10yr yield is now at 4.25%, unchanged from yesterday at this time.The price of gold will start today at just on US$3023/oz and up a net +US$9 from Saturday.Oil prices are stable from Saturday at just under US$68.50/bbl in the US and the international Brent price is still just over US$72/bbl.The Kiwi dollar is now at 57.3 USc and down -10 bps from this time Saturday. A week ago, it was at 57.5 USc. Against the Aussie we are holding at 91.4 AUc. Against the euro we are also holding at 53 euro cents. That all means our TWI-5 starts today just on 66.9, and unchanged. A week ago it was at 66.7.The bitcoin price starts today at US$85,264 and up +1.6% from this time Saturday. A week ago it was at US$84,261. Volatility over the past 24 hours has again been low at +/- 0.9%.You can find links to the articles mentioned today in our show notes.You can get more news affecting the economy in New Zealand from interest.co.nz.Kia ora. I'm David Chaston. And we will do this again tomorrow.

Kia ora,Welcome to Friday’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.And today we lead with news we are slipping in the Happiness rankings, and slipping fast in the inequality measures within it.But first, last week's American initial jobless claims report brought no surprises, coming it at a similar level to the prior week and exactly as anticipated. But they season factors suggested they should have decreased a bit more than they did. There are now 2.13 mln people on these benefits, +6 more than year-ago levels.There were a lot more existing homes sold in the US (excludes new-built homes) in February that either in January or than were expected. But they were still at a lower level that a year ago, and the volume of listings rose +5.1% from a year ago.The latest regional Fed factory survey was from the Philly Fed and its rust-belt region, and while it remained positive, most markers declines in March. New order level declines were part of that.And that is consistent with the Conference Board's latest update of American leading indicators, which declined in February.Across the border in Canada, and perhaps somewhat surprisingly, producer prices rose +4.9% in February from a year ago, an easing of the price pressure from January. But it is still the second fasted rise on this basis since the end of 2022. Raw material cost increases are keeping this measure up.And staying in Canada, their central bank boss signaled a policy change overnight in light of the economic impacts from US tariff threats; rather than setting policy on a median term outlook, the ime may have come for faster, more nimble responses to short-term pressures, he suggested.China kept its Loan Prime Rates unchanged at today's review with the one-year rate, a benchmark for most corporate and household loans, steady at 3.1%, while the five-year, a reference for property mortgages, holding at 3.6%. Both rates are record lows.Taiwanese export orders starred again in February. They soared by +31% from a year ago to US$49.5 bln, easily beating market expectations of +22% growth and rebounding sharply from a small January slip. You can see why the mainland government covets the independent offshore island.German producer prices rose only modestly again, a trend they have been in for four months now after exiting deflation over the past 17 months.The English central bank left its policy rate unchanged at 4.5% at their overnight meeting. This was as expected.In Australia, their February labour market data was a surprise disappointment - for the ruling Labor Party at least. The number of people in paid employment fell by -53,000 when a +30,000 rise was widely expected. This is not a small miss, and 'unwelcome' ahead of their upcoming election campaign. But the number of people jobless also fell, and by -11,300, which managed to keep their jobless rate unchanged at 4.1%. The reason both fell is because their participation rate fell to a nine-month low of 66.8%, down sharply from January's 67.2%. People are leaving their workforce faster than usual, many of them boomers. Monthly hours worked in all jobs shrank. Financial markets didn't react badly because it probably will shift the RBA away from worrying about 'tight labour markets' and open up the possibility of rate cuts.Global container freight rates fell another -4% last week to be -31% lower than year-ago levels. But they are still +59% higher than pre-pandemic levels, even though the down trend is gathering pace. Again it is lower rates on outbound cargoes from China to the US that is driving the decline. Bulk cargo rates however were +3.6% higher than week-ago levels, -17% lower than year-ago levels, but still +60% above pre-pandemic levels (which were unusually low, it must be said).In another global report, New Zealand is virtually tied with Australia as the 12th happiest country in the 2024 edition of the World happiness Report released overnight. The usual Scandinavian set is at the top, with Costa Rica, but oddly, both Israel and Mexico now rank higher than us, which seems a little odd. Neither Australia nor New Zealand rank well on the inequality measures.The UST 10yr yield is now at 4.24%, down -4 bps from yesterday at this time. The price of gold will start today at just on US$3038/oz and up a net +US$5 from yesterday.Oil prices are up another +50 USc from yesterday at just on US$68/bbl in the US and the international Brent price is at just on US$72/bbl.The Kiwi dollar is now at 57.5 USc and down -40 bps from this time yesterday in a continuing retreat. Against the Aussie we are down -10 bps at 91.3 AUc. Against the euro we are down -20 bps at 53 euro cents. That all means our TWI-5 starts today just on 66.8, and -40 bps lower.The bitcoin price starts today at US$83,747 and down -1.0% from this time yesterday. Volatility over the past 24 hours has again been mod

Kia ora,Welcome to Thursday’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.And today we lead with news it’s a big day of data locally with our Q4-2024 GDP result out later this morning, preceded by the Fonterra half year result. Either may have market-moving implications.But a few minutes ago, the US Fed released its latest monetary policy review and projections, the dot plot indications and forecasts, which suggest they see higher inflation in the year ahead (now 2.7% from 2.5% and a smaller economic expansion (1.7% from 2.1%). They also expect a higher jobless rate.They see two rate cuts this year. Nine of the 19 policymakers expect it to be in the 3.75%-4.00% range by the end of 2025.But at this meeting there was no policy rate change.In contrast, the AtlantaFed's GDPNow tracking suggests the US economy is now contracting at a -1.8% rate. Apart from the pandemic period, that would be their worst since the GFC.After two strong weeks of mortgage application growth, but mostly driven by refinance activity, last week there was a pull back with volumes falling -6.2%. But with the rise in US benchmark interest rates, and the consequent rise in the 30 year home loan rates (their first rise in nine weeks), perhaps this isn't much of a surprise. Still, overall activity is now +6% higher than year-ago levels.Tariffs and tariff threats are raising prices for basic commodities. For example, American steel is up +27% just from February 7, 2025. There is no way that won't have an inflationary impact there. Thinks cars. Interestingly with international steel diverted, these costs will be lower elsewhere, so the core competitiveness of American-made products are probably going to weaken noticeably. Chinese steel prices are back to where they were in 2017.Across the Pacific, Japanese exports rose +11.7% in February from the same month a year ago and this was the second best rise since December 2022 and much better than the +7.8% rise in February 2024. Still it wasn't quite as strong as expected.Japanese machinery orders rose +19.8% in January from the same month a year ago (up to ¥3.27 bln from ¥2.73 bln in January 2024.)The Bank of Japan kept its key short-term interest rate at around 0.5% during its March meeting, maintaining it at its highest level since 2008 and in line with market expectations. It was a unanimous decision and a cautious stance, focusing on assessing the impact of rising global economic risks on Japan’s fragile recovery. They noted ongoing uncertainties in the domestic economic outlook, including trade policies and global conditions.The central bank of Indonesia held its benchmark interest rate at 5.75% during its March 2025 meeting, as expected. They have had only one -25 bps rate cut in 2025 which took their policy rate back to where it was for most of 2023. Recently their inflation rate fell to only +0.8%. And there was a sell-off on their stock exchange earlier in the week. So this 'hold' may be their last. The financial instability in Indonesia is a bit of a worry, especially for its neighbour, Australia.In Turkey, their autocratic president is feeling increasingly vulnerable. He has moved against his main rival with trumped-up charges and the instability has caused the Turkish currency to dive - again. Inflation is running at 39% still but it is falling. And their central bank keeps cutting their policy rate, now down to 42.5%.The World Meteorological Organisation's latest report, for 2024, is a sobering read. New Zealand may be situated in a climate sweet-spot but that isn't the case for almost all our trading partners. CO2 levels in the planet's atmosphere are now at an 800,000 year high. The future won't be like the past. The main way it will hit our pockets is through insurance costs.The UST 10yr yield is now at 4.28%, up +1 bp from yesterday at this time.The price of gold will start today at just on US$3034/oz and down a net -US$2 from yesterday.Oil prices are up +50 USc from yesterday at just on US$67.50/bbl in the US and the international Brent price is at just over US$71/bbl.The Kiwi dollar is now at 57.9 USc and down -30 bps from this time yesterday. Against the Aussie we are unchanged at 91.4 AUc. Against the euro we are also unchanged at 53.2 euro cents. That all means our TWI-5 starts today just on 67.2, and -10 bps softer.The bitcoin price starts today at US$84,613 and up +3.3% from this time yesterday. Volatility over the past 24 hours has again been moderate at +/- 2.1%.Join us for the Q4-2024 GDP result at 10:45 am this morning. And before that, we will have the Fonterra half year update.You can find links to the articles mentioned today in our show notes.You can get more news affecting the economy in New Zealand from interest.co.nz.Kia ora. I'm David Chaston. And we will do this again tomorrow.

Kia ora,Welcome to Wednesday’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.And today we lead with news there are plenty of bumps in the economic road to note today.But first up today, there was another full dairy auction overnight, one that analysts had been nervous about and the derivatives market saw downside risks (on the uncertainties of how dairy product distortions would fare in the growing tariff disputes). In the end overall prices were unchanged - so no bump here - which the industry will take as a 'win'. But that is in USD terms. In NZD terms it certainly wasn't with prices down -3.3% overall as the USD weakened. Butter inched higher, and to a new record level. So did cheese. But WMP was little-changed, and SMP fell -0.4%. China was in there buying although not with notable enthusiasm.All eyes now turn to Fonterra's interim report on Friday, and the expectations are for only minor tweaks to their payout levels over that they have already announced at record highs.In the US, the retail impulse tracking though the Redbook index still shows a strong year-on-year +5.2% gain compared to the same week a year ago, but the advantage is fading and has done so each week in March so far. We don't get a week-on-week reading but for that year-on-year gain to fall from +6.6% three week ago, there must be a sharpish recent fall away.American housing starts unexpectedly jumped +11.2% in February from January, but that was just making back the -11.5% fall the prior month. The February 2025 build rate was at 1.501 mln units whereas the February buodl date was at 1,546 mln units so a -2.9% retreat on that basis.It was a similar story for US industrial production - up more in February from January (+0.7%) than expected (+0.3%), but the gains were less (+1.4%) than year-ago levels (+1.7%).There was a US Treasury 20 year bond auction earlier today and it brought less support, and at a median yield of 4.60%. The better supported prior equivalent event a month ago was at a median yield of 4.77%.Canada reported its CPI inflation rate at 2.6%, which was a notable rise from their January level of 1.9% and an expectation of 2.2%. It is probably only going to get worse from here due to the snarky tariff war the Americans started and the Canadians collective reactions. Their monetary policy decisions are based on "trimmed mean" rates, and they only moved up slightly.Across the Atlantic in Germany, and by a two thirds majority, their parliament has approved a massive €1 tln funding increase to allow it to build its defence capability and support Ukraine. It is a massive change in attitude to their fiscal policy direction.In the Pacific, Indonesia's stock market halted trading yesterday for the first time since 2020 after their market plunged more than -7% from Monday's close. Substantial concerns over economic stability and consumer sentiment are behind the move.In China the property sector woes are far from over. Another major developer, Sunac, has issued a major 'profit warning', actually a major warning about huge losses. Demand for its projects is very weak.In Australia, a superannuation fund has been convicted of greenwashing and ordered to pay a fine of more than AU$10 mln for making false claims about how it invested funds.The UST 10yr yield is now at 4.27%, down -3 bps from yesterday at this time. And we should probably note that the Tesla share price is down another -6% so far today.The price of gold will start today at just on US$3036/oz and up a net +US$42 from yesterday, and another all-time high.Oil prices are down -50 USc from yesterday at just under US$67/bbl in the US and the international Brent price is at just under US$70.50/bbl.The Kiwi dollar is now at 58.2 USc and unchanged from this time yesterday and maintaining its recent gains. Against the Aussie we are up +20 bps at 91.4 AUc and a new three-month high. Against the euro we are unchanged at 53.2 euro cents. That all means our TWI-5 starts today just over 67.3, and marginally firmer.The bitcoin price starts today at US$81,895 and down -1.9% from this time yesterday. Volatility over the past 24 hours has again been moderate at +/- 2.1%.You can find links to the articles mentioned today in our show notes.You can get more news affecting the economy in New Zealand from interest.co.nz.Kia ora. I'm David Chaston. And we will do this again tomorrow.

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.And today we lead with news the US Federal Reserve is meeting to review its monetary policy settings and uncertainty levels are high and rising, both on the growth and inflation fronts.But first, as we noted yesterday, China's State Council has launched 'a special action plan' to boost domestic consumption, including increasing residents' income and establishing a childcare subsidy scheme. The plan came a week after the Premier's work report to the National People's Congress, which focused on boosting household spending to cushion the impact of weak external demand.This had a notable impact on many, mainly Asian, financial markets.Meanwhile, China released an important set of recent data overnight. Their new home prices in 70 cities dropped by -4.8% year-on-year in February, easing from a -5.0% decline in January. This marked the 20th consecutive month of decreases but represented the softest pace since last June. For second hand home prices, they are down -7.5% year-on-year.China's retail sales were up +4.0% in the January/February period, a better rise than for any month, other than for October.China's industrial production was said to be up a strong +5.9% in the same period. However that doesn't quite square with their electricity production data in the same period which was -1.3% lower.Singapore's exports recovered in February after the disappointing January data. There were up +7.6% after falling -2.1% in January. However, that bounce back was weaker than analysts had expected (+8.7%).Indian exports were unremarkable in February, coming in just under US$37 bln and still low for an economy of this size, certainly one that is 'booming'. In India, it is all about internal demand. For reference, India's exports were US$41.4 bln in February 2024, so a shrinkage of -11% on that basis. They may be looking for new markets to shore up this weak performance.Legendary investor Warren Buffett once said his strategy is to be fearful when others are greedy, and greedy when others are fearful. Right now, market fears are high, in fact 'extreme'. So what is he doing? He is raising his stakes in Japanese trading houses.US retail sales in February were a disappointment. They fell -0.2% from January when a rise was anticipated and are now -0.9% lower than year ago levels. On an inflation-adjusted basis it will be worse than that. January data was soft too, and revised lower. Seven of the report’s 13 categories recorded declines, including car sales on a year-on-year basis. This data is consistent with earlier data indicating defensive consumer attitudes.A 'fear' retreat by American consumers will likely have more of a global impact on trade and consumption than tariffs by themselves.That same hesitancy also shows up in the NAHB/Wells Fargo Housing Market Index which fell in March to its lowest level in seven months, and below what was expected. Current sales conditions fell sharply, sales expectations in the next six months held steady, while traffic of prospective buyers dropped sharply too. And not helping the builders is cost uncertainty.It is even tougher in the latest update of the Empire State factory survey by the New York Fed. This is often a volatile survey, but the March results record the largest pullback since May 2023. New order intake levels were particularly weak. Capital spending was very weak too. The New York Fed called the retreat "significant".But at least national business inventories in relation to sales activity are still within range, even if they did rise in February.In Canada, housing starts fell -4% in February to an annual rate of 229,030 units, down from a revised 239,322 units in January and below market expectations of 250,000.Less trade has seen the OECD trim its 2025 and 2026 forecasts for economic expansion. Annual GDP growth in the United States is projected to slow from its +2.8% 2024 pace, to be +2.2% in 2025 and +1.6% in 2026. China's growth rates are slowing too. But they do expect improvements in Australia. (See page 5.) They see inflation rising to above policy target levels. New Zealand gets no mention in this update.The UST 10yr yield is now at 4.30%, down -2 bps from yesterday at this time. The price of gold will start today at just on US$2994/oz and up another net +US$9 from yesterday.Oil prices are up +50 USc from yesterday at just on US$67.50/bbl in the US and the international Brent price is at just on US$71/bbl.The Kiwi dollar is now at 58.2 USc and up +70 bps from this time yesterday. That is its highest level since December 10, 2024. Against the Aussie we are up +30 bps at 91.2 AUc and a similar three-month high. Against the euro we are up +40 bps at 53.2 euro cents. That all means our TWI-5 starts today just under 67.3, and up +50 bps to a two month high.The bitcoin price st

Kia ora,Welcome to Monday’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.And today we lead with news China's inability to get out of its rut, and the fast-fading of the American exuberance are the dominating global economic scene-setters.And this week it will be all about by the US Fed and its Thursday monetary policy review. They face the prospects of higher inflation in the immediate plannable future from the costs of the new tariffs, an expansion that is faltering fast, and probably a wave of job losses. How they assess those conflicts will be keenly followed by financial markets, even if no rate change is expected.New inflation pressures are also hitting Canada, and they will release CPI data this week, along with retail sales data.And many other countries will have monetary policy reviews this coming week, including Japan, China, Sweden, Switzerland and the English. Japan will also release inflation data.And China is about to release retail sales and industrial production data later today along with a look at February house prices.Over the weekend in China, after the spectacular rise in January loan growth, reported their February levels came in quite low, showing the policy-induced surge could not be maintained. There were only ¥1.01 tln in new loans extended in the month, far below the ¥5.03 tln January level and back to levels it bounced along at for most 2024 months. The February 2024 level was ¥1.45 tln, so this 2025 result is a definite sag since then.New official energy is going into boosting consumer demand by tackling consumers property losses, that haven't responded so far to prior efforts, and to 'stabilise' their stock markets.And their foreign direct investment data out for February was very weak again, only ¥114 bln in February, -20.4% lower than the already low ¥143.4 bln in the same month of 2024. And this is off the back of a 2024 which was their lowest FDI inflows in eleven years. For perspective in February 2022 they attracted ¥220 bln in foreign investment, so this 2025 level is about half of that.Across the Pacific, the widely anticipated American March survey of consumer sentiment from the University of Michigan was out and it fell much more than expected. In fact it recorded its lowest level since November 2022. It is now down -27% from a year ago.One key reason Americans are so glum (apart from the chaos of policy gyrations), they fear a sharp return of inflation. Year-ahead inflation expectations jumped up from 4.3% in February, already a high level, to 4.9% this month, also the highest reading since November 2022 and marking three consecutive months of unusually large increases. Their new long term inflation expectations of 3.9% have now hit a 32 year high.There is probably much more to come. The US price of timber is already rising and now at its highest level two years. Industrial commodities like tin are also tracking much higher. We have previously noted the cost of eggs which even after a recent pullback are still almost double what they were a year ago. There will elevated interest in the AtlantaFed's GDPNow tracking when it is updated tomorrow.The UST 10yr yield is now at 4.32%, up +1 bp from Saturday at this time. The price of gold will start today at just on US$2985/oz and up another net +US$2 from Saturday. Over the weekend it briefly spiked to US$3000 but then retraced sharply before settling at the current level.Oil prices are little-changed from Saturday at just over US$67/bbl in the US and the international Brent price is at just on US$70.50/bbl.The Kiwi dollar is now at 57.5 USc and unchanged from Saturday. Against the Aussie however we are also unchanged at 90.9 AUc. Against the euro we are holding as well at at 52.8 euro cents. That all means our TWI-5 starts today just under 66.8, and also virtually unchanged.The bitcoin price starts today at US$83,632 and down -0.7% from this time Saturday. Volatility over the past 24 hours has again been modest at +/- 1.5%.You can find links to the articles mentioned today in our show notes.You can get more news affecting the economy in New Zealand from interest.co.nz.Kia ora. I'm David Chaston. And we will do this again tomorrow.

Kia ora,Welcome to Friday’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.And today we lead with news the gold price is approaching US$3000/oz again after hitting a new record high earlier today. The equity markets are falling again. Benchmark bond yields are in risk-aversion mode but corporate debt yields are rising.But first, US initial jobless claims were little-changed last week from the prior week, slipping slightly on seasonal factors. There are now 2.163 mln people on these benefits, +4.0% more than at this time last year.American producer prices were up +3.2% in February from a year ago, slightly less than expected (+3.3%) and a notable fall from January (+3.7%). But January was an outlier. The average in 2024 was +2.5%.This updated chart of the price of eggs in the US is interesting. They are now up +100% in one year, up +42% in 2025 alone. US egg prices are rising faster than gold.There was a US Treasury 30 year bond tendered overnight and to slightly less demand. It resulted in a median yield of 4.56%, which was less that the 4.68% at the prior equivalent event a month ago.Meanwhile, US yields for sub-investment grade corporate bonds ("Junk bonds") have jumped in the past week or so on recession fears and tariff uncertainty. Today there were more tariff threats from Trump who can't seem to understand why others would retaliate.North of the border, riled up Canadians are now proposing to toll US trucks that go through B.C. to service Alaska. But this won't hurt Alaska much as most of their freight arrives by sea. However they seem to want to make a point by withdrawing a long-standing concession. Elsewhere, supply-chain and retailers are noticing significant anti-US consumer demand shifts.And staying in Canada, their residential building consent levels slipped in January, pretty much as expected after the surge in December. But they remain an impressive +29% higher than a year ago, largely due to multi-unit construction.Across the Pacific, Beijing has quietly moved to inject public funds worth ¥500 bln (NZ$120 bln) into ailing state-owned banks. It is a similar rescue to the 1998 Asian Financial Crisis when they injected the ¥270 bln for the same reason - wavering SOE bank health.Chinese warships may have been circling Australia for geopolitical warning reasons. Or they may have had other objectives as well. Yesterday the official work report from the Chinese National Congress was released, and it includes a mention (page 17) of it now being a "key task for 2025" to develop "deep-sea science and technology", which is a new item added this year. It's a reach of course, but we may be seeing more Chinese vessels on our presumably valuable continental shelf. If we don't want them there we will have to develop the ability to keep them away.Global container freight rates fell another -7% last week to be their lowest since January 2024 but still +67% higher than pre-pandemic levels. Bulk cargo rates rose sharply last week, up +27% for the week to be a third lower rthan this time last year.The UST 10yr yield is now at 4.27%, down -3 bps from yesterday at this time. Wall Street is falling again, down -1.4% on the S&P500. The price of gold will start today at just on US$2980/oz and up another +US$48 from yesterday. And that is a new all-time high. In intra-day trading it hasn't yet quite touched US$3000, but close, and probably soon.Oil prices are down -US$1 at just over US$66.50/bbl in the US and the international Brent price is at just under US$70/bbl.The Kiwi dollar is now at 57.1 USc and down -20 bps from yesterday. Against the Aussie however we are unchanged at 90.8 AUc. Against the euro we are still at 52.5 euro cents. That all means our TWI-5 starts today just under 66.4, and down -10 bps from yesterday.The bitcoin price started today at US$80,780 and down -1.7% from this time yesterday. Volatility over the past 24 hours has again been moderate at +/- 2.1%.You can find links to the articles mentioned today in our show notes.You can get more news affecting the economy in New Zealand from interest.co.nz.Kia ora. I'm David Chaston. And we will do this again on Monday.

Kia ora,Welcome to Thursday’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.And today we lead with news retaliation on retaliation seems to be the order of the day in the US tariff policy - exactly has observers had expected. The whole thing is a no-win battle and a repeat of a history lesson that failed the first time - one it should be noted that resulted in the 1929 Depression.Both Canada and the EU responded with retaliatory tariffs on imports from the US. Washington threatened more on them for responding.Separately, in the US, lower energy costs brought their CPI inflation rate down to 2.8% in February from 3.0% in January. This was a better result than expected. A year ago, CPI inflation was running at 3.2% and decreasing, when it dropped to 2.4% in September.But no-one expects the dip to last, as the tariff costs get passed on to consumers.Another fall in the long term US benchmark interest rates has brought another healthy rise in mortgage applications hast week, up at an +11% annual rate from the prior week. Again it was a continuing sharp surge in refinance activity (+16%), that drove the increase, rather than new lending (+4%).There was another well-supported US Treasury bond auction overnight, this one for their ten year maturity. It resulted in a median yield of 4.27%, sharply lower than the 4.56% at the prior equivalent event a month ago. Safe haven demand is strong.The Bank of Canada cut its key interest rate by -25 bps to 2.75% in its March decision, as expected and previously signaled, to mark -225 bps in rate cuts since the start of its loosening cycle in June 2024. More rate cuts are expected, especially now they can see a major economic bump coming from the tariff war.Japanese PPI is still rising at +4.0% year-on-year in February, reinforcing how embedded inflation has now become in Japan. And probably at a higher level than they are comfortable with. It's the sixth straight month it has exceeded 3%.In China, their national set-piece policy meetings adopted a 4% to GDP debt limit, but even local observers pointed out this will end up far higher than what will turn out in 2025. They will need massive new debt to achieve their 5% growth target. That much more debt creates a local government honey-pot rush.India's CPI inflation rate fell sharply in February, down from 4.30% in January to 3.60% in February, a fall larger than the 4.0% expected. The pace of the drop in food price inflation drove the moderation. This will probably lead to more rate cuts by their central bank.On the other hand, India's industrial production rose faster than expected. It was expected to be +3.5% higher in January than a year ago matching the December expansion. But in fact it came in +5.0% higher.In Greenland, the 56,000 mostly Inuit voters have chosen the opposition centre-right, pro-business party as their new government. And declared they don't want to be American (or Danes, for that matter).Also rising was Russian CPI inflation, which came in at +10.1% in February, up from 9.9% in January, driven by the +11.7% rise in food prices.In an extension of targeting its 'friends', the US confirmed that there will be no exemptions for tariffs on Australian steel and aluminium. Of course, the US still expects those it offends to keep buying US products and services.The UST 10yr yield is now at 4.30%, up +4 bps from yesterday at this time.The price of gold will start today at just over US$2933/oz and up another +US$17 from yesterday.Oil prices are up +US$1 at just over US$67.50/bbl in the US and the international Brent price is at just under US$71/bbl.The Kiwi dollar is now at 57.3 USc and up +20 bps from yesterday. Against the Aussie however we are unchanged at 90.8 AUc. Against the euro we are up +20 bps at 52.5 euro cents. That all means our TWI-5 starts today just under 66.5, and up +20 bps from yesterday.The bitcoin price started today at US$82,161 and up +1.0% from this time yesterday. Volatility over the past 24 hours has been moderate at +/- 2.0%.You can find links to the articles mentioned today in our show notes.You can get more news affecting the economy in New Zealand from interest.co.nz.Kia ora. I'm David Chaston. And we will do this again tomorrow.

Kia ora,Welcome to Wednesday’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.And today we lead with news the US is doubling its tariffs on Canadian steel and aluminium to 50% in a tantrum over Canadians asserting their independence. Wall Street reacted badly, dropping another -1% and taking the losses to -10% over the past four week, a drop in the market capitalisation of the S&P500 of about -US$2.5 tln. That is just the start of course because there are thousands of other companies on a range of other indexes like the Dow (down -1.4% today) and the Nasdaq (down -0.6% today). Bad public policy is expensive. There will be echoes in KiwiSaver accounts, some loud.Financial markets are signaling a US recession. Apparently Warren Buffett expected a Trump recession and has adjusted his holdings for that.Meanwhile, the US Redbook retail index was +5.7% higher last week than the same week a year ago, an easing from th +6.6% rate the prior week.January job openings is the US rose on strong demand in the retail sector. They rose by +232,000 to 7.74 mln, up from a revised 7.51 mln in December and above the market expectation of 7.63 mln. Quits rose too in January. January layoff levels in the government sector were particularly low, but this is expected to change over the next few months.There was a still well-supported US Treasury 3 year bond action earlier today which ended with a median yield of 3.85%. But this was sharply lower than the prior equivalent event a month ago of 4.26%.In Japan, the January household spending survey released yesterday delivered a large shock, with spending falling the most in one month since 2021. That dragged their year-on-year gain down to just +0.8% from +2.7% in December. No-one saw this coming, although it has to be said there have been other December/January shocks in the past and all followed by a recovery in February. All the same, perhaps Japanese households are suddenly turning fearful about what lies ahead, with reason this time.In China, there is massive confusion over its trade rail link to Europe, and alternative to sea freight. The Russians are seizing the cargoes as they enter their territory. This is no minor trade disruption.The Australian consumer sentiment survey by Westpac/Melbourne Institute reported a solid improvement in March, and taking it to its highest level since May 2022.Meanwhile the NAB business sentiment survey for Australia reversed in February in their report released today. They said business conditions rose marginally in February, with small lifts in both trading conditions and profitability. However, there was a notable fall in business confidence which fell -6 points, largely offsetting the improvement seen in January.The total value of housing in Australia owned by households reached AU$10.6 tln as at December 2024, up +4.4% from a year ago. That is a AU$448 bln rise in a year, but far less than the +8.1% rise in the year to December 2023, or +AU$760 bln. If we included the dwelling stock owned by others, the rise to December 2024 was also up +4.4%, and that adds another AU$440 bln, taking the total value of Aussie housing stock to AU$11 tln. Interestingly, all the 2024 rise happened in Q1-2024 - total values were flat for the rest of the year even after their new builds were added.According to a global air quality review of 2024, only 7 countries met WHO air quality standards. That included New Zealand, Australia, Iceland and Estonia, plus three Caribbean islands. Globally, this is as bad as its ever been. And now that the US has pulled funding for this monitoring, we will only get results in future for first world countries that fund their own. (The US funding for its own monitoring has been cancelled too.)And finally, we should probably note that 56,000 Greenland voters are voting in a national MMP election. Results will be known tomorrow.The UST 10yr yield is now at 4.26%, up +3 bps from yesterday at this time.The price of gold will start today at just over US$2916/oz and up +US$17 from yesterday.Oil prices are holding unchanged at just on US$66.50/bbl in the US and the international Brent price is down -US$1 at just over US$69.50/bbl.The Kiwi dollar is now at 57.1 USc and down -10 bps from yesterday. Against the Aussie however we are unchanged at 90.8 AUc. Against the euro we are down -50 bps at 52.3 euro cents. That all means our TWI-5 starts today just over 66.3, and down -30 bps from yesterday.The bitcoin price started today at US$81,309 and recovering +3.4% from this time yesterday. Volatility over the past 24 hours has stayed high at +/- 3.4%.You can find links to the articles mentioned today in our show notes.You can get more news affecting the economy in New Zealand from interest.co.nz.Kia ora. I'm David Chaston. And we will do this again tomorrow.

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.And today we lead with news Wall Street has taken sudden fright on the growing realisation of what Trump has wrought for them. It's risk-off in a big way with equities falling sharply and bond yields retreating. Normally on a risk-off phase the USD rises, but this time it's actually softer. Putin's puppet isn't good for business.Probably not helping is that one-year US inflation expectations are rising, the first rise in four months, and to its highest since May 2024. The broader survey reported rising pessimism. Fear of job loss jumped sharply. The worries about missing a debt payment over the next three months jumped to 14.6%, the highest level since April 2020. The increase was driven by those without a college degree and largest for those under age 40, the demographic that drove the election result.And its not just consumers. American farmers are recoiling at the impact on them and their markets. It is likely that farm spending and investment decisions will take a long holiday until most USDA and USAID programs are restored. Reports and data from those agencies are likely to become very unreliable now that DOGE-aligned managers are now in charge. Farmers are voting with their checkbooks and it is going to be tough for the wider agribusiness sector.And it is probably worth noting the the Tesla share price is down another -13% so far today. That is a now a -53% drop since the US election.Across the Pacific, there were a set of indicators out for Japan overnight. Their leading economic indicators index, which gauges the economic outlook for the coming months based on data such as job offers and consumer sentiment, edged up to its highest reading since October. However, that was slightly less than expected. On the other hand, annual household spending rose for the first time in five months, its fastest growth since August 2022. However consumer sentiment slipped.China said it will impose a 100% tariff on imports of certain Canadian agricultural products, along with a 25% levy on seafood and pork. They will come into effect in ten days in response to Ottawa's trade measures. Canada had previously imposed a 100% tariff on Chinese-made electric vehicles starting October 1 last year, aligning with similar actions by the US and EU over concerns of unfair competition. Additionally, Canada implemented a 25% tariff on Chinese steel and aluminium imports, effective since October 15 last year. They are trying not to be gamed in the manoeuvring between the US and China.And you may be interested to know that Beijing authorities have launched a trial of street patrols by robot dogs. Given their pervasive 'social security' system tied into the extensive facial recognition systems, this seems a particularly dystopian development.In Europe, German industrial production rose in January from December and by more than expected. That has helped them eat into their year-on-year decline, taking it to its smallest level since mid-2023.The UST 10yr yield is now at 4.23%, down -7 bps from yesterday at this time. The price of gold will start today at just over US$2898/oz and down -US$12 from yesterday.Oil prices are down -50 USc at just on US$66.50/bbl in the US and the international Brent price is down -US$1 at just over US$69.50/bbl. The Kiwi dollar is now at 57.2 USc and up +10 bps from yesterday. Against the Aussie however we are up +30 bps at 90.8 AUc. Against the euro we are up +10 bps at 52.8 euro cents. That all means our TWI-5 starts today just over 66.5, and up +10 bps from yesterday.The bitcoin price started today at US$78,624 and down another large net -4.8% from this time yesterday. That means it is given up all its gains after the US election in November, and more. Trump seems to have 'lost' the crypto tech-bros too. Volatility over the past 24 hours has been high at +/- 3.4%.You can find links to the articles mentioned today in our show notes.You can get more news affecting the economy in New Zealand from interest.co.nz.Kia ora. I'm David Chaston. And we will do this again tomorrow.

Kia ora,Welcome to Monday’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.And today we lead with news we start the week with current data that is almost certainly not indicative of what's to come. The policy landscape is in ferment.First in the week ahead however, locally it will be all about migration, retail sales, and a look a second look at 2025 inflation levels. In Australia their data releases will be about business and consumer sentiment, and industrial production.Elsewhere, India will release a CPI update. Canada's central bank will review its policy rate on Thursday (NZT) and is expected to cut it by -25 bps to 2.75%.In the US, upcoming updates will be for CPI and PPI, the Michigan consumer sentiment survey, and January JOLTS job data.But first up today, weekend data releases from China confirmed they have slipped into a deflationary funk. Consumer prices fell -0.7% in February from a year ago (-0.5% was expected), and producer prices were down -2.2% (-2.1% was expected).China's consumer price decline was their first consumer deflation since January 2024, amid fading seasonal demand following the Spring Festival in late January. Food prices fell the most in 13 months, down -3.3%, dragged by a steep decrease in cost of fresh vegetables and a sharp slowdown in pork prices. Beef prices are down -13.3% from a year ago, lamb prices by -6.6%. Milk prices are down -1.4% on the same basis.China's producer prices are falling faster than consumer prices, but not really at an accelerating rate.Earlier in the weekend, China said its exports rose +2.3% in February, but that was notably less than the +5% rise expected. China's imports fell -8.4% when a +1% rise was expected. That means their merchandise trade balance rose to +US$170 bln, well above the January +US$142 bln and spiked by reactions to US trade and tariff policies. Their data shows a -US$1.1 bln February deficit in their trade with New Zealand. With Australia it was a -US$8.4 bln deficit.We may also get China new yuan loan data at the end of this week, although it is coming in a bit later, and weaker, these past few months.Despite all the US, China and global trade woes, the New York Fed's tracking of global supply chain pressures is reporting a pretty sanguine situation. Of course, that will undoubtedly change going forward.In the US, the February non-farm payrolls report showed the US economy added +151,000 jobs in February, slightly below the +160,000 expected. The January data was downwardly revised to +125,000 from the original +143,000. Their jobless rate ticked up to 4.1%. We should note that virtually none of the DOGE cuts are reflected in this data. Their participation rate fell.The actual unadjusted rise in February from January was +891,000 in this payroll survey data, but that was less than seasonal factors would have usually delivered and less than the +1,065,000 gain in the same period in 2024. Including the unincorporated self-employed, the total number of employed people was 162.5 mln, and that was less than in January. The shift to company payrolls is still happening but slower, and the total number of people actually employed actually dropped. Average weekly earnings were up +3.4% from a year ago and that was their least in more than a year. (Over the past 12 months, that rise has averaged +3.7%, so a notable tailing off in February.)The US Fed boss Powell talked about the outlook for the US economy over the weekend, and commented that they see no reason to be cutting their policy rates any time soon.The US Fed's tightening process continues with their balance sheet now down to US$6.75 tln, down by -US$782 bln in a year and eating into its pandemic surge now. Pre-pandemic, it was a balance sheet equivalent to 19.0% of US GDP. It peaked at 35.4% in April 2022. Now it is back to 22.5% of GDP. So normalisation looms. (For reference the RBNZ balance sheet is also currently at 22.5% of our GDP.)In Canada, their February labour force data wasn't that flash. Full-time employment fell -20,000 while part-time employment rose +21,000. But their average hourly wages rose +4.0%. Their participation rate fell too. No-one expects this labour force data to improve while the tariff war hostilities build in 2025.The US president has threatened Canada again, this time with 'reciprocal' tariffs on dairy and timber. If he goes ahead, it will almost certainly backfire on Americans. Canada is already the US dairy industry's second largest export market and that market will almost certainly reject US goods. And Canadian timber is well-embedded into US house building. Trump wants US national forests harvested to replace Canadian supplies but that will take time to build volumes, and come at higher prices.In Australia, plans to call an April federal election have been shelved, partly because of the expected physical and financial clea

Kia ora,Welcome to Friday’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.And today we lead with news US policy making has now become so chaotic, businesses are holding off making decisions. That can only have negative consequences.Firstly, US jobless claims rose modestly last week from the week before but this was less than seasonal factors would have suggested. There are now 2.23 mln people on these benefits and back up near the October 2021 levels. The current consensus forecasts for tomorrow's release of the February non-farm payrolls is a rise of 160,000.But there might be some downside, if not in tomorrow's data, in the following set. The level of announced job cuts in February jumped to pandemic levels, and prior to that, to GFC levels. The Musk razor gang is getting some of the blame.The January American trade balance of both goods and services came in double the deficit of a year ago and an all-time record. Tariff policies have driven the change. For the year to January, their total trade deficit was -US$982 bln with a real surge from September to January and blowing it out to -3.4% of US GDP and a record high.Overnight the US announced delays on tariffs against Mexico. It is a never ending series of confusing 'definite' signals, none of which inspire confidence or allow for orderly business decision making. With Mexico, the situation has turned on its head in just four days. With Canada, Trump is ignoring what his Commerce Secretary said just one day ago, and US carmakers are in a real bind now.US wholesale inventories rose in January and their inventory to sales ratio rose too, ending a long period of improvement.Folding this data in gives the latest reading of Atlanta Fed GDPNow forecast for American Q1-2025 performance is now a -2.4% decline. Apart from the pandemic they won't have seen anything quite this dramatic since the GFC.Since its peak in December, the Tesla share price is continuing its fall, and it is only notable today because the value loss now exceeds -US$660 bln in that period. In NZD that is -$1.15 tln! That price is down another -5.6% so far today and filings show Tesla insiders are now selling.Going the other way, Canada's exports and their trade balance came in sharply positive. Exports were up +20% in January from a year ago and their trade surplus was its best since a brief spike in May 2022, and prior to that, best ever.The Malaysian central bank held its key interest rate at 3% for the tenth consecutive review during its overnight meeting, and that was in line with market expectations.In China, nothing meaningful or unexpected has come from their National People's Congress meetings.In Europe, the ECB cut its three key interest rates by 25 basis points, as expected, reducing the main refinancing rate to 2.65%. It was their sixth cut since the peak in September 2023 of 4.5%. Economic growth forecasts were revised downward to +0.9% for 2025 and +1.2% for 2026, reflecting weak exports and investment.EU retail sales volumes fell -1.6% in January from the same month a year ago.In Australia, tropical cyclone Alfred has slowed its move toward the Brisbane coast but is still generating damage and will do for longer, even if it actually losing some of its destructive power. Tens of thousands of people are without power now.Container freight rates fell another -3% last week from the week before to be -30% lower than year ago levels and now 'only' +76% above pre-pandemic levels. Bulk freight rates were up +13% in the week however but down -36% from a year ago.Today the UST 10yr yield is now at 4.29%, up +1 bp from yesterday.The price of gold will start today at just over US$2917/oz and little-changed from yesterday.Oil prices are down -50 USc to under US$66/bbl in the US and the international Brent price is just under US$69/bbl. Lower expected demand expectations are the reason.The Kiwi dollar is now at 57.5 USc and up +50 bps from yesterday. Against the Aussie however we are up +10 bps at 90.5 AUc. Against the euro we are down another -20 bps at 53.1 euro cents. That all means our TWI-5 starts today just over 66.7, and up +10 bps from yesterday.The bitcoin price started today at US$90,265 and up a net +0.3% from this time yesterday. Volatility over the past 24 hours has been moderate at +/- 2.5%.You can find links to the articles mentioned today in our show notes.You can get more news affecting the economy in New Zealand from interest.co.nz.Kia ora. I'm David Chaston. And we will do this again on Monday.

Kia ora,Welcome to Wednesday’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.And today we lead with news the tariff war mess is getting messier.First up, the overnight dairy auction came in a bit better than the futures market suggested it might. This event offered lower volumes at the back end of the current dairy season, and prices eased just -0.5% in USD terms from the last full event, but were up +1.0% in NZD terms. WMP eased -2.2% and that was as expected but butter and the cheeses made better gains than expected. Buying out of China was modest, but there was raised interest from both Europe and the Middle East. In the circumstances this was a solid overall result.Most other commodity prices are taking sizeable hits from the now-daily tariff-war battles. Behind all this is the expectation of falling demand as the US economy makes a sudden detour into recession. China's retaliation on US agricultural exports have seen sharpish falls in wheat and soybean prices.The impacts of the trade war haven't hit US retail sales yet - unless you think American consumers are stocking up ahead of the inflationary effects. There were up +6.6% from the same week a year ago.But they are showing up in sentiment surveys. Today's release was for the RCM/TIPP economic optimism index, and that retreated notably. This index rose in November, but has essentially retreated since and is now net-negative and a five month low.The American need for more warehousing and higher inventories is driving their logistics industry to a three year high. The components that weigh on productivity are getting the gains.The US is using a "fentanyl crisis" (one actually in retreat and one driven by American demand) as an excuse to impose increased tariffs. That alone will be inflationary. The counter-measure responses by Canada, Mexico, and now China will distort large parts of the American economy, and have global resonances.The US tariffs are expected to raise the costs of American carmakers by more than US$60 bln, and will drive most into losses, and may even kill some (like Stellantis). Car demand is expected to fall -12% in the US as a result of the needed higher prices.Financial markets continue to react in a negative way. They have given up any post-election gains, and more. Things could get much worse quite soon. Congress is nowhere near to agreeing a budget funding deal.Meanwhile across the Pacific, Japanese consumer sentiment is falling back too now, and is back to where it was two years ago.On the Australian east coast Cyclone Alfred is barrelling towards Brisbane and northern NSW. It is expected to make landfall as a category 2 storm late on Thursday or early Friday and would be the first tropical cyclone to impact NSW since Nancy in 1990.Today the UST 10yr yield is at 4.19%, down -4 bps from yesterday.The price of gold will start today at just under US$2912/oz and up +US$20 from yesterday.Oil prices are down -US$2/bbl to US$69.50/bbl in the US and the international Brent price is just on US$70.50/bbl. Lower expected demand is why this price is soft.The Kiwi dollar is now at 56.2 USc and down -10 bps from yesterday. Against the Aussie however we are up +30 bps at 90.5 AUc. Against the euro we are down another -30 bps at 53.3 euro cents. That all means our TWI-5 starts today just over 66.1, and down -10 bps from yesterday.The bitcoin price started today at US$82,930 and down a net -7.9% from this time yesterday. Volatility over the past 24 hours has been extreme at +/- 5.2%.You can find links to the articles mentioned today in our show notes.You can get more news affecting the economy in New Zealand from interest.co.nz.Kia ora. I'm David Chaston. And we will do this again tomorrow.

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.And today we lead with news chaos has consequences, but they seem to be coming faster than many thought. The giant US economy is resilient, but not immune to the consequences of misguided policy decisions.Regular readers will know we regularly track the Atlanta Fed's GDPNow signals. Today that has suddenly sifted from expecting a +3.0% Q1-2025 expansion with the data on hand at the start of February, to a sharp -2.8% contraction as the latest data comes in for the US economy.We have been noting the slide in the granular data over the past week or so in these reports. Today there was another from the ISM PMI for February. Specifically, new orders in their factory sector took a sharp turn into contraction as they report demand is weakening fast. The overall PMI rose in this report, but due to production and inventories. Shrinking new order levels are not going to sustained that however.It was a different story for the internationally benchmarked S&P/Markit US factory PMI which is still reporting an expansion, and a good one. But this one isn't supported by the wider series of data over the past few weeks of weak new order levels (other than for aircraft) and rising inventories. Nor the imbalance between household spending and disposable incomes. The Atlanta Fed is signaling these are turning the US growth into reverse.We won't actually know for some weeks yet of course, but it seems the Biden prosperity is being turned into a Trump/Musk contraction.And more uncertainty is on the way. Congress has less than two weeks to extend a federal funding deadline, but lawmakers are arguing over whether the Whitehouse will really spend the money they approve.The February Canadian PMI turned suddenly negative too in response to the tariff war outlook. Later today, the US is expected to impose the threatened tariffs, even though they earlier promised to delay them to the start of April. Consistency and promises are loose ideas in today's Whitehouse.There were a wide set of early factory PMIs for a number of Asian economies and they all showed very little change (and only minor variations around the expansion/contraction fulcrum). This includes reports for Japan (49.0), Malaysia (49.7), Thailand (50.6), Vietnam (49.2) and Taiwan (51.5). The tariff war impact are yet to hit. In fact, Indonesia was a bit of an outlier, recording a very good rise (53.6), but it enabled the overall ASEAN group to record a good rise.India's PMI's signaled a mild slowdown from their fast expansion rate.Singapore's SIPMM PMI recorded a minor expansion in February.The official China factory PMI came in at 50.2, an improvement for February from January's contraction. This was backed up by the independent Caixin factory PMI which came in with a slightly faster expansion (50.8) in its survey. This is consistent with the US import data for January and suggests the US import data will be very high again in February.In Europe, their inflation rate eased to 2.4% in February, down from a six-month high of 2.5% in January but slightly above market expectations of 2.3%. But there is a wide range, from 1.4% in democratic Denmark to 5.7% in autocratic Hungary. For the EU overall it was running at 2.8%, for the euro area 2.4%.Europe's overall PMI is still contracting, but the drivers of their contraction eased somewhat in February.In something of a surprise, the TD-Melbourne Institute tracking of inflation and cost of living in Australia reported a -0.2% drop in February from the prior month, after a +0.1% rise in January. Most thought a rise was on the cards. But on an annual basis inflation is still running in the 2-3% range.Also turning negative in February from January was the job ad series from ANZ/Indeed. It was down -1.4% from January, but at lease it wasn't down the -6.9% it was in February 2023 from January 2024.CoreLogic is reporting that the Aussie housing market stabilised in February, with small but consistent house price rises in the month in almost all main centers, rolling back some of the quarterly and annual falls in some of their larger cities. The one RBA rate cut is getting the credit for the sentiment improvement.By the way, it seems the expectation for an Australian election is narrowing to an early even, maybe on April 12In the face of US mis-steps, policy markers from Canada to China are readying plans for a global downturn. And high on their agendas are looser fiscal and monetary policies to insulate their people from the worst effects. The US is also moving to much looser fiscal policies with large tax cuts for the wealthy, and likely ballooning deficits. We are entering the era of huge distortions, and it is unlikely to be pretty.Today the UST 10yr yield is at 4.18%, down -2 bps from yesterday.The price of gold will start today at just un

Kia ora,Welcome to Monday’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.And today we lead with news the global economy seems to be settling back into a low growth phase on the back of the sharp rise in policy uncertainty in the US.But first, in the week ahead we will get our December trade balance update and data on building permits for January. And the first of the quarterly data sets building for our March 19 GDP result for Q4-2024 will come in, this one recording the construction work completed in the quarter. All relatively minor. There will also be another full dairy auction on Wednesday.Internationally the week will end with the US non-farm payrolls report for the US, for February (where a modest gain of +133,000 is now expected), more US PMI data plus factory order data. Tariff action may well overshadow these however. In Europe it will be all about their ECB decisions (expect a -25 bps rate cut), and inflation updates. Australia will release Q4-2024 GDP results, and trade balance data, as will Canada and China.Over the weekend China released its February PMI data and it was not negative. Their official factory PMI shifted back to a very minor expansion (although that is probably being generous). Their services sector is also officially expanding, also minor.And minor as well was the rise in South Korean exports, much less than expected in February. This came off the back of the unexpected January slump, one that was deeper than first reported. Although South Korean export growth been generally trending lower for about a year now, so have their imports, and that allowed them to report their second highest current account surplus ever.India reported Q4-2024 GDP results and those came in at a +6.2% rate, better than the +5.6% in Q3, but just missing analyst estimates of +6.3%.In the US, the widely watched PCE inflation level came in at 2.5% for January, down from 2.6% in December, and back to November's level. (The US CPI rate for January was 3.0%.) From a year ago, personal disposable incomes were up +1.8% and personal expenditures up +3.0%, so this isn't tracking in a favourable direction now. People will notice that and take household budget actions, such as increasing debt or cutting spending. When uncertainty levels are high, spending cutbacks are the more likely.The sharp jerk in trade policy direction has brought sharp changes in American commercial behaviour. First there was a large spike in imports, up 12%, driving their merchandise trade deficit to a mammoth -$US$153 bln in January. That is an all-time record and by a country mile.Secondly, American wholesale inventories jumped in January, especially for consumer goods which were up +2.1% from a year ago. Retail inventories rose even faster, up +5.1%.The Chicago PMI, which was in deep contraction over the December/January period recovered in February, but it is still contracting, just less so.The Trump administration designated importing timber a "national security issue" justifying new tariffs. They also said XRP (Ripple), SOL (Solana), and ADA (Cardano) would be in their new US crypto strategic reserve, jumping the prices of almost all cryptos including bitcoin (and their own personal wealth).North of the border, the good Canadian data continues. This time it is their Q4-2024 GDP growth rate, up +2.6% from a year ago, better than the Q3-2024 growth of +2.2%, and much better than the expected Q4 rate of +1.9%. Driving the rise was rising household spending, rising exports, and rising business investment. Of course, things for Q1-2025 are much more uncertain, although it will be interesting to see the echo of the 'Buy Canadian, Bye Americans' movement on their GDP. Perhaps it may give a Q1 fillip?Global air travel is rising fast. International passenger travel rose +12.4% in January from the same month in 2024. That makes it an all-time high, eclipsing pre-pandemic levels. Asia/Pacific travel rose more than +20%.Meanwhile air cargo traffic rose +3.2% on the same basis, although up +7.5% in the Asia/Pacific region.We should probably note that the coal price has fallen to a four year low, and back to prices it first achieved in 2016. And not only are oil prices lower, there are falls too for zinc, lead and nickel too, all core indicators of global factory demand. Lithium is also having trouble getting back up off the canvas.The UST 10yr yield is at 4.20%, down -3 bps from Saturday at this time, down -22 bps for the week as risk aversion takes hold.The price of gold will start today at just under US$2857/oz and up +US$12 from Saturday. A week ago it was at US$2938/oz so a -US$81 drop since then.Oil prices are little-changed, still just under US$70/bbl in the US but the international Brent price is still just under US$73/bbl. Both prices are -US$1 lower than a week ago.The Kiwi dollar is now at 55.9 USc and down -10 bps fr

Kia ora,Welcome to Friday’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.And today we lead with news trade and tariffs are in the headlines, but their impact of higher inflation and slower economic activity are just starting to be seen.US initial jobless claims rose sharply last week in seasonally adjusted terms, the largest rise in five month. In actual terms they were basically unchanged when seasonal factors would have normally brought a good reduction in claims. These initial claim levels are +10% high that year ago levels and there are now 2.17 mln people on these jobless benefits, also much higher than a year ago.US durable goods orders rose +3.1% in January from December, but there was a sharpish revision lower in the December data. The January level is +4.3% higher than year-ago levels. Non-defense capital goods were up +2.2% from a year ago.The second estimate of Q4-2024 GDP came in unchanged from the first at +2.3% growth. It would have been more but they noticed higher inflation in the period which trimmed the rising nominal expansion in the period.Pending home sales in the United States fell -5.2% in January from a year ago, following a -5% drop in December.And today's downbeat American economic data releases extended to the Kansas City Fed factory survey which fell in February, contracting by its most in five months.The US Administration said China will be hit with a new 10% tariff, the latest salvo in the US president's steadily escalating trade fights. That is on top of the earlier 10% already in place. The President also said he intended to move forward with a threatened 25% tax on imports from Canada and Mexico, which is set to come into effect on 4 March.So it is little wonder that inflation expectations are rising among Americans. Tariffs are a tax on yourself, and higher prices either result from more expensive imported goods, or they allow local producers to face much less price competition so those prices rise too. It will be impossible for the US Fed to ignore, and bond markets aren't either.But north of the border, Canada said weekly earnings are rising faster there. They rose +5.8% in December from a year ago in data released overnight, the fastest pace since March 2021.And staying in Canada, the reaction to the endless Trump insults are generating a "Buy Canada, Bye America" surge, and now apps are sprouting up enabling such choices right in shop and supermarket aisles. Apparently there are export markets for such services, especially in Europe.The tracking of consumer and business sentiment in the EU shows it is either holding or moving up in January. Now almost as may are positive as negative, which is the best they have had in almost three years, and slightly better than expected.With all the US tariff news, it will be no surprise to learn that container freight rates fell another -6% last week, taking them -30% lower than year-ago levels, and now only +85% higher than pre-pandemic levels. Usage of the Suez Canal is normalising now too. But bulk cargo rates shot up +32% last week from the week before to be -40% lower than year-ago levels.The UST 10yr yield is at 4.29%, up +2 bps from yesterday at this time.The price of gold will start today at just under US$2875/oz and down -US$35 from yesterday.Oil prices are up +US$1 at on US$70/bbl in the US and the international Brent price is now under US$74/bbl.The Kiwi dollar is now at 56.5 USc and down -60 bps from yesterday. Against the Aussie we are unchanged at 90.3 AUc. Against the euro we are down -10 bps at 54.2 euro cents. That all means our TWI-5 starts today just over 66.5, and down a net -40 bps from yesterday.The bitcoin price starts today at US$84,968 and -2.3% from this time yesterday. It is currently very much in a bear phase with prices only rising when there is minor volume, but falling sharply when there is high volume. Sellers are choosing their timing, and there are a lot of them. Volatility over the past 24 hours has been moderate at +/- 2.8%. You can find links to the articles mentioned today in our show notes.You can get more news affecting the economy in New Zealand from interest.co.nz.Kia ora. I'm David Chaston. And we will do this again on Monday.

Kia ora,Welcome to Thursday’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.And today we lead with news of more data dragging in the US, and more debt plans in China.First up, American mortgage applications fell again last week, and this is despite their benchmark 30 year mortgage interest rate falling further below the 7% level. Lower home loan rates now are not motivating home buyers.And that lack of motivation is really coming through in new home sales, which were down more than -10% in January from December to an annual rate that was -15% below year ago levels. For their new home building industry, this will be a real cause for concern.There was another US Treasury bond auction earlier today, this one for the 7-year Note and it delivered a median yield of 4.15%, lower than the 4.41% at the equivalent auction a month ago. Demand for these issues is not flagging.In China, they are adding capital to their big state-owned banks, maybe as much a ¥1 tln to the six of them. The funds will be raised by new sovereign bond issues. More debt for the state so that banks can lend more debt to clients.And that could just be the start. Bloomberg is reporting that a key policy adviser said China needs to vastly step up its efforts to cleanse the balance sheets of their local governments, giving them the space needed to support consumer spending and strengthen the economy. He said central government should take on at least ¥20 tln worth of local sovereign debt. For reference ¥1 tln is about NZ$240 bln. ¥20 is NZ$4.8 tln. They are talking real money here.Singapore's industrial production rose +9.1% in January from the same month a year ago in a solid turn up, although the gain was pretty much as analysts had expected.Taiwan revised its Q4-2024 GDP growth rate up to +2.9%, and it was a sharp revision higher from the earlier estimate of +1.8%. That means their economic activity expanded by +4.6% in all of 2024.Australia's monthly CPI inflation indicator rose 2.5% in January, unchanged from the prior month but below market expectations of 2.6%. Despite this, inflation remained at its highest since August. But this monthly update probably won't shake the RBA estimate of acceptable inflation in Q1-2025.And staying in Australia, the latest data available, for Q3-2024 released yesterday, buyers from China were the largest group of foreign investment into Australian housing, recording more than AU$400 mln in approvals. This data was for the period ahead of the Australian ban on temporary residents acquiring established homes and Chinese buyers accounted for 30% of it. You have to say it isn't much of a surge - and since then foreign buyer demand has fallen away.The UST 10yr yield is at 4.27%, down -4 bps from yesterday at this time.The price of gold will start today at just under US$2910/oz and recovering +US$16 from yesterday.Oil prices are marginally lower at under US$69/bbl in the US and the international Brent price is still under US$73/bbl.The Kiwi dollar is now at 57.1 USc and down -10 bps from yesterday. Against the Aussie we are unchanged at 90.3 AUc. Against the euro we are down -10 bps at 54.3 euro cents. That all means our TWI-5 starts today just under 66.9, and little-changed from yesterday.The bitcoin price starts today at US$86,928 and down a minor -0.4% from this time yesterday. Volatility over the past 24 hours has been moderate at +/- 2.2%. You can find links to the articles mentioned today in our show notes.You can get more news affecting the economy in New Zealand from interest.co.nz.Kia ora. I'm David Chaston. And we will do this again tomorrow.

Kia ora,Welcome to Wednesday’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.And today we lead with news that is not good. Markets are suddenly gripped by extreme fears of where the world's largest economy is heading.But first up today we can report that the overnight dairy Pulse auction has seen milk powder prices fall. The big fall expected for WMP didn't happen but it was a retreat all the same. The small fall expected for SMP actually came in more pronounced than expected. Both shifts have ended the recent run up in these prices although they probably don't necessarily end the higher trending. Neither correction was enough to unstitch that at this event. But uncertainty is back all the same.US data releases overnight remained resilient. The US retail impulse, as measured by the Redbook survey, held strong, unchanged and up +6.2% from the same week a year ago.The next Richmond Fed factory survey moved up a bit but is now showing an expansion, its most since October 2023. This was a better result than anticipated and in complete contrast to yesterday's Texas survey.The Dallas Fed's services survey eased back, but is still expanding although the trend has turned down mainly because the outlook uncertainty is rising.But none of this data trumped the fast-rising doom mood in the US. The latest Conference Board survey of consumer sentiment was particularly negative. Its reading of consumer confidence registered the largest monthly decline since August 2021. Although other similar surveys like the PMIs and the University of Michigan one showed the same trend, this latest one was worse and has just compounded the negative mood.Risk aversion sentiment is gripping financial markets today. Wall Street is lower, the US Treasury bond prices are surging (yields falling), yield inversions are returning, and the USD is rising, in the normal reaction to a risk-off mood. Everyone from consumers to the financial market professionals know the US is going the wrong way with its public policy.And we should probably note that the Tesla share price is down more than -8% so far today, down -14% in a week and down -20% since the start of the year. The "move-fast-and-break-things" strategy isn't proving to be a good business practice.There was another US Treasury 5yr auction today and the well-supported event delivered a yield of 4.07%, lower than the the 4.29% at the equivalent event a month ago.Elsewhere, Taiwanese retail sales are on the rise, up +5.3% in January from a year ago in a strong showing, much better than expected. Meanwhile, Taiwanese industrial production growth eased, but only back to the levels expected.South Korea's central bank cut its policy rate by -25 bps to 2.75% yesterday. This was as expected. It is their third cut since this rate peaked in January 2023 at 3.5%. Their cutting cycle started in October 2024.In China, exports through Hong Kong fell to a one year low in January, and a sharp retreat from December. This is the weakest growth in exports activity after sharp reversals for exports of electrical machinery, and household appliances.In Australia, regulator ASIC is warning of the risks of investing in private markets, a growing trend recently. The opacity of valuations, liquidity and governance has them worried.And as the Aussies get ready for a probably May election, it has been standard to expect the ruling Labor Party to lose, mainly because incumbents are losing elsewhere. But a new poll suggests a change may in fact not happen there. No doubt they are encouraged by the German election where essentially the center held.The UST 10yr yield is at 4.31%, down -10 bps from yesterday at this time. The price of gold will start today at just under US$2894/oz and down -US$48 from yesterday.Oil prices are down -US$2 at just under US$69/bbl in the US and the international Brent price is now just under US$73/bbl.The Kiwi dollar is now at 57.2 USc and down -20 bps from yesterday. Against the Aussie we are unchanged at 90.3 AUc. Against the euro we are down -40 bps at 54.4 euro cents. That all means our TWI-5 starts today just on 66.9, and down -30 bps from yesterday.The bitcoin price starts today at US$87,309 and down a massive -7.7% from this time yesterday. Bitcoin has dropped about 20% since Trump’s January inauguration, as initial optimism over his crypto-friendly stance fades. Bitcoin wasn't the only crypto to drop. Volatility over the past 24 hours has been very high at +/- 4.8%.You can find links to the articles mentioned today in our show notes.You can get more news affecting the economy in New Zealand from interest.co.nz.Kia ora. I'm David Chaston. And we will do this again tomorrow.

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.And today we lead with news the fading of confidence in the US is spreading, but trailing the international reputation demise.First up today, the widely-watched Chicago Fed's National Activity Index for the US fell in January from an upwardly revised result for December, suggesting American economic growth decreased to below trend. The personal consumption and housing categories, along with the production sector, both retreated.The Dallas Fed's regional factory survey fell sharply in January from a positive expansion in December to quite a negative contraction in this latest survey. New orders led the shift lower, while the company outlook index fell 24 points and the outlook uncertainty index surged to a seven-month high of 29.2 from nearly zero last month. There are some suddenly worried folks in the US oil patch - or as the Dallas Fed themselves noted, businesses are faltering under increasing uncertainty.So investors are shifting to risk-free options. There was a large two year US Treasury auction earlier today, one that was again well supported, It delivered a median yield of 4.13%, down from the 4.17% yield at the prior equivalent event a month ago.Singapore's CPI inflation rate fell to 1.2% in January from a slightly revised 1.5% in the prior month. This was well below analyst expectations of 2.2% and is the lowest level in four years. (In between, it peaked at 7.5% in September 2022, but it has been falling since.) Lower food prices were a key contributor in this January result.Locally, we should probably note that the annual maintenance of the Cook Strait power cable has been putting huge pressure on an already stretched power supply. There was a very wide divergence in pricing between the Islands yesterday (very high in the South Island in the early afternoon) and a "low residual notice" was issued. (H/T TR.)The UST 10yr yield is at 4.41%, down -2 bps from yesterday at this time.The price of gold will start today at just under US$2942/oz and up +US$7 from yesterday.Oil prices are up less than +50 USc at just under US$71/bbl in the US and the international Brent price is now just under US$75/bbl.The Kiwi dollar is now at 57.5 USc and up +10 bps from yesterday. Against the Aussie we are unchanged at 90.3 AUc. Against the euro we are also unchanged at 54.8 euro cents. That all means our TWI-5 starts today just on 67.2, and up +10 bps from yesterday.The bitcoin price starts today at US$94,565 and down -1.1% from this time yesterday. Volatility over the past 24 hours has been modest at +/- 1.4%.You can find links to the articles mentioned today in our show notes.You can get more news affecting the economy in New Zealand from interest.co.nz.Kia ora. I'm David Chaston. And we will do this again tomorrow.

Kia ora,Welcome to Monday’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.And today we lead with news that 100 days of mayhem has not only killed the global leadership position of the US, Americans themselves (consumers and business) are reacting by turning sharply defensive.The US dollar is under pressure, Wall Street is down sharply, and benchmark bond yields are dropping hard.However, before we get into that, the week ahead will bring a relatively light set of data. In the US it will mostly be about durable goods orders in January, a second revision for the US Q4-2024 GDP, and personal income & spending updates. Elsewhere India and Canada will also update their GDP and Australia will release its CPI data. There will be business and consumer confidence data for New Zealand at the end of the week too.Over the weekend, the US February PMI shows that output growth is faltering and payrolls are declining, as optimism slumped as costs rise. Their services sector is now contracting and at a 2 year low, their factory sector is expanding however but only back to its mid-2024 levels.And it isn't any better for American consumers. The final survey results for the University of Michigan consumer sentiment tracking have come in weaker than the 'flash' result which indicated a sharpish turn lower. In fact it is now -10% weaker than in January, -16% weaker than a year ago. American consumers are spooked. One reason is that they see higher inflation ahead. The final reading for this indicates consumer prices are expected to be +3.5% higher in a year, a worsening of the 'flash' February result we reported earlier of +3.3%.January existing home sales slumped nearly -5% too from December, although they were up slightly from the same month a year ago. But the year-on-year improvement is being whittled back.And new homes are likely to get more expensive in the US with global tariffs to be imposed on softwood timber.Now more of Trump's billionaire backers are having second thoughts about what they funded. And about-to-retire Warren Buffet issued his shareholder letter over the weekend, with some clear criticisms of Trump and his tax-avoiding accomplices. Buffet said paying taxes is patriotic and essential for a functioning society, and his companies paid US$26.8 bln in 2024, alone 5% of all corporate taxes in the US - and far more than all the tech companies combined. Trump is going into bat to ensure those tech companies don't have to pay any taxes in the foreign companies they operate in.In Canada retail sales volumes were up +2.5% in December, up +3.9% in value terms from a year ago. This is actually quite an impressive result. This will be an interesting metric to watch in future given the nationwide push by Canadians to shift away from buying American-made products in protest at the insults launched by the US President.In Japan, they finally have inflation, real inflation this time. It climbed to 4.0% in January from 3.6% in the prior month, which is their highest reading since January 2023. Food prices rose at the steepest pace in 15 months up 7.8%, with fresh vegetables and fresh food contributing the most to the upturn. No doubt their central bank will react to this sharper than expected move.Despite that, the Japanese February PMIs show improvements in activity in both their services and factory sectors, with their services sector expanding at a healthy rate for a developed economy, and their factory sector contracting less.India is still expanding fast. Their February PMIs show a better-than-January rise for their services sector, and a weaker-than-January expansion for their factory sector. Both expansions are the envy of most other countries, even if it is from a low base.The EU PMI survey for February recorded a small expansion, but it also records their fastest input cost inflation since April 2023. The overall expansion recorded is largely due a recovery in the German factory sector.And speaking of Germany, they have been voting in federal elections this weekend. Counting is underway and it seems no party won a majority. The conservative CDU won the largest boc and the far-right AfD came in second according to exit polling. But as all other parties have declared they won't work with the revivalist Nazi party, they are in for a long negotiation period trying to form an MMP government. A grand coalition remains a possibility.In Australia, who will probably go to the polls themselves in May, their February PMIs report an improving economic activity situation, with their services activity at a six month high, and their factory PMI at a 27 month high. However, to be fair, neither levels are particularly strong compared to other countries.The UST 10yr yield is at 4.43%, up +1 bp from Saturday at this time. The price of gold will start today at just under US$2935/oz and down -US$3 from Saturday.O

Kia ora,Welcome to Friday’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.And today we lead with news that while Trump is playing Putin's puppet, his lieutenants are setting the stage for a new global bout of stagflation - higher tariff-induced costs for little or no economic expansion. Wall Street is starting to price in what is increasingly likely to lie ahead. The USD fell.US jobless claims came in lower last week than the week before, with all the decrease accounted for by seasonal factors. Markets had expected an even lower level from those seasonal factors, so this result was a disappointment. There are now 2.2 mln people on these benefits, a rise, when a season decrease was expected. For most of 20025 this level has been tracking higher than in 2024.The regional Philly Fed factory survey expanded in February, but at far less a rate than in January. A fall-off in the new order component explains most of the change.Meanwhile, the Conference Board tracking of leading index metrics shows a larger fall-off than expected and a negative outlook.Also lower (than a month ago) is the Atlanta Fed's GDP Now tracker.And we should also probably note the -6% fall in the Walmart share price overnight. It is dawning on markets that the new public policy settings are fertile ground for stagflation - inflation with no real growth. Retailers like Walmart are in the front line of that, and their latest outlook really disappointed markets even as they reported improved current results.Canadian producer prices rose rather sharply in January from December, and were +5.8% higher than year-ago levels. To be fair, some of this is base effect (January 2024 fell -3%) but the recent trend is higher too.Taiwanese export orders fell in January from December and came in -3% below year-ago levels. Analysts had expected them to hold at last year's level. But to be fair, they did rise in local currency; it was the USD change that showed them dragging.In the EU, the consumer mood is improving, largely around the expectation that ECB interest rate cuts will continue. Their sentiment tracking shows it at its best level in four months and this survey came in much better than observers were expecting. But despite all that, it is still net negative as it has been 'forever'.China kept its February Loan Prime Rates unchanged at their record low levels.In Australia, their employed workforce grew by +44,000 in January, above what was expected (+20,000), but less than the December gain (+60,000). But there was a virtuous twist to the January levels with a shift to full-time roles, with +54,000 more of them, and part-time roles shrank -10,000. Average weekly earnings rose +4.6% from a year ago. But high tax rates and inflation at 3.0% will mean most workers felt they just stayed even. (For perspective the NZ jobless rate is 5.1%.)And staying in Australia, the SA State Government and the Federal Government have "seized control" of the Whyalla steelworks - essentially nationalising it. And they are having to tip in AU$2.5 bln to keep it afloat. Its British owner has had a very chequered history.And we should probably note that key Aussie pillar bank NAB has seen its share price fall -15% in a week. CBA is down -6.5%, Westpac is down -11% and ANZ is down -8.0% over the same period. Aussie bank shares are being re-rated lower, and because they are very widely held in Aussie superannuation and KiwiSaver portfolio's savers will notice.Container shipping freight rates fell -10% last week as the puff goes out of global trade, especially on trans-Pacific routes. These overall rates are now -26% lower than year-ago levels, even if they are still double pre-pandemic levels. But with weak trade out of China, these rates will likely fall much further, and quite quickly. Although they remain historically low, bulk cargo freight rates rose +16% last week, although remain -48% lower than year-ago levels.The UST 10yr yield is at 4.50%, down -6 bps from yesterday at this time.The price of gold will start today at just under US$2943/oz and up +US$15 from yesterday, and again close to its all-time high of US$2955/oz.Oil prices are up +50 USc at just under US$73/bbl in the US and the international Brent price is unchanged at US$76.50/bbl.The Kiwi dollar is now at 57.6 USc and up +50 bps from yesterday. Against the Aussie we are also up +10 bps at 90 AUc. Against the euro we are up +20 bps at 55 euro cents. That all means our TWI-5 starts today just over 67.2, but unchanged from this time yesterday.The bitcoin price starts today at US$97,763 and up +1.7% from this time yesterday. Volatility over the past 24 hours has again been modest at +/- 1.4%.You can find links to the articles mentioned today in our show notes.You can get more news affecting the economy in New Zealand from interest.co.nz.Kia ora. I'm David Chaston. And we will do this again on

foreign investors, both friends an foes, are quitting their exposure to the new Russified US.But first up, the Redbook tracking of American retail sales shows they were up +6.3% last week from the same week a year go. This is a heady gain outside the seasonal shopping windows. Buyers may be trying to insulate themselves ahead of the inflation that will flow from impending tariffs. Last week's gain was twice what it was a year ago, and also higher than the same week two years ago. Some of this defensive "doom spending" is being done with higher credit card debt.They aren't spending on new housing. American housing starts slumped -9.8% in January from the prior month and are also lower year-on-year. The rise we noted in December was an outlier over the past year, not sustained.And they aren't spending on switching houses either. Mortgage applications fell by -6.6% last week from the previous week, the sharpest decline so far this year. Mortgage interest rates are staying close to the 7% mark - plus there is rising uncertainty over the future status of Fannie Mae and Freddie Mac. The new Administration wants to sell these two mortgage infrastructure behemoths to their billionaire supporters. Borrowers supported by such loans, common in the US, may be facinging an unwelcome future surprise. American 30 year fixed mortgages, only possible because of Fannie Mae and Freddie Mac, have an uncertain future.There was a well-supported, but relatively small US Treasury 20 year bond auction earlier today and that brought a yield of 4.77%, down -9 bps from the median yield of 4.86% at the equivalent auction a month ago.Foreign holdings of US Treasury paper is falling. December data was released overnight, showing total holdings are now US$8.5 tln, down from US$8.6 tln just before the election. Japan, the largest holder and only one holding more than US$1 tln, cut its exposure -5% from a year ago. China cut theirs -7% to its lowest level in more than 15 years.And the more the US President talks up Russian propaganda points, the more unstable this is likely to become. The locals are worried.Across the Pacific, Japan's core machinery orders fell -1.2% month-on-month in December, the worst reading in four months. The latest reading also reversed from a +3.4% rise in November. Markets had expected a slight +0.1% gain.China’s new house prices in 70 cities fell -5.0% year-on-year in January, but that was an easing from a -5.3% drop in the previous month. It was also the smallest decline since last July. But prices in icon cities like Beijing are falling faster now. However Shanghai was an exception with prices there rising.In Indonesia, as expected their central bank kept its policy rate unchanged at 5.75%. Inflation is under control there (under 1%) and their currency is stable, still at the same level it was in mid 2024.In the UK, inflation is rising, hitting 3.0% in January, up from 2.5% in December in a jump that wasn't expected. A year ago it ran at 4.0%, so a fall from then.The UST 10yr yield is at 4.56%, up +2 bps from yesterday at this time. The key 2-10 yield curve is steeper at +26 bps. Their 1-5 curve is steeper at +16 bps. And their 3 mth-10yr curve is also steeper at +23 bps. The Australian 10 year bond yield starts today over 4.58% and up +3 bps from yesterday. The China 10 year bond rate is now at 1.69% and down -1 bp. The NZ Government 10 year bond rate is now over 4.69%, up another +3 bps from yesterday.Wall Street is marginally lower in its Wednesday trade. Overnight European markets all fell ranging from Frankfurt's -1.8% to London's -0.6%. Tokyo ended its Wednesday trade down -0.3%. Hong Kong was down -0.1%. Shanghai however rose +0.8%. Singapore ended up +0.2%. The ASX200 ended its Wednesday trade down another -0.7%, whereas the NZX50 ended down only -0.1%.The price of gold will start today at just under US$2928/oz and down -US$3 from yesterday.Oil prices are up +US$1 at just over US$72.50/bbl in the US and the international Brent price is now at US$76.50/bbl.The Kiwi dollar is now at 57.1 USc and up +10 bps from yesterday. Against the Aussie we are also up +10 bps at 89.9 AUc. Against the euro we are up +20 bps at 54.8 euro cents. That all means our TWI-5 starts today just over 67.2, and up +30 bps from this time yesterday, also partly helped by a gain against the yen.The bitcoin price starts today at US$96,136 and up +1.4% from this time yesterday. Volatility over the past 24 hours has been modest at +/- 1.8%.

Prime Minister Christopher Luxon visiting India before China could be seen as an insult in China, Beijing-based New Zealander David Mahon says. But he says China's recently announced strategic partnership with the Cook Islands, through which NZ was kept in the dark, shouldn't be viewed as insult to, or provocation of, NZ.Mahon, who is Managing Director of Mahon China Investment Management and has lived in China since 1984, spoke to interest.co.nz in a new episode of the Of Interest podcast.Luxon, who before the 2023 election said achieving a free trade agreement with India would be a major strategic priority for a National government, is set to visit India next month. He's yet to visit China as Prime Minister, but is expected to do so this year."If the Prime Minister had gone to China and conferred upon it as a great power the respect it deserved in the last year or so of his tenure, it'd be fine. But it's almost a statement of a diplomatic insult not going to China before going to India," Mahon said.He said potentially the prospects for NZ products in China over the next two to three years are very good, with China retaining a great need for protein, wanting to buy seafood, and NZ logs still selling reasonably well.However, Mahon suggested after a good relationship with China for many years, highlighted by the 2008 Free Trade Agreement (FTA), NZ is now seen as "a country of diplomatic infidelity.""And for most of my life, we've been the opposite of that. Under Helen Clark, John Key, Jim Bolger, we were the country that was respected. Now people are scratching their heads and saying, what's wrong with New Zealand? It seems to have lost its sincerity, its sense of loyalty."The recent signing of a China-Cook Islands comprehensive strategic partnership, which the NZ Government was kept in the dark over, shouldn't be viewed by NZ as an insult or provocation from China, Mahon said. The Cook Islands is a self-governing state in ‘free association’ with NZ with its citizens having NZ passports."...what China is determined to do is to make sure that it retains this relationship with New Zealand, although New Zealand is struggling in many ways to hold up its end.""We shouldn't be too peevish that they [the Cook Islands] want to do a deal with someone with more money than us," Mahon said."In the end, China is going to invest throughout the Pacific, where it can. Part of it is that it wants to express its influence."The Cook Islands-China agreement reportedly includes plans for co-operation on seabed mining, the establishment of diplomatic missions and preferential treatment in regional and multi-lateral forums, but excludes security ties.An attraction of the Cook Islands deal for China will "definitely" be minerals, Mahon said."If you go back to the technological revolution, which is really what's occurring in Chinese manufacturing, they need these minerals very much," said Mahon. "China is actually very poor in resources."'China is full of Deep Seeks'Meanwhile, Mahon said recent surprise around Chinese artificial intelligence (AI) company Deep Seek highlights westerners taking their eye off China and its burgeoning technology sector."China's full of Deep Seeks. There are companies in China, the names of which we just have never heard of, that are about to change major sectors that influence our lives."So Deep Seek is like the first, I don't want to say shot across the bows because it makes a sort of military metaphor, but it is a flare, a signal.""This is what China's been focused on in the last 10 years. Getting away from making nylon socks and teddy bears and cheap stuff and making really good technology, really sophisticated technology. And so this is what's going to come out of China now in waves and make all our lives cheaper in terms of buying stuff that's important to us," said Mahon."And it's going to be a major challenge to the major tech companies of the West, creating the kind of competition that markets run on. Innovation's driven by it. So this should be perceived as a positive thing."In the podcast audio Mahon talks about these issues in more detail, plus this week's meeting between President Xi Jinping and Chinese business leaders, the "shameful scandal" of NZ immigration and visas "violating the spirit" of the FTA, China's relationship with the United States in the time of Donald Trump's second presidency, tariffs, trade war, and the "ghastly concept" of potential military conflict between China and the US, possibly over Taiwan."China doesn't want a war. China doesn't want to invade Taiwan. If China were to invade Taiwan, it would be out ofthe global financial system within hours. China within six months would face a massive economic crisis," he said.*You can find all episodes of the Of Interest podcast here.

Kia ora,Welcome to Wednesday’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.And today we lead with news inflation is still not beat and the new tariff wars are messing with when that might happen.First up today, there was another dairy auction, and this one came in weaker than the derivatives markets had anticipated. Prices slipped overall by -0.6% in USD terms and by -1.5% in NZD terms. It was a much lower SMP price that was the surprise undershoot, down -2.5% from the prior event and last week's Pulse event. Cheddar cheese also took a -3.4% tumble, whereas the WMP price was only -0.2% lower than the last event, but it didn't fall as much as the derivatives market anticipated. Going the other way, there was a -2.2% rise in the butter price, taking it to almost matching its record high in June 2024. It is at its record high in NZD. Overall, of note today, "North Asia" (ie China) returned with renewed demand to be the top buyer, after largely sitting on the sidelines recently.In the US, the New York region factory survey turned from a negative to a positive expansion in February, a continuation of an improving trend that started in early 2024 but one that has been volatile.But their national survey of house builders turned more cautious in February, hurt by tariff-talk and the expected resulting inflation.In Canada they reported January CPI inflation, and that came in at 1.9% and pretty much as expected. But the "trimmed mean" core rate came in at 2.7%, the one the Bank of Canada follows, above the December level of 2.6% and well above the expected 2.5% level. This is going the wrong way for them and they may now skip the expected March rate cut.We should probably note that German business sentiment rose in February, ahead of this weekend's federal elections, on the hope that a new government won't get stuck in coalition paralysis. More broadly, EU business sentiment is rising too.The Reserve Bank of Australia cuts its policy rate by -25 bps to 4.1%, much as expected by financial markets, citing progress on getting inflation down towards its target range. It was their first cut since 2020. But it was a hawkish cut, and post-election there may not be any more until the clear inflation pressures ease, especially those expected from the looming tariff war. Despite that, financial markets are still pricing in at least two more rate cuts in 2025.The UST 10yr yield is at 4.54%, up +5 bps from yesterday at this time.The price of gold will start today at just under US$2931/oz and up +US$33 from yesterday.Oil prices are up +50 USc at just over US$71.50/bbl in the US and the international Brent price is now at US$75.50/bbl.The Kiwi dollar is now at 57 USc and down -40 bps from yesterday. Against the Aussie we are down -30 bps at 89.8 AUc. Against the euro we are down -20 bps at 54.6 euro cents. That all means our TWI-5 starts today just over 66.9, and down -30 bps from this time yesterday and has been among the largest devaluers over the past 24 hours.The bitcoin price starts today at US$94,789 and down another -0.7% from this time yesterday. Volatility over the past 24 hours has been modest at +/- 1.1%.Join us at 2pm this afternoon for full coverage of the RBNZ's Monetary Policy Statement. And before that, we will have the January REINZ results at 9am.You can find links to the articles mentioned today in our show notes.You can get more news affecting the economy in New Zealand from interest.co.nz.Kia ora. I'm David Chaston. And we will do this again tomorrow.