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 just being classed as "another commodity". Also, even before the latest tariff chaos, the Germans were worried about a Trump America, and talking about relocating its gold reserves out of New York. Those voices are louder now.

Oil prices have dropped another huge -US$4.50 from Friday at just on US$62/bbl in the US and the international Brent price is now just on US$65.50/bbl. This market faces steep demand drops just as it wants to increase production.

The Kiwi dollar is now at 55.9 USc, up +30 bps from Saturday but an enormous -220 bps dump from this time Friday, down -4.3%. Against the Aussie we are down -10 bps at 92.5 AUc and the Aussie dollar took an even larger hit on Friday. Against the euro we up +20 bps but down -150 bps from Friday at just under 51.1 euro cents. That all means our TWI-5 starts today now just on 65.8 and down -120 bps from Friday to its lowest since the brief pandemic dive on March 20, 2020, and before that in March 2011 as the GFC bit hard..

The bitcoin price starts today at US$81,097 and down -3.2% from this time Saturday. 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 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 view

The 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. 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 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 over US$73.50/bbl.

The Kiwi dollar is now at 57.2 USc and unchanged from this time Saturday. Against the Aussie we are unchanged at 90.9 AUc. Against the euro we are also unchanged at just under 53 euro cents. That all means our TWI-5 starts today still just over 66.7.

The bitcoin price starts today at US$82,272 and down -1.9% from this time Saturday. Volatility over the past 24 hours has 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 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 now

US 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 today at US$86,905 very little-changed (+US$39) from this time yesterday. Volatility over the past 24 hours has again been modest at +/- 1.0%.

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 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 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.