Dairy prices slip; US business sentiment mixed; Canada inflation pressure rises; German business sentiment rises; RBA makes a hawkish cut; UST 10yr at 4.54%; gold and oil up; NZ$1 = 57 USc; TWI = 66.9

Here's our summary of key economic events overnight that affect New Zealand 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 key 2-10 yield curve is still at +24 bps. Their 1-5 curve is steeper at +13 bps. And their 3 mth-10yr curve is also steeper at +20 bps. The Australian 10 year bond yield starts today under 4.55% and up +5 bps from yesterday. The China 10 year bond rate is now at 1.70% and up +2 bps bps. The NZ Government 10 year bond rate is now under 4.66%, up +3 bps from yesterday.

Wall Street is back from holiday but with virtually no change in its Tuesday trade. Overnight European markets all rose, a minor +0.2% except London who had a minor dip. Tokyo ended its Tuesday trade up +0.2%. Hong Kong was up a strong +1.6%. Shanghai however fell -0.9%. Singapore ended up +0.5%. The ASX200 ended its Tuesday trade down -0.7%, whereas the NZX50 ended down only -0.1%.

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.

The easiest place to stay up with event risk is by following our Economic Calendar here ».