Here's our summary of key economic events overnight that affect New Zealand 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 Australia, regulator ASIC is suing Australia's largest superannuation fund for delayed, unfair and inefficient processing of death benefit transfers for almost 7000 people. It is far from the first time regulators have had to step in to enforce proper operations. AustralianSuper is the world's 16th largest retirement fund at AU$340 bln and is essentially controlled by Australian unions, although its trustee is formally owned by the ACTU, and the employer peak body Australian Industry Group.
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 key 2-10 yield curve is a little flatter at +33 bps. Their 1-5 curve inversion is now +1 bp. And their 3 mth-10yr curve inversion is at +2 bps. The Australian 10 year bond yield starts today at 4.51% and up +2 bps from yesterday. The China 10 year bond rate is now at 1.92% and also up +2 bps. The NZ Government 10 year bond rate is now at 4.69%, up +6 bps from yesterday.
Wall Street has stopped falling, up +0.4% on the S&P500. Overnight, European markets were all higher with London up +0.5 and Frankfurt up +1.5%. Yesterday, Tokyo ended its Wednesday session up +0.1%. Hong Kong was down -0.8%, and Shanghai was down -0.2%. Singapore was up +0.2%. The ASX ended its Wednesday trade down -1.3% and that matched the NZX50, also down -1.3%.
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%.
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