Here's our summary of key economic events overnight that affect New Zealand, 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 Friday'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 conditions 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 in March it was only ¥6.9 bln, a -45% drop 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 also say that their growth outlook has worsened from the escalating trade tensions.
On Thursday, Australia released its March labour market data and there was a good +33,000 rise in new jobs, bouncing back from the February drop. The March data saw the increase evenly split from an increase in full-time jobs and part-time jobs. Their jobless rate unchanged stayed at 4.2%. There are +308,000 more people employed in Australia over the past year, a rise of +2.2%. (New Zealand will release its March labour market data on May 7, 2025 and no-one really expects ours to be flash.)
The UST 10yr yield is now at 4.40%, up +7 bps from this time Saturday. The key 2-10 yield curve has jumped to +66 bps. Their 1-5 curve is now flat. And their 3 mth-10yr curve is a positive +9 bps. The Australian 10 year bond yield starts today at 4.24% and unchanged from Saturday. The China 10 year bond rate is now at 1.66% and up +1 bp. The NZ Government 10 year bond rate is unchanged at 4.53%.
Wall Street is taking it on the chin in its Monday session, down a very sharpish -3.1% on the S&P500, and staying down. The Nasdaq is down -3.6%, the Dow down -3.3%, so a broad retreat. Overnight, European markets were all closed for Easter. Yesterday, Tokyo ended down -1.3%, Hong Kong was closed for Easter, but Shanghai traded up +0.5%. Singapore was closed, as of course were both the ASX and the NZX. All these markets will likely return today in a glum mood.
The price of gold will start today at US$3417/oz, and up +US$90 from Saturday.
Oil prices have fallen (in USD), down -US$1.50 from Saturday to be now just over US$63/bbl in the US and the international Brent price is now just on US$66/bbl.
The Kiwi dollar is now at 60 USc, up +60 bps from Saturday at this time and its highest in six months. Against the Aussie we are up +50 bps at 93.6 AUc. Against the euro we unchanged at just on 52.1 euro cents. That all means our TWI-5 starts today now just under 68 and its highest since mid December.
The bitcoin price starts today at US$86,811 and up +2.6% from this time Saturday. Volatility over the past 24 hours has again been moderate at +/- 2.2%.
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