Here's our summary of key economic events overnight that affect New Zealand with news global financial markets are showing nerves ahead of tomorrow's US CPI data, not only because there is upside risk that will restrain the US Fed from, rate cuts, but also gun-shy after getting non-farm payrolls reports they basically didn't believe. Sanitised US data is a risk no-one wants (other than the White House.)
First in the US, there were 248,000 initial jobless claims last week, a small decrease but the one explained by seasonal factors. There are now 2.215 mln people on these benefits, more than the 2.19 mln in the same week a year ago.
And American existing home sales came in sharply lower in January that the good December level. They ran at a -4.4% lower rate than in January 2025, and even lower than the unusually low January 2024 level. They fell everywhere and was the largest fall in four years, although prices rose marginally from a year ago.
The New York Fed released a detailed review of "who pays" the Trump tariff taxes, and surprise, surprise, they found it is almost exclusively (90%) Americans who pay. Who knew? They also found that after these tariffs, China's share of US imports is basically unchanged. Some people are slow learners - tariff taxes are a tax on yourself. But you have to take stage one economics to learn this stuff.
In India, they released CPI inflation data overnight and it came in at 2.75%, their highest since May. And we should also probably note that protests in India are growing against their recently-agreed free-trade deal with the US.
In China, their Spring Festival / Chinese New Year formally starts on Tuesday, and a lot depends on the consumer spending patterns during this two week annual break. Forward bookings for travel indicate a record level of travel, a sharp jump in international travel, and a preference for independent, non-package holidays. Thailand, Russia, Turkey and the Philippines are getting outsized bookings this year.
Separately, China has rolled back its steep tariff penalty on EU dairy products.
In Australia. consumer inflation expectations rose in February to 5.0%. This follows a seven-month period of below five-per cent expectations. The increase in February is present across a number of inflation expectations measures.
And staying in Australia, chances are rising that extended drought conditions related to the return of an El Niño weather pattern that may come later in 2026. It will be hotter there too. If that occurs, there will be spillover implications for New Zealand, particularly for the rural sector.
Global container freight rates were little-changed last week (-1%), to be -38% lower than year-ago levels. Once again, the key change were weaker outbound China rates. Although shifting in between, bulk cargo rates are essentially unchanged from a week ago, but they are +150% higher than year-ago levels. (But that base was unusually low.)
The UST 10yr yield is now just over 4.11%, and down -6 bps from yesterday in a hard shift to 'safety'. The key 2-10 yield curve is little-changed at +66 bps (+1 bp). Their 1-5 curve is flatter at just under +23 bps (-4 bps) and the 3 mth-10yr curve is also flatter at +43 bps (down -2 bps). The China 10 year bond rate is down -2 bps at just on 1.78%. The Japanese 10 year bond yield is little-changed at 2.23%. The Australian 10 year bond yield starts today at 4.75%, down -3 bps. The NZ Government 10 year bond rate starts today at 4.55%, down -7 bps from yesterday.
Wall Street has started its Thursday with the S&P500 down -1.3%. Overnight, European markets were mixed between London's -0.7% fall and Paris's +0.3% rise. Yesterday Tokyo ended is trade Thursday little-changed. Hong Kong was down -0.9%. Shanghai closed little-changed. Singapore also closed up +0.6%. The ASX200 ended its Thursday up +0.3%. And the NZX50 closed up +0.2%.
The price of gold will start today down -US$122 from yesterday at US$4953/oz. Silver is down a very sharp -US$8 at US$76/oz and even more volatility.
American oil prices are down -US$2 at just over US$63/bbl, while the international Brent price is now just under US$68/bbl.
The Kiwi dollar is down a minor -10 bps against the USD from yesterday, now just over 60.5 USc. Against the Aussie we are up +20 bps at 85.2 AUc. We are down again against the yen. But against the euro we are unchanged at 51 euro cents. That all means our TWI-5 starts today also little-changed, still at 63.9.
The bitcoin price starts today at US$66,288 and up +0.5% from this time yesterday. Volatility over the past 24 hours has been modest at just on +/- 1.7%.
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36 Comments
It would relevant to now canvas the impact of the tariffs on NZ exports to the USA apropos the data revealed by the NY Fed as above. The basic question being have any CIF prices had to be reduced in compensation and/or has volume fallen off due to consumer price resistance.
“tariff taxes are a tax on yourself”
Similar to GST but:
- only on imports
- foreigners pay 10% of it
- you can use it to manipulate other countries.
- doesn't apply to most necessities like food and housing
- helps your own manufacturing be competitive
- Joe Bloggs doesn’t have to do anything unless they are an importer so it’s much more simple than GST.
Personally I think the idea has merit for the US where no one is retaliating. If only they used that revenue to pay off some of their crazy public debt.
GST is a pretty stupid regressive tax too, we aren’t any smarter
Disagree. The US essentially shaped the world as it is today, especially the western world. As the Europeans have identified, the US is now destroying that world order, but only because they voted a uneducated, venal, egotistical, misogynistic prat into the white house. The tariffs are his vergeltungswaffen against the rest of the world for mythical transgressions that exist only in his pea brain. The would never have addressed their deficit, but may have driven them to make the deficit larger.
Some degree of subtlety might have worked, not to punish the countries who export specifically , but support and encourage the redevelopment of manufacturing in the US. I'm not sure they needed it though as the Yanks are very big on buying "US MADE" and most business's understood that it is always better to build at least some of their product in the US if they want to sell them there.
Is the way they shaped the world working for them (or even us)? Maybe 20 years ago it wasn’t too bad, China made the cheap crap and the west made some of the good stuff. But it seems to be heading towards Asia making everything, surely that doesn’t pan out well for the west does it?
By the way I am no Trump fan, the guy is an idiot, but even an idiot can see the status quo will just make the US weaker and weaker, they probably should try something while they can. The other option is to wait until it’s too late then start a war.
No. I don't believe it ever has worked for them or us. They saw an opportunity to change the world order through economics without understanding how the lessons of history applied. Their 'Free Market' economic theories were more destructive than productive. Steve Keen's history lesson in that link is worth watching. But over all I would have to say the Free Market capitalism has undermined democracy and freedom. Ironic isn't it?
"But over all I would have to say the Free Market capitalism has undermined democracy and freedom."
As compared with which alternative?
American's are seeing the alternative play out now. While NZ and Europe are being flooded by Chinese Vehicles and EV's there are virtually none in the US and thus saving tens of thousands of US automotive jobs.All thanks to Tariffs.
This is one of those situations where the benefits accrue almost entirely to those tens of thousands workers, while the (much larger) costs are spread across the rest of society who have to pay more for worse cars. Even the American-made cars get more expensive due to tariffs on materials and lack of competition.
Repeat this protectionist exercise across enough industries and the economy will stagnate.
Saving manufacturing jobs? For how long?
My understanding is that new vehicle cost to consumers has risen sharply in the last 12 months or so, and inventory is at record high - just waiting for the planets to align to deliver lay-offs?
The Multiplier Effect: Which Industries are the Biggest Job Creators?
According to this US study in general each Manufacturing job has a 9 to 1 spill over effect-which is why the Rust Belt was hit so hard when manufacturing shifted to Asia. However, drilling down to Light Truck Manufacturing this study shows a 56/1 ratio of job creation for each manufacturing job. Critical Industry-I would say so.
Does anyone trust any study? I am sure you could find one that says the opposite, for example manufacturing jobs encourage people to do low value work that could be done elsewhere instead of upskilling.
It works both ways doesn't it? They may sell more cars to themselves, but less overseas.
Why the focus on Auto industry and jobs? Yes it is all important from a humanities / social perspective. But it contrubutes under 4% of the US total GDP - which includes the supported jobs and their indirect contribution. Other higher level contributions to GDP are Government, Healthcare and Other Manufacturing.....(each of which are more than double Auto Industry in their contribution)...and might we add. That the former two have been under the wrecking ball recently too. Whether you believe in the GDP indicator or not. It is a levelling metric.
KKN go to yesterdays daily brief and find LMBF's link to Steve Keen's video for the reserve currency and I think you'll get the idea. The system proposed by Keynes would have prevented the stealthy colonisation by the US that occurred I suggest, or at least made it a lot harder.
I think there was also a decent amount of hubris assuming European technological, political and cultural advances would remain significantly ahead of the savages.
My perception is that the US lead the charge to offshoring production to countries with cheap labour, all while championing their leadership in helping lesser developed nations to lift living standards and building/diversifying economies. While those US corporations built their branf and added massive profit mark ups on product sales in developed Western markets.
I recall a study of NIKE talked about when I went back to university in the late 90s. Where a pair of shoes selling in the US for over US$100 cost less than $US$5 to manufacture, shelf ready in Vietnam or some other similar low labour cost country. And then having no qualms shifting production to another lower labour cost country when the benefits of their 'economic development' resulted in rising labour costs and elevated rights of workers in working conditions and human rights - all to save maybe $2 in the cost of production of each pair of shoes.
You can identify the trail. In the sixties made in Japan was fast becoming a feature, followed by Taiwan and Korea. Then others as you say were fed in, even as far flung as Mauritius. Then other great impetus was a combination of fashion and disposables. Being out there in something new and chic became a priority. Just need to take a bit of a trawl through the end of line retailers, Ross, TJ Max to discover the fate of what didn’t sell before the new stuff arrived. For instance my best one XL Nautical reversible, water & wind proof, breathable, yachting jacket with hood original retail US215 bought for $65. That was twenty years ago, still going strong.
ps.Just checked - made in Thailand.
There was also a debate around the wages as to whether they were appropriate, which quickly became more complex than many expected. Manufacture a shoe for $2 - $5 sell for $50 - $100, pay the people who made the shoes 50 cents per hour or less in very poor working conditions. Looks like a form of slavery to the west, but pay them more, perhaps not even to the level we would expect and then what does that do to the local economy?
Well if to continue the theory of the genesis of off shoring being Japan then the pathways of such as Toyota or Nissan became quite incredible. Likewise who in 1960 would predict that Bridgestone would be positioned to buy out Firestone.
GST is a tax on consumption. The tax itself flows through the manufacturing and production processes (either through refunds to a producer for GST paid on items that will be used in production or a zero rate as between producers) and is only paid by the final consumer.
Tariffs apply to production inputs e.g. steel used by car manufacturers in USA. Tariffs therefore increase cost of production and consumption. A great way to kill your industry.
We add 15% to the price of a car. They add say 10% to the cost of some raw materials, maybe 5% to the price of the car. Wouldn't GST be more of a killer?
I guess the main difference is that tariffs apply to something they import, add value, then export (like cars). Maybe like GST there should be a way to claim tariffs back in that scenario.
Gold and especially silver showing extreme volatility. Not for the faint hearted.
I came across something the other day that determined there's 100x more paper silver than actual silver.
To be avoided unless you need it for manufacturing.
Regarding silver: 5 million ounces were just pulled from COMEX vault, yet the paper price plummeted 10%.
There are 300M+ ounces of futures approaching settlement and only 98M ounces left in the vault.
Could be an attempt to lower the cost of cash settlements as we approach a large inventory to delivery divergence.
Trump rolls back the EPA "Endangerment Finding". "Today the single largest act of deregulation in the history of the United States – over $1.3 trillion, the elimination of the endangerment finding – is signed sealed and delivered"
Even the dripping wet lefty WaPo agrees it was a crock enabling bureaucratic overreach for scant benefit.
"For now, free-market-driven innovation has done more to combat climate change than regulatory power grabs like the “endangerment finding” ever did.
The U.S. share of global greenhouse gas emissions has been trending downward since the end of World War II, and the 2009 policy change didn’t meaningfully alter its trajectory. The recent decline has been driven by the embrace of natural gas and renewables, which lower electricity prices when adopted for economic reasons rather than because of government mandates"
https://www.washingtonpost.com/opinions/2026/02/10/epa-is-right-reverse…
That it's share of emissions has gone down isn't the same as them reducing emissions.
Both have happened. US CO2 emission peaked in 2007 and has been declining since despite increase in population the Obama's bureaucratic gravy train "endangerment finding".
Define "free market". Should ruining the environment be free?
There are certain things that a free market cannot price in and the government should. A tax on pollution (in any form) makes the market price the destruction accordingly and consumers choose accordingly. And if that tax is used to offset other taxes, there is no net difference to the average consumer.
I am very keen on free markets. But having a free market doesn't mean you get the right to destroy something that belongs to everyone for free, whether that be sea, air, land, health, climate, etc.
"Free Market" simply means free from government regulation. Run with that to explore the consequences.
In a free market I can build a nuclear power plant next door to your house?
I still think taxes are the way to go. Its basically the free market approach to saving the environment; the government charges for the "use of" the environment on our behalf.
Much better than the government making rules / regulations / exceptions etc, or allowing the destruction of the environment for free.
Disingenuous Jimbo. What market would demand and support a nuclear power station under that economic theory? I hope you're better than that.
umm France? If you are lucky enough to be next to nuclear the locals get a lot of tax benefits and infrastructure. If you are in centralized NZ all benefits are sent to Wellington and nothing stays local.
"Avoine, the commune that hosted the first EDF reactors, for example, saw annual revenue jump from tens of thousands of francs in the mid 1950s up to nine million a year by the time EDF2 and EDF3 were being brought online in 1964–1966. Locals dubbed their town ‘the Kuwait of Indre-et-Loire’."
https://worksinprogress.co/issue/liberte-egalite-radioactivite/
You missed out the innovation part of WaPa "free-market-driven innovation" statement. There were already laws in place for "ruining the environment" and "destroying" - even in free market economies. But I think you know that.
Free market compared to what? The Soviets? The moa hunters?
Free market generally insinuates the market is controlling pricing and production. Compared to the state.
China doing the complete opposite of climate leadership NZ.
"The number of urban residents with access to natural gas had nearly tripled to 484 million by the end of 2024 from 170 million at the end of 2010."
https://x.com/JKempEnergy/status/2021954605882466793
Both crude oil and natural gas production hit all-time highs, with crude oil output reaching 216 million tons while natural gas rising to 263.8 billion cubic meters, it said.
https://www.chinadaily.com.cn/a/202602/03/WS6981dfa2a310d6866eb37435.ht…
All finite.
Just means the day of reckoning comes ever nearer, ever faster.
Only a fool...
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