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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4 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.
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