Here's our summary of key economic events overnight that affect New Zealand with news global bond yields have eased notably overnight in many economies, as inflation concerns eased somewhat. Although not in the US.
[Please note, there will be no Economy Watch podcast again today due to some equipment failure.]
First up today, the overnight dairy auction brought another good rise, the fourth in a row, up +3.6% in USD terms this time, up almost +4% in NZ terms. Both SMP (+3.0%) and WMP (+2.5%) posted good gains again. But the star the show today was the +10.7% rise for the butter price. This result probably won't change any farmgate payout forecasts, but it will solidify current levels.
In the US, the ADP weekly employment report came in with a +10,250 jobs gain last week.
And the latest NY Fed survey of New York manufacturing businesses confirms that with a good rise.
However, their house builder are less upbeat. Persistent affordability challenges, including high housing price-to-income ratios and elevated land and construction costs, helped push builder confidence lower for the second straight month to start the year.
Meanwhile, there were two Fed speakers out overnight, with differing views. The Chicago Fed boss indicated that rates cuts are likely if US inflation keeps on tracking lower. But another senior Fed spokesperson said rates are likely on hold for the foreseeable future.
Across the border, Canadian inflation seems to be easing, down to 2.3% in January from a year ago. The easing is due to lower gas energy prices.
In Japan, new official forecasts show Japan's debt-servicing costs could take up 30% of their budget in 3 years, with interest payments reaching NZ$450 bln in fiscal 2029.
The release of the RBA minutes of its February 3, 2026 meeting shows them concerned that inflation is not beaten, and that their policies are not currently restrictive enough to weigh against those risks.
The UST 10yr yield is still just under 4.05%, down -2 bps from this time yesterday. The key 2-10 yield curve is flatter at +62 bps (-1 bp). Their 1-5 curve is holding at just under +16 bps (-2 bps) and the 3 mth-10yr curve is essentially still at +36 bps (unchanged). The China 10 year bond rate is unchanged at just on 1.81%. The Japanese 10 year bond yield is down -9 bps at 2.14%. The Australian 10 year bond yield starts today at 4.69%, down another -3 bps today. The NZ Government 10 year bond rate starts today at 4.45%, down -2 bps from yesterday.
Wall Street is back after its long weekend holiday and is -0.3% softer today. Overnight, European markets were firmer between London and Frankfurt's +0.8% rise and Paris's +0.5%. Yesterday Tokyo closed down -0.4%. Hong Kong, Shanghai and Singapore were all on holiday for CNY. The ASX200 ended its Tuesday trade up +0.2%. But the NZX50 ended down -0.7%.
The price of gold will start today down -US$134 from yesterday at US$4858/oz. Silver is down -US$4 at US$72.50/oz today.
American oil prices are down -US$1.50r at just under US$62/bbl, while the international Brent price is now at US$67/bbl.
The Kiwi dollar is unchanged against the USD from yesterday, now just on 60.3 USc. Against the Aussie we are also unchanged at 85.3 AUc. We are marginally firmer against the yen. Against the euro we are unchanged as well at 50.9 euro cents. That all means our TWI-5 starts today little-changed from yesterday, still at 63.8.
The bitcoin price starts today at US$67,530 and down -0.1% from this time yesterday. Volatility over the past 24 hours has been modest at just under +/- 1.8%.
Join us at 2pm today for the RBNZ's OCR review, Governor Dr Anna Breman's first.
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9 Comments
The state of the Aussie finance minister. Answers a few text message while stumbling around try to find out from an aide if savings are net or gross. More like a 14 year than a finance minister. How could someone so inept, not to mention rude, hold such a position. People this lightweight cannot be running a country.
"However, their house builder are less upbeat." Perhaps a much lower flow of illegal immigrants has something to do with it as well?
Perhaps so. The inflow of illegal immigration applied pressure to American industry & society across the board.The cheap labour undercut traditional labour union forces, increased crime and drugs, with associated demand on health and welfare services. How it can be claimed that offenders are not criminals when they have in the first instance broken the US immigration law is beyond farcical. What is truly astonishing though is that it is now clear that only one President has had the ability to react and effectively address the problem.
What? By sending in the brown shirts to detain anyone looking (brown) suspect? And didn't the previous administration send home more illegals than this one.
The order for deportation is for residing in the USA illegally. That is without having met the required immigration criteria. It stands to reason though that ethnicity of the deportees will be pro rata to that of the illegal entrants. If the Biden administration processed more deportees in its four years then it now obviously remains to be seen as to what the current administration will have achieved, in about three years time, when it will have completed its term. Such comparison would of course need to record the relative inflow of illegal entrants during the respective periods.
Built into Immigration Law in the US is an incredibly complex "Due Process". The reason there are 1.6 million with "final orders" for removal still in the country is the inordinate amount of further appeal process granted to each one-for instance a 30 day window to then appeal, and until this administration there was never enough Detention facilities (beds) to hold people with final orders imposed by an Immigration Judge. By late 2026 there will finally be detention facilities built to allow for holding those with Final Removal Orders, but even then if they lawyer up the number and length of further appeals just stretch on and on, and then there is the issue that the 10 million who walked across the border under Biden meant that the Immigration Court system was overwhelmed to the point were the first step in due process would be years and years away before a court date could be scheduled-because everyone once they are in the country they get to plead their Asylum case, but historically less then 7% are granted Asylum-the rest are que jumpers as the Aussie would say. The Aussies it would seem operate a much more streamlined deportation system.
Perhaps a much lower flow of illegal immigrants has something to do with it as well?
That would indeed make already expensive new houses, more expensive, and harder to sell.
KungFu robots steal show at China’s Spring Festival gala
https://www.stuff.co.nz/world-news/360940115/china-unveils-kung-fu-robo…
What the West gets wrong about Chinese manufacturing
https://www.channelnewsasia.com/commentary/china-tariffs-manufacturing-…
Meanwhile...
https://www.stuff.co.nz/nz-news/360939448/moa-point-short-pipe-pumped-o…
A turnaround in the labour market is a sign of an improving economy:
https://www.rnz.co.nz/news/business/587129/company-boss-shocked-as-2500…
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