Here's our summary of key economic events overnight that affect New Zealand with news the US leading index fell again but investors are still ignoring the risks of this unbalanced economy.
US initial jobless claims fell to 207,700 last week, slightly more than seasonal factors would have indicated. There are now 2.207 mln people on these benefits, slightly higher than year-ago levels and +5% higher than two years ago.
US exports fell in December from November, and for the third consecutive month. That was primarily because they exported less gold. All up, that took their monthly trade deficit back to the same levels as in 2024 and 2025 and consigning the August to November reductions as anomalies. For full 2025, exports rose +6.2% to US$3,4 tln with nonmonetary gold delivering the largest rise.
Meanwhile Philly Fed factory survey improved in February, and for a second straight month. That means six of the past twelve months recorded a gain. But the February 2026 level is still -15% lower than the February 2025 level. New order levels slipped in the latest month, but so did the elevated cost pressures.
US pending home sales (sales under contract) decreased -0.8% in January from the prior month and were down -0.4% from a year ago. They rose in the West, but were lower in the South in this latest report.
Meanwhile the Conference Board's leading indicator tracking fell again in December, and although by more than expected, not as much as in November. But they did revise the October decline lower.
The minutes of the last US Fed meeting on January 29 were released yesterday, revealing considerably varying viewpoints in this key group. The tension between the need to contain inflation and the desire to support the labour market are clear. Several participants indicated that further reductions in the fed funds rate would likely be appropriate if inflation continues to decline in line with their expectations. Others argued that it may be prudent to hold the policy rate steady for some time. And some even raised the possibility that rate increases could become necessary if inflation remains persistently above target. A majority judged that downside risks to employment had moderated in recent months while the risk of more persistent inflation remained elevated.
Meanwhile, strong demand from subprime customers spurred growth in American unsecured loans last year with their combined balances surging +10% to a new high of US$276 bln. Lower-income consumers are using these loans as a stopgap measure to deal with higher costs of living that have not been followed by similar raises in wages.
Canada's exports rose in December from November but were -6% lower than the same month a year ago. But their imports were unchanged, so their trade deficit eased. Their trade deficit with the US was lower. For all of 2025 their trade deficit widened to C$31 bln.
In Japan, the IMF urged them to keep raising interest rates and avoid loosening fiscal policy further, warning that trimming the consumption tax would erode its capacity to respond to future economic shocks.
Japanese machinery orders surged in December, up at a remarkable +19.1% rate in December (excluding volatile big-ticket items which showed even stronger gains). They are forecasting January-March orders to rise another +6.2%.
China said its second day of holiday travel was busier than the first, up almost +10% on the same period a year ago. This is the first time that the number of daily passenger trips during the 2026 Spring Festival travel rush has exceeded 300 million.
The Indonesian central bank kept its policy interest rate unchanged at 4.75% for the fifth consecutive time in its overnight meeting, in line with what markets were expecting.
In Europe, consumer sentiment improved in February in the Eurozone, continuing the improving trend that started in September.
In Australia, their January labour market data was released yesterday. Payrolls grew by +17,800. Within that, full-time employment rose by +50,500 people, offset by a fall of -32,700 part-time jobs. That takes their employed workforce to a record 14.7 mln. Better, they revised their December jobs gain up. Their jobless rate stayed at 4.1%, a seven month low. A strong labour market, and rising inflation raises the chance of another RBA rate hike.
Global container freight rates were little-changed last week, down a minor -1% to be -31% lower than year-ago levels. Bulk cargo rates are up +8.5% for the past week to be +144% higher than year-ago levels.
The UST 10yr yield is still just under 4.08%, unchanged from this time yesterday. The key 2-10 yield curve is also unchanged at +62 bps. Their 1-5 curve is holding at just over +16 bps (-1 bp) and the 3 mth-10yr curve is just over +40 bps (up +1 bp). The China 10 year bond rate is unchanged at just on 1.81%. The Japanese 10 year bond yield is holding at 2.14%. The Australian 10 year bond yield starts today at 4.74%, up another +4 bps today. The NZ Government 10 year bond rate starts today at 4.42%, up +2 bps from yesterday.
Wall Street is lower with the S&P500 down -0.5% today. Overnight, European markets were all lower between Paris's -0.5% and Frankfurt's -1.0%. Yesterday Tokyo closed up +0.6%. Hong Kong was up +0.5, while Shanghai remained closed. Singapore rose an outsized +1.3%. The ASX200 ended its Thursday trade up +0.9%. And the NZX50 ended up +1.5% and the best of the markets we follow, again.
The price of gold will start today down a minor -US$5 from yesterday at US$5005/oz. Silver is down -50 USc at US$77.50/oz today.
American oil prices are up +US$2 at just under US$66.50/bbl, while the international Brent price is now just over US$71.50/bbl.
The Kiwi dollar is down -20 bps against the USD from yesterday, now just on 59.7 USc. Against the Aussie we are little-changed at 84.7 AUc. We are also little-changed against the yen. Against the euro we are down -10 bps at 50.8 euro cents. That all means our TWI-5 starts today down -10 bps from yesterday, now just under 63.3.
The bitcoin price starts today at US$66,422 and down -1.1% from this time yesterday. Volatility over the past 24 hours has remained modest at just under +/- 1.2%.
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53 Comments
Kiwi dollar is down as market no longer thinks a rate hike this year?
Most likely. Good to see.
New, significant inflationary spike inbound, with lower Kiwi and higher oil.
Bremen/RBNZ to look like total fools/inept, in a few months, as inflation flogs higher 3s to 4% range........
Big OCR hike before mid-year IMHO. They will scuttle around like upset/uncovered cockroaches and hastily recalibrate the hiking cycle rather quickly!!!
Aye oil is the dominant force and what is to result in the Gulf, is the dominant question.
It looks like the play is to topple oil dictators and take over their distribution.
Good update on what's currently going on
Regime change by force? No easy toppling unless the local military is either turned or capitulates as per Libya and Syria. In this case Israeli intelligence will undoubtedly have a large dossier on the whereabouts of political and military hierarchy and the location of strategic infrastructure, armaments and systems. The Americans are not short of regional advice as to the consequences of getting it wrong. Think Bush junior and Iraq in recent times and Libya is hardly a picture book of stability.
Regime change by force? No easy toppling unless the local military is either turned or capitulates as per Libya and Syria
We won't really know what the Americans and Israelis have planned. But we know there's political instability and resentment in the population, and the regime is old and due for retirement anyway.
Another Epstein files distraction. It's all about him. More dead people is not really a problem for this president
Agreed. The tail on the Epstein case runs far deeper and darker than most are equipped to digest. We have only started to scratch the surface.
Behind the veil are truths far more destabilising to the global order than any conflict in the middle east.
Bremen is taking a lot of risk by not raising when CPI is out of band IMO. Although she has said that the global economy looks uncertain and they will need to react if things change, and 3.1% is not something to panic about.
But imagine what would be happening if we had 0.1% deflation (eg 0.1% outside the band in the opposing direction) ie improving affordability of goods and services for people. That is what CPI deflation is. Cheaper goods and services for people - wouldn’t that be nice for people with cash?
But if this happens we would have emergency rate cuts and drama from the RBNZ!!! ‘The world is ending and we must take drastic action immediately!!’
So there is clearly a bias in modern central banks. Happy to cause pain by slowly reducing the quality of life for people by destroying the value of their purchasing power of goods and services via inflation outside their mandated band……. but then also completely fixated on making sure the purchasing power of the dollar never improves by allowing a little bit of deflation. Where goods and services are a bit cheaper.
Why the complete lack of urgency to tame inflation that destroys our purchasing power but absolutely insane responses if we might ever experience improvement in purchasing power by small amounts of deflation?
ps - I know the answer and it’s the reason why everything is in such a mess and it’s all to do with the prioritisation of debt/debt holders. And a reason why private debt to GDP is bonkers and why the housing market is a mess.
Happy to cause pain by slowly reducing the quality of life for people by destroying the value of their purchasing power of goods and services via inflation outside their mandated band
Or.... Is debt the only way we can sustain this quality of life, allowing us to get poorer, slower.
The fundamental issue is the boom bust nature of industrialisation. Production flows where labour is cheaper and infrastructure is newer, and a mature economy tries to shift to more tertiary industry. Then you get financial services, as well as a lot of other swell things like marketing and bureaucracy become where the money is at.
We have a long shopping list of things we say we need, but no actual plan of how to pay for it (except debt).
You’re basically describing what others are calling ‘the ponzi’.
I am?
People using the term usually neglect the inevitable nature of production shifting to where things can be done more efficiently.
They say the "ponzi" is what's keeping them poor, and if not for it, there'd be better jobs, investment and productivity. My view is it's a symptom that allows the entire economy/society to live above its means rather than rationalize it's value.
So if we remove the ponzi, we will get some true price discovery, and most people will discover they're poorer again than they think they are.
You just did it again.
Well, it's hard to talk about a term that gets bandied about with such loose association to its actual meaning.
People seem to thinking ending "the ponzi" will put them in a better position.
I think they'd be in for a big shock.
The problem of declining (net) output cannot be solved by debt (money)...finance does not trump physics no matter how much we believe.
But you gotta spend money to make money!
No you have to produce something of value in order to make money.
I was being sarcastic.
Although if it's a significant piece of capital you need, financing it may be necessary/preferencial.
Rest assured if we just had to boot strap everything, things would be a lot more sparse.
Point being missed....money cannot overcome declining real resources nor the increased proportion of activity required to source/maintain those resources.
'Money' is little more than a rationing mechanism/incentive....and one that relies upon belief.
Exactly - ultimately wealth is only created via improving means of production.
You can BS the system periodically by doing what Painter describes in his responses - but that is all it is..BS that makes a few people rich in the short term while screwing the economy as a whole in the long term.
Pretty much the entire FIRE economy promotion and hype of the past few decades has been BS that has screwed the country. It was never about improving our means of production, but about hyping up asset prices to a point where they become uncoupled from productivity/income generation/long term stability.
They have basically created a fools paradise - and it was pretty easy to spot those fools as they were the ones on here doing all the hyping up of asset prices for their own financial gain - while screwing the country for the generations to come.
Exactly - ultimately wealth is only created via improving means of production.
People have confused ideas of exactly what that means.
Spot on, IO!
And the establishment eCONomists and academia cheerlead this perpetual grand theft from society.
I did economics in the late 90s and half the lecturers sounded more like you than the ones you sat in front of in the 70s.
And still, Pa1nter, you demonstrate, almost every time you comment on this platform, that you have zero clue about the monumental distinction between real money and credit.
At the same time, it remains obvious that you don't understand the fundamental difference it could make to any economy if the money supply was created as credit, and as a public utility, compared to paying out billions every year simply to feather the pockets of privately owned banking cartels, as unearned monopoly rent.
Your attitude demonstrates precisely why the real economies of most Western-facing countries have been raped and plundered for more than a century, simply to reward the giant squidlike corporations and the financial plutocrats, and why none of this ever changes.
You were being misleading, not sarcastic. Bending the truth which is a common theme across society in recent times and a reason why we find ourselves in the mess we do.
I was taking the mickey at the oft cited position that if we just kept deficit spending, we'd eventually get rich.
So when you said
You were being misleading, not sarcastic
And then
Bending the truth
You just made yourself a self fulfilling prophecy.
Hot tip - try using (sarc) after your sarcastic statements. It avoids confusion.
Then that'd remove the point of it.
Imagine watching Blackadder, and they'd have to say it at the end of every other sentence.
Well I didn't realise until now that your account on here was a comedy show, but I do now.
If I didn't laugh, I'd cry.
No you have to produce something of value in order to make money.
Sadly not todays day and age. Plenty of rug-pulls out there for things like random crypto which provides no tangible value to anyone.
And then you use another ponzi example to justify wealth creation with zero productive effort. Which highlights the delusion people are living in.
"We can all get rich by gambling up the prices of each others digital tokens".
I didn't mention anything about justifying wealth creation, or getting rich from crypto in my comment. I simply pointed out an observation that today vs say 50 years ago, we live in an age where people can swindle others for money in more ways than before. There was no insinuation we can all get rich, nor moral opinion on the matter other than that I think it is sad. I appreciate your stance on the matter, but please read the words before insinuating I've said something that I haven't.
ps - I know the answer and it’s the reason why everything is in such a mess and it’s all to do with the prioritisation of debt/debt holders.
Debt is money, and money is debt. It is the promise to pay, and aways has been in terms of fiat currency. Central banks prioritise preserving the fiat currency system.
But they are not prioritising the fiat currency system - every time we resort to money printing to avoid deflation and create inflation, they are fast tracking the destruction of that fiat currency. They are actually destroying the fiat currency - not protecting it, not extending its life span. They are reducing the life span of that fiat currency.
All they are doing are saving those with too much debt relative to their means of production (ie those who have too much debt relative to the income they are generating).
Please please please read Ray Dalios 'The Changing World Order' - it goes in depth on the life cycle of fiat currencies, inflation, money printing etc.
Pease please please read Ray Dalios 'The Changing World Order'
I'm well aware of Ray Dalio's work and have linked to it several times in the past couple of years on here. His work simply shows the macro impact of the fatal flaw in the human condition: That we are all tangible, and as such we tend to forget the past and repeat it's mistakes, albeit on a more and more grand and destructive scale with the more energy at play (sticks in battle vs guns, ships, drones etc).
Just because currency debasement occurs doesn't mean I agree with it in any way. I simply accept that it is too larger scale for me alone to enact change, and at this point in the cycle, the best course is to ensure more self-sufficiency for food, transport etc in case the worst happens.
But they are not prioritising the fiat currency system - every time we resort to money printing to avoid deflation and create inflation, they are fast tracking the destruction of that fiat currency.
Is it destruction if they can technically do it forever provided the citizens hold faith in the currency? Rapid inflation or hyper inflation causes people to lose faith in the currency and resort to other means. The USD has lost a vast amount of it's value since being removed from the gold standard, however they still have reasonable purchasing power despite this.
Since 1971, the U.S. dollar has lost approximately 98.2% of its purchasing power against gold.
Gold is the only money that has been able to reliably benchmark the true value of human labour or goods and services for thousands of years.
In terms of its remaining purchasing power, this leaves a value of only 1.8 cents in the dollar, left to evaporate into thin air.
They will end up where all fiat currencies go to die - worth a big fat ZERO, or occasionally kept as nostalgic monopoly tokens, evidencing yet another monetary experiment that went horribly wrong for humanity.
That is different because an OCR cut doesn't kill the economy and make people unemployed, so there is no downside.
And I don't think there would be emergency OCR cut if the CPI was just below target and expected to get back into target.
NZD much more volatile than the Swedish Krona. She might not be used to this variable
Fonterra payout just lifted from $9 to $9.50. Range of $9:20-9.80
+++ New inflationary spike, via farmers sellout/mega payout.....
Thanks, David.
Quoted... "For full 2025, exports rose +6.2% to US$3,4 tln with nonmonetary gold delivering the largest rise". - Brilliant! (not).
My translation - a combination of unprecedented physical sales and paper gold trading made the total 2025 trade deficit slightly less appalling. In October, gold was the largest export item. The very item they should have been holding onto.
The demand from foreign central banks and investors was driven by geopolitical tensions and a weakening of the US dollar - this is not a good look for a consumer-driven financial economy.
In 2025, the total U.S. trade deficit was $901.5 billion. The deficit as a percentage of GDP is ~3.7%, based on a GDP of about $24.3 trillion for that year.
Meanwhile, BRICS-centric countries position themselves for a global financial reset based on a foundation of hard-backed currencies (backed with gold, other PMs, and a multitude of durable commodities), as the purchasing power of fiat currencies continues to implode.
IMO, taken within the context of a looming fiat currency debacle, any celebration of high physical gold exports and paper trades, as having contributed to the US posting a less disastrous trade deficit for 2025, is a tragic comment on where that financial and consumer-based economy is headed.
Up from ~33% three decades ago, the consumer economy (people madly swiping plastic cards) now constitutes a whopping 70% of the economy.
If the numbers weren't all so totally manipulated, it would be obvious to us all that the US is already in a stagflationary mode, and yet it is now betting the farm on a tech and AI race, that they will lose to China, just based on electricity costs alone.
The US 2025 GDP figures in billions according to GPT-4o mini...
Civilian Aircraft and Parts $123.0
Gold $64.0
Pharmaceutical Preparations $58.0
Electrical Machinery $50.0
Natural Gas $40.0
Automobiles and Parts $39.0
Soybeans $36.0
Chemicals and Related Products $35.0
Military Exports $30.0
Machinery $32.0
Processed Foods $31.0
Regards to all
Col
Thoughts on Bitcoin by Steve Keen
https://youtu.be/EDvnkcqGt0g?si=sJoY2irObHWZQW0w
He raises an interesting observation; that the value of Bitcoin is highly related by the amount of spending a government is doing.
Attention David,
When I click up the thumbs up in the comments the count increases by 2 instead of 1, This has happened 3 times today, and at least twice in the same article in sucession.
Nigel, clearly your approval is more valuable than most of the rest of ours.
Thanks for the complement.
It's possible that someone else has clicked thumbs up since you accessed that screen.
To check, click on Undo and see if it goes down by 1 instead of 2. Then clink the Thumbs Up again.
Sometimes my thumbs up jumps up by 5. It's a great feeling for a brief moment before I realise what's probably happened.
I had the same thought and tried that later by doing an untick followed by an up tick which gave an increase of 1 vote, so the explanation is valid. Initially I didn't think that a simultaneous up vote by myself and another person 3 times in a row was likely, and it's never happened before for me.
Diversified economies that do the difficult thing and produce real things where there is local advantage, and their products are hard to replicate in other places and intellectual climates, seem to be prospering or at least doing OK.
We have gone down the path of services, administration, software and the like that have little or no barriers to competition and no real local advantage.
Given our background, we could be creating hard to reproduce things like high-value-add and high-technology agricultural, horticultural, arboricultural and other biological products at scale for the world market, and yet we sell them as raw material commodities. I'd cite the sale of Anchor and all the other consumer brands by Fronterra, and the way we ship logs rather than finished timber products prime examples.
It looks increasingly like the blocks in our development are the depth of our intellectual pool, the paucity of investment interest in scale and, frankly, the will and grit to do complex things while being prepared to take a decade or more to become an overnight success: so many keep looking for unicorns.
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