US PMI's rise on prices, not orders; most other PMIs rise on strong new order flows; China FDI shows recovery; some key commodity prices jump; air cargo rises; sea freight rates leap; UST 10yr at 4.06%; gold and oil rise; NZ$1 = 59.3 USc; TWI-5 = 62.9

Here's our summary of key economic events overnight that affect New Zealand with news the world has suddenly gotten far more dangerous after the US/Israeli strike on Iran. Shipping costs especially are in a dramatic rise on necessary re-routing. The cost of war will hit inflation soon and that is a looming problem for central bank policymakers.

And investors are demanding higher yields from not only corporate paper, but benchmark government bonds as well.

But first in the US, the February PMI from the widely-watched ISM survey dipped very slightly from January, but held up better than analysts were expecting. It is only the third time in 40 months that this metric shows an expansion. It was driven by prices and imports, both of which are rising faster. New order flows rose at a slower pace. This metric is basically the same as the parallel S&P Global factory PMI for February, which noted faltering exports.

This contrasts with the latest EU PMI which reports its strongest rise in new factory orders since April 2022 taking their factory PMI to a 44-month high. But coming with it are building inflationary pressures. Driving this result is a notable uptick in Germany which is now back in expansion.

The rise and rise of Japanese manufacturing is now getting real momentum. Their February factory PMI burst out of its trend (confirming the January rise), to now be at almost a four year high. This is on the back of output, new orders and employment that all expanded at their fastest rates since January 2022.

Not to be outdone, Taiwan's factory PMI rose sharply too in February, although this also came with higher inflationary pressure than for Japan. Firms there are struggling to meet demand.

In some other selected Asian nations, their factory PMI's were mostly positive. This is true for Vietnam, Indonesia, and Thailand, although the same survey in Malaysia isn't quite so positive.

Indian industrial production rose 4.8% in January from a year ago, and while most countries would love that, it represents a sharp slowing from December's +8.0% and is way below the +6.5% expected. The December rate was unusual however, and the January expansion mirrors what we saw for most of 2025.

China announced late yesterday that they attracted ¥92 bln (US$12.6 bln) in foreign direct investment in January 2026. This was -5.7% less than in January 2025. But we probably should also note that the December FDI was quite good, standing out from the long run of negative flows. (The December inflow was +US$20.6 bln.)

In Australia, the Melbourne Institute monthly inflation gauge recorded an easing in monthly inflation in February, dipping -0.2% from January. The main influence were lower fuel prices. In annual terms, however, headline inflation remains elevated above the RBA's 2–3% target band and has exceeded the top-end of the band for the past six months. Changes in the monthly cost of living were mixed, with employee households experiencing the largest monthly increase.

And staying in Australia, the Cotality Home Value Index rose +0.7% in February, easing slightly from a +0.8% gain in January. Price growth remained strong in Brisbane, Adelaide, and Perth, but values were flat in Melbourne and Sydney. Year on year, national home values rose +9.6%, moderating from +10.2% rise in January on this basis.

Globally, we should probably note that the aluminium price is up during this turmoil, now at a four year high. And tin has taken off, now at a record high. Copper is near a record high too, but it isn't changed during this crisis; its been at the current level all year.

Also globally, we should note that air cargo demand rose +5.6% in January from a year ago with international airfreight up +7.2%, driven by the +9.4% rise in the Asia/Pacific region, and restrained by the +1.4% riser in North America.

Meanwhile passenger air travel rose +3.8% with international travel up +5.9%. It is notable that domestic air travel fell in the US on a year-on-year basis. But it also did in Australia as well.

And ocean freight costs have surged in the past day, shocking many as ships need to be re-routed away from the Middle East.

The UST 10yr yield is now just on 4.06%, up +10 bps from this time yesterday. The key 2-10 yield curve is holding at +57 bps. Their 1-5 curve is still just on +8 bps (+2 bps) and the 3 mth-10yr curve is now at just on +36 bps (up +9 bps). The China 10 year bond rate is unchanged at just on 1.83%. The Japanese 10 year bond yield is down -6 bps at 2.06%. The Australian 10 year bond yield starts today at 4.65%, unchanged from yesterday. The NZ Government 10 year bond rate starts today at 4.38%, up +2 bps from yesterday.

Wall Street has opened its week with the S&P500 little-changed. It started down -0.8% but has since recovered that. Overnight European markets were down between London's -1.2% and Frankfurt's -2.4%. Yesterday Tokyo ended its Monday session down -1.3%. Hong Kong was down -2.1, but Shanghai was up +0.5% on home team support. Singapore fell -2.1%. The ASX200 ended its Monday session little-changed. But the NZX50 dipped -0.5%.

The price of gold will start today up +US$18 from yesterday at US$5296/oz. Overnight it got up to a new record high of US$5415 but it has retraced since then. Silver is down a sharp -US$6 at US$87/oz today also after an interim burst higher.

American oil prices are up +US$3.50 at just on US$70.50/bbl, while the international Brent price is up +US$4 to be now just over US$77/bbl. These at +6% rises. Given the intensified Middle East tensions, this seems pretty restrained. But European natural gas prices have leapt overnight.

The Kiwi dollar is -70 bps lower against the USD from yesterday, now just on 59.3 USc. Against the Aussie we are down -40 bps at 83.9 AUc. We are down -20 bps against the yen. Against the euro we are unchanged at 50.7 euro cents. That all means our TWI-5 starts today down -50 bps, now just on 62.9 and a one month low.

The bitcoin price starts today at US$69,835 and up +5.5% from this time yesterday. Volatility over the past 24 hours has been high at just under +/- 3.4%.

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