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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32 Comments
Just refixing all my loans today. I might be wrong by a little or I might be right by a lot.
Comiserations, being in property in NZ is a classic case of being in the wrong place at the wrong time. The smart money is in equities.
The property market in NZ is now dead.
It is a matter of what you are smart about. We all live somewhere so we all have some smarts about property. Decades ago when I bought property I worked with IT and instead of investing in somewhere to live I could have used my IT smarts to buy Apple, Google, NVidia but could just as likely I would have bought Altvista, MySpace, Blackberry.
The property market in NZ is not dead. But you are probably right in thinking there are more properties to be sold in a hurry than their are bargains to be grabbed - note selling is activity.
Still need somewhere to live.
NZ property up a long and windy road with a well armed and connected community is where the smart money is at.
from Hypertiger Wisdoms - lol
"MAGA was created before Trump was placed at the head of it and now he is being mind controlled off a cliff with you all following behind."
Could be the end of NZs green shoots again if inflation picks up. Might end up like last year - promising summer followed by a winter recession. Would make for an interesting election.
I wonder if NZ public are fixing their interest rates accordingly. We went 18 months but probably should have gone 2 or 3 years.
“The cost of War will Hit Inflation soon.” That lead in caption does provide a new player in the form of “war” over the previous transitory and imported labels harped about by the previous government
Thoughts and prayers for those who recently ran to their bank and fixed for 5 years because the pundits told them to.
Haha. Could work either way, interest rates are a bit of a lottery at the moment.
I think it's always been that way Jimbo. Crystal ball gazing is always a fraught pastime.
Despite inflation pressures increasing the RBNZ will still want to leave the OCR at stimulatory levels, to slow the collapsing housing market, which is essentially a giant ponzi scheme and is the driver of the NZ economy. Hard time ahead.
Can someone please explain to me why the US10yr yield is not spiking despite ongoing deficits which are only likely to increase with further billions being pissed away on expensive ordinance being dropped on Iran?
Because the markets still consider USD denominated assets as a safe haven despite the fruit loops currently running the country.
Happily I filled up at Pukekohe PacknSave on Sunday 95 discounted to $ 2.487.
Even better the other car on Thursday at Gull Pukekohe $ 2.349.
See what the $, the oil price and freight charges do over the next little while to our fossil fuel fixation.
UK gas prices up over 40% and European gas up over 30%. They are paying the price for American aggression (and some of that cost will end up paying more for imported US gas...)
This is the kind of price shock we'll be exposing ourselves to once the gas import terminal is operational. Well, it's a small taster. UK natural gas has risen to 114 pounds/thm today, in the aftermath of the Russian invasion of Ukraine it reached as high as 600 pounds+ and spent a year and a half above today's price.
We are already energy exposed at the gas pump. Our clever government decided to not electrify our vehicle fleet and now we are over exposed compared to most countries. To double down on being linked to tinpot dictators and exposed to the whims of crazy war mongers is insanity, but we voted for it because "we like our utes".
"...we are over exposed compared to most countries"
Source of your assertion?
You can look it up yourself: https://ourworldindata.org/grapher/electric-car-sales-share?tab=discret…
2022 - 18% of all new vehicles electric
2023 - 22%
2024 - 11%
2025 - 5.6%
Compared to other developed countries (except the US which is rapidly turning into a basket case anyway), we are down the bottom of the pack.
China at 48% !
If you have been to China in the last 5 years, its NOT CHINA. They are so far ahead of us economically, technologically and in their infrastructure it would make your head spin. If you separated out the East Coast cities in that, I think you would find the BEV uptake would be more than 50%, the overall countries uptake is less because as you travel West, the necessity to drive longer and longer distances is more pronounced (more countryside).
Yes I have heard that from people that have been there recently, they make us look like idiots, and National made us even bigger idiots when they scrapped the clean car discount.
New vehicle sales %s are not a statistic of current "country" / fleet "over exposure".
Jeez, do I need to spell it out for you?
We don't produce fuel for our transport fleet. So if we have to import fuel which makes us price takers and links our economy to the price of fuel on international markets. Its worse than this, it links our economy to the refined price of fuel on international markets. So if a couple of refineries are taken out of operation, refined fuel prices spike, our economy will be hit hard. The less exposure we have, the better it is, same for every country.
The new car BEV% stats indicate the uptake of BEV's in NZ. If this is accelerating towards 100%, then we are de-linking ourselves from international fuel markets. If this is going downwards, we are increasing our reliance international refined fuel. That's because a greater and greater percentage of ICE cars are being sold as opposed to electric, increasing our exposure.
This is the opposite of what most other countries are doing, increasing their uptake of BEVs, decreasing their reliance on international fuel prices. Yes, many still need to import electric cars which are also at the end of a long chain fossil fuel products, but by having a larger percentage of their fleet in BEVs, it means flow on to prices/economic activity due to fuel price spikes is delayed and diminished. Unlike in NZ where it is and will continue to be felt immediately.
Sad that I have to spell this out, deductive reasoning clearly isn't strong in this one. Or they are a paid shill/bot for oil and gas companies. There's a reason most countries we compare ourselves to are moving away from ICE cars.
The fact we import all of our petrol perhaps? We could and should move to an energy source that we can produce (electricity), and we were heading that way pretty fast under Labour
And NACT and their supporters HATED it. So woke.
mfd. I share some of the concerns about the LNG backstop project but on worries about price spikes due to ME conflicts closing off transport routes, I wonder if these are overblown. The probability of Hormus strait closure in any one year coinciding with a dry period in NZ would be relatively low. There will be price spike triggering events such as the current conflict but Hormus has never been closed during large scale ME conflicts until now (Yemeni Houthis forced some rerouting in 23/24). It's over 50 years since the Tiran strait was closed.
Indeed and by way of HMNZS Canterbury New Zealand played a role in keeping that trade route open in the Gulf in the early 1980s. An old schoolmate was an officer on board for a while. It was no fun.
Interesting snippet thanks FG. But no fun - really ? Surely a non conscripted officer would consider participating in a genuine conflict setting to be a career highlight. As you'll probably recall it was Nasser blockading the gulf of Aqaba in 1967 that the Israelis pounced on as justification for launching the 6 day war which changed the face of the ME. With China a major buyer of Iranian crude the chances of its blockade enduring for very long seem low.
Well it was PM Muldoon’s idea so as to release a Royal Navy vessel for the Falklands. The trouble was if I recall correctly the Canterbury wasn’t rigged for the tropics, ventilation was insufficient and there were only few ports suitable and virtually no shore leave. A long monotonous patrol. Just looked it up. The Brits named it as the Armilla Patrol.
Yes, it's a risk rather than a fact. For the Europeans, this is the second shock in 4 years (although it may be a little early to call this a shock, all depends on what happens next and an optimist could imagine the price falling back).
In the position we're in today, I don't think the gas terminal is crazy. But really this was very foreseeable, the gas production trends have been there for years, and we should already have been well down the path of putting in a better solution by now.
Z sharetank app lets you pre-buy. Might be a good idea for those not in EVs to go get a few months worth
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