Here's our summary of key economic events overnight that affect New Zealand with news bankrupt US/Israeli decisions to choose war over peaceful pressure are having global consequences.
But first, the Federal Reserve Beige Book for February reported that overall US economic activity increased at a slight to moderate pace in seven of the twelve Federal Reserve Districts, while the number of Districts reporting flat or declining activity increased from four in the prior period to five in the current period. This is not a review that found strong growth.
US jobless claims rose last week by +18,000 from the prior week to 213,000 but most of that can be accounted for by seasonal factors. There are now 2.21 mln people on these benefits, similar to this time last year, but significantly higher than the 2024 levels.
February announced job cuts were lower than in January, but together the first two months have been almost as high as the equivalent 2025 levels. This survey also tracks hiring plans and that is down more than -50% from last year.
Tomorrow the February US non-farm payrolls will be released and analysts expect a low +59,000 gain. That would be half the +130,000 January level, itself historically low.
According to AAA monitoring, average petrol prices (91) in the US are now US$3.25/gal (NZ$1.46L / AU$1.23/L) This is up +9% from US$2.98/gal a week ago, up from US$2.89/gal a month ago, or a +12.5% rise.
US natural gas prices are up +7.2% over the same time-frame but to be fair are still very low. But in Europe, these prices are up +70% (in the UK) and up 53% (in Germany) for example. In India, natural gas prices have tripled for many users over the past few days. It is natural to wonder what Trump would say if the EU (or India) took unilateral actions that imposed similar cost jumps on the US. It is no longer safe to be a 'friend' of the US, or any country that pursues policies that "put me first".
American policymakers are scrambling to assess a wide range of materials where access is at risk. And institutions more broadly are doing the same.
We need to start keeping a closer eye on supply chain pressures. The NY Fed's February monitoring shows it elevated but nothing like the pandemic period, although not yet accounting for the current stresses.
Taiwanese industrial production rose +28.5% in January from a year ago, no surprise given the export order data we have been noting. But it is their sharpest rise in at least a decade, probably longer. However, things are not positive for Taiwanese retail sales; they actually decreased in January. But this was entirely due to Chinese New Year falling in a different period this year.
Singapore retail sales data for January also got twisted by the holiday timing.
The Malaysian central bank kept its policy rate unchanged overnight at 2.75%, saying inflation there is well contained. But they are worried about Middle East conflict effects.
China said it is lowering its growth target - slightly. Premier Li Qiang is set to announce a "around 4.5 to 5%" target while delivering the government work report, a key policy document, at the opening session of the National People's Congress later today. The departure from the "around 5%" growth target for the past three years signals the start of a period of slower expansion in China.
A big focus is on stabilising their moribund real estate markets. 'Stabilising' will undoubtedly mean subsidies and incentives to unlock buyer interest in the sector again. That will be a hard ask, given the widespread pain still in recent memory.
EU retail sales rose +2.3% in January, although slightly less in the Euro Area.
In Australia, household spending rose +4.6% in January from a year ago, the slowest pace since late May, following a +5.0% rise in December. This was a smaller increase than expected.
Global container freight rates, which had been falling every week in 2026 so far, turned +3% higher last week as the early signs of the Middle East pressures started to mount. Outbound China rates are up +10% for the week. However they are still -23% lower than year-ago levels. It might be different when this weeks data is released next week, of course. More currently, bulk cargo rates are up +6% for the week. Shipping traffic in the Straits of Hormuz has ceased altogether. (Live here.) And we should note ships outside the Strait are under attack too, so the conflict stresses are spreading.
New Zealand and Australia have significant food exports into the Middle East region, and they are now disrupted. We noted the sharp rise in fertiliser costs yesterday and more broadly, that is bringing warnings of food shortage consequences.
And as if these crises aren't enough, overshadowed is the Blue Owl private credit car crash in the US, and the wider concerns about their risky loans. Some insiders are now talking about a consequential "bank run" being caused by this.
The UST 10yr yield is now just on 4.14%, up +6 bps from yesterday. The key 2-10 yield curve is holding at +55 bps. Their 1-5 curve is steeper at just on +14 bps (+5 bps) and the 3 mth-10yr curve is now at just on +44 bps (+7 bps). The China 10 year bond rate is stable at just on 1.79%. The Japanese 10 year bond yield is up +4 bps at 2.15%. The Australian 10 year bond yield starts today at 4.80%, little-changed from yesterday. The NZ Government 10 year bond rate starts today at 4.48%, up +5 bps from yesterday.
Wall Street has opened its Thursday trade with the S&P500 down -1.2% and falling. Overnight European markets were down between Paris's -1.5% and Frankfurt's -1.8%. Yesterday Tokyo ended its Thursday session up +1.9%. Hong Kong was up +0.3% and Shanghai was up +0.6%. Singapore was up +0.7%. The ASX200 ended its Thursday session up +0.4%. And the NZX50 rose +0.6%.
The price of gold will start today down -US$71 from yesterday at US$5076/oz. Silver is down -US$2 at US$82/oz today.
American oil prices are up more than +US$5.50, up +7% in a day, at just under US$79.50/bbl, while the international Brent price is up the same to be now just on US$84.50/bbl.
The Kiwi dollar is down -40 bps against the USD from yesterday, now just on 58.9 USc. Against the Aussie we are up +20 bps at 84.1 AUc. We are down -30 bps against the yen. Against the euro we are down -10 bps at 50.9 euro cents. That all means our TWI-5 starts today down -30 bps, now just over 62.6.
The bitcoin price starts today at US$71,316 and down -2.6% from this time yesterday, although holding on to a large part of yesterday's rise. Volatility over the past 24 hours has been moderate at just on +/- 2.1%.
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19 Comments
Any thoughts on the length of the war and effect on shipping across the Strait of Hormuz?
Probably best if our household buys bulk fuel before the supply chain ripples reach ol' Kiwiland
Just had a look at Gaspy. Was expecting prices to be higher, but 91 is at $2.33, similar or better than a month ago. Yeah would make sense to at least fill up the cars, not sure if it’s worth the hassle of filling containers
My car takes 95, amazing to see the price differences in just a 5k radius, $2.51 to $2.93. Adding an extra 42 cents a litre to the market price is $21 on a 50 litre tank added profit, talk about gauging, who cares about the supermarkets if the gas stations can do that!
With my Farmlands card at the truck stop the diesel can be 50c cheaper than at the BP 2 km away.
And you can be sure the big trucks filling up at the truck stop are paying a lot less than me.
Stock markets and crypto are still vastly overpriced, commodities are underpriced.
Property starting to look cheap! Could be another crazy boom there. Although you really need a global market to get the real crazies going.
Ummh. Property prices starting to look better (meaning down). In no way does that indicate they are going to climb.
Agree, but it does look cheap compared to other assets. Would you rather own a decent property that also can be lived in or rented, or a few Bitcoin, or some almost useless metal that you need to pay to hold, or some Nvidia shares that are based on a short term increase in cloud AI hardware? Or maybe some Doge or Trump coin? If aliens landed they’d probably think we’re nuts.
Satoshi Nakamoto is one of the Tall Whites
Thank goodness for some distraction.
"I explained that I had practised law in Iran until the age of 24, that I had been imprisoned, tortured and lashed by Islamic Republic thugs and that I continue working in human rights advocacy now in New Zealand.
I asked what I consider to be the central question when every peaceful mechanism has failed – when UN resolutions, special rapporteurs, Human Rights Council sessions and diplomatic negotiations have not dismantled the regime’s coercive machinery: “What is left to save us?”
https://www.nzherald.co.nz/nz/when-human-rights-rhetoric-ignores-realit…
"To suggest that voting is the pathway to change under such conditions betrays ignorance (or forgiveness) of the authoritarian reality." That is Helen Clark to a 'T', but not just ignorant, arrogant too
“What is left to save us?”
Probably not the US. It's path to extreme authoritarian fundimentalist christian nationalism may be irreversible, if the current regime can corrupt the coming mid term elections.
I have considerable sympathy for this woman. Regardless, what will the war achieve and what state will the country be in when it’s finished - will it be better off? Netanyahu has said he’ll be quite happy if there is a civil war in Iran. Past history from Syria has shown that once the US and Israel got rid of Assad there was killing of minorities/Christians and the country’s stability remains fragile.
“Bankrupt Us/Israeli decisions.” So far so good then, air and sea supremacy attained. If there is a plan for the next stage it is fantastically well camouflaged. The existing Iranian power remains in control of the vital military, therefore the cities and the land. If there is a cache of enriched uranium it is buried deep out of harms way. How is that then to be let’s say, liberated. Twice Iraq got to this early stage and twice armed forces had to land and invade simultaneously. The parallels with Iran are not difficult to perceive. So what happens next then?
Always remember there is spin. "Weapons of Mass Destruction"
There was the announcement of discovery of a chemical weapons factory in Iraq. With pictures no less.
The story disappeared after a NZ engineer popped up and said "that's no chemical weapons factory, it's a dairy factory. I know because I built it"
CIA do their MO and arm the Kurds and civil war ensues. This is asymmetric warfare and the Iranians can drag this out a long longer than the USA in particular. Midterms are Trumps Achilles heel.
The Kurds played a big part in overturn of Assad in Syria and got scant reward for it. In Syria & Libya the existing military land forces turned and collapsed. In Iraq it was crushed by the invading forces. Iran is a very big territory and to transit and 20,000 or so lightly armed Kurds, even with air support, cannot possibly succeed against the tanks and artillery of the hard core Iranian army if it remains loyal to the regime. Totally agree then that time is on the Iranian side and hunkering down and dragging out regional turmoil is a completely understandable strategy.
FG.There can be no credible physical invasion plan. The vast, mountainous nature of Iran renders large scale invasion impractical. Using the Kurdish forces is fraught with logistical supply challenges and the reaction from Turkiye would be hostile, although with US air power now unchallenged the Iranians would struggle to assemble forces so a limited incursion may be on. But if the fighting moved to urban areas there'd be a bloodbath. A likely outcome is that this conflict will, after destruction of Iranian military infrastructure is complete, switch to a protracted assassination and Iranian government operational degradation campaign. China will not allow Hormus to remain blockaded for too much longer and with Iran vitally dependent on oil exports I'm not sure time is on the Iranians side. Its government could well be forced to bend its neck to imperial Washington. The world could yet be forced to endure the spectacle of spectacle of Trumpist Triumphalism.
S and P 500 crashes through support, none of the levels below us have been seriously tested until 6500
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