Here's our summary of key economic events overnight that affect New Zealand with news the US economy ended 2025 weaker than previously reported, with inflation more stubborn than ever. Things will only get worse from there for them as it seems to be on a losers track.
It will be no surprise to learn that US core PCE inflation rose at a +3.1% rate in January, its most since late 2023. And the rises in December and January were at more than a +4.5% annualised rate. Given subsequent events, it seems unlikely this rate will have eased since.
It its second interim report, the US economy expanded an annualised +0.7% in Q4-2025, far less than the +1.4% advance estimate, and the weakest performance since a contraction in the first quarter of 2025. Downward revisions came for exports, consumer spending, government spending, and investment. Imports decreased less than previously thought. It is turning out economic expansion is far less now than at any time during the Biden presidency.
The January JOLTS report showed more openings than in the five-year-low December report, but these were still -6% lower than a year ago.
Meanwhile, the widely-watched University of Michigan sentiment survey fell as expected in its March edition, to a three-month low, but inflation expectations didn't fall as expected. The shifts were comprehensive across all income and age groups. War uncertainty and the rising fuel costs were the [obvious] triggers. Those petrol prices are up +18% now from a year ago, up +9% in a week. The darker mood is very obvious from two years ago (before Trump 2), with sentiment down -30%.
Meanwhile the Congressional Budget Office is sounding the alarm about where US federal debt is tracking. Page 3 of their February report shows the essential corruption - personal income taxes are up +10% (and you can be sure that does not relate to billionaire 'taxpayers'), corporate income taxes are down -33%. Even the 'tariff tax' collections are essentially taxes on Americans collected at the border. These are up +US$109 bln, about the same as the rise in personal income taxes. The result seems to be that US Treasury debt held by the public is currently 101% of nominal GDP and without changes will rise to 175% of GDP in 30 years.
In Canada, their labour market shrank in February and by an outsized -83,900 following a -25,000 decrease in January and sharply missing forecasts for a +10,000 gain. Job losses were concentrated in full-time positions which were down -108,400, so the report is grimmer than it first seems. It has been called a 'brutal' jobs report, and will undoubtedly end the Bank of Canada's hiking cycle.
India loan growth rose +14.5% in February from a year ago, maintaining its high rate of expansion (and almost three times their GDP growth).
New passenger vehicle sales in India hit a record high in February, up more than +10% from the same month a year ago, but to be fair, this overall market is nothing like China - or the the US for that matter.
China new yuan loans rose +¥900 bln in February, just as was expected. But that gain was slightly less than the +¥1 tln in February 2025, and much less than the +¥1.5 tln in February 2024.
It won't be a surprise to know that the prices of most hard commodities are rising. But some ubiquitous ones like plastics (polyethylene +32%), steel (hot-rolled coil steel +13%), aluminium (+14%), and bitumen (+35%) have all jumped sharply in 2026. This won't be good for inflation control.
And of course there is a global scramble for fuel underway, one New Zealand is unlikely to win.
The UST 10yr yield is now just on 4.28%, up +8 bps from Friday, up +17 bps for the week. The key 2-10 yield curve is flatter at +55 bps (-2 bps). Their 1-5 curve is steeper at +23 bps (+2 bps) and the 3 mth-10yr curve is now at steeper on +59 bps (+5 bps). The China 10 year bond rate is little-changed at just over 1.81%. The Japanese 10 year bond yield is up +7 bps bps at 2.25%. The Australian 10 year bond yield starts today at 4.99%, up another +2 bps from Friday, up +10 bps for the week. And the NZ Government 10 year bond rate starts today little-changed at 4.69% but up +17 bps for the week.
On Wall Street, the S&P500 is lower in Friday trade, down -0.4% so far, down -0.8% for the week. Overnight European markets were lower between London's -0.4% and Paris's -0.9%. Yesterday Tokyo fell another -1.2% to end its week down -1.4%. Hong Kong dropped -1.0% but was up +1.6% for the week. Shanghai was down -0.8% on Friday, unchanged for the week. Singapore was down -0.3%. The ASX200 fell -0.1% on Friday for a weekly gain of +0.2% . And the NZX50 also ended down -0.1% on Friday, but down -2.5% for the week.
The Fear & Greed index has now moved into the 'extreme fear' zone, after being hard over in the 'fear' zone last week
The price of gold will start today down another -US$62 from yesterday at US$5057/oz, down -US$98 from a week ago. Silver is down -US$4 at US$81/oz today, down -US$3 from a week ago. One thing that is not happening is bringing in more US oil rigs into production in the US, even with these higher prices - yet anyway.
American oil prices are up +US$2, at just under US$97/bbl, while the international Brent price is now just over US$101/bbl. A week ago these levels were US$90 and US$92/bbl respectively. The Straits of Hormuz remain essentially closed, the situation still extremely unstable
The Kiwi dollar has slid another -50 bps against the USD from yesterday, now just under 58.1 USc. That is a -1c drop in a week, down -1.5%. But against the Aussie we are up +10 bps at 82.8 AUc. We are down -70 bps against the yen. Against the euro we are down -10 bps at 50.7 euro cents. That all means our TWI-5 starts today down another -40 bps at just over 61.8, down -1.4% for the week.
The bitcoin price starts today at US$71,970 and up +2.2% from this time yesterday, up +5.4% from a week ago. Volatility over the past 24 hours has been moderate at just on +/- 2.7%.
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34 Comments
NZ could benefit indirectly form the war in Iran and from the general unrest throughout the world due to our remote location. I'm currently in Europe and there is definitely apprehension about what is happening in a not so distant geographical location (Ukraine and the Middle East) and a desire to avoid travel anywhere near a war hotspot. There is also an overriding dislike for the US and a desire to avoid traveling to the USA. In this sense, NZ is perceived as a safe destination about as far away as possible from unrest.
It’s a long way to travel with fuel being expensive.
President Trump’s favourite yapper Fox News (we are not related) has him this morning describing his Iranian foes as “deranged scum bags.” Guess that sort of reveals in terms of vocabulary finesse, just how important an Ivy League education is from Penn, one of America’s very first universities..
It takes one to know one? Apparently it also takes a persistent draft dodger to declare war.
The impacts will far outweigh any small benefits.
I can't see much other than humanity being collectively much worse off for the time being.
Yvil could be right in that there will be value being so isolated.
But it's only a relative bonus. There will be a sharp adjustment period. Reshoring of some industry. Re-routing of trade routes. The dissolution of some sectors.
One of our redeeming features is food security, that's why watties is closing?
We often say the world needs food, clearing not our frozen veges.
No, nor many other things you can grow or produce overseas at much lower cost.
So we tend to stick to things we have inherent natural advantages producing.
Don't worry, if it goes pear shaped our agricultural sector will have to radically alter from export focused production to internal consumption. Although we will still want to be an exporter in such a scenario.
Geez, that's an awful lot of fruit, meat, dairy and wine we'll all have to consume at our collective kitchen tables
90+% of production is export......
Yeah, hence the ag sector will have to readjust. That'd be 5-10 years I reckon.
Not if we don’t have diesel or fert.
Our overall economy will likely require far less fuel than currently.
Fertiliser we can partially shift more indigenous. Likely less produce overall, but certainly more than enough for domestic consumption and some export.
You have to envisage the economy being fundamentally different. With potentially a long period for people to adjust and accept the new realities.
Watties: If Watties, and others, were locally owned they would not be closing. And especially not closing if it was local family owned.
Forget all the "work harder, work smarter" urgings. What really counts is ownership.
New Zealander and New Zealanders don't understand ownership being where the benefit lands. They need to smarten up.
So: Go for ownership.
When some multinational produces stuff in a cheap place to sell in a richer place that stops producing stuff, what do you think will happen to the richer place.
"Watties: If Watties, and others, were locally owned they would not be closing. And especially not closing if it was local family owned."
It may be fair to observe they would be less inclined to close if locally owned but local ownership would not protect a non profitable business forever....they would however perhaps have more incentive to pressure the government to ensure they dont face unfair competition.
The (US) rises in December and January were at more than a +4.5% annualised rate
The US economy expanded an annualised +0.7% in Q4-2025
That is negative real rates and "stagflation" to be very clear.
GDP growth is measured after inflation isn’t it?
I wouldn’t say the US is in stagflation, they have been growing quite well. Potentially heading that way I guess.
Why is there an image of indigenous people dancing in grass skirts ? I could not see any correlation with any of the financial news today ?
Because it’s pasifika festival in Auckland this weekend. Many of the images posted do not have relevance to financial news. Do they need to?
Worth going to if you like seafood
Exactly.
Why is there an image of indigenous people dancing in grass skirts ? I could not see any correlation with any of the financial news today ?
Indigenous people are dancing and laughing at us all around the world.
"You idiots have everything and live like spacemen, and the best you can do is blow each other up? I'm going back to the beach".
None of the Weekend Briefing articles do Yves. Maybe stay in Europe if you've such an issue which you seem to bring up from time to time.
Are people still seeing green shoots? Business owners seeing increased orders? Or has the war singed those green shoots? I suspect it’s another winter of discontent in NZ.
I don’t envy the new RBNZ governor. This would be the first time ever where I don’t even have an opinion of what she should do, every option seems terrible. I guess I’d be tempted by a 0.25% cut next review because otherwise it could be another year of recession. But you could easily argue the other way. Genuine stagflation in NZ most likely.
https://www.afr.com/chanticleer/macquarie-s-bank-warning-10pc-of-mortga…
There is going to be no jobs recovery = no housing recovery
AI changes everything
Remember when Windows 95 came out? All of a sudden we had computers that could do stuff we used to have to do on paper. Potentially it should have replaced many jobs, but I suspect it actually just created them.
Not saying AI is the same thing, but throughout history technology has never really reduced employment, it’s just changed it.
Until now. AI will reduce jobs.
And if there is a new job created , it has to be one AI cannot compete with, because it will do it better and cheaper then a human.
People who can drive AI are not new jobs, they are simply the survivors of the current workers.
We live in a consumer economy and you cannot consume without a job.
AI doesn't just allow the human to operate faster, it replaces the human as IT operates so much faster.
what does 10% unemployment look like - success?
Even if your job remains, 1:10 in your street will be mortgagee sales
The economy seems to be pretty good at inventing nothing jobs once old vocations get obsoleted. We'll just borrow money to pay for it.
Keynesian, baby.
People would have said that back then too.
AI can’t currently replace physical jobs, and that’s probably a long time away. To replace humans in jobs like contact centres it has to be integrated with the company’s backend systems, that will take a lot of manpower for every company to achieve and test. And even then there are potential legal issues when it gets stuff wrong which it will do.
At the moment I’d say all it can do is reduce headcount for certain types of jobs by helping those people with their job. There are very few jobs it will replace altogether in the next decade IMO.
Indeed.
I remember when email was getting into mass adoption. And we had internet, and wireless network. Communication has gone digital baby.
We were told of paperless offices, but because we have made communicating lots of information so fast and cheap we've just ended up generating exponentially as much waffle and printing much of it off.
There was a time when to create a chart you started with a pencil and compass. Now you can knock one up in 10 seconds. That didn’t mean lots of office workers were out of work, it just meant we chose to make lots more charts and presentations because they were essentially cheaper to produce.
I use AI constantly for my job, it’s not reducing my work hours, just increasing the amount of things I can do. I suspect that will be the same for a lot of jobs. Not for all of course, some careers will struggle.
I run an air conditioning business. It is the off season (summers gone, no cold snaps yet) however all my leads have dried up and quotes haven’t landed. It’s happened very quickly. People have closed their wallets on big ticket items. I imagine it’s a quiet weekend for the car salesmen.
Unless it's an EV.
Have you tended to find in the last 12-18 months your customer base being older/more monied than a few years back?
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