Here's our summary of key economic events over the weekend that affect New Zealand with news US$100/bbl oil is settling in as the Persian Gulf conflict settles in to an attritional conflict with no end in sight.
And although he apparently sees no irony in it, US President Trump called for help from other countries to dig him out of the crisis he started by sending naval forces to keep the Strait of Hormuz "open and safe". But so far, no country has stepped forward with any commitment.
Elsewhere, there will be a lot going on in the week ahead. The big economic event will be the US Fed decision on Thursday. This is supposed to be Chairman Powell's second last meeting where he is the boss and no change is anticipated. But Trump has been losing the court fights over his campaign to oust Powell, and Congress won't progress Kevin Walsh's nomination, so who knows how that will all play out.
Central bank decisions will also come this week from Canada where no change is expected and none from any of Sweden, Switzerland, the ECB, Japan, China, or England. For all of them it is a wait-and-see situation. Russia review as well and may cut by -50 bps. Of course, locally the big one will be the RBA's cash rate target review tomorrow and market are now expecting a +25 bps hike.
For economic data all eyes will be on the New Zealand Q4-2025 GDP outcome, and probably more importantly, the Aussie labour market report for February. And there will be key releases from the US for PPI and industrial production, the Eurozone trade balance, and the Canadian inflation rate. Additionally, China will release its industrial production, retail sales, unemployment rate, housing prices, and fixed-asset investment, many of them later today.
Back in the US, it will be no surprise to learn that 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. The rising inflation threat will be the main reason the Fed won't cut.
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 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.
The UST 10yr yield is now just on 4.29%, up +1 bp from Saturday, up +18 bps for the week. The key 2-10 yield curve is holding at +55 bps. Their 1-5 curve is steeper still at +23 bps and the 3 mth-10yr curve is now at +58 bps. The China 10 year bond rate is up +3 bps at just over 1.84%. The Japanese 10 year bond yield is down -1 bp at 2.24%. The Australian 10 year bond yield starts today at 4.95%, down -4 bps from Saturday, up +6 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.
The price of gold will start today down another -US$40 from Saturday at US$5018/oz, down -US$138 from a week ago. Silver is down -50 USc at US$80.50/oz to start today, down -US$3 from a week ago.
American oil prices are up +US$2, at just under US$99/bbl, while the international Brent price is now just over US$103/bbl. The Straits of Hormuz remain no-go areas for most, although there are reports of LNG ships getting through to India. But the situation still extremely unstable. One reaction that is not happening is bringing in more US oil rigs into production in the US, even with these higher prices - not yet anyway.
The Kiwi dollar has slid again, down another -30 bps against the USD from Saturday, now just over 57.8 USc. That is more than a -1c drop in a week, down -1.5%. But against the Aussie we are down -10 bps at 82.7 AUc. We are down -30 bps against the yen. Against the euro we are down -10 bps at 50.6 euro cents. That all means our TWI-5 starts today down another -20 bps at just over 61.6, down -1.3% for the week.
The bitcoin price starts today at US$71,356 and down -0.9% from this time Saturday, although up more than +5% from a week ago. Volatility over the past 24 hours has been low at just over +/- 0.9%.
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7 Comments
Average US Govt budget deficit for the last 30 years is 6% of GDP. Enabling them to import loads of stuff and increase the financial wealth of their rich folks. Exorbitant privilege.
How do you think NZ has managed to, on average, balance Govt budgets and run persistent current account deficits? Yes, praise be the ponzi.
Hard to know why Donald would care about the straight. The US are a fuel exporter, high fuel prices make them richer. And better still (in Donald’s eyes) it’s the rich that will get richer. I guess he has to appear to care that Average Joe is paying a whopping $1 a litre for gas now.
The President is 3 months from turning eighty and pressure on him , largely self created, is compounding rapidly and it shows. The implications and prospects of that condition, are in my opinion, the scariest outlook.
Rising gas prices last nail in the coffin for mid-term elections results ...
A small part of his pea brain will be understanding that Americans will blame him for the escalating fuel prices. The US companies will be on the band wagon, profiteering from the chaos and average Americans will be feeling it in the pocket. Doing the exact opposite to what he promised them. The Republicans have to be seeing the writing on the wall, but still will not act to stop him. Too late I suspect, the harm has already been done.
What will a future Iran look like now? If anything they'll be much worse than they were I suspect. The ground work for the next ME war has been done. and the partisan lines have been largely drawn as Russia and perhaps China stoke the flames.
IMO the most likely explanations for the shaft New Zealanders attitudes and actions of the present government is they are given large donations, and the 2nd most likely is they are living in the past and incapable of learning anything new... as in early onset dementia.
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