Here's our summary of key economic events overnight that affect New Zealand with news financial markets are relatively calm today mainly because the Persian Gulf situation has slipped into a stalemate with no new developments good or bad.
But first up today, the overnight dairy auction brought little change in overall prices, but there was surprising variation between the commodities on offer. The net result was a tiny +0.1% gain in USD, +0.4% in NZD. But AMF rose +6.4% and SMP rose +5.2%. Offsetting these was WMP which dropped -4.0%. These shifts are much larger than the derivatives market signaled. In fact, the AMF price is back up to late 2024 levels, and the SMP is now at its elevated October 2022 levels - and apart from those pandemic distortions, back to the unusual 2014 levels. The WMP shift, which seems big, actually isn't when viewed from a slightly longer perspective.
There was good demand, mainly from precautionary buying, and from everywhere except from China. That deserves watching.
In the US, ADP weekly jobs report showed some weakness with just a +9000 gain nationally, far less than the expected gain and almost half what it has recorded over the past four weeks. They say there is a noticeable slowing in hiring.
Business activity continued to decline significantly in the New York region’s service sector in March, according to firms responding to the New York Fed’s Business Leaders Survey.
US pending home sales picked up marginally in February from January but are still -1.4% lower than year-ago levels. But there is wide variation, with the West (California) rising notably, the South and Mid West with minor gains, but the North East had notable declines.
In Canada, their real estate markets did it tough in February, from both the economic uncertainty and prolonged bad weather.
Elsewhere and as expected, the central bank of Indonesia held its policy rate at 4.75% where it has been since September 2025.
In Germany there has been a huge drop in confidence as recorded by the ZEW sentiment index, all related to Trump's war in the Middle East and the downstream consequences for Europe. But perhaps somewhat surprisingly though, the negative reading was very minor.
And as expected, the RBA raised its policy rate late yesterday by +25 bps to 4.1%. But what wasn't expected was how close the vote on the hike was. Five members voted for the rise, but four wanted to hold. In the end it was the growing risks of inflation that tipped the scale, made worse by the Middle East tensions and consequences. All the major banks have now announced pass-though rises to their variable rates.
Globally, it is also probably worth noting that the airline industry's forecasts show that air travel is expected to double by 2050. Obviously that assumes the current geopolitical tensions subside. They see an outsized share of the expansion will come from China.
The UST 10yr yield is now just on 4.20%, down -3 bps from yesterday at this time. The key 2-10 yield curve is holding at +54 bps. Their 1-5 curve is flatter at +15 bps (-4 bps) and the 3 mth-10yr curve is now at +50 bps (-3 bps). The China 10 year bond rate is little-changed at just over 1.83%. The Japanese 10 year bond yield is down -2 bps at 2.27%. The Australian 10 year bond yield starts today at 4.90%, down -6 bps from yesterday. And the NZ Government 10 year bond rate starts today also down -6 bps at 4.71%.
Wall Street has started Tuesday trade with the S&P500 up +0.4% so far. Overnight, European markets were also up, between London's +0.8% and Paris's +0.4%. Yesterday, Tokyo closed down -0.1%. Hong Kong ended its Tuesday session up +0.1%, but Shanghai fell -0.9%. Singapore ended up a large +1.4%. The ASX200 closed up +0.4%. And the NZX50 closed on Tuesday up +0.1%.
The price of gold will start today up +US$17 from yesterday at US$5001/oz. Silver is down -US$1 at US$79.50/oz.
American oil prices are down -50 USc, at just on US$95/bbl, while the international Brent price is still just on US$102/bbl. The Straits of Hormuz remain no-go areas for most with the situation still extremely unstable. The ships transiting are those approved by Iran, which holds all the cards at present.
The Kiwi dollar has risen today, up +10 bps against the USD from yesterday, now just on 58.6 USc. Against the Aussie we are down -40 bps at 82.5 AUc. We are up +10 bps against the yen. Against the euro we are down -10 bps at 50.8 euro cents. That all means our TWI-5 starts today little-changed at just on 62.2.
The bitcoin price starts today at US$74,160 and up +0.5% from this time yesterday. Volatility over the past 24 hours has been modest at just under +/- 1.8%.
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40 Comments
So the US president has created a quagmire that threatens the rest of the world, and is now flailing around for help, while notably telling everyone he doesn't need help, to fix the mess he has created. To cap his day another rat is jumping from his sinking ship as the Director of the National Counter Terrorism Centre Joe Kent resigns. Kent's parting gift speaks volumes when he says “Iran posed no imminent threat to our nation ...." Trump's response is typical; saying Kent wasn't very smart or savvy because he didn't see Iran as a threat.
The entire psychology of this is fascinating in that the people, the military and amazingly the majority of the politicians with some power are all continuing to support him and do as he directs. It seems that collective stupidity is the dominant trait in America at the moment. The frightening component of all this is that it affects the whole world.
Yes it does, but as I've said once or twice, Trump is a symptom, not a cause. The same can be said of this wee stoush; there was always going to be a scrap over energy resources and ultimately - given our species' 5-7x overshot-tedness - a scrap over who gets to live at what level of comfort.
This is made harder to see, because of our fierce clinging to seeing things through a $$$$$$ lens, which chooses not to account (we've seen that in knock-on form; people opining that this is all to do with avoiding the Epstein irrelevance; they do so because they start off blind).
Was good to see the resignation - and well articulated too, considering his track-record. But that just does what it does to any bully-gang; by default the Himmlers and the Goebbels and the Rohms are all that's left. And suddenly democracy finds it has been circumvented structurally. Mind you, democracy in its increasingly bought-and-paid-for hack form, was an integral part of the GROWTH which was always going to put the squeeze on and produce competition.
And: 'show that air travel is expected to double by 2050. Obviously that assumes the current geopolitical tensions subside' No; it assumes there will be jet fuel in twice the volume, doesn't it? Which there won't be, physically. A clean example of the blindness of $$$$$$$-lens assumption.
"And: 'show that air travel is expected to double by 2050. Obviously that assumes the current geopolitical tensions subside' No; it assumes there will be jet fuel in twice the volume, doesn't it? Which there won't be, physically. A clean example of the blindness of $$$$$$$-lens assumption."
It depends upon your measure...if it is 'money' , then air travel may well double by 2050. though it may consist of a single flight from San Fran to Queenstown.
It is interesting that populations see their rights as critical without acknowledging that rights walk hand in hand with responsibilities. One couple having a child produces responsibilities to provide for that child; housing, food clothing, education etc. A government promoting population growth has responsibilities towards infrastructure to provide for sewage, water, food, transport, employment, education, healthcare and so on, and then there is the bit that everyone ignores; being able to have the ensuing communities live without poisoning the environment and then not being able to provide the requirements like food and water. As a species we're really not much better than base animals in that we don't look much past our immediate needs. But every choice has consequences.
PDK this one is especially for you; MSNBC's Rachel Madow is reporting that Trump has just approved BP to drill another deep water well not too far from where the Deep Water Horizon exploded in 2010. She notes that BPs emergency plan is the same as it was in 2010, so totally not effective, and this new one is in 6000 ft of water as opposed to the 5000 ft of the Deep Water Horizon. Just a 'small' increase in risk.
Rachel is as ever at her expressive best when she says; "That is the level of genius and competence we’re dealing with at the helm as an arsonist, mad king president sets the world on fire."
Thank you.
Deeper :) delving, modern society demands a minimum EROEI energy (a lowness of entropy in its energy, if you prefer) and that demand is growing exponentially. Unsurprisingly, the stock we hoe into, have been depleting exponentially - how about that! And of course, we extracted the best/easiest/closest stuff first (for psychological/competitive/business reasons). So we are accelerating into dregsville; fracking, tar-sands, sour crudes, kerogen, coal-to.
All take more energy to obtain the energy - some of which shows up in satety-parrying. Which gets short-cutted which can be traced to consumer-demand for 'cheaper'. Deep-Water Horizon wasn't an if, in those circumstances, it was a when. So too are Middle-East wars (essentially over 'what's left' of an essential-to-churn resource.
Trump - like our present government - is forced to try and kick-start churn-growth which means he needs to up FF extraction (renewables don't do modernity). So safeguards will be set aside - exactly as climate-combatting and water-quality and real grounded education are being set aside here. All sacrifices the GROWTH - all therefore doomed to fail. My curcles are increasingly talking about the physical ramifications of that failure; the failure-events, the types, the knock-ons. What happens if a nuclear reactor gets abandoned or de-gridded? (Deepwater x how many? think Fukushima) What happens to just-in-time food is supply-chains seize up?
Maddow - like Lawyers for Climate here - is still part of modernity. Which is inevitably temporary. Funny old world.
What is truly absurd is the contortions that republican spokespeople perform to justify/support his decisions.
It seems that collective stupidity is the dominant trait in America at the moment
I'd say it's more fear.
Fear would be the consequence as they begin to realise what they've done, and what the consequences of that could be. Accountability can be a bitch. History will mark their legacy. But then if they've destroyed the world as we know it, who will record the history?
What was scary when Biden was in charge? Fear of woke?
"In a letter posted to his X account, National Counterterrorism Center Director Joe Kent said that Iran posed "no imminent threat" to the US and claimed that the administration "started this war due to pressure from Israel and its powerful American lobby"."
Time we asked the question:
Do we want to be aligned with Israel's continued genocide-approach?
And as an addendum - with its cranially-curtailed pet bear?
It would seem that Canada and the EU and the British people (therefore Starmer reluctantly) are of a mind to distance themselves. We could do worse than join them.
Do we want to be aligned with Israel's continued genocide-approach?
Depends if the objection is going to war to defend Iran, or just doing something token like flying a flag on the weekends.
We live in a world where there's very large gaps between what people say and what they do.
Trump says the decision to bomb Iran came after advice from Jared Kushner, Steve Witkoff and Pete Hegseth.
A real estate developer. A television host. And the president’s son-in-law.
Maybe they were all on the piss together and did it for a dare.
The lack of intelligence in both senses is a replay of the wmd invasion of Iraq by Bush junior. In his first term Trump eliminated General Soleimani perceived correctly as the powerhouse of the IRG. The IRG was formed in 1979 and developed with in mind exactly the circumstances of today. That is the central unbreachable control of Iran as a nation. Did it not seem obvious that the ill fated General Soleimani would not be alone, there would be many others in the ranks so attuned, ready to step up. Now the old Ayatollah is gone, his successor has been implanted by the IRG and they are not far off an actual military dictatorship. Not the negotiating types either, complete opposite in fact.
Yes the complete opposite of negotiator types. Art of the Deal philosophy being applied?
If the goal is to create a pretext for action, sending in a team that the opposing side refuses to take seriously is a classic way to ensure the negotiations fail
Some Jared Kushner symbolism…
Kushner Companies purchased the office tower at 666 Fifth Avenue for $1.8 billion ($1.8 = 6+6+6). Jared Kushner officially closed the deal on his 26th birthday. Jared is a tall fellow at 6’3”
Two from Israel's belief-system, one from another.
We are seeing this globally; the endgame for the rise in consumption (from say 1945 until now) is a breaking-down of the narrative which suggested the trend was endless. That in turn is leaving only those who can 'believe' (in a cranial-style way) in the political arena. Because our growth-forever narrative is losing its legitimacy, some have gone down woke/apologist rabbit-hole in response, others have chosen to double-down on chosen avoidance/blindness.
So we have fundy believers more and more in leadership roles, both because the voters vote for continuance of the narrative and because only believers can say with sincerity that they can deliver it. NZ being no exception. And the mental dexterity required to lead through the bottleneck, is not a common trait in fundy believers.
And as an important aside; belief comes in many forms; the permanence of fiat-issued proxy is no different to pie-in-the-sky-when-you-die, that way.
Kushner's been playing big boys games around investment in the ME. It'd be a reasonably safe bet he was given some promises about what would come his way, and hence to the Trump family if he could just get Daddy-in-law to sort the Iran problem. Easy done then daddy-in-law is a not too bright egotist.
A real estate developer. A television host. And the president’s son-in-law.
Must have been one hell of a dinner
To be fair, Kent is full on MAGA. Just a rat jumping ship before it hits the rocks.
We are all allowed to have a Road-to-Damascus epiphany.
Otherwise why... anything?
Some retreat from their apparently-solid reversal (Carney post-Davos is a classic example of moral strength walked back) and water it down - peer pressure/approval probably accounts for some of that.
On the other hand, he could have tended his resignation on the day the decision was made to declare war on Iran, rather than wait till it went tits up.
Carney post Davos is an example of making politics work to get the required results PDK. He could never set the world on fire to put it right. He has to negotiate with a whole lot of different parties, all with different, often competing priorities that need to be acknowledged. The common ground that gets them together is what he talked about and their concerns over a future of being run over and trampled by the big powers. Give it time to work. It was never going to happen over night.
Sounds like Rachel Hunter re Pantene...
But agree with you mostly...
I with you that I don't think it will be totally effective too. But Trump is driving the world away from America, so it will be Carney's 'Middle Powers' (Tolkien anyone?) who will have to keep the planet on an even keel if it is at all possible. The damage he and his supporters will do inside America will prevent them from rebuilding their influence for decades if ever. The age of the great champion of democracy is over, nibbled at by the rats within. Funny that - they were never a great democracy....
The UN will become even more crippled as the veto powers cripple any united move against the great powers. Perhaps it is time to disestablish it and create a new one centred in Brussels maybe?
Levity...Love it
Some people like Independant Observer and NZ Gecko have been calling for the RBNZ to raise the OCR to reduce expected inflation (+150 bps OCR hike was Gecko's view). How exactly does a higher OCR reduce the price of imported oil ?
It doesn't and if things snowball they'll be dropping rates, not raising them.
But it's a crapshoot either way.
Strenghten the $? Reduce demand?
....theory would be to weaken economic growth & reduce demand at the margin - but it's drawing a long bow
From the perspective that the reset of the economy away from realestate being a major driver, will be painful, this morning's Paddy Gower article in Stuff is, IMO, evidence of that pain being clearly evident now:
https://www.stuff.co.nz/nz-news/360952255/absolutely-brutal-how-todays-…
Paddy seems to stop at the first conclusion that the jods market is brutal. And the second conclusion I draw is that AI screening of applications is blocking applicants progressing if they haven't guessed and included the exact key words in their application, that will open the AI gate to progress to consideration by a human.
History repeats even though the technology environment changes (I'm not sure substituting advances for changes is appropriate). In the 30s, registered unemployed MALES peaked at around 17% (some suggest it was well past 20%) . For other years and I expect gender inclusive, the peaks I could find were: 1991 (11%), 1998 (8%), 2006 (6.6%) and 2012 (6.4%). Comparing the current 5.1% with past periods, it's not that grim.
BUT
Over the last 30(?) years or so regulations have entrenched that every citizen is entitled to a cosy, predictable, comfortable, lifestyle, attempting to eliminate all risk of discomfort to individuals, and eroding personal choice/decision guiding responsibility for outcomes of individual action. E.g. food safety standards pursuing zero risk to consumers, healthy homes, tobacco smoke free (while attempting to legalise smoking marijuana), OSH, earthquake strengthening, pursuing fresh water quality standards that i argue no other country in the world comes anywhere close to, etc. This has (exponentially?) ramped up the costs of simply living. Now we have a cost of living crisis....go figure.
These policy/regulatory shifts have alienated the population from the fundamental biological reality that hand in hand with living goes the risk of injury, sickness and the certainty of death with individual choices/actions contributing to lifes fortune/misfortune. That alienation has elevated the perception that misfortune is someone else's fault. That central/local/regional government (the general population in total through taxes and rates/levies) is responsibility and obligated to eliminate risk to individuals and restore the individual's comfort/security no matter what when inevitable misfortune happens (aka s**t happens). In other words, created a la la land.
What I would like to see from Paddy and others of his ilk is not that there is pain (that's patently obvious), rather, what/how individuals are making adjustments to the painful yet new reality that is their lives today. That is resilience building.
"AI screening......key words"
Be great to know what those key words are, although we can have a pretty good guess. I wonder if those key words need to be in a sentence?
It takes a crisis to expose that the frailties are pretty much skin deep. The Canterbury EQ sequences did just that and rapidly. Many of the badly affected had not a clue about such as finding alternative water supply and then conserving it or existing without electricity. What went deeper though was the social division between one side of town being the withs, and the other being the withouts. And then the EQC/Insurance claim wrangles quickly emerged which introduced too many rancorous disputes, punitive and unfair on one side and opportunistic and dishonest on the other. So in support of your theme it certainly revealed that society today lacks the resilience, adaptability and self reliance that it once out of necessity did possess.
Bravo Lou - well stated.
Paddy and Bernard Hickey are the most likely to broach the big picture.
Others have perhaps the intellectual capability - but seem to choose to leave it in the box.
I have simliar sentiments. We push standards higher and higher for good reasons but it rarely cost free and often compounding.
Mentioned to someone that unemployment rate was twice as high in the 90s and got a slightly dumbfounded look.
Age brings perspective but it is rarely learned, mostly everyone has to live it for themselves.
These policy/regulatory shifts have alienated the population from the fundamental biological reality that hand in hand with living goes the risk of injury, sickness and the certainty of death with individual choices/actions contributing to lifes fortune/misfortune. That alienation has elevated the perception that misfortune is someone else's fault.
Wholeheartedly agree, and would go so far as to say that we have become complacent in our survival instincts due to a heavy reliance on technology and systems to make life easier and less risky (imagine what people would do if we had no unemployment benefit, and while not advocating for this, people would get shit done and fast to survive). Personal responsibility is at an all time low, and we have not had a large scale upheaval like the late 80's where millennials and Gen Z have seen true loss and realised the harsh realities. We have seen govt buyouts of land form natural disasters, council buyouts for uninsured properties e,g cyclone Gabrielle, and the embedded thought process that (as well as the fault factor mentioned) someone else will solve our problems. This, naturally, goes against engagement in politics which as we know is crucial to have fair and accurate representation at local and central govt level.
What a fantyastic comment Lou. Responsisility for one's own life has indeed been eroded over the years at the cost of freedom and efficiency. We should be responsible for our actions much more and be prepared to enjoy or endure the good or bad consequesnces, rahter than Big Brother cushioning us into a bland life of cotton wool.
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