Here's our summary of key economic events overnight that affect New Zealand with news deeper turmoil in the Middle East has overshadowed the US Fed meeting.
But first up, in an 11-1 vote, the US Federal Reserve decided to hold its policy rate unchanged at 3.25% at todays meeting. Only Trump's insert, Stephen Miran, voted against the consensus. The immediate response from financial markets wasn't large, probably because this is the expected result. While their dot plot signals a rate cut this year, markets do not have that priced in. In fact the futures market is looking for rises. Update: Markets are now pricing in higher benchmark rates, lower equity prices, and a stronger USD on risk aversion.
Elsewhere in the US, mortgage applications sank last week by almost -11% as rising mortgage rates killed off demand. Almost off of this pullback was for refi demand
American producer prices surged +0.7% in February from January to be +3.4% higher than year-ago levels. That is the biggest rise in more than a year. If you just isolate producer prices to 'goods' only, the jump was noticeably more, up +1.1% just in one month.
That makes the January factory order data look rather weak. They were up just +0.1% from a month earlier, up +3.5% from a year ago. So almost all of this is accounted for by inflation, and the recent order level growth is far less than recent inflation.
Financial markets noticed and sagged.
US crude stocks rose and by more than expected last week, but this had little impact on the rising oil price. But US domestic petrol inventories dived last week in a major way. Making this notable was it was the fifth consecutive weekly drop.
The Bank of Canada left its overnight target rate steady at 2.25% in its March meeting, as expected.
Staying in Canada, they reported that their 41.5 mln population declined by more than -100,000 in 2025 mainly due to an exodus of foreign workers..
Meanwhile the Japanese Reuters Tankan Index rose to 18 points in March from 13 points in February and its highest (non-pandemic) level since 2019.
In South Korea we should note that a 66,000 member union has voted to strike at a major Samsung electronics facility in May. If it happens, it will be yet another supply chain disruption for a key global electronics supplier. This is a company union, and only the second time in its history it has voted to strike, so there must be deep dissatisfaction involved.
In Malaysia, they became the first country to confirm that their special trade pact with the US is now 'void' following the US Supreme Court's tariff ruling. It will likely trigger a cascade of other countries declaring the same.
In China, new official data out shows that cement production surged in February, back to 2023 levels, and perhaps a solid indication that construction activity is picking up, after a long two-year low period.
In Australia, the six-month annualised growth rate in the Westpac–Melbourne Institute Leading Index, which indicates the likely pace of economic activity relative to trend three to nine months into the future, held at +0.08% in February, unchanged from January but down from more firmly positive reads seen late last year. Of course, this metric covers periods before the US-Iran war.
Meanwhile, Far North Queensland is being warned to brace for Tropical Cyclone Narelle, forecast to make landfall as a category four or five system on Friday morning, with destructive wind gusts of up to 250 kph !!
Generally, we should probably note that the USD's steady devaluation against the Chinese yuan seems to have ended, with the rate holding steady for the past few weeks.
The UST 10yr yield is now just on 4.22%, up +2 bps from yesterday at this time, littel-changed after the Fed decision. The key 2-10 yield curve is flatter at +54 bps (-3 bps). Their 1-5 curve is steeper at +18 bps (+3 bps) and the 3 mth-10yr curve is now at +54 bps (+4 bps). The China 10 year bond rate is little-changed at just over 1.82%. The Japanese 10 year bond yield is down -5 bps at 2.22%. The Australian 10 year bond yield starts today at 4.93%, up +3 bps from yesterday. And the NZ Government 10 year bond rate starts today down -8 bps at 4.63%.
Wall Street started Wednesday trade with the S&P500 down -0.6% ahead of the Fed decision. After that it fell a bit further. Overnight, European markets were also lower, between London's -0.9% and Paris's -0.1%. Yesterday, Tokyo closed up a very sharp +2.9%. Hong Kong ended its Wednesday session up +0.6%, and Shanghai rose +0.3%. Singapore ended up another +1.3%. The ASX200 closed up +0.3%. But the NZX50 closed on Wednesday up a full +1.0%.
The price of gold will start today down -US$121 from yesterday at US$4880/oz. Silver is down -US$2.50 at US$77/oz.
American oil prices are up almost +US$3, at just under US$98/bbl, while the international Brent price is up +US$6, now just over US$108/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 Israeli attack on Iranian gas fields has delivered a large spike in natural gas prices.
The Kiwi dollar has dipped today, down -20 bps against the USD from yesterday, now just on 58.4 USc. Against the Aussie we are unchanged at 82.5 AUc. We are little-changed 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 -20 bps at just over 62.
The bitcoin price starts today at US$71,293 and down -3.9% from this time yesterday. Volatility over the past 24 hours has been moderate at just on +/- 2.8%.
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17 Comments
Israel is driving this crusade. We need to distance ourselves from that, genocide and murder are not good to be associated with.
Trump is bewildered - and seems to be deteriorating mentally.
The US is increasingly looking like a pariah state.
The US was leaving the oil infrastructure intact - probably because it assumed soon-ownership. Also to keep the global 'economy' energised (same with reducing repression of Russian FF). This attack seems to be mostly-internal gas, but the retaliations will be globally-implicative, meaning oil.
Repercussions for every First-World activity. Interesting times.
So big fan of drill baby drill, within NZ, PDK?
While we see only small oil finds in NZ over recent decades and all of it exported as crude, we seriously need another large gas discovery now and a fast building out on infra, on any new field. It would need to be "operation warp speed 2"
Where is Maui's big brother? Start poking Aussie oilers!
You seem to be confusing need with reality?
What was needed, was to preserve the resource we did have, rather than burn it as quicky as possible for private profit. Probably pursuing economic and population growthist ideology wasn't that bright either.
That worked out real well for the Watties etc. workers. Preserve away, but sort out your plan B first - rather than going for an arbitrary Captains Call and waffling about green hydrogen. At least make some effort to preserve employment - not just go for UN brownie points and damn the workers.
Huh? Watties was an iconic NZ company producing NZ product using NZ workers. Then neoliberal growthist globalists got hold of it, as they did the rest of the countries' assets, looking to squeeze ever more profit out, sold off, pared down, outsourced, until there's nothing left but a shell. I would hazard a guess that Watties provided far more well paid jobs before 1984, than 2026, in spite of all the expert management applied?
Preserving finite assets should be both plan A and B in a sane world!
Selling off assets is a natural consequence of us running a persistent current account deficit. To avoid it, we need to buy less stuff from the rest of the world and/or export more stuff to them.
Reducing our fossil fuel dependence would be a great start.
Amen.
Was Russian oil repressed? Russia has been producing and exporting as much oil as it physically could. The only thing being repressed was the price. The whole point of this "price cap" was to avoid restricting availibility to the global economy, while reducing funds flowing into Russia for Putins imperialist ambition.
The only thing changing is funds flowing to the Kremlin, not the amount of Russian oil flowing to market. Removal of the cap was Trumps gift to his mate. A gift he was probably looking to expedite at first opportunity since taking office.
Reported in the Guardian, the online betting company, Polymarkets, owned by an exquisite bunch of including DJT and the NYSE, seems that insiders may be making a buck on bets on the attack on Iran. Gamafying and making a buck. Joy. Capitalism at its most dynamic.
Just another symptom of the most corrupt US administration in living memory.
Remember when the worst thing a President could do was get a hand shandy from a Whitehouse Intern
Those were the days
Yes, plenty of wash trading being reported on the Iran betting markets.
The Whitehouse X/twitter account is also turning into a gaming lobby, they're busy dropping flawless victory edits
See here: https://x.com/WhiteHouse/status/2032115039985881556/video/1
Yes, SL - the Western financial casino model (est 2020) at its most obscene level...
- A cryptocurrency-based casino HQ based in, of all places Manhattan NY.
- Punters can bet on everything from weather patterns, sports matches, economic indicators, awards, pluds political, and legislative outcomes!
- Participants can deposit USDC crypto through the Polygon network and trade shares that represent the likelihood of specific future outcomes.
- This casino allows betting on military strikes, and the opportunity for individuals to use insider information is almost unlimited - so too are attempts by gamblers to manipulate outcomes, as well as to put pressure on the media.
- From 2022 until Dec 2nd 2025, Polymarket blocked access to US punters after a settlement with the Commodity Futures Trading Commission, which had accused it of running an unregistered derivatives trading platform.
- Predictably, Captain Chao$ eased the regulations, and Polymarket added the creep DT Jr as an advisor - his firm, 1789 Capital, also invested in the company.
Move along, folks... nothing to see here.
Col
The neoliberal, globalisation, market as arbiter is a 'forked' system (i constrained myself from using the first adjective that came to mind).
NZ has been largely divvied up amongst massive transnational corporations. Rather than NZ controlling the chess game that is NZ society and economy, we are mostly relegated to pawn status being manipulated at the whims of those corporations. The last bastions of NZ not being manipulated from off shore are, in my opinion, Fonterra and Zespri. Meat processing, oil refining, gold mining, banking, tractor maintenance, land (carbon farming) - controlled from off shore now.
The sale of state owned assets has been caste as selling the family silver and it was. But I reckon the most important family silver to disappear has been achieved by the narrow minded ideology that readily permitted offshore interests to buy NZ companies, use transfer pricing, with few checks and balances on ensuring profits are taxed in NZ and a significant percentage of profits retained and reinvested within NZ.
How do we reclaim? I don't know that we can. I do know, that under no circumstances should Fonterra and Zespri their statutory protections as farmer owned cooperatives. Because if they do, we will be destined to peasantry at a great rate of knots.
Some very good points there, Lou.
And you also touched on what I see as the key to a solution that should be staring us all in the face, when you said...
"The sale of state owned assets has been caste as selling the family silver and it was."
IMO, there is one key element, in terms of public utilities, that could transform NZ into a very wealthy society within a few short years.
By undertaking fundamental change to our banking system, beginning with the RBNZ, we could divert the billions of dollars away from the deep pockets of the global private banking cartels. IOWs. We could make banking a public utility as well, IF only this solution could be politically brokered.
Billions of dollars could be gathered as revenue for the Treasury, which would no longer need to be raised in the form of taxes.
This immediate, and potentially permanent windfall, could be deployed domestically to invest in infrastructure, entrepreneurship, our productive economy, and, of course, our future.
AND THE BIG IF? - as long as we don't do what we did in the late 1930s, which was to sell the brilliant model we had back to global banking corporations, and consign our economy, once again, into a debt-based money trap vortex... which is precisely where we are...
right now.
Cheers
Col
"relegated to pawn"
There has been no greater global cheerleader for the rush to be relegated to pawn than NZ. The dash to sell off valuable assets has been beyond indecent and into the realm of economic prostitution. The latest being the sale of Fonterra owned consumer brands. Where is the kick to the economy that was supposed to eventuate? Asset gone, money evaporated, now we have Irish dairy product sailing to North America and US rubbish dairy sailing back, burning bunker fuel that runs out in a couple of months?
The payout from consumer brands won't happen until next month. So you are a bit early, looking for the flow on effects.
My expectation is that initially, only a small part of the payment will enter the wider trading economy because I expect farmers will apply the returned capital to debt repayment in the first instance to gain a stronger balance sheet position.
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