Here's our summary of key economic events overnight that affect New Zealand with news Qatar has being hit hard by Iranian missiles today, upending the global trade in natural gas. In fact, it is clear now there will be a protracted energy shock that everyone needs to adjust to. The impacts are ahead and aren't going away.
Elsewhere, US initial jobless claims came in at +190,000 last week, a slightly bigger dip than seasonal factors would have expected. There are now 2.1 mln people on these benefits, marginally less than a year ago but still above two year-ago levels.
The Philly Fed factory survey for March rose from February although that wasn't due to new orders, which retreated.
Clearly these businesses are not involved in new home construction, because new home sales fell sharply nationally in February to their lowest level since early 2023.
US wholesale inventories fell in January, and their inventory-to-sales ratio fell even sharper. So there is plenty of capability to rebuild inventories to 'normal' levels - but clearly most businesses aren't doing that, choosing to boost cashflow with lower inventory levels.
Elsewhere there were a number of central bank policy rate decisions released overnight. China held its Prime Loan Rates unchanged at record low levels. Taiwan left its policy rate unchanged at 2.00%. Japan also held unchanged at 0.75%. Switzerland held at 0%. Sweden held at 1.75% (link for Governor Breman.) And the ECB was also unchanged at 2.15%. There were others, like the Czech Republic (3.5%), England (3.75%), Moldova (5.0%), and none of those changed either.
In Australia, their jobless rate rose to 4.3% in February, up from the 4.1% forecast and levels seen in the previous two months. This is back to the November level. Full time jobs fell -30,500 while part-time jobs rose +79,500. Their participation rate hit a four-month high of 66.9%. (As at December 2025, the NZ jobless rate was 5.4% and will be updated for Q1-2026 on May 6.)
And staying in Australia, the Cat5 tropical cyclone packing 260kmph winds is now hitting Far North Queensland, but it way up there above Cairns and Port Douglas which isn't taking the brunt of it. It may affect Weipa, the source of bauxite for our Bluff smelter, however.
Global container freight rates were up only +2% last week to be down only -4% from year-ago levels. In fact these rates have been remarkable stable out of China. But inbound rates to Europe jumped +10%, and transatlantic rates into the US dived -35%. But twisted supply chain pressures will likely change this ahead. Bulk freight rates rose +7.5% in the past week to be +24% higher than year ago levels.
The UST 10yr yield is now just on 4.28%, up +6 bps from yesterday at this time. The key 2-10 yield curve is much flatter at +41 bps (-13 bps). Their 1-5 curve is slightly flatter at +16 bps (-2 bps) and the 3 mth-10yr curve is now at +60 bps (+6 bps). The China 10 year bond rate is little-changed at just under 1.82%. The Japanese 10 year bond yield is up +5 bps at 2.27%. The Australian 10 year bond yield starts today at 5.02%, up +9 bps from yesterday and its highest since 2011. And the NZ Government 10 year bond rate starts today up +8 bps at 4.71%.
Wall Street has started Thursday trade with the S&P500 down another -0.5%. Overnight, European markets were sharply lower, between Paris's -2.0% and Frankfurt's -2.8%. Yesterday, Tokyo closed up another sharp +3.4%. Hong Kong ended its Thursday session down -2.0%, and Shanghai fell -1.4%. Singapore ended down -0.7%. The ASX200 closed down -1.7%. But the NZX50 closed on Thursday down -2.0%.
The price of gold will start today down -US$293 from yesterday at US$4587/oz. Silver is down a massive -US$6.50 at US$70.50/oz.
American oil prices are holding up at just on US$95/bbl, while the international Brent price is now just over US$107/bbl. Both were higher earlier. 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. They are talking about charging fees to transit safely. (A tariff !!)
The Kiwi dollar is little-changed against the USD from yesterday, still just on 58.4 USc. Against the Aussie we are up +40 bps at 82.9 AUc. We are down -80 bps against the yen. Against the euro we are basically holding at 50.7 euro cents. That all means our TWI-5 starts today up less than +10 bps at just under 62.1.
The bitcoin price starts today at US$69,465 and down -2.6% from this time yesterday. Volatility over the past 24 hours has been moderate at just on +/- 2.4%.
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33 Comments
The ships transiting are those approved by Iran, which holds all the cards at present. They are talking about charging fees to transit safely.
They're also now actively targeting energy production/storage in the Gulf States.
Whatcha gonna do Don-don. Probably continue pooping the bed and blaming it on the cat.
The answer is simple really and I must admit that I am surprised Trump hasn't already done it. From a strictly military perspective the US should stop all traffic, especially Iranian aligned traffic transiting the strait until all military action is stopped.
That doesn't mean I approve of what is happening. It is simply looking at the local tactical picture and considering what strategies are required to bring this to the quickest end. If no fuel of any form is getting to the other countries of the world, then no fuel should transit the strait period.
I agree
They would need a significant navy presence in the strait/gulf to do that and so far they have been reluctant to do that because they know they would be an easy target.
The answer is simple really and I must admit that I am surprised Trump hasn't already done it. From a strictly military perspective the US should stop all traffic, especially Iranian aligned traffic transiting the strait until all military action is stopped.
So you blockade the Strait.
That's two blockades
Who do you think blinks first?
Trump already has a few block(head) aides
Iran is stopping all the other traffic. The US only has to stop that which is getting through. The IRGC will try to force it, but will get beaten down.
This will become like Ukraine, a war of attrition. Israel and Trump have opened a significant can of worms without a comprehensive plan of how to manage all aspects of it, or it seems a comprehensive understanding of how tight a grip the IRGC and the Basij have on the population. I can't see a complete resolution without boots on the ground. and that means casualties. How far will Trump be prepared to go? His hypocrisy (and ego) knows no bounds. The old question resurfaces, what will it take to rein him in and keep him in check?
The US/Israeli action is already destroying the Gulf (allies?) economies....not to mention the rest of the worlds', do you think they should add to that disaster by stopping even more supply?
Seems that there is a law of the seas, says non belligerent ships are free to transit the straits. You know, rules. Such a pain.
How about we do something mature, call for immediate ceasefire? Stand up to the bullies in the 3 countries involved.
So it looks like central banks worldwide are choosing to ignore the inflationary effects of the war. It’s feeling similar to post Covid.
When Covid hit we got massive emergency rate cuts, same with the GFC. When there’s a war which is obviously inflationary, crickets.
We thought COVID was going to be like a zombie apocalypse, and did a rather significant and sharp over reaction.
Maybe we'll just sleepwalk into an actual apocalypse.
Good luck to any official trying to accurately pre-empt this clusterfudge.
Central banks are a bit gun shy as many economies are still feeling the aftermath of the previous rate hikes. Doing the old wait and hope. But if the luck isn’t in their side they’ll have to increase the OCR big and fast instead of a few small increases now.
I'm still a bob either way.
If gas goes up a buck or two for us, that sounds bad. Elsewhere, that increase is as much as some people's hourly pay. Per litre.
So we have parts of Asia and elsewhere moving to 4 day weeks, or some economic activity just isn't happening at all.
And this is just early days.....
You’d have to be pretty crazy to build an economy that relied on cheap imported fuel and LNG wouldn’t you?
That describes the EU pretty well.
Its also the NZ blue team's fantasy.
If I was in government I'd be spending every last buck on electrification (and I am not conveniently saying that now, I have been for a while). The 3 billion a year tax cut could have bought a lot of EV subsidy / solar subsidy / electricity generation / electric rail over 10 years. A proper investment in the future for a change...
The technology doesn't really exist to electrify our agricultural sector.
And you need that or you can't pay for much.
Seems we're about to find out how our ag sector will work without fossil energy input?
"And this is just early days....."
Yes, indeed but a decision should be made earlier rather than later. War is mostly about wealth and trade. If practically the whole world realize they are being held to ransom by one state then the decision should be relatively simple regardless of it being possibly repugnant.
It is an interesting situation. Israel exists because of the decisions of a large number of nations. A large number of nations need shipping routes to stay safe and open, especially exporters like the Arab oil states. A large number of nations bear some responsibility for this mess.
Can the world afford Iran to have such control? Not if Iran is totally unreasonable. Iran has made a wise move in putting a price on ships transiting the strait. They know if the cost is too high, like no transit, that will lead to their conquest with ground troops. Marching on Tehran and restoring the Shah may be all that is required. However if Iran set the price at affordable they may just win this.
Iran is pursuing reasonably satisfactorily a strategy of playing to its strengths and not wasting too much effort on where it can’t compete.
I argue the world simply cannot afford Iran to have such influence over key shipping routes and world economics. They also have significant reach into the Red Sea through their proxies. If they win they will have even more influence. It will come down to what is affordable. The IRGC needs to carefully play to its strengths from now on or risk fatally overreaching.
I would have to agree with you on that Zach. They're an extremist government arming and funding proxies across the ME to gain influence while hiding behind religion. But the terror they inflict on their own as well as others marks them as evil.
Likely they are now even more extremist. The old venerated Ayatollah is gone along with a very high percentage of the other government hierarchy. The new Ayatollah has been appointed more or less by the Republican guard and it is quite obvious that body now holds the keys to power. When you consider the persona, policies and activities of the former IRG general Soleimani before he was eliminated on Trump’s orders in 2020 it is clear that while the IRG is intact and control the streets Iran is under their complete control and as said the other day they are not the negotiating types at all.
I argue the world simply cannot afford Iran to have such influence over key shipping routes and world economics.
It's not really a problem until someone starts throwing rocks at them.
Perhaps it's not Iran who shouldnt be exerting so much influence.
Israel and the States have started a war and are socializing the costs to most of the rest of us.
Central banks are energy-ignorant, retroactive and ultimately powerless (power is a physics term).
No energy equals no work equals no production.
The rest is Ponzis hoping to be underwritten by more production somewhere in the future.
And you can't eat the Mona Lisa.
It’s impossible to work out what to do for the RBNZ. So inflation is clearly going to spike. But activity is going to crater. So if they are sitting there deciding what to do you saying “ so we have a crisis of costs in NZ, Companies rolling over, food parcel demand up 200%, queues at the supermarket for supply shortages. CPI looks like it will hit 7% so we should hike rates.” How will that bring it back down? Zero chance.
but that said it’s their job.
impossible situation. Brennan will be earning her salary and to be honest I wouldn’t want to be in her shoes at 1mio a year
Interesting read on BBC this morning:
https://www.bbc.com/news/articles/c24de9e97vno
The EU facing some major challenges to energy security, ghg emissions targets, and principled positions re sanctions on Russia and nuclear electricity generation.
Right now I think the threads in the seams that hold the EU economic blok together are under stress.
The EU is important to us. It - plus Canada and Australia and one or two others - is our only chance of finding a peer-group during the long unwind ahead.
The US is a gone goose; removing Trump doesn't solve its physical problems.
China is going to be much more resilient, but they will see it as their turn to use us as cheap labour.
I witnessed heck of a drop in Gold and SIlver overnight down to $4,500 and $66 respectively, as I'm currently in Europe, Both have recovered quite bit since, but it was incredible watching Silver drop 13% and Gold 7% with what seemed no end in sight.
its a liquid market, as margin is required its easier to sell gold on margin then stocks... so down it goes, buy the dip.
I get the feeling Aus is in the line for a big jobs hit. Their economy is underpinned by extracting and shipping metals. Cost of living is super high so a big wobble there could cause major problems.
Only 47 days to go. Hope everyone has the horse and buggy fed and polished?
Seeds collected for next season, more like.
Otherwise what are you travelling for?
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