Here's our summary of key economic events over the weekend that affect New Zealand with news its all about watching financial markets and their reactions to the US war on Iran and its long-term impact on US fiscal management - and their November election prospects. It is going to be volatile, yo-yo mix of gloom and temporary relief rallies.
During the pandemic crisis, we had essentially a fiscal and central bank 'put' policy to deal with that crisis, an implicit policy promise where the Government and central bank acted with programs to set a floor for employment and asset prices, typically by purchasing assets to inject liquidity during market downturns. But this time there seems little appetite to reprise that if things get really unstable.
In the week ahead, locally we will get some mortgage data for February, but apart from that, data releases will be light. Today's Fonterra results will be interesting however.
In Australia, Wednesday's February inflation data will be the key thing we are watching.
Globally, it will be all about actions and reactions during the fourth week of attritional conflict in the Persian Gulf and how that affects oil and natural gas flows.
In the US, there are a range of sentiment indicators for March out this week including PMIs, the University of Michigan consumer survey, and many regional Fed surveys.
In China, there isn't much data ahead this week, just industrial profit data. In Japan and Singapore, they too will update inflation data.
But we need to watch US Treasury yields which jumped at the end of last week, and to their highest level in nine months. Investors seem to be coming to realise that Trump doesn't know what he is doing, and the inflation impacts from these mistakes will likely deliver a much more hawkish US Federal Reserve, despite the Warsh and Miran inserts. We may all be in for rising benchmark interest rates.
And it won't help us that credit rating agencies are looking at these impacts and starting to consider downgrades, sovereign and corporate. Risk premium rises will be on top of the benchmark rises.
Meanwhile, the IEA says the market disruptions from the US/Israeli "conflict has triggered the largest supply disruption in the history of the global oil market". They say we should all work from home, and if we drive, drive slowly.
American petrol prices are up a third in just four weeks. That signal from the world's largest economy will be sharply inflationary. By a different means, Trump is effectively imposing a giant carbon tax on everyone.
And what will flow from that? Sharply higher inflation, and sharply lower global economic activity. That is the definition of stagflation. Everyone suffers because monetary policy needs higher interest rates to restrain the inflation risk. And that undermines the global banking system because stagflation is the worst scenario for bank lending.
Meanwhile, Canadian retail sales rose in February by +0.9% from January to be +1.8% higher than year-ago levels.
But Canada's producer prices rose much less than expected in February. They were up +0.4% from January when a +1.1% rise was expected. For the year they are up +5.4% however.
Taiwanese export orders are still growing fast but the February rise was only +24% and by the standards of the +60% January rise, this seems a let-down. Analysts has expected another very large rise and so were disappointed. But anyone else would have been over the moon with a +24% rise.
In China, foreign direct investment inflows fell -5.7% in February from a year ago to ¥161 bln, -22% lower than the same period in 2025, and its lowest for this period since 2020. There were some positive sectors in high-tech, but mostly this is a weakness Beijing won't appreciate.
And Chinese customs data shows why the silver price jumped earlier in the year. China bought up 700 tonnes of the metal in January and February to shore up its strategic reserves. But the buying seems to have eased or stopped, and we are seeing the price dive now.
We should probably note that with the Australia-New Zealand "Closer Defence Relations" statement, there is growing expectations that the two countries will buy its replacement frigates from Japan.
In South Australia, the incumbent Labor state government has won re-election handily. Advance results show it winning 33 of 48 seats, with the Liberals suffering a heavy reduction (10). With 98% of polling booths counted, so far Pauline Hanson's One Nation Party is not ahead in any of them.
And we need to note that Fitch has changed their outlook for the New Zealand economy, shifting its AA+ rating from 'Stable' to 'Negative' on the basis that debt reduction is now far less likely for either the private or public sectors.
The UST 10yr yield is now just on 4.39%, unchanged from Saturday at this time, up +11 bps for the week. The key 2-10 yield curve is little-changed at +50 bps (+1 bp). Their 1-5 curve is slightly steeper at +19 bps (+2 bps) and the 3 mth-10yr curve is now at +71 bps (+2 bps). The China 10 year bond rate is unchanged at 1.83%. The Japanese 10 year bond yield is still at 2.26%. The Australian 10 year bond yield starts today at 5.02%, down -5 bps from Saturday. And the NZ Government 10 year bond rate starts today unchanged at 4.76%, up +7 bps for the week. The Fitch downgrade probably won't help.
The price of gold will start today down -US$83 from Saturday at US$4590/oz. That is down -$528 or -10.5% in a week. And that its largest weekly fall in more than 40 years. Silver is down another-US$2 at US$67.50/oz, a -16% weekly retreat.
American oil prices are holding at just on US$98/bbl, while the international Brent price is up +US$1.50, now just over US$112/bbl.
The Kiwi dollar is little-changed against the USD from Saturday, down -10 bps at 58.3 USc. Against the Aussie we are also little-changed at 83 AUc. We are down -20 bps against the yen. Against the euro we are down -10 bps at 50.4 euro cents. That all means our TWI-5 starts today down -10 bps at just on 62 but up +40 bps over the past week.
The bitcoin price starts today at US$68,741 and down -1.3% from this time Saturday, down -3.3% from a week ago. Volatility over the past 24 hours has been modest at just on +/- 1.8%.
Daily exchange rates
Select chart tabs
The easiest place to stay up with event risk is by following our Economic Calendar here ».
49 Comments
Stagflation rising globally. Bank assets become worth less as the gambling becomes further exposed.
Let the staggering begin....
Would add last time stagflation set in was the 70s. The Fed took interest rates into the low 20s to offset the impacts. This was a almost a decade of high interest rates. Ergo those locking in longer rates will be exposed when they roll to floating, as NZ dosent offer more thag 5 year loans.
If the Fed follows Volkers playback from then, little ol NZ will be towed along just like last time.
"Let the staggering begin...."
You do realise stagflation is a bad thing, right?
Absolutely. Its in the text books under the "avoid at all cost section".
The real questions are "why are we here again?", and "how do you position to ride thru and take advantage post fallout?"
Yes, that is the question
But the answer lies not in economics; it lies in physics (and in turn, chemistry and biology).
Keep printing proxy - and bets on bets on bets on that proxy increasing its purchasing power - while hoeing into the resource-stocks being purchased at ever-exponentially-greater rates.
It's not the reduction in purchasing-power of the proxy is the worry (although clearly some here need to fixate on that); it's the reduction per capita, of the resource-stocks. Coupled with increasing entropy of resource-stocks already processed into something that is now decaying.
Stagflation? I'd be more concerned about actual supply. Cargo-cultism never took off...
Answer lies in physics....
And base human nature
The first is inevitable; immutable.
The second is somewhat more fraught.
When you disenfranchise large numbers of people - as per Islam generally, with tame-puppet exceptions - you can expect particularly the young frustrated males, to become a thorn in the side of the enfranchised. We have hung on the coattails of the enfranchised for more than a century. They are looking less than permanent - with implications.
The second is somewhat more fraught
This is the massive wildcard that makes future predictions "tricky". We can make reasonable predictions of human behaviour, but human action (or inaction) in the fringes often drives significant change.
IMO, Averageman, the Western fiat Ponzi scheme will implode before 10-year treasuries reach even the mid-fives or 6%, simply because the monumental amount of debt embedded in both the government and the private sectors worldwide is not sustainable at those numbers
Worse still, so much of this debt is being deployed in the financial casino economy rather than the productive sectors.
Add in the multi-quadrillion derivative time bomb, the private credit debacle that is already imploding, sub-primes lurking around every corner, stagflation already here (the fictitious CPI/inflation stats are hiding it), and we are facing the bursting of a speculative bubble that is bigger than the roaring 1920's, 1980's, Dotcom, and the 2008 GFC combined.
Now we have a complete lunatic in the White House, an oil supply/price crisis, commodities all set to skyrocket, and potentially, a world war to add to the mix.
Talk about a perfect storm - none of those previous bubbles had anything like this current combined buildup of classic bubble-bursting potential.
Powell, or whoever the poor blighter on watch at the Fed happens to be when the fiat Ponzi goes tits up, has no tools left in the toolbox to deal with an event of this scale.
There is no fix for this clusterf%$k, because the MOAT fiat Ponzi is dead... mortis, fatum, nex, der Tod, shi, mawt, olum, chet....
The US SOT, Bessent, is a gibering moronic George Soros asset who will only make things worse... (that's probably why he was put there in the first place - as part of the demolition team).
My personal feeling is that TPTB will crash the dollar in one last feeble attempt, in which they will appear to be trying to save a broken system.
Newsflash - they are not trying to save it. The plan they have in mind for all of us unwashed is that we will own nothing. We will be herded into a global technogulag, where they aim to control every aspect of our existence.
It is absolutely no coincidence that "Larry the Fink", the co-founder, chair and CEO of BlackRock, is also the vice-chair of the WEF - you couldn't make this shite up.
2026 will be the craziest year in history. I still believe the inevitable unwind will be a net positive in the very long term because the TPTB have completely overplayed their hand. Nevertheless, in the meantime, one hell of a lot of people are going to get hurt or killed.
Well said.
All of that, plus an environmental/climate catastrophe on the side..
Agrre with all of that. I used the term gambling. Your breakdown is more broard and detailed.
Why is gold going down? China has enough gold, stopped buying? Is it that margin trading thing, small cascade? Or (rose tinted) gold holders seeing a better opportunity with equities? 😁 Or (darker) selling gold to buy other commodities like sulphur or even crude, smart money? What is the meaning of the signal?
Margin calls. Everything is being liquidated.
Enough fools have bought in for the smart people to sell up and move on to the next speculative asset?
The Chinese are still stacking, SL.
IMO, this dive is caused by a combination of the classic wartime reaction, the tail-end efforts of the paper manipulation racket, and the element of margin trading that you mentioned.
I would add that some entities are selling because their gold was bought at much lower prices, and they are now selling a very liquid asset and taking a profit because either they have a weak hand, and/or they are very nervous about the future, plus have no concept of the huge difference between real money and credit.
As I wrote during the weekend...
"All of these currencies have lost at least 98% of their purchasing power. It's panic mode right now as both the casino Ponzi and the insidious fiat currency debasement are being exposed.
Gold and silver, even in the artificial paper markets priced in these fiat monopoly tokens, highlight the debasement. Hence, a desperate attempt by the establishment to bash these prices down.
Of course, these prices are spot paper prices, not physical - if these were true organic supply and demand-driven markets, the extent of the currency debasement would be even more obvious and graphic.
China is still stacking and probably can't believe their luck that they have been handed another opportunity to build their physical PM reserves with this latest price hiccup.
It seems that a quiet deal has been struck where the US is sourcing some essential/rare earth minerals from China and paying with physical gold. This, at the same time, masks what would be even more disastrous monthly trade deficit figures if this physical gold was not being used as payment.
The short-term pullback in the spot gold price was already to be expected as this plays out. The market at large still views the US dollar as a safe default to hide when trouble is brewing, even when it is anything but safe, other than as very short-term dry-powder liquidity ready to deploy when the markets crash.
This flight into the US dollar as a default currency was counterintuitive when you consider that the 2008 GFC was caused by the extraordinarily reckless behaviour of the US govt, Wall Street criminals, and TBTF banks, which threatened the US economy as well as the entire global economy.
SUMMARY - Crises trigger demand for the most liquid and widely accepted assets, even when the crisis originated in that domestic domain."
Just my 2-cents worth.
Cheers
Col
China stacking until they have the opportunity to peg their currency to gold and expand the purchase of oil in Yuan.
Exactly.
Surely some kiwi live deer capture dude has the patent.
"Russian troops in Ukraine are being equipped with an anti drone net system mounted on AK rifle grenade launchers. The net deploys mid air after firing, designed to intercept incoming drones."
Ukraine was actually using nets launched from drones to take down Russian UAVs a year ago. Don't know how successful it was. haven't heard much since.
https://www.rferl.org/a/ukraine-net-firing-drones-snag-russia-uavs/3351…
The solution to a Russian invader firing a net? Two drones.
Sounds meshy
According to https://nzoilwatch.com/ our diesel-powered supply chains will grind to a halt in May
There's up to a handful of ships that the NZoilwatch stats haven't picked up yet that could extend the supply for maybe a week or two, but not much more beyond that unless our country leaders can beat global titans to secure more supply.
It's a wonder why our different areas of government haven't proactively escalated their response and are leaving it to voluntary action only so far
https://www.civildefence.govt.nz/assets/Uploads/documents/publications/…
What are some things that people can do to weather the supply disruptions?
What are some things that people can do to weather the supply disruptions?
- Hoard diesel now.
- Find alternative distribution methods (if you aren't near a railway line or a shipping port then there may not be any).
- Order inventory in bulk now, in the hope that it can be stored, will sell in a timely manner and won't cause you to go under though exposure to that abnormally large bill from your suppliers.
- Or, expect a recession as no one has petrol or diesel to go anywhere and so buying in general slows down. It kind of depends on your industry of course as to what the impact will be. Food = important. Fashion = not so important.
They're doing it, as rational individuals.
They're stockpiling energy, or the results thereof.
Dropping-out the discretionary, will be a part of that process; I wouldn't want to be in a discretionary business from here on in.
And 'weather' is an implication of 'recovery'. I suggest the more accurate word is 'endure' - it better describes permanence. We are not - ever - going back to 2025.
Perhaps "adapt to supply disruptions" might be a better phrase. There's no end in sight except an end to cheap, accessible liquid fuels in NZ for the (very short) foreseeable future.
Gofundme an oil refinery?
"The change of the Marsden Point facility to a fuels terminal would have a significant impact of New Zealand's fuel security including:
◼ A reduction in physical inventories (expected to be 25-30%) that ultimately is likely to impact New Zealand's supply security;
◼ Loss of ability to process New Zealand crude in a major supply emergency (global meltdown or pandemic where New Zealand might be isolated for a time).
https://www.mbie.govt.nz/dmsdocument/15260-refining-nz-impact-of-conver…
Fund?
Possibly the biggest lie we told ourselves, societally, was 'funding' this or that.
It's not keystroke-issued proxy on them thar tankers...
Every time I refresh the nzoilwatch page it goes back to 38 days again. Maybe if the government assign someone to refresh the page every 5 minutes we will be fine?
Now you're getting it
Glad that we are on the same (refreshed) page.
It's the most important point of all.
The difference between keystroke-issuing proxy, unrelated to remaining physical stocks - and keystroke-assurances that there is physical stock there
is"
Nil.
See?
haha true, I hadn't noticed that yet
My screenshot record has shown it has gone down since yesterday.
Either way, it doesn't change the messaging at all. What's half a day in this bigger picture?
Chaston nailed it in 'During the pandemic crisis, we had essentially a fiscal and central bank 'put' policy to deal with that crisis, an implicit policy promise where the Government and central bank acted with programs to set a floor for employment and asset prices, typically by purchasing assets to inject liquidity during market downturns. But this time there seems little appetite to reprise that if things get really unstable.'
and IMO they're going to get very unstable guaranteed by bombing oil terminals and production facilities in the Middle East plus the follow on effects in over leveraged private credit funds and shadow banking in the USA.
Trump’s 48 hour (now 30?) deadline will be interesting.
Either, there will be considerable escalation, Iran will cave in and oil shipments restart, or it will be Taco.
All are likely possibilities .
I think you can eliminate 'Iran caving in'.
They are well aware that the result would be Gaza-style existence for them. They all know the example, and the perpetrators.
So they might as well go down fighting - as with Hezbollah and Hamas...
Forget "Iran will cave in" - this is an existential fight for the survival of their civilisation.
Remember too, that the Straits are open only with a toll booth system operating... and IF...
#1 The ship's cargo is settled in petroyuan.
#2 A toll is paid (perhaps10% of the value of the cargo?)
#3 The ship navigates through Iranian territorial waters.
The escalation is off the charts now in response to Israel/US attacking Iran's South Pars gas field. Iran has issued evacuation orders for...
Samref Refinery - Saudi Arabia
Al Hosn Gas Field - UAE
Jubail Petrochemical Complex - SA
Messaieed Petrochemical Complex (affiliated with Chevron) - Qatar
Ras Laffan Refinery - Qatar
Haifa Refinery - Israel
PS... In helping to set fire to a sizeable chunk of the ME/West Asia, TOOFOO, AKA Captain Chao$, has also set fire to the last remnants of the US petrodollar.
This was the only thing that had been keeping the global fiat Ponzi alive.
All of these actions are far too stupid to be simply garden-variety, cabbage-like stupidity.
To me, this entire debacle is looking more and more like a deliberate and planned takedown of the entire fiat system.
Meanwhile, TPTB is hoping that they can fit Iran up as the terrible culprit that "wrecked the global economy", when successive US administrations operating a fiat ponzi trainwreck had already done that job anyway.
TOOFOO doesn't have the faintest clue what the grand plan is that TPTB and his techno-surveillance-data spy czars are working on - he is simply along for the personal agrandissement ride.
It's high time both he and his idiotic Minister of War (amongst the other culpprits in his war council) were put away in straightjackets, to face charges of mass murder of civilians, international war crimes, and mass genocide.
But not those who voted for them?
:)
Stupidity has never been a crime PDK. Sometimes it can get you voted into the White House though; Bush Jr and Trump being two examples. The people who voted for them though? 'Fraid not.
Colin's looking more and more correct as time passes though.
The people that voted for him will learn a few life lessons that's for sure. It will hit their wallets, their food security and their lifestyles first and foremost.
Or perhaps the people who "voted for him" are unable to learn, ever.
There is always hope, Yvil.
Case in point - Larry Johnston (Fmr. analyst for the CIA). He admitted live on one of JudgeNap's interviews that he himself had voted for Trump no less than three times.
Listen to him now - he is one of the most active critics of Trump and his admin on the planet.
As previous wars have told us, everyone can learn from tragedy Yvil. The issue being that human memories are short and after a generation or two, the same territorial and greed traits seep in as individualism grows at the expense of the community, and as Ray Dalio puts in the changing world order, all empires follow the same key steps to collapse before another takes their place.
Then again, taking some time away from the internet r social medial does wonders to allow fresh perspective in a world where commercial algorithms polarise users for profit, and slowly erode rational thought.
They're not the only ones...
Lessons? Nope. It'll be someone elses fault. There's always the rapture to fall back on for those that missed last Septembers event.
Early on, Murray, I was ripped to shreds and personally insulted every time I posted here on ICNZ.
And my crime? A different perspective as to who the real enemy might be? Also, I dared challenge a certain resident echo chamber group that got off on launching pack-attacks and insults, whilst they ignored the site rules.
These personal insults were duly overlooked by the site moderators - I have no problem with that - presumably, they figured I was big, ugly, and old enough to look after myself.
I continued with my subscription because I could see the potential in this site as a very productive think tank.
I have recorded those insulting comments for posterity, including one where a certain poster claimed that I was so misguided and pathetic ... "that I belonged in a care home because I was probably incapable of even wiping my own bum".
This ad hominem abuse only encouraged me to stick around - IOW, my god, is that all they have got?
You’re very sensitive for someone who wants to force some rather bold opinions on people as fact over the internet.
It's easy to criticise Colin. Less easy to proffer reasoned argument against an established opinion. There is much you have said I don't agree with, one being Putin being one of the adults in the room. But disagreement adds depth to debate. Keep up posting. The more diverse the arguments the more valuable they are for learning. If people disagree, challenge them to offer their reasoning, most of the regulars here have thick skins and offer interesting and widely diverse perspectives. There are none I disagree with completely and all add value.
Who knew the greatest climate hero of our time would be Trumptm? Greta generated a lot of hate among middle aged white males, I wonder if they'll similarly flood any remaining post crash internet with Trumptm hate memes?
Shutting down the global economy and fossil use, while creating global starvation, is quite the achievement in only a few weeks.
Trumptm needs to work on his anger management problem, then go to a good old fashioned movie with a friend and chill.
Aye.
We have met the enemy and he is us....
:)
We welcome your comments below. If you are not already registered, please register to comment
Remember we welcome robust, respectful and insightful debate. We don't welcome abusive or defamatory comments and will de-register those repeatedly making such comments. Our current comment policy is here.