Here's our summary of key economic events overnight that affect New Zealand with news Trump seems to be seeking a way out of his morass, and parts of the financial market is cheering the shift.
Planned strikes on Iranian electricity production and energy infrastructure have been halted "for five days", after Trump claimed "very good and productive" discussions with Tehran. He is maintaining the claim even as the Iranians scoffed at his claims. (Probably what is happening is that the Americans are talking to Pakistani officials, who claim to be in discussion with some Iranians.) TACO in action, and equity markets liked this shift. The oil price retreated sharply too. But the USD sank and the bond markets have maintained most of their risk premium in the face of this instability in American policy-making.
Meanwhile, the IEA boss, speaking in Australia, accused the Americans of not realising the damage to the global economy that they have already done.
And the Israelis are continuing their strikes against Iran, probably unhappy with the Trump backflip. They will likely keep things very unstable.
Meanwhile in the US, the Chicago Fed's National Activity Index decreased yet again, its ninth below-trend result in the past year. And since the start of March, nowcasting forecasts for US economic expansion have fallen away noticeably.
And that is reflected in updated construction data for January. It fell from December (-0.3%) when a rise was anticipated to be less than +1.0% higher than year-ago levels, far less than accounted for by inflation. The worrying part for them is that it is private construction that is weak, the only strength is in public construction. Residential construction is tailing off faster in this data.
In Singapore, they reported that inflation dipped to 1.2% in February. But they also reported that their core inflation rose to 1.4%, and while that isn't much different to their headline result, it is their highest level in late 2024.
In the EU, consumer sentiment has taken a dive in March, likely for the obvious reason. It is now back to October 2023 levels all of a sudden.
And staying in Europe, it is probably worth noting that the French far-right parties failed to make meaningful gains in weekend local elections. And in Italy, the right-wing government also failed at a referendum to change their constitution.
The UST 10yr yield is now just on 4.34%, down -5 bps from yesterday at this time. The key 2-10 yield curve is little-changed at +49 bps (-1 bp). Their 1-5 curve is also little-changed at +20 bps (+1 bp) and the 3 mth-10yr curve is now at +68 bps (-3 bps). The China 10 year bond rate is up +1 bp at 1.84%. The Japanese 10 year bond yield is up +4 bps at 2.30%. The Australian 10 year bond yield starts today at 5.05%, up +3 bps from yesterday. And the NZ Government 10 year bond rate starts today much higher at 4.90%, up +14 bps.
Wall Street opened its week with the S&P500 up +1.5%. Overnight, European equity markets were mixed between London's -0.2% dip and Frankfurt's +1.0% rise. Yesterday however, Tokyo fell -3.5%. That was matched by Hong Kong, and Shanghai fell -3.6%. Singapore was down -2.2%. The ASX200 was down -0.7%. And that was matched by the NZX50.
The price of gold will start today down -US$104 from yesterday at US$4386/oz. Silver is actually up +US$1.50 at US$69/oz.
American oil prices are down -US$8.50 at just on US$89.50/bbl, while the international Brent price is down -US$11, now just on US$101/bbl.
The Kiwi dollar is firmer against the USD from yesterday, up +20 bps at 58.5 USc. Against the Aussie we are up +50 bps at 83.5 AUc. We are unchanged against the yen. Against the euro we are marginally firmer at just under 50.5 euro cents. That all means our TWI-5 starts today up +20 bps at just on 62.2.
The bitcoin price starts today at US$70,555 and up +2.6% from this time yesterday. Volatility over the past 24 hours has been high at just over +/- 3.3%.
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12 Comments
So Trump says they're in talks with Iran (and Iran called him), so there's a hiatus on destroying their electricity infrastructure.
And Iran came back saying Trump's fired, and they're not talking with the US.
Who'd have thought this shit talkers' game would be called by a 4th tier country.
The media is now saying Turkish officials are mediating. So the Turks are talking to both, but Trump, or his people, is talking to Turkey. But is is just TACO and now he's trying to save face.
A question will be how much control does the IRGC have over it's people? Plus will Israel stop?
Buying time, the 12k Marines not ready
God loves the Marines.....
No one moves that many Marines around without firing a few rounds.
Trumps best quality is that he chickens out, imagine if he went through with all his threats.
In saying that it does tend to work for him; he had global leaders happy that he chickened out with a 10% tariff. Clever reverse psychology, or genuine chicken out, hard to tell.
Trump's standard business tactic is go in hard and extreme. People with normal standards and decorum tend to quail a bit when faced with such extremism. I would suggest the best opening move with Trump when negotiating with him is to call his bluff. Walking out on him, one of his tactics, would be a failure for him. Take his power away and he is revealed for who he really is as a person. He beat banks into submission many times using those tactics.
Perhaps Putin taught him that? Another commenter here said that the KGB's primary strategy was to bluff big early. Much of what Putin threatened early on in the Ukraine war has not come to pass, but Europe was to scared to call his bluff.
"Trumps best quality is that he chickens out"
I get your point, but he's too dumb to realize that it threatens the USA's world hegemony.
If this war is pretty much done, and Iran walk away thinking they’ve somehow won when they’ve been smashed, probably one of the best wars the US have had. Maybe he doesn’t care that he gets called TACO, as long as he’s won the battle. I think he’s very good at manipulating people, making them think they’ve won when he’s actually shafted them.
The wild ride of Gold continues, it dropped to $4,100 before rallying almost all of its losses (possibly after Trumps TACO?). That's a cool $1,000 down in a week, or 19.6%. Whatever happened to slow, steady, defensive Gold, lol.
Gold is the real currency isn’t it? In which case fiat is up 25% in a week. I thought fiat was dead?
No one dies in a straight line, but the trend is your friend with gold
Flooding the zone seems to be a valid political strategy for manipulating markets. Markets are keen to grasp any fairy dust if it means avoiding gravity. I guess there will be a point when real events are the dominating factor, but apparently not yet?
I do sometimes wonder what Trump thinks of himself. I mean, he clearly TACO'd about his threats to annihilate Iran's power and gas supplies (like multiple times before), and even Trump himself must realise that it is yet another empty threat, and that he did lose this "negotiation"
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