Here's our summary of key economic events overnight that affect New Zealand with news there is a general relief rally underway as the US indicates it is pulling back from its aggressive tactics with Iran. Trump seems to be 'declaring victory', but the Iranians seem to have given up nothing he sought. The Iranians are letting non-combatant ships pass through the Straits of Hormuz on their terms and schedule. They are also continuing active attacks on their foes.
Even if "it is over", the echo of sharply higher inflation will linger. Yes, oil prices have pulled back but they remain more than +50% higher than at the start of Trump's crazy adventure. Benchmark interest rates are higher too. Wall Street is down a net -5% even after today's rally. 1500 civilians were killed in Iran in these attacks, 18,500 injured. The US seems to have revealed it is relatively impotent to impose its will, even with apparent overwhelming force. Certainly when applied incompetently.
Meanwhile, US mortgage applications fell sharply for a second week, due to mortgage interest rates rising to a five month high. Refinance activity was hit particularly hard, but even if that wasn't the case, there was a notable retreat for new purchases too. That is two consecutive weeks of -10% reductions and that is the sharpest two-week retreat since December 2024.
US crude stocks rose again last week and their fifth consecutive weekly rise, the longest stretch since early 2024. Meanwhile petrol inventories fell for a sixth consecutive week. This allowed pressure on US pump prices to rise +34% in a month. So they have an odd combination of plenty of crude oil stocks, and sharply rising energy inflation. Grifting at its best.
In an item we don't usually report on, a jury in New Mexico has found both Meta and YouTube liable in a first-of-its-kind lawsuit that aimed to hold social media platforms responsible for addiction harm to children using their services, awarding US$3 mln in damages.
Yesterday we noted the sharp rise in yields at the US Treasury two year Note auction. Today there was a similar one for the five year equivalent. And it too brought a dramatically higher yield - 3.92% up from 3.56% at the prior equivalent event a month ago. Demand was less for this one too, but not as dramatically as for the two year.
In China, we should note that after a 21 day suspension, state owned shipping line COSCO is taking bookings for China to Middle East destinations again.
In Germany, their widely-watched Ifo Business Climate Index dropped in March to its weakest reading since February 2025, as the Middle East conflict dampened economic sentiment.
In Australia, February CPI inflation was reported as 3.7%, a marginal dip from 3.8% in January. Most sub-categories dipped, except the housing category which rose at the rate of 7.2% pa.
The UST 10yr yield is now just on 4.33%, down -8 bps from yesterday at this time. The key 2-10 yield curve is flatter at +45 bps (-3 bps). Their 1-5 curve is also flatter at +19 bps (-4 bps) and the 3 mth-10yr curve is now at +63 bps (-7 bps). The China 10 year bond rate is little-changed at 1.83%. The Japanese 10 year bond yield is down -2 bps at 2.25%. The Australian 10 year bond yield starts today at 4.92%, down -11 bps from yesterday. And the NZ Government 10 year bond rate starts today at 4.75%, also down -11 bps.
Wall Street rising on the S&P500 with up +0.7% in steady trade. Overnight, European equity markets were higher between London's +1.4% dip and Paris's +1.1%. Yesterday Tokyo rose +2.9%. Hong Kong was up +1.1%, and Shanghai rose +1.3%. Singapore was up +0.9%. The ASX200 gained a +1.8%. And the NZX50 also gained +1.8%.
The price of gold will start today up +US$132 from yesterday at US$4556/oz. Silver is up +US$3 at US$72.50/oz.
American oil prices are down -US$2.50 at just over US$90/bbl, while the international Brent price is down -US$3 at just on US$101/bbl.
The Kiwi dollar is unchanged against the USD from yesterday, still at 58.2 USc. Against the Aussie we are up +10 bps at 83.6 AUc. We are up +20 bps against the yen. Against the euro we are +10 bps firmer at just on 50.3 euro cents. That all means our TWI-5 starts today up +10 bps at just on 62.
The bitcoin price starts today at US$71,453 and up +2.7% from this time yesterday. Volatility over the past 24 hours has been moderate at just under +/- 2.3%.
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19 Comments
Trump adventure was because of...
would have been the bigger headline
The world pivoted before the prophecy was revealed.
The script from here is anyone's guess.
We're all just passengers on this pony ride.
Just kidding, tell us again from the top
I’d like to know the rest of that sentence. They didn’t grab any resources did they? So it was either Epstein distraction (seems to have worked) or to disarm their nuclear.
Resources are a factor otherwise there's far less incentive.
But that's only an incentive. This isn't happening because the planets running out fast.
There is rub of the matter. Supposedly, initially at least, the main aim was the dismantling of Iran’s nuclear weapon ambitions. Then there were immediate contradictions. Was the cache of uranium not then buried irretrievably beneath the rubble of the June strike. Which if it was why then was a raiding party being suggested and how were they to dig it out. Or, was the raid to target another location where it was “believed” to be stashed. A great deal of destruction and targeted death has been founded on Israeli intelligence but in regard to the key objective, the potential nukes, that issue appears to remain intact and if anything with the Ayatollah and his hierarchy no longer in place and the IRGC calling the shots the risk has surely been intensified.
Back up big-picture, and this is a stoush over who gets their currency aligned with oil (with real energy). The US got its foot in that door via Kissinger, post Nixon floating the USD away from gold. They have held it ever since, to the detriment of all others.
The US is a failing State - not a democracy (that got knobbled by business interests - read: interests in making money at the expense of anything; people, the future, the livable environment). It has, as they do, thrown up a maverick leader and the old rules are being thrown away in an attempt to maintain hegemony. A lost cause, but when you're inside the tent...
China, Iran and Venezuela - and presumably Russia and India and now apparently Japan - have been trading oil in yuan. This is inacceptable to the US - indeed it is in banana-republic territory the moment it relinquishes that petrodollar (reserve) status.
Thus Venezuela knobbled - back to USD. Nothing to do with 'narco-terrorism'.
Thus Iran being attacked - nothing to do with nuclear (of which the US has how many?).
So the wild card here is China - which cannot let Iran go without making a move of some kind. Send forces to the Gulf? Maybe. Take Taiwan and embargo chips for oil? More likely.
We are heading for a re-jig of the political planet - while noting that we have passed the zenith of physical growth. It would appear that the USD is on the way out, with ramifications that include internal disruptions - even a split or two. It would appear that other plavers will form a bloc with an exchange mechanism of their choosing. The ramifications for a small poodle-country on the end of the USD leash - think Kiwisaver - are immense. Making Conway's remarks yesterday, the utterings of a B Deck steward on the Titanic. But faithfully reported by the Titanic Times - whose business model, we note, depends on the ship remaining afloat...
I'll give ya a thumbs up for that
This is one of the better summaries you've posted PDK.
Some thoughts; I'd suggest we passed the zenith of growth some time back. Technology is pushing us into an area of more for less. That is we are achieving more with less. That's all around miniaturisation which involves less physical resources being used to create more capable 'machinery' (computing stuff etc). But as you repeatedly point out, the energy requirements to produce that are not diminishing, even if a part of the technology is to reduce the energy required to run it.
Part of the insanity here is the 'growth' mantra has morphed to population growth, which results in demand growth, which results in consumption growth. But unspoken is that it also results in growth to the threats to security, viability and stability. So in the end it all becomes self defeating. Capitalism is killing us just as surely as communism tried to oppress us.
I'd suggest we passed the zenith of growth some time back.
In developed nations, probably.
If you track this back nearly 200 years, the poms worked out the bones of an industrialized economy. Huge growth. Since then, the same process has occured across the globe, and the growth and fortunes move from established to emerging economies.
Went from England to America, then Europe as it rebuilt after the war. Then parts of Asia. Then others.
Well said, PDK.
As I see it, this multi-quadrillion-dollar card game has at least 7 joker cards in the pack, and the RoW/Global South holds them all.
Playing any one card alone could drastically erode the hegemon’s position within a week. Using the combination would be game over for the Empire of Chao$
Joker #1 – As China probably already has at least 60,000 tons of physical gold that it can use to back an international yuan, it could peg the yuan to physical gold. Other BRICS countries that have been stacking can follow suit.
Joker #2 – China can remonetize silver and back the domestic yuan with silver.
Joker #3 – Alongside 1&2 as the fiat monopoly currencies lose the last 1-2% of their purchasing power, invoke the return of sound money principles, and promote it as a key to regaining national sovereignty. IOWs, a return to real money, and away from the credit/debt-based system that carries massive counterparty risk.
Joker #4 – Launch the new trade instrument (the “UNIT” or whatever they decide to call it).
This will not be a reserve “currency” as such, but a trade-only instrument which can be used to settle out the deficits/surpluses between trading partners.
This would be the end of the status quo and multi-century idea of an extremely dominant national currency always simultaneously filling the reserve currency role.
The Triffin Paradox will no longer apply, and neither will there be the opportunity for hegemonic financial behaviour by the incumbent nation.
Reserve portfolios of various countries could then be very diverse, tailored to a nation’s specific needs, and consist of a mix of precious and strategic metals, rare earths, currencies of trading partners, and a host of durable commodities as well.
Joker #5 – USTs can be liquidated, and BRICS and developing countries can invest in their own future, rather than squandering their hard-earned savings in a Western fiat Ponzi that is already going up in smoke alongside the petrodollar.
Surely it will finally dawn on the holders/buyers of US debt that they are, in effect, financing the US’s hegemonic rampage, and in doing so, they are financing their country’s victimhood.
The new BRICS-orientated countries could then trade bilaterally, liquidating their existing USTs. This action alone could have the US on its knees in no time.
Joker #6 – Arise the petroyuan.
Which TOOFOO (The Orange Oaf From the Oval Office) just gave a gigantic kick-start in what should turn out to be the MOAT own goal.
Joker #7 – MAKE BANKING A PUBLIC UTILITY AGAIN – from central banking right down to the community, and savings/postal bank level.
This is what I regard as the absolute long-term winner, which would disenfranchise the financial plutocrats and the global MIC. As such, this would put an end to the forever wars that they finance and orchestrate.
This is also known as the PBS (Public Banking Solution), where hundreds of billions of dollars can be invested in societal wealth and infrastructure, rather than being continually siphoned off by the global private banking cartels.
I won’t drone on about the PBS no-brainer, as I covered it at length two years ago in Section 7 of the link below.
Not much has changed, except that there is now a far more imminent financial crisis looming.
The end of the fiat era is a mathematical certainty, and so the accompanying financial meltdown might make the PBS slightly easier to broker politically.
"The Iranians are letting non-combatant ships pass through the Straits of Hormuz on their terms and schedule."
Don't you mean 'Non-Hostile'? The words Iran used. Reports generally indicate that none of the traffic would alleviate the pressure on our fuel demands. The only crude is going to China, LNG to India. None of it to the refinery in Singapore that would benefit us. In their view we are aligned with the US and UK. Tainted by culture and association, not participation.
Depends how far back you want to look.
Long memories? Perhaps. The IRGC is lashing out at anyone and everyone. Being Arab is not an identifier for 'friend' or 'non-hostile'. Being 'Infidel' is probably a qualifier for being 'non-friend', unless you've got lots of money and are giving it to the IRGC. Where that puts 'non-Shia' is anyone's guess, but recent events suggest 'non-friend' too.
Our culture/society has benefitted for quite some time by drawing lines all over the planet and dictating the terms. Usually at others' expense.
Others have risen while our own relevance has waned, yet the rules have still remained the same.
We could've re-written the rules to be more fair, but that would've come at extra expense to us.
Murray, I can loan you one of my copies of Adventure in Oil (Longhurst). It - with 1958 naivety - traces the history of Western oil extraction from the ME, starting with William Knox D'Arcy and Anglo-Persian.
The map in the front flyleaf tells us why 'Iran', and why the Persians now.
Edit - they're not 'lashing out at anyone'. They are targeting US bases and US-supplying infrastructure. Sound like logical targets to me.
Yes, they have chosen alignment. Oddly enough, it isn't with those who took advantage of them, nor with those who repeatedly attack/repress others with oil under them (Iraq x2).
How unusual...
We were lucky to have been on the right side of the resource-grab, for the better part of a century. That appears to be changing...
So the airports in Qatar and Dubai are "US bases and US-supplying infrastructure'? What you say might be their intent, but the accuracy of their weapons makes them somewhat indiscriminate (although perhaps less so than WW2 was).
I agree about the luck part, but politicians have rarely, if ever, been about 'fairness'. Power, privilege and control. Now the dog they've tried to leash is trying to bite them again. My view is Trump should be put in a house in the US facilities in Dubai. If we did that, this shooting match would be over pretty quick.
Look at what they do not what they say. You don’t have 5000 marines and another 1000 paratroopers heading to the gulf to wind down operations. There is a very real threat of trump embarking on ground troops in southern Iran and surrounding islands. That would be a suicide mission but aligns with trumps lack of strategy
The volume of troops would suggest isolated missions rather than a serious ground assault.
The sort of thing you do to declare mission accomplished.
Perhaps these gung-ho morons are dumb enough to try a ground operation, Albert, but it will be suicidal.
Some military experts estimate that a serious ground invasion of Iran would require a 3:1 ratio of invading troops to defenders - particularly in terrain as challenging as this country, where much of it resembles a geographical fortress.
Given that Iran can already muster at least 1 million troops and that they are overwhelmed with young people wanting to enlist, the maths is not difficult.
6000 personal is nothing more than a tragic joke. It will be a hell-on-earth suicide mission for them all.
There are probably only around three people on Earth dumb enough to cheerlead this strategy - Captain Chao$, Hegseth, and the moronic warmongering Powder Puff from South Carolina.
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