Here's our summary of key economic events over the long holiday weekend that affect New Zealand with news of the US mess in the Persian Gulf gets no better. Trump's latest social media post may be his most unhinged yet.
But first, the week ahead will be a very light one for economic data releases locally, except there will be an important RBNZ OCR review on Wednesday. While no change is anticipated in the rate, the way these decision-makers see the global economic stagflation storm affecting us, and their likely reactions, will be very important.
In Australia, it will be all about household spending and building consent updates for February.
More broadly, the conflict with Iran will remain in focus as it enters its sixth week. Traders will continue to assess prospects for de-escalation, as well as any concrete developments toward reopening the Strait of Hormuz, following ongoing back-and-forth in recent weeks.
In the US the economic focus will be on the FOMC minutes, CPI data, the ISM Services PMI, the preliminary Michigan Consumer Sentiment reading, and the PCE report.
Elsewhere, key releases include China’s CPI, Germany’s factory orders, and the monetary policy decisions from the Reserve Bank of India, and from Korea.
Over the weekend we got confusing US employment data. The headline data says "Payroll employment increases by 178,000 in March; unemployment rate changes little at 4.3%." But the same headline data shows February was revised lower by -133,000. For Q1-2025 this payroll data show a rise of +205,000 (seasonally adjusted) to 158,637,000 in jobs. Despite that, their participation rate fell, and average weekly hours fell. There was essentially no rise in average weekly earnings (+US$1.70 for a week).
However, a look at the official household survey data shows a seasonally adjusted employment level of 162,848,000 in March, while the revised February data is 162,912,000. By our math, that is a fall of -64,000. February fell by -185,000 on this measure, so for Q1-2026 that is a total -856,000 civilian jobs lost (seasonally adjusted). (-956,000 lost on an 'actual', unadjusted basis.) The difference is the self employed and jobs in unincorporated micro businesses. It seems this group is under extreme pressure to twist to overall data that much.
US vehicle sales recovered in March. 1,043,000 vehicles were sold in March, up from 1,224,000 in February. Cars accounted for 237,000 units in March, while light trucks totaled 1,167,000 units. This pushed the annual rate higher to its best since September.
The S&P Global US Services PMI fell to 49.8 in March of 2026 from 51.7 in the previous month, the first contraction in the sector in over three years. The decline came amid the weakest growth in new business since April 2024. The ISM services PMI isn't released yet.
US oil rig counts rose by two last week. Despite the high prices, no-one is rushing to pump more.
In the US private credit market, pressures are building as investors rush to get their money out, causing ever more 'moratoriums'. Junk bonds are feeling this exit pressure from investors too.
In China, the S&P Global services PMI growth of activity eased from February's strong pace. New business expansion was driven by domestic demand. Cost pressures remain modest, enabling lower discounting. The deflation threat that has been hanging over China seems to be easing.
In Japan, their services PMI expanded solidly again, but they are noting higher cost pressures.
In India, their factory PMI slowed again, under sharper cost rises. Their growth of factory orders and production eased.
The FAO Food Price Index rose for a 2nd straight month in March to its highest since September. Prices across all commodity groups rose, Dairy prices were up +1.2%, the first increase since July, driven primarily by higher prices for skim milk powder, butter, and whole milk powder. Meat increased +1% mainly driven by higher pork and beef prices.
The UST 10yr yield is now just on 4.35%, unchanged from Saturday. The key 2-10 yield curve is still at +50 bps. Their 1-5 curve is unchanged at +27 bps and the 3 mth-10yr curve is at +66 bps. The China 10 year bond rate is unchanged at 1.82% but is now expected to rise as their deflation threat eases. The Japanese 10 year bond yield is still at 2.38%. The Australian 10 year bond yield starts today at 5.01%. And the NZ Government 10 year bond rate is holding at 4.76%.
The Fear & Greed index is still in its 'extreme fear' state.
The price of gold will start today unchanged at US$4676/oz. Silver is still at US$73/oz.
American oil prices are still high but little-changed from Saturday at just on US$111.50/bbl, while the international Brent price is still up at just under US$109/bbl, and still lower than US prices. Ship transit traffic in the Strait of Hormuz seem to be slowly returning, but on Iran's terms.
The Kiwi dollar is unchanged at 56.9 USc. Against the Aussie we still at 82.7 AUc. We are holding against the yen. Against the euro we are at just on 49.5 euro cents. That all means our TWI-5 starts today unchanged from Saturday at just over 60.8 and its lowest since November.
The bitcoin price starts today at US$67,338 and up +0.6% from this time Saturday. Volatility over the past 24 hours has been low at just on +/- 0.9%.
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28 Comments
Gulf nations led by UAE, Bahrain, Saudi Arabia have submitted to UN Security Council forthem to sanction “defensive” actions against Iran. Likely this is anticipating Iran increasing strikes on them in retaliation for the USA strikes going even further beyond Iranian military targets. If that eventuates then it will last until Iran is completely exhausted of any offensive capability but until that happens there will be great damage, casualties and everlasting repercussions for the Middle East and if Iran’s regime is not overturned, then ongoing conflict for decades.
Leaving aside all thoughts of how those future actions appear as intelligent as the strategy of MAD preventing a nuclear exchange, and thinking only about the economic impact on NZ, can we predict the end of the supermarket duopoly? My thought is that we could begin to discuss what our food supply lines would look like under extreme fuel shortage. What economic activity has low imported fuel inputs, and absorb staff? Not building houses. Not hospo. Not tourism. Coal mining?
I wrote an article about that, a decade ago, for OrganicsNZ, titled 'The Coming Exodus'.
Dairying, as formatted, collapses. Cities need fed, food production needs more people, closer to the land. So a reversal of the influx of the last 150 fossil-fuelled years. Hub towns fill up, nodes become important again, local becomes the overarching driver, simply-repaired becomes more desirable than complexity.
Regarding Dairy in NZ, collapse is not correct. Significant reductions in production (mainly due to no Urea and no PkE), yes. Big centralised drying powder plants, yes. But at a farm level, collapse is not correct. Most dairy farmers in NZ can produce milk with 0 fossil fuels and still be profitable (assuming prices stay similar).
No they can't.
Or at least, not at nearly the scale they do - try hefting a bailage roll by hand... Try fertilising by hand. And you cannot go to horses; they require acreage to be fed too.
And their debts are predicated on the volume that only export can absorb; NZers just cannot drink/eat enough to assuage that debt. So jubilee? Or system collapse? But not a smooth morph to a profitable local ex fossil supply.
It may well be that the herd reduction coincides with a food-system collapse and a demand for protein...
I heft those bales by hand for horses, its not easy, will not scale to decent herd.......... banking is nationalized, hold gold... more simple life.
I said significant reductions in production (40%). You said collapse (80%). I guess I'm not sure what % are we talking about here. My guesses are in ().
What are the horses for on a dairy farm? Not talking about Beef and Lamb.
Debts are ~80% concentrated on ~20% of Dairy farmers. There will be some losers for sure. Most DFs will lose millions on their biggest asset (land). Not sure how that impacts the wider society though..
Good reply.
I don't think 40% reduction is achievable ex fossil input. Remember food is energy, and it takes several calories of fossil energy to get one calorie of food over the line. 60, maybe, 70 more likely.
Wider society will implode in lockstep; we're all tied to each other and when one goes down - it becomes self-fulfilling.
Ex fossil energy, how many can NZ feed, long term and without soil quality reduction? Maori managed 150,000 - and fought each other so not underpopulated. We have more crop variety, more science - but 5 million? Unlikely. Would be a struggle.
Most dairy farms can store 2 days milking until they require a diesel powered tanker to take the milk away to be processed to make room for the next milking....
That is true Frank, but once the milk goes over 48hrs old we are told to dump the milk as bacteria starts to form quickly.Fonterra told us at latest meeting they had priority of diesel supply for tankers- but priority of no diesel still equals to. 0 diesel.We are about to receive our share of $5 billion dollars next week of Dividends,Milk Supply payment & capital return- I was looking at paying down max debt but I think holding some back for that rainy day ...... maybe prudent in this world environment.
then it will last until Iran is completely exhausted of any offensive capability
Question is, who will run out first? The Iranians of drones and missiles or the gulf/US/Isreal of interceptors?
Both Russia and China have supported Iran's missile program in the past and presumeably they are now if Iran requires support.
Iran has now displayed and recognised the power of holding the Straits of Hormuz to ransom. That effectively bottles up seven other nations reliant on safe trade passage. That ability left in place therefore, is a potential threat and device for Iran to manipulate control. If that feature was latent before it is now clearly, overt. Consequently there has been a submission to the United Nations as remarked my initial post. IF the other Arabic nations are going to enter into the conflict then they would hardly simultaneously be asking the USA to exit.
Important to note Iran is demanding payment in Chinese yuan as the permit to pass. Why yuan? Well China is Iran’s lender of last resort and it’s biggest customer absorbing 90% of Iran’s total crude exports. They’ve recently signed a 25 year comprehensive cooperation program, suffice to say they’re all onboard. It’s goodbye to the Petrodollar and howdy to the Petroyuan.
Coincidentally Trump has just taken control of the world's largest oil reserves in Venezuela. Double coincidently the US has spent decades and billions of dollars specifically configuring the refineries on the US Gulf Coast to handle heavy crude.
Hegseth’s latest security strategy is the Greater North America project, stretching from Greenland to Guyana. Seemingly within this plan they could create a closed loop with Canada/Venezuela providing the heavy, Texas/Dakotas providing the light, and the US Gulf Coast refineries mixing it into diesel and jet fuel.
The US is performing a controlled demolition of it’s Middle Eastern commitments. Perhaps the Hormuz ransom is now a problem for Asia + Europe to resolve amongst themselves?
The US consumes 1/5th of global of consumption (19 mbpd) and fracking is temporary; the decline rates are steep and the Red Queen effect is palpable. So they will be licky to hold station.
Dollar-wise, you're right; the petrodollar is on the way out - and with it US dominance. By the time they've started to pay their way again they'll be a banana republic
What is too easily overlooked is the embedded hostilities in the Middle East that sets Sunni against Shia. For instance there is no love lost between Saudi Arabia, of the former and Iran of the latter. At present the Saudis undoubtedly believe they have a score to settle over the Iranian sponsoring of the Houthis aggression in Yemen , on the Saudi border. It might well be that Trump’s episode here in Iran is going to set in motion many wheels of animosity that have been held in check, but historically were around along time before even the Ottomans and the map drawing by the Western powers post WW1.
Trump complained about the management fees of the place back in 2019. See here
Anyway it’s no longer a US concern in the new multipolar world. The US assignment is to build a local fortress. BRICS could be the new police squad in the Middle East. Results pending…
And we’re yet to mention Israel. The remaining gravity pulling the US into this ongoing conflict. I don’t think they’re keen on US pulling out.
For completeness I would add another possibility is that the gulf nations decide the price they are paying for supporting the US is too great and the US is asked to leave their country. Iran has stated that they want US military forces out of the middle east.
'In February 1953, Britain and America once more presented proposals to Persia...'
Persia said no. Then: CIA activities in Iran - Wikipedia
No wonder 1979, and no wonder they want the US out. And just below the House of Saud level, the rank and file throughout the ME think the same. That crony leadership layer is fragile and thin - the Arab Spring is worth remembering.
The lack of support from some other western nations (eg UK and France) may be a tell that this time it’s different. Trump’s problem (one of) is that he is unable to unite other western countries behind the US’s position. The US is losing more credibility and inadvertently probably solidifying support within the BRIICS alliance.
Iran’s strategy of allowing some eastern nations transit the strait is a way to retain some support and income.
Over the past two weeks we have been chronicling the increased rate of crossing across the "blockaded" strait of Hormuz as a growing number of ships from friendly nations - whether untolled Chinese tankers or toll-paying Indian, Japanese and Korean vessels - have been making the passage. And as traffic through the Hormuz strait has been picking up in the past week, the seven-day rolling average for transits on Friday reached the highest since the war started, according to Bloomberg.
More vessels are crossing, including those with no clear links to Iran or China, as nations negotiate with Tehran to get their ships through. Transits over the past day were led by liquefied petroleum gas carriers, including one headed to India and others with Iranian affiliations.
Saw an interesting claim: Since 2000, Aussie has almost never seen annual mortgage issuance drop below 10% of GDP. Even in "slow" years (like 2019 or 2023), Aussie issues more mortgage debt as a share of its economy than the US or UK do during their booms.
Key Takeaway: Australia is the only OECD country to maintain "bubble-level" issuance (over 12% of GDP) for nearly 25 years without a system-clearing crash. In 2025, while the rest of the world has moderated, Australia continues to issue new debt at a rate that is 3x higher than Ireland and nearly double the USA relative to the size of its economy.
That didn't make sense to me. Did my own research on this and could not confirm nor deny using Perplexity Computer to source and crunch the relevant data.
What I did confirm was the following: the CAGR of the housing credit stock was approximately 8.7% per year, which significantly outpaced nominal GDP growth of approx 5.9% per year — a sustained differential that structurally ratchets up the leverage ratio over time.
You are Lucky until you are not
Just it's clear, this measures flows not stock - mortgage issuance is not same as mortgage credit growth.
Therefore, flows > stock. This generally suggests rising leverage and growing future debt-service burdens, which can boost activity in the short run but tend to raise vulnerability and drag on growth over time.
BYD is renting hectares of makeshift storage space including at a theme park south of Sydney after importing thousands more cars than it sells, allowing it to stockpile lucrative carbon credits under Albo's new vehicle efficiency standards.
https://au.finance.yahoo.com/news/byd-defends-chinese-ev-stockpiling-af…
Storing things that are not selling, sounds a lot like Auckland Townhouses.
TBH, I would have thought they'd be selling like hot cakes.
Listened to some white shoe salesperson selling cars out of Devonport (actually Lake Road) saying orders and demand is off the Richter. What's more, you can borrow 40-50K at 1% interest rates from the banks - which sounds a little off to me.
you can for 5 years
You mean like EV finance if you have a mortgage? For mortgage customers under ≈80% LVR. Westpac has offered 0% interest loans up to $50k for 5 years for energy‑efficient purchases like EVs. Doesn't apply if you have mortgage‑free property.
Central bank should issue 0% loans for everyone to buy an EV. But max the grid can handle is about 10% EV ownership.
https://economics.infometrics.co.nz/article/2018-03-big-ev-fleet-can-ne…
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