Here's our summary of key economic events overnight that affect New Zealand with news most of our trading partners are coming under much heavier input cost pressure, along with supply-chain disruption.
Meanwhile, US and Iran have rejected each other’s proposals to end the war. That is pushing up the price of oil. And in the US, the head of their largest bank is saying private credit losses will be much larger than most assume.
In the US, the widely-followed March ISM services PMI came in a touch lower than expected, and lower than for February. The strong activity component slowed very fast but is still expanding. This survey found employment contracting. It also found prices rising their fastest since October 2022. These firms are not waiting to push through recovery price increases this time.
Remember, The S&P Global services PMI released earlier found its first decline in activity since January 2023, employment was down amid their weakest rise in new orders for nearly two years. They also found steeper rises in both input costs and output prices in March. So very similar to the ISM version.
One of those input costs is fuel, and now petrol is up +38% and diesel is up +51% since the start of their war on Iran.
The Canadian services PMI is still contracting, extending that retreat to five straight months. However, the March shortfall was the least in that period. Inflation accelerated due to rising fuel and transportation costs. Employment fell although overall confidence was up to six-month high.
The Singapore economy was still expanding at a moderate pace in March, but there were signs of slowdown. Their PMI dropped to its lowest seen in 2026 so far from softer growth in output and new orders. Input price inflation accelerated to a survey-record (ten year) high.
Singapore's retail sales fell in February from January on a seasonally-adjusted basis, down an unexpectedly large -4.1%. The year-on-year result isn't so relevant this month due to the skewed timing of Chinese New Year.
India's services PMI was still expanding fast in March, although continuing the receding growth trend they have had for more than eight months. Input price inflation climbed to a 45-month high and they had their weakest rise in new business and activity since January 2025. But they also had another strong upturn in services exports.
The UST 10yr yield is now just on 4.34%, down -1 bp from yesterday. The key 2-10 yield curve is flatter at +48 bps. (-2 bps) Their 1-5 curve is unchanged at +27 bps and the 3 mth-10yr curve is flatter at +64 bps (-2 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 up +4 bps at 2.42%. The Australian 10 year bond yield starts today at 5.04%, up +3 bps. And the NZ Government 10 year bond rate is holding at 4.76%.
Wall Street has opened its week, still hoping the Persian Gulf crisis will resolve soon, up +0.2% on the S&P500. European markets were all closed yesterday. Tokyo was up +0.5%. Hong Kong and Shanghai were closed for Qingming Festival. Singapore was closed too, as of course were both the ASX and NZX.
The price of gold will start today down -US$24 at US$4651/oz. Silver is holding at US$73/oz.
American oil prices are up +US$2.50 at just on US$114/bbl, while the international Brent price is up +US$1.50 at just under US$110.50/bbl, and still lower than US prices.
The Kiwi dollar is up +20 bps at 57.1 USc. Against the Aussie we have dipped -10 bps to 82.6 AUc. Against the euro we are unchanged at just on 49.5 euro cents. That all means our TWI-5 starts today up +15 bps from yesterday at just under 61.
The bitcoin price starts today at US$69,614 and up +3.4% from this time yesterday. Volatility over the past 24 hours has been moderate at just on +/- 2.3%.
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37 Comments
How the ETS was used to shut down Marsden Point - in a country with negative 38 million tonne/annum C emissions and despite the government being told “Closure of the refinery would lead to negative environmental and economic outcomes.”
"The RIS recorded Refining NZ’s profits over five years:
∙2012: $31M
∙2013: -$5M (a loss)
∙2014: $10M
∙2015: $151M
∙2016: $47M
Average that out and you get roughly $47M per year (with an exceptional 2015 year).
The ministry itself said full ETS exposure would nearly halve profitability even at $18/unit.
NZU prices didn’t stay at $18 which was readily foreseeable.
The NZU price hit a record high of $88.50/unit in late 2022.
Applied to the Refinery’s Scope 1 emissions of 1 to 1.3 million tonnes per year, that’s an annual ETS liability of $88.5M to $115M, and that’s before Scope 2 costs on purchased electricity and gas.
On a business losing money in bad years, a potential $100M+ annual carbon bill isn’t a headwind. It’s a death sentence.
The ministry knew this in 2019, and suggested options the government could take in terms of emissions liabilities to keep the refinery in operation, warning:
“The closure of Refining NZ, which employs approximately 300 people, would have a
significant negative impact on the Northland economy and would leave New Zealand
dependent on the supply of refined petroleum products sourced from overseas refineries that may choose to prioritise supply to other nations ahead of New Zealand at times of shortages.”
https://x.com/JosephMooneyMP/status/2041067813700518365
https://environment.govt.nz/assets/Publications/Regulatory-Impact-State…
Virtue signalling while ignoring the economic consequences. Both sides of the aisle were guilty of this as the silence from the opposition benches signalled acquiescence.
Actually, hamstrung by economic-speak hijacking of the narrative.
Which gave us the wrong goal (economic growth).
The better goal is: Will our grandchildren thank us?
Children and grandchildren, yes that is the question. Unwillingly got involved in a family of friends bust up over the weekend. Parents at war but at least with some genuine thought to their two young children’s situation. Advised them make your first priority whats best for the kids and the rest of it will fall into place a lot easier. There is no greater gift in life than the love of your children and no greater responsibility than their trust.
Just read on Stuff, TPM has called for a pay freeze for all politicians including the PM. Luxon has said 'No!" Says it all about attitude really.
TPM/Rawiri Waititi virtue signalling to his acolytes on getting value for money from MPs definitely "says it all about attitude really"
That Stuff article also quoted Luxon “I’m not taking the increases,I’m giving them away to charity. Personally, that’s my personal decision to do that.” Still waiting to hear back from Rawiri...
Yes but in the mean time, while they're happy at getting all their pay rises courtesy of the Higher Salaries Commission (who is actually directed by the government), they starve all government departments, preventing employees at the frontlines from being paid decent wages and even just keeping up with inflation. Their attitude is "I'm all right Jack....!" They'll screw everyone else while making sure they don't get on the receiving end...
I would add that the vast majority of Kiwis couldn't afford to give all of a pay rise, or even some , to charity. This has far deeper implications of attitude that are just ugly, in that they think we should be kept down and dependent.
There is too many of them and no need for it. Take it back to the number prior to MMP and that would undeniably lift the calibre in general. Sure the old system introduced the odd dunce but the list entrants have been riddled with nonentities and slackers by the fault of all the parties. Create more electorate seats and reduce the numbers of the list would too be advantageous.
Nah.
There have always been dunces - Nash comes to mind,,,
But the price of democracy is representation, and half the community is below average.
Autocracy can be better - but can also be worse.
FPP failed; MMP was the best the alternative-pushers could get over the line.
PS - Party hacks are obvious. eh?
They certainly are.
Lost opportunity of using the available energy to build the next generation of economic base. But then they had all bought the BS economic and growth mantra that is increasing evident as utter rubbish. That denial still largely exists.
Not to mention the silence from the MSM - your typical Stuff piece contains no mention of the elephant-in-the-room ETS - only "refining margins".
https://www.stuff.co.nz/business/121939523/ending-refining-at-marsden-p…
If the ETS exempts every polluting industry, what's the point of it? It just becomes a tax on businesses that can't afford lobbyists.
The ETS applying to Marsden was bipartisan policy. Nobody proposed extending their exemption, so the argument is sort of moot (especially coming from a National politician who did nothing about it).
What actually happened was Gull was importing refined product into Tauranga and undercutting the domestic refined stuff, forcing margins down. The only way for the majors to compete was to do the same.
What is the point of the ETS if your country is already massive CO2 sink and it leads to negative environmental outcomes? Turned a "polluting industry" in to a more polluting industry. Good one. Not to mention the negative employment, economic and resilient outcomes. National are just a bunch of lefty wets so no surprises there.
“Closure of the refinery would lead to negative environmental and economic outcomes.”
https://environment.govt.nz/assets/Publications/Regulatory-Impact-State…
Because it isn't one.
Only by cherry-picking start/stop dates can you fudge the massive fossil input as if it isn't.
The bigger question is: Why did those behind you need to put this red herring up, again/now?
Yeah massive, our hydrocarbon fuel imports are half our net sink even if you exclude our 7 million km2 continental shelf sink. Cool conspiracy theory you have got going there - be sure to let Time Lord know.
Be sure to email NIWA and let them know to adjust the sink data criteria you don't feel comfortable with.
Prior to human arrival, there would have been equilibrium. No sink capacity, beyond same. Is that too hard to grasp?
So if NZ is somehow sinking more carbon now, than it imports now - what created the below-equilibrium state?
It's a pretty simple question.
There would have been no equilibrium. Where do you think all our limestone came from? Life stops below 150 parts per million. C4 grasses adapted to cope with this CO2 starvation period.
"…on still days and nights a maximum variation of 200 ppm has been observed; from 410 ppm at night to 210 pmm, during active photosynthesis. Since the equilibrium CO2 level at which net photosynthesis becomes zero is in the neighborhood of 150 ppm such marked drops in the CO2 content of the air may be expected to limit photosynthesis and crop yields.”
You lost it there PDK. Profile is correct, there would not have been equilibrium. Nature itself is in a permanent state of flux, perpetually changing. Some of that might be around points of equilibrium and the degrees and rates of change would vary, but change would be constant. And major events, natural ones like volcanic eruptions, earthquakes - possibly triggering tidal waves would also occur, irregularly.
Dimond is absolutely correct - it's not an if, it's a when.
Associated, is the matter of clear leadership addressing the future, not the past. Willis (this morning M/R) and Peters addressing Rubio soon, should be dropping the equivocation. Someone has to be the mature party in the room, and wishy-washing our way around a declining pariah State, is not good statespersonship.
Here's a better example:
(1) French Senator criticizes Trump - YouTube
And a couple of links: HUGE Missile Barrage On Israel As Oil, Desalination Plants STRUCK
(1) Iranian strikes hit Haifa and Tel Aviv as damage spreads across Israel - YouTube
President Trump “expletively” informed the Iranian leadership of his weakness by confirming just how much Iran’s control of the Straits of Hormuz is getting to him. Consequently, understandably Iran is not going to relinquish their ace card in any sort of hurry. What’s more getting that ace card off Iran to prevent its future play, is going to be a heck of a bigger challenge than it was before this conflict started.
Peters has an opportunity to grab world headlines - just use expletives while telling Rubio, clearly and concisely, that his mob should eff off.
But he won't. He'll shimmy his way while not offending Israel.
Which is rapidly looking like the biggest genocidal thug on the planet.
Actually, that's not quite accurate - Netanyahu is. I suspect appetite for war is wearing thin in the Israeli population; they probably just want to go back to living. Netanyahu, like Trump, is playing double or quits now - lose power and it's court and probably prison, for both.
Netanyahu or Putin?
Netanyahu is trying to removing any group which may have a competing claim to the land we call Israel today, so I guess that really does qualify him. But it's just the same old war that has gone on for probably 5000 years or more. That began when they poisoned the land away from the rivers by intensive farming.
Salinity and senility - the ME predicament in a nutshell
:)
He’s always promising to obliterate Iran. But never today, maybe tomorrow or next week. What a moron.
Ultimately for us to use more than we can reasonably produce ourselves (we're never making micro processors and the such), we have to be a vassal state to some sort of global order. No leverage otherwise.
Very hard to paint a picture that's more prosperous than the status quo and a hermit kingdom at the same time.
Where humanity is heading, there will be no microprocessors - hard though that is for some folk to imagine (most folk don't do imagining or original thinking very well).
I did think we would have decades of degrowth - albeit unpretty - I now wonder if it's going to be quicker? Global interconnectedness has to be a victim of conflict over 'what's left' and no nation is self-sufficient in everything. So who keeps what running, for how long?
Are they all going to vanish?
Last lemming to go over the cliff edge shouts out, “I won.” Same scenario?
What, the people or the infrastructure? Please be clear.
The reduction in global population to a level which energy and material throughput (including waste-assimilation) can maintain long-term, may take the rest of the century (factor in the point that most people alive now, won't be in 70 years' time). But that, via food-supply breakdowns or nuclear fallout, could be a lot quicker than if nature-driven (scarcity-driven).
As to infrastructure, triage will be the order of the day. Complex SUVs won't make it; they'll be abandoned, lived-in near food-production, or raided for materials. Simple vehicles - Fergie TEAs, for example - may be in demand longer. Appliances will sort themselves out - most reliable will equal most sought-after. But power ones are grid reliant - and more and more I am questioning whether we will be able to maintain the physical grid. Nobody has done so ex fossil energy; nobody has done so ex global supply-chains. So I see hand tools as being sought after and even being made again locally.
One of my thoughts behind my argument for national resilience is that a solid manufacturing base provides vital skills and industry for a country when the world is collapsing. The nay sayers are in denial of that possibility. But then no one really believed the US would ever have a president like Trump too. The learning curve's slope is increasing dramatically, as we all realise the Doomsday Clock is not just about nuclear war, but can include idiots in charge of huge a military and bugger all constraints.
Well said
The story goes that none of our more complex technology is possible without a large portion of the world contributing various complex components.
We'll find out in the coming years how true that is. But how and when we can't say today.
Regardless, that wasn't my point. Prosperity is linked to how well you can comply with a larger system. We can as a nation give the big finger, but it's unlikely we would manage things in a way that has us better off. This goes doubly for any of us as individuals.
EMP from a few nuke bursts and microprocessors will essentially revert their usefulness back to that of their raw materials. I understand tests carried out in the 90s demonstrated that shielding had severe limitations in any ability to protect circuitry from EMP.
Whoever crosses that line first though will have to wear the consequences. Iran's theological leadership will likely be more ready to do that. A population constrained from technology will be easier to control.
Agreed. They are an interesting case - a university-level society with the ability to run long term ex the internet.
Try that here or in the @&%$^F%#^& USA.
Chaos in 5 minutes.
Just looked at a poll on Stuff re how long fuel prices will stay elevated for. Of the 3000 votes so far, 64% believe it will be longer than 6 months.
That gives a good indication of spending intentions ( or lack thereof) for the foreseeable future.
Still doing excellent work....must read a hell of a lot of material.
https://www.youtube.com/watch?v=U6jvkwZVVRA
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