Here's our summary of key economic events overnight that affect New Zealand with news financial markets are betting Trump will endlessly extend the ceasefire with Iran and the crisis there will fade. Ships are getting through the Strait of Hormuz despite the US's 'blockade'. But there remains plenty of high-stakes risks, especially as Chinese navy warships are heading to the region. But Iran holds all the long-term cards.
In the US, Trump has renewed his threats to fire Fed boss Powell for 'corruption', a clear misdirection play that has few falling for it. If he did, it still remains uncertain how this would play out, or even whether he has the authority to do so.
US mortgage applications rose slightly last week with a return of better refinance activity. But activity for new home purchases slipped lower.
The US Fed's Beige Book survey found the conflict in the Middle East being cited as a major source of uncertainty that complicated decision-making around hiring, pricing, and capital investment, with many firms adopting a wait-and-see posture. It also found signs of consumer financial strain, increased price sensitivity, and rising demand at food banks and other social service organisations. But spending among higher-income consumers was resilient, they reported.
The April New York Empire factory survey revealed at sharp rise in costs and prices, but it expanded anyway and better than expected on a rise in new orders. But optimism waned and capital spending plans weakened.
Meanwhile home builders in the US are doing it tough with widespread discounting and incentive use to spur weak sales. The NAHB/Wells Fargo Housing Market Index fell to its lowest since September in March when a rise was anticipated in this sector.
There was a big surprise out of Japan yesterday. Machinery orders rose +13.6% in February from January, to be +24.7% higher than year-ago levels. This was after January orders were up +13.7%. The February year-on-year gain was three time higher than what was expected. (Japan has been drinking some Taiwan juice.) But a lot has happened since. Japanese manufacturers' confidence posted its biggest month-on-month drop in more than three years in April, dampened by surging oil prices and supply-chain disruptions caused by the Middle East conflict, the Reuters Tankan poll showed.
Meanwhile, EU industrial production rose more in February from January than expected, and the decline from a year ago was less than expected. This data is inflation adjusted, but still, it isn't particularly positive.
In Australia, long term permanent immigrant arrivals bounced back strongly in February from January to +14,100 for the month but it was still -4.4% lower than for February 2025 and -14% lower than February 2024. For the year to February, permanent arrivals totaled +141,660, down more than -10% from a year ago and the least since September 2023.
And Australian prime minister Albanese has been in Brunei where he secured substantial oil and fertiliser supply agreements.
The UST 10yr yield is now just on 4.28%, up +3 bps from this time yesterday. The key 2-10 yield curve is at +51 bps (+1 bp). Their 1-5 curve is at +20 bps (+2 bps) and the 3 mth-10yr curve is at +59 bps (+1 bp). The China 10 year bond rate is now at 1.78%, unchanged. The Japanese 10 year bond yield is down -1 bp at 2.41%. The Australian 10 year bond yield starts today at 4.97%, up +5 bps from yesterday. The NZ Government 10 year bond rate down -3 bps at 4.67%.
Wall Street is firmer with the S&P500 up +0.8% in Wednesday trade and rising on Trumps latest Iran TACO. European markets mixed between Frankfurt's +0.1% and Paris's -0.6%. Tokyo rose +0.4% in its Wednesday trade. Hong Kong was up +0.3%, and Shanghai was unchanged. Singapore was rose +0.3%. The ASX200 also rose +0.1%. And the NZX50 ended up +0.5%.
The price of gold will start today down -US$44 at US$4493/oz. Silver is up +US$1.50 at US$79/oz.
American oil prices are up +US$1 at just under US$92.50/bbl, while the international Brent price is also up US$1, and now at US$95.50/bbl.
The Kiwi dollar is essentially unchanged from yesterday at this time at 59.1 USc. Against the Aussie we are down -30 bps at 82.5 AUc. Against the euro we are holding at just on 50.1 euro cents. That all means our TWI-5 starts today down -10 bps from yesterday at just on 62.4.
The bitcoin price starts today at US$74,187 and down -0.7% from this time yesterday. Volatility over the past 24 hours has been low at just on +/- 0.9%.
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12 Comments
The US will pull out of NATO
the gap between the Republican US and Liberal Europe is just to big
Perhaps they should never have been in it. Twice the USA has crossed the Atlantic to shorten up world wars started up between the Europeans. In fact the Europeans prior to that, scarcely went many years without conflict and ever changing alliances. The Marshall plan post WW2 provided a financial plan for reconstruction and a barrier to the Iron Curtain so to speak. The EEC was subsequently formed to establish security and self sustainability in production, resources and defence, but it hasn’t.
It comes down to the end goal doesn't it? Wikipedia provides this; "To prevent economic collapse in Europe, foster stability, and ensure the growth of pro-capitalist markets, which were considered essential for American economic stability." That plan was bolstered by the presence of NATO and the recognition that the West perhaps would not have won WW2 without the US industrial capacity and it's distance from the antagonists.
To that end I'd say it has served it's purpose, but the US should have been there, because without them the Soviets may well have attacked Europe. Today however the situation is considerably different, and there is an argument that the US, especially with it's current attitude is not just no longer needed, but not wanted. It's not a simple debate.
There are a multitude of complexities involved. But those early alliances and politics certainly set the ground for what is happening now.
I can't see why the entire European Union can't look after themselves economically and militarily. Perhaps this was Trump's 4D chess move. Aggravate Europe, the Commonwealth countries, and even Japan, to make them wake up to their responsibilities and start pulling their weight instead of being welfare recipients. They may not be able to always rely on the US.
The Europeans have had a big red hungry Russian bear on its north east frontier since 1918. Post WW2 that moved westwards considerably and while that in the 8o’s was reversed territorially by Reagan & Co the bear nevertheless is still there. Things in the rear view mirror can be a lot closer than you see.
Do you really think Trump is that clever? I suggest he is only interested in what makes him wealthier and builds his image up (in his eyes). I doubt history is going to be kind to him. He's a modern day Nero, Caligula or perhaps closer to Idi Amin.
For the last 70 years the US has positioned itself as the guardian of the free world, deliberately. The also involved them taking a strong leadership role in almost every aspect, including military. For Vance and Trump to hold the position they did (not fighting other peoples wars) is blatant denial of their own history and recent historic fact that most of the recent significant wars were actually American ones and more than a few of the minor ones because of their political meddling.
At the very least it could be a wake up call for Europe. Things change, not necessarily for the better.
An interesting listen on the Taranaki basin compared with the North Sea. How NZ could be refining it's own diesel in a year. Highlights how unexplored NZ is, even in Taranaki, and how politics dominates domestic production and resilience.
https://rcr.media/episodes/dave-bennett-oil-gas-exploration-veteran-exp…
Yes, current constraints are investment and policy, not physics!
"...heavily dependent on politics"
We should have stuck with the clean car rebates. Might have half a million EVs on the road by now, and that would have pushed more to invest in solar, reducing grid load. The diesel security risk plummets when it's no longer used to power SUVs for an afternoon school pickup.
Only about 20% of SUVs would be diesel.
Listened to it. Good interview and an opportunity waiting for a brave government.
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