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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38 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.
It HAS been a wake-up call for Europe. They're ramping up their defense industries big time. But the Ukraine war has taught lessons to the US too. The sheer consumption of munitions has shocked everyone, probably even Russia. A lot of munitions have a limited shelf life so stockpiles cannot really solve the problem. Production capacity that can be built up rapidly on short notice is what is required, as well as munitions with durable storage capability.
I suggest the whole world is watching and learning. Ukraine is already exporting it's drones to other nations. cheap to build, easy to operate, hard to defend against. The technology to effectively defend against them is a ways off yet, but will get there.
They can't support themselves 'economically and militarily' because they are not internally energised.
Therefore they can never be 'self-supporting'.
It's just physics.
Sheesh.
Working within the global system it will be no trouble at all for the wealthy Europeans. We are not looking at a physics issue at all but a systems one.
Excepting those "wealthy europeans" only function within the system if it remains unchanged.
The Spanish, French & Germans in that order have invaded and occupied Continental territory and similarly Sweden and Russia have interchanged. All of that by armies that marched with horse drawn support and navies before WW1, under wind power. It is too often overlooked that the Wehrmacht in WW2 was still substantially reliant on horses. Modern military though needs oil, for instance on the battlefield, heavy armour or artillery pieces are hardly candidates for electrification. Throughout WW2 Germany struggled to maintain not only fuel supply but also essential minerals such as nickel, chrome and tungsten. Western Europe today is scarcely better off.
Oil is so last century. Maybe modern militaries now run on lithium. Drones and ballistic missiles are the thing to have now. Even fuel for petrol powered drones will be minimal.
Working within the global system is not being self-sufficient.
Simple, when one gets the hang of it.
The USA's military industrial complex can only grow so much within its own borders - they benefit plenty from "looking after" Europe. And the occasional "excursion"
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.
But they are currently cheaper than when they had the rebates, as naturally when it was announced, manufacturers just hiked the price by the same amount pre-importation.
Listened to it. Good interview and an opportunity waiting for a brave government.
Straw man?
More like straw army.
Firstly, using our own 15,000 bpd would be a good idea - but is it too LSC? I understood that was why it was never put through Marsden Point.
2ndly politics: The Key government spent taxpayer money to survey the whole country - and gave it away free to any company which wanted it. Corporate theft, by any other name.
3rdly if has never been financially viable - that 'market' bollocks again - so has never happened. Can a government do something that doesn't pay? In small proportion yes, in big proportion no (small fractions can be cross-subsidised).
Yes, we should be allocating energy and resources to having an internal supply of diesel for essentials like agriculture - to smooth the descent.
But the bigger tableau is that the global 'economy' will collapse via energy-reduction, long before development offshore NZ becomes nest-on-the-list. It'll never happen. The other bigger question is how long the tractors run, and therefore whether biodiesel is worth diverting effort/area into? Given that the existing fields are finite.
Any "oil bonanza" would be shipped off to the "market" anyway. These clowns proposing we "drill baby drill', will still be riding their donkeys to town as they're out bid by people with pockets deeper than they can dream about.
You and PDK suffer from too much anxiety mixed with pessimiism.
Im curious as to where all this oil and gas is waiting to be tapped when even if the exploration (for new offshore) reserves was abandoned post 2018 there were decades previous that failed to find anything considered worth the further investment.
Well, this is on Reality Check Radio and Paul Brennan is the interviewer so in his mind it'll be out there in vast quantities and the "woke" state has been hiding the facts for decades.
Woke of course being absolutely nothing to do with the environment but rather "woken up to racial injustice" but that's the least of the delusion going on here.
Exploration was stopped because it would find many decades worth of new oil and gas fields. We would have so much that it would likely delay investment in renewables and dealing with emissions etc.
Would find? You'd better roll up to Shane's office with your geological surveys.
Bollocks.
Pessimism? Nah, just sick of rah, rah, shifty sales people controlling the narrative. They cause my less than cheery outlook, but that's only when I engage with them, and they need engaging, before what remains of our beautiful planet reaches their goal of a smoking wreck. Otherwise I'm pretty happy actually. I have everything I want/need, zero desire to compete with the Joneses, spend my days doing just what I want, enjoy helping others. It's yeasty empire builders, greedy narcisists, bean counters, techno utopians, and anthropocentric breeders that disturb my otherwise sustainable happy lifestyle. :-)
Yes the original refinery was an issue. why can't we build one to refine our own oil?
Politics belongs to the government of the day. Key was wrong.
The issue is we need to be more self sufficient. Financial viability; how much are we as individuals and as a nation, prepared to pay for imported oil, and if there is a good supply in our back yard can we reduce the cost/risk in time? My view is FFs will always be a part of the picture, just a much smaller part.
That global economy collapse makes this even more important as it will provide us with a greater margin to survive through it and sustain ourselves. The goal here is not to become an oil exporter (we already are and how has that helped us?), but to be more resilliant if not fully self sufficient and less dependant.
I image Marsden Pt was configured to produce mainly diesel because this was the most important liquid fuel for the NZ economy. Still is.
Any oil that might exist in our territorial waters wouldn't be ours. It would belong to the developer. If we tried to nationalise it, we'd have an aircraft carrier stationed off shore and black hawks landing in parliment grounds conducting a special liberation operation.
I have family that used to work there that attested that Marsden could process different types of crude which was an advantage. The loss of the refinery was not only the fuels, but the other byproducts e.g CO2, suphur, bitumen, and more.
Yes, there are all sorts of products that can be produced from crude oil. Maybe it could process different grades of oil in theory, but it was configured to process medium sour crude imported from the middle east, because a greater fraction of diesel could be extracted as finished product.
The price of gold will start today down -US$44 at US$4493/oz
That seems incorrect, more likely US$4,793
The lucky country seems to have mined that resource to exhaustion.
"A fire has broken out at one of Australia's two remaining oil refineries, with emergency services responding to reports of "explosions and flames"."
https://www.rnz.co.nz/news/world/592511/explosions-as-one-of-australia-…
Will be interesting to find out why?
A young, disenfranchised, Anti-oil kid, with a Ukrainian-esk drone and a giant Double Happy onboard ?
Easily done nowadays it seems.......?
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