Here's our summary of key economic events overnight that affect New Zealand with news conflict in the Persian Gulf has erupted again with attacks on US naval forces trying to open the waterway for US flagged vessels. Iran also hit the UAE. Iran also warned that it will tighten its control over the Strait. So far there have been 28 attacks and 6 near-misses.
The oil price has risen, equities have fallen, and benchmark interest rates rose.
How China reacts will be important now. So far they are bolstering their support of Tehran via trade and payments support, and banning their companies from respecting the US sanctions threats.
In the US, factory orders rose in March and by more than expected as the stockpiling trend got started. They are now almost +3.7% higher on a nominal basis than a year ago. This data matches the recent factory PMI data we have reported earlier.
US April vehicle sales came it at an annualised 15.9 mln rate, slightly less than for March and less than expected. This was down -7.2% from April 2025, but holding at about the post-pandemic average which in turn is about -10% lower than pre-pandemic levels.
The US Fed loan officers survey may have disappointed some observers. Earlier in the year, indications were for rising demand. But the results of the April survey found little-change. At least it didn't find softer demand.
In Canada, they have announced a $C1 bln support program for manufacturers hit by the swingeing Trump tariffs on their steel products, a sector hit particularly hard. Another C$500 mln in regional support was announced at the same time.
In South Korea, we got another very good factory PMI for April. The S&P Global version rose to 53.6 in April from 52.6 in March, the strongest expansion since February 2022. But the scramble for more orders, and production is to get ahead of incoming inflation pressure. In fact, input costs and output price inflation surged to its highest in the 22-year history of this monitoring.
In Taiwan, the same scramble is underway, with production and sales rising sharply as firms look to stockpile. That drove their factory PMI to new momentum and a five year high.
In Europe, the ECB also released a survey of bank forecasters. They found there were expectations for higher inflation in the near term, but unchanged further out. These analysts have downgraded their 2026 and 2027 growth expectations, but left longer forecasts unchanged.
In Australia, the Melbourne Institute's Inflation Gauge tracking reported a +0.6% rise from March to be 4.3% higher than a year ago. The April result was lower than the record high monthly increase at +1.3% in March, and compares with the official March monthly annual rise of 4.6%. Despite the easing, this rate remains very high and likely well above what the RBA will be comfortable with. The RBA is widely expected to raise its policy rate +25 bps to 4.35% later today, although in the past 24 hours, the market conviction has wavered.
The UST 10yr yield is now just on 4.44%, up +6 bps from this time yesterday. The key 2-10 yield curve is now at +48 bps (-1 bp). Their 1-5 curve is now at +33 bps (+3 bps) and the 3 mth-10yr curve is at +78 bps (+7 bps). The China 10 year bond rate is now at 1.75%, unchanged. The Japanese 10 year bond yield is down -1 bp at 2.50%. The Australian 10 year bond yield starts today at 5.02%, down -1 bp. The NZ Government 10 year bond rate is down -3 bps at 4.69%.
Wall Street has started its week with the S&P500 down -0.4%. Overnight, European markets were down between London's -0.1% and Paris's -1.7%. Yesterday Tokyo was closed for a holiday. Hong Kong was open and was up +1.4%. But Shanghai and Singapore were closed for holidays. The ASX200 ended down -0.4%. But the NZX50 ended up +0.5%.
The price of gold will start today down -US$92 at US$4522/oz. Silver is down -US$2 at just under US$73/oz.
American oil prices are up +US$3 at just on US$105/bbl, while the international Brent price is up +US$5.50 and now at US$113.50/bbl.
The Kiwi dollar is down -30 bps from yesterday at this time at 58.7 USc. Against the Aussie we are holding at 81.9 AUc. Against the euro we are down -10 bps at just on 50.2 euro cents. That all means our TWI-5 starts today at just under 62.1 which is down -20 bps from yesterday.
The bitcoin price starts today at US$80,587 and up +2.4% from this time yesterday. Volatility over the past 24 hours has been modest at just under +/- 1.6%.
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32 Comments
'In the US, factory orders rose in March and by more than expected as the stockpiling trend got started. " To me this seems to be dicing with the devil. Not so bad if they're anticipating an increase in demand and it eventuates, but on the other hand if they're just trying to get ahead of pricing escalations because of the war uncertainty, then the upturn will be followed by a matching or worse downturn. Inventory costs money to store and maintain, so without some level of turnover that cost can be punishing.
Bought a few appliances and parts from Harvey Norman etc recently. Seems they have nothing in country anymore, have to wait weeks after you buy it.
And retailers get angry when people look in store and then buy the same product online for cheaper. But if the stock isn't even in-country then they've lost a lot of comparative advantage
I will only ever pay a premium for getting something in hand, on the day, if they have it and I need it that day. For those with patience and forethought, online ordering saves large sums on so many things. Long live the repairability of goods! Currently fixing a 30yr old vacuum cleaner given to us by family (very minor fix) and will be going strong once again as good as the day it was purchased.
Upon taking it apart it has a chunky heavy motor, plenty of copper and brass for connections, and on small, simple chip board which is very easy for anyone to work out. This vs a cheap, Chinese made thing that will last all of 2 years this day and age and built to last just outside the warranty period.
This was down -7.2% from April 2025, but holding at about the post-pandemic average which in turn is about -10% lower than pre-pandemic levels.
I thought Trump was going to make the US automobile industry great again. Pass me another TACO I’m not full yet.
Trump was indeed loquacious in his electioneering that he would make his fellow Americans “better off.” The great majority of those Americans are now starting to realise that they are the opposite, and that it is worsening. That dissatisfaction will outturn in the mid term elections with the Democrats likely in control of both houses. How a volatile, self contradictory and unpredictable President copes with that will be more than interesting and portends much much increased uncertainty.
If they do indeed end up in control of both houses, the writing will be on the wall for the Republicans. It would be almost certain that another impeachment trial of Trump would occur, and if successful he would be removed from office. It would be an ignominious end to his reign. What follows that will indeed be interesting.
It seems the whispers against Vance are growing, and his nearest competitor is Rubio, but it seems the Republicans don't necessarily like him. The GOP has some big problems on their plate.
To remove Trump the Democrats will need a 2/3 majority in the Senate. They'll be lucky to get a simple majority in the upcoming mid-terms. GOP will never break with Trump so he's not going anywhere.
“It's easier to fool people than to convince them that they have been fooled.”
― Mark Twain
Yes he has been over dominant hasn’t he. Not since FDR has a President contested three elections in a row. By 2028 that will just the one identity in the running for 16 straight years. Thus his forthcoming departure cannot help but reveal a great gap, if not void, in the selection for a successor and in all likelihood that process will be quite a dog fight and if the Democrats win back the Presidency, the Republicans will have something of a challenge in rebuilding and regaining a convincing image and structure.
He'll be the first to contest 4 presidential elections in a row come 2028.
Its been an interesting experiment whether globalisation and neo liberalism are better than government controlled markets. It looks like the outcome is as expected, the government interfering in markets makes everyone poorer. But I hope we get a few more years so we know for certain.
No, it hasn't.
But it has been interesting to note those who need to believe it has.
They all make the mistake of thinking money is the yardstick for 'richer' or 'poorer'.
Which, as we are seeing, it isn't. Having stocks and supply-lines is 'richer' - without them money is absolutely worthless.
Which is increasingly becoming a problem for those continuing to peddle the falsehood that life is a series of 'financial' decisions. It is actually a series of strategic ones - and the proxy-system we have all used is failing, as it was always destined to do.
This is perhaps the one area you and I don't really agree on. The role of the government is to regulate the markets. If they don't the big players and everyone else is trying to manipulate them to their advantage and at everyone else's expense. That makes everyone else poorer.
True some governments don't do a good job, but that's what democracy does for you.
We can all see the strength of regulation (sarc) in the USA by the sheer cost of healthcare and education, two of the pillars of a functional democratic society.
Different economic model there Int. Hard core capitalism designed to let a few get rich. It is not a good example to use when arguing against government regulation. That regulation is a core to democracy. it's entire purpose is to permit and protect the entire population to participate and not get shafted by the rip off merchants and parasites. Our social housing paradise as a good example of what happens when the regulation is not present or wrong.
I agree regarding regulation is necessary and for the benefit of all. In fact something that we need more of in some regard such as the Commerce Commission as an example.
The social housing topic is an interesting one. On one hand the selling off of these has lessened availability and put more strain on building new expensive housing, however the financial cost of maintaining all of the state housing, and increased housing standards under healthy homes, as well as increased access to information for HNZ tenants to push for things to get done, may have tipped the cost to be much higher to maintain these properties. The financial cost may have been used as a scapegoat to sell off state houses, but the societal cost has been the worst.
I generally do not disagree with you. But it's bigger than just one area. A lot of regulation impacts on housing costs. Some of the regulation is good some not so much. Housing costs in general are impacted by many aspects of the NZ economy directly and indirectly, much of which has been discussed at various times on this site over the years. The end results are what counts though, and as you have indicated, resulted in significantly increased costs of housing. One example of how unintended consequences, by regulators and courts, can impact the industry is the consequence of trademarking of Gib products.
IPCC drops the RCP8.5 pathway. For all the scary headlines from MSM/Interest over the years nary a mention in the media. The Reserve Bank, government and local councils will all have to get busy rewriting their chicken little plans once their relief celebrations are over. Good work Kate.
The Network for Greening the Financial System framework, used by more than 140 central banks, has utilized a “Hot House World” scenario calibrated to RCP8.5 physical risk into the bank stress tests run by the European Central Bank, the Bank of England, the Reserve Bank of New Zealand, the Banque de France, and the US Federal Reserve. The World Bank’s Climate Change Knowledge Portal, which provides the climate diagnostics that feed into the Country Climate and Development Reports for more than 100 client countries, defaults to SSP5-8.5 and SSP3-7.0.
The abandonment of the high-end legacy scenarios by CMIP7 will need to propagate through this entire infrastructure. The policy machinery built on RCP8.5 and the other implausible scenarios is systemic.
https://rogerpielkejr.substack.com/p/rcp85-is-officially-dead
For the 21st century, this range will be smaller than assessed before: on the high-end of the range, the CMIP6 high emission levels (quantified by SSP5-8.5) have become implausible
The Scenario Model Intercomparison Project for CMIP7 (ScenarioMIP-CMIP7)
https://gmd.copernicus.org/articles/19/2627/2026/#section6
https://www.interest.co.nz/public-policy/127062/katharine-moody-calls-m…
Now to see what the Kapiti council does.
When people use put-down couplets - like 'chicken little' - we know their argument is weak.
The real word is 'precautionary'.
And if we had been, the Chch Red Zone wouldn't have happened.
It was people with Profile's attitude - essentially a need to believe in anthropocentric superiority - who allowed it. And no doubt paid planners needing to pay off their student debts - who planned it.
There are some signs though that the “Red Zone” will live again with the Christchurch City Council pondering marketing land in said areas. For instance a well publicised hill property at the time, featured a busted out old wooden villa and a wide deep fissure running through the length of it was sold recently for over $1 mill for the bare land. At one stage that section had been categorised as in the danger zone, a probability of future fatalities. Now since then nothing has changed. So what was the reason for the previous classification and consequent ousting of the owners and what actually has been done so that the land is now safe. Yes that word “precautionary” certainly is malleable isn’t it.
It may well be a fatal weakness, this discounting of the future in otherwise-sapient minds.
Unchecked, we make ourselves extinct by peddling 'growth is good' - when we could, if we wanted, learn that it isn't.
Remember 10 years ago when there was overwhelming public support for returning the red zone to nature, native plantings, wetlands etc? Feels like the council is dragging the chain until people forget what could have been so the city can creep back in.
Yes that is where immigrants and suchlike are ideal clients, useful idiots perhaps. No knowledge of locality or its history. Sort of I gotta bridge to sell scenario. Mind you given the height of the liquefaction on that land, a bridge might well be handy.
FG. I personally share your sentiments about building in the red zone but remind you that many of the 8000 eastern sections thus zoned remained physically liveable. Repairs were often feasible but the cost of reinstating public infrastructure was prohibitive thus resulting in the RZ scheme to compensate for the difference between insurance payouts and the market value of the property. Sound homes with only moderate damage were bulldozed. Suburb wide blanket designation had to be applied notwithstanding a good number of properties within each area being sited on more elevated areas such as ancient river banks and sand hills. Selective rebuilding on elevated low liquefaction RZ sites is feasible.
And to add Foxy, it might be several hundred years before another major quake around Chch. So agree with you.
It might be too. Then again it might be in the next 10 hours, days, weeks or years. Who would know. One thing for sure, for those that lived through the series, the experts certainly knew all about them, after they had happened.
FG. Quite a few of those early mass land movement and collapse risk designations have been lifted after further geological study. In an area wide event like ChCh authorities are bound to apply an excess of caution early on. I know someone who has built on a rocky hill section with lateral spread, probably not too far from the one you describe I suspect. The new house is set well back from the crack line and a caveat on the title requires them to minimise the amount of gardening time they spend below it.
Much of the red zone area in ChCh was developed well before the Council understood the areas' vulnerability to liquefaction and land elevation change. Engineer Ian McCahon did some early pioneering work but its not until 2001/02 that key research was published. Before then the city could not have been more 'precautionary' given how little was known of the hazards and risks at the time.
One RCP is already off the table. Unsurprising the silence from our resident climate denial expert over this achievement. RCP2.6 has already been consigned to the dustbin of unrealised scientific probability. We've already amassed 2.7+W/m2 increased radiative forcing post industrial revolution.
https://world-nuclear.org/information-library/energy-and-the-environmen…
Of course there's pressure to water down official climate reports from the usual evangelical "feed the planet through the grinder for a digital dollar" types. Is RCP8.5 off the table? No, not really, just watered down. As 8.5's basically a death sentence for human civilisation, those focusing on quarterly reports don't want any language that might scatter pigeons and affect sales.
"plausible alternative descriptions of how the future may develop based on a coherent set of assumptions"
Good to see the proposal buried deep in your referenced study, that modelling periods should be extended to 2150 and in some cases for 500 years to take into account, as your reference says "Considerations of equity and justice are a cornerstone of the global climate discourse." I guess the authors feel there's more at stake here than the contents of profiles bank account?
Although I hold Pielke in very low regard, he's correct that population and fossil fuel use are unlikely to reach the levels proposed for an 8.5 scenario. Resources, pollution, population will follow the LTG BAU2 model. Pielke is correct, but for the wrong reasons. The reason 8.5 is unlikely, is because the planet and civilisation will be wrecked before we "achieve" that level of radiative forcing!
Hey Palm, thing is humanity is on the road to nowhere. Just make the most of life and enjoy. No one gets out of here alive, that is how it has all ways been.
"Is RCP8.5 off the table? No, not really, just watered down." What part of implausible/removed from CMIP7 do you not understand?!
on the high-end of the range, the CMIP6 high emission levels (quantified by SSP5-8.5) have become implausible
The Scenario Model Intercomparison Project for CMIP7 (ScenarioMIP-CMIP7)
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