sign uplog in
Want to go ad-free? Find out how, here.

Dairy prices mixed; US factory orders disappoint; Yellen sees rate raises, borrows aggressively; EU carbon price jumps; global trade expands; UST 10yr at 1.58%; oil up and gold down; NZ$1 = 71.4 USc; TWI-5 = 73.4

Dairy prices mixed; US factory orders disappoint; Yellen sees rate raises, borrows aggressively; EU carbon price jumps; global trade expands; UST 10yr at 1.58%; oil up and gold down; NZ$1 = 71.4 USc; TWI-5 = 73.4

Here's our summary of key economic events overnight that affect New Zealand with news stimulus and strong trade growth may spark rate rises, and that is according to Janet Yellen.

But first, today's dairy auction has produced some mixed signals, although it is generally positive. The event organisers reported overall prices are "-0.7%" lower, at an average prices of US$4,162/MT. But they reported the previous event average price at US$4,110/MT. So today's result is actually +1.2% higher than that. This makes more sense when you know that the dominant WMP price rose +0.7% and the also-large SMP rose +2.0%. Dragging the result lower was Butter which slumped 12.1% and Cheddar Cheese down +4.5%. But the relative volumes sold of those two are pretty small. Anyway, in NZD terms, this has resulted in a dip of just -0.1%.

US factory orders for March disappointed. They came in +1.1% higher than for February and that was much less growth than analysts had expected. New orders for Capital goods actually fell -3.2% on that basis. (Recall, the year-on-year data suffers from pandemic base effects, so is not a reliable indicator at present.)

US Treasury Secretary Yellen commented overnight that inflation could well rise as a result of the Biden recovery and stimulus programs. Rates may have to rise "to prevent overheating". She is no lightweight and markets took notice. Meanwhile she plans to borrow nearly US$1.3 tln extra over the next two quarters as federal spending picks up under those recovery plans.

Canadian building permits were a bright spot, rising strongly in March from February reflecting a booming residential building sector there.

In the EU, the cost of carbon is racing higher, now above €50/tonne (NZ$84). For comparison, the New Zealand price is currently NZ$37/tonne.

International trade is recovering strongly. The Baltic Dry Index as a measure of demand for ships for trade, is now above the 3000 index level. Global air cargo volumes reached an all-time high in March amid an improving macroeconomic backdrop. Industry-wide cargo-tonne kilometres (CTKs) picked up by +4.4% compared with the pre-crisis level in March 2019. Asia/Pacific volumes were flat on that same basis however. Globally, domestic air travel is recovering (especially in China), but international travel is still in the doldrums.

In Australia, new home loan commitments for housing rose +5.5% in value in March to a new record high of AU$30.2 bln in the month. Lending to investors accounted for more than half of the March rise in housing loan commitments. The number of first home buyer loan commitments fell.

The RBA kept all its policy settings unchanged at its monthly review late yesterday, but it has upgraded its growth forecasts to +4.75% over 2021, up from +3.5% in its February statement.

On Wall Street, the S&P500 is down a sharp -0.9% in midday trade. Overnight, Frankfurt fell a startling -2.5% and other European markets fell about -1%. Shanghai and Tokyo were closed for public holidays yesterday, but Hong Kong traded +0.7% higher. The ASX200 was up +0.6%, while the NZX50 Capital Index rose a strong +1.1%.

The latest global compilation of COVID-19 data is here. The global tally is still rising, now 153,738,000 have been infected at some point, up 702,000 in one day, largely driven by rises in India. Global deaths reported now exceed 3,217,000 and up +11,000 in one day. Vaccinations in the world are also rising fast, now up to 1.179 bln (+15 mln) and in the US more than half of their population (245 mln) have had at least one dose as they keep up their fast rollout. Almost one third have been fully vaccinated (106.8 mln people). The number of active cases there has fallen to 6,731,000 with -39,000 fewer new infections than recoveries in the past day.

The UST 10yr yield starts today at 1.58% and down -3 bps overnight as the slide by equities bolsters the price of bonds. The US 2-10 rate curve is little-changed at 145 bps. But their 1-5 curve is flatter at +78 bps, as is their 3m-10 year curve at +160 bps. The Australian Govt ten year benchmark rate is down -2 bps at 1.68%. The China Govt ten year bond is unchanged at 3.19%. And the New Zealand Govt ten year is unchanged at 1.69%.

The price of gold starts today at US$1778/oz and that is down -US$14 since this time yesterday, and giving up most of Tuesday's jump.

Oil prices are up +US$0.50 today at just over US$65/bbl in the US, while the international Brent price is up a bit more at just under US$68.50/bbl.

The Kiwi dollar opens today at 71.4 USc and down almost -¾c since this time yesterday. Against the Australian dollar we are little-changed at 92.7 AUc. But against the euro we are down at 59.4 euro cents. That means our TWI-5 is now at 73.4.

The bitcoin price is now at US$54,215 and down a very sharp -6.6% since this time yesterday. We are back at a level we first reached in mid February. Volatility in the past 24 hours has been very high at +/- 4.5%. The bitcoin rate is charted in the exchange rate set below.

The easiest place to stay up with event risk today is by following our Economic Calendar here ».

Daily exchange rates

Select chart tabs »

The 'US$' chart will be drawn here.
Daily benchmark rate
Source: RBNZ
The 'AU$' chart will be drawn here.
Daily benchmark rate
Source: RBNZ
The 'TWI' chart will be drawn here.
Daily benchmark rate
Source: RBNZ
The '¥en' chart will be drawn here.
Daily benchmark rate
Source: RBNZ
The '¥uan' chart will be drawn here.
Daily benchmark rate
Source: RBNZ
The '€uro' chart will be drawn here.
Daily benchmark rate
Source: RBNZ
The 'GBP' chart will be drawn here.
Daily benchmark rate
Source: RBNZ
The 'Bitcoin' chart will be drawn here.
End of day UTC
Source: CoinDesk

We welcome your comments below. If you are not already registered, please register to comment.

Remember we welcome robust, respectful and insightful debate. We don't welcome abusive or defamatory comments and will de-register those repeatedly making such comments. Our current comment policy is here.



Looks like rates are going to be rising sooner than what many people thought. This happening after Covid pushed the world into a debt super cycle and many people took on large loans to survive or speculate in never ending house price rises. We are going to be in for one hell over a hang over when this party comes to an end.

It will be interesting to observe the first “nudge” upwards here in NZ. By that I mean the political reaction by our government if widespread panic and outcry arrives on the street. Of course the media will have a bit to do with that. Probably heating their pokers already.


I reckon the media will downplay any correction in house prices. It will be one mysterious exception to their usual love of fearful narratives. Oneroof will run a bunch of stories about how it’s the Government’s fault.
Besides which, regardless of what the US does with rates, I don’t see the RB making a move until the NZD has been beaten to a Venezuelan pulp. They’ll say it’s for the farmers.

The smart ones have already locked in 2-3 year rates, not much little old NZ can do about Janet Yellen and the Fed. Floatsam on the sea of FIAT and money printing.


"She is no lightweight and markets took notice"

Maybe they did, but actually, she is. In the big picture, she's pure flotsam.

All she can do is threaten and hope it persuades. She knows damn well that if the cost of debt-repayment goes up, the whole house of cards comes down. This have been coming since Nixon unpinned the dollar, and that was because it had been coming since about WW1. There WILL be a great re-set, but I doubt it will be the re-set the Davos/Bilderberg types are hoping for.

Yep..jawboning again. She knows the house of cards will collapse if interest rates rise. They will not let that happen.

Made up our minds - locking in 5 years in June

Locked in for 5 years at 2.99% about a week ago. Our 1 year loans at 2.5% were coming up for review in November so only a 0.5% increase until that time. Have a feeling that short term rates might not be much below 3% come the end of year in any event...

We just missed the 2.99% because ASB moved first but got them back down to 3.19% for 5 years. Could have got 2.99% for 4 years but I don't see rates being that low then.

The smart ones have sold


The first nudge upwards will crash the property market & cause a notable recession. I think however if they don't increase rates then we will end up with a "young person renter revolt" which will manifest itself in either Greens or TOP getting enough vote to force a major party to make concessions on their property ponzi policies. Young people are not happy at the moment with the status quo & although completely ignored by the mainstream media you can sense a strong undercurrent of bitterness when you venture onto social media. Check out the average property orientated thread on reddit NZ, this is a sub reddit (300,000 members) full of young Kiwi's.

Imagine... a nationwide protest and a corresponding boost in voters for greens or TOP - the signalling from Labour-Nats of intent to increase rates or restrain the property ponzi would start immediately, but the actual action to change anything would not arrive for another 5 years.

While I agree with the sentiment, that subreddit is a toxic cesspit.

Will the party ever comes to end....Mr Orr and Mr Robertson cannot afford it to end, for if it happens, they are finished and it is for their survival will keep it running, come whay may.


If you look at the rhetoric of CB heads in Canada, the US Oz and NZ they all say the same thing. These Keynesian bots are so programmed they have no survival instinct, they can only parrot the defunct models they religiously follow to the doom of anyone who cares about the intrinsic value of the currency they earn.

Central Bank NPCs

Rates increases have a long way to go before people get into trouble. Many will just extend their mortgage term. Some will just elect to put more each week on the mortgage which may be a problem for the wider economy in a few years time. I think a few people here need to understand that paying the mortgage is at the very top of the list and rates have a long way to go before people quit the house.


Yea but you see, the economy relies on retail spending. If rates rise and people tighten the belt this will have a domino effect on the entire economy. It'll happen gradually, then all at once.

As ydb said, the key is what drops of the bottom of the list as the top Starts taking more and more. The dominos from there will be ugly.

This is a tricky one, if rates double then repayments are going to double so I'm not sure there is that flexibility in disposable income. As also said above this much change will indeed break consumption patterns and trigger recession.

Rates will rise soon in NZ, sooner and faster than many would have predicted. This will have significant impacts in the housing market.
It will be interesting to see for how much longer the RBNZ can manage to desperately keep the NZ housing Ponzi alive. Winter is coming.

We all know that Mr Orr has no intent to control the housing ponzi and the same will be confirmed in his announcement today.

Though will announce it later in the month but if he remains silent on the issue will be evident or if interested should give a hint just like he does about interest rates and other policies - giving direction.

I'm not so sure. Rate increases will have a very negative impact on discretionary spend, and hence inflation. Even small increases in rates will head off inflation quite quickly in my view.

Add on to that the impact of a stalled or falling housing market (and the consequential impact on the 'real' economy) - I think most punters underestimate the portion of economic activity in NZ is illusory (i.e. housing ponzi). Hardly a recipe for high inflation...

Yes but once prices go up they become very sticky and tend not to go back down.

Agreed - central banks will relish a one-off increase in price levels. That helps to devalue the debt load they've unleashed on society.

You make a good point but the actual inflation will be imported not domestic. If the RB does not raise rates (even if it hurts) then the inflation will be imported via the exchange rate. So ether way what NZ does is of marginal impact on whether we have inflation here.

Yes - all those years of unearned income from house price increases have to get paid for by somebody...

Rates will NOT be increased
You cant have MORE leverage & higher rates
And leverage is the only thing keeping the show on the road

And so inflation will be allowed to maraud around, totally unchecked. Either way, those chickens WILL be coming home to roost. Central banks are trapped. #CheckMate

HnE, Financialisaton and collateralisation of everything is upon us! Let is rejoice in infinite leverage! ;) /s

Yellen has already "corrected" her statement.
This is just (ex)central bankers trying to play games with market behaviour. Trying to create inflation by convincing everyone its coming.

Inflation is here. If you don't believe the media go look at your shopping bill.

I'm not convinced, foods not really moved for me meat is possibly down in price veggies might be up and few things I buy are no longer loss leaders. Consumer goods are flat (Running shoes are cheaper now than they were 15 years ago). Petrol is still below previous peaks.
Inflation is extra money (velocity and amount) in the system not policy and market failures driving the cost up of some critical items.

Running shoes are going up in price as we speak. I am currently purchasing some and prices have gone up, not down. Everything is going up in price at the moment, especially imported goods. We are seeing Coca Cola, Milk, Bread, Petrol, Ovens, plastics, Electronics, Furniture all going up.

This price is slightly lower than what you paid 15 years ago and you wait for a sale before you actually buy it.
Supply chain issues and changes in demand from lockdowns are not going to be fixed by rate rises. Unless you want to push our dollar higher but we are already exchanging at pretty high values.

'Cost push' inflation is on its way, big time. Commodity prices are rising and will soon go nuts. When the cost of raw materials goes up, the cost of all the end products will be going up. The dumbo's at the central banks & the complacent economists have only considered 'demand pull' inflation initiated by end consumers, they have missed the elephant in the room!

Missed the elephant in the room by design.

The only inflation they actually care about preventing is your wages increasing.

Remember an article in Time magazine early 1980s concerning New Zealand’s economic status, plight if you like, and our then PM Robert Muldoon. The sentence that stood out was something like in terms of inflation Muldoon’s solution was simply to ban it. This government now is fast becoming interventionist in similar manner afraid to say.

This government will go to any lengths to hide it's failure to deliver on big promises with meaningless posturing.

Pay freezes will drain away the productive ones who can attract higher pay elsewhere for their skills and good performance records, while inefficient public workers earning big won't have anywhere to go; resulting in worsening productivity and poorer outcomes for the public.

FYI this is how we do restructure in NZ - Mega polytech has 21 staff with chief executive in their title and 6 deputies who collectively earn in excess of $4 million

I think identifying the productive ones is the challenge, I am sure there are examples but its hard to see their impact.

Hard to see them, even harder to find them. The unproductive mass make sure they are buried deep in trenches so as to not show them up. Kipling summed it up yonks ago. “ it’s Tommy this and Tommy that, and Tommy how’s your soul, but it’s a thin red line of heroes, when the drums begin to roll.” Similarly in my view, an unfortunately large number of public servants are astonishingly adept at being in the front line for medals and well behind the lines for the action.

Labour have one real ugly duckling that could turn out to be a black swan so I hope Jacinda knows it is the hunting season and time to remove unwanted pests.

US factory orders dissapoint? Who cares! Apparently an economy going gangbusters = printing, borrowing, and spending trillions. Productivity and output don't matter it seems to our modern day economists and financial journalists.

Taiwan is on an absolute tear so US Factory orders are not telling the story.

So the govt puts a pay freeze on public servants. Are they going to do the same on house prices and rents?

Well, only rents to go :) and although it will make Kate very happy it will also ring in our complete transformation to the communist republic of Aotearoa

yep..the definition of kind is apparently having everyone earning the same, regardless of ability, skill or effort. Some of the highest paid in society are now solo mothers. Net weekly benefit often over $1000, plus the $1,500 and sometime $3,000 cost per motel unit. These ladies apparently worth the $200k per year investment.

Subsidise what you want more off, tax what you want less off = a land of beneficiaries and landlords.

"Yellen sees rate raises, borrows aggressively"
How does that make sense? Why borrow more if you think interest rates are going rise?

Only way that makes sense is if you are borrowing off yourself. That’s why nations still have lunatic asylums at the ready one supposes.

US is borrowing off itself, and has for 70 years. The Social Security Trust Fund each month receives Payroll Taxes at the rate of15.6% on income up to $120,000 per year per individual. and Each month end immediately the Treasury Borrows the Tens of Billions of dollars that go into the Trust Fund. Unlike the Cullen Fund in the US the retirement funds contributed from Payroll Taxes can only by law be invested in US Treasury Bills. Total amount owed to the Fund now exceeds $5 Trillion dollars that it has ""borrowed from itself". Used to be about 1/2 of US Debt was repayments owed to the Social Security Trust Account but the past 25 years have changed to about 15% of total debt outstanding.

"The RBA kept all its policy settings unchanged but it has upgraded its growth forecasts to +4.75% over 2021, up from +3.5% in its February statement."

Would that not be an ideal time to "normalise" its policy settings?

RBNZ is reactive Yvil, not proactive