Here's our summary of key economic events overnight that affect New Zealand with news that while Trump is playing Putin's puppet, his lieutenants are setting the stage for a new global bout of stagflation - higher tariff-induced costs for little or no economic expansion. Wall Street is starting to price in what is increasingly likely to lie ahead. The USD fell.
US jobless claims came in lower last week than the week before, with all the decrease accounted for by seasonal factors. Markets had expected an even lower level from those seasonal factors, so this result was a disappointment. There are now 2.2 mln people on these benefits, a rise, when a season decrease was expected. For most of 2025 this level has been tracking higher than in 2024.
The regional Philly Fed factory survey expanded in February, but at far less a rate than in January. A fall-off in the new order component explains most of the change.
Meanwhile, the Conference Board tracking of leading index metrics shows a larger fall-off than expected and a negative outlook.
Also lower (than a month ago) is the Atlanta Fed's GDP Now tracker.
And we should also probably note the -6% fall in the Walmart share price overnight. It is dawning on markets that the new public policy settings are fertile ground for stagflation - inflation with no real growth. Retailers like Walmart are in the front line of that, and their latest outlook really disappointed markets even as they reported improved current results.
Canadian producer prices rose rather sharply in January from December, and were +5.8% higher than year-ago levels. To be fair, some of this is base effect (January 2024 fell -3%) but the recent trend is higher too.
Taiwanese export orders fell in January from December and came in -3% below year-ago levels. Analysts had expected them to hold at last year's level. But to be fair, they did rise in local currency; it was the USD change that showed them dragging.
In the EU, the consumer mood is improving, largely around the expectation that ECB interest rate cuts will continue. Their sentiment tracking shows it at its best level in four months and this survey came in much better than observers were expecting. But despite all that, it is still net negative as it has been 'forever'.
China kept its February Loan Prime Rates unchanged at their record low levels.
In Australia, their employed workforce grew by +44,000 in January, above what was expected (+20,000), but less than the December gain (+60,000). But there was a virtuous twist to the January levels with a shift to full-time roles, with +54,000 more of them, and part-time roles shrank -10,000. Average weekly earnings rose +4.6% from a year ago. But high tax rates and inflation at 3.0% will mean most workers felt they just stayed even. (For perspective the NZ jobless rate is 5.1%.)
And staying in Australia, the SA State Government and the Federal Government have "seized control" of the Whyalla steelworks - essentially nationalising it. And they are having to tip in AU$2.5 bln to keep it afloat. Its British owner has had a very chequered history.
And we should probably note that key Aussie pillar bank NAB has seen its share price fall -15% in a week. CBA is down -6.5%, Westpac is down -11% and ANZ is down -8.0% over the same period. Aussie bank shares are being re-rated lower, and because they are very widely held in Aussie superannuation and KiwiSaver portfolio's savers will notice.
Container shipping freight rates fell -10% last week as the puff goes out of global trade, especially on trans-Pacific routes. These overall rates are now -26% lower than year-ago levels, even if they are still double pre-pandemic levels. But with weak trade out of China, these rates will likely fall much further, and quite quickly. Although they remain historically low, bulk cargo freight rates rose +16% last week, although remain -48% lower than year-ago levels.
The UST 10yr yield is at 4.50%, down -6 bps from yesterday at this time. The key 2-10 yield curve is little-changed at +25 bps. Their 1-5 curve is now at +15 bps. And their 3 mth-10yr curve is flatter at +18 bps. The Australian 10 year bond yield starts today at 4.57% and down -1 bp from yesterday. The China 10 year bond rate is now at 1.70% and up +1 bp. The NZ Government 10 year bond rate is now over 4.67%, down -2 bps from yesterday.
Wall Street is lower in its Thursday trade, down -0.8% on the S&P500. Overnight European markets all fell about -0.4%. Tokyo ended its Thursday trade down -1.2%. Hong Kong was down -1.8%. Shanghai however was unchanged. Singapore ended down -0.2%. The ASX200 ended its Thursday trade down another -1.1%, and the NZX50 ended down -1.2%.
The price of gold will start today at just under US$2943/oz and up +US$15 from yesterday, and again close to its all-time high of US$2955/oz.
Oil prices are up +50 USc at just under US$73/bbl in the US and the international Brent price is unchanged at US$76.50/bbl.
The Kiwi dollar is now at 57.6 USc and up +50 bps from yesterday. Against the Aussie we are also up +10 bps at 90 AUc. Against the euro we are up +20 bps at 55 euro cents. That all means our TWI-5 starts today just over 67.2, but unchanged from this time yesterday.
The bitcoin price starts today at US$97,763 and up +1.7% from this time yesterday. Volatility over the past 24 hours has again been modest at +/- 1.4%.
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90 Comments
Exactly what I thought Pa1nter. The same old statements coming from the so called intelligent ones stating the NZ peso is heading south with the lowering of the OCR and oil going thru the roof so imported inflation a bit like the 10 percent guaranteed and yet some still state interest our OCR are all depends on the US and rates are going up.
I hold a very small number of carefully selected US stocks and value wise have done well (I haven't cashed in on any yet so it's not real) but a notice across the board a decline in values.
The emotional quotient in investment is quite high, and despite all the academic rhetoric, I feel it is probably the dominating force. But the chaos Trump is sowing is going to reverberate strongly in America too and many of his so called 'friends' are going to get hurt. Some of them possibly seriously, and it looks like some reactions are starting to take effect. The fallout could be wide spread.
Echelons of American society conduct their lives en masse and react en masse too. Said it before to say it again if Trump doers not deliver up on the expectations he promised of “making you better off,” there will be huge backlash and that will be a double whammy because if the electorate thought they were badly off before his return then it will soon materialise as being made worse off.
I doubt Trump cares. He’ll get his 4 years to make himself and his mates rich and destroy the lives of everyone who thinks differently to him. He’ll be pretty much ready for the retirement home after that.
Unless Trump can convince the average American to upskill, he has no chance of making them better off. They were at their greatest when they were at the forefront of technology; assembling cars used to be a reasonably skilled job, now it’s not.
Making money the old fashioned way.
EPA administrator Zeldin told the Washington Free Beacon. "When we learned about the Biden Administration’s scheme to quickly park $20 billion outside the agency, we suspected that some organizations were created out of thin air just to take advantage of this." ..."As we continue to learn more about where some of this money went, it is even more apparent how far-reaching and widely accepted this waste and abuse has been," the EPA administrator continued. "It’s extremely concerning that an organization that reported just $100 in revenue in 2023 was chosen to receive $2 billion."
https://freebeacon.com/trump-administration/billions-doge-found-parked-…
Did I suggest it would "make them great"? You seem worry about what might happen (despite this being Trumps second term) and ignore/gloss over what did happen under Biden and his cronies. Laughable that you are worried about Musk getting rich! Why didn't Trump do this in his first term?
As for those humble public servants Obama, Clinton x3, Pocahontas, Pelosi etc who came to Washington with peanuts and are now rolling in it, let's just give them a free pass too.
Reading that article I see no actual evidence of fraud, nor abuse. Sounds like the organisation in question, a coalition of smaller agencies was set up to have the critical mass to actually disburse 2b in energy efficiency aid. I also note, that most of the agencies listed in the article as abusers have not actually started to disburse the monies granted to them. I did read plenty of 'left leaning' slights throughout. I went looking for evidence but found none. I also note that the 'freebeacon' has a hard right bias.
DC. President Trump is not Putin's puppet.
He knows a stupid war when he sees one. Not a common idea in the USA.
He is attacking the stupidity in his way, which upsets the traditional pattern. I don't care about the traditional pattern.
But tens of thousands of young men of Ukraine and Russia might live full lives because of him.
History like endless war in Europe with short periods of peace and ever changing borders and name changes?
What we are seeing is nothing out of the ordinary if you’ve really studied enough history (although I’m not claiming to be a European history expert (I have read enough to understand how lucky we have been post WW2 to have such stability for such a long time globally)- although you appear to be given your dismissive view of KH’s comment).
And yet apparently it’s bad because of the orange man (who is trying to bring peace to the region).
What are your credentials to claim being a history expert? Do you have a history major at University or higher? (honest question and I’ll bow to your superior knowledge if you do)
People are judging the tree and not the fruit from the tree. Let’s see how these negotiations go before we decide that Trump is going to make things worse.
Biden and Harris didn’t even want to talk to Putin - instead they were happy to just let hundreds of thousands of young people of both sides die - was this a superior strategy than actually talking to Putin and his team and resolving the conflict peacefully?
TBH I’m somewhat flabbergasted by how much people don’t want the fighting to stop and are willing for more Ukrainians to die so that we can get revenge on Putin.
I can't speak for everyone, but I'd be happy to see a reasonable peace deal made. The signs are that the USA is going to team up with Russia, and attempt to impose their demands on Ukraine while possibly stripping them of some natural resources.
I don't think this is an ideal outcome. I would be delighted to be proven wrong.
TBH I’m somewhat flabbergasted by how much people don’t want the fighting to stop and are willing for more Ukrainians to die so that we can get revenge on Putin.
To be clear, I absolutely want the fighting to stop which is why I completely disagree with Trump's strategy. At best it might cause a temporary pause as Russia rearms and then result in a bigger more extensive conflict. It also undermines the international rule of law and I'm almost certain we will see more aggression and conflict in other areas. The Chinese warships in Australia at this time are no coincidence.
And to answer your previous question about qualifications. I don't really think an academic qualification is a pre-requisite to study history but as it happens I do have a post-grad level education in this area (unrelated to current employment) so if it's a dick-swinging comp on who has the most academic chops I come packing 🤣. You don't need a history/politics/international relations degree to know that KH hasn't read history.
Those men and women you pretend to be concerned about will be purged anyway, if the fascist empire of Vlad the greatish takes over. Building torture chambers will be a growth industry in the ex state of Ukraine.
https://www.hrw.org/news/2023/04/13/ukraine-russian-torture-center-kher…
Independent Observer, your argument makes absolutely no sense and your judgment is clouded by the propaganda you consume.
Ukrainians fight for survival, they have become a play ball of Putin and Trump and can only chose who they get shafted by.
Trump has pressured and withheld aid to Ukraine all along with all sorts of demands (like dirt on the Bidens).
He doesn't give a damn about Ukrainian lives, so please stop repeating the garbage he constantly drivels or no one will take you seriously.
60k Palestinians dead, + 200k dead from indirect causes. Almost complete destruction of hospitals, education, water, sanitation and housing. Prolonged blockade of food, leading to starvation of children. You are one sick SoB if you think Israel holds the moral high ground.
This was started by Hamas who fully understood the reaction they would get. They are prepared to sacrifice their own people for a political aim. You are one sick, twisted, SOB to think that is justified! In the intervening time since their October attack have they renounced their aggression against Israel? No. So the casualty count is what they wanted and was looking for so gullible innocents would blame Israel and not them.
Do not misunderstand me. I believe Israel to be too heavy handed, and what they are doing on the West Bank and else where appalling. But Hamas started the confrontation in Gaza knowing what they'd get. They were not wrong.
Multiple and frequent accounts of the assassination of innocent Palestinian children, I assume as punishment for the actions of a terrorist group, is not "heavy-handed". This war did not start in October 2023, and to dismiss Israel's illegal 50 year occupation of Palestine while crying for Ukraine is even more sickening. This twisting of history will be the end of us all.
"Assassination" of innocent Palestinian children implies specific targeting of the children. Are you suggesting that that is what happens? Do you understand that that is exactly what Hamas did? What evidence do you have? And Are you ignoring the fact that Hamas is hiding their leadership, fighters and munitions dumps behind those children, in and under their hospitals and schools? All of this has been identified and verified. If you are claiming it is false what is your proof?
Oh, so the attack on Ukraine should go without vengeance. We should all bow tow to the Mighty Donald's view on history. In fact it is time for the world to realize that the USA is not a reliable partner.
The rest of the World needs to stand up and look to their own interests. As our PDK states, it's all about resources, and they are dwindling fast.
Why is the USA so adamant on Ukraine resource to fund things rather than promoting freedom and democracy. The answer is simple, they can drill and pump as hard as they like but the end will come rather faster than they anticipated, and they know that.
Also Iran is a thorn in the side and if Russia is pulled into line with USA then the Mighty nation is free to deal with China.
Or so they think.
History major, in European history. Here's some simplified reckons.
Here's a nice little parallel for you - Quote from Neville Chamberlain:
In spite of the hardness and ruthlessness I thought I saw in his face I got the impression that here was a man who could be relied upon when he had given his word.
Quote from Trump
I believe President Putin when I spoke to him yesterday. I know him very well.
I think he wants peace. I think he would tell me if he didn’t.
History rhymes - the 1870 Franco-Prussian War (the Germans won). 40 years peace before Germany invaded France again. Then 1918 - 21 years later (proving Foch's prediction that it was a 20-year armistice, not peace), 1938 concessions given to Germany in Czechoslovakia didn't stop German aggression. France gets invaded again. While France was the one that declared war in 1939, it was in response to German aggression post Chamberlain. [edit for structure]
How do you think the introduction of nuclear weapons will change the course of history after WW2 and interrupt aggression within Europe between nations and allegiances that have nuclear weapons?
Will a nation like Russia just be able to use conventional warfare to pave a path across Europe like Hitler - because that is what happened when Hitler was around? Has technology changed since then? What influence does that play in the current environment?
Introduced a sudden and precipitate definition didn’t it. For instance Saddam in Iraq so armed would not have lost his job. On the other side in the region likewise Israel, with nuclear capability, didn’t have to worry about Arabic nations seriously assisting the Palestines militarily.
IO, it's very naive of you to think that Trump reaching temporary "peace" in Ukraine to inflate his ego "I'm a peace maker", will result in lasting peace for Europe or anywhere else. The real outcome to bowing down to Putin, is that he and other large powers will feel emboldened to take over other countries. Putin will have another go at invading Ukraine in a few years, Xi will take over Taiwan, and Trump will use these as excuses to take over Greenland, the Gaza Strip and who knows what other country he wants.
What are your credentials to claim being a history expert? Do you have a history major at University or higher? (honest question and I’ll bow to your superior knowledge if you do)
One of my degrees has a history major. Not that that gives much credence to subjective views.
The issue here is we've an autocrat with a history of picking fights with their neighbors, and such people rarely change their ways, especially if you placate them in the short term.
So a historical comparison to Trumps "peace" with Putin, is Neville Chamberlains arrangement with Hitler. He gets to promote himself as the peacemaker, and the autocrat sees that as license to double down in the medium term.
@ dollar bill.
Here is an example of the ethnic madness. There is a lot of Welsh DNA in the Donbass. The core city of Donetsk was originally named Hughesovka after it's founder John Huges. https://en.wikipedia.org/wiki/John_Hughes_(businessman)
All this fighting and killing over ethnic matters has been going on for much longer that this current war. An Ukraine is implicated seriously in that, especially since 2014.
In my view they are all - all - mad murderers. (And we have people who are starting to think like this in New Zealand. Sadly)
Odd, Putin has said himself that Ukraine doesn't exist and everyone living their is part of the Russian slavic brotherhood.
"Russia and Ukraine, between the parts of what is essentially the same historical and spiritual space"
http://www.en.kremlin.ru/events/president/news/66181
Lots of mumbo jumbo in Putins manifesto. Historical revisionism. Boiling it down he sees Ukraine as belonging to Russia, ipso facto, Tsar Putin.
"Putin told him that ‘his goal was to stop Ukraine from becoming a fully independent state."
https://www.euronews.com/my-europe/2024/11/21/putin-told-me-he-did-not-…
'Let us be clear about what is happening. The US is not just abandoning Ukraine. By pre-emptively ruling out NATO membership and accepting Russia’s territorial gains, Washington is capitulating to Moscow’s demands before negotiations even begin.
As former Swedish Prime Minister Carl Bildt observed on X, “It’s certainly an innovative approach to a negotiation to make very major concessions even before they have started. Not even Chamberlain went that low in 1938."'
https://www.nzinitiative.org.nz/reports-and-media/opinion/the-day-the-w…
I agree - all I’ve learned from this is EU leaders are a bunch of dysfunctional fools that love war and love American tax payer money to fight their battles for them - even after the spend decades poking the bear with a stick (Russia) then get scared when said bear bites and come running asking for help of the US to tame the bear. Then when the bear is being tamed they say ‘look at the US being Putins puppet’ because they appear to want more war and more US tax payer money spent on a ridiculous and unnecessary conflict on the opposite side of the world to them.
Europe has spent more supporting Ukraine than the US. They have also given more flexible financial support allowing Ukraine to spend where they actually need, whereas most of the US support is pretty prescriptive.
https://www.ifw-kiel.de/topics/war-against-ukraine/ukraine-support-trac…
Yep, Europe should have done more to support its own defence, but on the other hand, until post truth became so popular the US was glad to maintain its global hegemony through military projection. The US wasn't FORCED to spend more on its military than the rest of the developed world put together! It was entirely the choice of elected US govenment!
I do agree there is a threat of stagflation and that is a very serious threat. Our economy would absolutely implode if the RBNZ were forced to increase interest rates again. I think the RBNZ will be very cautious from here - and we may already be at the bottom of the cycle. Way better to not cut than to cut then raise.
I still think k the most likely case is that they cut to 3%, but there is the possibility of no cuts or bigger cuts too. It will all depend how the data comes out (worldwide) in the next few months.
Swaps (in my opinion) look like they are forming a floor - just as they appeared to be forming a ceiling a not so long ago.
2 year and longer it looks like a good floor is in place for rates - 1 year I’m not so sure yet.
But this could indicate that this might be it for rate cuts this cycle - time will tell.
The notion of the formation of the EEC introducing self reliance, self determination and security can only be seen as a failure if even now the members of the now EU, shirk in the face of a very real threat on their north east frontier, and can still only prevaricate, squabble and in fight as has been the nature of Europe for centuries. Same teams, different uniforms. Putin is not going to stop with only 20% of Ukraine when the intention was always 100%. It will take time to regather, reset and rebuild Russia’s military. With help from China it might not be all that long before Putin recommences hostilities and this time, from a much more advantageous geographical location. By that intent Continental Europe can expect to find that north east frontier a lot closer.
yes that is one of the more amazing things about the current situation. I struggle to understand that the European leadership formed the EEC to create a bloc to compete with the US, and be less influenced and dependent on it, yet they quibble when faced with a significant security threat.
Three countries are somewhat, but not fully, capable of providing for their own defence needs n most fronts; France, Sweden and Germany. But even they do not have the level of industrialisation and production capacity to supply for a sustained war. I feel they do understand that now, at least. But they lost the opportunity to stop this war before it started through their prevarication. The threat has only grown since, and more, it has taken on a new shape with a radical President in the White House. That's a threat most of them would have argued could never happen.
" I struggle to understand that the European leadership formed the EEC to create a bloc to compete with the US, and be less influenced and dependent on it, yet they quibble when faced with a significant security threat."
The EU lost that war with the US(D) long ago...culminating with the euro crisis. Trump et al may provide a new raison d'etre.
Yes but it is more than that. That fight was also going to go against the fact that the US$ is the international reserve currency and would be a difficult win. But what they chose to do required commitments in significant areas other than trade and economics (e.g. defence) even though they're all connected. If they'd had the strength of will, the understanding and were ultimately able to make it work, they may have even been able to offer an alternative reserve currency. The vision understood they had a dependence on the US that made them vulnerable, and that they needed to move away from it.
Who knows? However this plays out they may find the conditions to make it work and achieve that original vision, or some variation of it?
You cant say they didnt give it a good crack when you look back at the likes of the european space agency, BAE, Airbus etc....but they missed the bus on the internet. Yes the US had the advantage of incumbency of currency but they also didnt have the disadvantage of having to meet a plurarity of national interests.
From NZs perspective I think it reasonable to suggest that had they been successful we would likely be no better off today.
The EU had its shot at providing an alternative reserve currency and that chance I suspect wont recur. indeed the next reserve likely dosnt exist currently.
The USA only arrived as a rising superpower post WW1. Overlaying 100 years of that on top of centuries of European history and culture was hardly ever going to be either accepted or accomplished with ease. The Europeans neither bury nor forget the grudges and emotion of their differences. Alsace, South Tyrol and Schleswig - Holstein for instance are themselves of less than 100 years present status. WW2 then brought the USA onto the scene and hugely so. There has been a lot of negativity over Brexit but it is not unlikely that, amongst it all, the UK had had by then, enough of the continuous continental crap. As pondered my earlier post if all that the EU has achieved is a quagmire of squabbling infighting bureaucracy with nothing existing in actual solidarity in a time of need, then nothing really has changed since its establishment.
That may be but the EEC was a significant attempt to bury past differences, create a framework to bridge political differences, and ultimately work together in a manner not unlike the US does. Except they didn't merge to become one country as a union of states. For them that must have been a step too far and now that has cost them. But can they fix it?
Might be topical to ask right now - United Nations where the hell are you. Another well intended mission to protect freedom and prevent warfare but virtually toothless when it happens. Still if there is to be a neutral task force inserted to seperate Ukraine & Russia in revised borders then that may be an opportunity for NZ to earn some tosh and perhaps simultaneously improve its military capability. Understand Fiji does very well in this regard with its soldiers overseas as such.
Exactly - I used to see myself on the politic left or at least left of centre. But I’m rapidly running from anything left of centre right now - big governemennt, moral virtue signalling, war, huge deficit spending, censorship of free speech, it’s all gone a bit mad on the political left at least in my opinion and I used to be part of that crowd. Political left seems to want Orwells 1984 to come to 2025.
It's odd, because most of the concerns you mention are as a response to the post truth generated by the hard right. Cause and effect. Big corporate is the new big government. And that answers to no one! The right is the Orwellian future. Who on the left do you believe is Big Brother?
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