Here's our summary of key economic events over the weekend that affect New Zealand with news the global economy seems to be settling back into a low growth phase on the back of the sharp rise in policy uncertainty in the US.
But first, in the week ahead we will get our December trade balance update and data on building permits for January. And the first of the quarterly data sets building for our March 19 GDP result for Q4-2024 will come in, this one recording the construction work completed in the quarter. All relatively minor. There will also be another full dairy auction on Wednesday.
Internationally the week will end with the US non-farm payrolls report for the US, for February (where a modest gain of +133,000 is now expected), more US PMI data plus factory order data. Tariff action may well overshadow these however. In Europe it will be all about their ECB decisions (expect a -25 bps rate cut), and inflation updates. Australia will release Q4-2024 GDP results, and trade balance data, as will Canada and China.
Over the weekend China released its February PMI data and it was not negative. Their official factory PMI shifted back to a very minor expansion (although that is probably being generous). Their services sector is also officially expanding, also minor.
And minor as well was the rise in South Korean exports, much less than expected in February. This came off the back of the unexpected January slump, one that was deeper than first reported. Although South Korean export growth been generally trending lower for about a year now, so have their imports, and that allowed them to report their second highest current account surplus ever.
India reported Q4-2024 GDP results and those came in at a +6.2% rate, better than the +5.6% in Q3, but just missing analyst estimates of +6.3%.
In the US, the widely watched PCE inflation level came in at 2.5% for January, down from 2.6% in December, and back to November's level. (The US CPI rate for January was 3.0%.) From a year ago, personal disposable incomes were up +1.8% and personal expenditures up +3.0%, so this isn't tracking in a favourable direction now. People will notice that and take household budget actions, such as increasing debt or cutting spending. When uncertainty levels are high, spending cutbacks are the more likely.
The sharp jerk in trade policy direction has brought sharp changes in American commercial behaviour. First there was a large spike in imports, up 12%, driving their merchandise trade deficit to a mammoth -$US$153 bln in January. That is an all-time record and by a country mile.
Secondly, American wholesale inventories jumped in January, especially for consumer goods which were up +2.1% from a year ago. Retail inventories rose even faster, up +5.1%.
The Chicago PMI, which was in deep contraction over the December/January period recovered in February, but it is still contracting, just less so.
The Trump administration designated importing timber a "national security issue" justifying new tariffs. They also said XRP (Ripple), SOL (Solana), and ADA (Cardano) would be in their new US crypto strategic reserve, jumping the prices of almost all cryptos including bitcoin (and their own personal wealth).
North of the border, the good Canadian data continues. This time it is their Q4-2024 GDP growth rate, up +2.6% from a year ago, better than the Q3-2024 growth of +2.2%, and much better than the expected Q4 rate of +1.9%. Driving the rise was rising household spending, rising exports, and rising business investment. Of course, things for Q1-2025 are much more uncertain, although it will be interesting to see the echo of the 'Buy Canadian, Bye Americans' movement on their GDP. Perhaps it may give a Q1 fillip?
Global air travel is rising fast. International passenger travel rose +12.4% in January from the same month in 2024. That makes it an all-time high, eclipsing pre-pandemic levels. Asia/Pacific travel rose more than +20%.
Meanwhile air cargo traffic rose +3.2% on the same basis, although up +7.5% in the Asia/Pacific region.
We should probably note that the coal price has fallen to a four year low, and back to prices it first achieved in 2016. And not only are oil prices lower, there are falls too for zinc, lead and nickel too, all core indicators of global factory demand. Lithium is also having trouble getting back up off the canvas.
The UST 10yr yield is at 4.20%, down -3 bps from Saturday at this time, down -22 bps for the week as risk aversion takes hold. The key 2-10 yield curve is still at +22 bps. Their 1-5 curve is now inverted by -7 bps. And their 3 mth-10yr curve is also now more inverted by -11 bps. The Australian 10 year bond yield starts today at 4.31% and down -5 bps from Saturday, down -22 bps for the week. The China 10 year bond rate is now at 1.77% and down -1 bp. The NZ Government 10 year bond rate is now at 4.50%, little-changed from Saturday, down -17 bps for the week.
The price of gold will start today at just under US$2857/oz and up +US$12 from Saturday. A week ago it was at US$2938/oz so a -US$81 drop since then.
Oil prices are little-changed, still just under US$70/bbl in the US but the international Brent price is still just under US$73/bbl. Both prices are -US$1 lower than a week ago.
The Kiwi dollar is now at 55.9 USc and down -10 bps from Saturday. That is a -160 bps drop in a week. Against the Aussie however we are still little-changed at 90.2 AUc. Against the euro we are also little-changed at 53.9 euro cents. That all means our TWI-5 starts today just on 66.2, unchanged from Saturday, down -100 bps for the week.
The bitcoin price started today at US$91,401 and up a net +9.2% from this time Saturday on the US crypto reserve news. Volatility over the past 24 hours has been high at +/- 3.6%.
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The Australian sharemarket will open higher on Monday despite investors bracing for a wild week that could be pivotal for global growth, and the possibility of growth-sapping tariffs and growth-boosting stimulus.
While futures on the S&P/ASX 200 point to a strong start – up 48 points or 0.6 per cent as traders take heart from a late bounce on Wall Street – markets are preparing for more volatility from policy decisions and announcements in the United States and China.
all eyes are on wall street this week, US Consumer is looking weak.
I think in a couple of months time you'll be looking back and glad you swapped the kiwisaver. Overvaluations en masse can only hold for so long before reality sets in and the average punter heads for the exit.
Reflections on the floating of NZD from Michael Reddel, a longish but interesting read
https://croakingcassandra.com/2025/03/01/forty-years-of-floating/
"...Meanwhile, Te Pāti Maori’s annual accounts for the year to December 2023 were filed with the Electoral Commission almost six months late.
The accounts are incomplete and appear not to have been signed by the party’s executive team.
The audit report for the accounts is also missing. Pages 12 and 13 are headed “Audit Report Te Pāti Māori for the year ended 31 December 2023”.
The pages have been left blank."
https://pointofordernz.wordpress.com/2025/03/01/john-tamihere-and-te-pa…
Let them be. The longer they carry on, the longer Labour cannot put a viable coalition before the electorate.
Show me the money. Show me the money.
Seems to be an issue with commenting, unable to comment on the other thread
Try logging out and back in again. I had to do so at the weekend.
Had the same problem but needed to close browser also.
The US economy has reverberations everywhere. The melt down between Trump, Vance and Zelensky in the White house over the weekend and sent a message to European leaders, and I note there they are already talking about stepping away from NATO and having a separate European only defense alliance. The US MIC relies on foreign arms sales, but if nations around the world stop buying American the impact will be huge. Good for SAAB, Airbus, Dassault, Aermacchi, the Eurofighter consortium and so on.
While the US economy will go further down the track to chaos, what impacts will there be on the rest of the world.
Big question if Trump orders his military to invade Panama or Greenland with his generals obey? I'm already noting so you-tube comments from US veterans who state they joined and fought in the belief they were the "good guys", but are now beginning to question that?
It is true that view is somewhat superficial, and they seldom looked to history and the political manipulations behind what they were doing. But it is still a crucial rationale behind a call to arms.
I'm already noting so you-tube comments from US veterans who state they joined and fought in the belief they were the "good guys", but are now beginning to question that?
If they are starting to see clarity through the military brainwashing, then they are becoming more educated and thinking more critically, as opposed to simply doing as they're told. This doesn't bode well for the elite who rely on the masses following the direction given. Long may this development in their thought process continue.
Critical junction now for the European nations. Those nearest to Ukraine should be worried. Russia will not be satisfied with the 20% of Ukraine already occupied. As well they would have every reason to consider territory beyond Ukraine because these European nations can only argue amongst themselves, about what they are not going to do. In turn, that is making NATO itself look entirely ineffectual. Poland & the Baltic States cannot not fail to realise that Russia is intent on their eventual re-occupation. Russia after three years has severely diminished its military prowess hence the North Korean presence which in itself is a precedent of the enlistment of a foreign nation, rather than mercenaries. Those factors plus the fact that is always better to fight beyond your own border should now be being given, quite some deep thought.
It was evident at the meeting with Zelensky that Trump and Vance both essentially expected and wanted nothing more than Zelensky to bend the knee to America the Great, also known as Trump and Vance. They were not happy when he did not (I'm sorry your lunch invitation has been revoked!). Macron probably got away with it because the crass yank didn't understand the underlying nuances in his European charm.
While they used to trumpet the fact that they were the leader of the 'Free World' it is clear that that is no longer the case as it was plain that they are in the process of throwing Ukraine under a Russian bus. While there is plenty of partisan commentary it is pretty hard to soften the negatives when the live stream video says it all.
World economics without the US is the next consideration, or will the US suddenly realise the biggest threat to their constitution is in fact their Commander in Chief (US Senate Oath of office;I do solemnly swear (or affirm) that I will support and defend the Constitution of the United States against all enemies, foreign and domestic)?
It would be wonderful if European nations united to provide a security guarantee for Ukraine, and become in the long term a stronger military, more self-reliant European economic force. But that would mean less talk and more action, sadly I'm not convinced at all Europe can unite.
Those nearest to Ukraine should be worried.
Correct. If Ukraine falls the border with Russia become closer to those countries, and Russia will claim their existence is an affront on Russian security, hence invasion. Trump is killing the only path to peace which is sanctity of borders backed up by US force. Russian aggression will continue under the Trump approach, it may halt temporarily to give the illusion the Trump has 'won' but it will be business as usual for Russia - rearming and planning for their next invasion.
Could the USA be thrown out of NATO ?
If the European nations are saying that while they are about to unite in greater support for Ukraine but at the same time declare they will need USA back up for security, then that rather defines that without the USA present, NATO cannot stand on its own.
Without the US, Europe's only defense is nuclear deployment. Russia will not proactively deploy nuclear for aggressive actions but definitely would for defensive/reactive purposes. Europe is being forced closer to that predicament. If Russia is not repelled with non-nuclear means i.e land-forces/air-forces/ sea-forced (which absolutely needs US weapons support to succeed) then Europe is confronted with use of Nukes to defend itself or the alternative which is defeat by Russia. Putin's Russia has no intention of ever stopping their territorial expansion.
Early on Putin & Co spelt out that Russia would only resort to nuclear strikes if it faced an existential threat to its territory. Since then though such utterances have become more bellicose and there has been no definition of what exactly the territory is that would provoke such a response. Assumedly it would include the Ukrainian land they now occupy. General Austin, Biden’s defence secretary, is said to have made it very clear to his Russian counterpart what the consequences would be and in that, believed to have held sway. Now though, that stance obviously appears to have been substantially softened. Trump certainly has been Putin’s saviour hasn’t he.
Remember early on it was identified that a major Soviet, and now Russian tactic has been to bluff big. To call the bluff take a lot of courage with significant consequences, but now we see what Russia is really capable which is not much. NK is profiting now from the war, will China put troops on the ground to support Russia. I'm not too sure they will.
From what others have written about China, I'd expect them to let the others fight each other then maybe come in when both sides are exhausted with their armaments depleted and deal to the survivors.
Or sell stuff to both sides to keep the war going, while profiting off them both.
Disagree. The European nations combined can field considerable military capability, without nuclear weapons. France, as I understand it is the only one with the capability to produce and field it's own nukes. All of the NATO ones that are not French, are US. France has already discussed the possibility of stationing nuke capable fighters in Germany as a counter to Russia.
The big question that is interesting is if Trump on his own has an agreement to surrender a part or all of Ukraine to Putin, what will he do if the European nations refuse to abide by it and stand with Ukraine against Russia?
Agree that the combined industrial & military substance the European nations is greater than that of Russia, but what about the stomach. There is a correlation here to the 1936 occupation by Germany of the Rhineland even though there was no actual combat involved. Unlees a meaningful and strong defence and/or deterrence is now assembled, Putin cannot help but be similarly emboldened.
The European nations combined can field considerable military capability
They have theoretical capability but no political will to commit land-forces in sufficient numbers. A nuke option would be the most likely scenario if Russia is not repelled.
Foxy and Ag both I agree about political will. The interesting thing that many nations don't seem to get is that when one has a stick to wield they need to use it when necessary. The Americans learnt this lesson in Vietnam. Using it early can avoid the necessity of using much greater force later. Europe is in exactly that position now. They knew well in advance that Russia was going to invade Ukraine and did nothing but sit back and to all intents wrung their hands in dispair and said "Please don't...." And now they are facing a much bigger, more significant security threat. NATO for all intents was designed for exactly this scenario, but they too failed. Putin's bluster made them all tremble in fear. Trump accused Zelensky of gambling on WW3. But he was wrong. Ukraine is only defending itself. NATO gambled and lost. Now they face a very real threat of WW3.
Does Europe have the political will? More like do they have a choice now? The longer they take to take action to stop Putin, the harder it will be and the more it will cost. Who really knows?.
A bit into it all there was a story that the French Foreign Legion might go into action. Being a quasi mercenary force of volunteers rather than of the regular army. Macron quickly quashed the notion. Still if the North Koreans are now involved as volunteers, so too can the other side employ the same. The Foreign Legion might then attract soldiers from any number of armies who are inclined to be volunteers.
While technically one might view them as mercenaries (if they are indeed, then they are poorly paid ones), they are still a part of the French Armed Forces and therefore an instrument of French policy. Historically they have often been used in the more dubious of French foreign adventurism, but have won their accolades against some significant odds although not fully. It was the Legion Etrangere who lost at Dien Bien Phu in Viet Nam. If it was French foreign policy to actively support Ukraine the I would expect the Legion Etrangere to be the vanguard.
Not sure. I don't think they'll have a veto, but they certainly believe they lead NATO. It is possible otherwise NATO will just become defunct as Europeans withdraw into a different alliance that excludes the US.
The process is beginning where the US membership of the rich and powerful club is slowing being withdrawn, not because they are no longer rich and powerful, but because they won't behave to established rules and respect everyone else. The hissy fits are going to get better!
Thought provoking comment - thanks!
My gut reaction to the whole debacle in the White House was that the US MIC could be facing trillions in lower profit projections if the US was no longer materially involved in protecting Ukraine? Surely they'd not stand for that?
Equally, if Europe's answer to a drastically reduced US involvement was to lend Ukraine more and more money to keep buying US-made armaments, Trump could simply whack tariffs on these and make these manufacturers richer by many magnitudes more? But where does Putin stand on this angle, he'd certainly expect a US withdrawal from Ukraine to be both symbolic as well as material?
Presumably, Europe doesn't have the manufacturing prowess that the US does, or they'd simply offer to replace the US as supplier-of-choice instead of lending money?
What a mess.
Production capability is certainly an area of concern, but both Germany and France have significant capability already. The question is can it be ramped up sufficiently to meet the needs of active combat? The US is already stumbling over that and I suspect the Europeans have noticed and will be looking at their own capabilities now, especially with Trump's evident attitude. I would suggest we will be seeing more European countries develop the capability to manufacture their own armaments, perhaps under license, or not. Europe will be forced to come together more than ever now, and that will be at the US's expense.
Kinda interested in the scepticism of many at the ability of Europe to wage war against Putin.
You are talking of a group of countries with an unprecedented ability to kill off million's at a time on an absolutely industrial scale. And they will do it close to home or far away, which ever it doesn't matter. Once they get the urge they really are very very good at it.
Putin's reaction may be key. Russian forces don't appear terribly strong at this point but Putin will be weighing up whether a break in hostilities will benefit him or allow Europe time to grow, or whether he's better to go all in with Trump's support at this point before Europe get their shit together.
Some above was counting Nukes in Europe. Great Britain have a similar number to France don't they, but some are Submarine based.
My two reckons and a conclusion
Russia will not use nukes, unless they believe their whole territorial integrity and regime is at stake (that doesn't include the recently invaded Ukranian territory or the Kursk region Ukraine has taken. It is all over for them and the world if they do use nukes. They know this.
European countries will not engage in a land war with Russia without US troops, it is not to their militaries strengths and politically it is not feasible. They would engage in limited aerial support but this would likely be ineffective against the current Russian tactics on it's own. It needs land-forces to flush out the Russian from the Ukrainian lands. The land-forces require a shed load of armaments and equipment (which only the US can supply).
So if the US does not pony up the armaments and the equipment, Russia will not be stopped from expanding. It means Europe will be forced to use nukes in the Russian occupied areas of Ukraine and along the border with Russia (it is the only politically feasible option for European leaders to stop the aggressive advance). A large part of Ukraine will be lost and the area will become a defacto dead man's land. Russia would not retaliate as there is no upside to retaliating.
If Europe and US had been stronger in their support for Ukraine when Russia first invaded this could have been avoided. Russia would have backed off.
Except it stands to reason that after three years of combat and only limited territorial gains, the Russian military is not as strong as it was in the beginning as far as armaments, ordnance, personnel and morale. By way of comparison the Wehrmacht with hugely extended supply lines, largely horse drawn, were able to take Kharkov twice whereas Putin’s army, from right next door, has failed twice. Given Trump’s forthcoming get out of jail card to Putin, the Europeans may need to realise that there is no better time than now to make a stand. That is before Russia can regather and reset for another go.
The fighting is essentially at a stalemate so long as the armaments from the US keep coming. Both sides are pretty dug in now. Holding is much easier than taking. There will be very low appetite for European troops to take heavy casualties taking land back for Ukraine. If that is going to happen it will be Ukrainians who will need to do it, with potentially European air support and some SFs, and that requires ongoing armament and equipment support from the US.
My take is that Europe will not make a stand with on the ground troops (it will be too hard to get internal support), if they have to make a stand it will be with nuclear weapons.
Having said that I did not anticipate a land war in Europe. I never imagined NATO would have allowed to let it get this far. So I have been wrong (very) before.
Appreciate the conversation .Would add presently it is still a frozen battlefield and next comes Rasputitsa. After that though Russia can recommence the grinding attrition, regardless of casualties. If though it is true that only the USA, by way of support, can stop the Russian advance then that is indeed dire for both the Ukraine and Continental Europe itself as Trump is obviously of a mindset to take what’s grabbable but not give up anything any more. Undoubtedly Putin has likely already worked that out.
Are the questions about NATO including Ukraine and/or USA rather meaningless. Military power is not about numbers of dedicated fighters otherwise the Zulus would have won the Zulu wars. And it is not about tanks and guns - training horse cavalry didn't help win WW2. At present the Ukraine leads the world with drones and it will be drones that win territory from now on. They are leaders by necessity. The rest of Europe needs to coordinate their drones preferably under Ukrainian leadership. Can all the parts be produced in Europe? Does Europe have the satellites and air power? Does Europe have the AI skills?
Drones have been very effective at supporting land troops take land, and stopping land troops taking land, bit by bit, but that's about it. They are essentially a more accurate form of artillery and surveillance. They are one piece of the puzzle but not the be all and end all. They just appear to be because they are new.
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