Here's our summary of key economic events overnight that affect New Zealand with news of mixed economic data out overnight. And a very sharp steepening in rate curves.
In the US, mortgage interest rates fell by -15 bps last week as the long term benchmark rates eased on recession fears. That triggered a huge +37% surge in mortgage refinancing action, and overall mortgage applications rose +20% from the week before. Applications for a mortgage to purchase a new home were +9% higher, breaking the six-week streak of no significant increases. Lower rates may not last however, given today's moves, which may explain why may borrowers jumped in last week.
Going the other way, private businesses in the US added 77,000 workers to their payrolls in February, the smallest increase in seven months, compared to an upwardly revised 186,000 in January and well below forecasts of 160,000. This ADP survey is noting hiring hesitancy and more layoffs on the policy uncertainty.
But the ISM services PMI was little changed with its good expansion maintaining at levels they have had for the past six months or so. New order levels expanded slower in February however. And we should probably note that the internationally-benchmarked S&P/Markit services PMI reported much weaker growth in February.
January factory orders in the US expanded, and at a slightly faster rate than in December. That makes them +3.5% higher than in the same month a year ago, marginally besting inflation. But without aircraft orders the gain was about half that.
US economic data is coming under fire from the MAGA crowd. Howard Lutnick, Trump's commerce secretary, suggested government spending should be excluded from data about American economic output, a twist to make the Trump Administration look good. It is a move that opens the door to all sorts of political interference.
On the tariff front, Lutnick also suggested a delay in imposing tariffs on Canada and Mexico could be imminent.
In China, their senior leadership is meeting in a big set-piece Congress. They have kept their 5% growth target but provided for substantial stimulus to get there while they fight the tariff wars. Maybe as much as 4% of GDP in stimulus will be required, so huge. China's promise to 'spend more' is in sharp contrast to Trump's US cutbacks.
In China, the private Caixin services PMI survey basically held its small expansion, and this was better than the slight slippage expected in February from January. The February level is mid-range compared to the past nine months. It was also reporting a better expansion than the official services PMI.
In Japan, their service sector saw rising activity in February. It was a fourth monthly rise in a row, with the rate of growth reaching the strongest since August.
In Singapore, retail sales recovered in January after a weakish December of trading. They were up +4.5% from the same month in 2024, rebounding from a -2.9% fall in December. This is their strongest expansion in retail trade in a year.
The Australian Q4-2024 economic activity was +1.3% higher in inflation-adjusted terms than the same quarter in 2023, not particularly strong but boosted by a better than expected Q4 expansion over Q3.
And staying in Australia, they reported a small rise in retail sales in January from December, but it may not have been quite what it seems. The data shows most of the monthly gain coming from basic food, which was affected by industrial action in December, with a sharp pull-back in household goods retailing as a ‘bargain hunting’ pull-forward unwound. Cafes and restaurants recorded a decent gain, boosted by major sports events. Sales fell -0.3% in NSW but rose across all other states. Nationally, sales turnover was up +4.1% from the same month a year ago, but only +2.6% in NSW.
Tropical cyclone Alfred, is still about 200 kms east of Brisbane and is expected to make landfall as a category 2 storm on Friday. Evacuation orders are in place for southern Queensland and northern NSW. It is likely to be a weather event that draws significant levels of insurance claims, and be the basis for yet another surge in premium cost with echoes in New Zealand because our general insurers (IAG and Suncorp) have exposures in the storm hit zones.
Today the UST 10yr yield is now at 4.28%, up +9 bps from yesterday. The key 2-10 yield curve is again steeper at +31 bps. Their 1-5 curve inversion has vanished. And their 3 mth-10yr curve is sharply flatter, with this inversion now back to -4 bps. The Australian 10 year bond yield starts today at 4.47% and up +15 bps from yesterday. The China 10 year bond rate is now at 1.76% and unchanged. The NZ Government 10 year bond rate is now at 4.62%, up +12 bps.
Wall Street has opened its Wednesday trading with the S&P500 up +0.2% after yesterday's big fall. The latest update to Q4 earnings have been strong. Overnight European markets were mixed with London down slightly but both Paris and Frankfurt up very strongly. Yesterday Tokyo closed up +0.2%. Hong Kong was up +2.8%, and Shanghai rose +0.5%. Singapore rose +0.2% The ASX200 ended its Wednesday session down another -0.7%. And the NZX50 also fell again, by-0.5%.
The price of gold will start today at just under US$2917/oz and up +US$5 from yesterday.
Oil prices are down -US$3/bbl to US$66.50/bbl in the US and the international Brent price is just over US$69/bbl. Lower expected demand expectations are building.
The Kiwi dollar is now at 57.1 USc and up +90 bps from yesterday. Against the Aussie however we are down -10 bps at 90.4 AUc. Against the euro we are down another -30 bps at 53.3 euro cents. That all means our TWI-5 starts today just over 66.6, and up +50 bps from yesterday.
The bitcoin price started today at US$89,8621 and up a net +8.4% from this time yesterday. Volatility over the past 24 hours has been very high at +/- 4.2%.
Due to some earlier technical issues, there will be no podcast or video versions today.
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41 Comments
On the tariff front, Lutnick also suggested a delay in imposing tariffs on Canada and Mexico could be imminent.
I thought these tariffs already came into effect yesterday ?
We have seen a lot of criticism of Richard Prebble's resignation. We have not seen so much about what he himself said about it. Here is his letter of resignation.
https://www.bassettbrashandhide.com/post/richard-prebble-letter-of-resi…
Pretty much confirmed to me that either he had absolutely no idea what the tribunal is, or he never intended to stay.
It confirmed to me that he developed a very clear view of what the Tribunal is / has become, from the inside.
Agreed - as he said the Tribunal thinks it is a constitutional court when that is not its mandate
So Politicians need to act to bring the Tribunal back to do what its is mandated to do
Maybe a job best left to David Seymour
He has just thrown a political grenade into NZ Politics.
Seymour will capitalize on this with his desire for a referendum.
@redcows. Confirms to me he will not be involved in b******t. As he never has.
is likely to be a weather event that draws significant levels of insurance claims, and be the basis for yet another surge in premium cost
Isn't the concept of insurance to gather money via premiums when there is no major event, and spend it on the occasion when a weather event occurs ? I can't remember Insurance companies using the reverse logic and lowering premiums, when there are no catastrophes happening for 6 months time.
I'm not sure what your point is. The insurance companies work out how much money they need to take in to cover potential future claims. What keeps premiums as low as possible is the competition between companies to offer the lowest premiums for the lowest price.
If the risk goes down premiums go down. For example in Wales, once they implemented lower speeds limits car insurance premiums went down as the likelihood of having to pay out for crashes also went down.
If insurers see the increasing risk of severe weather events on the horizon, e.g. by more and more extreme weather events actually materialising they work out that they are likely to require more money to cover future claims and increase premiums. If other insurers don't believe those future climate related weather events will materialise they can offer lower premiums and consumers can go with them.
Climate scientists warned many decades ago that more extreme weather events would be one of the consequences of human induced climate change. Insurers have been fairly blassé about it but are now having to factor it in more seriously as people start to draw down on the money put aside.
Insurers had a lot of total write offs on cars due to Auckland flood events = higher premiums
I've had a few annual insurance renewals over the last couple of months. Home & Contents stayed same as previous year, car & jetski both reduced ~20%. No claims or crimes.
I was also surprised to see my car insurance (AA) go down by 10%, until I saw that they had reduced the agreed value by 40%, to a figure that is about 20% less than what I could replace the car for.
More evidence the super-rich are just outright buying their way to power now in the US. You can see how similar is starting to play out in NZ. Sad times.
https://www.theguardian.com/us-news/2025/mar/05/billionaires-funding-re…
How can you see a similar pattern forming in NZ ? Certainly not from the article which is purely about the USA.
Look at party donations and how the legislation has recently been passed to reflect those donors wishes:
- Tobacco laws
- Mining on conservation land
- Charter schools
- Tax breaks for landlords
- Planning reform to benefit landbankers on the City edge
- Rolling back state support for media
- Attempt to destroy the public health service
- More private prisons
Notice a pattern, all about privatising public services or benefitting commercial interests over the interests of the nation.
It's becoming normalised.
The new proposed development contributions levy, watch and learn how rich and powerful will be able to bypass council planners (hint I think this is a good thing though), though they will need to spend $$$ to develop, right now councils block them as contributions are not ring fenced.
Agnostium, I think your left leaning views, conflate your views between privatisation and donations. They are not the same, although I'm sure you conclude that one necessarily leads to the other.
I don't have left views. Some of my views are left some are right.
I think you are confusing not being in favour of the state favouring special commercial interests with being left wing. I'm not left wing. Some of my views are pretty extreme right.
I am all for privatising public services when they result in better outcomes for the public at cheaper rates. Are you suggesting mining companies will do a better job of conservation than DOC and tobacco companies will do a better job of combating addiction than a government regulatory body?
On transport I am very right, I don't think council's should get involved in parking as it distorts the private market, I think only projects that return a positive BCR should be progressed which is why I oppose all the subsidies to roading and car industry while penalizing walking and cycling.
On planning I am also super right wing and think people should be able to do what they want on their own property so long as it doesn't result in ratepayers having to spend money to fix it, which is why I'm in favour or removing the ability of NIMBYs to stop their neighbours developing their land and ratepayers having to pick up the bill for private developers who build out in the wop wops but don't contribute towards the cost of the infrastructure that is then needed to service those properties.
Supporting the interests of the rich over everyone else is not true right-wing, what's happened is that the traditional 'right' is being taken over by super rich interests, which was my initial point.
I don't think council's should get involved in parking as it distorts the private market
Interesting, can you elaborate? I ask as I know for a fact that the council uses parking funds in my region to help fund the public transport, and as thus they have a vested interest in enforcing parking, which could also in a way be argued to be doubling down on promoting public transport to reduce congestion.
Agnostium may be referring to Council's providing paid parking cheaper than private companies
The cost of Council's providing parking is not recouped from paid parking charges.
Council's get a fair bit of revenue from 'parking enforcement' but in Auckland at least that comes from issuing regos/warrants/bus lane infringements, etc... so not really parking. Parking enforcement would be one that makes sense to privatise as the private sector can be much more incentivised to get tickets than the public service.
I have no doubt that some of the revenue raised through parking is used to support PT but like I've said the parking is already being subsidised via rates and government contributions so the 'revenue' isn't real revenue as the costs are being funded from a different pot.
It also makes no sense to subsidise driving and parking as both modes compete for customer trips. Pick one or the other. Saying you are going to use parking revenue to help subsidise PT trips is like the govt deciding to sell cigarettes to raise revenue to treat lung cancer.
Finally and most importantly, Council providing parking can only ever make parking prices cheaper than they otherwise would be by virtue of increasing supply. This undermines the profitability of private companies providing that service. E.g. a private entity may be able to turn a profit on providing 100 spaces of they can charge market rates but if the council comes in and provides another 100 car park spaces the effect is to reduce prices (as supply has doubled) and now the private entity can't turn a profit and exits the market. This then requires the ratepayer to chuck in even more of a subsidy.
When council's say parking raises revenue, it is because the costs are borne by one part of the organisation and the revenue is taken in by another. The departments that get the revenue are incentivised to show they are productive so they can get more staff and more power within the organisation.
I think it's pretty clear that donations are used to buy access and influence here in NZ. I'd be more than willing for my taxes to increase a little to allow public funding of the political parties to remove this opportunity to buy power.
Yep, fair enough.
Attempt to destroy the public health service
I'm on the fence on this one. Yes there is greater funding needed but yes there is also a lot of fat to be trimmed in many areas in the healthcare system.
Labours decision to embark on a complete national overhaul of the health system amongst an artificial economic boom, and not keep tabs on spending or have a feasible and logical plan for rolling this out, has lead to significant disruption and confusion in the sector.
Add in the over-hiring (yes it happened) of nurses across the country in response to the shortage through 2020-2023 leading to crazy restrictions on hiring where high level signoff is needed for ANY new hiring (including changes in contracts to different FTE or shifting departments which requires another contract), it isn't entirely on the current lot for the state of affairs.
Most likely always been the case. Dem's just do a better job of fronting it while skimming the flow both ways eg the Clinton Foundation.
Or as per an old quote - the only difference between Republican and Democratic administrations is that the latter, the poor too are allowed to be corrupt.
If we can all agree that both sides are at it, then can we all agree that public funding is a better solution?
Parliament has had a couple of cracks at legislation to provide public scrutiny of political donations. Then immediately the MPs that have created the law set about it themselves to break it. For example staggered donations to keep each under the cap, which appeared to be at the centre of the Bridges/Ross kerfuffle. From a cynical point of view providing all funding out of the public purse would likewise be open to such manipulation and administering the mechanics to apply pro rata, from the largest to the smallest party standing, a nightmare of political bickering. But anyway, at the end of the day none of the existing larger political parties would ever entertain such a system.
Yes it is tricky. Clearly in the public interest as far as I can see, but perhaps not in the interests of the political parties. Particularly the larger ones as you say who enjoy the tilted playing field, and the individuals who intend to partake in the light, above-the-table, corruption of acting favourably to vested interests in return for a nice cosy directorship after their political career has fizzled out.
What I find truly bizarre is that normally when I propose it normal people tend to jump up and complain about the prospect of spending a few dollars a year in tax money in order to close this wide-open door to corruption.
Oil price under $70/barrel and dropping fast. This could be a godsend for Trump's inflationary tariffs.
From what I've read, Opec are increasing output, perhaps they're having another go at driving the price of oil down to put US shale producing companies out of business.
It will crush what is left of the fracking game. US oilmen need prices much higher than this to be viable.
How long before Bessent's 3/3/3 plan gets canned? He wants 3% GDP growth, 3% budget deficit, and an additional 3 million barrels of oil production per day.
On the first, there is open talk of recession in the first quarter due to the shock and awe attack on government jobs and consumer/industry confidence lead by Trump and Musk
On the second, any savings seem to be counterbalanced by calls for tax cuts. No chance unless Medicaid is hit hard which will be disastrous for Trump's new working class base.
And the third - as you say, that needs higher prices to stimulate the production.
"The expected downturn will not likely come in a straight line. It is my view that machines and algos will exaggerate moves up and down, contributing to a sawtooth pattern lower."
https://www.youtube.com/watch?v=LiE1VgWdcQM the whipsaw song
Kass expects short-term relief rallies, such as the strong intraday rally witnessed on Tuesday afternoon, but he says those rallies will fail and stocks will wind up with lower highs and lows.
"I do not expect the recovery in stocks (seen in the last 12 hours) to be long-lasting or the start of another leg in the bull market that we have witnessed over the last two years," said Kass. "I believe the market is on a path for a 10-15% decline this year."
The reasons cited for his downbeat view: slugflation (sticky inflation and low GDP growth), the Fed's pause on interest rate cuts, stock valuation (the S&P 500's forward price-to-earnings multiple entered this week above 21, higher than the 10-year average of 18), and the tariffs.
https://www.thestreet.com/investing/stocks/veteran-fund-manager-who-cor…
Great song, "My Grass is Blue".
The best news this week is still the resignation of Governor Orr - and by a country mile
Now if the Chairman could follow him out the door
The "tricky" part now is for politicians to find a non political replacement
Grattaway - your comment means you aren't scoping wide enough.
Sure, by the look of him Orr may not have been the sharpest tool in the shed - but the shed is slipping down the hill... that's the bigger story.
RE YOUR REFERENCE TO LUTNICK
There appears to be something incredibly dodgy going on behind the scenes, involving Trump’s Secretary of the Treasury, Howard Lutnick of Cantor Fitzgerald fame.
The word is that Lutnick has spearheaded a cunning, outrageous, and unprecedented plan to transfer the clearing of US treasury futures over to an entity based in The City of London!
Is Lutnick Trump’s main link to the entrenched Wall Street financial kleptocracy, ie the group that always makes money regardless of what is going down, and from both entities regardless of where a skirmish is staged?
It seems that Dick Durbin (Senate Minority Whip, dems) put this question to the authorities as a ‘please explain’ request back in August 2024 and he has had no response to date.
Reading between the lines, the plan suggests that the brokers would remain in the US and that Lutnick is lobbying for a new set of rules that would allow the broker and the clearing house (usually a major bank) to invest the collateral in the sovereign debt of countries like the UK, Canada, Japan etc – seemingly an entire list of Western-centric countries.
Clearly, the UK is in the midst of a budgetary crisis with ~£36 billion in unfunded spending and the sale of their Gilts (UK Treasury Bonds) not going well, this might be a cunning plan to try to cover up their dreadful monetary position. Also there is an 8-12 week delay for entities that stand for physical gold delivery at the LBMA - and no guarantee of delivery delivery then either - IOW blatant default - what happened to the famed T+1 delivery - this sounds more like T+100 or T+NEVER.
Who knows what goes on in the halls of power of the legacy financial oligarchs, but this signals to me that Trump might have a fair degree of rivalry within his camp – and not the least of which is a tooth-and-nail fight between the old Deep State money barons, and the brand new dancing billionaire technofeudalists and especially the defacto PM, Musk – this new brigade had set themselves up to yank all of the strings from now on.
Is this a backhanded way for the US to keep cashing in on massive ongoing arms sales for the MIC, by using the rabidly Russiaphobic UK govt to extend a war, leave the UK holding a shite-sandwich when they have their arses handed to them by Putin, AND to try to further lionise King Donald in the process?
Only time will tell
Col
Goff's question to the Finnish Prime minister that got him sacked.
Who's "woke" now eh.
"Churchill] turned to [then UK prime minister Neville] Chamberlain, he said, ‘You had the choice between war and dishonour. You chose dishonour, yet you will have war’,” Goff said.
“President Trump has restored the bust of Churchill to the Oval Office. But do you think he really understands history?”
Pretty outrageous to be sacked for this. Clearly Peters was just waiting in the wings for anything to get rid of him.
Chamberlain was from the North. He had a deep connection with the working class. He had seen the consequences of WW1. Towns, villages, sectors stripped of their youth by the horrors of those battlefields. His priority was to save the next generations from the same fate and that objective became overwhelming. It is generally overlooked that once war broke out, and until his death soon after, Chamberlain was completely committed to Churchill, a hard working and effective member of the war cabinet.
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