US labour market starts to show weak signs; US trade hits unwanted record; Canada shines; ECB cuts; Alfred hits; freight rates retreat; UST 10yr at 4.29%, gold holds and oil soft; NZ$1 = 57.5 USc; TWI = 66.7

Here's our summary of key economic events overnight that affect New Zealand with news US policy making has now become so chaotic, businesses are holding off making decisions. That can only have negative consequences.

Firstly, US jobless claims rose modestly last week from the week before but this was less than seasonal factors would have suggested. There are now 2.23 mln people on these benefits and back up near the October 2021 levels. The current consensus forecasts for tomorrow's release of the February non-farm payrolls is a rise of 160,000.

But there might be some downside, if not in tomorrow's data, in the following set. The level of announced job cuts in February jumped to pandemic levels, and prior to that, to GFC levels. The Musk razor gang is getting some of the blame.

The January American trade balance of both goods and services came in double the deficit of a year ago and an all-time record. Tariff policies have driven the change. For the year to January, their total trade deficit was -US$982 bln with a real surge from September to January and blowing it out to -3.4% of US GDP and a record high.

Overnight the US announced delays on tariffs against Mexico. It is a never ending series of confusing 'definite' signals, none of which inspire confidence or allow for orderly business decision making. With Mexico, the situation has turned on its head in just four days. With Canada, Trump is ignoring what his Commerce Secretary said just one day ago, and US carmakers are in a real bind now.

US wholesale inventories rose in January and their inventory to sales ratio rose too, ending a long period of improvement.

Folding this data in gives the latest reading of Atlanta Fed GDPNow forecast for American Q1-2025 performance is now a -2.4% decline. Apart from the pandemic they won't have seen anything quite this dramatic since the GFC.

Since its peak in December, the Tesla share price is continuing its fall, and it is only notable today because the value loss now exceeds -US$660 bln in that period. In NZD that is -$1.15 tln! That price is down another -5.6% so far today and filings show Tesla insiders are now selling.

Going the other way, Canada's exports and their trade balance came in sharply positive. Exports were up +20% in January from a year ago and their trade surplus was its best since a brief spike in May 2022, and prior to that, best ever.

The Malaysian central bank held its key interest rate at 3% for the tenth consecutive review during its overnight meeting, and that was in line with market expectations.

In China, nothing meaningful or unexpected has come from their National People's Congress meetings.

In Europe, the ECB cut its three key interest rates by 25 basis points, as expected, reducing the main refinancing rate to 2.65%. It was their sixth cut since the peak in September 2023 of 4.5%. Economic growth forecasts were revised downward to +0.9% for 2025 and +1.2% for 2026, reflecting weak exports and investment.

EU retail sales volumes fell -1.6% in January from the same month a year ago.

In Australia, tropical cyclone Alfred has slowed its move toward the Brisbane coast but is still generating damage and will do for longer, even if it actually losing some of its destructive power. Tens of thousands of people are without power now.

Container freight rates fell another -3% last week from the week before to be -30% lower than year ago levels and now 'only' +76% above pre-pandemic levels. Bulk freight rates were up +13% in the week however but down -36% from a year ago.

Today the UST 10yr yield is now at 4.29%, up +1 bp from yesterday. The key 2-10 yield curve is again steeper at +33 bps. Their 1-5 curve inversion is now a positive +3 bps. And their 3 mth-10yr curve now has no inversion. The Australian 10 year bond yield starts today at 4.50% and up +3 bps from yesterday. The China 10 year bond rate is now at 1.77% and up +1 bp. The NZ Government 10 year bond rate is now at 4.70%, up +8 bps.

Wall Street has opened its Thursday trading with the S&P500 dropping -1.8% and resuming Wednesday's retreat and makes it -3.7% lower so far this week. Overnight European markets were mixed with London down -0.8% but Frankfurt up +1.6. Yesterday Tokyo closed up +0.8%. Hong Kong was up +3.3% (boosted by the profit Hutchinson make selling its Panama port operations), and Shanghai rose +1.2%. Singapore rose +0.5% The ASX200 ended its Thursday session down another -0.6%. But the NZX50 ended up +0.1%.

The price of gold will start today at just over US$2917/oz and little-changed from yesterday.

Oil prices are down -50 USc to under US$66/bbl in the US and the international Brent price is just under US$69/bbl. Lower demand expectations are the reason.

The Kiwi dollar is now at 57.5 USc and up +50 bps from yesterday. Against the Aussie however we are up +10 bps at 90.5 AUc. Against the euro we are down another -20 bps at 53.1 euro cents. That all means our TWI-5 starts today just over 66.7, and up +10 bps from yesterday.

The bitcoin price started today at US$90,265 and up a net +0.3% from this time yesterday. Volatility over the past 24 hours has been moderate at +/- 2.5%.

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