Here's our summary of key economic events overnight that affect New Zealand with news the US is doubling its tariffs on Canadian steel and aluminium to 50% in a tantrum over Canadians asserting their independence. Wall Street reacted badly, dropping another -1% and taking the losses to -10% over the past four week, a drop in the market capitalisation of the S&P500 of about -US$2.5 tln. That is just the start of course because there are thousands of other companies on a range of other indexes like the Dow (down -1.4% today) and the Nasdaq (down -0.6% today). Bad public policy is expensive. There will be echoes in KiwiSaver accounts, some loud.
Financial markets are signaling a US recession. Apparently Warren Buffett expected a Trump recession and has adjusted his holdings for that.
Meanwhile, the US Redbook retail index was +5.7% higher last week than the same week a year ago, an easing from the +6.6% rate the prior week.
January job openings is the US rose on strong demand in the retail sector. They rose by +232,000 to 7.74 mln, up from a revised 7.51 mln in December and above the market expectation of 7.63 mln. Quits rose too in January. January layoff levels in the government sector were particularly low, but this is expected to change over the next few months.
There was a still well-supported US Treasury 3 year bond action earlier today which ended with a median yield of 3.85%. But this was sharply lower than the prior equivalent event a month ago of 4.26%.
In Japan, the January household spending survey released yesterday delivered a large shock, with spending falling the most in one month since 2021. That dragged their year-on-year gain down to just +0.8% from +2.7% in December. No-one saw this coming, although it has to be said there have been other December/January shocks in the past and all followed by a recovery in February. All the same, perhaps Japanese households are suddenly turning fearful about what lies ahead, with reason this time.
In China, there is massive confusion over its trade rail link to Europe, an alternative to sea freight. The Russians are seizing the cargoes as they enter their territory. This is no minor trade disruption.
The Australian consumer sentiment survey by Westpac/Melbourne Institute reported a solid improvement in March, and taking it to its highest level since May 2022.
Meanwhile the NAB business sentiment survey for Australia reversed in February in their report released today. They said business conditions rose marginally in February, with small lifts in both trading conditions and profitability. However, there was a notable fall in business confidence which fell -6 points, largely offsetting the improvement seen in January.
The total value of housing in Australia owned by households reached AU$10.6 tln as at December 2024, up +4.4% from a year ago. That is a AU$448 bln rise in a year, but far less than the +8.1% rise in the year to December 2023, or +AU$760 bln. If we included the dwelling stock owned by others, the rise to December 2024 was also up +4.4%, and that adds another AU$440 bln, taking the total value of Aussie housing stock to AU$11 tln. Interestingly, all the 2024 rise happened in Q1-2024 - total values were flat for the rest of the year even after their new builds were added.
According to a global air quality review of 2024, only 7 countries met WHO air quality standards. That included New Zealand, Australia, Iceland and Estonia, plus three Caribbean islands. Globally, this is as bad as its ever been. And now that the US has pulled funding for this monitoring, we will only get results in future for first world countries that fund their own. (The US funding for its own monitoring has been cancelled too.)
And finally, we should probably note that 56,000 Greenland voters are voting in a national MMP election. Results will be known tomorrow.
The UST 10yr yield is now at 4.26%, up +3 bps from yesterday at this time. The key 2-10 yield curve is steeper at +35 bps in a bear steepening. Their 1-5 curve inversion is now -1 bp. And their 3 mth-10yr curve inversion is flatter -5 bps. The Australian 10 year bond yield starts today at 4.49% and up +5 bps from yesterday. The China 10 year bond rate is now at 1.90% and back up +6 bps. This is quite the move given it started the year at 1.60%. The NZ Government 10 year bond rate is now at 4.63%, down -1 bp from yesterday.
Wall Street is continuing its retreat, down another -0.6% on the S&P500. Overnight, European markets were all down about -1.3%. Yesterday, Tokyo ended its Tuesday session down -0.6%. Hong Kong was little-changed, and Shanghai was up +0.4%. Singapore was down a sharpish -1.9%. The ASX ended its Tuesday trade down -0.9% while the NZX50 ended down -0.8%.
The price of gold will start today at just over US$2916/oz and up +US$17 from yesterday.
Oil prices are holding unchanged at just on US$66.50/bbl in the US and the international Brent price is still at just over US$69.50/bbl.
The Kiwi dollar is now at 57.1 USc and down -10 bps from yesterday. Against the Aussie however we are unchanged at 90.8 AUc. Against the euro we are down -50 bps at 52.3 euro cents. That all means our TWI-5 starts today just over 66.3, and down -30 bps from yesterday.
The bitcoin price started today at US$81,309 and recovering +3.4% from this time yesterday. Volatility over the past 24 hours has stayed high at +/- 3.4%.
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41 Comments
It appears I can comment again. Policy change?
Russia halting China-Europe freight seems like something I would expect to see in banner headlines on MSM but this is the first I've heard of it.
Guess the Russians were somewhat astonished that such as Ukrainian army uniforms were transiting through their territory. The shipper needs to get a new shrink.
more likely drone parts
So Rubio and the Ukrainian delegation have reached an 30 day peace agreement, that the US can take to Russia. Their reaction will be interesting...
Also, it was nice to see some adults talking at the press conference (Rubio) rather than petulant children.
This deal seems little more than an intent. There is no minerals agreement with the US, and as far a I know, there are no details about what territory Ukraine is willing to relinquish, nor any details about any security guarantees. (I'm happy to be corrected if someone has definite news). If that's the case, then basically the US is making a big announcement that Ukraine is ready for a cease fire, hardly a breakthrough!
Part one is that it is obvious that Russia will not be ejected from the territory it has captured. Part two is, regardless of any ceasefire, what is to be done to stop Russia capturing more territory in the future. If the USA invests into extracting the touted rare earth minerals and shale oil, then they likely would see fit to protect such interests. That may become a key additive to part two.
So if Russia wanders in to take them USA will go to war to protect their rights to the minerals they ( the Yanks) have themselves stolen from the Ukrainians?
The mineral rights are in exchange for the billions provided in military equipment.
The billions in aid were GIVEN to Ukraine by the Biden administration. Trump is simply trying to renege on that past agreement.
It really helps to see Trump as a mob boss rather than a president. His family has done a favor to Ukraine, and now it is time to call it in.
In this world, Putin is the boss of a rival family and is accorded respect to reflect that position. Zelensky is merely an underling in Trump's family and can be belittled when he gets ideas above his station.
And of course, the interests of the mob boss trumps all other concerns.
More or less in a nutshell, in USA eyes, it’s payback time . The insertion first of a “international peace force” to cover wherever a new border is declared would be useful too.
Or do Trump and Putin do a deal, a 50:50 split on the mineral rights, and trumpet it as a new era in US/Russia co-operation. Both Trump and Putin are capable of ignoring the international backlash if that happens.
Can anyone put forward a solid argument as to why Putin would accept a 30 day ceasefire ?
This whole mineral thing is a ruse - Ukraine is not mineral rich;
https://en.wikipedia.org/wiki/Lists_of_countries_by_mineral_production
https://worldpopulationreview.com/country-rankings/rare-earth-reserves-…
A ruse, just like the ruse that fentanyl is the reason Trump is imposing sanctions on Canada.
Trump wants Canada because it is mineral rich; Putin wants Ukraine as its territory is strategically important for Russia's expansion in rebuilding the USSR;
https://www.csis.org/analysis/geostrategic-importance-black-sea-region-…
There is vast resources of shale gas/oil. In the 1980s I had a colleague in finances at Occidental Oil London. Armand Hammer was lining up the Soviets to secure the rights. The subsequent collapse of the USSR curtailed all of that. It was known then though that access and extraction would be very challenging. Forty years on though, those challenges are likely less challenging. Russia already has gained a considerable percentage of resources east of the Dnieper river, but there is much more.
Yes, understand that, but all the comment by the US administration is about rare earth minerals because the oil/gas is of limited use to the US. All the more reason that the US is patiently waiting for Russia to succeed in the total annexation of Ukraine.
Mineral deal or not, I doubt the US under Trump will ever re-start its defense of Ukraine with equipment and intelligence. I suspect that is exactly why Trump and Vance intentionally scuppered the signing of the deal in that Whitehouse meeting. There was never any advantage to the US in that deal and only an advantage to Russia. So they gave Vlad what he wanted.
Can't wait to see what comes of the US/Ukraine talks in Saudi Arabia.
All the comment by the US administration is all over the place. As Hollywood often scripted - white man talks with forked tongue. This is the way Trump operates. Confusion sows uncertainty and obscures the motives. That was evident enough in the first term. That reality shouldn’t be any surprise then for the second
Yes, forked tongue. Same way Putin operates - make agreements, break agreements.
So the meeting is now over and the US has come out with nothing (for the US) - AND agreed to;
In a joint statement, the US also said it would immediately restart intelligence sharing and security assistance to Ukraine, which Washington had suspended after the unprecedented public row at the White House.
Now let's just see if the intelligence and arms or money starts to flow again.
I suspect Putin will have something to say about that.
Seems to be a preliminary agreement for a 30 day ceasefire with talks to continue, what bits of the blackmail the USA has levered for this prelim “help” will be interesting to see.
It seems like a win for Ukraine to me. The only concrete outcome is that US supply of weapons and intelligence to Ukraine has resumed immediately.
It's not "blackmail" just a deal. Similar to how the US treated the British in WW2.
Not to mention WW1. The much maligned President Hoover was met with a vicious French backlash when he refused to retire the massive debt France owed the USA. The UK had one too. All of that got mopped up in the Marshall plan post WW2 where the USA gifted $billions in the European reconstruction. WW1 was fair and square a European affair started inanely all by themselves. WW2 not too dissimilar. How many times is the USA expected to cross the Atlantic to solve warfare that the Europeans create and find they can’t handle.
That's a slight re-writing of history, Foxy.
The US took over the role of global hegemony from Britain, post WW1. It had been a scrap over who got what of the rest-of-the-world's resources. The US subsequently embargoed Japan - which we can trace directly to Pearl Harbour. The US was at Versailles - to which we can directly trace WW2.
And the Marshall Plan recognised the cost of an un-rebuilt Europe, and the trade potential of a rebuilt one.
Underneath it all the idea of isolationism in USA has never really disappeared. In WW1 the Kaiser’s Germany made fatal overtures to Mexico which angered the USA and thereby hastened German’s undoing. In WW2 the mad headed Fuehrer declared war on the USA. What is the undeniable point though is that on both occasions thousand of American lives and $billions went east and never came back. So too, as to the former, thousands from the Commonwealth about which Paul Keating once caustically reminded various dignitaries, there remains very little thanks to be had. Japan’s rise as an Empire had its roots in British duplicity over the taking of the German enclave at Tsingtao in WW1 which gave Japan the foothold for the genocidal Manchurian invasion and a string of islands to occupy and fortify in the West Pacific with then an eye to the oil rich Dutch East Indies etc. Sure with the subsequent reconstruction of Europe and Japan the USA implanted itself relatively lucratively industrially but if you were to run a general ledger on it all Europe is hardly the creditor is it.
I see Trump is hell bent on becoming the Tsar of North America and the Atlantic? Holy cow, trying to force Canada to become the 51st state of the US, which doesn't make any sense anyway, if it were to happen, wouldn't the provinces become states? Anyway, more crazy from orange man, I thought last term we had seen the extent of it, it seems he is hell bent on out doing himself while he can. How long will he last, one wonders? Surely all the republican businesses that are getting absolutely hammered in the stock market will be wondering what they have done?
I nearly vomited watching the fawning by Republicans when Trump spoke to Congress, not holding my breath that Republicans will do anything.
the news coverage of fawning and outrage/puking on both sides is becoming tiring.
I have friends on Facebook that are outraged everyday, going to be a long 4 years and no way to live.
Indeed, perhaps a few of your homebrews might lighten their mood for a time XD
I may have drunk more heavily under Labour.... but I did not go on and on about it like the left seems to. Perhaps amplified by a left leaning media. I certainly did not continually post about how bad Hippy and Jacinda were. Worst PM ever though.
Love him or hate him it cannot be denied that Trump is a "Great Man" of history. We don't get too many of those. Strap in for a wild ride.
So "great" = self-centered, narcissistic, lying crook in your eyes?
The hammering was coming eventually, so either now or later.
If the net leverage is really 2.9 times at peak and we are at net 20 year lows of cash at hedge funds, the hammering will continue for a bit, with vicious short covering rallies thrown in.
About $1 billion in annual Australian steel and aluminium exports to the United States will be hit with 25 per cent tariffs from Wednesday (Thursday AEDT) after Donald Trump ruled out an exemption.
ASX will get hammered today, another hit to NZ Kiwi Savers
You timed your Kiwisaver fund change well. I was considering doing the same but was too slow out of the gate.
Rush to cash funds, should have started 4 weeks ago......
I wonder at the relevant % in NZ? Given that our build costs are approx double
"Research by the Australian Centre for International Economics shows 49 per cent of the money for a house and land package in a Sydney suburban development goes toward regulatory costs, infrastructure charges and tax...Government taxes, fees and charges on new homes have doubled in five years."
https://www.msn.com/en-au/money/homeandproperty/half-cost-of-new-house-…
Touting isn't real wondering, it's rhetorical at best.
Ask why the whole First World is facing this expponential rising of 'costs'?
And the answer is the Limits to Growth, plus entropy.
We have built-out the closest and the best - every next option is sequentially further away, or worse. That process has run into other threats; flooding potential, slip potential, sea-level rise - it's been funny to watch those who need to deny one after another, to continue justifying their personal narratives. And their collective narrative (humans are superior, and they can use that to transcend physics) which is looking a tad incorrect...
It will take ever-more effort, to do anything, from here on in. And the maintenance demands will go up, not down.
Globally, this is as bad as its ever been. And now that the US has pulled funding for this monitoring, we will only get results in future for first world countries that fund their own. (The US funding for its own monitoring has been cancelled too.)
USA not monitoring air quality anymore? I guess they have privatised healthcare for the most part so the long term health consequences aren't seen as a public issue for public funding. Sad representative view really, which disregards the greater good of the nation and the world.
This was always going to happen - there as here.
The narrative - the one chugged daily by some who should know better - is that economic growth is (a) desirable and (b) permanently attainable. As it comes up against Limits, those who monitor are going to be de-funded, de-voiced and devalued. It has to be; if they were listened to, we'd slow down - actually reverse.
Thus the de-funding of Dr Mike Joy, in this country. Not hard to join the dots, or notice that the Listener gave Connor English - not Mike Joy - space in the most-recent issue. The media are merely regurgitators; time they matured.
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