Here's our summary of key economic events overnight that affect New Zealand with news Wall Street is recovering today, making back some of the -US$5 tln plunge over the last few days. But the background economic drivers haven't improved, so it is a hesitant correction.
And that is because the widely anticipated March survey of consumer sentiment from the University of Michigan was out and it fell much more than expected. In fact it recorded its lowest level since November 2022. It is now down -27% from a year ago.
One key reason Americans are so glum (apart from the chaos of policy gyrations), they fear a sharp return of inflation. Year-ahead inflation expectations jumped up from 4.3% in February, already a high level, to 4.9% this month, also the highest reading since November 2022 and marking three consecutive months of unusually large increases. Their long term inflation expectations of 3.9% have now hit a 32 year high.
In China, after the spectacular rise in January loan growth, February levels came in quite low, showing the policy-induced surge could not be maintained. There were only ¥1.01 tln in new loans extended in the month, far below the ¥5.03 tln January level and back to levels it bounced along at for most 2024 months. The February 2024 level was ¥1.45 tln, so this 2025 result is a definite sag since then.
And their foreign direct investment data out for February was very weak again, only ¥114 bln in February, -20.4% lower than the already low ¥143.4 bln in the same month of 2024. And this is off the back of a 2024 which was their lowest FDI inflows in eleven years. For perspective in February 2022 they attracted ¥220 bln in foreign investment, so this 2025 level is about half of that.
In Australia, academic researchers there who receive some project funding from US agencies have received a 36 point ideological vetting questionnaire from the US Administration asking about their political and social views. China has its 'communism'; the US now has the same in 'trumpism'.
And we should expect Pharmac to come under attack from the US Administration, pressured to pay US drug companies more.
The UST 10yr yield is now at 4.31%, up +4 bps from Friday at this time, down -1 bps for the week. The key 2-10 yield curve is marginally flatter at +30 bps. Their 1-5 curve inversion is now -1 bp. And their 3 mth-10yr curve inversion is gone. The Australian 10 year bond yield starts today at 4.48% and up +1 bp from yesterday. The China 10 year bond rate is now at 1.90% and also up +1 bp. The NZ Government 10 year bond rate is now at 4.68%, and it too is up +1 bp from yesterday, up +4 bps from a week ago.
Wall Street is in recovery today, up +2% on the S&P500. But that is still down -1.5% from this time last week. (See this.) Overnight, European markets rose too, Paris and London up +1.1%, Frankfurt up +1.9%. Yesterday, Tokyo ended its Friday session up +0.7% for a net +0.2% weekly gain. Hong Kong was up +2.1% on Friday to close its week down -0.7%. Shanghai was up +1.8% on Friday, up +1.4% for the week. Singapore was little-changed on Friday. The ASX ended its Friday trade up +0.5% but down -2.0% for the week. And the NZX50 was also up +0.5% on Friday, but down -1.1% for its week.
The Fear & Greed Index ends the week staying in the 'extreme fear' zone, and unchanged from last week.
The price of gold will start today at just on US$2983/oz and up another net +US$3 from yesterday. Overnight it briefly spiked to US$3000 but then retraced sharply before a partial recovery. A week ago this price was US$2908/oz so a +US$75 rose since then, or +2.6%.
Oil prices are up +50 USc from yesterday at just on US$67/bbl in the US and the international Brent price is at just under US$70.50/bbl. This is the same level of a week ago.
And we should probably note that despite the new Administrations exhortations to the US oil industry to "drill, baby, drill" in fact North American rig counts are decreasing, and are now -4% lower than year-ago levels.
The Kiwi dollar is now at 57.5 USc and up +420 bps from yesterday. That makes it up +50 bps from a week ago. Against the Aussie however we are up +10 bps at 90.9 AUc. Against the euro we are up +30 bps at 52.8 euro cents. That all means our TWI-5 starts today just on 66.7, and up +30 bps from yesterday, up +40 bps for the week.
The bitcoin price starts today at US$84,261 and up +4.3% from this time yesterday. A week ago it was at $87,508 so a net -3.7% decline since then. Volatility over the past 24 hours has again been moderate at +/- 2.1%.
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38 Comments
US inflation fears rise
That caught my attention, bond yields will remain elevated if inflation persists.
Here’s a comparison of the OCR and the NZ2Y going back to 1999 when the cash rate was first introduced, you can see the OCR doesn’t stray much from the 2y. I’m suggesting the RBNZ follows the 2y. It will become very apparent this year if the 2y remains around 3.65% or sells-off and the RBNZ response is to hold rates and not make further cuts.
Link to the chart: https://imgur.com/a/ShzZvq4
The gaps in the chart on the 2Y in 2014 and 2020 are just periods where ... Read more
US inflation fears rise
That caught my attention, bond yields will remain elevated if inflation persists.
Here’s a comparison of the OCR and the NZ2Y going back to 1999 when the cash rate was first introduced, you can see the OCR doesn’t stray much from the 2y. I’m suggesting the RBNZ follows the 2y. It will become very apparent this year if the 2y remains around 3.65% or sells-off and the RBNZ response is to hold rates and not make further cuts.
Link to the chart: https://imgur.com/a/ShzZvq4
The gaps in the chart on the 2Y in 2014 and 2020 are just periods where Investing.com was missing data.
Read lessI suspect you will find this of interest:
https://ourfiniteworld.com/2025/03/04/energy-limits-are-forcing-the-eco…
I found it confusing so gave up. Young people are not buying cars or driving but a quick Google for global sales says "2023 and 2024 sales surpassed pre-pandemic levels and are forecast to keep rising through 2025". Apparently the UK fought WW1 because they couldn't sell coal profitably. It is hard to get your head around resources are running out (makes sense because they are finite) but prices are dropping and that will lead countries to fight.
There is an argument to be made but this article isn't helping.
Just speculating here, it’s always fun to throw out a prediction and let people call you out on it later.
Orr left because the bond market wasn’t going to allow another rate cut. He saw two good inflation prints at 2.2% for the last two quarters and figured it was a good time to make his exit.
If we end up getting three 25bps cuts this year, well… I’ll be way off.
If Australian academic researchers are now upset by a questionnaire by the current American administration seeking information as to the status and purpose of financial grants that are being received, then best they simply cancel the subscription.
Got a link to the article? Haven't seen this report.
Asking about their political and social views. That's not status and purpose.
But yea, cutting ties with anything USA is becoming common sense.
Oh badly phrased on my part, apologies. Was meaning their status and purpose. Either way, believe, we are on the same page.
Isn't it marvelous? I'm sure the US will be more than happy to stop this stupid research funding. I never thought I would see this day. I've been advocating for this sort of thing for a long time. Even got banned from this site for a while because I expressed a view that the struggle would be a long and hard one. A cold, hard, look at these "institutions" is well overdue and appropriate action taken.
Strikes me that in any event any University possesses enough professors, boffins and associates to between them construct, answers that are sufficiently confusing and meaningless as becoming of any institution or bureaucracy.
Except those that hold the purse strings can now see through this BS. We are witnessing a counter-counter-culture revolution. The proponents of "der lange Marsch durch die Institutionen" will soon be in full retreat.
Your narrative is orders of magnitude further adrift than theirs.
And if yours was correct, you wouldn't have to displace anyone - the unlimited growth would accommodate all.
At any one time resources are obviously limited. There is a budget to fund the institutions in any given year. It takes time to grow, drill, mine, process, develop and manufacture. The resources for practically unlimited growth are there however our time is limited to 24 hours a day, 365 days a year.
It's also not a given that we will progress. Taking the right path takes struggle. Orwell's novel 1984 describes a world that has lost its potential to grow. Some religions and ideologies are antithetical to growth.
You must have been hard to teach at school, and obvi0usly never had to defend a thesis.
'The resources for practically unlimited growth are there..'
Bollocks.
References please.
Keeping in mind the reduction in EROEI, and of quality. (At first, it took the removal of 10 tons of overburden, to access one ton of copper. That was done using 100:1 EROEI oil. Now it takes the removal of 400 tons of overburden to get that ton of copper, and the oil is down to perhaps 10:1. A compound problem in energy-required terms.)
I would call that trend 'practically-limited'.
BadRobot must have passed the baton on to you to harass my every comment.
I believe in the indomitable human spirit. Where there is a will there is a way. We have overcome every problem so far.
Bank of America reveals the motivation behind Trump's reform: one-third of GDP comes from fiscal expenditure, and 85% of new jobs rely on the government...
https://longportapp.com/en/news/231824092
This is just the start, if Trump really wants to address this , things are going to get very interesting, US is buying economic growth with debt...
The motivation is evident in Project 2025 and Trumps fascination with tarrifs....ultimately the destruction of state provision and handing of control to 21st century robber barons (with zero tax?)
A state where the paymaster makes the rules, not the population.....and its for export.
They will access that which they need/want from abroad either by the adoption of these policies and failing that by threats and/or force.
Great comment.
But force has hithertofore been associated with nations/governments. Thus the need to usurp those...
Corporations will provide their own ....the masses will be left to look out for themselves....a libertarian wet dream.
If you usurp government, you usurp the justice system - which is essentially the defense of property-rights.
Then?
They need Govt like a cancer needs a body...
"If you usurp government, you usurp the justice system - which is essentially the defense of property-rights."
You have no need of a justice system if the only rule is raw power....and obviously the ultra wealthy feel they now have enough. Who owns starlink and impacts the ability to wage modern war?...not a government, but a corporation controlled by an individual (who constantly flouts law).
Private armies have been on the rise for decades...who do they serve?
When Trump says you are going to be so rich he is not addressing the US population but a clique.
Getting a Roman sense to it then. Identities such as Sulla, Pompey, Caesar, Crassus owned their armies. Fought each other too.
As ultimately the corporates will if they succeed
Don't forget the East India Company.
Don't forget the East India Company.
Another precedent....'company towns' on a global scale.
Right now the little guy is funding the big guys by deficit funding.
Not sure the little guy deserves this or gets any benefit.
They dont get any benefit.....but the solution isnt to abandon the 'little guys', it is to tax the power away from the ultra wealthy and restore power to the populace....aka democracy.
Why did the left and Biden not do the "solution" ?
Why?....maybe because the ultra wealthy have had 40 odd years of (largely unfettered) wealth accumulation that left them more powerful than governments.
The frog was slowly boiled and it may now be too late to reverse.
TDS tragics wringing hands over US tarrifs while meekly going under house arrest on Big Pharma sayso and ignoring the judicial take over in TOW, SNA's, equality of suffrage, personal and property rights etc. in NZ. Issues in our own backyard without worrying about Trump.
Lincoln is the final level boss when it comes to wreaking havoc with tarrifs. Historically Trump is a bit player in the tarrif game.
Yes Trump is certainly deranged...as for worrying about our own backyard, I somehow doubt that NZ is likely to change the global order anytime soon.
If it is about changing the global order that award would go to Clinton - letting China into the WTO and repealing the Glass-Steagall Act did more to change global order and reward the big end of town that a few lousy Trump tarriffs. But I 'spose that is not on the NPC talking points list.
The National Provincial Championship has talking points?...like should a penalty be worth 2 or 3 points? I'm happy with 3
Consider...
"The history of taxation in the United States begins with the colonial protest against British taxation policy in the 1760s, leading to the American Revolution. The independent nation collected taxes on imports ("tariffs"), whiskey, and (for a while) on glass windows. States and localities collected poll taxes on voters and property taxes on land and commercial buildings. In addition, there were the state and federal excise taxes. State and federal inheritance taxes began after 1900, while the states (but not the federal government) began collecting sales taxes in the 1930s. The United States imposed income taxes briefly ... Read more
Consider...
"The history of taxation in the United States begins with the colonial protest against British taxation policy in the 1760s, leading to the American Revolution. The independent nation collected taxes on imports ("tariffs"), whiskey, and (for a while) on glass windows. States and localities collected poll taxes on voters and property taxes on land and commercial buildings. In addition, there were the state and federal excise taxes. State and federal inheritance taxes began after 1900, while the states (but not the federal government) began collecting sales taxes in the 1930s. The United States imposed income taxes briefly during the Civil War and the 1890s. In 1913, the Sixteenth Amendment was ratified, allowing Congress to levy an income tax on individuals and entities."
https://en.wikipedia.org/wiki/History_of_taxation_in_the_United_States
Read less
Pharmac potentially entering US sights.
With India becoming a tariff target, where apparently, US sources 80% of it's generic drug supplies, perhaps tariff free trading amongst other countries will become more attractive and maintain a degree of price stability for Pharmac.
80% of generic drug supplies shouldn't come from one country. Keep in mind that all the other countries impose tariffs too.
Interesting finding related to the Aussie Ponzi. Most landlords and rental properties exit the sector within five years.
Because a rental property constitutes a large share of a small landlord's wealth, it needs to be kept liquid. And it will need to be sold when the landlord's financial position changes. Short leases and evictions are the result.
https://www.ahuri.edu.au/sites/default/files/documents/2022-11/AHURI-Fi…
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