Here's our summary of key economic events overnight that affect New Zealand with news behind the tariff headlines that shows impacts of recent policy changes are starting to show up in some places, but not everywhere yet.
US jobless claims fell slightly last week and about at the level seasonal factors would have expected. There are now 2.08 mln people on these benefits, about the same level as a year ago.
That was the first of some marginally better data out overnight. The US merchandise trade balance pulled back in February from its record January deficit but it still came in far higher than what was expected. US exports stagnated but imports were +19% higher than year-ago levels.
US wholesale and retail inventories rose with wholesale inventories up +1.2% from a year ago, and retail inventories up +4.6% on the same basis. Supply chain inefficiencies from the new tariff policies are starting to show up now
US pending home sales came in -3.6% lower in February than year-ago levels, although the industry emphasised the +2% rise from January.
The Kansas City Fed factory survey was a touch more positive than expected and better than in some other regions. But they too had lower new order levels, so this positivity probably won't last.
In the Washington swamp, overshadowed perhaps by obvious lying by their unqualified Defence Secretary, the Administration has hit carmakers with new 25% tariffs. This will likely have a significant global impact on manufacturing as well as destabilising local supply chains. It is a move that may not play out as they want and will almost certainly mean US-produced cars will cost a lot more. GM's share price is down -7% today which accounts for most of the YTD drop. Ford is down -3.2%. Stellantis is down -4.3% today. The big local producers are not expected by investors to do well out of this change.
And they are not the only ones being hit. The recoiling of international tourists going to the US has seen substantial drops in the values of major US airlines. Delta is down -21% so far this year, United is down -22%. And American Airlines is down -35%. The whole industry is down -16% since the start of the year with those with extensive international routes worst hit. And this is despite global air travel being up about +10%.
The final review of the Q4-2024 economic growth rate came in at +2.4%, which means that for all of 2024 they recorded an economic expansion of +2.5%. Both outcomes were marginally better than expected. 2025 has gotten off to a rocky start for them.
In China, after the January -3.3% retreat, industrial profits were expected to be reported up +4.0% in February. But in fact they came in -0.3% lower again, so a market surprise. The SOE group saw profits rise +2.1%, public listed companies saw their profits down -2.0%, Hong Kong/Macao companies reported a +4.9% rise, and other private enterprises suffered a -9.0% drop.
In Europe, the Norwegian central bank kept its key policy rate unchanged at 4.5% for the tenth consecutive meeting in its overnight March review, as widely expected.
In Australia, household wealth was up +0.9% or +AU$144 bln in the December quarter, the lowest growth since September quarter of 2022. Year-on-year this was up +6.6% at a time inflation accounted for +2.4%. On that annual before-inflation basis their dwelling values only rose +4.4%. Their Super was up +9.3% however, and the value of their bank accounts were up +8.5%.
Post their 2025/26 Budget, the Australian Treasury (AOFM) said it has raised its target bond fundraising from AU$100 bln in the coming year to AU$150 bln. Swap spreads then dived, indicating that demand for this debt paper could be hard to find. Expect Aussie Govt bond yields to rise sharply.
It is widely expected that there will be an election date announcement later this morning, and most are expecting May 3 to be when the Aussies next go to the polls. Their recent Budget seems to have gone down well with the electorate so they want to capitalise on that.
Globally, container freight rates fell -4% last week and are now -31% lower than year ago levels but +53% above pre-pandemic levels. Freight rates for bulk cargoes were essentially unchanged last week from the prior one, to be -19% lower than year-ago levels.
The UST 10yr yield is now at 4.36%, up +2 bps from yesterday at this time. The key 2-10 yield curve is steeper at +36 bps. Their 1-5 curve is flat. And their 3 mth-10yr curve is a positive +6 bps. The Australian 10 year bond yield starts today at 4.56% and up +3 bps from yesterday. The China 10 year bond rate is now at 1.87% and down -1 bp. The NZ Government 10 year bond rate is now at 4.68%, and up +6 bps from yesterday.
Wall Street has started its Thursday session and dipping further by -0.1% on the S&P500. Overnight, European markets were mostly down about -0.5%. Yesterday, Tokyo ended its Thursday trade down -0.6%. Hong Kong was up +0.4%. Shanghai was up +0.1%. Singapore was up +0.5%. The ASX200 ended its Thursday trade down -0.4%. And the NZX50 dipped -0.2% on the day.
The price of gold will start today at just on US$3049/oz and up a net +US$32 from yesterday.
Oil prices are down -50 USc from yesterday at just over US$69.50/bbl in the US and the international Brent price is now just over US$73.50/bbl.
The Kiwi dollar is now at 57.3 USc and down -10 bps from this time yesterday. Against the Aussie we are also down -10 bps at 91.1 AUc. Against the euro we are up +10 bps at just on 53.3 euro cents. That all means our TWI-5 starts today just on 66.9, and down -10 bps.
The bitcoin price starts today at US$86,905 very little-changed (+US$39) from this time yesterday. Volatility over the past 24 hours has again been modest at +/- 1.0%.
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20 Comments
DC your headline says NZ$1 = 57.6 USc, but the text 57.3c. Which is it?
I have millions at stake - get it right!👉
😂🤣
A couple of days ago Trump announced the USAF is going to build the latest 6th gen air dominance fighter the F47, and the USN is going to announce theirs any day. But the economics of that are starting to lose some sense. The US is one of the largest arms exporters in the world and the economic benefits are huge for them, but already there is pull back from F35 contracts. France and Sweden are going to profit hugely if they can meet the demand (France are already increasing their production rate for the Rafale). From an economic stand point the US MIC are very quickly going to find a big portion of the market for their products will vanish. the unit costs are going to be very high and will not come down with export orders that don't exist. The other issue that is already being acknowledged is the resources needed to build some of this equipment, rare earths and metals, which the US either has very limited sources or none at all. Therein may lie an opportunity for countries who can provide these, but they do need to guard their own interests. Trump and Vance are already attacking the universities so a lot of the research that supports their technological development is going to slow down if not vanish. Can we assume that the US will not turn into another Russia, and invade countries to secure mineral resources? Many Americans are already questioning what is happening because they are supposed to be "the good guys".
Japan may also see the opportunity to step into that arena, although currently their laws prevent them from exporting weapon systems. A shame because their Mitsubishi F2 is at least as good as the F16, and optimised for maritime strike, and would be very good for our needs.
The ripple effect is gong to be significant
Many Americans are already questioning what is happening because they are supposed to be "the good guys".
They were sold the tale of being the good guys to benefit their standard of living. Now that standard is threatened by inflation and likely (like NZ has seen the last 2 years) lowering amount of options for goods to purchase (tangible), and with Mr Pres taking actions that further deepen this situation, they are starting to slowly wake up to the fact that they rely on resources of other countries to function. Who knows, perhaps with so much coverage around how the rule of law is not being upheld, and challenged by the head of the country, voters will educate themselves more than just the polarising snippits they get on social media, and with this, push for meaningful change.
But a truth of human psychology is that often people just don't want to know unpalatable truths. And we can already see the uncertainty having a big impact across the world. Trump has already said "They'll do what they need to, to control Greenland". For European countries that is clearly a threat. And Vance has justified their stance as a 'global security" one which to some extents contradicts his expressed position on 'bailing out' Europe.
As I've pointed out consistently, for years, this is a global scrap-to-the-death over who gets what's left. The nice wee stories we told ourselves (growth is perpetually possible, therefor get rid of Trump and all will be fine; technology is indefinitely improving; 'they' are poor because 'they' are inferior) are becoming untenable.
Some folk are, of course, doubling-down (I had one recently telling me it was 'my truth' - meaning it wasn't his!). But the truths are emerging like rocks from a receding tide - and the gloves will inevitably come off... Logic tells us the US will lose.
It is of course possible the US will lose. Ironically the Chinese and Russians just need to be patient - they're doing it to themselves! But the end effect is the threat to global stability. It would have been nice if those we elect to lead us were smart enough to initiate the unwinding gradually.
Trump has reentered the stage with serious conflicts in Europe and the Middle East underway. So far his presence has added more instability and turmoil. All his talk about Gaza and Ukraine has amounted to no more than talk. Nothing meaningful has materialised. Israel has resumed pulverising the Palestinians and Putin has said- is that all you’ve got. Unfortunately those who brandish power are invariably not receptive to being ignored and it is becoming apparent that temperatures are rising. Very uncertain times indeed.
Long range forecast shows rain next weekend across north island, much needed if it occurs.
Any progress on that solar IT?
Sooo important NZ meets its Paris promises and pulls its weight.
"...there is no indication of any acceleration in the overall rate of global decarbonization since 2015, and in fact, since 1965.
Consider that to achieve an 80% reduction in global greenhouse gas emissions by 2050 implies a rate of decarbonization of 8.1% per year (for a 2.5% annual rate of GDP growth), far larger than the 1.9% since 2015 presented by the IEA.
...Global climate policies have many consequences, but accelerating the rate of decarbonization is thus far not among them."
Five takeaways from IEA's Global Energy Review 2025
Yes, modernity is unsupportable ex fossil energy.
But fossil energy is finite, therefore modernity is temporary.
So why argue endlessly on its behalf?
Might be some life left in NZ log exports yet.
"In this paper, we report a self-densification strategy to develop super-strong wood by reassembling orderly arranged wood fibers as functional units and self-densified without the need for hot pressing. The resulting self-densified wood exhibits ultra-high tensile strength (496.1 MPa), flexural strength (392.7 MPa) and impact toughness (75.2 kJ/m2), surpassing those of compressed densified wood and traditional metal materials like aluminum alloys.
...This characteristic leads to an order-of-magnitude enhancement in the overall mechanical performance of the wood, presenting a significant advantage over compressed densified wood. Such super-strong yet lightweight wood has great potential for application as a sustainable engineering material, replacing traditional structural materials such as metals and alloys."
https://www.sciencedirect.com/science/article/pii/S2369969825000167
Still to be fully developed and be able to be scaled pro, but promising yes.
But the science around wooden structured buildings already identifies that they are more resilient for smaller builds. The ability to seal and protect wood is better than it used to be and the strength of laminated wood beams is impressive.
I understood that NZ Forest Research (now SCION) were working on similar projects around 15 years ago. I recall attending a Trade & Industry roadshow that visited them in Rotorua & being shown some small scale examples. Also looking at using wood waste in creating durable + ultimately environmentally degradable plastic products using lignin process treatments.
Wood is the product of a few decades of solar-acreage. It doesn't scale to our current level, which is another way of saying we are in overshoot.
And if we reduced population/consumption to the point where we weren't overshot...
We'd have spare built capacity for decades.
Profiles link is to a different technology KK. The wood waste products were really just a form of fibre or chip board. This technology essentially keeps the structure of the wood intact. Read this link it explains it well.
The Accoya system isn't waste wood - uses radiata clears from pruned logs.
Yep that's why we are pruning our forests now Profile. I believe pruned logs will be in demand.
That Scion acetylating tech was sold to a UK company.
In action in Canada.
https://www.ucfp.com/inspiration/exteriors/accoya-wood-decking-used-at-…
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