Here's our summary of key economic events over the weekend that affect New Zealand with news commodity prices are falling away across the board, along with crypto, as a risk-off mood builds in financial markets.
In the week ahead, the most interesting developments will be close to home. There will be the usual monthly dump of February data from the RBNZ later today, and the real estate industry will start reporting its March results and listing levels. And in Australia, their central bank will be reviewing its monetary policy settings. But because they are in an election campaign it would be surprising indeed if they may any moves either way that might influence voters.
The week will end with American labour market data for March. But because the impacts of DOGE cuts or tariff hikes are yet to be felt, little-change is anticipated here either. But more PMI reports will start to reveal new order levels, which will give important early warning signals.
There will be PMIs out for China too, Japan business sentiment, EU inflation, and German factory orders, which will all help paint a picture of how the global economy is coping.
But first up today, there will be a lot of interest on tomorrow's Wall Street open. It ended its Friday session with the S&P500 down -2.0% and no signs of recovery late in the session. The Nasdaq fell -2.7% on the day. Weekend futures trading has the S&P500 recovering +0.8%, but that basically embeds the Friday retreat. Risk-off sentiment is strong with major investors selling, seeing this as a time to hold cash.
The core reason Wall Street is risk-off is that American consumers are increasingly anxious about their jobs, and the inflation pressures ahead. And both of those worries are over what higher tariffs will do to them. Town-hall meetings across the country are giving the message to Congresspeople that they aren't too happy about the self-serving government- by-billionaires either.
The final University of Michigan March sentiment survey was revised lower from its already low 'flash' result. Consumers are in full defensive mode, expecting inflation to jump, and job security to worsen. Wall Street can't ignore these signals.
Other data out over the weekend didn't help. The core US PCE inflation indicator for February rose its most since January 2024, and of course this doesn't include the effect of the recent policy missteps. This data is a little signal magnified by current policy settings.
US consumer spending came in lower than expected. Consumer savings rates rose. This is consistent with consumers shifting to a defensive mood ahead of their expected rough economic weather.
It isn't any better in Canada where their monthly GDP indicator for February revealed no net expansion, following a positive January expansion.
In China, talk about rate cuts that officials don't like brings prosecution. They say "the local public security organs" have dealt with two such people.
In Australia, they are off and running for their May 3, 2025 federal election. Like most elections, it will be fought on "cost of living" issues. The campaign starts with the incumbents in a strong and rising position on their two-party-preferred basis. Expect a sledge-a-thon for the next five weeks.
And for the record, when we are thinking of drought and rainfall in Australia, this resource is useful to keep perspective.
Commodity prices are under pressure. Worth watching is the price of copper. It is very high at present, but lower economic activity in both China and the US could bring about 'a collapse'. It would not be the only commodity to suffer.
We should also possibly note that the US Fed balance sheet shrunk again last week to be -US$745 bln lower than this time last year. So far we haven't seen any slacking in the pace of their tightening.
We should also note that in this current risk-off phase, the US dollar has not risen. This is very unusual and may portent a diminished role for the greenback in the global economy.
So far, the world has kept buying US Treasury paper, but the more the Federal finances are twisted by Trump, the less likely that demand will hold. But remember less than 24% of total US federal debt is held by foreigners (US$8.512 tln of US$36.218 tln in gross terms), so the impact from foreign demand will be muted. However, markets will notice any substantial pullback by this group, and that will colour its market status and price. The big impacts will come from the locals' willingness to absorb this debt.
The UST 10yr yield is now at 4.25%, unchanged from Saturday at this time. The key 2-10 yield curve is still at +34 bps. Their 1-5 curve is inverted by -6 bps. And their 3 mth-10yr curve is also still inverted by the same -6 bps. The Australian 10 year bond yield starts today at 4.47% and up +1 bp from Saturday. 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 4.66%, and unchanged from Saturday.
The price of gold will start today at just on US$3085/oz and up another net +US$5 from Saturday. Although off it at the moment, gold keeps challenging it's all-time high levels.
Oil prices are little-changed from Saturday at just under 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 57.2 USc and unchanged from this time Saturday. Against the Aussie we are unchanged at 90.9 AUc. Against the euro we are also unchanged at just under 53 euro cents. That all means our TWI-5 starts today still just over 66.7.
The bitcoin price starts today at US$82,272 and down -1.9% from this time Saturday. Volatility over the past 24 hours has been modest at +/- 1.1%.
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16 Comments
I'm in the market for a new car - doing some test drives this week. I should have been out there in march because there were some end of financial year 1% financing deals.
I know nothing about cars or the industry, but with tariffs about to hit I'm thinking to wait a month and see if there are any sweet financing deals or other offers as business need to shore up cashflow. Or would I wind up waiting a lot longer?
Unsure how Tariffs would impact NZ's car industry. I'd imagine new orders would be made soon and old stock will need to be cleared to make space for the new models on the lots. Offer and walk, sometimes they come calling after 2-3months if it hasn't sold and then you an get your price when the new orders are due and the space has to be cleared on the lots pronto.
Just find the car that's right for you. Negotiate the best price you can.
Ignore the so called finance deals. Any so called concession they make will just be added to the eventual price.
If you have to finance, there are better deals that what a car dealer will offer. Do that bit elsewhere.
Replacement Interisland ferry announcement due today, apparently more destination than details.
https://www.rnz.co.nz/news/political/556651/what-to-expect-from-today-s…
I repeat the gist of my comment from earlier this year:
How vehicles are shipped all over the world.
“Nowadays, the Pure Car Carrier (PCC) is being replaced by the Pure Car and Truck Carrier (PCTC). PCTCs typically have a wide stern quarter ramp and a side ramp for dual loading and discharging of a combination of cars and high-and-heavy cargo units in a short time span."
This configuration allows RoRo vessels to berth at practically any quay with no special purpose terminals. These ships can been seen regularly visiting Aotea Quay Wellington to unload vehicles
Put a couple of these on a Wgtn – Lyttleton run & take the vast majority of the trucks off the ChCh-Picton SH1. Leave Wgtn – Picton to BlueBridge.
Forget the inefficient double/triple handling, featherbedded rail/rail ferry operation. We did well enough without it for years after the Kaikoura earthquake.
Std. production vessels, also avoiding a billion dollars & years of terminals construction disruption.
Forget the inefficient double/triple handling, featherbedded rail/rail ferry operation. We did well enough without it for years after the Kaikoura earthquake.
All well and good now, until in a decade, 2, 3's time when the cost of fuel will increase, leaving us with high transport costs flowing through to the price of goods to the south island. Best to invest now for futureproofing and reap the benefits for another generation or two.
Electric/hybrid general goods vehicles will still be more efficient & cost effective than diesel electric rail networks - exception for bulk point to point eg the west coast Lyttleton coal train, Oz ore trains
I'm unschooled in ship design but these have always looked to me to be top heavy with a high CoG. They operate in the North Sea reasonably successfully so they should be able to handle the Cook straight waters and wind.
I do agree run them to Lyttleton rather than Picton. I never understood the rationale for dropping the Lyttleton run? Possibly some lobbying of the governments of the time, or doing it on the cheap, but costing in the long term? Is that what the current government is doing?
An overnight each way Wellington - Lyttelton would take a heck of a lot of trucking off the road without much more transit time.
Why the proposed RMA replacement will prioritise property rights
https://thespinoff.co.nz/politics/19-03-2025/nobody-is-as-creative-as-a…
Memo to Party faithful - we need this spread around.
PS - avoid people who point out that there are no 'rights'; there are societal obligations, individuals-to-whole. Or run as an outcast.
Individuals running as parasites?
To be controlled by rules; there's no other way, apparently.
"...individuals-to-whole"...apparently Communism has failed miserably everywhere it's been attempted
...& killed untold millions in the process
Ideological blinkers must be a pain.
I call it caring for each other.
And what you denigrate, was/is totalitarianism.
Which is actually what NACT are heading towards.
Blindness comes in many forms.
"Idealogical blinkers must be a pain"
...conflating a totalitarian parasite strawman out of an article on urban planning decisions
Absolutely incredulous. You couldn't make this stuff up.
Shows just how useless the situation is ……
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