Here's our summary of key economic events overnight that affect New Zealand, with news US Treasury yields are rising today on concern growing American recession fears may prompt investors to question the safety of US Treasuries as a safe haven asset. The risk premium jumped after a weekend to think about last week's yield falls.
But Wall Street equities have stopped falling. They are not rising either as investors ponder what to do. But last week's sell-off is baked in. They rose after reports of a tariff pause, but fell when this was denied.
Then Trump threatened China with 50% tariffs because they retaliated. Gloom returned.
And EU ministers are meeting to coordinate their response, and 25% retaliatory tariffs are likely on "some goods".
Everyone, except Trump (and his acolytes), can see that this mob-boss theatre will just produce a combination of recession and inflation. And the US won't be immune. The situation is an "urgent problem" for policymakers worldwide, including central banks. Ours meets tomorrow but because this is a fast developing situation, maybe it is too soon to expect a comprehensive response. It is a situation that will play out over years, but we will still want to see our fiscal and monetary policymakers working to contain the impending fallout as best they can.
In Canada, their central bank's Business Outlook Survey is reporting widespread concern. Business conditions have deteriorated due to the trade conflict with the United States. Sales outlooks have softened, particularly for exporters. Firms reported having sufficient capacity, and many are delaying investment and hiring decisions amid uncertainty. Firms expect the widespread tariffs will raise costs and lead to higher selling prices. In this context, expectations for inflation are higher.
China's FX reserves rose in March, but their overall reserves rose more, mostly because they purchased a little more gold and that took their holdings to just under 2300 tonnes. The March gold price zoomed higher, bolstering other reserves. This may reverse sharply in April if the gold price keeps on tracking down.
Away from the economic news, we probably should note that while China's overall population is in decline, not all regions are. The Pearl River Guangdong region in from Hong Kong grew by 740,000 to 127.8 million (+0.6%), and births rose by +100,000 to 1.13 mln (+0.8%) in the 2024 year. If this region was its own country, these demographic changes would be impressive. But it does highlight how fast some other parts of China are shrinking.
Overall, the recent Qingming Festival (Tomb Sweeping) holiday saw 790 million cross-regional trips in China, an increase of +7.1%, a record high for this holiday period.
European retail sales rose +2.3% in February in the euro area on a volume (real) basis, quite a bit better than expected and its best rose since September 2024. In the wider EU it was up +2.0% and still a quite positive shift.
German industrial production however was down a sharpish -4.0% in February from the same month a year ago, although to be fair the year-ago benchmark was unusually high. On a seasonally adjusted basis the decline was "only" -1.3%. German export growth is rising however.
In Australia yesterday, their pre-election Budget update was released. The underlying cash deficit in the 12 months ending June 30 will be -AU$28 bln, swelling to -AU$42 bln through June 2026, they now say. That's going from -1.0% of GDP to -1.5% of GDP. "[The] escalation in trade hostilities has created significant economic uncertainty and exacerbates the risks to the economic and fiscal outlook", they say.
The UST 10yr yield is now at 4.15%, up +15 bps from this time yesterday. Risk premiums are jumping. The key 2-10 yield curve is steeper at +42 bps. Their 1-5 curve is now inverted by only -4 bps. And their 3 mth-10yr curve is less inverted by -13 bps. The Australian 10 year bond yield starts today at 4.34% and up +17 bps on Monday. The China 10 year bond rate is now at 1.64% and down -15 bps. The NZ Government 10 year bond rate is now at 4.40%, and up +5 bps from yesterday at this time. We should also note that wholesale swap rates tumbled yesterday by about -7 bps.
The VIX volatility index has stayed very elevated.
Wall Street is unchanged on the S&P500 to start its week, after a volatile morning session (-4.4% to +0.7%). Overnight, European markets were all down -4.0%. Yesterday Tokyo ended its Monday session down -7.8%. Hong Kong was down a massive -13.2%. Shanghain fell -7.3% and very hard for them. Singapore was down a similar -7.5%. The ASX ended its Monday session down -4.2%. So the -3.7% drop on the NZX50, in the perspective of all those other markets doesn't look so bad.
The price of gold will start today at just on US$2966/oz, and down -US$71 from yesterday, down -2.3% and "just another commodity". Holders are selling to cover margin calls now.
Oil prices have dropped another -50 USc from yesterday at just on US$61.50/bbl in the US and the international Brent price is now just under US$65/bbl.
The Kiwi dollar is now at 55.5 USc, down -40 bps from yesterday. Against the Aussie we are unchanged at 92.5 AUc. Against the euro we down -40 bps from yesterday at just on 50.7 euro cents. That all means our TWI-5 starts today now just on 65.5 and down -30 bps from yesterday.
The bitcoin price starts today at US$78,846 and down -2.8% from this time yesterday. Volatility over the past 24 hours has been very high at +/- 4.1%.
[Due to staffing holidays, the video version of this review will not return until April 28, 2025.]
Daily exchange rates
Select chart tabs
The easiest place to stay up with event risk is by following our Economic Calendar here ».
33 Comments
From ghost cities to ghost factories. Great for the global consumer - unless you have been laid off at the factory or don't like things made out of coal.
‘The Tsunami Is Coming’: China’s Global Exports Are Just Getting Started
…Five years ago, before a housing bubble burst, cranes putting up apartment towers dotted practically every city in China. Today, many of those cranes are gone and the ones that are left seldom move. At Beijing’s behest, banks have rapidly shifted their lending from real estate to industry. Recent data from China’s central bank shows that state-controlled banks lent an extra $1.9 trillion to industrial borrowers over the past four years. As new factories come online, China’s exports are rapidly accelerating. They rose 13.3 percent in 2023 and then another 17.3 percent last year.
…China is exporting so much partly because its own people are buying so little. A housing market crash since 2021 has wiped out much of the savings of the middle class and ruined many wealthy families.
…Tax revenues are falling, but military spending is rising rapidly. That has left the government wary of spending on economic stimulus to help consumers. China has offset its housing debacle instead with its export campaign, creating millions of jobs to build, outfit and operate factories.
https://www.nytimes.com/2025/04/07/business/china-manufacturing-exports…
The old adage when the USA sneezes the world catches a cold is obviously, and amply, outdated and understated. Since the USA emerged from WW1 as an international force, a looming super power, it has grown itself, and been allowed to grow, to the biggest elephant in the room imaginable. Now the world is experiencing what a rogue elephant is capable of.
"When elephants fight, it is the grass that suffers." African proverb
The kknz quote re grass, is closer than many realise.
We forgot - chose not to - measure the grass. Meaning we have no idea how many elephants we can support, of what size?
Some folk are discussing this: https://www.youtube.com/watch?v=CJinJCNvxJY
Meaning we have one NZ journalist - admittedly perhaps the brightest we've ever produced - who cannot say they are unaware. The fellow on the right of the panel is the standout - he obviously gets it in spades. Well worth the watch.
been allowed to grow
It has been allowed to grow to obesity, and now it coughs, splutters and is sick with debt and there isn't any medicine to heal them as they're on their way out. Financialisation of the economy, outsourcing of jobs, overuse of their own oil reserves as well as QE after 2008 have led them here. And the orange man of course.
Bit like learning about Humpty Dumpty many, many years ago in so much Mr Dumpty is in the final stages, broken up beneath the wall, and waiting to see if he can be put back together again. Some things you never forget.
Ours meets tomorrow but because this is a fast developing situation, maybe it is too soon to expect a comprehensive response. It is a situation that will play out over years, but we will still want to see our fiscal and monetary policymakers working to contain the impending fallout as best they can.
Realistically, what are they going to be able to do that would have any appreciable impact? Not much would be my guess.
Agreed.
It's a physical/ecological problem, being reflected as a political knee-jerk.
What it WILL do, is show up (even more) the shortcomings of 'fiscal' and 'monetary'; both as ways of thinking, and as levers.
It will also probably do something about the increasing variance between the collection of forward bets - think Kiwisaver - and the remaining physical forward underwrite.
The amount of grass remaining, so to speak. It is understandable that folk want to avoid that, as it undermines more than a few personal narratives, but clear thinking about what is evolving, demands we see things in proportion. Too little grass, too many elephants - they go to war. Is Collins up to the tusk?
It's a physical/ecological problem, being reflected as a political knee-jerk.
It is life unfolding.
There is a worthwhile premise in much of what you say, in that we take permanence as a given. But to try and shoehorn everything into a sole narrative, is a bit of folly.
In your 70+ years, presumably life has eventuated counter to your anticipations, many times. Things in your personal or commercial life, turned out counter to what you expected.
The answer should be to assume tomorrow will be like today, but to cater your view on life that change can occur at any time. Build a bit of resilience, put in so effort, but also take some time out to smell the roses.
Treating every day as if the sky will fall, is wasting many days.
Methinks you make false assumptions re moi. I'm betting that I spend more time rose-smelling than you. Just saying.
:)
I can only assume that (your assuming) has an underlying motive (most dissing of messengers can be traced to same) and I ask what that might be?
Some degree of denial of the message, is all I can come up with.
Go well
I'm betting that I spend more time rose-smelling than you. Just saying.
Well duh, you're a retiree, I'm still of working age, have children, etc.
Although most days allocate 1-2hrs to rose sniffing, then some times if the stars align I fit in a few weeks of months of doing it continuously. It greatly aids in interrupting the same circular though patterns. Stops the needle being stuck in the same groove, allows understanding to be a continual process, rather than a fixed point.
But sniffing roses is my advice to anyone, wasn't particularly aimed at you.
I can only assume that (your assuming) has an underlying motive (most dissing of messengers can be traced to same) and I ask what that might be?
I try to avoid being cryptic, it should be fairly apparent.
There's no guarantees and predicting the future is fraught with inaccuracy.
Trying to reinforce the same narrow argument by trying to bring any major happenstance under it's umbrella, is the opposite of open mindedness.
If every post is the same sermon, not really much of a discussion, is it?
Last sentence said it again
:)
Edit - and 'retiree' needs questioned too. I've never been busier; so many people equate 'work' with 'income'.
Last sentence said it again
Yeah it did.
"It's a physics/ecological problem", has no room for:
- has America the leverage to do what it intends?
- will someone (presumably China) be able to use this situation to its advantage?
- will there be new alliances?
- what will the fallout look like?
And so on, and such forth. Just a sole line of reasoning, with no breadth of understanding and inquiry.
You're wasting your time Pa1nter, PDK cannot see past his narrow blinkers, he's just not capable of considering anything else apart from "the planet is finite, we're running out of resources, the end is nigh"
PDK needs to be called out more often.
These minds are much like record players.
What we consider conscious thoughts, is often the replaying of a record.
Play the same track enough times, the needle wears the record, and skips the same segment, over and over again.
It's not the minds are the problem to you three (two? :)
It's the message. And that has to be kept front and centre.
So too does the 'calling out'. ZS the other day was an important classic - claiming he had trumped entropy by 'getting married and having children'.
The first part, of course, is convoluted thinking. Marriage is a human construct (of the then-elite, religion, to control) and it is interesting to note that - like the wearing of ties - the folk who haven't the original-ness of mind to dismiss/bypass it. But to entropy? An irrelevance.
The second part is, of course, flawed thinking too. Indeed, it proves my - the real - interpretation of entropy. He has not trumped entropy - he will decay and die. As will all individuals of nearly all life-forms (parts of a splitting-reproduction species can be said to be continual but are atom-for-atom replacement-parted). What he is describing is proof that life has NOT parried entropy but has found a way to continue in the face of it, via reproduction. As I say, it proves my - not his - point.
Then there was the waffle about x litres of petrol available from Southland coal - no mention of the energy proportion required to do the digging/processing/delivering (the EROEI) or the fact that the only refining capacity we had, has concrete through its pipework (or worse). Even then, he was describing a finite resource...
Yes, people need to be called out. Repetitively, apparently.
:)
Life cannot exist without the energy flow associated with entropy. Your thinking on these matters can only be described as childish.
If your first sentence is a statement, I agree.
We can prove it by not eating. .
Better still, we run the experiment to prove/disprove the age-reference - try a child not eating, during the same timeframe.
I'll tell you what happens; we die. Entropy wins. And it will be the same with the child.
That 'childish' was as skewed as 'married', and as skewed as 'My wealth/knowledge/status is superior to the Laws of Physics. You can get there, perhaps, but there will need to be a great deal of cranial uncluttering before the reassembly, I suspect.
Try this: https://www.thegreatsimplification.com/frankly-original/frankly-03-ener…
And rate yourself with this: https://dothemath.ucsd.edu/2015/04/programmed-to-ignore/
It is important to note there are two 'definitions' of entropy; the thermodynamic one, and the 'physical degradation over time' one. Strictly speaking, the former is correct, but both are incompatible with the (false) narrative of endless growth. Your reference to coal-to-petrol, failed to defend growth - merely mentally defended your temporary, very energy-intensive, way of life.
Go well
No one has claimed "endless growth". We are just talking about growth in the foreseeable future. No doubt societal changes will be required as circumstances change, populations decline, some resources become scarcer and technology develops.
It's not the minds are the problem to you three (two? :)
It's the message. And that has to be kept front and centre.
No issues at all raising matters such as the possible impermanence of a kiwisaver account, a finite amount of resources, where growth might likely go, etc. I have no problem recognising that all of this might go away, at any moment - but, in most given moments, it probably won't.
Trying to ram the same idea down everyone's throat at any even remotely plausible instance, no matter how relevant (or not) is the problem. That's your mind at play, not the message. Everyone on here has likely well and truly received the message.
Repetition is not advancing your argument, it's removing from it.
As you observe it may be irritating to be frequently reminded that there is an obvious result of the consumption of limited resources it may be equally irritating to see this obvious reality being ignored/dismissed in the majority of posts/articles.
The EU need to respond with tariffs on US services, like all the tech companies, not goods. They could use the same flawed reasoning, the USA have a trade surplus on services with the EU (deficit for the EU), therefore it needs to be taxed via tariffs.
Vehicle insurance anecdote. I've renewed 2 vehicle policies this year, 1 comprehensive the other 3rd party. Both reduced by 23% (no other changes, claims or crimes). TradeMe/Tower.
Thank you for this intel, worth a lot to get these insights!
Things getting real. No more Alex at The Telegraph. No more Steve Braunius at Herald. And now we have to go without David for 90 seconds for three weeks!
Thanks for the update, David - just a few things of note.
#1 I am wondering now if we will even see a dead-cat bounce this week?
IMO the circumstances we see are reminiscent of 1929 - the difference being, that this credit bubble is exponentially worse than it was back then.
#2 Interesting that as dreadful as bank stocks look, they received quite a bit of support from the keepers of the house who of course own the Fed anyway - remember that Citi and JPMG between them, own more than 70% of the New York Fed, the most prolific money-spigot/Ponzi scheme on the entire planet.
#3 "Everyone, except Trump (and his acolytes), can see that this mob-boss theatre will just produce a combination of recession and inflation." -TOTALLY.
It is so obvious that #47 is taking a wrecking ball to Western-centric financial economies that events can only be interpreted one way - that is, a demolition job being undertaken by the non-national OCFC (Owners Controllers of Global Financial Capital) who have decided that the U$ economy is long overdue for the chopping block. Trump and the completely clueless Bessent are the Patsy fall guys who are selling this demolition job to Mainstreet.
Nothing they are doing makes a jot of sense until you realise that demolition is the intention. It is farcically ridiculous to suggest that any of their policies will bring back jobs or help develop a healthy GDP profile.
The OCGFC have zero national loyalties - all they are concerned with is maintaining their centuries-old throat-hold on power. Trump and Bessent are perfect for this job because not only are they both as thick as two bricks, but they are also controlled assets. They are particularly suitable because the two of them would go along with anything whispered in their ear, especially if it involves throwing their weight around and remaining in the limelight.
Everything they are doing will only accelerate the continued financialisation of the U$ economy, which is precisely what got the entire economy into this casino debt death spiral in the first place.
#4 "The situation is an "urgent problem" for policymakers worldwide, including central banks. Ours meets tomorrow but because this is a fast developing situation, maybe it is too soon to expect a comprehensive response. It is a situation that will play out over years, but we will still want to see our fiscal and monetary policymakers working to contain the impending fallout as best they can."
Yes, but the Western-centric central banks that haven't realised that ALL fiat currencies are well past their use-by date will completely miss the point - all they will be doing will be tinkering with the band playlist aboard the U$ Titanic as the inevitable disaster unfolds.
NZ's economy is already performing horribly, largely because our total debt is more than 600% of GDP.
#5 "Firms expect the widespread tariffs will raise costs and lead to higher selling prices. In this context, expectations for inflation are higher."
Yes, but there will be inflation (in life's necessities) and deflation (in discretionary spending) at the same time - the net effect will be stagflation as the orange wrecking ball plays out.
#6 "China's FX reserves rose in March, but their overall reserves rose more, mostly because they purchased a little more gold and that took their holdings to just under 2300 tonnes."
The 2300-ton figure is the Western-centric narrative - govt reserves are much closer to 32,000 tons. China has been stacking for yonks - why would they be dumb enough to show their hand, when they are not required to?
I can't see any sharp reversal in gold, as Central Banks with half a clue are still gold stacking and supply is extremely limited on tonnages. IMO, the amount of loose gold coming on stream as a result of the margin calls that you mention in your later comments, is of little consequence in the big picture.
Once Mainstreet America realises that their economy is right on top of the iceberg they will try to increase their gold wealth holdings as insurance - note, at the moment the average physical gold in US private portfolios is a minuscule 0.5% - if this was raised to even a moderate 2% level, that would create huge extra demand, let alone with people reaching this realisation around the rest of the world.
#7 Bitcoin - "... Volatility over the past 24 hours has been very high at +/- 4.1%."
It is the same cohort of Bitcoin buyers that are into Nasdaq and the Mag 7 tech stocks - the graph correlations are very strong, and so I wonder if these two will continue to track closely until it is clear that a credit bubble is already in the process of bursting.
The volatility is precisely what we should expect from such uncertainty in everything, with subprimes lurking around every dark corner, and the fact that these modern-day tech-tulips are nothing more than another layer of credit on top of, yes, more credit (fiat currencies) - how on earth is that going to pan out when the entire planet is right on the peak of the biggest credit bubble seen in financial history?
Regards, and best of luck to everyone as we navigate 1929, Mark II
Col
Mostly agree.
But where it differs from 1929, is that there were a mere 2 billion planetary inhabitants, and enough stuff in the ground to supply WW2 and 70 years of subsequent churn.
But the reconciliation? Of unlimited fiat-levered bets on the future? There we agree. A tulip will end up being worth what a tulip is worth. And they're inedible, aren't they?
You never miss a trick do you, PDK. :-)
Also the ordinary public that staggered out of the desperation of that depression, and its aftermath, were not loaded up to the eye balls with the personal debt that the explosion of credit card debt has created over the last fifty years or so. There is a vast number of people about with maxed out credit cards and the only way out for them, it seems to be, is to get an increase to the limit or somehow an additional card.
Agreed.
They were closer to reality too; and therefore not as energy-blind as the current crop.
They mostly turned to growing food, and kept it up during and after WW2. They mostly abhorred debt - and 3% Housing Corp loans were the result, repayable during the growth boom years. And they had more skills - built their own houses, kept their cars on the road, built boats and caravans.
And there was more of everything, per head.
re maxed out - it's been interesting to see the ever-longer interest-free periods, as the game gets ever-further ahead of itself. Getting to the point where the item will be in the landfill but still being 'paid off'. A Ponzi, in its way...
In sync with all of that. Couldn’t have said it better.
ps.When we lived in a semi rural area of the US 25 or so years ago there was still vestiges of it. Folk still had log splitters and produced their own firewood, many made their own pasta, oven baked bread and preserved fruit, tomatoes etc. Department stores sold haberdashery and sewing/knitting patterns. But in our last visit all that was fast disappearing, our old neighbours grandchildren, now in their twenties, no connection, not a clue about any of that. Quite sad in its way, life per the old Saturday Evening Post covers to the young now, could have been 200 years ago.
Wow BTC has also been hit hard here. If anything gold is perhaps the least sold off?
We welcome your comments below. If you are not already registered, please register to comment.
Remember we welcome robust, respectful and insightful debate. We don't welcome abusive or defamatory comments and will de-register those repeatedly making such comments. Our current comment policy is here.