Here's our summary of key economic events overnight that affect New Zealand, with news that past notions of safe havens have been upended, and now it is the turn of the bond market to be roiled. The cost of long-term money is rising sharply as risk premiums leap.
First, China has reacted in equal measure to Trump's capricious 104% tariffs on their goods, with their own extras, a 50% retaliatory tariff. The predictions any junior could see from the known Smoot-Hawley tit-for-tat protectionism are playing out.
The first to blink hasn't been the Chinese. Trump has made an about-turn and paused higher reciprocal tariffs "for 90 days" that hit dozens of trade partners just after they became effective, while raising duties on China further to 125%. This u-turn surprised markets which is having an emotional relief reaction. But any gains today will be built on sand.
So we are in a period of unmoored 'policy', with all the impacts ahead of us. History tells us this doesn't end well, for anybody including us.
American homeowners know what's coming, and are rushing to fix their mortgage rates before they rise unaffordably. There was a sharp +20% rise in mortgage applications last week from the week prior, with the refinance component up an eye-popping +35% and almost double the level of a year ago. Borrowers sense they may not see rates this low again for a long time.
Meanwhile, at the other end of the interest rate market, US Treasury yields are leaping, which means prices are dropping and holders are taking large losses. Today's US Treasury 10 year bond auction was well supported but at notably higher yields. Today the median yield was 4.34% whereas at the prior equivalent event a month ago it was 4.27%. This is a market where participants have regulatory obligations to buy.
But in the open secondary market, the effects are starker. The UST 10 year yield rose +16 bps just from yesterday. (from a month ago, up +11 bps). Volatility is a new feature of these bond markets too.
There was some US wholesale inventory data out overnight, but it was for February, and these were up just +1.1% from a year ago. But of course this was from a period well before the April omnishambles.
Also out today were the US Fed minutes from their March 20 (NZT) meeting, but the views in these have all been overtaken by subsequent events, so have little current relevance. But even back then they sensed threats to inflation from Washington's tariffs, with heightened concerns about stagflation.
In Japan, machine tool orders jumped sharply in March driven by export orders. They were up +11.4% year-on-year for the sixth consecutive month. Domestic demand remained stable
In India, and as expected, their central bank cut its policy interest rate by -25 bps to 6.00%. They cited easing inflation, slowing economic output, and growing global trade tensions as the reasons why they cut for a second successive time.
The UST 10yr yield is now at 4.40%, up +16 bps from this time yesterday. Risk premiums are growing. The key 2-10 yield curve is steeper, now at +54 bps. Their 1-5 curve is now +4 bps. And their 3 mth-10yr curve is now +7 bps. The Australian 10 year bond yield starts today at 4.39% and up +11 bps on Wednesday. The China 10 year bond rate is now at 1.65% and down -1 bp. The NZ Government 10 year bond rate is now at 4.75%, and up +21 bps from yesterday at this time.
The VIX volatility index is volatile on the lower side today.
Wall Street is currently up +7.4% on the S&P500 in its Wednesday trade as the tariff-pause relief rally kicks in. Who knows where it will end today. Overnight, European markets were all down about -3%. Yesterday Tokyo ended its Wednesday session down -3.9%. Hong Kong was up +0.7%. Shanghai rose +1.3% as the home team kept buying with the Beijing put in place. However Singapore was down another -2.2%. The ASX ended its Wednesday session down -1.8% and the NZX50 ended down -0.7%.
The price of gold will start today at just under US$3070/oz, and up +US$91 from yesterday. Perhaps this is one commodity exhibiting traditional safe-haven attributes.
Oil prices have risen +US$2 from yesterday at just on US$62/bbl in the US and the international Brent price is now just on US$65/bbl.
The Kiwi dollar is now at 56.2 USc, up +70 bps from yesterday at this time. Against the Aussie we are down -80 bps at 92.1 AUc. Against the euro we up +30 bps from yesterday at just on 51.1 euro cents. That all means our TWI-5 starts today now just on 65.8 and up +20 bps from yesterday.
The bitcoin price starts today at US$81,930 and rising, and up +6.1% from this time yesterday. Volatility over the past 24 hours has been very high at +/- 4.2%.
[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 ».
57 Comments
Just as well no one moved a factory or two
It's the kind of policy making that really gives you confidence to invest a few billion, isn't it?
Maybe, just not with the US.
Medium term investment in other territories could be worth investigating.
I see India benefitting from this as countries look to shift cheap manufacturing elsewhere, however with them buying up cheap Russian oil, there's plenty to consider.
My possible but improbable wish would be for a greater alliance between the newer superpowers, to greatly tilt global economics and power away from the anglosphere.
We've had centuries of imperialists lording over the planet and the results have been "iffy" to say the least.
Ridding the place of slavery and cannibalism plus lifting billions out of poverty is iffy? Don't have to go far outside the front gate to see the benefits of this. Poor, nasty, brutish and short is over rated.
Ridding the place of slavery and cannibalism plus lifting billions out of poverty is iffy?
Not if you simplified things in such a way, no. But the backstory and history is far more iffy.
We advanced things in a material sense in the most fantastic way. We have arguably regressed in many other areas, to the point of now being fairly rudderless, or appointing drunken sailors as captains.
Ridding the place of slavery and cannibalism
But ask yourself, who started and benefitted from the [international] slavery? The Anglosphere rose to power on it. Not that I condone it in any way, but perspective on our current power dynamics in the world. The Dutch, then the British, and then the American empires all were built on the mass exploitation of others. Now they cling to their dying power as they no longer have the ability to exploit as they once did for various reasons.
But ask yourself, who started and benefitted from the [international] slavery?
The retort is there's always been slavery.
But not on the industrialized global scale the imperialists produced.
Then they worked out keeping slaves is expensive. You have to feed, house and clothe them, and look after them when they're sick. Far more cost effective to lord over people with contracts, pay them a pittance and tell them to come back in the morning and do it again.
Then claim you fixed the mess you helped make.
Profile has it - predictably - a about f.
The slaves we harnessed, this last 200 years, were fossil energy. By so many orders of magnitude that labour, slave or otherwise, is mere noise.
They are leaving us, as they were bound to do.
Inevitably, those used to living off that 'slavery', will attempt to divert to using others. As we already do now, re just about everything we buy.
Are you trying to say that the good people's jobs should not be able to afford them:
- daily nutrition and water
- lodgings
- motorized transport
- furniture
- clothes
- telecommunications
- electric lights
- tvs, computers, fridges, ovens, etc
- and a bit left over for savings?
Good sir, this should be but a meer minimum
Once again we have to ask the eternal question: is Trump a grifter, or just incompetent?
I'm sure there will be a full and thorough investigation into any insider trading from his associates that may happen to align with the seismic policy shifts over the last week...
Or is it just palace intrigue and Navarro is no longer flavor of the month?
Elon Musk took another shot at Peter Navarro on Tuesday over tariffs, calling President Donald Trump's top adviser on trade and manufacturing a "moron" and "dumber than a sack of bricks."
https://abcnews.go.com/Politics/musk-top-trump-adviser-feud-tariffs-dum…
while not a fan of Musk, when he's right, he's right! What amazes me is the criticism for calling that duck a duck!
"calling President Donald Trump's top adviser on trade and manufacturing a "moron" and "dumber than a sack of bricks."
Elon did end up apologising though….. to the sack of bricks !
Once again we have to ask the eternal question: is Trump a grifter, or just incompetent?
Trump is Trump. Neither grifter or incompetent. Everyone and everything around him is an appliance for him to exploit. There's next to no fixed belief system, just an ever fluid stream of brainfarts of varying degrees of misidrection. He has an aim and objective almost completely detached from what he is promoting, which will become clearer as most of the rest of what he has said will be abandoned.
His cabinet will lean towards sychophancy over competence, and they are there to do his bidding as publically plausible as possible.
In general terms, a person best to be avoided in ones personal life. There is no reasoning, and no compromise unless the other party has superior and obvious leverage.
Unfortunately, Trumps behaviour impacts most of us, whether we like it or not.
I don't disagree, but these things are not mutually exclusive. You'd think the SEC would find something interesting in Trump's Truth Social posts today.
"THIS IS A GREAT TIME TO BUY!!! DJT"
followed a few hours later by an announcement pausing the tariffs on everyone but China, leading to a 9%+ bump in the S&P, 12% on the NASDAQ...
I don't disagree, but these things are not mutually exclusive
We can definitely say Trump is hyper capable of getting what he wants. Just that the means he does so are at others' expense. Usually those he's claiming to benefit.
Anyone can get what they want when they're immune to prosecution.
In that ruling the US Supreme Court unstitched and shredded all the careful planning, checks and balances implemented by the great forefathers, the Constitution to prevent any one identity, being a future President, wielding unchallengeable authority and power. In completely opposite thinking, subsequent Chief Justices such as the great John Marshall saw fit to further strengthen the essentiality of the criteria. Sad and bad day for the USA indeed.
"We can definitely say Trump is hyper capable of getting what he wants"
LIke what Pa1nter ?
Like ending the war in Ukraine ?
Making Canada the USA's 51st state ?
Getting China to yield to the USA's tariffs ?
Conquering Greenland ?
Turning Gaza into the "Riviera of the Middle East"
Sorry Pa1nter, but I think you give Trump far too much credit, he's just an incompetent, petulant child
I'm talking about his personal business empire up until now.
Start building a tower and halt it until the city or state gives you tax exemption status, that sort of thing.
This isn't to say he'll be successful doing this in the world of geopolitics or global trade, just that he's had 75 years or whatever bullying his way into success, so it's his MO, and he won't be modifying this approach.
I think everyone (incl. the SEC) are potentially still too stunned to know how to act?
Insider trading typically (and according to Hollywood?) plays out in the deepest, darkest bowels of the corporate world needing hundreds of investigators poring over thousands of documents to unveil corruption...
What to do when it's actually writ large over the most public platforms and stated so obviously?! Hiding in plain sight?
The first to blink hasn't been the Chinese. Trump has made an about-turn and paused higher reciprocal tariffs "for 90 days" that hit dozens of trade partners just after they became effective, while raising duties on China further to 125%
Is it blinking, or was everything else a veil for an intended trade war with China?
Volatility was pretty extreme in interest rates yesterday there were some massive moves in the derivative space with respect liquidation of “carry” trades and swap spreads to government risk. I think once this liquidation stops ( i.e position that margin requires stopping out) you could actually see volatility decline quite rapidly as banks and funds etc actually stop trading. It’s impossible to decision make off one man’s twitter feed. So money movement will be minimal. Irrelevant to whether or not you agree with the policy or the person it’s necessary to adapt.
He has killed animal spirits as the economy weakens...
Trump loses tariff war. At least he managed to end the war in Ukraine…
I don't think we're even part way through the war of tariffs. Possibly the opposite, Trump likes attention and all the Tariff spam certainly attracts that.
Not sure you've noticed but the war in Ukraine is still going. Nothing Trump can do or say will change that. In the meantime Europe and NATO are pivoting away from US being the centre of all things. The damage is already done.
Nothing Trump can do or say will change that.
Potentially if Putin exercises enough beligerence over a ceasefire you could see a substantive increase in US aid for Ukraine - Putin clearly won't accept a ceasefire without the sorts of terms normally reserved for a peace deal.
However, even though Trump promoted his ability to end this during the elections, he has generated enough noise in other areas for the Ukrainian conflict to be relatively out of the spotlight.
That said, Russia has just launched a new offensive and a new draft, it'll be interesting how far he can push things without re-entering Trump's radar.
The ability of the USA to intervene and offer support will be determined by the confidence the rest of the world has in their currency amid greater and greater deficit spending. If the USD tanks, they will try print their way out and further their downfall, reducing any ability to recover if they continue down the military aid path. My bet is that Putin knows this and is tryin to slowly bleed the US until they implode on themselves. His people are less likely to revolt with civil unrest.
.
Europe and/or NATO will have to handle the Ukrainian situation full stop. It’s their territory and their own responsibility if to safeguard the security of their people. Combined, their industry and population dwarf that of Russia. If one thing, Trump has at least kick started that realisation into reality.
damage - or do you mean he has achieved his goal ? After all Russia is no threat to the US -- cant take Ukraine its hardly going to invade or attack the US -- so if the EU and the rest of Nato double their defence spending th US can save 40 billion it has chucked in so far ... its all about perspective !
A longer perspective would be that the US is better off if there's no war in Europe, and we clearly haven't secured peace there for all time.
But it's not as if Europe's current aggressor has ties to a recently emerged Asian superpower that the US is trying to economically cripple.
It's all rhyming in an uncanny way.
Don’t think the USA’s strategy or whatever could cripple China anymore than the raft of sanctions have crippled Russia, or even Iran. Those nations have populations with century on century history of indoctrination and subjugation from totalitarian regimes. They will simply suffer whatever hits them for as long as it takes. China has also reasserted itself hugely internationally. They have acquired for example around the sub continent a great swathe ot territorial interest and influence. Myanmar, Pakistan, Sri Lanka, Afghanistan, Syria, Iran, Lebanon, Iraq and throughout Africa and within all of that there is quite some resilience.
Politics aside, China makes stuff. And is still largely peasant - or at least remembers how to be.
The US has b/a current skills, b/a factories, and those who remember the useful skills are in old-folks homes.
Note: playing with $$$$$ on a screen, is not a skill.
The one lever the US has, is food from the mid States.
Note: playing with $$$$$ on a screen, is not a skill.
It is. But so is picking your nose.
The one lever the US has, is food from the mid States.
They have a lot of levers but that is indeed one.
In days gone by, there was a "Greater East Asia Co-Prosperity Sphere", and targeting of resource access.
Russia is no threat to the US? You need to take a look at history. The US believed the Viet Minh were not threat, but who won that war? Russia has nuke capable ICBMs, claims to have developed functional hypersonic missiles, their latest fighter the SU57 is supposedly stealthy...... and that's just directly. Then there is the possibility that Putin has or will sell his soul and provide those to other players who will also attack the US!
As you say, it's all about perspective! But stick your head in the sand and it is very likely that sooner or later someone will come along and kick your butt, and you'll never see it coming!
It's unbelievable how much the stocks are surging. Anyone with common sense will sell into these rallies. A trade war between the USA and China and 10% tariff worldwide is nothing to be enthusiastic about.
We're still ~10% down since Trump took office, but I agree this rally looks overblown.
Those that bought the dip and are making a quick buck on the rally will be away laughing however.
They will only laugh if they can sell higher, and I for one, don't think the stock marker has much higher to go. Time will tell if you or I are correct.
They will only laugh if they can sell higher
Buy when it dropped, sell when it bounced back for a quick profit. That was my statement, neither of us are correct nor incorrect here.
It's a bit silly looking back at stock prices and saying: "look you could have bought then at X amount and sold then and amount Y and made a profit.
Of course, however I never stated that.
Sell stocks as they rally because of the risk of a trade war, makes sense. Same for bonds? Sell bonds as they rally because of the risk of a trade war?
Insider trading you say?
Surely not.
https://www.rnz.co.nz/news/business/557722/donald-trump-tells-investors…
So far, so just the here and now folks. Apart from Painter talking of a change from the Anglosphere...
https://degrowthuk.org/2025/04/04/prospects-for-degrowth-2025/
A thoughtful backgrounder; puts Trump in perspective.
VanEck confirms that China and Russia are settling energy trades in Bitcoin. De-dollarization. Probably a good idea for the US to end sanctions on Russia or it's game over for USD.
While Russia has publicly encouraged the use of crypto and last summer passed a law to allow digital currency payments in international trade, its use in the country's oil trade has not previously been reported.
Some Russian oil companies are using bitcoin, ether and stablecoins such as Tether to smooth the conversion of Chinese yuan and Indian rupees to Russian roubles, the sources said, adding that it is a small but growing part of Russia's overall oil trade, which according to the International Energy Agency was worth $192 billion last year.
All the sources declined to be identified due to the sensitivity of the matter.
https://www.reuters.com/business/energy/russia-leans-cryptocurrencies-o…
How small a part?
I saw a report some days ago that indicate that in the 1950s the US$ was used to cover 98% of international trade. Today (as in recently) it is 58%. I'm picking that number will fall further and faster now.
Craig Singleton, the senior China fellow at another Washington-based think tank, the Foundation for Defence of Democracies, agreed that a phone call from Beijing is “unlikely in this climate”.
“Each side believes time is on its side, which raises the risk that neither moves to de-escalate until real damage is done,” he said. “This is no longer about tariffs alone. It’s a test of wills.”
It’s a test of wills
Wills of those in power to the detriment of their people. Sad indeed
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.