Here's our summary of key economic events overnight that affect New Zealand, with news the gears of the global economy are grinding disconcertingly as the unnecessary trade war is prosecuted with little strategy and no apparent viable end game.
But first up today, the latest full dairy auction brought an overall rise of +1.6% in USD. However, the fall and fall of the USD has completely undermined this result, with prices in NZD falling -2.1%. In USD all categories except SMP rose, and demand was strong from "North Asia" (ie China). Milk fats were in demand, while global milk supply is waning in the major producers, underpinning the demand. Pity about the currency effect.
Inflation is showing up in the retail trade in the US, with the weekly Redbook index up +6.6% from the same week a year ago. There is no way that reflects a volume rise. And the consumer mood is now as bad as it was in the pandemic.
Business activity continued to fall in March in the New York Fed's factory survey in the New York state. New order levels extended their decline/
In Canada, their CPI inflation rate eased lower to 2.3% in March. That is after the eight-month high of 2.6% in February. The March result was tamer than expected (2.6%) and below forecasts by the central bank of 2.5%. It comes after some GST and other tax changes earlier have now been flushed through their data. The Bank of Canada next meets to review its official policy rate later today, but it will be the economic impact of their unfriendly neighbour that will dominate policy, rather than current inflation. They will likely hold off making rate changes for now, keeping the 2.75% policy rate. That is a change from the earlier expected cut.
Canadian housing starts came in weak in March, down more than -11% from the same month a year ago.
India CPI inflation rate fell in March to 3.3%, its lowest since 2019. Food price inflation fell to 2.7%. Both were much lower than expected and well below the central bank's policy rate mid point of 4%.
Indian exports rose sharply in March from February in the normal seasonal pattern. Their imports rose even more so their trade deficit grew from the prior month, although only back to its usual level.
In China, they are cancelling their orders for Boeing aircraft, a blow to the US aircraft industry.
In February, EU industrial production rose, a surprise gain and the best monthly gain in two years.
But that wasn't an indicator for economic sentiment. The latest ZEW survey reveals a sharp deterioration as they watched the US turn away from friend to foe, making them feel boxed in between the US and Russia. It was a shift reminiscent of the uncertainty during the pandemic.
And it seems that trade talks between the US and the EU are making "little" (ie no) progress.
In Australia, the latest release of the RBA minutes was a dull affair, giving little guidance on how they are going to deal with the trade and inflation challenges. It's all 'wait-and-see' and 'respond-to-data' for them. But they do claim to be in a good position to be able to act decisively if it is needed. A cut on May 20 is still possible however.
OPEC's latest monthly review lowered its demand outlook, although some observers thought the smallness of the cutback was brave in the circumstances.
And we should also note that there are now three elections due soon. Canada goes to the polls on April 28. Australia votes on May 3. And now a snap election has also been called in Singapore, also for May 3. Being Singapore, that unsurprisingly leaves very little time for campaigning. All these elections will have the Trump shadow hanging over them, and it very much helps campaigning to present an anti-Trump stance. Trump has resurrected the fortunes of the centre-left candidates, enough to cancel the anti-incumbent mood.
The UST 10yr yield is now at 4.33%, down another -4 bps from this time yesterday. The key 2-10 yield curve is flatter, now at +49 bps. Their 1-5 curve is now inverted -6 bps. And their 3 mth-10yr curve is now only +2 bps, also a lot flatter. The Australian 10 year bond yield starts today at 4.32% and down -7 bps from yesterday. The China 10 year bond rate is now at 1.66% and unchanged. The NZ Government 10 year bond rate is down -13 bps at 4.60%.
Wall Street has started its Tuesday basically unchanged on the S&P500. Few bulls in evidence today. European markets all rose about +1.4%. Tokyo ended yesterday up +0.8%. Hong Kong was up +0.2%. Shanghai was up +0.1%, but Singapore gained a full +2.1%. The ASX200 ended its Tuesday session up +0.2%, but the NZX50 fell -0.8%.
The price of gold will start today at just on US$3229/oz, and up +US$16 from yesterday.
Oil prices have firmed marginally, up +50 USc from yesterday to be now at US$61.50/bbl in the US and the international Brent price is now just over US$64.50/bbl.
The Kiwi dollar is now at 59.1 USc, up +30 bps from yesterday at this time and the highest since mid-December. The fall of the USD extends. Against the Aussie we are down -10 bps at 92.9 AUc. Against the euro we up +30 bps from yesterday at just on 52.4 euro cents. That all means our TWI-5 starts today now just under 67.6 and up +30 bps from yesterday.
The bitcoin price starts today at US84,616 and holding again, up a mere +0.1% from this time yesterday. Volatility over the past 24 hours has been modest at +/- 1.2%.
[Due to staffing holidays, the video version of this review will not return until April 28, 2025.]
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39 Comments
A calmer week on the markets with Reinz Auckland median house price up 3.8% in a month!
Fancy Belgian Easter eggs this year! 🥚🐣
🥂🥂
Shame about the much more reliable HPI being down 0.5%, but if you feel better picking cherries for breakfast then go ahead.
He is having cherries for breakfast, and he's vey happy with it.
he is up 3.8% for the month but down 2.4% for the year...
Full your boots with success, but do not choke on the cherry pips.
https://www.reinz.co.nz/Web/Web/News/News-Articles/Market-updates/REINZ…
Sometimes it is better to be happy than correct.
Ignorance is BLISS.. you forgot to quote the remaining 95%of metrics that were pointing downwards..
Hopefully you will still indulge in your Easter bunnies..
A weak USD during a global recession is going to hammer NZ and Aussie
Why? A lot of stuff will to all intents be cheaper.
Of more interest I've noted a recent new contributor Colin Maxwell identifying that one of the crucial areas of economic success for governments is NOT ceding the ability to create money to the private banks, a point I've argued for years.
Because it makes our exports to the USA more expensive (on top of the 10% tariffs) ? What alternative does the US have to replace our meat and dairy exports in the short term though ? Won't they just have to pay the additional price ?
Commodities are priced in USD, at auctions, we are not a price setter
Yes like the diary auction, demand goes up and less NZD flows to the producer...
the falling NZD has always provided an NZD boast to farmers during past recessions and help NZ big time... without this
We are in serious trouble regionally
You highlight NZ's biggest vulnerability, the over dependence on farmers. But they are generally fleeced by all their suppliers and the banks to hopefully and finally get rich when they sell their farms (if they've been reasonable business managers).
And despite what some say, I don't accept that that money flows all the way through NZ society. Banks and foreign corporations have gotten too good at finding ways to hoover it up, directly and indirectly. In some respect in this the government is complicit.
So why the need? Are advanced bookings sending alarm bells?
Government invests $13.5m to 'turbocharge' tourism marketing | RNZ News
What does tourism do for us really?
Overall I don't believe it raises the wealth of the people or our national resilience.
Certainly if it does it is proven to be at the very lowest level of any sector of the economy. Very hard to see the $13.5m as an "investment".
The projected returns exceed $100 million.
And I rebut that with.....
Flying pigs.
If even a very tiny portion of such projections came to fruition we'd all be rich beyond imagination.
Well, it's a roughly 10% spend on marketing.
The problem with marketing can be it's hard to attribute it directly to sales in some cases.
its called advertising in other businesses?
its tax deductable and not something the government normally pays for.
Generates export revenue, GST receipts, that sort of thing.
You know, the sorts of things we can't seem to do via other alternatives.
Also generates a huge need for more infrastructure, which has a bad habit of needing to be paid for by rate payers often in low population area's. Have a listen to Westlands Mayor on RNZ yesterday.
we need a decent bed tax per day to collect for this
It's nowhere near the infrastructure requirement for permanent residents and citizens. Once the tourist is gone, there's no future retirement and health liabilities for one.
The West Coast had an unusually busy tourist period, because the weather was good there this summer and terrible everywhere else.
It creates jobs in accommodation, events, retail, hospitality and many more industries. Not a bad thing to have money earned overseas, spent into the NZ economy
I don't disagree in principle Yvil, but is it significant enough for the emphasis that is put on it? Tourists increase local costs for regional and municiple authorities, which impact the people, for which they are generally not compensated for. Last year it was identified that foreign tourists raise the cost of maintaining our national parks, but DoC is not funded for that.
average wages are low and often staffed by migrants on work visa. we need to house school and provide medical services for
As we do for a raft of low paid vocations
Many which earn no export revenue at all
So it's a case of wanted: an economy with nothing but high paying export jobs. Someone should get on that.
Luxy Growth Growth Growth
Hippy Borrow Borrow Borrow
place your bets
People seem to want it all.
Pretty obvious by now that globalisation was going to impact incomes in the West. We got *some* high paying service jobs, but not enough, while still requiring a decent amount of menial low paying work.
Just like Brexit produced a populist fueled basket case, we'll likely see the US show the rest of us you can't get back what you've lost.
we'll likely see the US show the rest of us you can't get back what you've lost.
And Chinese middle class blew all the gains on a Property Ponzi, and they are now all financially ruined at the exact point they need domestic spend to help economy due to reduced exports. Local gov in China now also bankrupt as no property taxes coming in from developers.
The entire world owes more then can be paid back
How about borrow to grow, borrow to grow, borrow to grow ?
it only works if the growth funds the borrowing, new hospitals? education? roads ? I doubt roads unless the tolls are going to be $50 a turn
Did we not learn during covid that mass tourism was not the way to go and vowed to change our customer type?
My bet is that mass tourism is coming to an end and we are going to see it soon - the adverting suggest to me its already being seen in fwd looking data.
..and there we have it -
Air NZ also noted that recent US tariff announcements "have also added uncertainty to the broader demand environment".
"While no material changes in bookings or cargo have been observed, the company is closely monitoring the situation."
Air New Zealand says profits may drop by as much as a third | interest.co.nz
What does tourism do for us really?
Overall I don't believe it raises the wealth of the people or our national resilience.
Sell a product and it will be used for a time, but sell an experience, and this will keep on giving the more you can offer it to, over and over again.
You're talking about the people who are coming here not the 'wealth' that is returned to us, as a nation or individually.
Yes people learn we are decent people, and they learn that NZ has plenty of untapped (relatively) resources, and realise that apart from people being decent we have very little to protect us. More than a few will look on with greed and want to control it all. It's not always an upside!
Business optimism for 2025 dims further
Each month with sponsorship from Mint Design I invite Tony's View readers to give their insights as businesspeople regarding what their concerns are, where they intend spending their scarce cash flow, pricing and employment intentions and so on. Key results from our latest survey include these.
- Businesses have become more concerned about the economy’s growth prospects, the political situation in NZ, and supply chain functioning amidst the tariff war offshore.
- As a result they have cut back on plans for investment in new equipment, intend further stock level reductions, and measures of employment have deteriorated anew.
- Despite the worsening outlook for 2025, the pressure on margins from rising costs is sufficiently great that plans for raising selling prices have increased.
It was never optimism, it was "well it sure as hell can't get worse than this so it's GOT to get better". If you look at the surveys the optimism was in construction last quarter and now in retail. It's switching around depending on who's had the worst most recent quarter. I've said many times the economists who think that an economy can turn around in a couple of quarters even though we haven't even reached the turning point in unemployment - they need to get outside more.
Its the lowering of interest rates, because things are so bad, that's causing optimism, therefore if things get even worse, optimism will be even better!
Shares go up with QE because things are so bad...
IMHO it was all over with QE1 and we are now approaching the event horizon... like it or not a mass liquidation event is coming to town. China is the most visable re property.
More interest rate drops, more QE and more inflation, just a matter of time. How to protect 'wealth' is the biggie.
Regardless of where housing goes, owning ones home is probably one of the better assets to own - investment properties not so much.
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