Here's our summary of key economic events overnight that affect New Zealand, with news that gold is rising, being the 'last man standing' as a perceived safe-haven asset. And American bond funds are having a moment, a negative one. Outflows are continuing, building selling pressure at the rate of about US$10 bln per week and have done so for the past five weeks now.
The position of the US dollar and US Treasuries are being directly undermined by the US president. He and his advisers have been raging about the role of the Fed boss. If he tries to remove him, expect a larger market reaction, especially from the bond market. But so far it is all bluster.
But first, it will be a short, truncated week post-Easter with just three business days until Friday's ANZAC Day holiday. Our March export results are one of the few data releases. We will also get an update this week from the RBNZ's six-monthly credit conditions survey.
Internationally, we will get the start of the March 'flash' PMIs for April. Wall Street will continue with its early earnings season results, dominated this week by big tech. US durable goods orders for March, and confidence survey results for April are also due for release this week.
Over the weekend China left its key lending rates unchanged for the sixth consecutive month in April. After that, the yuan rose as did the Hong Kong and Shanghai stock exchanges. Expectations for a reserve ratio cut to boosrt bank liquidity are mounting there.
China ramped up its budget spending in the first quarter at the fastest pace since 2022, allocating nearly 22% of planned outlays to counter weakening foreign demand amid an ongoing tariff war. The move is part of a broader strategy to boost domestic demand and support industries hit by trade tensions.
Earlier they said foreign direct investment into the country is struggling again. In January it was down -14% from a year ago to ¥13.4 bln in the month. It rose to ¥16.6 bln in February, a +16% year-on-year gain. But in March it was only ¥6.9 bln, a -45% drop from the same month a year ago. China prefers to look at this data "year-to-date" but that masks the current weakness.
Japanese CPI inflation stayed high in March although it did slip to 3.6%, and the second consecutive decrease and the lowest of 2025.
Across the Pacific, the US dollar has fallen to a three year low. Sentiment is being undermined by the Trump attacks on the US Fed. And it seems pretty clear that the US in now in a tariff-tax recession. Not only is the Atlanta Fed's GDPNow signaling a -2.2% economic contraction, the blue chip 'consensus' forecasts are now showing up with contraction forecasts too. And the spread into investors funds is happening rather quickly now. 90 of the top 100 best-performing exchange-traded funds of last year are down in 2025, with an average loss of -13%, according to Bloomberg Intelligence.
American new housing starts unexpectedly dropped -11.4% in March from February to an annualised rate of 1.324 mln, the lowest level in four months and virtually the same as the same month a year ago. But the expectation is that these will fall from here as new-builds get much more expensive from the tariff-tax effect.
US initial jobless claims came in at 220,000 last week, an increase although less of an increase than seasonal factors would have anticipated. But that puts them +5.1% higher than year-ago levels.
Diving even more is the Philly Fed's factory survey in the heartland Pennsylvania manufacturing rust belt. This is the icon region the tariff-taxes are supposed to save. But they aren't feeling any benefit - although hardly surprising to everyone but MAGA zealots. New orders dropped to pandemic levels, and apart from the pandemic, the overall sentiment has seen its fastest and steepest drop since these survey records started in the 1970s.
In Canada, they are a week away from their federal election (Monday, April 28, 2025 Canadian time). The polls are tightening but the incumbent Liberal Party still holds a comfortable lead over the Conservatives. Likewise in Australia, their federal election is in the week after that. Polls there also show a comfortable lead for the incumbent Labor Party. In both cases, the conservative forces are undermined by the toxic Trump effect. But on the other side, the Labor Party is wavering in some key heartland Sydney seats, hurt by "the Gaza issue".
In Europe, they are in a better position to cut interest rates because they also don't have the inflation pressures the US has. And they have. The European Central Bank cut its policy interest rates by -25 bps on Thursday, as expected, marking the sixth consecutive cut since June and bringing the key deposit rate down to 2.25%. They say their disinflation process is progressing well and they have now dropped previous references to a "restrictive" policy stance. They also say that their growth outlook has worsened from the escalating trade tensions.
On Thursday, Australia released its March labour market data and there was a good +33,000 rise in new jobs, bouncing back from the February drop. The March data saw the increase evenly split from an increase in full-time jobs and part-time jobs. Their jobless rate unchanged stayed at 4.2%. There are +308,000 more people employed in Australia over the past year, a rise of +2.2%. (New Zealand will release its March labour market data on May 7, 2025 and no-one really expects ours to be flash.)
The UST 10yr yield is now at 4.40%, up +7 bps from this time Saturday. The key 2-10 yield curve has jumped to +66 bps. Their 1-5 curve is now flat. And their 3 mth-10yr curve is a positive +9 bps. The Australian 10 year bond yield starts today at 4.24% and unchanged from Saturday. The China 10 year bond rate is now at 1.66% and up +1 bp. The NZ Government 10 year bond rate is unchanged at 4.53%.
Wall Street is taking it on the chin in its Monday session, down a very sharpish -3.1% on the S&P500, and staying down. The Nasdaq is down -3.6%, the Dow down -3.3%, so a broad retreat. Overnight, European markets were all closed for Easter. Yesterday, Tokyo ended down -1.3%, Hong Kong was closed for Easter, but Shanghai traded up +0.5%. Singapore was closed, as of course were both the ASX and the NZX. All these markets will likely return today in a glum mood.
The price of gold will start today at US$3417/oz, and up +US$90 from Saturday.
Oil prices have fallen (in USD), down -US$1.50 from Saturday to be now just over US$63/bbl in the US and the international Brent price is now just on US$66/bbl.
The Kiwi dollar is now at 60 USc, up +60 bps from Saturday at this time and its highest in six months. Against the Aussie we are up +50 bps at 93.6 AUc. Against the euro we unchanged at just on 52.1 euro cents. That all means our TWI-5 starts today now just under 68 and its highest since mid December.
The bitcoin price starts today at US$86,811 and up +2.6% from this time Saturday. Volatility over the past 24 hours has again been moderate at +/- 2.2%.
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28 Comments
Now for the removal of Fed boss Powell. Just as well the President is infallible.,Some may remember Whoops Apocalypse. Then in a similar vein PM Pork was Superman and self appointed not only Minister of Defence but the entire defence force itself.
Yes history told us this was going to be bad. In a comment I made a few weeks ago I said in his first term Trump was a clown. That was largely because despite what he thought he didn't really understand what he was getting into. the second part of the comment I said he was a clown with a plan. The knowledge he gained in his first term combined with some feedback has truly unleashed his ego and spoilt child persona.
The great concern is that because of the west's history in accepting the leadership of the US we are all vulnerable to every little tribulation that happens in the US.
Throughout these discussions though, there is largely agreement that the US was indeed broken and needed to be fixed. This is through the entrenching of corruption at the highest levels of Government. I'm not sure when America was truly at it's greatest, as you can always point to things they were doing around the world that they shouldn't have been. But from a leadership perspective they've certainly fallen off their dais due to their corruption. Trump is the worst way to try to fix that as all he will achieve is total collapse of the union. At best all we can hope is that they come to their senses and someone does something to remove him from office before that total collapse occurs.
Removing him is potentially even more destructive than leaving him there.
The position of the US dollar and US Treasuries are being directly undermined by the US president.''
This is where DC is consistently wrong (and appears unable/unwilling to alter).
Trump is there because the situation was not as rosy as was being reported. We are watching a global game of bluff, being played with ever-less chairs every time the music stops. Whose proxy gets the remaining chairs? How much of a 'loss' does one take to prolong the game? How long will that appear valid?
Agree fully that Trump is irrelevant - if the dam didn't burst this way, it will burst that way.
He's kerosene at best.
Your quote at the bottom is a bit imprecise. Really it's robbing the future which may not be you. Politicians amongst others could learn that.
US stock markets fell again on Monday morning as Donald Trump continued attacks against the Federal Reserve chair, Jerome Powell, who the US president called “a major loser” for not lowering interest rates.
“There can be a slowing of the economy unless Mr. Too Late, a major loser, lowers interest rates, NOW,” Trump wrote on social media.
In recent days, Trump has amped up attacks against the Fed chair, pushing Powell to lower interest rates to offset the inflationary impacts of the new tariffs.
Trump is pressuring the Fed to cut rates, likely to appease the stock market, which plummeted after he announced his newest slate of tariffs. But Wall Street isn’t taking the bait and appears to be reacting in opposition to Trump’s attacks against Powell and the independence of the US central bank.
A Major loser is not really showing respect.
BRICS: The reports of my death are greatly exaggerated.
A Kiwi's perspective aired in LatAm, with a mind-boggling 78.8% of the global population wanting to board the peace train, and god only knows how many other countries making quiet plans...
https://globalsouth.co/2025/04/21/brics-the-reports-of-my-death-are-gre…
Seemingly obvious now, America wants to renegotiate its global alliances and freeze out China.
Hard to say how many partners will willingly walk away from some fairly entrenched ties.
Many, like us and Australia, export far more to China then the USA.
We cannot stop trading without total collapse.
Clear why Gold is going up.
How many of those exports are for Chinese internal consumption (i.e are they the end user, or intermediary)?
And are trade levels the primary concerns?
Can others gain from barriers to Chinese exporting?
As you know, IT, gold is only "going up" in relation to fiat currencies which are already in their final stages of collapse.
Gold is the only reliable unit of measure humanity has left. Even at today's price, an ounce still buys roughly the same amount of goods and services as it did millenniums ago.
Gold is money - all else is credit - or at least until silver is remonetised which, IMO is not far off becoming a reality.
Bring on the hard-backed BRICS currencies where they will be 40% backed by gold, up to 20 durable commodities, including other PMs, and countries' national reserves will consist of a wide range of assets.
Captain Chao$ has turbocharged the dedollarisation process. The U$ dollar will be the last hegemonic national reserve currency. The proposed BRICS currency, won't be a 'currency' as such - it will be an instrument used only by approved members who will use it to settle trade imbalances.
The vast majority of their trade will be conducted in bilateral trade, outside of the US dollar system. This will bypass the Triffin Paradox and the effect of the incumbent country running consistent trade problematic deficits and the problems that come with this system.
Captain Chao$ wants to have his cake and eat it too - he is about to be served a very painful lesson. He bragged that he had already slayed the BRICS dragon - in fact, all he has done is given it a new lease on life.
https://www.timesnownews.com/world/donald-trumps-big-claim-says-brics-b…
Trump's Repeated Threats To BRICS Nations
Donald Trump, even before taking office, had warned BRICS nations of sweeping tariffs if they launched a new currency. Trump said that the US requires a commitment from the BRICS nations that they will "neither create a new currency nor back any other currency to replace the mighty US dollar."
"There is no chance that BRICS will replace the US Dollar in International Trade, or anywhere else, and any Country that tries should say hello to Tariffs, and goodbye to America!" the US President posted on Truth Social.
~~~~~~~~~~~~~~~~~~~~~~~~~~~
The BRICS has no intention of creating a new reserve currency. It was never part of their plan. Captain Chao$ and his chronies need to learn how to read, instead of simply creating their own delusional fantasies. They will also have to learn to share the global sandpit now, and so we can expect a fireworks show along the way.
The next few weeks could reveal the likely shape of a brand new global financial architecture, especially following what comes out of the July BRICS Summit in Brazil, and when the latest member applications are revealled.
All of the indications are that on a global population basis, 87-90% want to join the BRICS juggernaut. That number assumes that no NATOstan members will jump ship.
With Captain Chao$'s latest behaviour we can no longer rule that posibility out. Kissingers prophetic words may well be ringing in their ears...
"It may be dangerous to be America's enemy, but to be America's friend is fatal."
Cheers
Col
You generally need hyperinflation before a FIAT collapses, and most currencies are quite far from that, even the likes of Turkey or Argentina.
Gold is the place value goes in times of fear, but as a money it's deeply flawed in that people usually don't like to spend it (refer Greshams law), and it usually consolidates in the hands of a few. So expect it's value to rise for a time, then disappear as more profitable uses of value are apparent.
BRICS is flawed due to the power imbalances with China, and the fact it's core members all have some sort of beef with the other (you can't fly commercially from much of India, to much of China, Russia annexed bunch of China in a late WW2 land grab, for instance).
The pieces are all moving around but guessing where they'll land is very problematic.
It feels like no one is going to back down, therefore the S&P500, is going to go down, and a long way... 5,000, is not going to hold here, we are looking way lower.
It's funny how much terror that invokes in people.
Despite how many values there are grossly more than international equivalents.
People spend less if they are more worried about their assets falling in value.
However, I don't believe KiwiSaver delivers sufficient balances for a comfortable retirement. For example, the average balance for those aged 61-65 sits at around $54,000, arguably a small nest egg.
Not a lot to star with....
For sure, much of the economy is about confidence.
Kiwisaver and many other retirement mechanisms are problematic, because they're contingent on continuity of the same system. Or even worse, they're based on lofty future promises of corporates being met.
Recall working in a trading bank in the 60/70s collateral such as share scrip was valued at 33% of NZX price showing. Not without good reason.
https://www.fmcgbusiness.co.nz/letter-to-christopher-luxon-and-barbara-kuriger/
Why shouldnt hard work and risk be rewarded with a fair and modest margin?
There was a good NZ Initiative podcast recently where they discussed the insane planning rules where a new supermarket needs to prove there is sufficient demand in an area for a new supermarket, i.e. that they will not impact on existing businesses.
How can we have a competitive landscape when the local government rules require a newcomer to prove that they won't compete too much?
All Kiwisaver balances (except cash funds) taking an obsolute pummelling and with much more beatings to come.....
So the last and only remaining solid leg of the NZ housing market (FHBs using KS deposits) has been smashed out.......Watch the NZ HOUSING PONZI backslide faster, as it finds a much higher reverse gear!
Good times coming for housing affordability, as prices crash through the lower, previous price level support rungs, towards DTIs of 3x and 4x DTIs.
NZ housing prices to be down yet another -15% by Dec 2025/2026 now guaranteed?
Money back guarantee?
Hell yes SSC....... $100,000 cash back for the FHB (AKA the real estate cannon fodder) as they will pay much less later this year and the next.
Wonderfull!
Enthusiastic reply, love it 😂
NZ housing prices to be down yet another -15% by Dec 2025/2026 now guaranteed?
If the economy is sick enough, sure.
But, the boomers are far less likely to sell their houses than their parents or grandparents.
So that means available houses are more likely to be new, which is only getting more costly.
So a bob either way. Maybe if people wait, then circumstances will go against trend, and be in their favour.
Huzzah!
Will new may not be more costly?
An old clunker can be costly and in many cases are c##p quality.
Deflation is looking likely, (oil price is gonna help), land values may well drop significantly.
On the counter, the govt and banksters will do all they can to keep housing growth.
OCR turning negative and house prices up 7 fold guaranteed?
Anyone can write any rubbish it seems.
Keep the rubbish scralling going Y.
It makes you look really good!
Much further deflation, in NZ housing, is guaranteed from here...... Take your positions now folks!
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