Economy Watch

US sentiment falls further. China and US trade anti-trade probes. China's profits rise. Countries enact various fuel affordability measures. diesel crisis grows.

Kia ora.

Welcome to Friday’s Economy Watch where we follow the economic events and trends that affect Aotearoa/New Zealand.

I'm David Chaston and this is the international edition from Interest.co.nz.

Today we lead with news we are starting to see economic bite from Trump's war on Iran. There is corrosion everywhere today

The OECD's latest economic update says global GDP growth is expected to hold at 2.9% in 2026 before rising slightly to 3.0% in 2027, driven by strong tech investment and easing tariffs. But the ongoing Middle East conflict makes these projections wobbly due to the energy market disruptions. Inflation forecasts were revised upward, with G20 advanced economies facing 4.0% headline inflation in 2026 they say, 1.2 percentage points higher than previously anticipated..

They see American GDP expansion go from +2.0% this year to +1.7% next year. For China, they see a shift from +4.4% in 2026 to 4.3% in 2027. For Japan, it is stable at +0.9% in both years. Their forecast for Australia in +2.3% growth this year, +2.4% next years,

Back in the US, jobless claims dipped last week, but not by as much as seasonal factors would have indicated. There are now 2.04 mln people on these benefits, down from 2.07 mln a year ago but up from 1.8 mln two years ago.

Meanwhile the Kansas City Fed March factory survey was positive again in March, for a second consecutive month. The month-on-month indexes were all positive except for new export orders.

The overnight US Treasury 7yr  bond auction brought similar results to the earlier 2 and 5 year events - lower offer volumes and much higher yields. This latest 7 year bond had a median yield of 4.19%, up from 3.74% at the prior equivalent event a month ago. Bad management brings higher risk premiums.

In China, state-owned China Eastern Airlines said it will buy 101 Airbus aircraft in a deal worth about US$16 bln, extending a run of big-ticket Airbus orders by major Chinese carriers. That will juice up Airbus's 2026 order book sharply.

In Singapore, manufacturing production fell by -0.1% in February from a year ago, reversing the +12.9% surge in January. This February result was the first month of decline since August last year, driven by weaker output across nearly all sectors - except electronics.

Overnight, Norway's central bank kept its policy rate unchanged at 4.0%. But they do see a hiking possibility in 2026, a turn from where a cut was more likely.

Global container freight rates rose +5% last week from the prior week, and are also now +5% higher than year ago levels. This latest rise makes these costs up +20% from the end of February. Outbound rates from China were the main driver in these latest rates and the overall index would have been much higher except for the decline in EU to US rates. That trade has shrivelled to a -29% year-on-year pullback. Meanwhile bulk cargo rates rose +3% in the past week but are -22% lower than year-ago levels.

The UST 10yr yield is now just on 4.42%, up +9 bps from yesterday at this time and its highest since July 2025. 

The price of gold will start today down -US$173 from yesterday at US$4383/oz. Silver is down -US$4.50 at US$68/oz.

American oil prices are up +US$4.50 at just over US$94.50/bbl, while the international Brent price is up +US$7 at just on US$108/bbl. Ship transit traffic in the Strait of Hormuz, already low, has dried up again.

The Kiwi dollar is -50 bps lower against the USD from yesterday, now at 57.7 USc. Against the Aussie we are unchanged at 83.6 AUc. We are down -50 bps against the yen. Against the euro we are -30 bps lower at just on 50 euro cents. That all means our TWI-5 starts today down -40 bps at just on 61.6.

The bitcoin price starts today at US$68,909 and down -3.6% from this time yesterday. Volatility over the past 24 hours has been moderate at just under +/- 2.1%.

You can get more news affecting the economy in New Zealand from interest.co.nz.

Kia ora. I'm David Chaston and we’ll do this again on Monday.

Kia ora.

Welcome to Thursday’s Economy Watch where we follow the economic events and trends that affect Aotearoa/New Zealand.

I'm David Chaston and this is the international edition from Interest.co.nz.

Today we lead with news there is a general relief rally underway as the US indicates it is pulling back from its aggressive tactics with Iran. Trump seems to be 'declaring victory', but the Iranians seem to have given up nothing he sought. The Iranians are letting non-combatant ships pass through the Straits of Hormuz on their terms and schedule. They are also continuing active attacks on their foes.

Even if "it is over", the echo of sharply higher inflation will linger. Yes, oil prices have pulled back but they remain more than +50% higher than at the start of Trump's crazy adventure. Benchmark interest rates are higher too. Wall Street is down a net -5% even after today's rally. 1500 civilians were killed in Iran in these attacks, 18,500 injured. The US seems to have revealed it is relatively impotent to impose its will, even with apparent overwhelming force. Certainly when applied incompetently.

Meanwhile, US mortgage applications fell sharply for a second week, due to mortgage interest rates rising to a five month high. Refinance activity was hit particularly hard, but even if that wasn't the case, there was a notable retreat for new purchases too. That is two consecutive weeks of -10% reductions and that is the sharpest two-week retreat since December 2024.

US crude stocks rose again last week and their fifth consecutive weekly rise, the longest stretch since early 2024. Meanwhile petrol inventories fell for a sixth consecutive week. This allowed pressure on US pump prices to rise +34% in a month. So they have an odd combination of plenty of crude oil stocks, and sharply rising energy inflation. Grifting at its best.

In an item we don't usually report on, a jury in New Mexico has found both Meta and YouTube liable in a first-of-its-kind lawsuit that aimed to hold social media platforms responsible for addiction harm to children using their services, awarding US$3 mln in damages.

Yesterday we noted the sharp rise in yields at the US Treasury two year Note auction. Today there was a similar one for the five year equivalent. And it too brought a dramatically higher yield - 3.92% up from 3.56% at the prior equivalent event a month ago. Demand was less for this one too, but not as dramatically as for the two year

In China, we should note that after a 21 day suspension, state owned shipping line COSCO is taking bookings for China to Middle East destinations again.

In Germany, their widely-watched Ifo Business Climate Index dropped in March to its weakest reading since February 2025, as the Middle East conflict dampened economic sentiment.

In Australia, February CPI inflation was reported as 3.7%, a marginal dip from 3.8% in January. Most sub-categories dipped, except the housing category which rose at the rate of 7.2% pa.

The UST 10yr yield is now just on 4.33%, down -8 bps from yesterday at this time. 

The price of gold will start today up +US$132 from yesterday at US$4556/oz. Silver is up +US$3 at US$72.50/oz.

American oil prices are down -US$2.50 at just over US$90/bbl, while the international Brent price is down -US$3 at just on US$101/bbl.

The Kiwi dollar is unchanged against the USD from yesterday, still at 58.2 USc. Against the Aussie we are up +10 bps at 83.6 AUc. We are up +20 bps against the yen. Against the euro we are +10 bps firmer at just on 50.3 euro cents. That all means our TWI-5 starts today up +10 bps at just on 62.

The bitcoin price starts today at US$71.453 and up +2.7% from this time yesterday. Volatility over the past 24 hours has been moderate at just under +/- 2.3%.

You can get more news affecting the economy in New Zealand from interest.co.nz.

Kia ora. I'm David Chaston and we’ll do this again tomorrow.

Kia ora.

Welcome to Wednesday’s Economy Watch where we follow the economic events and trends that affect Aotearoa/New Zealand.

I'm David Chaston and this is the international edition from Interest.co.nz.

Today we lead with news escalation in the Middle East is rising as the US is increasingly desperate to extract itself. Through all this it is adding more troops as Iran widens its attacks. It looks grim.

But first up today we should note that the overnight dairy Pulse auction delivered slightly lower prices across the four commodities offered, all down about -3% in USD, marginally less in NZD.

In the US, while everything else is in flux, there is widening concern about private credit 'cockroaches'. We first noted the issues with Blue Owl funds. But it seems many more of these opaque funds have severe valuation issues. Funds managed by some very big names have been limiting withdrawals and investors clamour to exit their exposure. A list of troublesome funds include those managed by Goldman Sachs, JPMorgan Chase, Morgan Stanley, Blackrock, Apollo, Ares, and Blackstone. There are others of course. Limiting or stopping redemptions on funds that have dodgy valuations is a terrible signal.

Staying in the US, the weekly ADP pulse data delivered little-change from the prior week, a minimal +10,000 job increase.

The Richmond Fed's regional factory survey reported an improvement in their region in March, built on better order levels, an easier ability to pass on price increases, and a lower cost pressure. Despite all that, things are still net-negative. However their services survey is no longer negative (although it isn't positive either).

In Canada, small business sentiment took a hit in March, but it is still net-positive

There were many early March PMIs out overnight and the one for the US was weaker with weakened output growth and sharply higher prices following the outbreak of war in the Middle East. This survey is now at an eleven month low.

In Europe, this same survey shows Eurozone output growth slowed as input cost inflation hits its highest level for over three years.

India is reporting higher inflation and lower growth. Japan is reporting a slowdown in March too. And Australia reported a sudden contraction, their first in 18 months. In all PMIs released so far, the factory sectors are seeing less negative impact than the services sectors, where the effects are more immediate.

Taiwan reported a more 'modest' (for them) increase in industrial production in February, up +18% from a year ago. They also said their retail sales jumped an outsized +7.7% in February from a year ago, ending a long run of modest improvements.

We should note that the sharp restriction on sulphur exports from the Middle East is really juicing up the price of this commodity essential for phosphate fertiliser production, competing with mining demand for the remaining limited supply. Sulphur prices are now +40% higher than at the start of 2026 and +27% higher than the pandemic peak which was the prior record high.

The UST 10yr yield is now just on 4.41%, up +7 bps from yesterday at this time.

The price of gold will start today up +US$38 from yesterday at US$4424/oz. Silver is actually up +50 USc at US$69.50/oz.

American oil prices are up +US$3 at just on US$92.50/bbl, while the international Brent price is now just on US$104/bbl. And it will be no surprise to learn that jet fuel prices are leaping, globally.

The Kiwi dollar is softer against the USD from yesterday, down -30 bps at 58.2 USc. Against the Aussie we are unchanged at 83.5 AUc. We are down -40 bps against the yen. Against the euro we are -30 bps lower at just under 50.2 euro cents. That all means our TWI-5 starts today down -30 bps at just on 61.9.

The bitcoin price starts today at US$69,569 and down -1.4% from this time yesterday. Volatility over the past 24 hours has been modest at just over +/- 1.5%.

You can get more news affecting the economy in New Zealand from interest.co.nz.

Kia ora. I'm David Chaston and we’ll do this again tomorrow.

Trump chickening out on Iran strategy. US data soft. EU sentiment dives. Moderates start to win again in Europe.