Economy Watch

Kia ora.
Welcome to Monday’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 all eyes will be on the US tech industry selloff that gathered pace last week, delivering collateral damage to cryptos, and a very volatile ride for precious metals.
But first, this coming week will feature the delayed release of the January US non-farm payrolls report on Thursday (markets expect +70,000), and their CPI report on Saturday (markets expect 2.5%). Deviation from those expected levels will likely have financial market implications.
Australia is set for a busy data week, with releases including household spending, consumer and business confidence, building permits, home loans, and consumer inflation expectations.
In New Zealand the key data this week is for Q4-2025 ready mixed concrete, and migration updates. Plus Q1-2025 inflation expectation data.
China will release its CPI and PPI data on Wednesday (expect 0.4%) as well as January new loan data this week too.
In China over the weekend, their FX reserves got a boost from the weak USD in January which helped boost these by +US$41 bln from December to US$3.4 tln and the highest in more than a decade. That is up from US$3.2 tln in January 2025. They also added to their gold holdings, adding +40,000oz in the month to 74.19 mln oz. That is up +US$1.8 tln in a year.
Also over the weekend, US economic data looked shaky. Initial US jobless claims rose by +22,000 from the previous week to 252,000 on the last week of January, sharply above market expectations of 212,000. There are now 2.215 mln people on these benefits, up +78,000 from a week ago but that is lower than a year ago (2.252 mln), even if it is very much higher than two years ago
US job openings fell by -386,000 to 6.5 mln in December, the lowest since September 2020 and well below market expectations of 7.2 mln.
Job layoffs in January came in at 108,500, the highest level for a January since 2009.
The University of Michigan’s consumer sentiment index rose marginally in February from its record low levels and it was a third consecutive monthly increase. Analysts had expected it to dip again. Despite the improvement, sentiment remained roughly 20% below January a year ago. The gains were driven largely by consumers with significant stock holdings, while sentiment among households without significant equity exposure stagnated at depressed levels. Year-ahead inflation expectations fell sharply to 3.5% from 4.0% in January, the lowest level since January 2025, while longer-term inflation expectations edged up for a second month to 3.4% from 3.3%.
The jobless rate in Canada fell to 6.5% in January from 6.8% in the previous month, undershooting market expectations of 6.8%. But this 'improvement' was only due to fewer people looking for work. Their labour force contracted by -94,000, pushing the participation rate down to 65.0% from 65.4%. They lost -25,000 jobs in the month, interrupting the recent run of gains. But this was driven by a -70,000 fall in part-time jobs whereas full-time positions rose +45,000.
Meanwhile Canadian retail sales data in both November and December came in quite positive.
And their January Ivey PMI remained expansionary, a surprise because it was expected to shift back into contraction.
Japan has been voting in their snap national election. It was essentially a referendum about Sanae Takaichi, a die-hard conservative in the Shinzo Abe mould. She has won convincingly with a rare single-party majority. Actually, it is better that that, a rare two-thirds super-majority.
There was an election in Thailand as well, one where the ruling conservative/royalist/military party won, with 45% of seats decided, plus the proportional representation seats.
At the end of last week, around the world, there were a series of central bank policy updates. The Reserve Bank of India kept its its key policy rate at 5.25% during its overnight February after cutting it by -25 bps at the prior December meeting. This is what was expected.
In the EU, the ECB left its policy interest rates unchanged at its first policy meeting of 2026, on the basis that inflation is stable an within its target policy range. It is the "good place" the central bank wants to see.
The Bank of England left its rate unchanged too, at 3.75%. But that was a close-run thing with a 5-4 vote.
German factory orders surged +7.8% in December from November, defying market expectations for a -2.2% drop and accelerating from November’s marginally revised +5.7% gain. It is up more than +13% from a year ago. It marked the fourth straight monthly increase and the strongest since December 2023.
Australia recorded a merchandise trade surplus of +AU$6.7 bln in December, down -23% from the same month in 2024, taking the full 2025 surplus to +AU$45.0, which in turn was -33% lower than for all of 2024. Exports were $523.2 bln for the year, up only +1%. That gain was only possible because gold exports rose +66% to AU$60.9 bln for the full year. Rural exports rose +13.7% to AU$77.5 bln in 2025. Other mineral export receipts tanked.
The UST 10yr yield is now just on 4.21%, unchanged from Saturday.
The price of gold will start today very little-changed from Saturday at US$4966/oz. Silver is also little-changed at US$78/oz. In China, gold sales to investors topped those for jewelry from the first time in 25 years.
American oil prices are down about -50 USc at just on US$63.50/bbl, while the international Brent price is now just on US$68/bbl. A week ago these prices similar.
The Kiwi dollar is down -10 bps against the USD from Saturday, now just under 60.2 USc. Against the Aussie we are little-changed at 85.8 AUc. Against the euro we are down -10 bps at just on 50.9 euro cents. That all means our TWI-5 starts today just under 63.8, and down -10 bps from Saturday.
The bitcoin price starts today at US$70,693 and up +1.1% from this time Saturday. But it is still down -10% from this time last week. Volatility over the past 24 hours has been modest however at just on +/- 1.9%.
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.

​By Gareth Vaughan
The Reserve Bank of Australia's decision to lift its cash rate 25 basis points this week means it's now 160 basis points higher than the Reserve Bank of New Zealand's official cash rate highlighting differing levels of assertiveness between the two central banks, Imre Speizer, Head of New Zealand Strategy at Westpac, says.
The RBS's cash rate is now at 3.85% with the RBNZ's OCR at 2.25%. Speaking in a new episode of the Of Interest podcast, Speizer says it has been 13 or 14 years since there has been such a gap, with the two economies tending "to cycle together most of the time."
"It comes down to a different central bank approach. The RBA has deliberately maintained a fairly dampened approach to tackling either low inflation or high inflation. So when it has needed to hike or cut, it has done [so] in a very cautious and drawn out manner. And by doing so it hasn't had to flip around as much as the likes of some other countries," says Speizer.
"The central bank of New Zealand has been pretty much an activist in terms of tackling inflation. So when inflation was high in the most recent cycle it went fairly hard and hiked rates a lot to bring it back down again, and that then amongst other things did help to engineer a brief recession."
"It paid a cost to do so but it got inflation under control. Now we're basically coming out of that era and [economic] growth is starting to pick up. And so the Reserve Bank [of NZ] is now faced with the task of thinking well at what point do we need to start thinking about pushing rates up to prevent inflation from running away?"
"I guess it just means the assertiveness of the relative central banks is probably explained [in] why we've ended up with such big differences between New Zealand interest rates and say the Australian interest rate. In time that will rectify itself and will get back to something that looks a bit more normal, I.E. Kiwi rates a little bit higher than Aussie rates. But I think it's going to be some way down the track," Speizer says.
He says lots of people are asking how the cash rate differential between New Zealand and Australia might play out with mortgage rates.
"There shouldn’t be any direct impact if the cause of Australian rate rises is unique to Australia. But much of the time, there is a common global factor at play, so New Zealand rates do follow Australian and US term rates," Speizer says answering a follow-up question to the podcast interview.
"Also, if the strong Australian economy is seen as eventually benefitting New Zealand’s economy, New Zealand term rates could rationally follow Australian rates higher in dampened fashion."
In the podcast audio he also speaks about the direction of swap rates and what it means for mortgage rates, what the yield curve's suggesting at the moment, the outlook for NZ government bonds, the impact the volatility of US President Donald Trump's administration has on the US dollar and financial markets more broadly, incoming Federal Reserve Governor Kevin Warsh, the impact of US government shutdowns on economic data availability, geopolitics and more.​

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 the real economic markers in the world's largest economy painted a very lackluster picture today.
US mortgage applications retreated again last week, for a second consecutive week. But these are still running well above year-ago levels. The refinance activity retreated but the big fall was for new purchase finance.
Private businesses in the US added just +22,000 jobs in January according to the comprehensive ADP survey, (sample size of 26 mln) following a downwardly revised +37,000 rise in December and below forecasts for a +48,000 rise. Among these lackluster totals hiring in the health care sectors was a standout, adding +74,000 jobs. It was retrenchment in many others, including manufacturing.
Remember the January non-farm payrolls report won't be released at its usual time on Saturday (NZT) due to the shutdown delays. It will now come next Thursday, February 12 (NZT).
Meanwhile the ISM services sector PMI stayed in relatively good shape in January, although December was revised lower. New order growth slowed however, and price increases, pushed by tariff-taxes, rose.
This is not translating into consumers buying cars at a higher rate. In fact, in January the annualised rate was only 14.9 mln vehicles, the slowest month since December 2022, and -4.1% lower than in January 2025.
In China, and unlike the official January services PMI which was more negative, the private S&P Global version is more positive. The RatingDog China General Services PMI rose in January to a better expansion, from December’s six-month low and better than market expectations. It's the strongest expansion in their services sector since October, driven by stronger growth in new orders, and a fresh increase in foreign sales.
Meanwhile China said its fiscal revenue fell in 2025 for the first time since the pandemic. Sharp falls in non-tax takings outweighed a modest recovery in tax revenue.
In Europe, the surging value of the euro helped push down their January CPI inflation level to 1.7%. Food, however, was up 2.7%.
Australia released some living cost indexes yesterday, following the overall 3.8% December CPI. They say living costs for 'employees' rose just +2.2% in the year to January, but for 'aged pensioners' it was up +4.2%.
The UST 10yr yield is now just on 4.27%, down -2 bps from this time yesterday. The key 2-10 yield curve is still at +71 bps.
The price of gold will start today down -US$120 from yesterday at US$4860/oz. Silver is down -US$1 to US$85.50/oz. Some non-precious metals are lower too.
American oil prices are up a bit less than +US$1 at just under US$63.50/bbl, while the international Brent price is now just on US$67.50/bbl.
The Kiwi dollar is down -60 bps against the USD from yesterday, now just over 59.9 USc. Against the Aussie we are down -40 bps at 85.8 AUc. Against the euro we are also down -40 bps at just on 50.8 euro cents. That all means our TWI-5 starts today just under 63.6, and down -50 bps from yesterday.
The bitcoin price starts today at US$72,550 and down another -3.3% from this time yesterday, and falling. The last time it was this low was in November 2024. Volatility over the past 24 hours has been moderate at just on +/- 2.6%.
Please note that it is a public holiday in New Zealand on Friday, Waitangi Day. This podcast will not be published on Friday, but will return on Monday.

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 gold and silver are currently experiencing the volatility we saw with bitcoin in 2024/25. Meanwhile, bitcoin is being dumped heavily today.
Today starts with a series of unfortunate delays. The overnight dairy auction has concluded after an extended delay, but there is further delays in reporting the outcome. We will update this item when those results come through.
And there are delays in some key US data due to the snap federal government shutdown. We expected to report the December JOLTs report today but it is in abeyance now. And the January non-farm payrolls report will get delayed as well for the same shutdown reason.
But we did get US logistics data overnight, their LMI. This rose because first started building inventories in the way they did in January a year ago, but not excessively. Of note however is that inventory costs rose a sharp +8.4% this year, which will no doubt focus management minds.
There was a secondary survey out overnight on economic optimism in the US and that was moderately positive. The RealClearMarkets/TIPP Economic Optimism Index rose to its highest since August and above expectations. But to be fair it is still below the 2025 average and -6% lower than its year-ago level. But at least it is off its November low.
In Canada, their large aircraft manufacturing industry is holding its breath. The Trump FAA is withholding technical certification for new-built Canadian aircraft, waiting for the president to decide on the issue.
There was an unusual and notable rise in consumer sentiment in Taiwan in January, to its highest level in nine months. It is back up to mid-2023 levels after a general decline that started in September 2024.
And China warned Panama there would be "heavy prices" to pay after a court ruling in Panama annulled Hong Kong-based CK Hutchison's contract to operate two ports at the Panama Canal. This reaction will have relevance for the Darwin port issue, where a new 99 year lease owned by a Chinese firm is under threat of annulment too.
In Germany, and despite solid demand holding up, investors there are expecting and getting higher risk premiums for their government 30 year bond. It yielded 3.55% today, its highest in 15 years. Its 10 year bond is almost at 2.90%, and also near its 2011 levels. Germany plans to raise more than €500 billion this year to fund infrastructure upgrades and for defence spending. But most other European countries are doing the same, and that is driving up yields.
In Australia, and as expected, the RBA raised its policy rate by +25 bps to 3.85% and ending its shortish easing cycle. Most big banks there have already announced a full pass-through to their home loan and business lending rates. The RBNZ reviews its policy rate on February 18, 2026 but is not expected to make any changes to its 2.25% rate at that time.
The UST 10yr yield is now just on 4.29%, up +2 bps from this time yesterday.
The price of gold will start today up +US$273 from yesterday at US$4980/oz. Silver is up +US$8 to US$US$86.50/oz. Some non-precious metals are bouncing back sharply too.
American oil prices are up +50 USc at just over US$62.50/bbl, while the international Brent price is now just over US$66.50/bbl.
The Kiwi dollar is up +40 bps against the USD from yesterday, now at 60.5 USc. Against the Aussie we are down -10 bps at 86.2 AUc. Against the euro we are up +30 bps at just on 51.2 euro cents. That all means our TWI-5 starts today just under 64.1, and up +30 bps from yesterday. And the Chinese yuan is at its strongest level against the US dollar since 2023.
The bitcoin price starts today at US$74,990 and down -5.0% from this time yesterday, and falling. The last time it was this low was in mid November 2024. Volatility over the past 24 hours has been modest at just on +/- 1.7%.
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 Tuesday’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 commodity prices are still falling after last week's crazy surge. The retreats are widespread and substantial. Oddly, it isn't having much effect on commodity-based currencies however.
But first today, the January factory PMIs for the US were positive, based on good new order growth. The closely-watched local ISM version expanded for the first time in 12 months, preceded by 26 straight months of contraction. Prices rose sharply for both inputs and outputs, and some buying appears to be to get ahead of expected price increases due to ongoing tariff issues, they said.
Meanwhile the S&P Global factory PMI came in with similar trends, finding rises in production when sales growth was subdued. These two surveys are positive, but we should remember that January is "reorder month" and with the tariff threats lingering, it might mean this distortion is playing an outsized role.
In China, their PMI's trends were not too different from the US, even if they were in contrast to their official version. They reported an expansion in production at a faster pace amid higher new orders. Employment rose Output charges increased for the first time in 14 months.
In Taiwan, their factory sector recovery gathered pace in January, but cost pressures intensified.
In Singapore and Malaysia, they recorded a January uptick, but the expansions there are still modest in their factory sectors.
India and the US announced an agreement to lower tariffs and lower the temperature in their trade disputes. Given that India's exports to the US were already rising even with the higher tariff's, this is likely to be a substantial boost for India.
Back in the US, and under the radar, they have entered a new federal government shutdown, with layoffs. This one is expected to be short because a deal between Congress and the White House seems to be in effect. But it will delay this weekend's non-farm payrolls report announcement.
In Australia, Cotality said low supply levels, first home buyer incentives and a resilient labour market are combining to keep house prices rising. They are up +9.4% nationally from a year ago. But there is wide variation. They said mounting affordability and debt headwinds are butting up against 'fragile sentiment'. This is especially true where the prices are highest, in Sydney and Melbourne, where prices rose only +6.4% and +5.4% in January from a year ago, the least of any major city. The median house price in Sydney is now AU$1.29 mln (NZ$1,5 mln). It is now also above AU$1 mln in Brisbane at AU$1.055 mln (NZ$1.22 mln).
The UST 10yr yield is now just on 4.27%, up +3 bps from this time yesterday.
The price of gold will start today down -US$183 from yesterday at US$4707/oz. Silver is down -US$6 to US$US$78.50/oz. Non-precious metals are falling hard too.
American oil prices are down -US$3 at just underer US$62/bbl, while the international Brent price is now just on US$66/bbl.
The Kiwi dollar is down -20 bps against the USD from yesterday, now at 60.1 USc. Against the Aussie we are also down -20 bps at 86.3 AUc. Against the euro we are up +10 bps at just on 50.9 euro cents. That all means our TWI-5 starts today just under 63.8, and down -10 bps from yesterday.
The bitcoin price starts today at US$78,946 and recovering +2.0% from this time yesterday. Volatility over the past 24 hours has been high at just on +/- 3.0% with all the fall coming yesterday.
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.