Economy Watch

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 investors are ignoring big (geopolitical) risks by taking even bigger new tech risks.

On Wall Street, tech firms are reporting a profit gusher. Google (+81% rise in profits), Amazon (+56%) and Microsoft (+24%) delivered bonanza profit results yesterday, crediting AI for these outsized results. Meta was up too (+61%), but held back by a misfiring AI strategy that will require huge new investment. The positive results will likely boost valuations ever higher. In fact, Big Tech has committed to US$750 bln in new spending in the sector.

And this impulse is a big part of driving US economic activity which expanded +2% in Q1-2026 in their initial estimate, up from a modest +0.5% gain in Q4-2025 (which was revised lower at each subsequent update). However the current result was below market expectations of +2.3% growth. The outcome was driven primarily by AI investment, but also exports, and both consumer and government spending.

But their PCE inflation was reported for March at its highest in more than two years at 3.5%, with +0.7% of that coming in March alone, the steepest monthly increase since the pandemic distortions. Almost certainly April will have been higher, and probably by some margin.

Personal income, before adjusting for inflation, rose +4.2% while personal spending rose +5.4%. No wonder most Americans don't feel like they are making economic progress - although Big Tech won't feel the same way.

US initial jobless claims came in at 180,000 last week, a decrease and by more than seasonal factors would have indicated.

But although it was expected to continue to expand, in fact the Chicago PMI slipped into contraction in April. This unexpected shift was driven by a drop in new orders and a sharper than expected rise in input costs.

In Japan, retail sales (+1.7% vs expectations of +0.8% year-on-year) and industrial production data (+2.3% vs +0.4% in February) out yesterday for March were much stronger than any analyst was expecting. But it was only for March, and questions linger about their April data. Still it is better to lead into that with a good prior month.

There were two factory PMI surveys out for China yesterday. The official one has it expanding marginally slower and at a quite modest rate. The unofficial S&P Global version reported a slightly stronger expansion. The official services PMI showed a slightly larger contraction after the surprise tiny March expansion.

In Taiwan, they also reported GDP and it will be no surprise that it was a strong +13.7% growth, well exceeding the expected +11.3% expansion.

The EU said they expect April CPI inflation to come in at 3.0%, up from +2.6% in March and all driven my higher energy costs.

The ECB reviewed its monetary policy settings overnight and left its policy rate unchanged, as expected. (The English central bank did the same.)

In Australia, CoreLogic said its Home Value Index rose by +0.3% in April, slowing from a +0.6% increase in March and this latest level is the weakest growth in nearly a year. But values are now falling in the nation’s two largest property markets and they are easing in every other capital city. The prospect of another rate hike next Tuesday isn't helping.

Global container freight rates were little-changed last week from the prior one, and are now +6% higher than year-ago levels. There were few notable regional route changes. And bulk freight rates also held unchanged over the past week although at a high level. From a year ago these rates are up +90% however.

The UST 10yr yield is now just on 4.39%, down -2 bps from this time yesterday. 

The price of gold will start today up +US$72 at US$4616/oz. Silver is up +US$3 at just under US$74/oz.

American oil prices are down -US$3 at just on US$103.50/bbl, while the international Brent price is down -US$9.50, and now at US$109/bbl.

The Kiwi dollar is back up +50 bps from yesterday at this time at 58.9 USc. Against the Aussie we are up +10 bps at 82 AUc. Against the euro we are up +30 bps at just on 50.3 euro cents. That all means our TWI-5 starts today at just under 62.2 which is up +30 bps from yesterday.

The bitcoin price starts today at US$76,167 and up +0.3% from this time yesterday. Volatility over the past 24 hours has been modest at just under +/- 1.2%.

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 financial markets are starting to see the international geopolitical risks as something that can undermine their bull run. The oil price rises caused by Trump's Gulf War are messing with the outlook in a much more visible way today.

But first, in the widely expected result, the US Federal Reserve held its benchmark policy rates unchanged at 3.75%, in a 8-1 vote with only Trump's insert wanting a lower rate. Three other members abstained, not supporting language that wanted to lower the easing bias included in the Statement. This is likely the last meeting Powell will lead, although he said he will stay on as a Governor "for a period of time". His term officially ends in January 2028.

Benchmark yields rose, the USD rose, and stocks fell on the news.

US mortgage applications fell -1.6% last week even though benchmark interest rates hardly shifted. The fall affected both refi activity and new home purchases.

US durable goods orders rose +0.8% in March on a seasonally adjusted basis, to be +2.8% ahead of year ago levels. But with US producer prices up +4.0% in the same period, this isn't a 'real' increase.

But there was a big jump in US housing starts in March, up to just over a 1.5 mln annual rate and up more than +10% from February -  and to its highest level since December 2024.

The US trade deficit rose +5.3% in March from February to -US$88 bln for the month, about the level expected.

And US authorities reported that their crude oil stocks dived -6.3 mln bbls last week, and their petrol inventories fell by a similar very large amount. This had a dramatic impact on the WTI crude prices, which jumped

In Canada, their central bank also held its policy rate at 2.25%, also as expected. Some observers saw the review as hawkish, with rate hikes coming sooner than previously expected.

In Singapore, they reported a sudden and very dramatic jump in producer prices for March, up +21.6% from the same month a year ago, with oil-related prices up more that +60% in March from February.

Germany said its April CPI inflation will be +2.9%, all due to higher energy costs.

Global data out for March air travel revealed an overall +2.1% rise, but international travel dropped -0.6% while domestic air travel rose +6.5%. A large part of the reason was the sudden sharp drop in the Middle East (down -60%). Asia Pacific travel rose +11.5% in the month. Australian domestic travel was up +8.8%.

Meanwhile air cargo activity was severely disrupted by the Middle East conflict and Trump's Gulf War in March. It fell -4.8% overall, with international cargo demand down -5.5%. Asia Pacific demand was up a modest +5.5%, but North American air cargoes fell -1.5% and Middle East cargoes fell -55%. April is likely to be much worse.

Most airlines are cutting flight capacity as the fuel price and availability situation worsens sharply. April data will be bad. May likely even worse.

The UST 10yr yield is now just on 4.41%, up +6 bps from this time yesterday.

The price of gold will start today down -US$56 at US$4543/oz. Silver is down -US$2.50 at just over US$71/oz.

American oil prices are up +US$6.50 at just on US$106.50/bbl, while the international Brent price is up +US$7.50, and now at US$118.50/bbl.

The Kiwi dollar is down -50 bps from yesterday at this time at 58.4 USc. Against the Aussie we are down -10 bps at 81.9 AUc. Against the euro we are down -10 bps at just on 50 euro cents. That all means our TWI-5 starts today at just under 61.9 which is down -40 bps from yesterday.

The bitcoin price starts today at US$75,931 and down -0.3% from this time yesterday. Volatility over the past 24 hours has been modest at just under +/- 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.

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 of fractures emerging in the closure of the Strait of Hormuz, and of OPEC itself.

But first up today there was a dairy Pulse auction, but this one bringing few changes from the prior week's full event. Prices for butter, SMP and WMP were little-changed. But the AMF price did fall -4.4% to its lowest of the year so far.

In Australia, it is worth noting that bond markets are in full bear more. They have driven their AGB benchmark 10 year bond yield to a 15 year high (price to a 15 year low), and these movements are replicated across the whole maturity curve. Expectations are high that the RBA is about to tackle inflation head-on with purposeful monetary policy actions starting next week. And there is spillover to New Zealand benchmark rates too.

In the US, their weekly ADP employment report signaled a third week of good payroll gains in the private sector.

And the Conference Board's survey of consumer sentiment was marginally better than expected in April. Most aspects deteriorated in this latest survey, except the labour market conditions that the ADP signals have licked up.

It was similar for the Richmond Fed's factory survey which was little-changed but with a hint of positiveness. And the Dallas Fed services survey was marginally less negative.

Across the Pacific, the Bank of Japan kept its short-term policy rate unchanged at 0.75% at its April meeting overnight, leaving borrowing costs at their highest level since September 1995. The widely expected decision passed by a 6–3 vote, amid uncertainty over the Iran conflict and surging energy prices. The three dissenters wanted a hike to 1.0%. In its quarterly outlook, the central bank raised its FY2026 core inflation outlook to 2.8% from 1.9%, citing higher crude oil prices that likely push up energy and goods costs. Overall, this review was more hawksih than expected.

Korean manufacturing business sentiment rose in April to its highest since June 2024, with improvements across the board.

India's industrial production is settling in with a growth rate of about 4%, the March level which it has been at (or above) for eight of the past nine months.

In Europe, their has been a very big jump in inflation expectations. Eurozone median inflation expectations for the next 12 months jumped to 4.0% in March in the latest ECB survey, the highest level since October 2023 and up sharply from 2.5% in February. This was the largest monthly increase since early 2022, when Russia’s invasion of Ukraine disrupted energy markets.

The UST 10yr yield is now just on 4.35%, up +1 bp from this time yesterday.

The price of gold will start today down -US$83 at US$4599/oz. Silver is down -US$2 at just under US$73.50/oz.

American oil prices are up +US$3 at just on US$100/bbl, while the international Brent price is up +US$2, and now at US$111/bbl.

And the UAE announced overnight that it is quitting OPEC, chafing at the export restrictions the cartel uses to manipulate prices. Some wee this as the beginning of the end of OPEC. We should also probably note that a Japanese supertanker has transited the Strait of Hormuz - with Iran's permission and in defiance of the US blockade.

The Kiwi dollar is down -20 bps from yesterday at this time at 58.9 USc. Against the Aussie we are down -30 bps at 82 AUc. Against the euro we are down -10 bps at just on 50.3 euro cents. That all means our TWI-5 starts today at just under 62.3 which is down -20 bps from yesterday.

The bitcoin price starts today at US$76,178 and down -0.8% from this time yesterday. Volatility over the past 24 hours has been modest at just under +/- 1.2%.

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 oil prices are rising as 'peace talks' stall. And the German Chancellor has said the US is being 'humiliated' by Iran.

In the US, the Dallas Fed factory survey shows activity continued to rise in April but that their new orders index plummeted sharply into contraction territory. Their shipments index fell into negative territory for the first time this year, while perceptions of broader business conditions continued to worsen notably in April.

There were two large US Treasury bond auctions earlier today and while the yields achieved were little different to those at the prior equivalent events a month ago, there was a notable riser in demand. The 2 year bond brought +8.7% more bid value, and the five year +1.8% more. Together that was +US$18 bln more.

Canada has launched a new sovereign wealth fund, seeding it with an initial C$25 bln funding.

We should note that Moody's has upgraded China's A1 credit rating outlook to 'Stable' from 'Negative' from its last change in December 2023.

Despite the Middle East headwinds, China’s industrial profits were +15.5% in Q1-2026 than in the same period in 2025. This maintained the good expansion in January and February. SOE profits rose +10%, local private forms were up +25%, but foreign firms in China hardly managed any increase. A large part of the result has been the huge profits their metals industry is winning, especially for rare earth minerals.

Taiwanese consumer sentiment edged up in April, but only marginally from its very low level. It is still basically at its lowest since January 2023.

In Malaysia, a sharp rise in oil prices in March turned their overall producer price deflation into inflation. It is sure to get sharper in subsequent months.

Meanwhile in Singapore industrial production rose sharply in March, up +10% from the same month a year ago after the very lackluster February result.

In Germany, the GfK Consumer Climate Indicator dropped in May more than expected and to its weakest level since February 2023. Mounting pressure on households from rising energy prices has pushed inflation higher and sentiment lower.

The UST 10yr yield is now just on 4.33%, up +2 bps from this time yesterday. 

The price of gold will start today down -US$28 at US$4681/oz. (If you buy gold, it might just be supporting a criminal supply chain.) Silver is little-changed at just under US$75.50/oz.

American oil prices are up +US$2.50 at just under US$97/bbl, while the international Brent price is up +US$3.50, and now at US$109/bbl. A week ago these prices were US$84.50/bbl and US$91/bbl respectively, so a big net rise. And we should note that the Russian benchmark (Urals) oil price has eased by -US$1.50 to US$106/bbl

The Kiwi dollar is up +30 bps from yesterday at this time at 59.1 USc. Against the Aussie we are up +10 bps at 82.3 AUc. Against the euro we are up +20 bps at just on 50.4 euro cents. That all means our TWI-5 starts today at just on 62.5 which is up +30 bps from yesterday.

The bitcoin price starts today at US$76,753 and down -1.8% from this time yesterday. Volatility over the past 24 hours has been modest at just under +/- 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.

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 the breakdown of free passage in the Strait of Hormuz seems to have others considering the possibilities. Even if it isn't a formal idea, an Indonesian minister has wondered out loud about tolling the Malacca Strait.

And there is no indication of progress on re-opening the Strait of Hormuz. It is still a deadly no-go zone with no end in sight. Only bad news from the Persian Gulf.

In the US, actual initial jobless claims fell last week by -9,700 from the prior week. But this was less than the -16,000 seasonal factors would have expected. There are now 1,863,000 people on these benefits, less than the 1,880,000 a year ago but more than the 1,780,000 two years ago.

There was positive news from the US 'flash' PMIs for April. The factory version is expanding faster and is at a four year high. Their services sector is expanding again in a modest way after the March contraction.

But the April factory survey by the Kansas City Fed reported no improvement from the modest expansion in March.

However, the Chicago Fed's National Activity Index was notably lower in its latest update, reporting its biggest drop of the year.

And if you are working for the "Magnificent7" you may struggle to hold on to your job in the face of some severe downsizing. Meta has announced -10% or 8000 job cuts and said its 6000 open positions would be cancelled. And Microsoft is starting to shrink its large workforce by -7%. "AI productivity" is behind these moves.

Canada said its PPI rose sharply in March, up +7.8% from the same month in 2025, driven by very high metals price increases which were up an eye-watering +23.6% on that same annual basis.

In India, their April 'flash' PMIs reported a fast expansion that actually accelerated in the month, both for services and factories.

In Taiwan, and given earlier data on new orders, it will probably be no surprise to know that their industrial production was up +29% from a year ago, the fastest jump on record there. Their retail sales grew too, a turnaround from prior flat results, but nothing like in their factory sector.

There were 'flash' April PMIs out in Japan yesterday and their factory sector is strengthening (54.9 and a four year high) while their services sector's expansion cooled somewhat (51.2). This report also noted intensified cost pressures.

South Korea reported its Q1-2025 GDP rise at +3.6% from the equivalent 2025 quarter. This was the fastest growth since the fourth quarter of 2021 and exceeded forecasts of +2.7%.

In Europe, their factory sector is doing it tough in April. Eurozone output fell for first time in 16 months as prices surged higher.

In Australia, their S&P Global PMI tracking shows their economy expanding again in April after the surprise March contraction. Their factory PMI is back expanding at a modest pace (51.0) while their services sector is back at a steady state (50.3) after the notable March contraction. They noted rising cost pressures however.

Global container freight rates were essentially flat over the past week, with trans-Pacific rates rising but China-EU rates falling. These are now little-changed from a year ago too, up a minor +3% on that annual basis. But bulk cargo rates rose a sharpish +11% over the past week to be +110 higher than year ago levels.

The UST 10yr yield is now just on 4.33%, up +4 bps from this time yesterday.

The price of gold will start today down -US$54 at US$4682/oz. Silver is down -US$2 at just under US$76/oz.

American oil prices are up +US$34at just on US$96.50/bbl, while the international Brent price is also up +US$4, and now at US$105.50/bbl and back in the range it was during the second half of March.

The Kiwi dollar is down a sharpish -60 bps from yesterday at this time at 58.5 USc. Against the Aussie we are down -40 bps at 82.1 AUc. Against the euro we are down -30 bps at just on 50.1 euro cents. That all means our TWI-5 starts today down -50 bps from yesterday at just on 62 and a two week low.

The bitcoin price starts today at US$77,590 and down -1.8% from this time yesterday. Volatility over the past 24 hours has been modest at just under +/- 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 on Tuesday – because Monday is a public holiday in New Zealand, ANZAC Day.