Economy Watch

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 Iran has attacked three ships in Strait of Hormuz and detaining two others so far after Trump indefinitely extended is ceasefire. It is a standoff over Tehran’s closing of the strait and Washington’s blockade that raises doubts about whether talks would actually resume.

The Pakistani mediators are not happy about the disheveled US approach to it all.

In the US, mortgage applications rose last week as mortgage rates dipped slightly. But that was enough to trigger a good rise in both the new purchase activity, and the refinance activity. Modest to be sure, but positive all the same.

American petrol inventories dropped by -4.6 mln barrels last week (even as US crude oil stocks rose unexpectedly), and this followed a -6.3 mln barrels fall the previous week. This was the tenth consecutive weekly fall and way more than the expected -1.5 mln barrels retreat. US petrol prices eased marginally from a week ago - they have stopped rising on a daily basis - but they are still up +35% from the start of the Trump Gulf War. That rise is now embedding.

Today's US Treasury 20yr bond auction brought regular modest demand, if softish, but the median yield rose to 4.84% from 4.77% at the prior equivalent event a month ago. There were similar 20 year German bund auctions overnight too, and yields on them rose similarly although they run about -150 bps lower.

It will be interesting to watch the release of the Tesla financial update later this morning. Their recent production has far outstripped sales, and much lower cost Chinese alternatives are causing them real headaches. Their battery business is also under extreme pressure.

In another odd corporate transaction, it seems the Trump Administration is quite comfortable using taxpayer money 'rescuing' (nationalising) failing airlines, and maybe other struggling businesses. (Apparently the government knows best and can do a better job running these businesses than the private sector. The 'deep state' at work.)

The April EU consumer sentiment survey revealed a sharp fall, suddenly back to levels they were at early 2023. It is a crash reminiscent of the initial pandemic reaction, one that took years to recover from.

In Australia, iron ore major BHP has responded to Chinese state pressure, agreeing to denominate its contracts in Chinese yuan rather than the USD, probably a significant break that will speed the internationalisation of the Chinese currency. It was the 'price' of a month's long standoff.

Sulphur and urea have eased marginally over the past week from record highs, but to be fair the fall-backs are not especially meaningful.

The UST 10yr yield is now just on 4.29%, little-changed from this time yesterday. 

The price of gold will start today down +US$21 at US$4736/oz. Silver is up US$1.50 at US$8/oz.

American oil prices are up +US$3 at just over US$92.50/bbl, while the international Brent price is up +US$3.50, and now at US$101.50/bbl.

The Kiwi dollar is up +10 bps from yesterday at this time at 59.1 USc. Against the Aussie we are up also +10 bps at 82.5 AUc. Against the euro we are up +20 bps at just on 50.4 euro cents. That all means our TWI-5 starts today up +10 bps from yesterday at just on 62.5.

The bitcoin price starts today at US$79,034 and up +4.3% from this time yesterday. Volatility over the past 24 hours has been high at just on +/- 3.1%.

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 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 the US-wished resumption of talks with Iran don't seem to be happening. The Strait of Homuz remains closed, and even if it was re-opened it is never going back to 'normal'. It seems Trump has effectively generated to global push necessary to transition away from fossil fuels. Oil company share prices are retreating. Big investors are trying to offload their coal assets. China's green-tech is in demand everywhere, including in the US. We are now in the age of electricity where demand is surging.

Meanwhile the Warsh confirmation hearings in the US are following the predictable partisan scripts.

But first, today's full dairy auction featured a low amount of product offered and sold. -10% less than for the same week a year ago. Overall prices were down almost -2.75% below the last full auction in USD, down -5.85% in NZD. Northern hemisphere seasonal volumes are rising so global supply is very adequate. The main weakness in today's auction were from butter (-7.9%, AMF (-9.6%) and mozzarella (-3.1%). But WMP basically held its own (-0.6%) and SMP rose (+3.2%). Demand out of China rose, offsetting the unsettled Middle East demand.

In the US there was another strong indicator from the weekly ADP employment report, the second in a row.

And US retail sales came in better than expected for March, up +4.6% from a year ago, about twice the increase as for February. And that is their biggest rise in a year. But of course much of this will be inflation-related and much just came from the spike in retail petrol prices.

US pending home sales were up in March from February although the gain was less than in the prior month. That still leaves these residential real estate sales -1.1% lower than year ago levels.

Taiwanese export orders blew past all expectations yet again coming in at US$91.1 bln for March, up +67% from a year ago and up +18.5% above the prior stunning record high. Adjectives fail to adequately describe what is happening here

The German ZEW sentiment survey fell much sharper than the expected fall in April.

In Australia, the ACCC's court case against supermarket giants Coles and Woolworths regarding deceptive pricing practices over 'specials' is capturing attention.

The UST 10yr yield is now just on 4.29%, up +4 bps from this time yesterday. 

And we should probably note that US private credit funds are about to report their March results and especially in the direct lending sector redemptions are expected to far exceed new investment. It is notable that big-money, wealthy investors are leading the retreat and probably leaving late-arriving retail investors with very damaged positions.

Interestingly, there are similar, although not as severe, pressures in China's private credit markets too.

The price of gold will start today down -US$92 at US$4715/oz. Silver is down -US$3.50 at US$76.50/oz.

American oil prices are up +50 USc at just over US$89.50, while the international Brent price is up +US$3, and now at US$98/bbl.

The Kiwi dollar is up +10 bps from yesterday at this time at 59 USc. Against the Aussie we are up +30 bps at 82.4 AUc. Against the euro we are up +20 bps at just on 50.2 euro cents. That all means our TWI-5 starts today also up +20 bps from yesterday at just on 62.4.

The bitcoin price starts today at US$75,782 and off a minor -0.2% from this time yesterday. Volatility over the past 24 hours has remained modest also at just on +/- 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 Trump's Gulf War is back in escalation mode with the two belligerents' trading harsh rhetoric. Which of course means no oil is getting through. Kuwait has declared force majeure on its oil exports due to the US blockade.

Financial markets are reacting with caution, but it seems they remain ready to push up with yet another 'relief rally' if things calm down again.

Meanwhile. Canada's CPI inflation returned back to its 2.4% pa level where it has been for six of the past seven months and basically where it was in March 2025. But it is up from the unusual February 1.8% level, caused solely by the rise in energy prices.

And the Bank of Canada released two Q1-2026 expectation survey results. The business version reported improved sentiment, with fewer businesses saying they are being affected by trade tensions with the United States, and many expect sales growth to improve. The consumer one said they became less negative about their spending plans than in the previous quarter as downward pressure from trade tensions eased. All the same, it is still quite negative.

China has held its Loan Prime Rate (LPR) benchmarks at record lows for an 11th straight month in April 2026, matching market expectations. The one-year LPR, the benchmark for most corporate and household borrowing, was held at 3.0%, while the five-year LPR, a benchmark for mortgages, remained at 3.5%.

And China’s exports of electric vehicles, solar cells and lithium-ion batteries surged significantly in March, following a sudden spike in demand for green energy products. Their investment in 'green' non-oil alternatives is really paying off for them.

In Malaysia, their exports rose to a three-month high in March, but the rate of increased was lower at +8.3% from a year ago, compared to 10.7% in February.

In Germany, producer prices, which had been falling on a year-on-year basis since March 2025, were virtually unchanged in March (-0.2%), but they rose +2.5% from February as the oil price spike kicked in.

ECB boss Lagarde says they are uncertain how to react to the two threats of higher inflation from the oil shock, and lower growth prospects that result from that. She said the "double uncertainty about the duration of the shock and the breadth of pass-through argues for gathering more information before drawing firm conclusions for our monetary policy". But she also warned that if governments 'support' consumers with generous programs, their hand could be forced to weigh against the downstream consequences of embedded inflation. She used 2022 examples of how these problems are caused.

And the BIS is warning of the threats of stablecoins. "If widely adopted in their current form, stablecoins would pose policy challenges in areas ranging from credit provision to monetary policy, with risks to financial integrity and regulatory evasion looming large." They will be particularly threatening to the sovereignty of emerging markets, they say.

In Australia, they launched some direct "interest free" loans for certain sectors in their economy to assist them with the very high cost of fuel, logistics, fertilisers and plastics.

And we should probably note that the zinc price has risen to its highest since 2022, and prior to the pandemic, its highest since 2018.

The UST 10yr yield is now just on 4.25%, up +1 bp from this time yesterday. 

The price of gold will start today down -US$22 at US$4807/oz. Silver is down -US$1 at US$80/oz.

American oil prices are up +US$5 at just over US$89, while the international Brent price is up +US$4.50, and now at US$95/bbl.

The IEA's latest monthly report details the quantum of the Trump Gulf War on the oil market. They say the global oil supply dropped by -10% in March to 97 million barrels per day amid attacks on energy infrastructure in the Middle East and the plunge in shipping traffic through the critical Strait of Hormuz. 

The Kiwi dollar is up +10 bps from yesterday at this time at 58.9 USc. Against the Aussie we are also up +10 bps at 82.1 AUc. Against the euro we are unchanged at just on 50 euro cents. That all means our TWI-5 starts today also little-changed from yesterday at just over 62.2.

The bitcoin price starts today at US$75,925 and up 1.5% from this time yesterday. A week ago it was US$72,976. Volatility over the past 24 hours has remained modest at just on +/- 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 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 expectations of an imminent resolution of the Persian Gulf standoff have stalled. Iranian officials have reversed reopening the Strait of Hormuz after the US refused to end its blockade of Iranian ports. Ships attempting to cross the Strait of Hormuz have been fired on.

This is expected to weigh on financial markets when they open later today.

This week locally will be all about the March quarter CPI which will be released on Tuesday. Because most of that quarter didn't see the oil price spike until March, markets expect a 2.9% quarterly rate, slightly less than the 3.1% rate in Q4, 2025. It is a data series that really needs to be released monthly. It will be preceded by trade balance (today), and followed by the QSBO and an update on productivity.

In Australia, there are no major economic data releases, although we will get a flash report on their April PMI.

In the US, apart from earnings updates, they too will get a flash April PMI, and confirmation hearings for Kevin Warsh will but this billionaire in the spotlight.

In China, PMI results will also feature in a light data week. In Japan, it will be about March trade data and retail sales. Central banks will review their monetary policy settings and rates in China, Malaysia and the Philippines this week.

Over the weekend, Iran confirmed what most people understood - Trump was 'claiming victory' without any deals in place, and that is making ship transit of the Straits of Hormuz hazardous again. It looks like the progress claimed was a mirage.

In Canada, small business sentiment rose in April, an unexpected shift but likely due to local election results. The trade group that does this survey says it is still weak, but it is actually back to the levels that prevailed prior to the pandemic.

But Canadian housing starts sagged somewhat in March, coming in below February levels and what was expected. But they are now +6.9% higher than year-ago levels.

Indian loan growth reached +16.1% in the year to March according to official data released overnight. That is the fastest pace they have recorded since they started tracking this metric in April 2025.

In China, their construction machinery sector rose strongly in March with excavator sales up nearly +30%, of which domestic demand was up almost +24%.

Malaysian CPI inflation remained tame in March, up just +1.7%, although that was their highest rate since the beginning of 2025. They also reported that Q1-2026 economic activity rose +5.3%, and slightly less than the +5.5% expected.

Meanwhile, Singaporean exports were up +15.3% from a year ago, their second fasted monthly rise since mid 2024.

The UST 10yr yield is now just on 4.24%, down -1 bp from this time Saturday and the same for the week. 

The price of gold will start today down -US$28 at US$4829/oz. Silver is down -50 USc at US$81/oz.

American oil prices are down -50 USc at just under US$84, while the international Brent price is also down -50 USc, and now at US$90.50/bbl. These new levels are down -US$12 and -US$4/bbl respectively. The North American rig counts fell again. Tonight, all eyes will be on the IEA's April update of the global oil situation.

The Kiwi dollar is down -10 bps from Saturday at this time at 58.8 USc, up +30 bps for the week. Against the Aussie we are unchanged at 82.1 AUc. Against the euro we are also unchanged at just on 50 euro cents. That all means our TWI-5 starts today also unchanged from Saturday at just over 62.2 but up +20 bps for the week.

The bitcoin price starts today at US$74,842 and down -3.0% from this time Saturday. A week ago it was US$72,976. Volatility over the past 24 hours has been modest at just on +/- 1.1%.

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 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 of little progress in renewed US-Iran 'peace talks'. They seem to have descended into talks about extending the ceasefire rather than resolving any issues. The Strait of Hormuz is still essentially closed. Complicating the oil supply picture is that US crude inventories fell by -9.1 mln barrels last week, far exceeding analysts’ expectations for a modest +154,000-barrel increase. This is actually a big deal and has driven the oil price higher today.

In the US, initial jobless claims rose to 214,000 last week, but not as high as seasonal factors would have indicated. There are now 1.89 mln people on these benefits, less than this time last year but more than two years ago.

But American industrial production fell in March from February, its first fall in four months. That makes it only +0.7% higher than year-ago levels, and hardly a surge in re-shoring. If it wasn't for the growth of AI centers and the electricity required to run them, this would have been a very disappointing result - and it probably is more most companies.

That said, the latest update from the Philadelphia Fed's factory survey was quite positive in April, driven by good growth in new orders. Of course, they are measured in nominal dollars and these firms reported notable rises in inflation, for both costs and prices.

In China, new home prices across 70 key cities fell -3.4% in March from a year ago, a minor worsening from a -3.2% decline in February. That was the 33rd straight month of contraction and the steepest drop since May 2025. Pre-owned home sales prices fell harder although for the first time in a while some key cities recorded month-on-month rises in prices.

China said its Q1-2026 GDP expansion was up 5.0%, and better than the 4.8% expected and the official target of "about 4.5%". And its industrial output was up +5.7% in March, they said. But their retail sales only grew 1.7% which will have been a disappointment because they really need a better rise in internal demand. All the good data reported is somewhat underlined by their data that shows electricity production fell again and for a fourth month, up just +1.4% from March 2025.

Australia's March labour market report was pretty tame. The employment rose by +17,900 (about the +20,000 expected) and the number of unemployed people fell by -4,000 in the month. The unemployment rate remained steady at 4.3%. Full-time employment increased by +52,500 to 10,174,400 (after the -27,700 fall in February) while part-time employment decreased by -34,600 to 4,593,300..

The expected inflation rate rose by 0.7 percentage points in April to 5.9% in Australia. It was 5.2% in March. The sharp rise in April reflects the recent spike in oil prices, and makes it its highest since November 2022. In contrast, wage change expectations have remained unchanged for the past five months.

In Australia, the big fire at the Geelong Vic. refinery, one of only two in the country, has major implications for Australia's fuels. They will need to import more from a global system already strained with demands on it. (The other one is the Ampol one in Brisbane.) Talk of needing emergency fuel savings measures, especially in Victoria, are growing.

Global container freight rates dipped -3% last week from the prior week to be little-changed from a year ago. But bulk cargo freight rates rose +16% last week, and are now almost double what they were this time last year.

Global travel rose +4.1% in 2025 according to new research with 80 mln people on the move. But they are increasingly avoiding the US where visitor numbers fell -5.5%. The main gainer is China where visitor numbers rose +9.9% and is predicted to eclipse the US has the main global destination - at this rate in just three years. It is a fast reversal.

The UST 10yr yield is now just on 4.31%, up +3 bps from this time yesterday. 

The price of gold will start today little-changed, down just -US$5 at US$4488/oz. Silver is down -50 USc at US$78.50/oz.

American oil prices are up +US$2.50 at just over US$95/bbl, while the international Brent price is up US$4, and now at US$99.50/bbl.

The Kiwi dollar is down -20 bps from yesterday at this time at 58.9 USc. Against the Aussie we are also down -20 bps at 82.2 AUc. Against the euro we are down -10 bps at just on 50 euro cents. That all means our TWI-5 starts today also down -20 bps from yesterday at just over 62.2.

The bitcoin price starts today at US$74,361 and up +0.2% from this time yesterday. Volatility over the past 24 hours has been modest at just on +/- 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 Monday.