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.And today we lead with news retaliation on retaliation seems to be the order of the day in the US tariff policy - exactly has observers had expected. The whole thing is a no-win battle and a repeat of a history lesson that failed the first time - one it should be noted that resulted in the 1929 Depression.Both Canada and the EU responded with retaliatory tariffs on imports from the US. Washington threatened more on them for responding.Separately, in the US, lower energy costs brought their CPI inflation rate down to 2.8% in February from 3.0% in January. This was a better result than expected. A year ago, CPI inflation was running at 3.2% and decreasing, when it dropped to 2.4% in September.But no-one expects the dip to last, as the tariff costs get passed on to consumers.Another fall in the long term US benchmark interest rates has brought another healthy rise in mortgage applications hast week, up at an +11% annual rate from the prior week. Again it was a continuing sharp surge in refinance activity (+16%), that drove the increase, rather than new lending (+4%).There was another well-supported US Treasury bond auction overnight, this one for their ten year maturity. It resulted in a median yield of 4.27%, sharply lower than the 4.56% at the prior equivalent event a month ago. Safe haven demand is strong.The Bank of Canada cut its key interest rate by -25 bps to 2.75% in its March decision, as expected and previously signaled, to mark -225 bps in rate cuts since the start of its loosening cycle in June 2024. More rate cuts are expected, especially now they can see a major economic bump coming from the tariff war.Japanese PPI is still rising at +4.0% year-on-year in February, reinforcing how embedded inflation has now become in Japan. And probably at a higher level than they are comfortable with. It's the sixth straight month it has exceeded 3%.In China, their national set-piece policy meetings adopted a 4% to GDP debt limit, but even local observers pointed out this will end up far higher than what will turn out in 2025. They will need massive new debt to achieve their 5% growth target. That much more debt creates a local government honey-pot rush.India's CPI inflation rate fell sharply in February, down from 4.30% in January to 3.60% in February, a fall larger than the 4.0% expected. The pace of the drop in food price inflation drove the moderation. This will probably lead to more rate cuts by their central bank.On the other hand, India's industrial production rose faster than expected. It was expected to be +3.5% higher in January than a year ago matching the December expansion. But in fact it came in +5.0% higher.In Greenland, the 56,000 mostly Inuit voters have chosen the opposition centre-right, pro-business party as their new government. And declared they don't want to be American (or Danes, for that matter).Also rising was Russian CPI inflation, which came in at +10.1% in February, up from 9.9% in January, driven by the +11.7% rise in food prices.In an extension of targeting its 'friends', the US confirmed that there will be no exemptions for tariffs on Australian steel and aluminium. Of course, the US still expects those it offends to keep buying US products and services.The UST 10yr yield is now at 4.30%, up +4 bps from yesterday at this time.The price of gold will start today at just over US$2933/oz and up another +US$17 from yesterday.Oil prices are up +US$1 at just over US$67.50/bbl in the US and the international Brent price is at just under US$71/bbl.The Kiwi dollar is now at 57.3 USc and up +20 bps from yesterday. Against the Aussie however we are unchanged at 90.8 AUc. Against the euro we are up +20 bps at 52.5 euro cents. That all means our TWI-5 starts today just under 66.5, and up +20 bps from yesterday.The bitcoin price started today at US$82,161 and up +1.0% from this time yesterday. Volatility over the past 24 hours has been moderate at +/- 2.0%.You can find links to the articles mentioned today in our show notes.You can get more news affecting the economy in New Zealand from interest.co.nz.Kia ora. I'm David Chaston. And we will 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.And today we lead with news the US is doubling its tariffs on Canadian steel and aluminium to 50% in a tantrum over Canadians asserting their independence. Wall Street reacted badly, dropping another -1% and taking the losses to -10% over the past four week, a drop in the market capitalisation of the S&P500 of about -US$2.5 tln. That is just the start of course because there are thousands of other companies on a range of other indexes like the Dow (down -1.4% today) and the Nasdaq (down -0.6% today). Bad public policy is expensive. There will be echoes in KiwiSaver accounts, some loud.Financial markets are signaling a US recession. Apparently Warren Buffett expected a Trump recession and has adjusted his holdings for that.Meanwhile, the US Redbook retail index was +5.7% higher last week than the same week a year ago, an easing from th +6.6% rate the prior week.January job openings is the US rose on strong demand in the retail sector. They rose by +232,000 to 7.74 mln, up from a revised 7.51 mln in December and above the market expectation of 7.63 mln. Quits rose too in January. January layoff levels in the government sector were particularly low, but this is expected to change over the next few months.There was a still well-supported US Treasury 3 year bond action earlier today which ended with a median yield of 3.85%. But this was sharply lower than the prior equivalent event a month ago of 4.26%.In Japan, the January household spending survey released yesterday delivered a large shock, with spending falling the most in one month since 2021. That dragged their year-on-year gain down to just +0.8% from +2.7% in December. No-one saw this coming, although it has to be said there have been other December/January shocks in the past and all followed by a recovery in February. All the same, perhaps Japanese households are suddenly turning fearful about what lies ahead, with reason this time.In China, there is massive confusion over its trade rail link to Europe, and alternative to sea freight. The Russians are seizing the cargoes as they enter their territory. This is no minor trade disruption.The Australian consumer sentiment survey by Westpac/Melbourne Institute reported a solid improvement in March, and taking it to its highest level since May 2022.Meanwhile the NAB business sentiment survey for Australia reversed in February in their report released today. They said business conditions rose marginally in February, with small lifts in both trading conditions and profitability. However, there was a notable fall in business confidence which fell -6 points, largely offsetting the improvement seen in January.The total value of housing in Australia owned by households reached AU$10.6 tln as at December 2024, up +4.4% from a year ago. That is a AU$448 bln rise in a year, but far less than the +8.1% rise in the year to December 2023, or +AU$760 bln. If we included the dwelling stock owned by others, the rise to December 2024 was also up +4.4%, and that adds another AU$440 bln, taking the total value of Aussie housing stock to AU$11 tln. Interestingly, all the 2024 rise happened in Q1-2024 - total values were flat for the rest of the year even after their new builds were added.According to a global air quality review of 2024, only 7 countries met WHO air quality standards. That included New Zealand, Australia, Iceland and Estonia, plus three Caribbean islands. Globally, this is as bad as its ever been. And now that the US has pulled funding for this monitoring, we will only get results in future for first world countries that fund their own. (The US funding for its own monitoring has been cancelled too.)And finally, we should probably note that 56,000 Greenland voters are voting in a national MMP election. Results will be known tomorrow.The UST 10yr yield is now at 4.26%, up +3 bps from yesterday at this time.The price of gold will start today at just over US$2916/oz and up +US$17 from yesterday.Oil prices are holding unchanged at just on US$66.50/bbl in the US and the international Brent price is down -US$1 at just over US$69.50/bbl.The Kiwi dollar is now at 57.1 USc and down -10 bps from yesterday. Against the Aussie however we are unchanged at 90.8 AUc. Against the euro we are down -50 bps at 52.3 euro cents. That all means our TWI-5 starts today just over 66.3, and down -30 bps from yesterday.The bitcoin price started today at US$81,309 and recovering +3.4% from this time yesterday. Volatility over the past 24 hours has stayed high at +/- 3.4%.You can find links to the articles mentioned today in our show notes.You can get more news affecting the economy in New Zealand from interest.co.nz.Kia ora. I'm David Chaston. And we will 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.And today we lead with news Wall Street has taken sudden fright on the growing realisation of what Trump has wrought for them. It's risk-off in a big way with equities falling sharply and bond yields retreating. Normally on a risk-off phase the USD rises, but this time it's actually softer. Putin's puppet isn't good for business.Probably not helping is that one-year US inflation expectations are rising, the first rise in four months, and to its highest since May 2024. The broader survey reported rising pessimism. Fear of job loss jumped sharply. The worries about missing a debt payment over the next three months jumped to 14.6%, the highest level since April 2020. The increase was driven by those without a college degree and largest for those under age 40, the demographic that drove the election result.And its not just consumers. American farmers are recoiling at the impact on them and their markets. It is likely that farm spending and investment decisions will take a long holiday until most USDA and USAID programs are restored. Reports and data from those agencies are likely to become very unreliable now that DOGE-aligned managers are now in charge. Farmers are voting with their checkbooks and it is going to be tough for the wider agribusiness sector.And it is probably worth noting the the Tesla share price is down another -13% so far today. That is a now a -53% drop since the US election.Across the Pacific, there were a set of indicators out for Japan overnight. Their leading economic indicators index, which gauges the economic outlook for the coming months based on data such as job offers and consumer sentiment, edged up to its highest reading since October. However, that was slightly less than expected. On the other hand, annual household spending rose for the first time in five months, its fastest growth since August 2022. However consumer sentiment slipped.China said it will impose a 100% tariff on imports of certain Canadian agricultural products, along with a 25% levy on seafood and pork. They will come into effect in ten days in response to Ottawa's trade measures. Canada had previously imposed a 100% tariff on Chinese-made electric vehicles starting October 1 last year, aligning with similar actions by the US and EU over concerns of unfair competition. Additionally, Canada implemented a 25% tariff on Chinese steel and aluminium imports, effective since October 15 last year. They are trying not to be gamed in the manoeuvring between the US and China.And you may be interested to know that Beijing authorities have launched a trial of street patrols by robot dogs. Given their pervasive 'social security' system tied into the extensive facial recognition systems, this seems a particularly dystopian development.In Europe, German industrial production rose in January from December and by more than expected. That has helped them eat into their year-on-year decline, taking it to its smallest level since mid-2023.The UST 10yr yield is now at 4.23%, down -7 bps from yesterday at this time. The price of gold will start today at just over US$2898/oz and down -US$12 from yesterday.Oil prices are down -50 USc at just on US$66.50/bbl in the US and the international Brent price is down -US$1 at just over US$69.50/bbl. The Kiwi dollar is now at 57.2 USc and up +10 bps from yesterday. Against the Aussie however we are up +30 bps at 90.8 AUc. Against the euro we are up +10 bps at 52.8 euro cents. That all means our TWI-5 starts today just over 66.5, and up +10 bps from yesterday.The bitcoin price started today at US$78,624 and down another large net -4.8% from this time yesterday. That means it is given up all its gains after the US election in November, and more. Trump seems to have 'lost' the crypto tech-bros too. Volatility over the past 24 hours has been high at +/- 3.4%.You can find links to the articles mentioned today in our show notes.You can get more news affecting the economy in New Zealand from interest.co.nz.Kia ora. I'm David Chaston. And we will 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.And today we lead with news we start the week with current data that is almost certainly not indicative of what's to come. The policy landscape is in ferment.First in the week ahead however, locally it will be all about migration, retail sales, and a look a second look at 2025 inflation levels. In Australia their data releases will be about business and consumer sentiment, and industrial production.Elsewhere, India will release a CPI update. Canada's central bank will review its policy rate on Thursday (NZT) and is expected to cut it by -25 bps to 2.75%.In the US, upcoming updates will be for CPI and PPI, the Michigan consumer sentiment survey, and January JOLTS job data.But first up today, weekend data releases from China confirmed they have slipped into a deflationary funk. Consumer prices fell -0.7% in February from a year ago (-0.5% was expected), and producer prices were down -2.2% (-2.1% was expected).China's consumer price decline was their first consumer deflation since January 2024, amid fading seasonal demand following the Spring Festival in late January. Food prices fell the most in 13 months, down -3.3%, dragged by a steep decrease in cost of fresh vegetables and a sharp slowdown in pork prices. Beef prices are down -13.3% from a year ago, lamb prices by -6.6%. Milk prices are down -1.4% on the same basis.China's producer prices are falling faster than consumer prices, but not really at an accelerating rate.Earlier in the weekend, China said its exports rose +2.3% in February, but that was notably less than the +5% rise expected. China's imports fell -8.4% when a +1% rise was expected. That means their merchandise trade balance rose to +US$170 bln, well above the January +US$142 bln and spiked by reactions to US trade and tariff policies. Their data shows a -US$1.1 bln February deficit in their trade with New Zealand. With Australia it was a -US$8.4 bln deficit.We may also get China new yuan loan data at the end of this week, although it is coming in a bit later, and weaker, these past few months.Despite all the US, China and global trade woes, the New York Fed's tracking of global supply chain pressures is reporting a pretty sanguine situation. Of course, that will undoubtedly change going forward.In the US, the February non-farm payrolls report showed the US economy added +151,000 jobs in February, slightly below the +160,000 expected. The January data was downwardly revised to +125,000 from the original +143,000. Their jobless rate ticked up to 4.1%. We should note that virtually none of the DOGE cuts are reflected in this data. Their participation rate fell.The actual unadjusted rise in February from January was +891,000 in this payroll survey data, but that was less than seasonal factors would have usually delivered and less than the +1,065,000 gain in the same period in 2024. Including the unincorporated self-employed, the total number of employed people was 162.5 mln, and that was less than in January. The shift to company payrolls is still happening but slower, and the total number of people actually employed actually dropped. Average weekly earnings were up +3.4% from a year ago and that was their least in more than a year. (Over the past 12 months, that rise has averaged +3.7%, so a notable tailing off in February.)The US Fed boss Powell talked about the outlook for the US economy over the weekend, and commented that they see no reason to be cutting their policy rates any time soon.The US Fed's tightening process continues with their balance sheet now down to US$6.75 tln, down by -US$782 bln in a year and eating into its pandemic surge now. Pre-pandemic, it was a balance sheet equivalent to 19.0% of US GDP. It peaked at 35.4% in April 2022. Now it is back to 22.5% of GDP. So normalisation looms. (For reference the RBNZ balance sheet is also currently at 22.5% of our GDP.)In Canada, their February labour force data wasn't that flash. Full-time employment fell -20,000 while part-time employment rose +21,000. But their average hourly wages rose +4.0%. Their participation rate fell too. No-one expects this labour force data to improve while the tariff war hostilities build in 2025.The US president has threatened Canada again, this time with 'reciprocal' tariffs on dairy and timber. If he goes ahead, it will almost certainly backfire on Americans. Canada is already the US dairy industry's second largest export market and that market will almost certainly reject US goods. And Canadian timber is well-embedded into US house building. Trump wants US national forests harvested to replace Canadian supplies but that will take time to build volumes, and come at higher prices.In Australia, plans to call an April federal election have been shelved, partly because of the expected physical and financial clean up after tropical cyclone Alfred. There are now still more than ¼ mln people without electricity this morning, and the storm is lingering longer than expected and the flooding heavier. The new expected election date will be sometime in May. There will be a new Budget update there in three weeks, on Tuesday, March 25, 2025.In Western Australia, their incumbent Labor government won with a thumping majority, way better than anticipated.Today the UST 10yr yield is now at 4.30%, down -2 bps from Saturday at this time. Here is an update of Wall Street earnings for Q4-2024. It is pretty positive.The price of gold will start today at just over US$2911/oz and up +US$3 from Saturday.Oil prices are still just on US$67/bbl in the US and the international Brent price is just under US$70.50/bbl.The Kiwi dollar is now at 57.1 USc and up +10 bps from Saturday. Against the Aussie however we are down -10 bps at 90.5 AUc. Against the euro we are up +10 bps at 52.7 euro cents. That all means our TWI-5 starts today just over 66.6, and up +20 bps from Saturday.The bitcoin price started today at US$82,620 and down a net -5.6% from this time Saturday. That means it is given up all its gains after the US election in November. Volatility over the past 24 hours has been moderate at +/- 2.4%.You can find links to the articles mentioned today in our show notes.You can get more news affecting the economy in New Zealand from interest.co.nz.Kia ora. I'm David Chaston. And we will 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.And today we lead with news US policy making has now become so chaotic, businesses are holding off making decisions. That can only have negative consequences.Firstly, US jobless claims rose modestly last week from the week before but this was less than seasonal factors would have suggested. There are now 2.23 mln people on these benefits and back up near the October 2021 levels. The current consensus forecasts for tomorrow's release of the February non-farm payrolls is a rise of 160,000.But there might be some downside, if not in tomorrow's data, in the following set. The level of announced job cuts in February jumped to pandemic levels, and prior to that, to GFC levels. The Musk razor gang is getting some of the blame.The January American trade balance of both goods and services came in double the deficit of a year ago and an all-time record. Tariff policies have driven the change. For the year to January, their total trade deficit was -US$982 bln with a real surge from September to January and blowing it out to -3.4% of US GDP and a record high.Overnight the US announced delays on tariffs against Mexico. It is a never ending series of confusing 'definite' signals, none of which inspire confidence or allow for orderly business decision making. With Mexico, the situation has turned on its head in just four days. With Canada, Trump is ignoring what his Commerce Secretary said just one day ago, and US carmakers are in a real bind now.US wholesale inventories rose in January and their inventory to sales ratio rose too, ending a long period of improvement.Folding this data in gives the latest reading of Atlanta Fed GDPNow forecast for American Q1-2025 performance is now a -2.4% decline. Apart from the pandemic they won't have seen anything quite this dramatic since the GFC.Since its peak in December, the Tesla share price is continuing its fall, and it is only notable today because the value loss now exceeds -US$660 bln in that period. In NZD that is -$1.15 tln! That price is down another -5.6% so far today and filings show Tesla insiders are now selling.Going the other way, Canada's exports and their trade balance came in sharply positive. Exports were up +20% in January from a year ago and their trade surplus was its best since a brief spike in May 2022, and prior to that, best ever.The Malaysian central bank held its key interest rate at 3% for the tenth consecutive review during its overnight meeting, and that was in line with market expectations.In China, nothing meaningful or unexpected has come from their National People's Congress meetings.In Europe, the ECB cut its three key interest rates by 25 basis points, as expected, reducing the main refinancing rate to 2.65%. It was their sixth cut since the peak in September 2023 of 4.5%. Economic growth forecasts were revised downward to +0.9% for 2025 and +1.2% for 2026, reflecting weak exports and investment.EU retail sales volumes fell -1.6% in January from the same month a year ago.In Australia, tropical cyclone Alfred has slowed its move toward the Brisbane coast but is still generating damage and will do for longer, even if it actually losing some of its destructive power. Tens of thousands of people are without power now.Container freight rates fell another -3% last week from the week before to be -30% lower than year ago levels and now 'only' +76% above pre-pandemic levels. Bulk freight rates were up +13% in the week however but down -36% from a year ago.Today the UST 10yr yield is now at 4.29%, up +1 bp from yesterday.The price of gold will start today at just over US$2917/oz and little-changed from yesterday.Oil prices are down -50 USc to under US$66/bbl in the US and the international Brent price is just under US$69/bbl. Lower expected demand expectations are the reason.The Kiwi dollar is now at 57.5 USc and up +50 bps from yesterday. Against the Aussie however we are up +10 bps at 90.5 AUc. Against the euro we are down another -20 bps at 53.1 euro cents. That all means our TWI-5 starts today just over 66.7, and up +10 bps from yesterday.The bitcoin price started today at US$90,265 and up a net +0.3% from this time yesterday. Volatility over the past 24 hours has been moderate at +/- 2.5%.You can find links to the articles mentioned today in our show notes.You can get more news affecting the economy in New Zealand from interest.co.nz.Kia ora. I'm David Chaston. And we will do this again 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.And today we lead with news the tariff war mess is getting messier.First up, the overnight dairy auction came in a bit better than the futures market suggested it might. This event offered lower volumes at the back end of the current dairy season, and prices eased just -0.5% in USD terms from the last full event, but were up +1.0% in NZD terms. WMP eased -2.2% and that was as expected but butter and the cheeses made better gains than expected. Buying out of China was modest, but there was raised interest from both Europe and the Middle East. In the circumstances this was a solid overall result.Most other commodity prices are taking sizeable hits from the now-daily tariff-war battles. Behind all this is the expectation of falling demand as the US economy makes a sudden detour into recession. China's retaliation on US agricultural exports have seen sharpish falls in wheat and soybean prices.The impacts of the trade war haven't hit US retail sales yet - unless you think American consumers are stocking up ahead of the inflationary effects. There were up +6.6% from the same week a year ago.But they are showing up in sentiment surveys. Today's release was for the RCM/TIPP economic optimism index, and that retreated notably. This index rose in November, but has essentially retreated since and is now net-negative and a five month low.The American need for more warehousing and higher inventories is driving their logistics industry to a three year high. The components that weigh on productivity are getting the gains.The US is using a "fentanyl crisis" (one actually in retreat and one driven by American demand) as an excuse to impose increased tariffs. That alone will be inflationary. The counter-measure responses by Canada, Mexico, and now China will distort large parts of the American economy, and have global resonances.The US tariffs are expected to raise the costs of American carmakers by more than US$60 bln, and will drive most into losses, and may even kill some (like Stellantis). Car demand is expected to fall -12% in the US as a result of the needed higher prices.Financial markets continue to react in a negative way. They have given up any post-election gains, and more. Things could get much worse quite soon. Congress is nowhere near to agreeing a budget funding deal.Meanwhile across the Pacific, Japanese consumer sentiment is falling back too now, and is back to where it was two years ago.On the Australian east coast Cyclone Alfred is barrelling towards Brisbane and northern NSW. It is expected to make landfall as a category 2 storm late on Thursday or early Friday and would be the first tropical cyclone to impact NSW since Nancy in 1990.Today the UST 10yr yield is at 4.19%, down -4 bps from yesterday.The price of gold will start today at just under US$2912/oz and up +US$20 from yesterday.Oil prices are down -US$2/bbl to US$69.50/bbl in the US and the international Brent price is just on US$70.50/bbl. Lower expected demand is why this price is soft.The Kiwi dollar is now at 56.2 USc and down -10 bps from yesterday. Against the Aussie however we are up +30 bps at 90.5 AUc. Against the euro we are down another -30 bps at 53.3 euro cents. That all means our TWI-5 starts today just over 66.1, and down -10 bps from yesterday.The bitcoin price started today at US$82,930 and down a net -7.9% from this time yesterday. Volatility over the past 24 hours has been extreme at +/- 5.2%.You can find links to the articles mentioned today in our show notes.You can get more news affecting the economy in New Zealand from interest.co.nz.Kia ora. I'm David Chaston. And we will 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.And today we lead with news chaos has consequences, but they seem to be coming faster than many thought. The giant US economy is resilient, but not immune to the consequences of misguided policy decisions.Regular readers will know we regularly track the Atlanta Fed's GDPNow signals. Today that has suddenly sifted from expecting a +3.0% Q1-2025 expansion with the data on hand at the start of February, to a sharp -2.8% contraction as the latest data comes in for the US economy.We have been noting the slide in the granular data over the past week or so in these reports. Today there was another from the ISM PMI for February. Specifically, new orders in their factory sector took a sharp turn into contraction as they report demand is weakening fast. The overall PMI rose in this report, but due to production and inventories. Shrinking new order levels are not going to sustained that however.It was a different story for the internationally benchmarked S&P/Markit US factory PMI which is still reporting an expansion, and a good one. But this one isn't supported by the wider series of data over the past few weeks of weak new order levels (other than for aircraft) and rising inventories. Nor the imbalance between household spending and disposable incomes. The Atlanta Fed is signaling these are turning the US growth into reverse.We won't actually know for some weeks yet of course, but it seems the Biden prosperity is being turned into a Trump/Musk contraction.And more uncertainty is on the way. Congress has less than two weeks to extend a federal funding deadline, but lawmakers are arguing over whether the Whitehouse will really spend the money they approve.The February Canadian PMI turned suddenly negative too in response to the tariff war outlook. Later today, the US is expected to impose the threatened tariffs, even though they earlier promised to delay them to the start of April. Consistency and promises are loose ideas in today's Whitehouse.There were a wide set of early factory PMIs for a number of Asian economies and they all showed very little change (and only minor variations around the expansion/contraction fulcrum). This includes reports for Japan (49.0), Malaysia (49.7), Thailand (50.6), Vietnam (49.2) and Taiwan (51.5). The tariff war impact are yet to hit. In fact, Indonesia was a bit of an outlier, recording a very good rise (53.6), but it enabled the overall ASEAN group to record a good rise.India's PMI's signaled a mild slowdown from their fast expansion rate.Singapore's SIPMM PMI recorded a minor expansion in February.The official China factory PMI came in at 50.2, an improvement for February from January's contraction. This was backed up by the independent Caixin factory PMI which came in with a slightly faster expansion (50.8) in its survey. This is consistent with the US import data for January and suggests the US import data will be very high again in February.In Europe, their inflation rate eased to 2.4% in February, down from a six-month high of 2.5% in January but slightly above market expectations of 2.3%. But there is a wide range, from 1.4% in democratic Denmark to 5.7% in autocratic Hungary. For the EU overall it was running at 2.8%, for the euro area 2.4%.Europe's overall PMI is still contracting, but the drivers of their contraction eased somewhat in February.In something of a surprise, the TD-Melbourne Institute tracking of inflation and cost of living in Australia reported a -0.2% drop in February from the prior month, after a +0.1% rise in January. Most thought a rise was on the cards. But on an annual basis inflation is still running in the 2-3% range.Also turning negative in February from January was the job ad series from ANZ/Indeed. It was down -1.4% from January, but at lease it wasn't down the -6.9% it was in February 2023 from January 2024.CoreLogic is reporting that the Aussie housing market stabilised in February, with small but consistent house price rises in the month in almost all main centers, rolling back some of the quarterly and annual falls in some of their larger cities. The one RBA rate cut is getting the credit for the sentiment improvement.By the way, it seems the expectation for an Australian election is narrowing to an early even, maybe on April 12In the face of US mis-steps, policy markers from Canada to China are readying plans for a global downturn. And high on their agendas are looser fiscal and monetary policies to insulate their people from the worst effects. The US is also moving to much looser fiscal policies with large tax cuts for the wealthy, and likely ballooning deficits. We are entering the era of huge distortions, and it is unlikely to be pretty.Today the UST 10yr yield is at 4.18%, down -2 bps from yesterday.The price of gold will start today at just under US$2892/oz and up +US$35 from yesterday.Oil prices are down -50 USc just on US$69.50/bbl in the US and the international Brent price is just over US$72.50/bbl. Both prices are -US$1 lower than a week ago. Lower expected demand is why this price is soft.The Kiwi dollar is now at 56.3 USc and up +40 bps from yesterday as the USD comes under pressure. Against the Aussie however we are still little-changed at 90.2 AUc. Against the euro we are down -30 bps at 53.6 euro cents. That all means our TWI-5 starts today just on 66.2, essentially unchanged from yesterday.The bitcoin price started today at US$90,059 and down a net +1.5% from this time yesterday. Volatility over the past 24 hours has remained high at +/- 3.0%.You can find links to the articles mentioned today in our show notes.You can get more news affecting the economy in New Zealand from interest.co.nz.Kia ora. I'm David Chaston. And we will 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.And today we lead with news the global economy seems to be settling back into a low growth phase on the back of the sharp rise in policy uncertainty in the US.But first, in the week ahead we will get our December trade balance update and data on building permits for January. And the first of the quarterly data sets building for our March 19 GDP result for Q4-2024 will come in, this one recording the construction work completed in the quarter. All relatively minor. There will also be another full dairy auction on Wednesday.Internationally the week will end with the US non-farm payrolls report for the US, for February (where a modest gain of +133,000 is now expected), more US PMI data plus factory order data. Tariff action may well overshadow these however. In Europe it will be all about their ECB decisions (expect a -25 bps rate cut), and inflation updates. Australia will release Q4-2024 GDP results, and trade balance data, as will Canada and China.Over the weekend China released its February PMI data and it was not negative. Their official factory PMI shifted back to a very minor expansion (although that is probably being generous). Their services sector is also officially expanding, also minor.And minor as well was the rise in South Korean exports, much less than expected in February. This came off the back of the unexpected January slump, one that was deeper than first reported. Although South Korean export growth been generally trending lower for about a year now, so have their imports, and that allowed them to report their second highest current account surplus ever.India reported Q4-2024 GDP results and those came in at a +6.2% rate, better than the +5.6% in Q3, but just missing analyst estimates of +6.3%.In the US, the widely watched PCE inflation level came in at 2.5% for January, down from 2.6% in December, and back to November's level. (The US CPI rate for January was 3.0%.) From a year ago, personal disposable incomes were up +1.8% and personal expenditures up +3.0%, so this isn't tracking in a favourable direction now. People will notice that and take household budget actions, such as increasing debt or cutting spending. When uncertainty levels are high, spending cutbacks are the more likely.The sharp jerk in trade policy direction has brought sharp changes in American commercial behaviour. First there was a large spike in imports, up 12%, driving their merchandise trade deficit to a mammoth -$US$153 bln in January. That is an all-time record and by a country mile.Secondly, American wholesale inventories jumped in January, especially for consumer goods which were up +2.1% from a year ago. Retail inventories rose even faster, up +5.1%.The Chicago PMI, which was in deep contraction over the December/January period recovered in February, but it is still contracting, just less so.The Trump administration designated importing timber a "national security issue" justifying new tariffs. They also said XRP (Ripple), SOL (Solana), and ADA (Cardano) would be in their new US crypto strategic reserve, jumping the prices of almost all cryptos including bitcoin (and their own personal wealth).North of the border, the good Canadian data continues. This time it is their Q4-2024 GDP growth rate, up +2.6% from a year ago, better than the Q3-2024 growth of +2.2%, and much better than the expected Q4 rate of +1.9%. Driving the rise was rising household spending, rising exports, and rising business investment. Of course, things for Q1-2025 are much more uncertain, although it will be interesting to see the echo of the 'Buy Canadian, Bye Americans' movement on their GDP. Perhaps it may give a Q1 fillip?Global air travel is rising fast. International passenger travel rose +12.4% in January from the same month in 2024. That makes it an all-time high, eclipsing pre-pandemic levels. Asia/Pacific travel rose more than +20%.Meanwhile air cargo traffic rose +3.2% on the same basis, although up +7.5% in the Asia/Pacific region.We should probably note that the coal price has fallen to a four year low, and back to prices it first achieved in 2016. And not only are oil prices lower, there are falls too for zinc, lead and nickel too, all core indicators of global factory demand. Lithium is also having trouble getting back up off the canvas.The UST 10yr yield is at 4.20%, down -3 bps from Saturday at this time, down -22 bps for the week as risk aversion takes hold.The price of gold will start today at just under US$2857/oz and up +US$12 from Saturday. A week ago it was at US$2938/oz so a -US$81 drop since then.Oil prices are little-changed, still just under US$70/bbl in the US but the international Brent price is still just under US$73/bbl. Both prices are -US$1 lower than a week ago.The Kiwi dollar is now at 55.9 USc and down -10 bps from Saturday. That is a -160 bps drop in a week. Against the Aussie however we are still little-changed at 90.2 AUc. Against the euro we are also little-changed at 53.9 euro cents. That all means our TWI-5 starts today just on 66.2, unchanged from Saturday, down -100 bps for the week.The bitcoin price started today at US$91,401 and up a net +9.2% from this time Saturday on the US crypto reserve news. Volatility over the past 24 hours has been high at +/- 3.6%.You can find links to the articles mentioned today in our show notes.You can get more news affecting the economy in New Zealand from interest.co.nz.Kia ora. I'm David Chaston. And we will 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.And today we lead with news trade and tariffs are in the headlines, but their impact of higher inflation and slower economic activity are just starting to be seen.US initial jobless claims rose sharply last week in seasonally adjusted terms, the largest rise in five month. In actual terms they were basically unchanged when seasonal factors would have normally brought a good reduction in claims. These initial claim levels are +10% high that year ago levels and there are now 2.17 mln people on these jobless benefits, also much higher than a year ago.US durable goods orders rose +3.1% in January from December, but there was a sharpish revision lower in the December data. The January level is +4.3% higher than year-ago levels. Non-defense capital goods were up +2.2% from a year ago.The second estimate of Q4-2024 GDP came in unchanged from the first at +2.3% growth. It would have been more but they noticed higher inflation in the period which trimmed the rising nominal expansion in the period.Pending home sales in the United States fell -5.2% in January from a year ago, following a -5% drop in December.And today's downbeat American economic data releases extended to the Kansas City Fed factory survey which fell in February, contracting by its most in five months.The US Administration said China will be hit with a new 10% tariff, the latest salvo in the US president's steadily escalating trade fights. That is on top of the earlier 10% already in place. The President also said he intended to move forward with a threatened 25% tax on imports from Canada and Mexico, which is set to come into effect on 4 March.So it is little wonder that inflation expectations are rising among Americans. Tariffs are a tax on yourself, and higher prices either result from more expensive imported goods, or they allow local producers to face much less price competition so those prices rise too. It will be impossible for the US Fed to ignore, and bond markets aren't either.But north of the border, Canada said weekly earnings are rising faster there. They rose +5.8% in December from a year ago in data released overnight, the fastest pace since March 2021.And staying in Canada, the reaction to the endless Trump insults are generating a "Buy Canada, Bye America" surge, and now apps are sprouting up enabling such choices right in shop and supermarket aisles. Apparently there are export markets for such services, especially in Europe.The tracking of consumer and business sentiment in the EU shows it is either holding or moving up in January. Now almost as may are positive as negative, which is the best they have had in almost three years, and slightly better than expected.With all the US tariff news, it will be no surprise to learn that container freight rates fell another -6% last week, taking them -30% lower than year-ago levels, and now only +85% higher than pre-pandemic levels. Usage of the Suez Canal is normalising now too. But bulk cargo rates shot up +32% last week from the week before to be -40% lower than year-ago levels.The UST 10yr yield is at 4.29%, up +2 bps from yesterday at this time.The price of gold will start today at just under US$2875/oz and down -US$35 from yesterday.Oil prices are up +US$1 at on US$70/bbl in the US and the international Brent price is now under US$74/bbl.The Kiwi dollar is now at 56.5 USc and down -60 bps from yesterday. Against the Aussie we are unchanged at 90.3 AUc. Against the euro we are down -10 bps at 54.2 euro cents. That all means our TWI-5 starts today just over 66.5, and down a net -40 bps from yesterday.The bitcoin price starts today at US$84,968 and -2.3% from this time yesterday. It is currently very much in a bear phase with prices only rising when there is minor volume, but falling sharply when there is high volume. Sellers are choosing their timing, and there are a lot of them. Volatility over the past 24 hours has been moderate at +/- 2.8%. You can find links to the articles mentioned today in our show notes.You can get more news affecting the economy in New Zealand from interest.co.nz.Kia ora. I'm David Chaston. And we will 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.And today we lead with news of more data dragging in the US, and more debt plans in China.First up, American mortgage applications fell again last week, and this is despite their benchmark 30 year mortgage interest rate falling further below the 7% level. Lower home loan rates now are not motivating home buyers.And that lack of motivation is really coming through in new home sales, which were down more than -10% in January from December to an annual rate that was -15% below year ago levels. For their new home building industry, this will be a real cause for concern.There was another US Treasury bond auction earlier today, this one for the 7-year Note and it delivered a median yield of 4.15%, lower than the 4.41% at the equivalent auction a month ago. Demand for these issues is not flagging.In China, they are adding capital to their big state-owned banks, maybe as much a ¥1 tln to the six of them. The funds will be raised by new sovereign bond issues. More debt for the state so that banks can lend more debt to clients.And that could just be the start. Bloomberg is reporting that a key policy adviser said China needs to vastly step up its efforts to cleanse the balance sheets of their local governments, giving them the space needed to support consumer spending and strengthen the economy. He said central government should take on at least ¥20 tln worth of local sovereign debt. For reference ¥1 tln is about NZ$240 bln. ¥20 is NZ$4.8 tln. They are talking real money here.Singapore's industrial production rose +9.1% in January from the same month a year ago in a solid turn up, although the gain was pretty much as analysts had expected.Taiwan revised its Q4-2024 GDP growth rate up to +2.9%, and it was a sharp revision higher from the earlier estimate of +1.8%. That means their economic activity expanded by +4.6% in all of 2024.Australia's monthly CPI inflation indicator rose 2.5% in January, unchanged from the prior month but below market expectations of 2.6%. Despite this, inflation remained at its highest since August. But this monthly update probably won't shake the RBA estimate of acceptable inflation in Q1-2025.And staying in Australia, the latest data available, for Q3-2024 released yesterday, buyers from China were the largest group of foreign investment into Australian housing, recording more than AU$400 mln in approvals. This data was for the period ahead of the Australian ban on temporary residents acquiring established homes and Chinese buyers accounted for 30% of it. You have to say it isn't much of a surge - and since then foreign buyer demand has fallen away.The UST 10yr yield is at 4.27%, down -4 bps from yesterday at this time.The price of gold will start today at just under US$2910/oz and recovering +US$16 from yesterday.Oil prices are marginally lower at under US$69/bbl in the US and the international Brent price is still under US$73/bbl.The Kiwi dollar is now at 57.1 USc and down -10 bps from yesterday. Against the Aussie we are unchanged at 90.3 AUc. Against the euro we are down -10 bps at 54.3 euro cents. That all means our TWI-5 starts today just under 66.9, and little-changed from yesterday.The bitcoin price starts today at US$86,928 and down a minor -0.4% from this time yesterday. Volatility over the past 24 hours has been moderate at +/- 2.2%. You can find links to the articles mentioned today in our show notes.You can get more news affecting the economy in New Zealand from interest.co.nz.Kia ora. I'm David Chaston. And we will do this again tomorrow.