Here’s our summary of key economic events overnight that affect New Zealand with news it is becoming clearer that Iran holds the cards in the economic aspects of the Middle East conflict. Pointedly, so far no-one – not China, Japan, nor NATO – has responded positively to Trump’s call for naval help.

Meanwhile in the US, even though crude prices retreated somewhat today, retail petrol prices there are up +0.5% today from yesterday, up +7% in a week, up +27% in a month.

Away from Trump’s war, American industrial production rose in February, but by far less than in January and that was enough to reduce the January year-on-year gain of +2.3% to a February equivalent of just +1.4%. This is a sharpish slowing that wasn’t the expected +2.1% gain. It was their smallest month-on-month rise in six months.

And the New York Fed’s Empire State factory survey suggests it may have got worse in March. That survey did not grow unexpectedly. It came in with a ‘steady’ -0.2% dip when a +3.2 rise was expected. New order growth disappointed.

Meanwhile the NAHB homebuilder sentiment survey held steady at a good level as expected. But they are worried about the growing discounting required to maintain sales.

In Canada, they reported a lower February CPI rate of 1.8% with their core inflation rate at 2.3%, both less than in January.

Canada also reported housing starts which rose from January, maintaining a good level and about at the average level over the last five years. But they were +13.7% higher than year-ago levels, and actually their second best February level ever.

The Bank of Canada meets next on Thursday (NZT) and no change to its 2.25% policy rate is anticipated.

Across the Pacific, China’s new home prices across 70 cities dropped -3.2% year-on-year in February, following a -3.1% decline in the previous month. Shanghai was the outlier with higher prices. But for house resales, nothing is rising, even in Shanghai which was down -6.5% for the year. Some are down almost -10% (Wuhan).

But China’s February retail surprised to the upside, rising +2.8% and much better than January’s +0.9%.

China’s industrial production came in much better than expected as well, up +6.3% and well above the +5.1% expected and the +5.2% in the prior period.

Beijing is pushing through ‘pay reform’ for middle managers at its state owned banks – and it is turning out to be far more brutal than those managers expected. Many are seeing their pay cut steeply, especially bonuses. And there is a retroactive aspect as well applying to their 2024 bonuses.

Separately, India said its exports held steady in February, although its imports fell, allowing it to report a smaller trade deficit.

Later today, the Australian central bank will review its cash rate target settings with a backdrop of high and rising inflation before the Middle East war started. The RBA is the first central bank of at least nine this week to review monetary policy in these changed circumstances. Markets have priced in a two-thirds chance of a +25 bps rate rise. Most analysts have come to the view it is the likely result too. The RBA is prioritising its inflation fighting mandate, they expect.

The UST 10yr yield is now just on 4.23%, down -5 bps from yesterday at this time. The key 2-10 yield curve is holding at +54 bps. Their 1-5 curve is flatter at +19 bps (+4 bps) and the 3 mth-10yr curve is now at +53 bps (-5 bps). The China 10 year bond rate is down -1 bp at just over 1.83%. The Japanese 10 year bond yield is up +5 bps at 2.29%. The Australian 10 year bond yield starts today at 4.96%, up +1 bp from yesterday. And the NZ Government 10 year bond rate starts today up a sharp +8 bps at 4.77%.

Wall Street has started its week with the S&P500 up +1.0% so far. Overnight, European markets were also up, but only between London’s +0.6% and Paris’s +0.3%. Yesterday, Tokyo closed down -0.1%. Hong Kong ended its Monday session up +1.4%, but Shanghai dipped -0.3%. Singapore ended up +0.5%. The ASX200 closed down -0.4%. And the NZX50 closed on Monday down -0.2%.

The price of gold will start today down another -US$34 from yesterday at US$4984/oz. Silver is holding at US$80.50/oz.

American oil prices are down -US$3.50, at just under US$95.50/bbl, while the international Brent price is down -US$1 just over US$102/bbl. The Straits of Hormuz remain no-go areas for most with the situation still extremely unstable.

The Kiwi dollar has risen today, up +70 bps against the USD from yesterday, now just over 58.5 USc. Against the Aussie we are up +20 bps at 82.9 AUc. We are up +10 bps against the yen. Against the euro we are up +30 bps at 50.9 euro cents. That all means our TWI-5 starts today up +60 bps at just under 62.2.

The bitcoin price starts today at US$73,762 and up +3.4% from this time yesterday. Volatility over the past 24 hours has been moderate at just under +/- 2.3%.

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