Economy Watch

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 most of our trading partners are coming under much heavier input cost pressure, along with supply-chain disruption.

Meanwhile, US and Iran have rejected each other’s proposals to end the war. That is pushing up the price of oil. And in the US, the head of their largest bank is saying private credit losses will be much larger than most assume.

In the US, the widely-followed March ISM services PMI came in a touch lower than expected, and lower than for February. The strong activity component slowed very fast but is still expanding. This survey found employment contracting. It also found prices rising their fastest since October 2022. These firms are not waiting to push through recovery price increases this time.

Remember, The S&P Global services PMI released earlier found its first decline in activity since January 2023, employment was down amid their weakest rise in new orders for nearly two years. They also found steeper rises in both input costs and output prices in March. So very similar to the ISM version.

One of those input costs is fuel, and now petrol is up +38% and diesel is up +51% since the start of their war on Iran.

The Canadian services PMI is still contracting, extending that retreat to five straight months. However, the March shortfall was the least in that period. Inflation accelerated due to rising fuel and transportation costs Employment fell although overall confidence was up to six-month high.

The Singapore economy was still expanding at a moderate pace in March, but there were signs of slowdown. Their PMI dropped to its lowest seen in 2026 so far from softer growth in output and new orders. Input price inflation accelerated to a survey-record (ten year) high.

Singapore's retail sales fell in February from January on a seasonally-adjusted basis, down an unexpectedly large -4.1%. The year-on-year result isn't so relevant this month due to the skewed timing of Chinese New Year.

India's services PMI was still expanding fast in March, although continuing the receding growth trend they have had for more than eight months. Input price inflation climbed to a 45-month high and they had their weakest rise in new business and activity since January 2025. But they also had another strong upturn in services exports.

The UST 10yr yield is now just on 4.34%, down -1 bp from yesterday. 

The price of gold will start today down -US$24 at US$4651/oz. Silver is holding at US$73/oz.

American oil prices are up +US$2.50 at just on US$114/bbl, while the international Brent price is up +US$1.50 at just under US$110.50/bbl, and still lower than US prices.

The Kiwi dollar is up +20 bps at 57.1 USc. Against the Aussie we have dipped -10 bps to 82.6 AUc. Against the euro we are unchanged at just on 49.5 euro cents. That all means our TWI-5 starts today up +15 bps from yesterday at just under 61.

The bitcoin price starts today at US$69,614 and up +3.4% from this time yesterday. Volatility over the past 24 hours has been moderate at just on +/- 2.3%.

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.

Audio soundtrack opening is licensed from Shutterstock, Track 1219389 Monetization ID TFGEPGEI0LHEIJAI

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 Trump is about to make a national address (9pm NZT) where he is expected to claim Iran wants a ceasefire (which Iran immediately said was false). Many expect he will pull the US out of NATO as well (although Congress would have to agree for that to be effective). Despite the unhinged nature of it all, markets cheered the likely end of the pointless war he started.

Separately, on Saturday we will get the March US non-farm payrolls data which is expected to show a +60,000 gain. The ADP version of private sector employment was out today for March and that showed a similar modest rise (+62,000).

But we should also note that February official data for private sector hiring revealed a record low rate.

US mortgage applications fell sharply again last week, down a further -10.5% for a third consecutive big drop, which is unprecedented. Refi fell the hardest but new purchase activity was down sharply too. Rising interest rates continue there.

The widely-watched ISM factory PMI was little-changed in March from February with the same modest expansion recorded, as signaled in the alternate globally-benchmarked S&PGlobal version. The New Orders Index indicated slower growth compared to the previous month with new export orders actually in contraction. Both observed soaring inflationary pressures, back to pandemic levels.

US retail sales rose in February by +3.7% above the year-ago level. This month car sales led the increase. That is a real gain given that February CPI inflation ran at 2.4%.

In Canada their March factory PMI shows no growth, no decline.

The China S&P Global PMI expanded again, showing growth of output and new orders were maintained in March. But suppliers' delivery times lengthen the most since December 2022. And they also recorded their strongest inflationary pressures, since March 2022. Again, their PMI was slightly more upbeat than the official version.

Japan, Taiwan and Malaysia all recorded modest to good factory expansions in March in their respective factory PMIs, and all recorded higher inflation pressures.

Interestingly, the Bank of Japan's Tankan survey of businesses there for Q1-2026 shows little negative impact from the current geopolitical situation. Those firms surveyed remain quite upbeat.

In Europe, their eurozone factory PMI also expanded, and at a 45-month high. But the inflationary pressures were also very evident in their report.

In Australia, yesterday's national address by Prime Minister Albanese warned of a rocky road ahead due to their fuel crisis, and that urgent reforms are required, mainly because previous deregulation has left them uncomfortably vulnerable in this situation.

Separately, their main business trade association said their Industry Index fell 19.9 points in March to -23.6, the steepest monthly decline since the initial pandemic phase of early 2020. Industrial activity, employment, new orders and sales indicators all fell markedly in response to the emerging energy crisis. Uncertainty was the main factor, with 30% reporting volatility in fuel prices, freight and/or supply arrangements because of the energy crisis. More than a quarter (26%) of businesses said rising costs were a major pressure – in fuel, freight, raw materials, resins, plastics and packaging.

There was a surge in residential consents issued in Australia in February, with 19,022 issued. That is the most for any month since mid-2021. Of note is the rise in Victoria where over 6000 consents were issued. That compares to NSW's 4332 and Queensland's 3890 in February. It is notable that states with relatively lower new-build consenting are those with higher rises in house prices.

The UST 10yr yield is now just on 4.31%, unchanged from yesterday. 

The price of gold will start today up +US$142 from yesterday, now at US$4783/oz. Silver is up +US$1.50 to US$76/oz.

American oil prices are down -US$1.50 at just on US$100/bbl, while the international Brent price is down -US$2.50 at just under US$102/bbl. Ship transit traffic in the Strait of Hormuz seem to be slowly returning, but on Iran's terms.

The Kiwi dollar is another +30 bps firmer against the USD from yesterday, now at 57.7 USc. Against the Aussie we are down another -10 bps at 83.1 AUc. We are up +40 bps against the yen. Against the euro we are up +10 bps at just on 49.7 euro cents. That all means our TWI-5 starts today up +20 bps at just over 61.4.

The bitcoin price starts today at US$68,837 and up +1.8% from this time yesterday. Volatility over the past 24 hours has been moderate 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 after the Easter holiday break.

Audio soundtrack opening is licensed from Shutterstock, Track 1219389 Monetization ID TFGEPGEI0LHEIJAI

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 Americans are talking up apparent signals from Tehran that will allow them to declare victory and go home. Markets are taking all this at face-value.

But first today, there was a dairy Pulse auction overnight where prices dipped from the prior week with WMP down -1.5%, SMP down -1.9%, and butter down -6.8%. Results in NZD limited these USD drops.

In the US, the Conference Board's survey of consumer sentiment rose marginally in March from its recent lows. That was despite surging inflation expectations, now well over 5%, and a continuing decline in consumers' future expectations.

Meanwhile, US job openings in February retreated and by a bit more than expected. Quits fell too as job security fears rose. Hiring decreased.

The Chicago Business Barometer fell in March but from a near four-year high in February but the dip wasn't anticipated. Still, it is the third consecutive month of growth in Chicago's economic activity, rare since 2022, though the pace of expansion slowed significantly. New orders and output continued to grow, but at a slower pace, while jobs decreased.

However the Dallas Fed services PMI took quite a tumble to its steepest contraction in almost a year, and a big retreat from February for both their activity and outlook measures. Costs there are rising much faster than prices.

The US is getting no relief from petrol and diesel prices, as they hit another high milestone. The gap between WTI and Brent is unusually narrow at present.

In Canada, and perhaps unexpectedly. they reported a small expansion in economic activity in January from December (+0.1%) and a slightly faster expansion in February from January (-0.2%). In the face of the threats and bullying from their obnoxious southern neighbour, this is resilience that few expected.

In China, major property developer Vanke posted an enormous loss for 2025, and said it is facing a wall of funding maturities. Vanke has survived because of Shenzhen government ownership support, although that is being dialled back too.

Meanwhile, China reported better than expected industrial expansions, in their case for their official March factory PMI. And their services PMI also recorded improvement into expansion, again unexpected. Typically these official surveys have been more pessimistic than the unofficial ones from S&P Global, which won't be released for March until later today. They too are expected to record expansion.

Japanese data for industrial production and retail sales, both for February, sagged and by a bit morte than anticipated.

In Korea, they reported industrial production data that was surprisingly weak in February.

Global air passenger travel rose a strong +6.1% in February from the same month in 2025, bolstered by the timing of Chinese New Year. In fact, domestic travel within China in February was up +12.5%. Overall international passenger travel was up +5.9% with the Asia/Pacific region rising +8.6%. Likely much of this expansion will be upended now with the March disruptions and sentiment retreats.

The UST 10yr yield is now just on 4.31%, down -3 bps from yesterday.

The price of gold will start today up +US$94 from yesterday, now at US$4641/oz. Silver is up +US$4 to US$74.50/oz.

American oil prices are down -US$1 at just on US$101.50/bbl, while the international Brent price is down -US$7.50 at just on US$104.50/bbl. Ship transit traffic in the Strait of Hormuz seem to be slowly returning, but on Iran's terms.

The Kiwi dollar is +30 bps firmer against the USD from yesterday, now at 57.4 USc. Against the Aussie we are down another -20 bps at 83.2 AUc. We are down little-changed against the yen. Against the euro we are down -30 bps at just on 49.6 euro cents. That all means our TWI-5 starts today up +10 bps at just over 61.2.

The bitcoin price starts today at US$67,646 and up +0.4% from this time yesterday. Volatility over the past 24 hours has been moderate at just over +/- 1.8%.

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.

Audio soundtrack opening is licensed from Shutterstock, Track 1219389 Monetization ID TFGEPGEI0LHEIJAI

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 we are now in week five of a completely preventable global crisis.

But first we should note that we are now touching up against the end of the month, and end of the first quarter. This is when fund managers and other large investors lock in their results for upcoming reporting. So there is a lot of position squaring activity at present, and that tends to skew financial market activity.

But the fundamental drivers - economic activity, inflation, geopolitical events - are not stopping, so there is still substantial market reaction to those. That is driving serious risk aversion. And markets watch key policymakers too.

Fed boss Powell was out speaking today to an economics class at Harvard. In answer to questions, he said distress in the private credit market looks more like a correction and not like a broader systemic event to them. He also said their would regard the inflation threats from the war on Iran as transitory, but that their patience was limited - given the fact that US inflation has been above 2% for five years now.

The New York Fed boss Williams was also talking, and he seemed now more concerned with the jobs market, saying a rate cut is a real possibility if it weakens further.

Meanwhile, the Dallas Fed's factory survey was a touch weaker in March than February on slowing new order growth. But their company outlook index dropped into negative territory and their outlook uncertainty index leapt.

In China, they reported an enormous current account surplus of almost +US$¼ tln in Q4-2025, almost US$¾ tln for the year, one that is globally destabilising. Also we should note that countries that signed up to the Chinese Belt & Road system are finding that they are on the short end of that deal. The two items are likely related.

India's factory production was up +6.0% in February from a year ago, better than expected.

In Europe, their Eurozone Economic Sentiment Indicator dropped in March on rising inflation expectations tied to the Middle East conflict.

So it will be no surprise to learn that German inflation jumped in March, driven by fast-rising fuel costs to its highest in over two years (January 2024) at 2.7%.

We should note that the aluminium price is on a sharp move higher again, approaching its mid-March post-pandemic record high. With Middle-East production damaged or out of service because they can't ship, China's dominance of the aluminium market seems likely now.

And air cargo demand surged in February, not only in response to Chinese New Year demand, but businesses seemed to rush the sector to get goods shifted fearing the Middle East situation. Sharply rising fuel costs, fuel scarcity in parts of the world, and the severe disruption to key cargo hubs in the Gulf are major shifts. February air cargo activity was up +11% from a year earlier with the Asia/Pacific region up +13.6%. But how this played out in March, and will play out in subsequent month, are likely to be a highly volatile mix of 'urgency' restrained by sharply rising costs.

It is worth noting too that concerns are rising that the oil and supply-chain problems are almost certainly going to provoke a global food crisis at some stage. Not only die to sharply higher costs, but sharply lower production at the same time. But that is yet to hit us all.

The UST 10yr yield is now just on 4.34%, down -10 bps from yesterday. 

The price of gold will start today up +US$54 from yesterday, now at US$4547/oz. Silver is up +US$1 to US$70.50/oz.

American oil prices are up another +US$3 at just over US$102.50/bbl, while the international Brent price is -50 USc lower at just on US$112/bbl. Ship transit traffic in the Strait of Hormuz seem to be slowly returning, but on Iran's terms.

The Kiwi dollar is -30 bps lower against the USD from yesterday, now at 57.1 USc. Against the Aussie we are down -20 bps at 83.4 AUc. We are down -90 bps against the yen. Against the euro we are unchanged at just on 49.9 euro cents. That all means our TWI-5 starts today down -25 bps at just on 61.1.

The bitcoin price starts today at US$67.359 and up +1.4% from this time yesterday. Volatility over the past 24 hours has been moderate at just under +/- 2.5%.

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.

Audio soundtrack opening is licensed from Shutterstock, Track 1219389 Monetization ID TFGEPGEI0LHEIJAI

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 we are starting to see economic bite from Trump's war on Iran. There is corrosion everywhere today

The OECD's latest economic update says global GDP growth is expected to hold at 2.9% in 2026 before rising slightly to 3.0% in 2027, driven by strong tech investment and easing tariffs. But the ongoing Middle East conflict makes these projections wobbly due to the energy market disruptions. Inflation forecasts were revised upward, with G20 advanced economies facing 4.0% headline inflation in 2026 they say, 1.2 percentage points higher than previously anticipated..

They see American GDP expansion go from +2.0% this year to +1.7% next year. For China, they see a shift from +4.4% in 2026 to 4.3% in 2027. For Japan, it is stable at +0.9% in both years. Their forecast for Australia in +2.3% growth this year, +2.4% next years,

Back in the US, jobless claims dipped last week, but not by as much as seasonal factors would have indicated. There are now 2.04 mln people on these benefits, down from 2.07 mln a year ago but up from 1.8 mln two years ago.

Meanwhile the Kansas City Fed March factory survey was positive again in March, for a second consecutive month. The month-on-month indexes were all positive except for new export orders.

The overnight US Treasury 7yr  bond auction brought similar results to the earlier 2 and 5 year events - lower offer volumes and much higher yields. This latest 7 year bond had a median yield of 4.19%, up from 3.74% at the prior equivalent event a month ago. Bad management brings higher risk premiums.

In China, state-owned China Eastern Airlines said it will buy 101 Airbus aircraft in a deal worth about US$16 bln, extending a run of big-ticket Airbus orders by major Chinese carriers. That will juice up Airbus's 2026 order book sharply.

In Singapore, manufacturing production fell by -0.1% in February from a year ago, reversing the +12.9% surge in January. This February result was the first month of decline since August last year, driven by weaker output across nearly all sectors - except electronics.

Overnight, Norway's central bank kept its policy rate unchanged at 4.0%. But they do see a hiking possibility in 2026, a turn from where a cut was more likely.

Global container freight rates rose +5% last week from the prior week, and are also now +5% higher than year ago levels. This latest rise makes these costs up +20% from the end of February. Outbound rates from China were the main driver in these latest rates and the overall index would have been much higher except for the decline in EU to US rates. That trade has shrivelled to a -29% year-on-year pullback. Meanwhile bulk cargo rates rose +3% in the past week but are -22% lower than year-ago levels.

The UST 10yr yield is now just on 4.42%, up +9 bps from yesterday at this time and its highest since July 2025. 

The price of gold will start today down -US$173 from yesterday at US$4383/oz. Silver is down -US$4.50 at US$68/oz.

American oil prices are up +US$4.50 at just over US$94.50/bbl, while the international Brent price is up +US$7 at just on US$108/bbl. Ship transit traffic in the Strait of Hormuz, already low, has dried up again.

The Kiwi dollar is -50 bps lower against the USD from yesterday, now at 57.7 USc. Against the Aussie we are unchanged at 83.6 AUc. We are down -50 bps against the yen. Against the euro we are -30 bps lower at just on 50 euro cents. That all means our TWI-5 starts today down -40 bps at just on 61.6.

The bitcoin price starts today at US$68,909 and down -3.6% from this time yesterday. Volatility over the past 24 hours has been moderate at just under +/- 2.1%.

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 on Monday.

Audio soundtrack opening is licensed from Shutterstock, Track 1219389 Monetization ID TFGEPGEI0LHEIJAI

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 there is a general relief rally underway as the US indicates it is pulling back from its aggressive tactics with Iran. Trump seems to be 'declaring victory', but the Iranians seem to have given up nothing he sought. The Iranians are letting non-combatant ships pass through the Straits of Hormuz on their terms and schedule. They are also continuing active attacks on their foes.

Even if "it is over", the echo of sharply higher inflation will linger. Yes, oil prices have pulled back but they remain more than +50% higher than at the start of Trump's crazy adventure. Benchmark interest rates are higher too. Wall Street is down a net -5% even after today's rally. 1500 civilians were killed in Iran in these attacks, 18,500 injured. The US seems to have revealed it is relatively impotent to impose its will, even with apparent overwhelming force. Certainly when applied incompetently.

Meanwhile, US mortgage applications fell sharply for a second week, due to mortgage interest rates rising to a five month high. Refinance activity was hit particularly hard, but even if that wasn't the case, there was a notable retreat for new purchases too. That is two consecutive weeks of -10% reductions and that is the sharpest two-week retreat since December 2024.

US crude stocks rose again last week and their fifth consecutive weekly rise, the longest stretch since early 2024. Meanwhile petrol inventories fell for a sixth consecutive week. This allowed pressure on US pump prices to rise +34% in a month. So they have an odd combination of plenty of crude oil stocks, and sharply rising energy inflation. Grifting at its best.

In an item we don't usually report on, a jury in New Mexico has found both Meta and YouTube liable in a first-of-its-kind lawsuit that aimed to hold social media platforms responsible for addiction harm to children using their services, awarding US$3 mln in damages.

Yesterday we noted the sharp rise in yields at the US Treasury two year Note auction. Today there was a similar one for the five year equivalent. And it too brought a dramatically higher yield - 3.92% up from 3.56% at the prior equivalent event a month ago. Demand was less for this one too, but not as dramatically as for the two year

In China, we should note that after a 21 day suspension, state owned shipping line COSCO is taking bookings for China to Middle East destinations again.

In Germany, their widely-watched Ifo Business Climate Index dropped in March to its weakest reading since February 2025, as the Middle East conflict dampened economic sentiment.

In Australia, February CPI inflation was reported as 3.7%, a marginal dip from 3.8% in January. Most sub-categories dipped, except the housing category which rose at the rate of 7.2% pa.

The UST 10yr yield is now just on 4.33%, down -8 bps from yesterday at this time. 

The price of gold will start today up +US$132 from yesterday at US$4556/oz. Silver is up +US$3 at US$72.50/oz.

American oil prices are down -US$2.50 at just over US$90/bbl, while the international Brent price is down -US$3 at just on US$101/bbl.

The Kiwi dollar is unchanged against the USD from yesterday, still at 58.2 USc. Against the Aussie we are up +10 bps at 83.6 AUc. We are up +20 bps against the yen. Against the euro we are +10 bps firmer at just on 50.3 euro cents. That all means our TWI-5 starts today up +10 bps at just on 62.

The bitcoin price starts today at US$71.453 and up +2.7% from this time yesterday. Volatility over the past 24 hours has been moderate at just under +/- 2.3%.

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.

Audio soundtrack opening is licensed from Shutterstock, Track 1219389 Monetization ID TFGEPGEI0LHEIJAI

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 escalation in the Middle East is rising as the US is increasingly desperate to extract itself. Through all this it is adding more troops as Iran widens its attacks. It looks grim.

But first up today we should note that the overnight dairy Pulse auction delivered slightly lower prices across the four commodities offered, all down about -3% in USD, marginally less in NZD.

In the US, while everything else is in flux, there is widening concern about private credit 'cockroaches'. We first noted the issues with Blue Owl funds. But it seems many more of these opaque funds have severe valuation issues. Funds managed by some very big names have been limiting withdrawals and investors clamour to exit their exposure. A list of troublesome funds include those managed by Goldman Sachs, JPMorgan Chase, Morgan Stanley, Blackrock, Apollo, Ares, and Blackstone. There are others of course. Limiting or stopping redemptions on funds that have dodgy valuations is a terrible signal.

Staying in the US, the weekly ADP pulse data delivered little-change from the prior week, a minimal +10,000 job increase.

The Richmond Fed's regional factory survey reported an improvement in their region in March, built on better order levels, an easier ability to pass on price increases, and a lower cost pressure. Despite all that, things are still net-negative. However their services survey is no longer negative (although it isn't positive either).

In Canada, small business sentiment took a hit in March, but it is still net-positive

There were many early March PMIs out overnight and the one for the US was weaker with weakened output growth and sharply higher prices following the outbreak of war in the Middle East. This survey is now at an eleven month low.

In Europe, this same survey shows Eurozone output growth slowed as input cost inflation hits its highest level for over three years.

India is reporting higher inflation and lower growth. Japan is reporting a slowdown in March too. And Australia reported a sudden contraction, their first in 18 months. In all PMIs released so far, the factory sectors are seeing less negative impact than the services sectors, where the effects are more immediate.

Taiwan reported a more 'modest' (for them) increase in industrial production in February, up +18% from a year ago. They also said their retail sales jumped an outsized +7.7% in February from a year ago, ending a long run of modest improvements.

We should note that the sharp restriction on sulphur exports from the Middle East is really juicing up the price of this commodity essential for phosphate fertiliser production, competing with mining demand for the remaining limited supply. Sulphur prices are now +40% higher than at the start of 2026 and +27% higher than the pandemic peak which was the prior record high.

The UST 10yr yield is now just on 4.41%, up +7 bps from yesterday at this time.

The price of gold will start today up +US$38 from yesterday at US$4424/oz. Silver is actually up +50 USc at US$69.50/oz.

American oil prices are up +US$3 at just on US$92.50/bbl, while the international Brent price is now just on US$104/bbl. And it will be no surprise to learn that jet fuel prices are leaping, globally.

The Kiwi dollar is softer against the USD from yesterday, down -30 bps at 58.2 USc. Against the Aussie we are unchanged at 83.5 AUc. We are down -40 bps against the yen. Against the euro we are -30 bps lower at just under 50.2 euro cents. That all means our TWI-5 starts today down -30 bps at just on 61.9.

The bitcoin price starts today at US$69,569 and down -1.4% from this time yesterday. Volatility over the past 24 hours has been modest at just over +/- 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.

Audio soundtrack opening is licensed from Shutterstock, Track 1219389 Monetization ID TFGEPGEI0LHEIJAI

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 its all about watching financial markets and their reactions to the US war on Iran and its long-term impact on US fiscal management - and their November election prospects. It is going to be volatile, yo-yo mix of gloom and temporary relief rallies.

During the pandemic crisis, we had essentially a fiscal and central bank 'put' policy to deal with that crisis, an implicit policy promise where the Government and central bank acted with programs to set a floor for employment and asset prices, typically by purchasing assets to inject liquidity during market downturns. But this time there seems little appetite to reprise that if things get really unstable.

In the week ahead, locally we will get some mortgage data for February, but apart from that, data releases will be light. Today's Fonterra results will be interesting however.

In Australia, Wednesday's February inflation data will be the key thing we are watching.

Globally, it will be all about actions and reactions during the fourth week of attritional conflict in the Persian Gulf and how that affects oil and natural gas flows.

In the US, there are a range of sentiment indicators for March out this week including PMIs, the University of Michigan consumer survey, and many regional Fed surveys.

In China, there isn't much data ahead this week, just industrial profit data. In Japan and Singapore, they too will update inflation data.

But we need to watch US Treasury yields which jumped at the end of last week, and to their highest level in nine months. Investors seem to be coming to realise that Trump doesn't know what he is doing, and the inflation impacts from these mistakes will likely deliver a much more hawkish US Federal Reserve, despite the Warsh and Miran inserts. We may all be in for rising benchmark interest rates.

And it won't help us that credit rating agencies are looking at these impacts and starting to consider downgrades, sovereign and corporate. Risk premium rises will be on top of the benchmark rises.

Meanwhile, the IEA says the market disruptions from the US/Israeli "conflict has triggered the largest supply disruption in the history of the global oil market". They say we should all work from home, and if we drive, drive slowly.

American petrol prices are up a third in just four weeks. That signal from the world's largest economy will be sharply inflationary. By a different means, Trump is effectively imposing a giant carbon tax on everyone.

And what will flow from from that? Sharply higher inflation, and sharply lower global economic activity. That is the definition of stagflation. Everyone suffers because monetary policy needs higher interest rates to restrain the inflation risk. And that undermines the global banking system because stagflation is the worst scenario for bank lending.

Meanwhile, Canadian retail sales rose in February by +0.9% from January to be +1.8% higher than year-ago levels.

But Canada's producer prices rose much less than expected in February. They were up +0.4% from January when a +1.1% rise was expected. For the year they are up +5.4% however.

Taiwanese export orders are still growing fast but the February rise was only +24% and by the standards of the +60% January rise, this seems a let-down. Analysts has expected another very large rise and so were disappointed. But anyone else would have been over the moon with a +24% rise.

In China, foreign direct investment inflows fell -5.7% in February from a year ago to ¥161 bln, -22% lower than the same period in 2025, and its lowest for this period since 2020. There were some positive sectors in high-tech, but mostly this is a weakness Beijing won't appreciate.

And Chinese customs data shows why the silver price jumped earlier in the year. China bought up 700 tonnes of the metal in January and February to shore up its strategic reserves. But the buying seems to have eased or stopped, and we are seeing the price dive now.

We should probably note that with the Australia-New Zealand "Closer Defence Relations" statement, there is growing expectations that the two countries will buy its replacement frigates from Japan.

In South Australia, the incumbent Labor state government has won re-election handily. Advance results show it winning 33 of 48 seats, with the Liberals suffering a heavy reduction (10). With 98% of polling booths counted, so far Pauline Hanson's One Nation Party is not ahead in any of them.

And we need to note that Fitch has changed their outlook for the New Zealand economy, shifting its AA+ rating from 'Stable' to 'Negative' on the basis that debt reduction is now far less likely for either the private or public sectors.

The UST 10yr yield is now just on 4.39%, unchanged from Saturday at this time, up +11 bps for the week.

The price of gold will start today down -US$83 from Saturday at US$4590/oz. That is down -$528 or -10.5% in a week. And that its its largest weekly fall in more than 40 years. Silver is down another-US$2 at US$67.50/oz, a -16% weekly retreat.

American oil prices are holding at just on US$98/bbl, while the international Brent price is up +US$1.50, now just over US$112/bbl.

The Kiwi dollar is little-changed against the USD from Saturday, down -10 bps at 58.3 USc. Against the Aussie we are also little-changed at 83 AUc. We are down -20 bps against the yen. Against the euro we are down -10 bps at 50.4 euro cents. That all means our TWI-5 starts today down -10 bps at just on 62 but up +40 bps over the past week.

The bitcoin price starts today at US$68,741 and down -1.3% from this time Saturday, down -3.3% from a week ago. Volatility over the past 24 hours has been modest at just on +/- 1.8%.

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.

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