Kia ora.

Welcome to Thursday’s Economy Watch where we follow the economic events and trends that affect Aotearoa/New Zealand.

I'm David Chaston and this is the international edition from Interest.co.nz.

Today we lead with news financial markets are betting Trump will endlessly extend the ceasefire with Iran and the crisis there will fade. Ships are getting through the Strait of Hormuz despite the US's 'blockade'. But there remains plenty of high-stakes risks, especially as Chinese navy warships are heading to the region. But Iran holds all the long-term cards.

In the US, Trump has renewed his threats to fire Fed boss Powell for 'corruption', a clear misdirection play that has few falling for it. If he did, it still remains uncertain how this would play out, or even whether he has the authority to do so.

US mortgage applications rose slightly last week with a return of better refinance activity. But activity for new home purchases slipped lower.

The US Fed's Beige Book survey found the conflict in the Middle East being cited as a major source of uncertainty that complicated decision-making around hiring, pricing, and capital investment, with many firms adopting a wait-and-see posture. It also found signs of consumer financial strain, increased price sensitivity, and rising demand at food banks and other social service organizations. But spending among higher-income consumers was resilient, they reported.

The April New York Empire factory survey revealed at sharp rise in costs and prices, but it expanded anyway and better than expected on a rise in new orders. But optimism waned and capital spending plans weakened.

Meanwhile home builders in the US are doing it tough with widespread discounting and incentive use to spur weak sales. The NAHB/Wells Fargo Housing Market Index fell to its lowest since September in March when a rise was anticipated in this sector.

There was a big surprise out of Japan yesterday. Machinery orders rose +13.6% in February from January, to be +24.7% higher than year-ago levels. This was after January orders were up +13.7%. The February year-on-year gain was three time higher than what was expected. (Japan has been drinking some Taiwan juice.) But a lot has happened since. Japanese manufacturers' confidence posted its biggest month-on-month drop in ​more than three years in April, dampened by surging oil prices and supply-chain disruptions caused ‌by the Middle East conflict, the Reuters Tankan poll showed.

Meanwhile, EU industrial production rose more in February from January than expected, and the decline from a year ago was less than expected. This data is inflation adjusted, but still, it isn't particularly positive.

In Australia, long term permanent immigrant arrivals bounced back strongly in February from January to +14,100 for the month but it was still -4.4% lower than for February 2025 and -14% lower than February 2024. For the year to February, permanent arrivals totalled +141,660, down more than -10% from a year ago and the least since September 2023.

And Australian prime minister Albanese has been in Brunei where he secured substantial oil and fertiliser supply agreements.

The UST 10yr yield is now just on 4.28%, up +3 bps from this time yesterday. 

The price of gold will start today down -US$44 at US$4493/oz. Silver is up +US$1.50 at US$79/oz.

American oil prices are up +US$1 at just under US$92.50/bbl, while the international Brent price is also up US$1, and now at US$95.50/bbl.

The Kiwi dollar is essentially unchanged from yesterday at this time at 59.1 USc. Against the Aussie we are down -30 bps at 82.5 AUc. Against the euro we are holding at just on 50.1 euro cents. That all means our TWI-5 starts today down -10 bps from yesterday at just on 62.4.

The bitcoin price starts today at US$74,1867 and down -0.7% from this time yesterday. Volatility over the past 24 hours has been low at just on +/- 0.9%.

You can get more news affecting the economy in New Zealand from interest.co.nz.

Kia ora. I'm David Chaston and we’ll do this again tomorrow.