Here's our summary of key economic events overnight that affect New Zealand with news China's inability to get out of its rut, and the fast-fading of the American exuberance are the dominating global economic scene-setters.
And this week will be all about the US Fed and its Thursday monetary policy review. They face the prospects of higher inflation in the immediate plannable future from the costs of the new tariffs, an expansion that is faltering fast, and probably a wave of job losses. How they assess those conflicts will be keenly followed by financial markets, even if no rate change is expected.
New inflation pressures are also hitting Canada, and they will release CPI data this week, along with retail sales data.
And many other countries will have monetary policy reviews this coming week, including Japan, China, Sweden, Switzerland and the English. Japan will also release inflation data.
And China is about to release retail sales and industrial production data later today along with a look at February house prices.
Over the weekend in China, after the spectacular rise in January loan growth, reported their February levels came in quite low, showing the policy-induced surge could not be maintained. There were only ¥1.01 tln in new loans extended in the month, far below the ¥5.03 tln January level and back to levels it bounced along at for most 2024 months. The February 2024 level was ¥1.45 tln, so this 2025 result is a definite sag since then.
New official energy is going into boosting consumer demand by tackling consumers property losses, that haven't responded so far to prior efforts, and to 'stabilise' their stock markets.
And their foreign direct investment data out for February was very weak again, only ¥114 bln in February, -20.4% lower than the already low ¥143.4 bln in the same month of 2024. And this is off the back of a 2024 which was their lowest FDI inflows in eleven years. For perspective in February 2022 they attracted ¥220 bln in foreign investment, so this 2025 level is about half of that.
Across the Pacific, the widely anticipated American March survey of consumer sentiment from the University of Michigan was out and it fell much more than expected. In fact it recorded its lowest level since November 2022. It is now down -27% from a year ago.
One key reason Americans are so glum (apart from the chaos of policy gyrations), they fear a sharp return of inflation. Year-ahead inflation expectations jumped up from 4.3% in February, already a high level, to 4.9% this month, also the highest reading since November 2022 and marking three consecutive months of unusually large increases. Their new long term inflation expectations of 3.9% have now hit a 32 year high.
There is probably much more to come. The US price of timber is already rising and now at its highest level two years. Industrial commodities like tin are also tracking much higher. We have previously noted the cost of eggs which even after a recent pullback are still almost double what they were a year ago. There will elevated interest in the AtlantaFed's GDPNow tracking when it is updated tomorrow.
The UST 10yr yield is now at 4.32%, up +1 bp from Saturday at this time. The key 2-10 yield curve is holding at +30 bps. Their 1-5 curve inversion is now +1 bp. And their 3 mth-10yr curve inversion is +2 bps. The Australian 10 year bond yield starts today at 4.42% and down -6 bps from Saturday. The China 10 year bond rate is now at 1.89% and down -1 bp. The NZ Government 10 year bond rate is now at 4.68%, unchanged from Saturday.
The price of gold will start today at just on US$2985/oz and up another net +US$2 from Saturday. Over the weekend it briefly spiked to US$3000 but then retraced sharply before settling at the current level.
Oil prices are little-changed from Saturday at just over US$67/bbl in the US and the international Brent price is at just on US$70.50/bbl.
The Kiwi dollar is now at 57.5 USc and unchanged from Saturday. Against the Aussie we are also unchanged at 90.9 AUc. Against the euro we are holding as well at 52.8 euro cents. That all means our TWI-5 starts today just under 66.8, and also virtually unchanged.
The bitcoin price starts today at US$83,632 and down -0.7% from this time Saturday. Volatility over the past 24 hours has again been modest at +/- 1.5%.
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19 Comments
Would tariffs in the US lead to deflation in prodicer nations as product has to be sold elsewhere? At least in the short term until volumes a are painfully adjusted.
What am I missing?
A merry go round of uncertainty for all products all markets as the two hugest economies flail around. China is in a slump, induced by the distrust aroused through covid and its aftermath, as nations continue to pull back from involvement and the USA, day by day, now as unpredictable as its president. Large producers are not usually sufficiently agile to switch between markets at will however they can stop supplying if it means they will be actually losing money.
The Ponzi required folk to take on ever-more debt, so as to consume ever-more stuff.
That meant borrowing from the future, to pay for today - a process which was always temporary.
The US and China are no different from NZ in that regard. Incumbent leadership - of all hues - is intent on re-starting 'GROWTH'. But GROWTH can no longer be had, ex sleight-of-hand (ex pumping more debt into the system than is gotten in GDP, in other words).
We're still waiting for a journalistic overview-appraisal. What we are getting is blame-on-the-most-recent-manifestation. .
Thank you for the link, the heading of which actually is:
Global Growth Divergent and Uncertain
You also (3rd word in) claim a universal 'is'.
No, that's just the IMF - well known front for the First World screwing the Third out of its resources, by forcing debt-'repayments' on them, then taking in lieu.
And of course, those are economists - well known to be both resource and energy-blind. Tea-leaf-readers who were right by default, in the era of abundance - but hopelessly clueless in this era beyond abundance...
Reminds me of the thinning fleets of cars parked outside the reducing number of churches up ... Read more
Thank you for the link, the heading of which actually is:
Global Growth Divergent and Uncertain
You also (3rd word in) claim a universal 'is'.
No, that's just the IMF - well known front for the First World screwing the Third out of its resources, by forcing debt-'repayments' on them, then taking in lieu.
And of course, those are economists - well known to be both resource and energy-blind. Tea-leaf-readers who were right by default, in the era of abundance - but hopelessly clueless in this era beyond abundance...
Reminds me of the thinning fleets of cars parked outside the reducing number of churches up and down NZ of a Sunday. It's generations since Darwin, yet...
Read less"Divergent and Uncertain" doesn't mean no growth as you claimed. It just means that some countries will grow more than others. US growth is described as "already-robust". To claim this is supporting your "argument" is ludicrous. Your statements seem to be getting weaker and weaker.
Try addressing the points in my post.
.
I am puzzled by the short title that says China's weaknesses are self-inflicted. In dealing with the current complex global situation, it is not obvious to me that China's economic policy is fundamentally flawed. They appear to be achieving significant economic growth combined with very low inflation. So what are they doing that is fundamentally wrong?
KeithW
They appear to be achieving significant economic growth combined with very low inflation.
Or do you mean headline growth metrics are comparatively strong compared to other nations while the Chinese economy experiences price deflation?
On that note, a good article from the AFR on Aussie's federal budget. The article has a graph showing average annual growth in living standards over the past decade among OECD nations. Aussie is the worst.
The bad news is we’ve done well thanks to luck rather than good management. And the worse news is that, despite the luck that’s come our way, our social compact isn’t delivering prosperity: ... Read more
They appear to be achieving significant economic growth combined with very low inflation.
Or do you mean headline growth metrics are comparatively strong compared to other nations while the Chinese economy experiences price deflation?
On that note, a good article from the AFR on Aussie's federal budget. The article has a graph showing average annual growth in living standards over the past decade among OECD nations. Aussie is the worst.
The bad news is we’ve done well thanks to luck rather than good management. And the worse news is that, despite the luck that’s come our way, our social compact isn’t delivering prosperity: Australian living standards stood still over the past decade.
https://www.afr.com/policy/economy/we-wasted-a-400b-windfall-and-now-we…
Read lessKeith - they, like agribusiness here, made the fundamentally-flawed mistake of hitching their increase in work-done, to a finite energy source.
So they too, just later, built an interdependent set of infrastructure, which is largely useless beyond FF.
But they saw some of the writing on the Wall :) and tried to go down the 'renewables' route (they're really rebuildables, not renewables; dams PV and Wind). And have found what we early adopters have found (I'm 20+ years off-grid); that you don't get as much work out, for your energy in. A worse EROEI, in other words. So China is closer to ... Read more
Keith - they, like agribusiness here, made the fundamentally-flawed mistake of hitching their increase in work-done, to a finite energy source.
So they too, just later, built an interdependent set of infrastructure, which is largely useless beyond FF.
But they saw some of the writing on the Wall :) and tried to go down the 'renewables' route (they're really rebuildables, not renewables; dams PV and Wind). And have found what we early adopters have found (I'm 20+ years off-grid); that you don't get as much work out, for your energy in. A worse EROEI, in other words. So China is closer to where we will end up (on renewables by default) but is still in the cleft stick; in that you cannot run a modern 'economy' ex fossil energy. And it's finite.
Have you raised this in the 'agribusiness' world?
Read lessIn response to Powerdownkiwi
Both energy and nutrient recycling are issues that I think about a lot in relation to agribusiness. Here in NZ, that thinking relates to a mountainous land where the soils are low in terms of key nutrients. But I have also had the good fortune to work in more than 20 other countries (including China), and to visit a lot more. When I started my career more than 50 years ago, traversing and integrating both resource economics and science, I probably made the mistake of under-estimating technological progress. I continue to explore where the inevitable journey towards ... Read more
In response to Powerdownkiwi
Both energy and nutrient recycling are issues that I think about a lot in relation to agribusiness. Here in NZ, that thinking relates to a mountainous land where the soils are low in terms of key nutrients. But I have also had the good fortune to work in more than 20 other countries (including China), and to visit a lot more. When I started my career more than 50 years ago, traversing and integrating both resource economics and science, I probably made the mistake of under-estimating technological progress. I continue to explore where the inevitable journey towards sustainability within a finite world will take us, determined by what we can capture from the big red orb as it crosses the sky each day, using current and new technologies.
KeithW
Read less
It may be fair to suggest that the Chinese property collapse was self inflicted....and the structures that facilitated it. It is also fair to note that the decline in international demand for Chinese exports cannot be sheeted home to the Chinese government.
So perhaps in a way PDK is correct....in a global market the need for unlimited growth in a finite environment is the ultimate cause.
Autonomous net zero.
"China has approved the construction of a colossal hydropower project on Tibet’s longest river that could generate three times more energy than the Three Gorges Dam
Total investment in the dam could exceed 1 trillion yuan (US$137 billion), which would dwarf any other single infrastructure project on the planet."
https://www.scmp.com/news/china/science/article/3292267/china-approves-…
Dams represent a humungous amount of burnt fossil-fuel feedstock. And they require maintenance, and they're good for about 100 years.
China is on the right track - or at least, the better track - than our short-sighted bunch of Muppets, but this still assumes BAU will carry on being AU. Which is unlikely.
I just finished watching Landman on prime video. Dramatised of course, but has a few interesting thoughts into mainstream TV series around oil to get people thinking at least.
I just finished watching Landman on prime video
Good for you. Haven't started yet.
Electric recycling of Portland cement at scale
...We show that the proposed process may be economically competitive, and if powered by emissions-free electricity, can lead to zero emissions cement while also reducing the emissions of steel recycling by reducing lime flux requirements. The global supply of scrap steel for recycling may treble by 2050, and it is likely that more slag can be made per unit of steel recycled. With material efficiency in construction9,10, future global cement requirements could be met by this route."
"...In 2024 alone, one Chinese shipbuilder constructed more commercial vessels by tonnage than the entire U.S. shipbuilding industry has built since the end of World War II."
https://www.defensenews.com/global/asia-pacific/2025/03/11/chinas-shipb…
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