Equities drop on strong risk-aversion market moves

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 the gold price is approaching US$3000/oz again after hitting a new record high earlier today. The equity markets are falling again. Benchmark bond yields are in risk-aversion mode but corporate debt yields are rising.

But first, US initial jobless claims were little-changed last week from the prior week, slipping slightly on seasonal factors. There are now 2.163 mln people on these benefits, +4.0% more than at this time last year.

American producer prices were up +3.2% in February from a year ago, slightly less than expected (+3.3%) and a notable fall from January (+3.7%). But January was an outlier. The average in 2024 was +2.5%.

This updated chart of the price of eggs in the US is interesting. They are now up +100% in one year, up +42% in 2025 alone. US egg prices are rising faster than gold.

There was a US Treasury 30 year bond tendered overnight and to slightly less demand. It resulted in a median yield of 4.56%, which was less that the 4.68% at the prior equivalent event a month ago.

Meanwhile, US yields for sub-investment grade corporate bonds ("Junk bonds") have jumped in the past week or so on recession fears and tariff uncertainty. Today there were more tariff threats from Trump who can't seem to understand why others would retaliate.

North of the border, riled up Canadians are now proposing to toll US trucks that go through B.C. to service Alaska. But this won't hurt Alaska much as most of their freight arrives by sea. However they seem to want to make a point by withdrawing a long-standing concession. Elsewhere, supply-chain and retailers are noticing significant anti-US consumer demand shifts.

And staying in Canada, their residential building consent levels slipped in January, pretty much as expected after the surge in December. But they remain an impressive +29% higher than a year ago, largely due to multi-unit construction.

Across the Pacific, Beijing has quietly moved to inject public funds worth ¥500 bln (NZ$120 bln) into ailing state-owned banks. It is a similar rescue to the 1998 Asian Financial Crisis when they injected the ¥270 bln for the same reason - wavering SOE bank health.

Chinese warships may have been circling Australia for geopolitical warning reasons. Or they may have had other objectives as well. Yesterday the official work report from the Chinese National Congress was released, and it includes a mention (page 17) of it now being a "key task for 2025" to develop "deep-sea science and technology", which is a new item added this year. It's a reach of course, but we may be seeing more Chinese vessels on our presumably valuable continental shelf. If we don't want them there we will have to develop the ability to keep them away.

Global container freight rates fell another -7% last week to be their lowest since January 2024 but still +67% higher than pre-pandemic levels. Bulk cargo rates rose sharply last week, up +27% for the week to be a third lower rthan this time last year.

The UST 10yr yield is now at 4.27%, down -3 bps from yesterday at this time. 

Wall Street is falling again, down -1.4% on the S&P500. 

The price of gold will start today at just on US$2980/oz and up another +US$48 from yesterday. And that is a new all-time high. In intra-day trading it hasn't yet quite touched US$3000, but close, and probably soon.

Oil prices are down -US$1 at just over US$66.50/bbl in the US and the international Brent price is at just under US$70/bbl.

The Kiwi dollar is now at 57.1 USc and down -20 bps from yesterday. Against the Aussie however we are unchanged at 90.8 AUc. Against the euro we are still at 52.5 euro cents. That all means our TWI-5 starts today just under 66.4, and down -10 bps from yesterday.

The bitcoin price started today at US$80,780 and down -1.7% from this time yesterday. Volatility over the past 24 hours has again been moderate at +/- 2.1%.

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.