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.
And today we lead with news there have been some unusual events overnight. And that's putting it mildly.
Canadians are voting in federal elections, ones where the winner will need to tackle a weird US administration. The US president injected himself into the campaign at the last minute with a claim Canadians should vote for him to make Canada the 51st state of the US. There are no exit polls yet, but it is likely to steel Canadians to reject the call in record numbers whatever the result is.
The clear instability of the Trump action saw Wall Street fall almost immediately but has recovered slightly since. There are nerves on Wall Street about some impending Big Tech results out soon too.
In the real world, Canadian wholesale sales slipped -0.3% in March.
In the US, the Dallas Fed factory survey dived to its worst level since the pandemic, and before that its worst level since early 2016. The fall was worst in new orders. Inflation rose. Confidence in the future weakened. The US oil patch isn't a happy place.
In Europe, we should probably note that there has been a major electricity grid failure in Spain and Portugal with much of the country blacked out, although service is now being restored.
Separately, a key ECB figure said the European Central Bank may cut interest rates below the neutral level that keeps the economy in balance. He said euro zone inflation may come in lower than expected as a result of American tariff actions and require the much looser settings.
In Asia, India said its industrial production rose +3.0% in March from a year ago, similar to the slowdown reported in February, a lot more tamer than the expansion rate has been recently although back to its long term average. This is not evidence their economy is booming from manufacturing.
In China, their centr5al bank is signaling that both rate cuts and reserve ratio cuts are on their to-do list "at the right time". Both will boost liquidity and shore up any economic wavering.
Singapore's unemployment rate ticked up a little, but only from an historically low level and only back to its long-run level.
Singapore has a national election on Saturday, May 3. No surprise is expected in a contest closely controlled by the ruling party.
Australia's federal election is on the same day and that outcome is a lot more uncertain.
Australia is one of very few countries to have a AAA credit rating from Moody's, S&P, and Fitch. Now analysts at S&P are openly concerned about the cost of election promises in light of their budget forecasts that earlier showed long-term deficits rising. Election victory might be a bit of a poisoned chalice if it also comes with a downgrade, higher debt servicing costs and rising deficits. Public policy choices then become very hard, very necessary, and very unpopular.
The UST 10yr yield is now at 4.21%, down -4 bps from this time yesterday.
The price of gold will start today at US$3336/oz, and up +US$17 from yesterday.
Oil prices are down -US$1 at just under US$62/bbl in the US and the international Brent price is down a bit more, now just over US$65.50/bbl.
The Kiwi dollar is now at 59.6 USc, unchanged from Saturday at this time. Against the Aussie we are down -30 bps at 92.9 AUc. Against the euro we also down -30 bps at 52.2 euro cents. That all means our TWI-5 starts today still just on 67.7 and down -30 bps as well.
The bitcoin price starts today little-changed at US$94,137 and down just -0.1% from this time yesterday. Volatility over the past 24 hours has been modest at +/- 1.4%.
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 tomorrow.