US-Iran positions yo-yo

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 Trump's Gulf War is back in escalation mode with the two belligerents' trading harsh rhetoric. Which of course means no oil is getting through. Kuwait has declared force majeure on its oil exports due to the US blockade. Financial markets are reacting with caution, but it seems they remain ready to push up with yet another 'relief rally' if things calm down again. Meanwhile. Canada's CPI inflation returned back to its 2.4% pa level where it has been for six of the past seven months and basically where it was in March 2025. But it is up from the unusual February 1.8% level, caused solely by the rise in energy prices. And the Bank of Canada released two Q1-2026 expectation survey results. The business version reported improved sentiment, with fewer businesses saying they are being affected by trade tensions with the United States, and many expect sales growth to improve. The consumer one said they became less negative about their spending plans than in the previous quarter as downward pressure from trade tensions eased. All the same, it is still quite negative. China has held its Loan Prime Rate (LPR) benchmarks at record lows for an 11th straight month in April 2026, matching market expectations. The one-year LPR, the benchmark for most corporate and household borrowing, was held at 3.0%, while the five-year LPR, a benchmark for mortgages, remained at 3.5%. And China’s exports of electric vehicles, solar cells and lithium-ion batteries surged significantly in March, following a sudden spike in demand for green energy products. Their investment in 'green' non-oil alternatives is really paying off for them. In Malaysia, their exports rose to a three-month high in March, but the rate of increased was lower at +8.3% from a year ago, compared to 10.7% in February. In Germany, producer prices, which had been falling on a year-on-year basis since March 2025, were virtually unchanged in March (-0.2%), but they rose +2.5% from February as the oil price spike kicked in. ECB boss Lagarde says they are uncertain how to react to the two threats of higher inflation from the oil shock, and lower growth prospects that result from that. She said the "double uncertainty about the duration of the shock and the breadth of pass-through argues for gathering more information before drawing firm conclusions for our monetary policy". But she also warned that if governments 'support' consumers with generous programs, their hand could be forced to weigh against the downstream consequences of embedded inflation. She used 2022 examples of how these problems are caused. And the BIS is warning of the threats of stablecoins. "If widely adopted in their current form, stablecoins would pose policy challenges in areas ranging from credit provision to monetary policy, with risks to financial integrity and regulatory evasion looming large." They will be particularly threatening to the sovereignty of emerging markets, they say. In Australia, they launched some direct "interest free" loans for certain sectors in their economy to assist them with the very high cost of fuel, logistics, fertilisers and plastics. And we should probably note that the zinc price has risen to its highest since 2022, and prior to the pandemic, its highest since 2018. The UST 10yr yield is now just on 4.25%, up +1 bp from this time yesterday.  The price of gold will start today down -US$22 at US$4807/oz. Silver is down -US$1 at US$80/oz. American oil prices are up +US$5 at just over US$89, while the international Brent price is up +US$4.50, and now at US$95/bbl. The IEA's latest monthly report details the quantum of the Trump Gulf War on the oil market. They say the global oil supply dropped by -10% in March to 97 million barrels per day amid attacks on energy infrastructure in the Middle East and the plunge in shipping traffic through the critical Strait of Hormuz.  The Kiwi dollar is up +10 bps from yesterday at this time at 58.9 USc. Against the Aussie we are also up +10 bps at 82.1 AUc. Against the euro we are unchanged at just on 50 euro cents. That all means our TWI-5 starts today also little-changed from yesterday at just over 62.2. The bitcoin price starts today at US$75,925 and up 1.5% from this time yesterday. A week ago it was US$72,976. Volatility over the past 24 hours has remained modest at just on +/- 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