Economy Watch

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 consumers may be anxious about their political future, but they are spending like they are in healthy financial shape.In the US, their economy expanded an annualised +2.8% in Q3-2024, below the 3% in the previous quarter and forecasts of 3%. Holding it back was essentially no growth of inventories and slow expansion of capital investment. But personal spending rose at its fastest pace in more than a year. The US economy is running at a nominal pace of US$29.35 tln of annual economic activity. That is +US$1.4 tln more in a year, or +4.9% more, in nominal terms. (Their increase is about five times New Zealand's total activity, three-quarters of Australia's total annual pace.)The ADP employment report for October delivered a very positive signal, adding +233,000 paid private-sector jobs, when only +115,000 were expected. This will have analysts raising their forecasts for US non-farm payrolls.US pending home sales - a forward-looking indicator of home sales based on contract signings - rose an outsized +7.4% in September and the rise was broad-based, across the nation. But last week's mortgage applications were little-changed, but that level is +10% higher than year-ago levels (which to be fair were weak). Higher benchmark mortgage rates inhibited recent activity.In China, eyes are on the level of interest payments that local government is paying, as they borrow much more, replacing the 'revenue' that has dried up from land sales.Pushed by an unexpectedly positive German result, the EU Q3-2024 GDP rose much faster than expected (even if it is still low).EU sentiment is broadly stable, although there was a small rise in inflation expectations in these surveys.In Australia, their Q3-2024 CPI rate was expected to come in at 2.9%, and their September monthly inflation indicator was expected at 2.4%. They actually came in at 2.8% and 2.1% respectively (a 3 year low), so that eases the pressure on the RBA, although only slightly. Next week, the RBA will be reviewing its 4.35% policy rate, and these results are likely to be seen as an unexpected faster cooling, but largely resulting from the impact of the Canberra's government's Energy Bill Relief Fund rebate. It seems unlikely this distortion will prove enough for the RBA to cut rates.The UST 10yr yield is now at just on 4.25% and down -4 bps from this time yesterday. The price of gold will start today at US$2786/oz and up +US$21 from yesterday and a new high.Oil prices are up +US$1 US$68.50/bbl in the US while the international Brent price is up to US$78.50/bbl.The Kiwi dollar starts today at 59.8 USc and back up +20 bps from this time yesterday. Against the Aussie we are up +10 bps at 91 AUc. Against the euro we are down -10 bps at 55.1 euro cents. That all means our TWI-5 starts today at just on 68.8, and up +0 bps from yesterday at this time.The bitcoin price starts today at US$72,121 and down -0.7% from this time yesterday. Volatility over the past 24 hours has been modest at just on +/- 1.5%.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.

Kia ora,Welcome to Wednesday’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 the fiscal bazooka is reportedly in place in China. And it is bigger than expected.But first, US retail sales remain strong. The Redbook index rose +5.6% last week, its biggest gain since early September, and better than the +5.3% in the same week last year.The number of job openings in the US fell by -418,000 to 7.4 mln in September from a downwardly revised 7.9 million in August and below market expectations of just on 8 mln. It is the lowest level since January 2021, indicating their labour market is cooling. Quits fell to levels last seen four years ago. Just how fast this labour market cooling is going will be known on Saturday NZT when we get the US non-farm, payroll for October. That is expected to show a +115,000 gain. It might be better than that.The US Conference Board consumer sentiment index bounced back in October, confirming the similar University of Michigan survey earlier in the month. This wasn't expected however. Also surprising was the rise in future expectations. Consumers’ assessments of current business conditions turned positive. Views on the current availability of jobs rebounded after several months of weakness, potentially reflecting better labour market data in the month.And here's another positive signal. The Dallas Fed services survey rose in October after being negative in the past, the first positive reading after being negative in the past 30 months. Ahead, firms there are optimistic, even if election uncertainty shows up in this survey.The US merchandise trade deficit widened sharply in October to -US$108 bln, the widest since the disruptions around Russia's Ukraine invasion onslaught. As a proportion of US GDP, it isn't overly significant. This time, it is higher demand for consumer goods driving imports.There was another US Treasury bond auction earlier today, this one for their seven year bond, again very well supported. But the yield rose to 4.17%, up sharply from 3.61% at the prior equivalent event a month ago.Reuters is reporting that China is considering issuing a massive ¥10 tln (NZ$2.3 tln) in extra debt in the next few years to revive its fragile economy. This fiscal package is expected to be further bolstered if Trump wins the American election, they say. This is far more money printing that was originally expected.In Singapore things aren't great. Their PPI plunged -7.1% year-on-year in September, following -3.4% decline in the previous month. This was the steepest drop since August 2023.In Germany, their GfK Consumer Climate Indicator rose to a much less negative level in October. It was the highest reading since April 2022, with sentiment improving for the second month and exceeding market expectations. Income expectations strengthened and consumer propensity to buy reached its highest level in nearly three years.And the EU is pressing ahead with a sharp tariff rise on Chinese EV's to counter state subsidies.The UST 10yr yield is now at just on 4.29% and unchanged today. The price of gold will start today at US$2767/oz and up +US$24 from yesterday.Oil prices are little-changed at just under US$67.50/bbl in the US while the international Brent price is down to under US$71.50/bbl. That there is essentially no-change is impressive because the US is buying to restock its strategic reserves.The Kiwi dollar starts today at 59.6 USc and down -20 bps from this time yesterday. Against the Aussie we are up +10 bps at 90.9 AUc. Against the euro we are down -10 bps at 55.2 euro cents. That all means our TWI-5 starts today at just on 68.7, and down -10 bps from yesterday at this time.The bitcoin price starts today at US$72,595 and up a sharp +5.5% from this time yesterday. Volatility over the past 24 hours has been high at just on +/- 3.1%.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 tomorrow.

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 China is having trouble getting its economic mojo back. In fact most signals are suggesting they are slipping further behind.But first, this coming week is a very busy one in the US. Not only will they release key labour market data (JOLTS, non-farm payrolls) and PMI data (ISM), they will also release their Q3-2024 GDP result (expect +3%), all this while some megacap companies release Q3 earnings results, any one of which could be market-moving.Japan will release its policy interest rate decision this week. China will publish is official PMIs. And the EU will chime in with PMIs and its GDP result too.Australia will release its Q3-2024 CPI result in Wednesday, expected to come in at 2.9% which would be lower than the 3.8% in Q2. The RBA next reviews its policy rate a week from today and all indications are that it will hold it at 4.35%.Over the weekend there were two democratic election results of interest to us, and in both cases, long-governing parties were defeated. This wasn't unexpected however, although the results were a lot closer in both cases than pundits expected. In Japan, the current Prime Minister may be able to hang on by adding a third party to his current two-party coalition. In Queensland, the switch was clearer although not as brutal as was widely expected.In China official weekend data showed that industrial profits were -3.5% lower in the nine months to September than in the same period a year earlier. This comes amid persistent weak demand, deflation risks, and their property downturn. But just looking at September alone, profits dropped -22% from the same month a year ago. So the bite is on. It seems unlikely that Thursday's October PMIs will be very encouraging.Foreign direct investment into China for the year to September slumped too, down -30% from the previous year although on the year-to-date basis they favour that was a slight easing from the -31.5% fall in August. For the month of September, the inflow was +NZ$14.2 bln and a huge step down than the +NZ$540 bln that flowed in in September 2023. But at least it is positive.Leading Chinese economist Zhang Yu has raised the alarm over falling consumption in the Chinese domestic economy. Consumption is under pressure even though Beijing seems to be making big efforts to boost it. In Q3-2024, retail growth came in at just +2.5%, while in the mega-cities of Beijing and Shanghai it turned negative in the months of July and August. He points out that domestic consumption's economic contribution ratio dropped to 49.9% in the first three quarters of 2024, as compared to 60.5% for the first half. That is a very rapid shift. Exports have held their growth level up so far, but that isn't continuing. The shriveling consumption puts China's economy in some sort of peril and Beijing seems to have no answers so far. They have used half of their support measures already. Hopefully the next half will work better.Across the Pacific, American durable goods orders slipped slightly in September from August, but by less than analysts had expected. But that takes them -2.9% lower than a year ago. Capital goods orders retreated -6.5% year-on-year, but non-defense capital goods orders other than aircraft were higher (although only by +0.6%).The University of Michigan consumer sentiment index was revised up in October from their earlier 'flash' result, marking a third consecutive month of rises and reaching the highest level in six months. And this same survey found little concern about future inflation, with expectations at 2.7% and that is its lowest level in almost four years.The Dallas Fed's factory survey was much improved in October, its mildest contraction since the sag that started in May 2022. It was driven by a sharp improvement in production activity. However the recovery in new orders was much weaker.A very well supported UST 5yr bond auction earlier today brought a median yield of 4.07%. But that was an unusually large rise from the 3.46% at the prior equivalent event a month ago. There was a two-year UST bond auction as well, also well supported but also at a median yield that jumped just as much.In Canada, retail sales rose again in August mainly on the back of more optimistic car buying. While the overall gain is still low, it is a third month in a row they have reported a year-on-year rise.The UST 10yr yield is now at just on 4.29% and up +4 bps today. Wall Street earnings results for Q3 so far have stayed strong.The price of gold will start today at US$2743/oz and down -US$5 from yesterday.Oil prices are down a very sharp -US$4 at just on US$67.50/bbl in the US while the international Brent price is now just under US$72/bbl.The Kiwi dollar starts today at 59.8 USc and unchanged from this time yesterday or Saturday. Again

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.Today we lead with news we need to get ready for a +3o future and start adapting for it.But first, initial jobless claims in the US came in at just 203,000 last week, much lower than expected. There are now 1.635 mln on these benefits. We are about a week away from getting the US non-farm payrolls report and current estimates are that it expanded just +140,000 in October. That may be conservative.But the Chicago Fed's monitoring of their National Activity Index reveals a slip in September.But in October that may have picked up, and substantially. The S&P/Markit US factory PMI contracted its least in three months, and their services PMI is still expanding at a good pace and has been for six months now. This helps explain why employment has been stronger than expected for some time.The other encouraging feature of these PMI reports is that inflation pressures seem absent now.The Kansas City Fed's regional factory survey showed these trends; factory activity barely contracting now which was a sharp improvement from September. And their services sector was expanding still.Although firms in both regional and national surveys are increasingly optimistic about the future, they seem to be ignoring - or looking past - the damage the extended Boeing strike will cause. More here.Also encouraging for them is that American new home sales were on the rise in September, rising to a 738,000 annual rate, its highest since the outlier May 2023 spike. The September level is +6.3% higher than a year ago. This time, new home sales seems to be on a rising trend.In Japan their flash October PMI report shows a contraction too in their factory sector, but also only a minor one. But output and new order levels slipped at a slightly faster rate. Their services sector isn't expanding either according to this same report, a slip from the prior month. Apparently Japanese businesses are struggling to adapt to their modest inflation pressures.Korea reported its Q3-2024 GDP yesterday, revealing a +1.5% growth rate, lower than the +2% expected at the +2.3% in Q2-2024.India's October PMIs stayed strongly expansionary. New order levels were high. But there are signs of serious overheating, and inflation in India is a building concernThere is no overheating in the EU with everything ticking lower in October. But at least their service sector is still expanding.In Australia, their October PMI survey reveals that their factory sector is at a 53 month low with a moderate contraction. Their services sector however is holding its own - just.An updated UN report shows that we have essentially run out of time to cut greenhouse gas emissions. We are on track for a +3% rise in global temperatures and that will radically change how the planet operates, most of it not good. The difference between rhetoric and action is stark. China (+5.2% rise in emissions) and India (+6.1%) are overwhelming the US (-1.4%) and EU (-7.5%) restraint. Together China and India released 20,140 MtCO2e of greenhouse gas, 38% of the global total. Together the US and the EU released 9,200 MtCO2e or 17%. Neither China nor India are likely to heed the evidence, and if Trump is elected, the US will likely switch sides - so it will now be all up to how we adapt. Fortunately, New Zealand is in a relatively good position (or less-bad position).Container freight rates fell another -4% last week but are still +118% higher than the 2019 pre-pandemic average. Again it was outbound China routes that fell but there was also a slip in rates from the US to China. Bulk cargo rates fell a sharper -12.5% last week, to be -28% lower than a year ago and back to pre-pandemic levels.The UST 10yr yield is now at just on 4.19% and down -6 bps from this time yesterday.The price of gold will start today at US$2732/oz and up +US$12 from yesterday.Oil prices are -50 USc softer at just on US$70/bbl in the US while the international Brent price is now just over US$74/bbl.The Kiwi dollar starts today at 60.1 USc and up +10 bps from this time yesterday. Against the Aussie we are also up +10 bps at 90.6 AUc. Against the euro we are down -10 bps at 55.6 euro cents. That all means our TWI-5 starts today at just on 68.9, and down -10 bps from yesterday at this time.The bitcoin price starts today at US$67,558 and up +2.5% from this time yesterday. Volatility over the past 24 hours has been moderate at just on +/- 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.

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 that while officials cut policy interest rates, markets are bidding up benchmark bond rates.But first, there was another aggressive fall in the level of American mortgage applications last week, down almost -7% from the prior week, and extending the -17% plunge from that earlier period. But they are +3% higher than year-ago levels. Mortgage interest rates have been rising although they held last week at 6.73%. But they are still well down on the year-ago 7.16% level.Perhaps the fall in mortgage applications is due to the weak state of their housing demand. Existing-home sales fell -1.0% in September from August to an annual rate of 3.84 mln. That is a -3.5% dip from one year ago. And they are on track for their worst year since 1995. American money isn't 'invested' in housing, it is in financial markets.There was a well-supported US Treasury 20 year bond auction earlier today which delivered a median yield of 4.53%. But that was an outsized hike from the 3.97% at the prior equivalent event only one month ago.The US Fed released its October Beige Book review of the surveys in all its districts and it was unremarkable, only finding modest improvements.American petrol prices keep on easing at the pump, now -11.1% lower than year-ago levels.And as widely anticipated, Canada cut its official interest rate by -50 bps to 3.75% overnight. They signaled that they will continue to chop the rate should their economy develop as expected. The decision increased the pace of rate cuts following three -25 bps reductions, and this aligns with their recent sharp slowdown in Canadian inflation. Some expect another -50 bps cut at their December meeting.Singapore's core inflation rate rose again but only to 2.8%. This central bank version is different to the normal CPI because it is the one most influential on their rate settings.Taiwanese retail sales were up +3.2% in the year to September. And their industrial production was up +12.1% on the same basis.In China, it is still a long way off, but the retail event known as "Singles Day, or "11-11" (November 11) has kicked off early promotions and by some [official] reports is building momentum. It is a world-scale retail event, probably larger than "Black Friday" in the US and elsewhere.And staying in China, they are raising petrol prices again, their ninth rise of 2024. They blame "rising crude oil prices" which is a bit of a reach given they have fallen -13.3% over the past year.Consumer confidence in the Euro Area improved in October to its highest since February 2022. This was as expected. However, it remains negative but has now risen back to its long-term average for the first time in 32 months.The UST 10yr yield is now at just on 4.25% and up +5 bps from this time yesterday.The price of gold will start today at US$2720/oz and down -US$22 from yesterday.Oil prices are -US$1.50 lower at just on US$70.50/bbl in the US while the international Brent price is now just over US$74.50/bbl.The Kiwi dollar starts today at 60 USc and down -40 bps from this time yesterday. Against the Aussie we are unchanged at 90.5 AUc. Against the euro we are back down -20 bps at 55.7 euro cents. That all means our TWI-5 starts today at just on 69, down -10 bps from yesterday at this time.The bitcoin price starts today at US$65,928 and down -1.5% from this time yesterday. Volatility over the past 24 hours has been modest at just under +/- 1.5%.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.

Kia ora,Welcome to Wednesday’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 the global bond selloff has eased, but the reasons for it don't seem to have changed.First up today, the IMF has lowered its global growth forecast and warned of increasing risks ahead. The growth they see is from the stronger-than-expected performance in the US despite slowdowns in China and Japan. They still see 2024 expanding 3.2% this year in spite of all the supply-chain disruptions. Five years from now, global growth should reach 3.1%, a mediocre performance compared with the pre-pandemic average.It sees zero growth in New Zealand in 2024, a +1.9% expansion in 2025 and only rising to +2.4% by 2029. Still, that would be better than it sees for most advanced economies - and slightly better than in Australia.The US Treasury Secretary Yellen claimed that the US rejection of "Made in America" isolationism had made the world a better place than if it had continued, and was the basis of the current global expansion.The decline in inflation worldwide is helping to keep growth momentum steady, with headline inflation projected to slow to 3.5% by the end of 2025, below the average of 3.6% between 2000 and 2019, they said. Australia is the laggard on progress in taming inflation, they observe.The new threats they see relate to the rise and rise of trade wars.Meanwhile, the US retail pulse as measured by the Redbook monitoring eased slightly last week to be +4.6% higher than a year ago. This is better than inflation but at the lower end of the gains since March.The Richmond Fed's factory survey recorded a small improvement in October, a shift that was not expected. But it remains negative all the same. Their arguably more important services survey turned positive in October, and although also minor it was a shift that was also better than expected.Although it had been positive since April, Canadian producer prices sank in September, resuming the trend that has started in March 2023.Here is something we don't normally follow, but it helps explain why the EU manufacturing base remains in the doldrums. EU car registrations came in just over 810,000 in September, a bounce-back from August but well below the 1.1 mln June level. Since the pandemic, the average has been about +800,000 per month. But that is a long way down from the pre-pandemic average of about +1.4 mln per month. It a radical step lower.The UST 10yr yield is now at just on 4.20% and up +2 bps from this time yesterday.The price of gold will start today at US$2742/oz and up +US$22 from yesterday.Oil prices are +US$2 higher at just under US$72/bbl in the US while the international Brent price is now just on US$76/bbl.The Kiwi dollar starts today at 60.4 USc and up a minor +10 bps from this time yesterday. Against the Aussie we are down -10 bps at 90.5 AUc. Against the euro we are back up +20 bps at 55.9 euro cents. That all means our TWI-5 starts today at just on 69.1, up +10 bps from yesterday at this time.The bitcoin price starts today at US$66,933 and down -0.3% from this time yesterday. Volatility over the past 24 hours has been modest at just under +/- 1.0%.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.

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 that investors seem to be having second thoughts about Q3 earnings prospects in light of the supposedly close US election race. Wall Street is retreating and US Treasury yields are rising.But first, the US Conference Board said its Leading Economic Index fell by -0.5% in September following a -0.3% decline in August. Over the six-month period between March and September 2024, this leading indicator fell by -2.6% which was more than its -2.2% decline over the previous six-month period. Weakness in factory new orders continued to be the major drag, along with the yield spread.Canada is getting ready for a -50 bps rate cut on Thursday. Sentiment about where their economy is headed seems to be fractured there depending on age. Older Canadians are increasingly optimistic. Younger Canadians remain pessimistic.Across the Pacific, Malaysia said its economy grew +5.3% in Q3-2024 which is at the upper end of its quarterly growth rates since the start of 2023. A year ago it was expanding at a +3.1% rate.Taiwanese export orders rose to their highest level in two year in September, even though the pace of that growth slowed to +4.6%. All this is happening while it large neighbour is trying the squeeze it into submission.That large neighbour's central bank has pushed through cuts to its Loan Prime Rates by its big state-owned banks and by more than expected, cutting the 1 year by -25 bps to 3.10% and the five year by the same amount to 3.60%. These are record lows. The one year rate is the benchmark for most corporate and household loans, the five year rate the benchmark for mortgages.All this is part of its stimulus plan to prevent a dangerous slowdown from occurring in their economy.At the same time Chinese banks cut -25 bps from their deposit rates to prevent deterioration in their margins. This will impact huge amounts of Chinese household savings. This may become a factor in some shift of savings into their equity markets.The UST 10yr yield is now at just on 4.18% and up +10 bps from this time yesterday.The price of gold will start today at US$2720/oz and unchanged from yesterday.Oil prices are +US$1.50 higher at just on US$70.50/bbl in the US while the international Brent price is now just over US$74/bbl.The Kiwi dollar starts today at 60.3 USc and down -40 bps from this time yesterday. Against the Aussie we are unchanged at 90.6 AUc. Against the euro we are down -20 bps at 55.7 euro cents. That all means our TWI-5 starts today at just on 69, down -20 bps from yesterday at this time.The bitcoin price starts today at US$67,130 and down -2.1% from this time yesterday. Volatility over the past 24 hours has been moderate at under +/- 2.0%.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.

Kia ora,Welcome to Monday’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 that signs of economic under-achievement seem to be cropping up everywhere.First though, at the end of this week we have the long weekend holiday, for Labour Day. But first, the week ahead will feature October 'flash' PMIs from all over and the third week of Wall Street Q3 earnings results. In the US they will release September durable goods order data. Canada will chime in with a central bank rate decision (probably a -50 bps cut), and there will be confidence survey results from all over. Finally South Korea will release its Q3-2024 GDP growth rate, expected to be a bit north of +2%.Over the weekend there were no surprises in US housing start data for September, coming in just as expected and the general level it has been at for most of 2024.And Wall Street's Q3 earnings season reporting is building with 14% of S&P500 companies reporting so far, and the results are quite positive, reinforcing investor risk appetites.The US also reported its federal budget deficit for September over the weekend. It was a surplus of US$64 bln for the month. For the month, receipts jumped +13% from a year earlier, while outlays sank by -23%. But for the full fiscal year, it ended -US$1.8 tln in deficit (with interest costs exceeding US$1 tln for the first time). At that level the total deficit is equivalent to -6.3% of one year's economic activity in the country. This is up from -6.1% of GDP in 2023.Across the Pacific, China’s new home prices in their 70 major cities fell -5.7% in September from a year ago, more than the -5.3% fall in the previous month. It was the 15th straight month of decrease and the steepest pace since May 2015. Second hand houses seem to have fallen by much more, by -10.7%. This sector won't be helping China's "wealth effect".Meanwhile China said its Q3-2024 GDP expanded by +4.6%, marginally better than the +4.5% expected but less than Beijing's 5% target. They also said industrial production improved by +5.4% and retail sales were up +3.2%, on the same basis. Their jobless rate fell slightly, to 5.1%.Later today, China is expected to cut its Loan Prime Rates by -20 bps, their tenth consecutive cut since the pandemic, and to a record low. The have never raised these rates since they introduced them on 2019 - only ever cuts.And China's support of equity markets has almost hit ¥2 tln. With the Beijing 'put' in play, it is now not possible to read anything into Chinese equity market signals, especially when they rise. That may only indicate the size of the manipulation.Japan said its inflation rate fell to 2.5% in September from 3.0% in August. This was its lowest level since April. (It was also 3.0% in September 2023.)The regular ECB survey of professional forecasters shows that expectations are low for the bloc over the next two years to 2026. They see inflation staying under control, economic expansion rising to only modest levels, and their jobless rate staying little-changed.And in Australia, suddenly their housing market seems quite fragile. This past weekend, they may have had only a 40% auction clearance rate in Sydney, a very sharp and fast fall from their 'usual' levels of about 70%.The UST 10yr yield is now at just on 4.08% and unchanged from yesterday.The price of gold will start today at US$2720/oz and up +US$3 from Saturday - and yet another new all-time high.Oil prices are -50 USc lower at just over US$69/bbl in the US while the international Brent price is now just on US$73/bbl. These levels are -US$6/bbl lower than a week ago.The Kiwi dollar starts today at 60.7 USc and little-changed from this time Saturday. Against the Aussie we are +10 bps firmer at 90.6 AUc. Against the euro we are unchanged to 55.9 euro cents. That all means our TWI-5 starts today still just under 69.2, unchanged from Saturday at this time and little-changed from a week ago.The bitcoin price starts today at US$68,582 and down -0.4% from this time Saturday. Volatility over the past 24 hours has been low at under +/- 0.5%.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.

This is a test of the podcast generator on Google Notebook LLM

US data mixed. Japanese exports fall. China stimulus unconvincing. ECB cuts. Aussie labour market rises. Freight rates weaker.

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 economic data is light today and we await signals from the building Wall Street earnings season. Markets seem positive about what is ahead.Meanwhile in the US, mortgage applications fell very sharply last week from the prior week, down -17% and the most in nine years (excluding the pandemic). And that was on top of the more than -5% drop last week. The reason is that benchmark mortgage interest rates have been rising for three weeks and are now at a 2 month high of 6.52% for the standard 30 year mortgage.Canadian housing starts came in at a 224,000 annual rate in September, 18,806 for the month, less than expected but more than in August.Japanese machinery orders, excluding those for ships and electric power companies, fell -3.4% in the year to August from the same period a year ago. This is a large miss because they were expected to rise +3.6% on that same basis. It was the fifth drop so far this year. Orders for those excluded items (ships and electric power companies) were quite good however, mitigating the fall.The Bank of Thailand unexpectedly cut its key interest rate by -25 bps to 2.25% during its October meeting late yesterday, marking the first rate cut since early 2020. It was a move long advocated by the government but it was still not expected. They have a sluggish economy and inflation is now below the lower end of its target range of between 1% to 3%.Indian exports remained quite lackluster in September at US$34.6 bln and virtually unchanged from a year ago. India is no export powerhouse yet. Imports were US$55.4 bln, so they ran yet another trade deficit and they have been doing that now since 1997 (with one exception in one month in the 2020 pandemic).British CPI inflation fell to 1.7% in September, its lowest level since April 2021. It was down from 2.2% in August. But much of this sharply lower level came from sharply lower airline ticket prices, something that may be a bit of a one-off.In Australia, they reported an unusually low birth rate yesterday, with a record low fertility rate. (But it is similar to New Zealand's.) High housing costs are getting the blame.The UST 10yr yield is now at just on 4.01% and down -3 bps from yesterday. The price of gold will start today at US$2670/oz and up +US$p from this time yesterday - and a new all-time high.Oil prices are holding lower at just on US$70.50/bbl in the US while the international Brent price is still just under US$74.50/bbl.The Kiwi dollar starts today at 60.6 USc and down -25 bps from this time yesterday. Against the Aussie we are up +20 bps at 90.9 AUc. Against the euro we have dipped -10 bps to 55.7 euro cents. That all means our TWI-5 starts today now just under 69.2, and marginally lower that at yesterday at this time.The bitcoin price starts today at US$67,639 and up another +0.9% from this time yesterday. Volatility over the past 24 hours has been modeST at under +/- 1.7%.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.

Kia ora,Welcome to Wednesday’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 China is dusting off some unused regulations to shore up its deteriorating financial situation.But first, at the overnight dairy auction, prices were little-changed, down -0.2% in USD terms but up +2.8% in NZD terms. The dominant WMP price was essentially unchanged, but the foodservice commodities like SMP were down -1.8%, mozzarella down -8.2% and butter down -0.3%. Going the other way, cheddar cheese was up +4.2% and the only bright spot. No farm gate payout forecasts will be changed because of this event.Last week's US retail impulse survey shows a strong rise of +5.6% from a year ago. And this is not only well ahead of inflation, it is built on a strong +4.6% gain in the same week a year ago.Meanwhile, American consumer inflation expectations in September were little-changed at 3% for the year ahead. In fact consumer labour market and household finance expectations are largely stable too. Given it is an election period with its share of weirdness, perhaps this is not quite the result you might have expected.But it is not all good. Business activity contracted modestly in New York State, according to firms responding to the October 2024 Empire State Manufacturing Survey. After climbing into positive territory last month, the headline general business conditions index retreated rather sharply. New order levels fell, and shipments edged lower.Canada's CPI inflation rate fell to 1.6% in September, from 2.0% in August. It is now at its lowest level since February 2021. Lower fuel costs drove the retreat. It seems more likely now that Canada's central bank will cut its 4.25% policy rate when it next meets on Thursday, October 24 (NZT). Maybe outsized cuts are coming there.Japan industrial production is becoming quite volatile with big jumps followed by bit dips. The August data revealed a big dip, year-on-year. It is hard to know what to make of this new volatility. But overall it represents a sag.In a bit of a surprise, EU industrial production jumped in August and by enough to take the year-on-year level above August 2023, a rare event. It was the best month-on-month jump in more than a year. The European service sector is doing better and enabling local factories with more orders.In China, Bloomberg is reporting that tax authorities there are cracking down on offshore income earned by their wealthy. It has begun enforcing a long-overlooked tax on overseas investment gains. Some wealthy individuals in major Chinese cities were told in recent months to conduct self-assessments or summoned by tax authorities for meetings to evaluate potential payments, including those in arrears from past years, they reported. The move underscores growing urgency in Beijing to expand its sources of revenue as land sales tumble and growth slows.And we probably should note that those grain commodity price falls we noted yesterday have gathered steam today.The UST 10yr yield is now at just on 4.04% and down -8 bps from yesterday. The price of gold will start today at US$2661/oz and up +US$14 from this time yesterday.Oil prices are down a sharpish -US$3.50 at just on US$70.50/bbl in the US while the international Brent price is now just under US$74.50/bbl.The Kiwi dollar starts today at 60.8 USc and down -10 bps from this time yesterday. Against the Aussie we are little-changed at 90.7 AUc. Against the euro we are also little-changed at 55.8 euro cents. That all means our TWI-5 starts today now just over 69.2, and marginally lower from yesterday at this time.The bitcoin price starts today at US$67,003 and up another +1.9% from this time yesterday. Volatility over the past 24 hours has been moderate at under +/- 2.4%.Join us at 10:45am today when we will have full coverage of the Q3-2024 New Zealand CPI result, a crucial factor in setting monetary policy.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.

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 the world's second largest economy shows more signs of losing its expansion mojoChina's exports rose in September but at an unexpectedly slowish pace. They were expected to rise +6% from a year ago, but only rose +2.4%. This was the fifth consecutive month of export growth, though at the slowest pace since April. Cut price (dumped) steel exports were a factor, a trade that is worrying may countries. And as expected import growth was weak, barely more than a year ago and well less than the +0.6% rise expected.China's new yuan loan growth also came in less than expected, rising almost +¥1.6 tln and much better than the 'modest' +¥1 tln in August. Banks are making more debt available. But it was a slower rise than the +¥1.9 tln expected. And in September 2023 they rose +¥2.3 tln, so well down on that basis too.A lot now depends on issuing a lot more debt. Some this is an additional +¥9 tln is on the way, but to be fair much of that won't be direct commercial bank lending. But sovereign money-printing (bond issuance) may well flow though to this channel.In a side note for China, we can report that their ETS carbon price rose to its highest-ever level yesterday, ¥103.5/tonne. The reason is that 'tougher' emissions standards are on the way there. But this ETS tax is low by New Zealand standards, equivalent to just NZ$24.40/tonne. Currently our ETS is pricing carbon at NZ$63/tonne. In the EU, that same price is €64.60/tonne (NZ$116). China's disincentive to pollute is cheap by comparison.Singapore said it's economy grew +4.1% in Q3-2024 from a year earlier. That is its fastest pace in two years and accelerated from +2.9% growth in the Q2-2024 quarter.Meanwhile in India, consumer inflation rose sharply in September to 5.5%, much higher than the August 3.7%. Driving this change were food prices, up at the rate of +9.2% in September and a far faster jump than the already-high +5.4% rise in August. This data may inhibit their central bank from starting an expected rate cut cycle. They have a mid-point inflation target of 4%.In the US, recent days have brought sharpish falls in food commodity prices as it becomes clearer that US and international grain harvests will be very good this year. Wheat, soybean and corn prices are all falling on excess supply worries.Overnight, the Nobel Prize in Economics was awarded. The prize was given to Daron Acemoglu, Simon Johnson and James Robinson for work that advanced the understanding of differences in prosperity between countries. Two are the authors of a book, 'Why Nations Fail'.The UST 10yr yield is now at just on 4.12% and up +5 bps from yesterday. The price of gold will start today at US$2647/oz and down -US$10 from this time yesterday.Oil prices are down -US$1.50 at just on US$74/bbl in the US while the international Brent price is now at US$77.50/bbl.The Kiwi dollar starts today at 60.9 USc and down -20 bps from this time yesterday. Against the Aussie we are little-changed at 90.6 AUc. Against the euro we are also little-changed at 55.8 euro cents. That all means our TWI-5 starts today now just under 69.3, and marginally lower from yesterday at this time.The bitcoin price starts today at US$65,786 and up +5.0% from this time yesterday. Volatility over the past 24 hours has been high at just on +/- 3.2%.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.

Kia ora,Welcome to Monday’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 China's deflation Pressures keep on coming. And in the US disinflation rolls on, which they hope will end soon.This coming week will be another one with chunky data releases. The biggest will be on Wednesday, our own CPI result for the Q3-2024 period (Markets expect 2.0%). That that will follow the Tuesday's update of the September REINZ results.We won't be the only country reporting inflation data; we also get that from Canada, India and Japan this week. At the end of the week, the ECB will be reviewing its policy interest rate. And all week we will be getting American Q3 earnings reports.China will report its Q3-2024 GDP result on Friday, likely to fall well short of its 5% target.Over this weekend, China released sets of key data. The tiny bit of consumer price inflation they had disappeared in September, up now only +0.4% from a year ago. Beef, lamb, and milk prices all went backwards again. Their producer prices deflated at a faster rate. And we are now waiting for their new yuan loan data which isn't expected to be very strong (about +¥1 tln, and less than half the June level. So far, debt-induced growth hasn't worked).Meanwhile Chinese Ministry of Finance officials announced some more modest steps to "support the economy" and signaled much more is to come. It was a much-anticipated set-piece that left observers, and markets, underwhelmed.Key banks made simultaneous coordinated moves - signaled a while ago to be fair - to cut mortgage borrowing costs, as a practical measure to reduce the pressure on homeowner household budgets. They will come into effect in the last week of October.And coming up some time this week, the Chinese central bank is expected to signal lower wholesale borrowing costs in its 1-Year MLF announcement.In South Korea, they have started cutting their policy rates too, although not as aggressively as New Zealand. The Bank of Korea policy rate is now 3.25% after its first rate cut (-25 bps) since May 2020. That came after data showed their GDP shrank in Q2-2024 and their September inflation slowed to 1.6%, the lowest since February 2021.India's industrial production took a surprise drop in August from a year ago, its first retreat since October 2022. Few saw that coming. And they downwardly revised the +4.7% rise in July.Interestingly, the Indian currency is under pressure, and outflow levels have been high. The Indian rupee has hit a record low against the US Dollar, (but against the NZD it has been pretty flat since 2020).In the US, producer prices hardly rose in September. US factory gate prices were flat in the month from August and missing expectations of a +0.1% rise. On an annual basis, PPI inflation eased to a 7-month low of 1.8%.US consumer sentiment was little-changed in October according to the University of Michigan survey, holding at a level it has broadly been at since May. There was a slight dip from the prior month, something that is probably just related to election uncertainties.For those who follow such things, we can report no surprises in the October update of the USDA WASDE report. But they did raise their beef import forecasts marginally again, and lowered their US milk production forecasts, again.Canada reported a good +47,000 rise in employment in September, almost double what was expected. Better still, full-time jobs rose +112,000 while part-time roles shrank -65,000. Their jobless rate slipped to 6.5% when a rise was anticipatedRatings agency Fitch has downgraded their sovereign rating for France from 'Stable' to 'Negative', but still at AA-. They say “Fiscal policy risks have increased since our last review". (Fitch have New Zealand at AA+, Stable.)The UST 10yr yield is now at just on 4.07% and unchanged from Saturday. A week ago it was at 3.99% so up +8 bps since then.The price of gold will start today at US$2657/oz and down -US$3 from this time Saturday. That is up +US$8 from a week ago.Oil prices are holding at just on US$75.50/bbl in the US while the international Brent price is still at US$79/bbl. A week ago these prices were at these same levels, so no-change in a week.The Kiwi dollar starts today at 61.1 USc and downa minor -10 bps from this time Saturday. Against the Aussie we are unchanged at 90.5 AUc. Against the euro we are also unchanged at 55.9 euro cents. That all means our TWI-5 starts today now at 69.3, and unchanged from Saturday at this time. But that is -40 bps lower than a week ago.The bitcoin price starts today at US$62,627 and up +0.6% from this time Saturday. Volatility over the past 24 hours has been modest at just on +/- 1.1%.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 d

The Government could run a second retirement income scheme alongside NZ Superannuation as part of a transition to a new system, but according to Andrew Coleman, this couldn't be done without an increase in taxes on older people, or more general tax increases.Fresh from his 13 part interest.co.nz series on NZ's government retirement income system and associated taxes, Coleman spoke to myself and Terry Baucher on a combined episode of the Of Interest podcast and the New Zealand Tax Podcast.Coleman is currently a visiting professor at the Asia School of Business in Kuala Lumpur while on extended leave from the Reserve Bank. He has also worked for Treasury and the Productivity Commission. The views expressed are his own.Coleman says the urgency for making change isn't just down to an ageing population and the increasing taxes he says young people will have to pay. It's also because those under 45 are inheriting a very costly system, which might not be what they like or want.He uses an analogy of a 22 year-old who recruits help from their father or uncle to buy a car."And he says, 'oh, cars, I'm good at cars. You know, when I was a kid we had these great Holdens and you could put six people in them, everyone in the whole family would fit in them. And they had a big six litre engine'... And you say, 'oh, well that's maybe not what I wanted.' But he says 'oh look, I'll go and get you the car, just give me the money and I'll get you the car.' And so you give him ten grand and [he] comes back [with an] old Holden, which is a gas guzzler and not particularly safe.""And you've only got a girlfriend or a boyfriend and no kids and it's nothing like the car that you want and yet you've paid for it. And it's got these high ongoing costs because it's chewing down the petrol," Coleman says."You wanted a little hybrid or electric car or maybe just a Toyota Corolla, which was quite small and fits in your little parking place. And it's a bit like that. Young people today are inheriting a [retirement income] system designed in the seventies when Holdens ruled. And it may not be what they want and it's very costly."In his series Coleman suggests a new pension system, which he calls KiwiSaver 2.1, which would be a shift from pay-as-you-go funded pensions to save-as-you-go funded pensions. I asked him whether a transition could be made to the new system for those under 45, with the current system kept in place for older people, without higher taxes on older people which he suggested in his series would be required to change to a new system."There's no reason why you can't have two systems going. And one of the reasons is that your entitlement would depend on your birth date...that's very straightforward. We would just at some point introduce the second system for people under 45 and build it up and keep old people on the current system," says Coleman."Can we do it without an increase in taxes on older people, or more generally? No.""There is a transition issue. It's like digging a hole. Once you've dug the hole, if you want to get out of the hole, you have to do some work to fill it in again. And so when we adopted a pay as you go system or expanded it significantly back in the 1970s, it meant that to reverse it, some future generations are going to have to be worse off than they otherwise would have been. And that's the political difficulty here. It's like there's this beautiful thing that you want over there, a beautiful island that you can go to, but you can't get there for free.""But there's goodwill out there. I think a lot of people my age... recognise that young people are paying a disproportionate amount of the costs and that if we can find a way of increasing taxes on ourselves in order to make the system better for younger people, that's something that a lot of people would be prepared to do now. It won't have to be a permanent increase in taxes. It's a transitory phenomenon," Coleman says."Once we've got the new system up and running, taxes would come down and we would have a much better tax system. There should be, if we do this, a statue to the unknown 75 year-old who paid a few more taxes so that all the young New Zealanders of the future could be better off and have a better system."In terms of what tax(es) are used, Coleman says a transitional social security tax on older people is an option. Social security taxes, such as Accident Compensation Corporation levies, are paid on labour income.There's much more detailed discussion in the podcast audio including on taxes.*You can find all episodes of the Of Interest podcast here.

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.Today we lead with news China is wrestling with how to respond to its slowdown, with the measures announced so far causing volatility.But, first up today, and as expected, the American CPI inflation rate fell in September but by less than expected. It came in at 2.4%, down from August's 2.5%, but above the expected 2.3% rate. For three consecutive months. the month-on-month rise has been +0.2%, so it is tracking at the annual rate as well.Rents dipped to that +0.2% month-on-month rise but from a year ago they remain +4.9% higher. But food prices were up +0.4% in September from August, the most in a year, even though the year-on-year change was only +2.3%. So one to watch.However, the overall inflation situation remains pretty benign. No-one will be overly worried about this data. But it will reinforce the Fed that outsized rate cuts at this time are probably not warranted.Initial US jobless claims however spiked sharply last week, coming in at +235,000 actual (more on a seasonally adjusted basis). There are now 1.62 mln people on these benefits, and virtually no increase from the prior week. The spike probably has more to do with the Florida storm impacts, and perhaps the Boeing strike, than any meaningful slowdown in the US labour market.In China, money flows around their surging equity markets are creating issues for policymakers. Huge amounts have flowed out of WMP (wealth management products) chasing the expected equity market gains. But foreigners and some local professionals seem to have taken the opportunity to cash out in the rising market. And as the rises haven't been sustained, there may be a lot of very disappointed local investor/speculators.But help may be on the way. The central bank yesterday announced the start of a key operation to prop up the stock market. That put a floor under the market, embedding the Beijing 'put'.And all eyes will be on an announced weekend briefing by Beijing authorities on their next economic policy moves.The rise in Japanese producer prices in August matched the pace in the prior four months, and is embedding at about a +2.5% annual rate. Again, little to morrow policymakers here.German retail sales unexpectedly rose in August for a second straight month to now be +2.1% higher than year-ago levels, something few saw coming. That is actually their best year-on-year growth since April 2022. Further, this is a 'real', after inflation result. So it is quite strong. Food and travel volumes rose the strongest.In Australia, it seems that the stage is being set for a new Federal election. On emust be held before the end of September 2025 anyway, but it may well come earlier in 2025 now.Container shipping rates fell again last week to be down another -4% from the prior week, which takes them back to levels at the start of 2024. They are still elevated because they are +135% higher than pre-pandemic levels, and the reasons still relate to Middle-East security pressures. But clearly the world, and the industry, are finding ways to adapt. All the current weaknesses are China outbound rates.Bulk cargo rates fell a sharpish -9% last week from the week before, and are now also -9% lower than at the same time a week ago. But there is nothing special about these levels, which are similar to the long run 35 year average. However, on an inflation-adjusted basis, they are remarkably low. It isn't great for shipowners.The UST 10yr yield is now at just on 4.10% and up another +3 bps from yesterday.The price of gold will start today at US$2621/oz and up +US$12 from this time yesterday.Oil prices are +US$3 higher at just under US$76/bbl in the US while the international Brent price is now just over US$79/bbl.The Kiwi dollar starts today at 60.8 USc and up +20 bps from this time yesterday. Against the Aussie we are also up +20 bps at 90.4 AUc. Against the euro we are up +30 bps at 55.7 euro cents. That all means our TWI-5 starts today now at 69.1, and up +30 bps from yesterday at this time.The bitcoin price starts today at US$60,422 and down -2.2% from this time yesterday. Volatility over the past 24 hours has been modest at just on +/- 1.3%.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.

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 commodity prices go into reverse as the Chinese post-holiday rally stumbles after only a brief shine. It is an ominous sign.But first in the US there was a sharp fall in mortgage applications last week, down -5.5% from the prior week. That was because interest rates moved sharply higher after the strong non-farm payrolls report. But current application levels are running +55% higher than a year ago.Those higher interest rates also showed up in the latest (well supported) US Treasury bond auction, this one for their ten year bond. The median yield came in today at 4.01% and well above the 3.61% at the prior equivalent event a month ago.Hurricane Milton is about to hit just south of Tampa and Florida more generally. Analysts say it could cause US$60 bln in insurance losses apart from the far greater uninsured damage. Milton and Helene may be trigger events for widespread change in the way insurance cover is offered. Risks are rising fast for those who underpin these coverages.US Fed minutes for their September 19 (NZT) meeting were released earlier this morning and they show the Fed's -50 bps rate cut was well supported (page 9) and seen as a quicker way to align it with the progress on inflation and their labour market. It suggests this was a one-off move and future moves will be more 'regular'. Remember, the September CPI data for the US will be released tonight and it is expected to slip from 2.5% to 2.3%.Japanese machine tool orders rose in September from the weak August level but they remain -6.5% lower than year-ago levels - which it should be noted were unusually high at the time.Taiwanese inflation fell to near its lowest since the pandemic, down much more than expected to a 1.8% rate.In India, their reserve bank also reviewed its policy rate yesterday and left it unchanged at 6.5%, as expected. They see their economic expansion continuing and inflation broadly in line with the midpoint of their target rate of 4%. Inflation is currently running at 3.65%. However, their commentary does open the door for the next move to be down, which would be their first rate cut since May 2020.In China yesterday, the Shanghai stock market lost steam rapidly after the post-holiday euphoria. It was down -6.6% on the day as scepticism grew about what Beijing is doing - and not doing - to recover China's expansion mojo. It is a telling signal.In Australia, they reported Q2 dwelling commencement data yesterday and it continues to retreat as apartment building remains especially weak. Of course, low supply coming onstream isn't helping housing affordability. Rent inflation is still running at over 7% there.The UST 10yr yield is now at just on 4.07% and up +4 bps from yesterday. The price of gold will start today at US$2609/oz and down -US$2 from this time yesterday.Oil prices are -50 USc lower at just over US$72.50/bbl in the US while the international Brent price is now just over US$76/bbl.The Kiwi dollar starts today at 60.6 USc and down -60 bps from this time yesterday. Against the Aussie we are also down -60 bps at 90.2 AUc. Against the euro we are down -40 bps at 55.4 euro cents. That all means our TWI-5 starts today now at 68.9, and down -50 bps from yesterday at this time.The bitcoin price starts today at US$61,782 and down -1.1% from this time yesterday. Volatility over the past 24 hours has been low at just on +/- 0.7%.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.

Kia ora,Welcome to Wednesday’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 China has not announced the new stimulus that investors were expecting, rather just re-hashing existing measures. Equity and commodity markets reacted negatively to the disappointment.But first, the American retail Redbook index rose marginally last week to be +5.4% above year-ago levels, and well ahead of inflation.The US SME optimism index rose slightly in September even though uncertainty levels remained high as the US election gets closer, less than a month away now.Meanwhile the RCM/TIPP optimism index for investors rose to a 19 month high. But again, the change was small.And the US trade deficit in both goods and services fell in August from July in a better-than-expected result driven by stronger exports that were +5.2% higher than a year ago.There was yet another very well supported US Treasury bond auction overnight, this one for their 3 year Note. It resulted in a 3.82% median yield, but up sharply from the 3.40% median yield at the prior equivalent event a month agoCanada also posted its August trade result and its deficit came in a bit more than expected, mainly on a -1% fall in exportsIn China, the closely anticipated National Development and Reform Commission (NDRC) briefing was a damp squib, essentially not announcing anything new in the way of economic support for their economy. All they did was front-load existing measures. A rally in Chinese stocks on their return from the week-long holiday fizzled quickly as traders questioned Beijing’s resolve to add more effective stimulus.After rising strongly in anticipation over the past week or so, the iron ore price sank sharply after this briefing.And China said it will impose tariffs on European bandy in retaliation for EU tariffs on EVs.German industrial production rose in August from July and by more than expected to be 'only' -2.7% lower than a year ago, it least year-on-year decline in a year and a big improvement from July.In Australia, business sentiment became less negative in September. The NAB business confidence index 'rose' to -2 from August’s revised -5, amid notable improvements in retail and recreation & personal services.And the consumer mood is improving too. Australia's Westpac-Melbourne Institute consumer sentiment jumped to a 2½ year high in October, a sharp turnaround from the fall in September. This followed interest rate cuts in other countries and more signs that inflation is easing locally.We should also note that overnight Pulse dairy auction for just WMP and SMP came in less robust than the minor gains expected. The dips were small and most for SMP, but essentially both products are retaining their recent higher levels even if they are slipping slightly.On the weather front, Hurricane Milton isn't easing, still a category 5 event and heading straight for Tampa, Florida. Urgent evacuation orders are in place. Expected landfall is in about 24 hours. Even if it does ease somewhat, it will be a powerful event.The UST 10yr yield is now at just on 4.03% and up +1 bp from yesterday. The price of gold will start today at US$2611/oz and down -US$33 from this time yesterday.Oil prices are sharply lower, down -US$4 at just on US$73/bbl in the US while the international Brent price is now just on US$76.50/bbl.The Kiwi dollar starts today at 61.2 USc and unchanged from this time yesterday. Against the Aussie we are up +20 bps at 90.8 AUc. Against the euro we are still at 55.8 euro cents. That all means our TWI-5 starts today still just on 69.4, and up a minor +10 bps from yesterday at this time.The bitcoin price starts today at US$62,417 and down -1.9% from this time yesterday. Volatility over the past 24 hours has remained modest at just on +/- 1.6%.Join us at 2pm today when we will have full coverage of today's Monetary Policy Review and the expected rate cut to the OCR.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.

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 of powerful forces at work in both the US and China.All eyes today will be on the opening of the Shanghai equity markets after their week-long holiday. Many think outsized gains are likely. Over that same period the Hong Kong index rose +12%. And those changes will be in anticipation of the yet-to-be announced fiscal stimulus program that Beijing has signaled. There are high expectations. But investors are probably sensing they can't lose with the central bank's logic-changing ¥800 bln (US$115 bln) capital market support measure in place.But with 'buy-the-rumour-sell-the-fact' mentality of many investors, who knows what will happen. Some fund managers will feel they don't want to miss a unique profit opportunity, others are more sceptical the economic fundamentals are not getting proper attention.China can afford to throw money at their issues. Their foreign exchange reserves rose by +US$28 bln to US$3.316 tln (¥23 tln) in September, slightly more than expected. And it built to its highest level since late 2015. Their gold holding rose in value too, but only because of the rising price.Japan's leading economic index, which was expected to rise slightly, in fact fell and by quite a dip. In fact it was their lowest reading since 2020. They will be hoping this is a rogue result.European retail sales were expected to rise in August and they did, coming in +0.8% higher in 'real' terms than a year ago for the Euro Area. But that undershot expectations of a +1.0% rise. For the wider EU bloc, things were slightly better.Germany factory orders were weak in August, down -3.9% from a year ago. But that was a correction from the +4.6% rise in July.In the US, Hurricane Milton strengthened into a monster Category 5 hurricane as races towards Florida’s west coast. Cat 5 storms are rare. Given what Helene did recently (Cat 4), residents have begun to flee inland in large numbers. Hopefully it will lose strength before it hits Florida. It is still deep in the western Caribbean Sea about 1000 kms from landfall.After a +US$25 bln rise in July, American consumer debt was expected to rise another +US$12 bln in August. In fact this expected data wasn't available when we published, so we will update this item when it is released.The UST 10yr yield is now at just on 4.02% and up +5 bps from yesterday. The price of gold will start today at US$2644/oz and down -US$9 from this time yesterday.Oil prices are up +US$2.50 at just on US$77/bbl in the US while the international Brent price is still just on US$80.50/bbl.The Kiwi dollar starts today at 61.2 USc and down -40 bps from yesterday. Against the Aussie we are still at 90.6 AUc. Against the euro we are down -30 bps to 55.8 euro cents. That all means our TWI-5 starts today still just over 69.3, and down -30 bps from yesterday at this time.The bitcoin price starts today at USA$63,601 and up +1.3% from this time yesterday. Volatility over the past 24 hours has been modest at just on +/- 1.7%.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.

Kia ora,Welcome to Monday’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 the world's economy is expanding in most places despite some 'hot' pressures.The week ahead will crescendo on Wednesday with the RBNZ Monetary Policy Review and OCR decision. But there will be a lot else going on too. India and South Korea will also have rate decisions this week. In the US, they get their September CPI result along with PPI data. Japan will release sentiment survey updates, along with Australia. The EU will release retail sales data and factory order updates will come in Germany.But first, we should note that today is the final day of the Chinese Mid-Autumn Festival and normal work will restart tomorrow. And in Australia, most of their eastern states will be on holiday today (except Victoria). NSW and Victoria have also moved on to summer time, so are back to 2 hours behind us.But the big news over the weekend was the eye-catching headline (s.a.) rise in US non-farm payrolls (NFP) of +254,000, almost double the expected +130,000 rise. And as regular readers will know, we also check the actual change, which was almost double that, at +460,000. All very impressive. There are now 162 mln people employed in their civilian labour force. There is momentum here and the impact of +460,000 more paid workers will be widespread and impact the whole global economy.Both their unemployment rate, at 4.1%, and the number of unemployed people, at 6.8 million, changed little in September.And the East Coast/Gulf port strike has been settled. So that is no longer an economic irritant.This result is of outsized change and it had an impact on the financial markets. While the equity markets didn't react, the bond markets did, juicing up benchmark UST yields noticeably. The USD rose sharply too.The US Fed may well be restrained by this labour market surge. Cutting rates into a fast-rising economy would be inflationary and they have only just gotten things back on an even keel. By any measure, they have achieved a 'soft landing'. They seem set up for a solid 2025 expansion (provided their economic management stays professional of course).The latest Q3 estimate of US economic activity is +2.5% which would take their nominal GDP to US$29.4 tln and +US$1.4 tln more than a year ago. It is impressive. However, given today's labour market surge, there are upside 'risks' to these estimates.And we should note that all this is going on while the US Federal Reserve shrinks its balance sheet. It is now down to just over US$7 tln, a -US$76 bln drop in one month, a -US$900 bln drop in a year, and an almost -US$2 tln drop since its 2022 peak. Monetary policy resilience is being built back up. Yes, US Federal debt held by the public is rising in dollar terms but not as a proportion of overall economic activity (GDP). But a stock-to-flow ratio like that is a bit of a junk sideline stat. You will hardly ever see that ratio in the commercial world.China may still be on holiday. And by official accounts, travel-related activity is 'normal' but other aspects of their economy are still a worry. When they return tomorrow we will likely start to see the rollout of their signaled fiscal 'bazooka'.Singapore delivered good retail results for August, to be up +0.6% from a year ago and almost all of that in the latest month.And Vietnam surprised observers by releasing data that showed their economy grew +7.4% in Q3-2024, driven by exports, even though production was hit by Typhoon Yagi. That is up from 7.1% in Q2-2024 and expectations it would only expand by +5.5%. Along with India, they have wrestled the mantle from China of the fastest growing developing economies.More broadly, world food prices in September rose much more than expected, and across the board. In fact, it was the largest month-on-month increase since March 2022. Rising dairy prices were among the gainers, but not so much meat prices.The UST 10yr yield is now at just on 3.97% and down -2 bps from Saturday. But that is up +20 bps from this time last week.The price of gold will start today at US$2653/oz and up +US$4 from Saturday.Oil prices are down -US$1 at just under US$74.50/bbl in the US while the international Brent price is still just on US$78/bbl. A week ago these prices were US$7 lower at US$67.50 and US$71.50 respectively.The Kiwi dollar starts today at 61.6 USc and unchanged from Saturday. That is a big -2c fall from a week ago however. Against the Aussie we are still at 90.6 AUc. Against the euro we are down -10 bps to 56.1 euro cents. That all means our TWI-5 starts today still just under 69.7, and unchanged from Saturday, but down -100 bps from a week ago.The bitcoin price starts today at US$62,760 and up +0.8% from this time Saturday. Volatility over the past 24 hours has been low at just under +/- 1%.You can find links to the articles mentioned

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.Today we lead with global economic attention should have shifted to tomorrow's labour market report for September, but the US waterfront strike, and the Middle East tensions has sidelined it.However first in the US, there was a minor dip in the actual number of initial jobless claims last week, but a lesser dip than expected. There are now 1.62 mln people on these benefits, the lowest level since November 2023.And as you would expect, the level of job cuts in the US has remained very low.Tomorrow's non-farm payrolls labour market reports is expected to show a rise in payroll jobs of +130,000.Perhaps in something of surprise after the wavering factory PMI, the ISM services PMI came in much better than expected. It revealed the strongest growth in this sector since February 2023, amid faster increases in business activity and new orders. And that was mirrored by the internationally benchmarked version.US factory orders in August weren't as strong, little changed from the prior month to be -0.6% lower than the same month a year ago.The US East Coast & Gulf port strike is entering its third day, unresolved. But there are signs of progress in negotiations. The Canadian port strike has ended now.With China closed for holidays, all the equity market signals are being squeezed into Hong Kong which remains open. And that is not good for their property stocks which have had a heady run-up based on the stimulus signals. Now those property stocks are falling just as sharply as investors realise the fundamentals are just not there. And the expected ¥10 tln fiscal 'bazooka' has still be be launched. It is still being talked about and is still expected, but it won't happen till after the holiday week at the earliest.In the EU, there are signs that producer prices are rising again, up +0.4% in the bloc in August from July, but down -2.3% for the year to August which was a lesser rate of decline from the prior month.And later today, the EU is expected to approve an increase in tariffs to as much as 45% on electric cars imported from China, a move that officials said would help protect European carmakers from a glut of cheaper vehicles directly subsidised by Beijing.Those same subsidies have caused Toyota to pull back on developing EVs, because they are no longer commercial to produce.In China, price cuts along with those government subsidies helped the likes of BYD to boost monthly deliveries to all-time highs in September.Australian exports retreated slightly in August, but their imports retreated more, so their monthly merchandise trade surplus stayed at about AU$5.6 bln. But that was only because gold exports stayed strong boosted by sharply rising gold prices. Without those, their surplus would have halved.The latest IMF review of Australia isn't entirely convinced they have a sustainable disinflation trend underway and they warn them to prepare to do more to get price stability. They also say Australia needs to build many more houses in its efforts to tackle unaffordable housing and its pressures.Container freight rates fell another -5% last week as weak demand overcame the costs of the security issues in the Middle East. But that only dipped prices to 146% of pre-pandemic levels. Last week's weakness was mainly outbound China to Europe. The transpacific rate levels were unchanged. (Backhaul prices are now very low.) Bulk cargo freight rates slipped -2% last week after a long runup. They are now about +13% higher than year-ago levels, the same from the pre-pandemic period.The UST 10yr yield is now at just on 3.84% and up another +6 bps from yesterday. The price of gold will start today at US$2655/oz and up +US$5 from yesterday.Oil prices are up +US$3.50 at just on US$73.50/bbl in the US while the international Brent price is still just under US$77.50/bbl. Middle-East tensions are now starting to affect these prices as the never-ending 'retaliation' cycle shows no sign of ending.The Kiwi dollar starts today at 62.2 USc and down -½c from this time yesterday. Against the Aussie we are -20 bps lower at 90.8 AUc. Against the euro we are down -40 bps to 56.4 euro cents. That all means our TWI-5 starts today at just under 70, and down -30 bps from yesterday.The bitcoin price starts today at US$61,134 and down another -2.9% from this time yesterday. Volatility over the past 24 hours has stayed modest at just on +/- 1.8%.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.

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 Hong Kong is gripped by an unusual stock market frenzy, up +6.6% on the day.But first, US mortgage applications fell slightly last week after the best two consecutive weeks previously. The benchmark mortgage interest rate was unchanged and still at a recent low.This weekend (NZT) we get the important September non-farm payrolls report and it is expected to show +130,000 more jobs added in the month. Today the precursor ADP Employment Report came out showing a rise of +143,000 which was much more than the +90,000 anticipated. And their August data was revised higher. There was good job creation in both the factory sector (+42,000) and the service sector (+101,000) reported in this ADP data.Japanese consumer sentiment improved again in September, the fourth straight gain. However it isn't yet back to levels they had at the beginning of 2024.In Singapore, there was an unusually weak PMI result released overnight. Apart from the pandemic period, it fell to a record low in September, and is now in a deepish contraction.In Hong Kong, a wild stock market frenzy was underway yesterday, overwhelming brokerages with buying demand. Oddly, it is mainly about the expectation that the Chinese housing market will return to its old self and buyers will emerge to allow that. But that seems to be in the face of troubling demographics, and recent memories of steep losses for buyers. And the latest data still shows continuing steep losses for second-hand housing, continuing a 29 month trend. Maybe yesterday's Hong Kong rally was just FOMO.One thing is for certain, the Beijing government is going to print huge amounts of money to try and make a recovery happen. There will be winners, just not sure property will be one of them. But the price of key construction metals like zinc, iron ore and steel rebar are rising. The focus now turns to the late-October National People's Congress meeting and decisions to see if there really is a workable way out of their structural problems.In Australia, the widely-watched local PMI by the Australian Industry Group saw its factory PMI dive to its worst level ever at -33 (April 2020 excepted). This was far worse than expected where a much smaller contraction (-13) was forecast. Low order levels while inflation and labour pressures persist are making manufacturing there very tough. This AiG report pretty much mirrors the earlier S&P/Markit version.The UST 10yr yield is now at just on 3.78% and up +3 bps from yesterday.The price of gold will start today at US$2650/oz and down -US$20 from yesterday.Oil prices are down -US$1 at just on US$70/bbl in the US while the international Brent price is still just over US$73.50/bbl. It turns out American inventories are high so demand from this source won't be strong.The Kiwi dollar starts today at 62.7 USc and down a minor -10 bps from this time yesterday. Against the Aussie we are -40 bps lower at 91 AUc. Against the euro we are unchanged 56.8 euro cents. That all means our TWI-5 starts today at just under 70.3, and little-changed from yesterday.The bitcoin price starts today at US$61,919 and down another -0.2% from this time yesterday. Volatility over the past 24 hours has stayed modest at just on +/- 1.9%.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.

Kia ora,Welcome to Wednesday’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 of an expansion and the inevitable retaliations in the Israel/Gaza/Lebanon/Yemen flashpoints are now having an impact on global oil prices. It is also casting a pall over global sentiment as fears mounts for an even wider conflict. The shift toward safe-haven currencies has hurt the NZD.But first, the overnight dairy auction brought a +1.2% rise in USD terms, on the back of a +3.0% rise in WMP. There were good (+3.8%) gains for cheddar cheese as well. But most other products fell. In NZD terms, overall prices slipped -0.3%. Volumes sold were good. But this full auction broadly reflected last week's Pulse event for SMP and WMP.In the US, their retail impulse bounced back last week to be +5.3% higher than the same week a year ago.The September ISM factory PMI is still contracting slightly, little-changed from August. The dockworker strike isn't helping sentiment by American manufacturers. The S&P Global/Markit PMI for the US was more negative. Both report lower new order levels.But the Logistics Managers Index (LMI) jumped to its highest growth rate in the logistics sector in two years. They see rising demand for these services, but the transportation component was unchanged.Job openings rose in August from the July lower levels, but even though that rise was more than expected they are still in an easing trend, one that started in early 2022. Their quit rate fell.Yesterday we reported a soft factory report for the Texas manufacturing sector and its oil patch in September. Today we can note that the region's service sector was expanding, and by a bit more than expected.And we should note that Fed boss Powell yesterday emphasised that the recent 50 bps rate cut was probably just a one-off and that future changes will be "a more neutral stance" after that 'recalibration'.China is now on holiday, and will be for the next week.Eurozone inflation fell quite quickly in September, to just 1.8%, its lowest level since April 2021. Mostly this was driven by sharply lower energy costs.In Australia, retail sales rose in August more than expected to be +3.1% higher than a year ago - which is their best result for more than a year. But it is not that great because inflation is running at 2.7% there. But at least is is better than inflation finally. Sanguine weather conditions is getting the credit for this improvementMarket confidence in new home building in Australia has improved in recent months, as investors and owner occupiers return to the market. And that is now showing up in residential building consent data, which was +3.6% above year-ago levels.But CoreLogic says their housing market lost momentum in September, with insignificant overall changes in prices. Even Perth's monthly change was less than 2%, and that had been the epicenter of frothy housing prices.Globally, the market for corporate bond debt rose sharply in September. Bloomberg is reporting that more than 1200 issuers sold more than US$600 bln of bonds in the month, the most since these records began 20 years ago. The rush seems to have been driven by lower interest rates and rising uncertainty including of the US presidential election.The UST 10yr yield is now at just on 3.75% and down -3 bps from yesterday.The price of gold will start today at US$2670/oz and up +US$32 from yesterday, a new high.Oil prices are up +US$2.50 at just over US$71/bbl in the US while the international Brent price is still just over US$74.50/bbl. The crazy Middle-East situation is now affecting this commodity.And there have been moves higher for the price of many commodities, especially coal and steel. Zinc and nickel too. Some key food prices are turning up as well.The Kiwi dollar starts today at 62.8 USc and down almost -1c from this time yesterday. Against the Aussie we are -40 bps lower at 91.4 AUc. Against the euro we have fallen -30 bps to 56.8 euro cents. That all means our TWI-5 starts today at just over 70.2, and down -70 bps from yesterday.The bitcoin price starts today at US$62,020 and down another -2.3% from this time yesterday. Volatility over the past 24 hours has been modest at just on +/- 1.9%.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.

New Zealanders should be grateful insurance companies remain committed to New Zealand given the country's risk exposure, John Lyon of Ando Insurance says.In the latest episode of the Of Interest podcast I asked Lyon how well general insurers are serving New Zealanders, how competitive the market is, and how the public should judge strong financial results from their insurers. As well as being CEO of Ando, an underwriting agency, he's also the former CEO of Lumley Insurance. Statistics NZ's Consumers Price Index shows insurance costs rose 14% in the June year, making them a key contributor to households' cost of living pressures and the stubbornly high non-tradable inflation that meant the Reserve Bank held the Official Cash Rate at 5.50% for as long as it did."I think we should be grateful that there are insurance companies who are still committed to the New Zealand market, because what we need is a healthy, strong insurance market because the risks are so great in New Zealand," Lyon says."When you think about the risks we're exposed to from volcanoes that are overdue, to the well known earthquake exposures, the evolving cyclone and climate change issues, [and] we don't really fully understand tsunami risk. There's lots of evidence that there have been major tsunamis along the coast of New Zealand. At what frequency would we expect something like that to happen? We don't know. That's not been particularly well modelled. That's a major risk to the country.""There's a whole bunch of factors in there that we can talk about in terms of what New Zealand Inc needs to do to protect itself from the environment we live in. And climate change is a big part of that. But it's also all of the other generic risks that are there in front of us. So we have to think about how we manage them as well," says Lyon.With the likes of IAG, Suncorp and Tower having recently reported strong financial results, how should we judge how well they're doing financially?"One of the things that the reinsurers did [last year], as well as putting prices up, was they went to the insurance companies and they said, 'you now need to hold more of the risk to your own account'.""The Suncorps and IAGs, and indeed our business, was faced with a situation where if we had been holding, say, $100 million of the risk to our own account before reinsurance comes in, the reinsurers might have put that up to $500 million. So if you think about that, then if you've got an exposure of $500 million for any one event, you're not going to get $500 million every year.""So typically what insurance companies will do is they say, 'well, maybe over five years, we'd expect to have $100 million on average. So it'll be one big event every five years. That's $500 million. We'd spread that cost over five years.' So in every year you'd put a cat allowance [catastrophic event allowance] in of $100 million. If you don't have a cat event, you've got $100 million profit and then the next year you might have no event and you got another $100 million profit. But in year five you've got a $500 million event and you lose $500 million.""That's the market that we have moved to. The insurance companies need to be very profitable in the good years because the cost of managing the bad years is a lot higher. So it's not just reinsurers that suffer when there is a big event. The insurance companies hold more to their bottom line and that's a challenge for all the businesses in that respect," Lyon says."So it's hard to judge insurance on a year on year basis."Lyon suggests the most significant barrier to enter the general insurance market is New Zealand's risk profile, noting a number of international insurers look at NZ and see the economy is relatively small."It'll never be a major strategic value add to a global company in terms of incremental growth. So all you're going to have is a problem when a big thing happens like an earthquake."In the podcast audio Lyon also talks about what he believes should be done that would be more beneficial to customers' insurance costs than a market study, how the insurance industry is lagging from a transparency perspective, the perception of choice created by the big companies being behind numerous brands, how competitive the market is, the level of market power the big players have, climate adaptation, managed retreat and uninsurable areas, whether the general insurance market is a duopoly, insurance policies being used as a taxation device, risk-based pricing, parametric insurance, what the insurance equivalent of open banking could mean, and more.*You can find all episodes of the Of Interest podcast here.

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 we are into Q4 now and it is starting out modestly in most places, despite an eye-popping rise on the Shanghai stock exchange.First in the US, the Chicago PMI improved marginally in September although the gain was probably insignificant.Meanwhile the Dallas Fed factory survey for the US oil patch in September eased further, although again, not a significant change.But in October, this may all be affected by a looming East Coast and Gulf waterfront strike. And there is similar strike action underway in Canada. Workers are reacting to productivity changes from a new automation push.China's National Day Golden Week holiday period starts today, kicking off one of the year's busiest travel periods as the country marks the 75th anniversary of its founding as a communist state. But their tourism industry is bracing for sluggish activity with bookings down -20%, even as regional governments begin to distribute cash vouchers to boost flagging consumer spending.It is not only discretionary travel that is soft. The official Chinese factory PMI contracted at a lesser pace in September. And the companion Caixin factory PMI slipped from a minor expansion into a minor contraction.Further, the official services PMI expansion ended in September with their lowest reading since December 2022.But not everyone is looking ahead with trepidation there. Investors in Shanghai drove their equity markets up a remarkable +8.1% yesterday. After that exchange touched its lowest level in a decade on September 13, it has now suddenly shot up to its highest since April 2023. It is all about how Beijing is rolling out its stimulus - essentially guaranteeing investors that they won't lose (the Beijing 'put'). And they are all-in, filling their boots.Much of this is driven by a belief that Chinese construction will be getting a big boost. The steel rebar price rebound shows that.In the EU, the German CPI inflation rate fell to just 1.6% in September, its lowest since February 2021 when it was about to go on a tear, peaking at 8.8% in October 2022.In Australia, they are claiming its 'first back‑to‑back surpluses in nearly two decades'.The UST 10yr yield is now at just on 3.78% and up +2 bps from yesterday. The price of gold will start today at US$2638/oz and down -US$20 from yesterday.Oil prices are +50 USc firmer at just over US$68.50/bbl in the US while the international Brent price is still just on US$72/bbl.The Kiwi dollar starts today at 63.7 USc and up +30 bps from this time yesterday. Against the Aussie we are little-changed at 91.8 AUc. Against the euro we have risen +30 bps to 57.1 euro cents. That all means our TWI-5 starts today at just under 70.9, and up almost +30 bps from yesterday.The bitcoin price starts today at US$63,502 and down -3.3% from this time yesterday. Volatility over the past 24 hours has been moderate at just on +/- 2.2%.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.

Kia ora,Welcome to Monday’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 all eyes are on some well-signaled and massive fiscal stimulus due for release in China.When it is announced, it will overshadow everything else. But this week will also feature a wide range of other economic data released. Top of the list will be September's PMI data from China, the US and the EU among others, Japan will chime in with its industrial production and retail sales data, The EU will also be releasing inflation data, as will South Korea. And the US will also have more labour market updates, and end the week with its key non-farm payrolls report. In Australia, it will be about building consents and retail trade.Locally, it will all be about the September housing market reports, plus the Wednesday full dairy auction. But don't forget the following week, when the RBNZ will be releasing its OCR decision, so that will dominate this week's background outlook.We ended last week with some eye-catching optimism sweeping over Chinese stock markets after unprecedented money-printing fiscal stimulus signaling there.That came as their central bank some significant monetary policy changes. On Friday they cut the seven-day reverse repurchase rate by 20 bps to 1.5%. They also cut the reserve requirement ratio (RRR) by 50 bps, the second reduction this year, bringing the weighted average RRR for financial institutions to around 6.6% after the cut.They clearly need it. Construction firms are failing at a much faster rate now.The Hong Kong and Shanghai equity markets may be roaring, in anticipation of the coming stimulus. But Chinese industrial profits are weak. For the eight months to August, they are a touch less than for the same period last year. For August alone they were -23% lower than the same month in 2023.In Japan, they are about to get a new prime minister, a self-acknowledged policy wonk, and someone who has been on the outer of the main political establishment for years. He will now be at the center. Shigeru Ishiba is set to make the economy his top priority, signaling plans to lighten the burden of rising prices. Markets are expected to react when they open later today.In Taiwan, consumer sentiment rose in September to its highest level since March 2020. In the US PCE inflation rose at an annualised rate of +2.2% in August, a confirmation that inflation's impulse is back under control. That is its tamest rise since February 2021.American disposable personal income was up +3.1% in August from the same month a year ago, personal consumption expenditure was up +2.9% on the same basis.The final September reading of the University of Michigan consumer sentiment survey was released over the weekend and it was revised up from the flash result. The main reason for the increase was higher confidence in the 'present conditions' part of the survey. This survey is now at a five month high.US wholesale inventories slipped in August from July, but were up less than +1% from a year ago. It was similar for their merchandise trade deficit; down in August from July but up from a year ago. We have made the point before, but the size of these deficits is minor compared to their overall economic activity.Nothing in these second-tier data releases alters the expanding track of the giant American economy.EU sentiment is broadly stable in September. Firmer consumer sentiment offsets a slight weakening in business sentiment in the month.In Australia, they issued an unusual warning late last week: electricity supply from solar rooftops was destabilising their distribution networks because of oversupply. The immediate problem is in Victoria but may affect South Australia as well. The households in those regions will likely be paid nothing for supply.Separately, we should perhaps keep an eye on the butter price, At auction it has been basically stable for most of the year.at about US$6500/tonne. But the EU butter price has risen to US$7,200/tonne since July. Either the GDT price will shift up strongly, or the EU price will fall sharply. It might be the latter because we saw it fall -5% in the last few days of last week.The UST 10yr yield is now at just on 3.75% and down -1 bp from Saturday. The price of gold will start today at US$2658/oz and up +US$15 from Saturday and back up nearer it all-time high.Oil prices are h+50 USc firmer at just over US$668/bbl in the US while the international Brent price is now just on US$72/bbl.The Kiwi dollar starts today at 63.4 USc and down -10 bps from this time Saturday, up more than +1c from this time last week. Against the Aussie we are little-changed at 91.9 AUc. Against the euro we have slipped -10 bps to 56.8 euro cents. That all means our TWI-5 starts today at just under 70.6, and down -15 bps from Saturday.The bitcoin price starts today at US$65,683 and down -0.3% from this tim

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.Today we lead China is trying to get back on track to keep up with the US economically.First in the US, the number of initial claims for unemployment benefits fell again last week and by more than expected to 181,000. In fact there has been a consistent reduction each week since the end of July. There are now only 1.63 mln people on these benefits.American durable goods orders came in better than expected too in August. After an unexpected jump in July, they were expected to fall back sharpish. They did but not by anything like what was expected. In actual terms they rose +7.5% from July to be level-pegging with a year ago. The embedded year-on-year negative has now been extinguished. Capital good orders rose in August to be +2.5% higher than a year ago. This too is a bright recovery.There were no surprises in the US Q2 final GDP result, with their economic activity growing +3.0% 'real' and almost double the +1.6% expansion in Q1. For the full year to June, there was US$29 tln in economic activity recorded, a fast pace of expansion for the world's largest economy. By some estimates, that +3% pace has continued into Q3.It is not all good, or even even. The Kansas City Fed's factory survey retreated in its September review, even if expectations for future activity stayed positive.Again, there was good support for today's US Treasury 7 year bond auction. It went for a median yield of 3.61%, down from 3.71% at the equivalent event a month ago. And that is despite secondary benchmark yields rising slightly today.And as expected, the Swiss National Bank cut its key policy rate by -25 bps to 1% at their overnight meeting, a third consecutive reduction and pushing borrowing costs to the lowest since early 2023.Aussie job vacancies continue to fall. There were 330,000 job vacancies in August, down by 18,000 from May, and well down from the peak of 473,000 in May 2022. Their labour market stats shows there were 623,200 unemployed people in the same month, of which 418,500 were supposedly looking for full-time work.The OECD said the global economy is turning the corner as growth remained resilient through the first half of 2024, with declining inflation, though significant risks remain, according to the OECD’s latest Interim Economic Outlook. With robust growth in trade, improvements in real incomes and a more accommodative monetary policy in many economies, the Outlook projects global growth persevering at 3.2% in 2024 and 2025, after 3.1% in 2023. Global inflation is projected to be back to central bank targets in most G20 economies by the end of 2025. Headline inflation in the G20 economies is projected to ease to 5.4% in 2024 and 3.3% in 2025, down from 6.1% in 2023, with core inflation in the G20 advanced economies easing to 2.7% in 2024 and 2.1% in 2025.Container freight rates fell -7% last week from the prior week, to be +160% higher than the pre-pandemic levels and back to levels we last saw at the start of 2024. All the latest reductions were on routes outbound from China. Bulk cargo rates were up +6.6% last week to be +25% higher than a year ago.In China, Beijing has asked its four top state-owned banks to cover for it with lending that may not make a lot of commercial sense. Now Bloomberg is reporting that they are moving to bolster the capital in these key institutions. The amount of added capital required is enormous.And we are starting to see some movement in some commodity prices, responding to the Chinese stimulus program. For example the copper price is back above US$10,000/tonne which is approaching the upper limits of where it has been since its first rise in 2011. Iron ore or rebar steel aren't moving, but zinc is.The UST 10yr yield is now at just on 3.79% and unchanged from yesterday. The price of gold will start today at US$2670/oz and up +US$9 from yesterday to yet another new all-time high.Oil prices have fallen another -US$2 to US$67.50/bbl in the US while the international Brent price is now just on US$71.50/bbl. The Saudis seem to have surrendered the idea that production cutbacks will juice the price in their favour. They are shifting to pump more and regain market share.The Kiwi dollar starts today in a yoyo pattern at 63.3 USc and back up +60 bps from this time yesterday. Against the Aussie we are unchanged at 91.8 AUc. Against the euro we are up +30 bps at 56.6 euro cents. That all means our TWI-5 starts today at 70.6, and back up +30 bps from yesterday.The bitcoin price starts today at US$65,167 and up +3.3% from this time yesterday. Volatility over the past 24 hours has been moderate at just on +/- 2.9%.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

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 of a settling of the global economy after some big announcements by China. So far, little seems to have changed, other than investors now think they can't lose with Chinese equity investments.But first, the surge in American mortgage applications we noted last week has extended. Last week they soared +11% from the prior week, extending the earlier +14.2% gain to lift mortgage application volumes to their highest since June 2022, and now above year-ago levels. It's been a sudden shift. In fact this is the best two-week period in their housing market since late 2015. The upswing in home loan demand came as benchmark mortgage rates fell to a two-year low of 6.13%.So far it has not shown up in the purchase of new homes. Sales of new single-family homes fell -4.7% in August to an annual rate of 716,000 units. While this drop partially offset the revised +10.3% surge from the previous month, it was still marginally more than market forecasts. This market has been on a slow recovery since August 2022. But the mortgage application surge may well change this momentum in September.There was more evidence today that the US Government is having no problem attracting investors for its debt. The Treasury 5 year Note was well supported again with US$100 bln more in bids than available and the median interest rate came in at 3.46%, down from the 3.59% at the prior equivalent event a month ago.Taiwanese retail sales were subdued in August, rising only +1.1% from the same month a year ago. But their industrial production was up more than +13% on the same basis.After China's big signals of substantial monetary stimulus (and yesterday's follow-through of a -30 bps cut to the MLF rate to 2.0%, its biggest cut ever) you might have thought that commodity prices would have risen in anticipation of a meaningful market reaction. But they haven't - yet anyway. The copper price rose prior to the official announcements, but haven't kicked on today. Iron ore has stayed subdued. Other key metals have had conspicuously little reaction. This may all mean markets have been quite unimpressed with the scale of this stimulus effort. No-one is actually gearing up for 'the recovery'. Local investors still think they are however. But Aussie investors are very sceptical.Staying in China, an overnight announcement revealed a one-off cash handout to the poor will happen early next week. The amount of the gift wasn't revealed however.Overnight the Swedish central bank cut its key policy rate by -25 bps to 3.25% following a similar move in August and in line with market expectations. They signaled further cuts in the two remaining monetary policy meetings of the year.We don't often look at the French economy, Europe's second largest. But an overnight survey is worth noting. French consumer confidence rose more than expected in September and way above market expectations. This is the highest reading since February 2022. Consumers were less pessimistic about the outlook on both their financial situation and their standard of living. And their saving intentions rose. Tax rises for the rich seem to be on their agenda now.In Russia, the rise of their industrial production is slowing and quite fast. War is giving no meaningful boost to their output. Even corporate profits are struggling, down -6.5% from a year ago.In Australia, August inflation as monitored monthly was expected to fall to +3.1% from 3.5% in July. But in fact it fell far more sharply, down to 2.7% in August from a year ago. The RBA will be relieved as this is the first indication they wanted to see of it within their 1-3% target range. But, a lot of this was due to falls in the cost of petrol and electricity. And that came from a one-off impact of the start of their Commonwealth Energy Bill Relief Fund rebates, and the State Government rebates in Queensland, Western Australia and Tasmania, which drove the largest annual fall in electricity prices on record, down almost -18%. These rebates will last through 2025. Staying high however are rents, still rising about +7% pa.The UST 10yr yield is now at just on 3.79% and up +6 bps from yesterday. The price of gold will start today at US$2661/oz and up +US$11 from yesterday to yet another new all-time high.Oil prices have fallen -US$2 to US$69.50/bbl in the US while the international Brent price is now just over US$73/bbl. Libyan supply is on its way back.The Kiwi dollar starts today at 62.7 USc and down more than the ½c it gained yesterday. The spike was brief. Against the Aussie we are down -20 bps at 91.8 AUc. Against the euro we are down -40 bps at 56.3 euro cents. That all means our TWI-5 starts today at 70.3, and down -30 bps from yesterday.The bitcoin price starts today at US$63,112 and down a minor -0.2% from this time yester

Kia ora,Welcome to Wednesday’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 of some major emergency moves in China to reinvigorate their economy.But first, there was a good GDT Pulse auction result earlier this morning, although the reverse of what the futures markets had signaled. There was no gain in SMP prices, holding its recent higher levels. But the important WMP price rose +2.8% from the full auction a week ago and back to levels of a year ago.This is a good backdrop to this morning's Fonterra 2023/24 results announcement.The expansion of American retail sales at physical stores rose +4.1% last week from the same week a year ago. That is good but a slowing from the gains since August. A year ago they were rising +3.6%.But the widely-watched Conference Board consumer sentiment survey for September has brought a hesitation, slipping to the lower end of the narrow range it has been in for the past two years. Worries about job security seems to be a key factor here, although we probably shouldn't make too much of a range-bound shift.Election jitters have hit the Richmond Fed's factory survey covering the mid-Atlantic states, all "battle-ground states" where uncertainty of the outcomes is pronounced.There was a very well supported US Treasury 2 year bond auction today, delivering a median yield of 3.47%. That is down from 3.83% at the equivalent event a month ago. In both more than US$100 bln in bids went unsatisfied.And ratings agency Moody's has warned that a downgrade for the US Federal Government is a live possibility unless it tackles its growing deficits. This comes a year after it placed the AAA rating on 'negative outlook'. Clearly it is watching this with some unease.Across the Pacific, Japan's business activity continues to rise, largely based on a service sector that is now expanding at its fastest pace since April. Factory activity isn't expanding however, according to this PMI survey.Taiwanese export orders rose +9.1% in August from the same month a year ago, to a nine month high.In China, "a leading Chinese economist" and politician has called for Beijing to launch a ¥10 tln stimulus package (NZ$2.2 tln) equivalent to 8% of Chinese GDP, to tide their economy over through the rest of 2024, as credit growth and domestic demand remain drained of energy. The economist calling for this is Liu Shijin, deputy-director of the China Development Research Fund and deputy-chair of the economics committee of the Chinese People's Political Consultative Conference (CPPCC). He has been echoed by Yu Yongding.Responding to the plea for a jolt, the Governor of the Chinese central bank said in a rare briefing that they will cut their reserve requirement ratio by 50 bps, and likely match that again before the end of 2024. Together, these will add ¥2 tln 2024 liquidity. .He also said that the seven-day repo rate will be reduced by 20 basis points to 1.5%. And there will be a -30 bps drop in their medium term lending facility. Mortgage rates will be dropped by -50 bps and the minimum deposit on a home purchase will be dropped to 15%. They did not specify exactly when these changes will go into effect however. More here.Although these measures have more than a whiff of panic surrounding them, clearly President Xi has given his officials a rocket to act quickly to turn around an economy stuck in a rut. And equity markets responded with their own rocket.And so did some components of the commodities market; copper, for example. We may see more commodity action today. But we should also keep in mind the program announced yesterday is very much less than what its own experts are calling for.Yesterday, the RBA's policy review kept its rates unchanged in the face of higher than target inflation levels. It has been four years since they have had a rate cut. But inflation remains above target and is proving persistent so their room to move is limited.The UST 10yr yield is now at just on 3.73% and down -2 bps from yesterday. The price of gold will start today at US$2650/oz and up +US$32 from yesterday to yet another new all-time high.Oil prices have risen +US$1 to US$71.50/bbl in the US while the international Brent price is now just on US$75/bbl.The Kiwi dollar starts today at 63.3 USc and up +½c from this time yesterday and its highest of the year and back to where it ended in 2023. Against the Aussie we are up +40 bps at 92 AUc. Against the euro we are up +30 bps at 56.7 euro cents. That all means our TWI-5 starts today at 70.6, and up +40 bps from yesterday and a three month high.The bitcoin price starts today at US$63,216 and little-changed from this time yesterday. Volatility over the past 24 hours has been low at just under +/- 1.0%.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

Milford Asset Management’s head of KiwiSaver says KiwiSaver – the country’s voluntary retirement savings scheme which is in its 17th year – is a teenager that’s about to head into adulthood.“I think it's the right time to have the discussions we were having at the [Financial Services Council] Conference. By and large, providers are pretty well aligned around how we can improve KiwiSaver and make it better for New Zealanders retirements,” Milford's Murray Harris says on a new episode of the Of Interest podcast.KiwiSaver has become a bigger topic of financial conversation this year and the discussion around potential tweaks and changes to the savings scheme has become more of a ‘when they happen’ and less of an ‘if’ scenario.At the Financial Services Council Conference in early September, KiwiSaver was a hot debate, with KiwiSaver providers discussing how New Zealanders are simply not saving enough for their retirement and the Retirement Commissioner pointing out that Kiwisaver governance lacks clarity.Harris tells interest.co.nz that KiwiSaver has been “very successful” in attracting members and the savings scheme doesn’t have a participation problem.The latest KiwiSaver statistics out of Inland Revenue shows over 3.36 million people are now enrolled in KiwiSaver as of July 2024 and Harris says the participation rates are highest amongst those between the age brackets of 25–34 and 35–44. “The participation's really good, but we have an issue around the contribution rate or the amount that people are contributing,” he says.“Most people are doing 3%, and ... 90% of employers only do 3%. So together, those contributions are not going to be enough to get people to where they need to be for a really comfortable retirement. And I think that's the key issue. That's the real nub of it being very successful in terms of getting people interested and involved, but we're just not contributing enough.”The Financial Markets Authority released its 2024 KiwiSaver report on Tuesday which showed total KiwiSaver contributions – this includes employee, employer and government contributions – came to $11.2 billion in the March 2024 year. This is up 6.5% from the prior year.Harris says the KiwiSaver industry has a job to do in terms of educating its members that the current default contribution rate in KiwiSaver, which is 3%, is a good start – but not enough to get people to where they likely think they're going to be savings wise by retirement.“Most people think it's 3%, and that's the problem with the settings as they are. You tell people to do 3%, that's what they'll do, and they'll think that's all they need to do. But in reality, it's a lot more,” he says.The Retirement Commission has called for a higher default contribution rate of at least 4% and says employers should be matching at this level or more. Harris says there are also things New Zealand can learn from “the lucky country” – Australia – when it comes to saving for retirement. The minimum contribution rate for Australia’s superannuation scheme – the equivalent to NZ’s KiwiSaver scheme – is currently 11.5% for employees and employers. This is being raised to 12% in 2025.“They've amassed a lot of assets and they've been able to reinvest those assets into the local economy. So you go to Australia, you cross some wonderful bridges, the motorway systems, the tunnels through central Sydney. Now they've been built with superannuation money and it's been a win-win because the economy moves better, industry can move their goods and services at a better pace and they've provided some great investment returns for investors, for super investors. So that's a win win. I think that's something that we could definitely learn from,” he says.*You can find all episodes of the Of Interest podcast here.

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 the global expansion seems to be getting more uneven.In the US, the good economic data keeps on coming. They reported a healthy PMI expansion in September, driven primarily by their service sector which is now expanding its fastest since March 2022.And the Chicago Fed's National Activity Index surprised with an unexpected gain in August.And because there is now less than a week until the end of Q3-2024, the estimates now see an expanding economy rising at between a +2 and +3% rate 'real', and keeping up the pace of expansion that shows no sign of slacking. On a 'real', inflation-adjusted basis, the Trump economy grew +2.8% in his four year term. On the same 'real' basis the Biden economy has grown just on +10% during his 3½ years so far.So it may seem a bit odd that the heads of the regional Fed banks in Chicago, Minneapolis, and Atlanta all said, at a conference yesterday, they recommend more rate cuts.India's economy is still expanding fast in September, according to the same PMI survey results. However, the pace isn't quite as fast as they had in August.Singapore said its August inflation rate fell to 2.2% in August from 2.4% in the prior two months, matching market forecasts and notching the lowest level since April 2021, as food prices stayed at their lowest in over two years.China's September PMIs aren't released until next week. But they may not be great.China's car dealers are pleading for government help as demand softens fast.So in China yesterday, their central bank unexpectedly lowered the 14-day reverse repurchase rate by -10 bps to 1.85% yesterday. They also injected ¥75 bln in liquidity into the banking system. And they pumped in up to another ¥160 bln via 7-day reverse repos, but kept the rate unchanged at 1.7%.And in another unusual step, their central bank said its boss will give a unique briefing later today on "financial support for economic development".Also not great were EU PMIs. Their service sector is still expanding, but not as fast and service activity is now at a 7 month low. Their factory sector is actually contracting and at a nine month low. Leading them down is Germany.The flash Australia Manufacturing PMI fell further into contraction in September, an eighth consecutive month of contraction in manufacturing activity and at the fastest drop since May 2020. New orders and production also fell at the quickest pace in 52 months amid softening demand conditions. Their service sector expansion has almost evaporated, according to this same survey.And staying in Australia, their competition regulator is taking on the two dominant and giant supermarket chains (Coles & Woolworths), alleging that ‘Prices Dropped’ and ‘Down Down’ claims and the like are actually misleading.The UST 10yr yield is now at just on 3.75% and up +2 bps from yesterday. The price of gold will start today at US$2628/oz and up +US$7 from yesterday to a new all-time high again.Oil prices have dipped -50 bps to US$70.50/bbl in the US while the international Brent price is now just under US$74/bbl.The Kiwi dollar starts today at 62.8 USc and up +40 bps from this time yesterday and near its highest of the year. Against the Aussie we are unchanged at 91.6 AUc. Against the euro we are up +½c at 56.4 euro cents. That all means our TWI-5 starts today at 70.2, and up +30 bps from yesterday.The bitcoin price starts today at US$63,245 and +0.3% from this time Saturday. Volatility over the past 24 hours has been modest at just on +/- 1.8%.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.

Kia ora,Welcome to Monday’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 a risk-on shift will start the week in most major economies.As we wind down September this week here, into both school holidays upcoming and daylight saving on the weekend, the key focus will shift to Fonterra's results on Wednesday, and local consumer sentiment on Friday.And tomorrow the RBA will review its monetary policy settings including its cash rate target. Despite the continuing inflation pressures, no-one really expects them to alter their existing 4.35% policy rate this time. Oddly that comes a day before they release their August monthly CPI report, which is expected to slip from 3.5% to 3.1%. They hope so at least. And a day after that they release their Financial Stability Report.In the US, the key focus will be on PCE prices, personal income and spending reports. They are expected to validate the Fed rate-cut move. And they will release their final Q2 GDP report, PMI data, consumer confidence, durable goods orders, and both new and pending home sales data too. There will be September PMI reports from many other economies as well.Over the weekend, China left its loan prime rates unchanged in its September fixing, as expected. These remain at record lows.And their 'youth' (16-24) unemployment rate was 18.8% in August according to official data, the highest since they changed the basis of this stat in January. They say their general jobless rate is 5.4%, and that too is its highest in a year.And don't forget, next week is China's National Day Golden Week from October 1 to October 7. Most businesses and factories in China will be closed for the holiday. This extended shutdown will significantly impact international supply chains.Japan reported 3.0% CPI inflation in August, up from 2.8% in the prior three months. It is their highest level since October 2023. Japanese inflation now seems well embedded, after decades of deflation.The Japanese central bank left its 0.25% policy rate unchanged, as expected late on Friday. They said "Japan's economy is likely to keep growing at a pace above its potential growth rate, with overseas economies continuing to grow moderately and as a virtuous cycle from income to spending gradually intensifies against the background of factors such as accommodative financial conditions." But press conference remarks after the release suggests that the Bank has turned dovish, so expectations for more rate hikes are lower now.India's economic surge is built on aggressive borrowing. Loan growth is running higher than +13% from the same month a year ago, even if that is lower than the almost 20% rate it was running in the same month in 2023.Canadian retail sales rose more strongly than expected in July, up +0.9% from a year ago when a +0.6% rise was expected. A key driver was car sales. And these retail rises are expected to continue as a new sense of optimism grows in Canada.Consumer sentiment in the EU continues to rise, in spite of their obvious economic struggles. In fact, it is almost back to its long-run average levels, something it hasn't managed since the pandemic period.The UST 10yr yield is now at just on 3.74% and up +1 from Saturday. But that is up +8 bps from a week ago.The price of gold will start today at US$2621/oz and up +US$1 from Saturday to near a new all-time high again. That is a +1.5% rise from a week ago when it was US$2582/oz.Oil prices are unchanged at US$71/bbl in the US while the international Brent price is still just on US$74.50/bbl.The Kiwi dollar starts today at 62.4 USc and little-changed from Saturday but up +80 bps from a week ago. Against the Aussie we are unchanged at 91.6 AUc. Against the euro we are still at 55.9 euro cents. That all means our TWI-5 starts today at 69.9, unchanged from Saturday but up +60 bps from a week ago.The bitcoin price starts today at US$63,055 and +0.9% from this time Saturday. Volatility over the past 24 hours has been low at just on +/- 0.8%.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.

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.Today we lead with news stock markets are roaring today after the US Fed rate cut, many, including Wall Street, powering up to record highs. And interest rate curves are steepening.But first, the actual number of people making initial unemployment benefit claims in the US dropped from the previous week to 185,000 last week, significantly lower than the expected 230,000, and a 4-month low. There are now 1.68 mln people on these benefits, also a decrease.Meanwhile the Philly Fed factory survey reported improved conditions in the rust-belt states in September. Although the new orders component didn't rise, the sentiment indexes for the future all did.But not rising is their real estate market. Existing home sales fell -2.5% in August from the previous month, the fourth decline of the year. It was down -4.2% from the same month a year ago. The fall happened despite the drop in mortgage rates in the period. And the median existing-home sales price fell too, to US$416,900 (NZ$670,000). The inventory of unsold housing rose rose to 18 weeks of sales at the latest rate, rising from 15.6 weeks in the prior month.But one thing the Fed rate cut did was suddenly drop home loan interest rates, falling more than -25 bps in the first day to 6.09% for their benchmark mortgage. It is likely to go sharly lower tomorrow again.The US current account deficit widened slightly to -3.7% of GDP in Q2-2024. That is entirely manageable, especially as the USD is still the world's reserve currency. (For comparison, the New Zealand current account deficit is running at -6.7% of our GDP - and we are certainly not a reserve currency.)Overnight there were central bank rate decisions in both Taiwan and England. Both made no changes. Perhaps the Taiwanese one was a bit of a surprise because they tend to follow the US Fed's moves. Later today Japan will also review rates, and no change in their rate is expected either. But markets will be looking for signals about when the next rise is coming.Will the start of the rate easing cycle trigger an economic upside? Certainly some commodities markets think so. And they also expect China to come to the party soon with new emergency stimulus, which would be another boost.In Hong Kong, a man was jailed for 14 months for wearing a t-shirt with a protest message.In Australia, their number of workers without a job fell by -10,500 to 627,000, or an unchanged 4.2% of their workforce. Even though employment rose by much more than the expected +25,000, the number of new part-time roles rose +47,500 and the number of new full-time roles fell -3,100 in August. Almost 31% of all Aussie jobs are now part-time. (In New Zealand it is barely touching 20%.)The overall jobs growth in Australia has analysts thinking that the RBA will delay any move to cut rates there any time soon. But a rise doesn't seem on the cards either, despite their outlier sticky inflation.Container freight rates fell another -5% last week, taking them back to where they were at the start of the year. But they remain 180% higher than the average 2019 pre-pandemic rate. The Panama issues are resolved, but the Suez/Red Sea issues are not. The shipping industry is adjusting to that new reality however. Bulk cargo rates fell -3.6% over the past week and are now themselves +30% higher than year-ago levels. As we all know, for both there has been a lot of volatility in between and that volatility has probably not ended.The UST 10yr yield is now at just on 3.73% and up +2 bps from this time yesterday. The key 2-10 yield curve is now +14 bps positive. Wall Street is surging today with the S&P500 up +1.8% from yesterday after the Fed decision. Overnight, European markets were all up too, but with varying enthusiasm. Tokyo ended its Thursday trade up is own strong +2.1%. Shanghai was up a more modest +0.7. But Hong Kong closed up +2.0%. Singapore was up +1.1%. The price of gold will start today at US$2589/oz and up +US$14 from yesterday's high to near a new all-time high again.Oil prices are up +US$1.50 at US$72/bbl in the US while the international Brent price is still just under US$75/bbl.The Kiwi dollar starts today at 62.5 USc and up +10 bps from yesterday. Against the Aussie we are down -20 bps at 91.6 AUc although all of that before the Fed. Against the euro we are up +10 bps at 56 euro cents. That all means our TWI-5 starts today at 69.9, and up +10 bps from yesterday.The bitcoin price starts today at US$63,817 and up another strong +5.6% from this time yesterday. Volatility over the past 24 hours has been high at just on +/- 3.6%.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.

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 of a big call by the US Federal Reserve.First up you should know that the US Fed cut its benchmark policy rates by -50 bps, to the 4.75%-5.00% range, a larger cut that most professional observers had anticipated, but in line with some advance financial market pricing. (And it might be notable, that for the first time in almost 20 years, one voting member dissented, preferring only a -25 bps cut.)They say the key to the cut is their "greater confidence" that inflation is beaten.The Fed’s so-called dot plot, which they use to signal its outlook for the path of interest rates, shows the median 2024 year-end projection for the federal funds rate fell to 4.38%. That implies another -50 bps in cuts are coming soon. The median estimate for the end of 2025 decreased to 3.38%.Markets initially reacted with Wall Street rising, commodity prices rising, the USD falling, and UST bond yields moving relatively little at the long end but dipping at the short end. But conviction in these early market moves seems to be wavering.Of course, the US Fed isn't the first to cut rates in this cycle. We have already seen them from the ECB, Canada and England. And yesterday, Indonesia delivered a surprise rate cut. But now the Fed has moved, and decisively, many others will no doubt follow. Global rates are in a clear easing cycle, now that inflation seems to have been tamed.American mortgage applications leapt +14% last week from a week earlier, the fourth consecutive gain, marking the sharpest increase since the 18-month high of almost +17% in mid-August. The surge in home loan demand tracked the fall in borrowing costs, with the average interest rate on a benchmark mortgage falling by -14 bps from the earlier week to a two-year low of 6.15%.And there was a good (but not great) rise in American housing starts in August. They were up almost +10% from the previous month to an annualised rate of 1.36 mln units in the month, firmly above market expectations of 1.31 mln units, and rebounding from the near 7% plunge in the previous period. It was the sharpest increase in nine months. Starts of single-family homes rose by nearly +16%. Despite all that, housing starts are still -6.5% below the year-ago level.Japanese exports rose +5.6% from a year ago in August, slowing sharply from a 10.2% rise in July and falling short of market forecasts of another 10% rise. But it was the ninth successive month of increased export shipments.In China, and in another sign of worsening tensions, China has 'blocked' a Taiwanese company manager from returning home, essentially kidnapping him at the border.But that is minor compared to the economic signals. Mid-Autumn Festival mooncake sales were reportedly quite weak; celebrations didn't deliver the expected boost.In the UK, they delivered another tame inflation result for August. It was unchanged from July at 2.2% and as markets expectation. The largest upward contributions came from the almost +12% rise in air fares, mainly for European routes. The most significant falls came for petrol and other energy costs.The UST 10yr yield is now at just on 3.71% and up +7 bps from this time yesterday. The price of gold will start today at US$2575/oz and up +US$9 from yesterday's high to a new all-time high. This price jumped after the Fed decision to almost US$2600 but has since fallen backOil prices are down -US$1 at US$70.50/bbl in the US while the international Brent price is still just under US$73/bbl. Trading is active post the US Fed, but net movements are lower.The Kiwi dollar starts today at 62.4 USc and up +60 bps from yesterday after the US Fed decision although softening subsequently. Against the Aussie we are up +20 bps at 91.8 AUc although all of that before the Fed. Against the euro we are up +30 bps at 55.9 euro cents. That all means our TWI-5 starts today at 69.8, and up +40 bps from yesterday.The bitcoin price starts today at US$60,835 and up +4.9% from this time yesterday. Volatility over the past 24 hours has been high at just on +/- 3.3%.Join us at 10:45am this morning when we will be covering the Q2-2024 GDP release.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.

Kia ora,Welcome to Wednesday’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 we are in the shadow of tomorrows US Fed rate decision. There almost certainly will be a rate cut, but the size of it is still in doubt. Place your bets.Meanwhile, today's dairy auction was a relatively tame affair, largely delivering what the derivatives markets signaled. But AMF and butter slipped, with the rest of the powders and cheese all rising about +3%. But there was more of the weak milkfats in this auction than normal so the overall price rose only +0.8%. In NZD terms it was similar. There will be little to shake farmgate payout forecasts in this event's results.And staying local, we should note that there is another electricity crunch underway this morning from 7am to 8:30am. Prices are under pressure as you would expect.Elsewhere in the US, the data released overnight delivered another set of positives. August retail sales grew when a slip was expected. And July retail sales were sharply revised higher. Last week's Redbook index rose +4.7% from the same week a year ago.US industrial production rose and by more than expected in August. And that means on a year-on-year basis it is no longer negative.And their NAHB/Wells Fargo Housing Market Index rose in September beating expectations. This breaks a string of four consecutive monthly declines.There was a well-supported but relatively small UST 20yr bond auction today where the median yield came in at 3.97%, down from 4.10% at the equivalent event a month ago.In Canada, their CPI inflation rate fell to 2.0% and back to where their central bank needs it to be. It was a slightly larger adjustment lower than expected. The Bank of Canada next reviews rate on October 23 and there is growing talk of a -50 bps reduction then.Meanwhile Canada housing starts in August came in lower than expected.Across the Pacific, Singapore's August exports came in softer than was anticipated.But India's August exports beat estimates, even if the rise seems minor and overall Indian exports are not large by world scales.Remember, China is on holiday today.The UST 10yr yield is now at just on 3.64% and up +1 bp from this time yesterday. The price of gold will start today at US$2566/oz and down -US$15 from yesterday's high.Oil prices are up +US$1 at US$71.50/bbl in the US while the international Brent price is now just under US$74/bbl.The Kiwi dollar starts today at 61.8 USc and down -10 bps from yesterday. Against the Aussie we are down -20 bps at 91.6 AUc. Against the euro we are down -10 bps at 55.6 euro cents. That all means our TWI-5 starts today at 69.4, and down a minor -10 bps from yesterday.The bitcoin price starts today at US$60,835 and up +4.9% from this time yesterday. Volatility over the past 24 hours has been high at just on +/- 3.3%.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.

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 financial markets are now expecting a -50 bps rate cut from the US Fed later in the week.But first up in the US, the next regional factory survey came in surprisingly strong. The NY Empire State Manufacturing Index unexpectedly jumped sharply in September to its highest since April 2022. A key driver was new order growth.Also coming in better than expected was Canada's July manufacturing levels. Oil and coal production drove that. Also probably helping was an unexpected rise in Canadian vehicle sales. But that monthly gain only limited the retreat from a year ago to -1.1%.As regular readers will know, Canada has had longstanding housing affordability issues. Today it loosened some eligibility rules for first-home buyer access to 'insured mortgages'. But this is a demand side move. So these changes are likely to have the unintended consequence of adding more competitive pressures to already stressed markets.In China, the typhoon that hit Shanghai yesterday has come at a tricky time for China and its financial capital. Delayed and cancelled transport connections will have undermined their Mid Autumn Festival holiday spending in the region.In Australia, the ASX200 closed at an all-time high yesterday, fueled by bets the US Fed would cut interest rates by -50 bps on Thursday (NZT).But the same financial market 'bets' are pushing the USD lower, along with benchmark interest rates. Falling rates are having a global effect, except perhaps in Australia where there is widespread acknowledgement that the RBA hasn't tamed inflation yet. But they may be able to hold on with unchanged policy rates as the gap with others widens over the next few months.Interestingly, financial markets are also betting heavier that the next RBNZ rate change, on October 9, will also be -50 bps.The UST 10yr yield is now at just on 3.63% and down -3 bps from this time yesterday. The price of gold will start today at US$2581/oz and up +US$3 from yesterday's high.Oil prices are up +US$2 at US$70.50/bbl in the US while the international Brent price is now just under US$73/bbl.The Kiwi dollar starts today at 61.9 USc and up +30 bps from yesterday. Against the Aussie we unchanged at 91.8 AUc. Against the euro we are up +10 bps at 55.7 euro cents. That all means our TWI-5 starts today at 69.5, and up +20 bps from yesterday.The bitcoin price starts today at US$57,987 and down -3.0% from this time yesterday. Volatility over the past 24 hours has been moderate at just on +/- 2.3%.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.

Kia ora,Welcome to Monday’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 the world's second-largest economy is having trouble convincing anyone it is under control.This coming week it will be all about the US Fed rate decisions, and the size of the rate cut. We will get that on Thursday NZT. And there will be central bank rate decisions this week from Japan, Norway, China, the UK, and Turkey. Australia will release its labour market updates. And of course, the New Zealand Q2 GDP result will also come Thursday.But over the weekend it was mostly about China.China’s industrial production rose by +4.5% in August from a year ago, falling short of market forecasts and slowing from July. This was the softest growth since March, and the fourth straight month of a slowdown. But at least it was confirmed by their electricity production data, up +5.8%. It is rare that electricity use exceeds industrial production expansion, so perhaps that is an encouraging signal for them.But China's retail sales underperformed, rising just +2.1% from a year ago in August, moderating from +2.7% growth in the prior month and missing market consensus of +2.5%. Lower car sales kept a lid on this sector amid unusual weather events this summer.New home prices in 70 cities fell faster, down -5.3%in August, after a -4.9% fall in the previous month. It was the 14th straight month of decrease and the steepest pace since May 2015, despite Beijing's extensive measures to reverse a downturn in the property sector, such as trimming mortgage rates and reducing home buying costs.Every one of those cities recorded a fall in these official stats for used houses. The largest was the -13% fall in Wuhan. When resales lose money it will be very hard to sell new ones.So it will be no surprise that their August data shows new loan growth remains very subdued in what is extending to be unusual difficult trading conditions. Chinese banks extended +¥900 bln in new yuan loans in August, above a fifteen-year low of ¥260 bln in July, but less than the expected bounce-back. It is also the lowest value for an August month since 2015.And it won't be a surprise to that August FDI was particularly weak, down more than -48% in the year to August from the same period in 2023.We have noted the trend before, but the weak Chinese economy is driving a bond rally there. Yields fell to a new record low on Thursday, and state banks have been drafted in to sell some of their long-dated bonds to try and stem the rally. But until more confidence returns to the Chinese economy generally, it unlikely to work. If Beijing institutions don't have the firepower to move this market, it is unlikely the core SOE banks do either.In a rare statement with the loan growth data release, the central bank indicated that new stimulus is on the way to shore up the economy. Late last week, President Xi exhorted his government to ensure the 5% growth target is reached this year. Xi's intervention came after widespread voices warned that the 5% target was probably out of reach.Coming at a time that isn't convenient for their economy, China is going into an end-of-summer period of public holidays. First there is the upcoming Mid-Autumn Festival, September 15 to 17, a total of 3 days off - but where Saturday, September 14 has been declared a workday. That will be followed by the seven-day "National Day" holiday from October 1 to 7. But that is being offset by making it full workdays on September 29 (Sunday) and October 12 (Saturday). One consequence of all this time off is that foreign travel is expected to boom. Visa-free policies and lower air fares is seeing the number of Chinese booking holidays abroad surge.In India, officials there are chaffing over creditor moves in the US to put Byjus into bankruptcy. Indian officials have arbitrarily removed the creditors who petitioned the US court that ruled on bankruptcy, from the creditor processes in India. It might get quite messy.In Europe, July industrial production (real) was flat from June in the EU, but lower in the wider Euro Area. From a year ago the declines are -2.2% and -1.7% respectively.In Russia, their central bank increased its policy rate by +100 bps to 19% in a move markets did not expect. They are battling high inflation in a war economy that is distorting faster than their central bank is comfortable with.And in the US, the University of Michigan consumer sentiment survey increased for a 2nd month in September, to its highest level since May. This was above what was expected. Both current conditions and expectations improved, topping estimates. Meanwhile, inflation expectations for the year-ahead declined to 2.7% but those for the next five years rose marginally to 3.1%.You will recall that the Bank of Canada cut its policy rate two weeks ago, by -25 bps to 4.25%. But now the talk there is

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.Today we lead with news it is Friday the 13th, so don't expect too much from the day.The actual number of American jobless claims last week were +178,000, a one year low, taking the total number of people on these benefits to 1.71 mln, a nine month low. But the seasonally adjusted level reported was +230,000. It is unclear why the variance is so large this week.Meanwhile, American producer prices rose +1.7% in the year to August, the lowest in six months, easing from a downwardly revised +2.1% gain in July and below market expectations of +1.8%. Their 'core' PPI rose +2.4% however emphasising the role much cheaper energy costs are playing in keeping inflation down.The September USDA WASDE report confirmed global wheat and rice production will be higher than expected earlier in the year, coarse grains slightly less. They also say American beef imports will rise on rising demand. American milk production is expected to slip on lower local production.There was another well-supported US Treasury 30 year bond auction overnight delivering a 3.95% median yield. That is down sharply from the 4.22% yield at the prior equivalent event a month ago.India's inflation rate rose to 3.65% in August from an upwardly revised 3.60% in July (which was the lowest since August 2019). But the August level was above forecasts of 3.55%.. However, these levels are below the RBI's targets, and while food prices are still rising at a +5.7% rate, that is down from year-ago levels of +9.9%. It is this base effect change that is making overall price increases look low.Meanwhile, India's July industrial production was up +4.8%, about the average level it has been for all of 2024.In China, markets are expecting some significant cuts for interest rates for home loan borrowers soon. These were signaled earlier, but are now imminent. At the same time Beijing is rounding up investment bankers, taking passports, and investigating them for 'corruption'. Despite all this, their government bond sector is rallying sharply today in defiance of Beijing's efforts to calm matters. Equity prices are falling, also on the uncertainty, and in contrast to what is happening in other global markets.As expected the ECB cut its policy rates but they varied a lot this time by type of facility. The deposit rate was cut by -25 bps to 3.50%. But the main refinancing operations rate and the marginal lending facility rate were lowered to 3.65% and 3.90%, both from 4.00%, so these cuts are larger. They see a better inflation outlook and "better transmission of policy". They are also facing a weaker level of economic activity in the bloc. Their balance sheet reductions continue at an unchanged pace.It seems the Australian central bank is right to be sceptical inflation is trending in the way they need it to. Consumer inflation expectations are still at 4.4% in September in Australia, only slightly down from August's 4-month high of 4.5%. Perhaps the situation will turn soon. The same survey showed that respondents expected total pay was expected to grow by just +1.4% over the next 12 months.World container freight rates fell a rather sharp -13% last week as the shipping industry adjusts to the Suez Canal risks, and the Panama Canal drought impacts fade. Prices were down -13% last week from the week before to be only about double what they were a year ago. This is counted as 'progress'. The biggest falls were for cargoes outbound from China. But bulk freight rates are rising, up +3% over the past week but they are +60% higher than a year agoThe UST 10yr yield is now at just on 3.68% and up +3 bps from yesterday. The price of gold will start today up a significant +US$40 from yesterday at US$2554/oz and almost touching its record high of US$2555 on September 12, 2024. In fact, as we publish, it may have bested that ATH level.Oil prices are up another +US$1.50 at just on US$69/bbl in the US while the international Brent price is now just over US$72/bbl.The Kiwi dollar starts today at 61.6 USc and +30 bps firmer from this time yesterday. Against the Aussie we are down -10 bps at 91.9 AUc. Against the euro we are +20 bps firmer at 55.8 euro cents. That all means our TWI-5 starts today at 69.5, and +20 bps higher from yesterday.The bitcoin price starts today at US$58,242 and up almost +1.0% from this time yesterday. Volatility over the past 24 hours has been modest at just under +/- 1.1%.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.

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 inflation is easing in the world's largest economy.First up today, the American August CPI inflation rate slowed for a 5th consecutive month to 2.5%, its lowest since February 2021 and below market expectations of 2.6%. But it was up +0.2% from July, which was as expected. Meanwhile, their core inflation rate steadied at a 3-year low of 3.2% but this core rate was up +0.3% from July. So some mixed signals here. Energy costs were much lower, rents and travel costs a little higher.There were only modest market movements after this data. Benchmark bond yields firmed slightly, the USD rose, and Wall Street took it in its stride shaking off the pre-release jitters.None of this will change the Fed meeting discussions a week from today. Today's data probably locks in a -25 bps rate cut rather than the option of a -50 bps cut.American mortgage application levels were little-changed last week, continuing at a low level. But mortgage rates fell with the benchmark rate falling to under 6.3%. However, that was not enough to entice any significant change in housing market activity.Lower yields were also on full display in the UST 10yr bond auction. Today's event was strongly supported with a median yield of 3.61%, down from 3.98% at the prior equivalent event a month ago.Across the Pacific, China's August vehicle sales were soft. They were 2.45 mln units in the month, -5.0% lower than for August 2023. And this was despite a Beijing program to boost this key domestic market. 1.1 mln of the sold units (45%) were EVs or hybrids. In July, sales were -5.4% lower than a year ago. Without the support, you have to wonder what levels they would be at.Chinese long-term government bond yields hit a fresh low yesterday, underscoring strong investor appetite for these expected capital gains even as the central bank intervenes to tamp down what it considers a bubble. The yield, which moves inversely to price, on the China government 10 year bond fell to 2.106% at one point. That is its lowest level since 2015, the starting point for comparable data. That has Beijing officials scrambling (and threatening traders).And that is not the only problem they face in their financial sector. Recently Beijing cracked down on banks offering higher than official rates for deposits. That had the perhaps-predictable outcome that depositors - especially corporate depositors - withdrew their deposits from banks and shifting them to places they get better returns. The effect on bank balance sheets was substantial. And there is a new scramble on to shore up this sudden distortion.In a key update from an RBA official yesterday, they reinforced their guidance that the tight labour market is a key element in their hawkish views on inflation and its likely trajectory. They see it staying tight enough to prevent inflation from falling to where they need to get it. That reinforced last week's comments by Governor Bullock who said that monetary policy will need to remain sufficiently restrictive until inflation actually moves toward the central bank’s 2-3% target range on a sustainable way. Clearly they don't think they are there yet. Rate cuts are a ways off in Australia.The UST 10yr yield is now at just on 3.67% and up +3 bps from yesterday. The price of gold will start today up an insignificant +US$1 from yesterday at US$2514/oz.Oil prices have recovered +US$1.50 at just under US$67.50/bbl in the US while the international Brent price is now just over US$70.5/bbl.The Kiwi dollar starts today at 61.3 USc and -20 bps softer from this time yesterday. Against the Aussie we are down -40 bps at 92 AUc. Against the euro we are -20 bps softer at 55.6 euro cents. That all means our TWI-5 starts today at 69.3, and -30 bps lower from yesterday.The bitcoin price starts today at US$57,692 and up +0.9% from this time yesterday. Volatility over the past 24 hours has been moderate at just under +/- 2.2%.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.

Kia ora,Welcome to Wednesday’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 that while oil producers see sharply lower demand, the world's largest economy shows rising retail demand.But first, the overnight dairy Pulse auction saw SMP dart higher than expected to US$2800/tonne, its highest level since February 2023. The WMP component however slightly undershot expectations at US$3438/tonne, but holding its level of four weeks ago. It is not a serious weakness in over a series of auction events where the WMP price has been a little volatile.And staying with commodities, OPEC cut its demand forecast - for the second time in two months. That suddenly dropped the price of crude in all markets by almost -5%.So it might be a surprise to know that US retail demand at physical stores rose last week by +6.5% than in the same week a year ago, far outpacing inflation, and to it's fastest growth since the end of 2022 when it was recovering from the weak pandemic base. Prior to that anomaly, it is its highest growth rate since 2006 !Away from the business community and the Masters of the Universe crowd, a comprehensive review of US incomes for 2023 revealed a +4.0% rise in the year, and no-change in their poverty rates, which stand at income levels below US$30,900 (NZ$50,000). Their poverty rate was marginally lower at 11.1%.The NFIB Business optimism index slipped in August, but only off a very high level in the prior month. Even after this slip it is still near its highest since the end of 2022.There was another very well supported US Treasury bond tender today, this one for their 3 year Note. It brought a 3.40% yield. That is much lower than the 3.75% yield at the prior equivalent event a month ago.In China, foreign demand for their exports was strong in August. They increased by +8.7% in August from the same month a year ago, the most since March 2023, and to a 23-month high of US$309 bln. That was more than the expected rise of +6.5% and more than July's growth of +7.0%. It was the fifth straight month of expansion. The Chinese factory sector is being held up by international demand, not domestic demand.New Zealand and Australian demand for Chinese exports is falling however Ditto the EU, Japan and South Korea. Demand from the US is up but only by +2.8%. The countries with the largest demand increases are Brazil, South East Asia, and interestingly, Taiwan.In China, they are about to require basic military training for high school and university students, part of a broader push by Beijing to place a greater emphasis on national security in education.Outside their borders, China will help to train 3,000 foreign law enforcement officials over the next year to tackle global security issues and better protect Chinese interests beyond its borders, the country’s public security minister said.Australia's Westpac-Melbourne Institute Consumer Sentiment index dipped by +0.5% in September from August, the sixth time of decline in 2024. Consumers are still concerned their economy is heading for a harder landing. They are less fearful of interest rate rises, but more fearful of losing their jobs.The drop in business sentiment in Australia was a surprise, an outsized slump to a nine-month low and the weakest August since 2021.Aussie prudential regulator APRA has started the process to have banks cull their hybrid capital issues. They say these won't work as intended in a crisis. They are learning the lessons from the 2023 US and EU bank fizzes. Banks who need more capital will have to raise it directly, as full loss-absorbing shareholder support.The UST 10yr yield is now at just on 3.64% and down -6 bps from yesterday. The price of gold will start today up +US$11 from yesterday at US$2513/oz.Oil prices are down -US$2.50 at just under US$66/bbl in the US while the international Brent price is now just over US$69/bbl and these levels are a three year low.The Kiwi dollar starts today at 61.5 USc and marginally softer from this time yesterday. Against the Aussie we are +10 bps firmer at 92.4 AUc. Against the euro we are also +10 bps firmer at 55.8 euro cents. That all means our TWI-5 starts today at 69.6, and little-changed from yesterday.The bitcoin price starts today at US$57,169 and up +1.3% from this time yesterday. Volatility over the past 24 hours has been modest at just under +/- 1.5%.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.

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 the EU has suddenly realised it is on the wrong track, with an unstainable mix of policies which are leading them into blind social and economic alleys.But first, US consumer inflation expectations for the year ahead were unchanged at 3% in August, the same as in July and June. The five-year-ahead inflation expectations was also steady at 2.8%. These same consumers said median one-year-ahead expected earnings growth is expected to be +2.9% and up from 2.7% in July, and above its 12-month trailing average of 2.8%. There is nothing here suggesting consumers expect inflation to be a problem, or that it threatens their real earnings.Also not a problem is the level of wholesale inventories which continue to run at normal levels in July, showing no early signs of business stress.But perhaps some more current data points to an issue. Total vehicle sales in the US ran at the annual rate of 15.1 mlnn much lower than the 15.8 mln rate in July. That was softer than the expected dip to a 15.4 mln annual rate.American consumer debt rose by more than +US$25 bln in August, about double what was expected and the biggest rise since the end of 2022. The outsized +6.0% jump was driven by higher 'revolving' debt, like credit cards. It is a change that is sure to raise a few eyebrows.Across the Pacific, Taiwan said its exports were particularly strong in August at US$43.6 bln. That was more than +16% better than the same month last year and far more than the expected +7.4% rise. Imports rose too, by almost +12% but that was less than expected. Taiwan's economy is certainly starring in the region. And this data reveals another big trend. Taiwan's largest export market is no longer Mainland China. It is the US. The shift has been swift. It also mirrors what is happening in other East Asian nations.In China, the threat of deflation, a risk high on Beijing's agenda, is not fading as fast as they would like. Their CPI inflation rate edged up to +0.6% in August from a year ago, from +0.5% in June, but less than market forecasts of +0.7%. Still, it was the highest level since February, mainly due to a strong pick-up in food prices, especially fresh food. However, beef prices are down nearly -13% in a year, lamb prices by -6.3%. Milk prices are down -1.7% on that same basis.Meanwhile, Chinese producer prices fell by -1.8% year-on-year, the most since April, and steeper than the expected -1.4% drop.And a large investment bank, China Renaissance, has seen its share price collapse after Beijing apparently arrested its chairman on unknown charges. The bank was an important funder of China's digital economy. Local economists aren't as positive about China's immediate prospects any more. Beijing is losing the hearts and minds of and important set of influencers.Halfway around the world, a new EU report said they must be spending about €800 bln per year on investment if they are not to lag the US, China or Japan in productivity projects. Without that they would be “forced to choose” between climate, economic and foreign policy goals. That is about 5% of the bloc's GDP and would require a massive new commitment. Without this extra investment, the reports ays the EU will be unable to finance its social model and will have to "scale back some, if not all, of [its] ambitions".. It is a tipping point moment for Europe as their competitiveness wanes. They need to change direction.In Australia, all eyes are on the fast-falling iron ore price. In some markets it is now below US$90/tonne which represents a -23% fall in the year, down a massive -38% since the start of 2024.The UST 10yr yield is now at just on 3.70% and down -2 bps from yesterday. The price of gold will start today up +US$5 from yesterday at US$2502/oz.Oil prices are up +US$1 at just on US$68.50/bbl in the US while the international Brent price is now just under US$72/bbl.The Kiwi dollar starts today at 61.6 USc and and marginally softer from this time yesterday. Against the Aussie we are -30 bps softer at 92.3 AUc. Against the euro we are unchanged at 55.7 euro cents. That all means our TWI-5 starts today at 69.6, and little-changed from yesterday.The bitcoin price starts today at US$56,426 and up +3.8% from this time yesterday. Volatility over the past 24 hours has been moderate at just under +/- 2.4%.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 tomorrow.

The integrity of bond markets on both sides of the Tasman is at stake as regulators probe issues of potential market manipulation, Australian Financial Review senior reporter Jonathan Shapiro says.Shapiro is covering the Australian Securities and Investments Commission (ASIC) probe of the ANZ Group's role in a A$14 billion 2023 Australian government bond sale, and taking an interest in the Financial Markets Authority's probe into possible manipulation in New Zealand's wholesale interest rate and government bond markets. Speaking in the latest episode of the Of Interest podcastShapiro says the ASIC probe of ANZ boils down to allegations of interest rate rigging, allegations of providing false information to the Australian Office of Financial Management (AOFM), which manages the Australian government's debt portfolio and hired ANZ as risk manager for government bond issues, and workplace culture issues."What is alleged is in that role they [ANZ] might have moved the market in their favour and made trading profits. And those trading profits came at the expense of the [Australian] government because ultimately their alleged actions forced up the government bond [borrowing] rate. We calculated about five basis points extra ... and that's for $14 billion of debt over 11 years," Shapiro says.ANZ Group CEO Shayne Elliott says the bank itself has found no evidence misconduct or market manipulation by ANZ in connection with the bond issues cost the government financially. Elliott also says whilst some information provided to AOFM may have been incorrect, this was a mistake, rather than a deliberate act. Meanwhile, three traders have left the bank and a fourth has been warned.Shapiro says what's being alleged is very serious and everyone in Australia has an interest in the outcome because the government was ANZ's client.In New Zealand the Financial Markets Authority (FMA) says it's investigating two complaints about possible market manipulation in NZ's wholesale interest rate and government bond markets.Shapiro says market integrity is absolutely critical, with pension funds, sovereign wealth funds, central banks and other investors trading government bonds."They don't want to be on the other side of of any funny business...it's extremely important that these markets are trustworthy."Because they're viewed as the risk-free rate of return, government bond rates underpin the whole market, Shapiro notes."So regulators should absolutely be looking at any issues in these markets and making sure that they're transparent, that they're clean, and that there's nothing untoward going on. And one would think that participants in that market, especially the big banks of countries like New Zealand and Australia, would have an interest in making sure that, firstly, they're doing everything they can for their client, the government, but also making sure the bond market works as efficiently as it can."The ANZ Group has been left out of the last three Australian government bond issues, Shapiro says.In the podcast Shapiro also talks about why he refers to the ASIC probe as the biggest scandal in the ANZ Group's 182-year history, goes into detail on the three key issues at stake and the ANZ Group's responses, what's at stake for the bank potentially financially and reputationally, as well as for Elliott, possible similarities with what's at issue in the FMA investigations and more.*You can find all episodes of the Of Interest podcast here.

Kia ora,Welcome to Monday’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 expectations of flatter demand are hurting commodity prices. And that includes some key food prices which are also impacted by healthy supply levels.But first, this coming week will bring more attention to inflation rates. We will get monthly updates from the US, China, and India. And we will get industrial production data from India. There will also be sentiment data from the US and Australia. The ECB meets again this week and the results will be released Friday morning (NZT). Most see a -25 bps cut coming then, to 4.0%. And locally the focus will be on Wednesday's migration and tourism data.Over the weekend the data showed the US economy created fewer new jobs in August than expected, adding +142,000 in August, and below market expectations of +160,000. July's increase was revised sharply lower. Most job gains occurred in construction and healthcare while manufacturing employment declined. But their jobless rate edged lower to 4.2% in August from 4.3% in July.But we do need to note that the +142,000 rise is the seasonally-adjusted number. The actual rise is +263,000 from July which is pretty healthy, it must be said. From a year ago, payrolls are +2.3 mln larger. The economic impact of +2.3 mln more people employed is not insignificant. And that is after the March revision.Weekly earnings are up +3.5% from a year ago, hourly earnings up a bit more, and that was better than expected.The US job market is cooling, but not cracking. This fact will give the US Fed more room to maneuver at their meeting on September 19, in ten days time.Separately, Canada said it added +22,000 jobs in August, a recovery from the small dip in July. Almost all the August increase was for women.But their local, and widely-watched Ivey PMI fell sharply in August, down to its lowest level since December 2020. However it wasn't matched by the internationally benchmarked S&P/Markit version which reported a stable situation. One of them isn't right.In China, the end is nigh for struggling developer China Vanke. They reported terrible July metrics, and their liquidity situation worsened notably. Not helping them, China's regional banks are moving faster to quit nonperforming real estate loans. That is leaving the majors holding the bag as the government urges them to lend more to support a weak housing market. It is hard to see how the management of their real estate crisis won't end very badly. China's neighbours are increasingly concerned.Germany reported a very tough situation for industrial production in July, down -5.3% from the same month a year ago and worse than the June result. But at least exports are limiting the downside. These were up +1.7% from June and that was a gain that was better than expected and one that clawed back its year-on-year dip.In Australia, home loan activity for owner-occupiers picked up in July, adding +AU$18.9 bln in the month and the most in two years. For investors the rise was +AU$11.7 bln which was an even faster rate of increase and the most since January 2022.Prices for iron ore, nickel, cobalt, and lithium are all falling, and are all at or near their five-year lows.World food prices actually dipped in July with declines in cereal and meat prices in the month. (Dairy prices rose.) Overall prices remain their lowest in three years. Good agricultural conditions have persisted for some time now, boosting output. Updated forecasts for global cereal production point to a weather-driven drop in coarse grains offset by expected increases for wheat and rice. So far there is no indication yet that the world can't feed itself, and more than adequately, despite some high-profile pressures.The UST 10yr yield is now at just on 3.72% and unchanged from Saturday.The price of gold will start today up +US$4 from Saturday at US$2497/oz.Oil prices are -50 USc lower at just over US$67.50/bbl in the US while the international Brent price is now at just on US$71/bbl. Both are down -US$6/bbl in a week, or -7.5%.The Kiwi dollar starts today at 61.7 USc and unchanged from Saturday. That is -¾c lower in a week. Against the Aussie we are +10 bps firmer at 92.6 AUc. Against the euro we are also unchanged at 55.7 euro cents. That all means our TWI-5 starts today at 69.7, unchanged from Saturday, but down -75 bps in a week.The bitcoin price starts today at US$54,341 and up +1.5% from this time Saturday. Volatility over the past 24 hours has been low at just under +/- 1.0%.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 tomorrow.

Grocery Commissioner Pierre van Heerden wants a third supermarket competitor to set up shop in New Zealand in order to tackle the country’s supermarket duopoly, but reducing the barriers to entry won’t happen overnight.“What we've been told by these players is when they come and they want to open up a large store in New Zealand, the cost to get a spade in the ground is double that of Australia,” he says in a new episode of the Of Interest podcast. “Now that is significant. And when they look at 'do we open up a store in Wagga Wagga or Tamworth or wherever in Australia' versus coming to open up in Auckland where there is massive demand or any of the other centres, really, the cost is double that of Australia. And the timeframe often is more than double as well. So when they do their business cases, they look at that and say, 'well, we're going to be better off by going elsewhere rather than here.' Now the government is saying that they're going to change things to make New Zealand more competitive for international players. And that's really what we're looking at.”The Commerce Commission released its first annual grocery report on Wednesday which revealed ComCom’s efforts to boost grocery competition over the past year hasn’t had much impact. The report found between 2019 and 2023, price-cost margins on non-fresh products across the New World, Pak’nSave, and Woolworths brands increased by 3.1 percentage points on average, while fresh food margins rose a lesser 0.4% on average.The Commission defines price-cost margins as a measure of the difference between the price a firm receives for the sale of an item and the direct supply costs incurred.Broken down, the price-cost margins for non-fresh products in that period rose the most at Foodstuffs North Island’s New World stores which reported a 3.9 percentage point increase in that period.In second and third, Woolworths NZ’s Countdown stores, now renamed back to Woolworths, reported a 3.6 percentage point increase, and Foodstuffs South Island reported a 2.9% percentage point increase during 2019 and 2023.The consumer watchdog said the report provided “clear evidence for stronger action” in NZ’s $25 billion grocery sector.Speaking on the Of Interest podcast, van Heerden says the Commission wants to make sure the barriers to entry are reduced enough to make NZ’s supermarket sector more competitive. Barriers to entry for potential new supermarket hopefuls also include things outside the Commission's control like planning regulations including zoning requirements within the local council’s District Plan, and the resource consent process in some cases. The Overseas Investment Act 2005 can also create additional costs, delays and uncertainty in relation to site acquisition by overseas entities looking to enter or expand in the New Zealand grocery industry, van Heerden says.Asked if a giant entity would be needed to enter NZ’s supermarket sector – which is currently controlled by Woolworths NZ and Foodstuffs – as a third entrant or if a smaller grocery player could work as well, van Heerden says it can be a combination.“We would like to see someone who can come in and has the scale to do it nationally, because that's the way they're going to get the best prices from suppliers. You know, they can get good trade spend or discounts in their stores as well. Because when I look at Auckland as an example, in Auckland, the concentration or the market share of the major supermarkets has come down by 4% from 74 to, I think it's 70%. What has caused that – Costco coming into the market. A lot of the Asian supermarkets are growing and we've just seen Foodies open and they sold out from what I've seen, you know, four weeks' stock in three days,” he says.“So consumers are anxious and they want to get better deals and they will support these players. But I want to see that same level of competition out in the smaller areas. And if a big player comes in and as in Australia, a hard discounter where they really give very good prices, I think that will shake up the industry and it will ensure that the big players are more competitive.”Van Heerden says the supermarkets have “said all the right things” when contributing to the Commission’s work on the grocery sector“If you look at the comments that both the major supermarkets have brought out since the report came out, they all say they work, they work with us, they support the objectives. But I want those words to change into actions. I want to actually see it happening. I look at, for instance, the refund policies and the pricing issues. We've raised that now with them since I started. And quite honestly, the response has been, 'yes, we're getting it done,' but the actual actions have been slow. So I'd like to see them ramping up those actions and letting their actions be the same as what they're telling us, that they're happy to work with us to get things done,” he says.The Commerce Commission's grocery report can be found here.*You can

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.Today we lead with news mixed news but the underlying vibe is positive.First in the US, all eyes are now on tomorrow's August non-farm payrolls report. Analysts expect a rise of +160,000 jobs. But today's pre-cursor ADP Employment Report sharply undershot that level suggesting only +99,000 jobs will be added. If that is the case that would make it the smallest gain since 2021.This data has clouded financial markets today.A jump in reported layoffs in August added to the mood, but to be fair they only rose back to 'normal' levels.But there was good news about the US economy too.The level of jobless benefit claims last week fell, when a rise was anticipatedThe ISM services PMI rose more than expected, on the basis of better new order levels. That was backed up by the companion S&P/Markit services PMI.And the latest update for American productivity (for Q2) was particularly positive with a strong rise.So you would have to think there might be upside in tomorrow's US labour data. We will know soon enough.Wages in Japan rose by +3.6% year-on-year in July, slowing from a +4.5% rise in June which was the highest in 26 years, since January 1997. Markets expected a July rise of +3.1%.EU retail sales volumes rose in July, the fourth rise in the past sixth months. Better yet, they were higher than a year ago on a volume basis.German factory orders for July were another overnight surprise. They bounced back in June and July was expected to be weak. But in fact a good rise was posted again in July.And it might also surprise you to know that after being hooked on Russian energy, the Germans have made a substantial shift away, not to other fossil-fuel suppliers, but rather to renewables. More than 60% of electricity production is now by renewables. And the overall energy intensity in the German economy is declining (ie improving). Both are huge shifts for Europe's largest economy.Australia's merchandise trade surplus rose in July to its highest since February as exports grew to a 5-month high while imports fell to a 3-month low.But the iron ore price took a sharp tumble yesterday. While that isn't great news for Australia, it isn't all bad. They have advantages over their rivals in Africa and South America in both freight costs and mine productivity.Although China's media mouthpieces are talking up the prospects for recovering steel production, their trade association is warning that any short-term bump will probably be just a "flash in the pan".Bulk freight rates continue to rise however. And global container freight rates are still extremely high essentially because of the Suez Canal/Horn of Africa security issues. They did fall -8% last week, but they remain +236% higher than pre-pandemic levels. (China to Europe rates fell quite sharply, but trans-Pacific rates didn't move much.)The UST 10yr yield is now at just on 3.73% and down another -4 bps from yesterday. The price of gold will start today up +US$10 from yesterday at US$2513/oz.Oil prices are -US$1 lower at just under US$69/bbl in the US while the international Brent price is now at just on US$72.50/bbl. That has forced OPEC to delay is planned rise in production.The Kiwi dollar starts today up +30 bps from yesterday at 62.3 USc. Against the Aussie we are +10 bps firmer at 92.4 AUc. Against the euro we are also up +10 bps at 56 euro cents. That all means our TWI-5 starts today at 70 and up +10 bps from yesterday.The bitcoin price starts today at US$56,336 and down -2.7% from this time yesterday. Volatility over the past 24 hours has been moderate at just on +/- 2.3%.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 on Monday.

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 markets see a cooling US labour market in signals ahead of this weekend's August non-farm payrolls report.But first, US mortgage applications rose by an insignificant +1.6% from the previous week in the last week of August, a low and stable situation. They are now -4% lower than the soft year-ago levels. Their benchmark 30 year fixed home loan interest rate slipped slightly to 6.35% and its lowest since May 2023.(Yesterday, we mistakenly reported US retail sales from two weeks ago, up +5.0% at physical stores from a year ago. The actual result from this metric for last week was very much more positive, up +6.3% from the same week a year ago, its best rise since the end of 2022 when the very low year-ago base boosted results. This current result is actually quite impressive.)US exports hit their highest level ever in July at US$267 bln. Imports rose too, but not to a record high. Their full trade deficit rose to -US$79 bln but that was well short of records set during the pandemic. This deficit continues to quite small in relation to US GDP.US factory orders were solid in July. New orders rose by +5% from the previous month, above market expectations of a 4.7% increase. Year-on-year they are up +3.8%. Better, new orders rose by +9.8% for durable goods, lifted by transportation equipment which was up more than a third.But there was a sharper-than-expected drop in July job openings in the US. The number of job openings fell by -237,000 to just under 7.7 mln in July from a downwardly revised 7.9 mln in June. That is the lowest level since January 2021 and below market forecasts of 8.1 mln. This is a first real sign of a cooling labour market there, although the new order data may make that a temporary dip. This is the data that has the financial market's attention today.Meanwhile, the US Fed's Beige Book survey for August painted a modest picture of the American economy but with the balance of opinion that things are picking up from the current stable positions. This survey found little evidence of labour market stress.Canadian exports came in little-changed in July, holding the higher levels first achieved in mid 2022.And as expected, the Bank of Canada cut its policy rate by -25 bps earlier today to 4.25%, its third consecutive cut, saying excess supply in the Canadian economy continued to put downward pressure on inflation there which is now running at 2.5%, its lowest level in more than three years.In China, the Caixin services PMI eased a bit but is still expanding. Incoming new business and activity remained in growth, with export business rising at a faster rate in August. Meanwhile capacity pressures were still evident, but firms reduced staffing levels amid cost concerns.Bloomberg is reporting that China is considering cutting interest rates on as much as NZ$8.5 tln of mortgages in two steps to lower borrowing costs for millions of families while mitigating the profit squeeze on its banking system. To do that, financial regulators have proposed reducing rates on outstanding mortgages nationwide by a total of about 80 bps, part of a package that includes an accelerated timeline for when mortgages become eligible for refinancing, according to people familiar with the matter. The first cut may come in the next few weeks while the second move would take effect at the beginning of next year, said the people, asking not to be identified, they reported.The EU said producer prices are now edging lower in July from a year ago, helped by the falling cost of imported energy.Australia said its GDP was +1.5% higher in its June year after a smaller-than-expected +0.2% expansion in the June quarter. "Helping" keep it positive was record federal government spending on the public payroll and on the healthcare sector.Meanwhile an August survey of the Australian manufacturing sector was particularly grim. The Ai Group Industry Index dropped sharply by 11.3 points to -30.8 in August, further deepening the contraction that has persisted for two years.The UST 10yr yield is now at just on 3.77% and down another -7 bps from yesterday. The price of gold will start today up a minor +US$2 from yesterday at US$2493/oz.Oil prices have held from yesterday's lower level at just under US$70/bbl in the US while the international Brent price is still at just on US$73.50/bbl.The Kiwi dollar starts today unchanged from yesterday at 61.9 USc. Against the Aussie we are nearly +20 bps higher at 92.3 AUc. Against the euro we are -20 bps lower at 55.9 euro cents. That all means our TWI-5 starts today at 69.9 and down -20 bps from yesterday.The bitcoin price starts today at US$57,910 and virtually unchanged from this time yesterday. However, volatility over the past 24 hours has been moderate at just on +/- 2.5%.You can fin

Kia ora,Welcome to Wednesday’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 looking for excuses to be negative, and they found one - sort of.But first up today there was another full dairy auction and that brought a somewhat disappointing result. Overall prices fell a minor -0.4% in USD, down -1.1% in NZD. This event failed to maintain the upward demand for WMP, which fell -2.5% hurting the overall result. That contrasted with most other components, especially SMP which was up +4.5%. China and "North Asia" were the dominant buyers today but there was notably less demand for WMP from other regions. Although it was an unexpectedly soft result overall, at least it basically confirmed most of the prior months gains.In the US, the two August factory PMIs each show a contracting manufacturing sector. The ISM one improved from July's deeper contraction, but the S&P/Markit one slipped back but to a similar level to the ISM one. Slower new order growth was a shared feature, especially for export orders. Although the variance in both from market expectations was very minor, it has had an outsized impact on the mood of financial markets today, post the US-holiday. Equities fell, benchmark yields retreated, and the USD softened.Market ignored the rise of economic optimism in the RCM/TIPP survey, now at a 17 month high.They also ignored the rise of US retail sales last week at physical stores, up +5.0% above the same week a year ago on a same-store basis.Also ignored by markets was the 'good' logistics managers index for August that showed firms are gearing up positively for Q4-2024 activity.The Canadian factory PMI continues to be marginally disappointing, although it is broadly stable.China said it will likely impose tit-for-tat tariffs on Canadian canola imports as a retaliation for Canada's duty level on them dumping EVs into Canada.In Australia and despite strong mineral exports, they are now back running balance of payments deficits. Australia’s current account balance fell by AU$4.4 billion to a deficit of -AU$10.7 bln in the June quarter. This was the largest since June 2018, double what was expected, reflecting continued falls in bulk commodity prices and higher income paid to non-residents. They ran a +AU$6.3 bln current account deficit in Q1. For the year to June, they now have a -AU$18.8 current account deficit, the largest annual level since March 2018.The UST 10yr yield is now at just on 3.84% and down -9 bps from yesterday. Wall Street has opened after the holiday down -2.0% on the ISM result trigger. The NASDAQ is down -3.1%. The price of gold will start today down -US$8 from yesterday at US$2491/oz.Oil prices have dropped -US$3.50 from yesterday to just under US$70/bbl in the US while the international Brent price is now just on US$73.50/bbl. That makes it the lowest since the brief dip at the end of 2023, and prior to that, at 2021 levels. The restoration of Libyan oil supply after the apparent end of political and security issues there was a key trigger to today's drop.The Kiwi dollar starts today down -40 bps from yesterday at 61.9 USc and a two week low. Against the Aussie we are +40 bps higher at 92.1 AUc. Against the euro we are -20 bps lower at 56.1 euro cents. That all means our TWI-5 starts today at 70 and down -20 bps from yesterday.The bitcoin price starts today at US$57,914 and down almost -1.0% from this time yesterday. Volatility over the past 24 hours has been modest at just on +/- 1.9%.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 tomorrow.

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 the world's second largest economy may be seriously out of balance, with implications for everyone.With the US on holiday. the big global influences come from elsewhere today. First up, the private Caixin PMI for Chinese factories moved up from a minor contraction in July to a minor expansion in August. According to this survey, output growth accelerated amid an upturn in new orders and a stabilisation in employment. Meanwhile, price pressure eased and confidence hit a 3-month peak. All this was marginally better than the official factory PMI which recorded a slightly deeper contraction. The difference is that the Caixin survey is more about their private sector, the official PMUI more about their SOEs and the enterprises that dominate Chinese manufacturing.But despite this stable factory activity, their firms have been buying raw materials at a high rate, so consequently there is a huge buildup in inventories across a wide range of sectors. If the world doesn't take the surge in exports that would be necessary to justify this build-up, then the resulting pullback will have large-scale international consequences. There are plenty of signs this imbalance may end badly for everyone involved.And China's property woes are deepening, which is driving sharper equity market retreats. Falling prices aren't being stemmed, squeezing developers further and keeping house buyers away.Taiwan's August PMI only registered a modest expansion in the island nation, about the same as for China.Japan's August PMI showed neither an expansion nor contraction.South Korea's August data pointed to sustained and stronger increases in both output and new orders for their manufacturing sector amid growing signs of client confidence.India's August PMI registered softer increases in new business and output during August, albeit with rates of expansion remaining elevated by historic standards.In Australia, their factory sector is deteriorating at a faster rate, but there are some signs things may improve later in the year. Although new orders and production continued to fall, export orders picked up and along with it, confidence in the future. But they also report that cost pressures are not easing, which will worry the RBA.Australia is quite vulnerable to the Chinese economy's strugglesSo it will be no surprise that job ad levels continue to shrink in Australia. And that company profits seem to be diving.Meanwhile on the Australian property front, building consents jumped in July, especially for multi-unit developments although to be fair that is off a very low base, so it may not be significant.And CoreLogic said August house prices rose only modesty from July to be up +7% for the year. However all this rise was from Brisbane (+15%), Adelaide (+15%) and especially Perth (+24%). Without them, there would be no rises.The UST 10yr yield is now at just on 3.93% and up +2 bps from yesterday. The key 2-10 yield curve inversion has now disappeared, replaced by a positive +1 bp.The price of gold will start today down -US$4 from yesterday at US$2499/oz.Oil prices are little-changed from yesterday again, still just under US$73.50/bbl in the US while the international Brent price is still just over US$77/bbl.The Kiwi dollar starts today down -20 bps from yesterday at 62.3 USc. Against the Aussie we are sharply lower at 91.7 AUc. Against the euro we are also lower at 56.3 euro cents. That all means our TWI-5 starts today at 70.2 and down -30 bps from yesterday.The bitcoin price starts today at US$58,472 and back up +0.8% from this time yesterday. Volatility over the past 24 hours has been modest at just on +/- 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 tomorrow.

Kia ora,Welcome to Monday’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 the big northern hemisphere countries are starting to report their August activity levels - and most of them are fine.But first in China, their official August PMIs were released over the weekend. Their factory PMI fell a bit further into a minor contraction. New orders, foreign sales, and buying levels all dropped for a fourth consecutive month. Their employment weakness also persisted in this sector.However, the Chinese service sector lifted to maintain a minor expansion, but is still far below the February to May levels. In that broader perspective the August lift seems within the margin of error.The private Caixin versions of these PMIs should be released later today.Unofficial data of housing sales volumes and values in China weren't encouraging in August. More developers are being ordered to liquidate, unaided by any return of demand for housing. The top 100 developers faced a -10% retreat in sales in August from July, down more than a quarter from August 2023.South Korean exports were more than +11% higher in August than a year ago, but that undershot the expected +13% rise, and they rose almost +14% in July. The growth of exports to China lagged the overall gains but those to the EU and the USA outperformed. But China remains their top export destination.Japanese industrial production expanded in July, a good recovery from the June dip. But Japanese retail sales rose at a slightly slower rate than expected.In the US, they are ending their summer with a major national three-day-weekend holiday, Labor Day. Their markets return in full on Wednesday NZ time.But before this weekend started, another piece in the policy jigsaw was put in place for the US Fed, the PCE inflation level and that came in low and little-changed, confirming the conditions for a September rate cut. The July core PCE price index rose just +0.2% from the previous month and the market-expected change. The +0.2% monthly increase in headline PCE prices was also in line with expectations. That puts it +2.6% up on a year ago. Nothing disturbed market expectations here - although it probably means the chance of a -50 bps Fed cut is now off the table.Perhaps helping, there was a slight improvement in the Chicago PMI from the American industrial heartland although this is more of a "contracting less" situation rather than an expansion. New order levels edged up.Canada said its economy grew at a good +2.1% rate in Q2-2024 and that was better than what was expected by analysts there (+1.8%). Higher wages and savings helped, which drove more government spending.India also released its Q2-2024 GDP and that rise was in a different league - up +6.7% from a year ago. However analysts had expected a +6.9% rise so that result was tinged with a slight disappointment.The annual inflation rate in the Eurozone fell to 2.2% in August from 2.6% in the prior month, matching market expectations to result in the smallest rise in consumer prices since July of 2021. Much lower energy costs allowed the moderation.Australian retail sales were a disappointment in July, with no rise from June and up +2.3% from the same month a year ago, well short of inflation's impact. It is worse on a per capita basis. And given the elevated inflation level they face the real prospect of an interest rate hike. (Financial markets however are not pricing in a hike.)For the rest of the week, there will be a full dairy auction on Wednesday morning.And a slew of PMIs from all the major economies are due this week. Australia will release its Q2-2024 GDP and Canada will have a rate decision (where a -25 bps cut is expected). And this week will end with the US non-farm payrolls report which is expected to show a solid +163,000 jobs gain. If it does, that will bolster the expected Fed normalisation move the following week and the rate cut by them.The UST 10yr yield is now at just on 3.91% and unchanged from Saturday, up +11 bps for the week.The price of gold will start today yp +US$2 from Saturday at US$2503/oz.Oil prices are little-changed from Saturday, still just under US$73.50/bbl in the US while the international Brent price is still just under US$77/bbl. Despite all the obvious tensions in the usual places, actually global supply is more than enough and keeping prices low.The Kiwi dollar starts today up +10 bps from Saturday at 62.5 USc, up a full +1c from a week ago, up +3c from the start of August. Against the Aussie we are firm at 92.4 AUc. Against the euro we are up +10 bps at 56.6 euro cents. That all means our TWI-5 starts today at 70.5 and up +10 bps from Saturday, up +100 bps in a week and up +200 bps since the start of August.The bitcoin price starts today at US$57,989 and down -1.2% from this time Saturday. Volatility over the past 24 hours has been mode

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 the northern holiday season can still spring a few economic and market surprises.First in the US, mortgage applications last week were little-changed from a week ago (down -0.5%) and that is despite mortgage rates falling for a fourth consecutive week to 6.44% for their benchmark 30 year fixed loan. That is its lowest level since April 2023, and interestingly is the same rate that applied 30 years ago in October 1993. If you took our one of these loans back then and had to renew it today (!), the rate would be exactly the same.In their government bond market, the US Treasury had a 5 year bond tender and that was very well supported - again. There was a massive US$100 bln more offered than they accepted. It gave investors a median yield of 3.59%, down from 4.05% at the prior equivalent event a month ago. Their bond rally is extending, so perhaps it is no surprise investors are so enthusiastic. Lower rates also mean the pressure on their Federal deficit is less than it would otherwise be. On average, the US Federal government pays about 3.35% over all its debt, so today's tender is approaching that average again.The US holiday driving season is coming to an end with one final burst for their Labor Day holiday this coming weekend. Motorists there are paying -12% less for petrol than they did at this time last week, and on their way home they will be paying -1.4% less than they did a month ago. Energy inflation is not a thing there at the moment.Today will also be signature days on the US equity markets after Wall Street closes. Nvidia will release its results and investors will then know if their sky-high valuation is reasonable. And Berkshire Hathaway may hit a capitalisation of US$1 tln, putting it in a very small and exclusive club of seven, all the others big tech companies.In China, the levels of dissent are rising as their economy wavers, although the rises are containable by Beijing. In the year to October, they were up +16% according to detailed monitoring. Most current dissent is in the south in Guangdong province, but the big central provinces that include Beijing are also seeing rises in dissent. The October monthly levels may end up being the highest of the year. Almost half relate to workforce issues, about a fifth relate to homeowner stress.And in some parts of China, stress is more than citizen protest. In giant Chengdu, the capital of Sichuan province, they are in an extended and crushing heat wave. Electricity is being rationed with many companies halting production after the local government imposed sharp restriction as the power supply buckled.Australia released their month CPI Indicator yesterday. It rose 3.5% in July from a year ago, down from June's 3.8% but above consensus of 3.4%. It was the lowest figure since March, as electricity prices fell sharply following the extended Energy Bill Relief Fund rebate. Inflation remains outside the RBA’s target range of 2-3% and that electricity component is hiding some of the higher prices elsewhere. Don't expect Aussie rate cuts any time soon. And staying in Australia (and speaking of extremes), their Green Party said its “Robin Hood” reforms would levy an extra AU$514 bln in taxes over 10 years to pay for sweeping social benefit increases. (Chances of enactment are low however, because they only have 4 MPs in the House of Representatives, plus 12 of 76 in their Senate.) The Aussie Green's alignment to the bikie-gang controlled CFMEU union isn't endearing their policies to a wider audience either.The UST 10yr yield is now at just on 3.84% and unchanged from yesterday. The price of gold will start today down -US$13 from yesterday at US$2506/oz, another record high.Oil prices are down -US$1 at US$74.50/bbl in the US while the international Brent price is now just over US$77.50/bbl.The Kiwi dollar starts today down -20 bps from yesterday at 62.3 USc. Against the Aussie we are unchanged at 92 AUc. Against the euro we are up +20 bps to 56.1 euro cents. That all means our TWI-5 starts today at 70.1 and unchanged from yesterday.The bitcoin price starts today at US$58,877 and down another -4.7% from this time yesterday. Volatility over the past 24 hours has been high at just on +/- 3.7%.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 on Monday because I am taking a short winter break.