Economy Watch

Kia ora,Welcome to Friday’s Economy Watch where we follow the economic events and trends that affect Aotearoa/New Zealand.I'm David Chaston and this is the international edition from Interest.co.nz.And today we lead with news all about American GDP and reactions to the first quarter results.US economic activity expanded an annualised +1.6% in Q1-2024, compared to +3.4% in the previous quarter and below forecasts of +2.5%. It was the lowest growth since the contractions in the first half of 2022, the advance estimate showed, although there are two more revisions due (an in the Q4-2023 set, they rose with each revision). The result was held back by a decrease in inventories and a rise in imports. However, disposable personal income rose an impressive +4.5% according to today's release.However, the PCE data released with this shows inflationary pressures unabated. So the US 10-year Treasury note yield rose to above 4.7%, the highest since early November, as traders to scale back their expectations regarding the timing of a Fed rate reduction, with the the first cut now not priced in fully until December.We should note that lower growth with still-high inflation equals stagflation, a gnarly public policy problem, as history shows.Further, today's US Treasury 10 year bond auction reveals median yields rise to 4.47% in yet another well-supported offer. That was +37 bps higher that the prior equivalent event a month ago. (But it does seem curious that the secondary market prices these at 4.7% however, especially when demand is so strong in the primary market.)Meanwhile the number of initial US jobless claims fell to just 201,000, a bigger than expected retreat and the second-lowest weekly level in the past 13 weeks. That means there are now 1.82 mln people on these benefits the lowest since mid-December.US mortgage applications fell rather sharply last week, down -2.7% from the week prior and are now -15% lower than the same week a year ago. So it will be a surprise to know that March pending home sales rose +3.4% from February although they are virtually unchanged from a year ago.New orders for durable goods surged by +2.6% in March from February, following a downwardly revised +0.7% growth in February. The March rise was more than expected, but the year-on-year change is still a negative -2.2%. It was the largest monthly advance in durable goods orders since last November, primarily propelled by robust demand for transport equipment. Orders for non-defence capital goods rose too.Canada released retail sales data for February, and in real, inflation-adjusted terms, they fell -0.3%.All eyes are now turning to the Bank of Japan which is meeting today. They have important policies to balance regarding rising inflation, an expanding economy, but a currency that the being depreciated in USD terms, the one relationship that motivates them. But then, many countries are struggling with the rising USD at present.In China, the Shanghai prime office vacancy rate has hit a 20 year high - at over 20% vacant. That is a lot of spare capacity and it will worry policymakers that it is continuing to swell.In Australia, Warren Hogan, who was ranked 2023’s most accurate economic forecaster, predicts their rising economy will force the RBA to lift rates to 5.1% this year. He is an outlier, but part of a growing cohort of analysts who don't see inflation beaten yet and the economic expansion rolls on in many of the world's major countries with its pressures.Better income expectations, economic prospects and a rising 'propensity-to-buy' among consumers has shifted the German GfK Consumer Climate Indicator to it's 'highest reading' in two years (well actually its least negative reading in two years). But they will take the progress.We should note that copper prices have surged recently and now top US$10,000/tonne and that is its highest since April 2022. (It is now only 6% below the all-time high, also in 2022)Global container freight rates were unchanged last week on average, making them +55% higher than year ago levels. Bulk cargo rates fell -4.9% in the past week, but they remain little-change from long-run averages.The UST 10yr yield is now at 4.70% and up +10 bps from this time Wednesday, and that is its highest level since late October 2023. The price of gold will start today a little firmer, up +US$7 from this time Wednesday at US$2333/oz.Oil prices are little-changed from Wednesday to just under US$83.50/bbl in the US while the international Brent price is still at just over US$87.50/bbl. In between however it has been volatile.The Kiwi dollar starts today little-changed at just under 59.5 USc. Against the Aussie we are -¼c softer at 91.3 AUc. Against the euro we are little-changed at 55.4 euro cents. That all means our TWI-5 starts today just on 69.1 and little-changed from Wednesday.The bitcoin price starts today virtually at US$64,762 and down -3.0% from this time Wednesday. Volatility over the past 24 hours has been modest h

With economic growth no longer producing benefits seen in the past such as raising living standards for the middle class, and human activity having exceeded some planetary boundaries, it's time to embrace degrowth, argues Jennifer Wilkins.Wilkins is a researcher and advocate on sustainability in business with a focus on degrowth. In a new episode of interest.co.nz's Of Interest podcast, she discusses the degrowth movement."Degrowth is normally described or defined as an equitable downscaling of production and consumption. Other people add in other parts of that definition, which is about reorganising the market for a new role in provisioning. So I think about degrowth as being a transition. Starting from the economy that we have now, which is very much about trickle down wealth and extracting from nature, to a future economy which is more about universal wellbeing in an economy within ecology and nature. And degrowth is really the transition from one to the other," Wilkins says."So I don't think about it as being a very rapid change or a very smooth change. I think about it as being a hybrid of emergence and receding ideas, quite a lot of tension and a lot of mutation in the economy. So it's quite a complex thing, degrowth."She traces degrowth's origins to the 1970s, and Romanian mathematician, statistician, economist and author of The Entropy Law, Nicholas Georgescu-Roegen, "the father of ecological economics."The push for net zero greenhouse gas emissions is needed but not enough, Wilkins says. With a degrowth economy requiring more of a collective than individual approach, Wilkins says "the jury's out on the role of capitalism." And does advocating for a reduction in production and consumption mean people would be expected to accept a lower standard of living?"I think degrowth is definitely looking to raise standards of living for the majority of people around the world. I think standards of living are actually decreasing at the moment. I think around the world, middle class lifestyles are decreasing in quality. And so there's this myth, if you like, that raising growth improves wellbeing. But the evidence shows that there's actually a bliss point. Economic growth improves wellbeing up to a certain GDP per capita, and beyond that, it either doesn't make a difference and/or eventually it begins to reduce wellbeing," says Wilkins."The bliss point is actually quite a lot lower than New Zealand's GDP per capita. So we have theoretically enough wealth already. We just need to redistribute it. I think people who are very well off will not see a reduction in their wellbeing or their living standards through a redistribution, but I think people who are less well off will see a great improvement in their wellbeing through a redistribution."Wilkins believes degrowth will become public policy, saying politicians who want to run on a degrowth platform have lots of positive things they can say."It's about redefining what we see as value. I mean, at the moment we think about wealth as value and prosperity, but prosperity is really about things like having more leisure time, having a healthier natural environment around us, having more community health and more community cohesion, having more access to services and assets, and having an increase in our democratic participation. And those are all things that degrowth wishes to grow," Wilkins says."I think it [degrowth] will become public policy. I think parties will run on it as a platform. It's hard to say when that would happen, but I think in the not too distant future. And I think the thing is that growth as an idea is so embedded as a common sense that it never has to explain itself. And so there's a bit of an unfair playing field in terms of degrowth will have to explain itself to become credible. Whereas growth gets a free pass.""Growth is not producing the effects that we have experienced in the past, like the raising the living standards of the middle class. That ship has sailed. We're in a different world now. There isn't room for growth to create those kinds of benefits anymore. We need to create benefits in a different way. So growth will fail to evidence itself as a wellbeing, a process for wellbeing in future. And there'll be a confluence of factors. There'll be, you know, this failure of neoliberalism, which I think we're already experiencing," says Wilkins.There's more from Wilkins in the podcast itself, including what degrowth would mean for individuals, businesses and communities, and what it would mean for agriculture, manufacturing and tourism.*You can find all episodes of the Of Interest podcast here.

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.And today we lead with news the world's factories are getting busier, especially in India.But first, the strong run of American retail sales is continuing. Sales at bricks & mortar stores on a same-store basis were +5.3% higher last week than the same week a year ago. This extends the +5% expansion to four consecutive weeks, and the above-inflation streak to eight consecutive weeks.There were American PMI's out for April, the internationally-benchmarked set, but they revealed growth slowing amid signs of demand weakness. The factory PMI slipped to a minor contraction, and the services expansion slowed marginally.However, sales of new-built houses soared +8.8% in March from February, the highest level in six months, and rebounding from a -5.1% drop in February. Demand seems to be returning despite elevated mortgage rates. Meanwhile, building consents and housing starts eased back in the month. This will have the effect of tightening inventories of unsold new-builds.The latest US Treasury bond tender brough rising support, and rising yields. But the push higher seems to be rising. Almost US$184 bln was bid for the US$69 bln on offer. The median yield on these two year Notes was 4.85%, up +31 bps from the prior equivalent event. A year ago the equivalent auction went for 3.92%.In fact investors are now starting to price in the chance of a US Fed rate hike, rather than a cut, in 2024.In Japan, their factory PMI made big gains in April, meaning the sector is now stabilised and no longer contracting. Their services PMI rose at a good rate too, expanding faster. Both are now at 11 month highs.Taiwan industrial production rose +4.0% in March from the same month a year ago, confirming the strong recent export order data we have previously reported. But the retail sales growth impetus is slowing, up only +0.7% in the month.The severe flooding in the Pearl River basin in southern China continues and is predicted to get worse before it eases.Led by its factory sector, Indian PMIs revealed economic growth continued to strengthen in April. Positive demand trends fuelled new order intakes and output. In both cases, rates of expansion were the fastest in close to 14 years. India is in a significant expansion. In fact, it is now enough to topple Japan from being the fourth largest economy globally on a gross basis sooner than expected (although nowhere near on a per capita basis of course). That switch is expected to happen in 2025, a year earlier than previously forecast.The Eurozone recovery is building momentum in April according to the overnight release of their PMIs, but price pressures are also revived.In Australia, their 'flash' PMI rose at a good clip too, expanding for a third consecutive month and at the quickest pace since April 2022. Although most of the rise was from the services sector, like Japan, their factory sector improved sharply too to a 'stable' level.The UST 10yr yield is now at 4.60% and down -2 bps from this time yesterday. The price of gold will start today marginally lower, down -US$4 from this time yesterday at US$2326/oz.Oil prices have risen +US$2 to just under US$83.50/bbl in the US while the international Brent price is up a bit less at just over US$87.50/bbl.The Kiwi dollar starts today up nearly +¼c at just over 59.4 USc. Against the Aussie we are softer at 91.6 AUc. Against the euro we are unchanged at 55.5 euro cents. That all means our TWI-5 starts today just on 69.1 and little-changed from yesterday.The bitcoin price starts today virtually unchanged at US$66,766. Volatility over the past 24 hours has been modest at just on +/- 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 on Friday because tomorrow is a public holiday in New Zealand.

Kia ora,Welcome to Tuesday’s Economy Watch where we follow the economic events and trends that affect Aotearoa/New Zealand.I'm David Chaston and this is the international edition from Interest.co.nz.And today we lead with news markets are waiting for some big earnings reports, especially from Big Tech in the US. They are waiting in a positive mood.But first in the US, the Chicago Fed's National Activity Index rose for a second consecutive month March, the first time that has happened since mid-2022. The result was more than expected and is the highest reading since last November, build primarily on employment gains. When this index is positive it indicates activity is expanding faster than its long-term average.Canadian producer prices fell -0.5% in March from the same month a year ago, notable because this the smallest fall since February 2023. Raw material prices rose, only the second year-on-year rise in the same timeframe.The People's Bank of China left benchmark lending rates unchanged at the April fixing, in line with market expectations. The one-year loan prime rate (LPR), the benchmark for most corporate and household loans, was maintained at 3.45%. Meanwhile, the five-year rate, a reference for mortgages, was retained at 3.95% for the second straight month. The strong USD limits their ability to cut rates to provide local economic stimulation because doing so would sharply weaken the yuan.Following a weak February, Taiwanese exports jumped in March to their highest level since July 2022 in an impressive performance. They also got a strong rise in export orders in March, although only at the upper end of what they have been getting over the past year.Although it is in a minor improving trend, EU consumer sentiment in April has remained deeply negative, well below its long-term average.Cocoa prices leapt up through an all-time record US$5000/tonne in early February. Three weeks later they hit US$6000/tonne. Two weeks after that it was US$7000/tonne. US$8000/tonne came just a few days later. Then an accelerated surge began in earnest, hitting US$10,000 at the end of the first week of April. Today? Well this price has reached US$12,218/tonne. Where to from here? As hard as it is on chocolate consumers, I hope the West African farmers are getting some long-delayed rewards.The UST 10yr yield is now at 4.63% and up a minor +1 bp from this time yesterday. Wall Street is roaring today with the S&P500 up +1.3% on expectations of strong earnings reports and future guidance that is positive, especially from Big Tech companies. Tesla is likely to star in these releases for all the wrong reasons, however. Overnight European markets all rose, led by London's +1.6% and trailed by Paris's +0.2%. Yesterday, Tokyo ended its Monday session up +1.0%. Hong Kong ended up +1.8%. But Shanghai fell -0.7%, a real outlier in yesterday's trade. Singapore ended up +1.5%. The ASX200 finished up +1.1% and the NZX50 closed up +0.5%.The price of gold will start today sharply lower, down -US$61 from this time yesterday at US$2330/oz.Oil prices have slipped -50 USc again, to just on US$81.50/bbl in the US while the international Brent price is down -US$1 at just under US$86/bbl.The Kiwi dollar starts today up +¼c at just under 59.2 USc. Against the Aussie we are still at 91.8 AUc. Against the euro we are a +¼c firmer too at 55.5 euro cents. That all means our TWI-5 starts today just on 69.1 and up +30 bps from yesterday.The bitcoin price starts today sharply higher at US$66,788 and almost a +3% gain from yesterday. Volatility over the past 24 hours has been modest however 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 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.And today we lead with news the ongoing rise in the world economy is shifting some key metals prices into a bull-run.But first a look ahead. The American data to be updated this week will be their advance Q1-2024 GDP which is currently expected to come in at +2.5%. That will follow key updates to durable goods orders and new home sales - and advance April PMIs. It will be peak reporting for their earnings season this week too. April PMIs will also come for Australia, Japan and the EU, as will CPI updates in Australia. And there will be key central bank policy decisions for Japan, China, and Turkey this weekIn the dominant global economy, their central bank reported that sticky inflation and sticky high interest rates were cited as the key risks to financial stability in its survey of key contacts, with geopolitical troubles and the upcoming American presidential election also getting a strong mention. These heightened risks were reported in the US Fed's half-yearly Financial Stability Report.The Fed itself is worried about a steady decline in the liquidity of life insurers’ assets and their use of non-traditional liabilities and other novel funding which would be hard to control in a crisis. They were less worried about American households. Vulnerabilities from household debt were judged as only moderate. Inflation and uncertainty surrounding the direction of federal policy on trade, and government spending are banks' own top financial stability concerns.Meanwhile in the financial world, yet another key voting Fed member is out dampening down prospects of rate cuts. The Atlanta Fed boss said US inflation is only coming down "very, very slowly" and "let's not be in a hurry" on interest rate cuts.In China, and in all of March in all of the country, their incoming foreign direct investment was only +NZ$20.7 bln in March. But that was far better than the tiny +NZ$3 bln in March a year ago. Still the total for the first three months of the year was down a startling -26% compared to Q4-2023, up just +3.9% from the same quarter a year ago which was unusually weak. From Q1, 2022 the current levels are -28% lower. It will worry Beijing policymakers that these levels are bedding in so low.China will review its two Loan Prime rates later this afternoon (NZT). No change is expected this month.And we should note that the large southern Pearl River system is flooding, some of it severe.Over in Germany, March data shows that their producer price deflationary impulse is easing. Their PPI was down -2.9% from the same month a year ago, but that was far less than the February equivalent of -4.1%. And those March producer prices actually rose +0.2% from the prior month and that was better than the no-change expected.It is worth noting that the IMF and the World Bank have been having their annual talkfest Spring Meetings this past weekend.In the real world, we should also note that it is not only the aluminium price that is rising at present (which is up +20% since the end of February), but the copper price is on the move higher too, up +16% in the same timeframe and actually approaching its all-time high set a year ago.Other base metals like nickel, tin, and zinc, have all been rising sharply recently too. But not iron ore, lead, titanium or lithium - or the carbon price. (Even locally, here.)The UST 10yr yield is now at 4.62% and down -3 bps from Saturday but up +10 bps over the past week. The price of gold will start today down -US$3 from this time Saturday at US$2391/oz.Despite continuing Middle East tensions and uncertainties, oil prices have slipped lower to just over US$82/bbl in the US while the international Brent price is up slightly at just under US$87/bbl. Over the past week these prices have fallen -US$2.50 respectively.The Kiwi dollar starts today little-changed at just under 58.9 USc. But that is down nearly -½c in a week. Against the Aussie we are up +10 bps at 91.8 AUc. Against the euro we are still at 55.3 euro cents. That all means our TWI-5 starts today just on 68.8 and unchanged from Saturday, -30 bps lower for the week.The bitcoin price starts today firmer at US$64,854 and a minor +0.8% gain from Saturday. A week ago this price was US$67,601 so a -4.8% retreat from then. 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 do this again tomorrow.

For open banking to really grab people's attention the focus needs to be on the services it can enable, rather than the technology behind it, says Andrew Dentice.In the latest episode of interest.co.nz's Of Interest podcast, Dentice, a technology lawyer and partner at HudsonGavinMartin, discusses the data sharing that enables open banking, what open banking actually is, why progress towards it has been slow in New Zealand, what's going on with open banking overseas, the threat and opportunity of open banking for banks, the benefits of it for consumers, and more.One of the points he makes is consumers need to be put at the heart of it."If you're talking about APIs [application programming interfaces] and bank account information, it's not exactly the most sexy conversation to be having," Dentice says. "We have to put the consumer front and centre, have a look at some of these really amazing use cases that are starting to come out, and get people excited about it. And then that drives the [banking] industry to do more as well." "I think you've almost got to separate the open banking technology itself from the stuff that it enables," says Dentice."That technology itself is actually not that exciting as a consumer. APIs have been around for years. As a consumer, I don't really see that. What I see is the cool new app, the Sharesies, the Monzo, the Wise in market, that when I go and use it gives me a really fantastic, brand new experience.""We're never going to get people excited with the underlying tech around open banking. We're going to get them excited around the use cases that it's driving. So it's kind of an enablement layer rather than new technology in itself," Dentice says.Asked what the banking experience might look like for consumers in five to 10 years time if open banking really takes off in NZ, Dentice says better, more competitive, more interesting product offerings would be a great outcome."I would hope that there's a range of new, great, innovative New Zealand fintechs that are able to drive their business models off the back of this. I'd also hope that the great companies from overseas see New Zealand as a market that they want to enter. There's some larger [overseas] fintechs like Revolut and others coming into the market. I think if we have that open banking framework all up and running, then it makes New Zealand a much more likely place [where] the big players will come in and offer more competition."He also thinks service from incumbent banks could be better and more competitive."I saw recently HSBC basically launched a competitor to Wise in that FX [foreign exchange] space. So there's the fintechs kind of coming in cutting [banks'] lunch, and then the banks' trying to cut the lunch back.""And then I think digital first financial services means that people just have a better understanding of their money, their financial position. Financial literacy is really important. There's some great fintechs who are doing things with kids in that space, like SquareOne and Banqer.""So there's a societal benefit to it, as well as a pure kind of competition and innovation benefit as well," Dentice says.*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.And today we lead with news that while we weren't watching a few people are making financial bets so large they could hurt us all.In its latest global financial stability report, the IMF says near-term risks have receded as disinflation (that is, the lowering of the positive inflation rate) is entering its "last mile" zone. But they warn that medium-term vulnerabilities are mounting. One of those comes from the hedge fund sector. The IMF says that a small group of very large firms in this sector has built up an enormous short bet on global stability, one so large that if (as seems likely) those bets are wrong that could be a problem for all of us. “Some of these funds may have become systemically important to the [US] Treasury and repo markets, and stresses they face could affect the broader financial system,” they warn (on page 37).Meanwhile in the US, the number of new claims for jobless benefits in the US was was marginally less than in the prior week at 208,500 and this was less than analysts’ expectations. And that means continuing claims were broadly unchanged at 1.865 mln, also less than market expectations. Those waiting for early signs of US labour market stress are still waiting. It has now been a full 2½ years of weekly reports saying broadly the same thing and there are few signs this will change any time soon.One reason the wait may be longer is that the powerhouse Pennsylvanian/New Jersey rust belt manufacturing region seems to be on an upswing. The Philly Fed factory survey for April delivered positive new order and activity activity levels, in fact the best from that region in two years.But there is no sign that the American housing market is improving. US existing homes sales in March were -3.7% lower than a year ago at an annualised rate of 4.19 mln units. They actually fell at a faster -4.3% rate from February.Later today, all eyes will be on the Japanese CPI inflation rate. You may recall it came in at 2.8% in February and it is expected to be at a similar level (2.7%) when the March data is released this afternoon. If that is the case, the Bank of Japan will likely be emboldened to widen its moves to get off its very long-running QE programs.Australia's jobless rate ticked higher to 3.8% in March from February’s five-month low of 3.7% but below analysts’ expectations of 3.9%. The number of unemployed individuals increased by +20,600 to 569,900 while total employment fell -6,600 to 14.3 mln. There are now 9.9 mln people in full-time work, up +27,900, and 4.4 mln people in part-time work, down -34,500. Part-time roles make up 31.1% of their employed workforce. Their participation rate slipped to 66.6%. (The updated New Zealand jobless rate for March will be released on May 1. As at December it was 4.0%.)Global container freight rates fell another -3% last week, making them +53% higher than year-ago levels. Outbound rate from China fell again, but there was some movement up in rates to China even though they remain at very low levels. Bulk cargo rates rose +10% in the past week although they are still only essentially at long-run levels.The UST 10yr yield is now at 4.65% and up +6 bps from yesterday. The price of gold will start today up by +US$11 from this time yesterday at US$2383/oz.Despite continuing Middle East tensions and uncertainties, oil prices have stayed lower at just under US$82.50/bbl in the US while the international Brent price is down -50 USc at US$86.50/bbl.The Kiwi dollar starts today at just on 59 USc and a minor -10 bps softer from yesterday. Against the Aussie we are unchanged at 91.9 AUc. Against the euro we are also marginally softer at 55.4 euro cents. That all means our TWI-5 starts today just on 69 and actually little-changed.The bitcoin price starts today back up at US$63,221 and a +3.1% gain 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 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.And today we lead with news our meat exports to China face tough conditions, and not just from competition from excess Aussie lamb supply.But first, US mortgage applications rose +3.3% last week even as benchmark mortgage interest rates rose to 7.13% plus points and a four month high. (A month ago it was at 6.84%.) But to be fair, the recent shift higher in application levels is still -10% lower than the same weak week a year ago,so last week's rise is hardly significant.Today's UST 20yr bond auction was another success with the usual excess demand. But just like the mortgage market, the median yield rose again to 4.77%, up from the prior equivalent event a month ago at 4.50%. It seems investors are prepared to accept a lesser rise than they want from home loan rates.Despite these rising interest rate levels, the Fed's Beige Book survey paints a picture of a moderate and broad expansion in recent activity in the country, consistent with other recent data. They said overall economic activity expanded slightly since late February. Ten out of twelve Districts experienced either slight or modest economic growth, up from eight in the previous report, while the other two reported no changes in activity. They still found an expanding labour market, and the economic outlook among contacts was cautiously optimistic, they reported.While most blue-chip professional economists think the US economy is expanding at about a +2% rate, the Atlanta Fed's GDPNow model ingesting current rate thinks it is much faster than that, near +3%. It is an expansion that is driving the global economy, including that of its rivals like China.And Japan, which is on a roll, despite their currency issue angst (in USD terms). Their exports rose by +7.3% in March, following a +7.8% rise in February. It was the fourth straight month of increase for them.In China, meat prices - especially pork prices - are in an extended slump. Pork accounts for almost two thirds of Chinese meat sales and you will recall prices hit a peak in October 2022. But it has been all downhill since, dropping -40% and putting producers at increased bankruptcy risk. It is a crisis that has national attention, even international attention because feed grain imports are falling. Soybean prices are down -23% from a year ago. It is tough for beef and sheepmeats to compete with pork in China at present.The British released their March inflation rate overnight and it eased to 3.2% from 3.4% in February. But remained slightly above the market expectation of 3.1%. It was their lowest rate since September 2021, primarily driven by a slowdown in food prices.The UST 10yr yield is now at 4.59% and down -7 bps from yesterday. The price of gold will start today lower by -US$22 from this time yesterday at US$2372/oz.Despite continuing Middle East tensions and uncertainties, oil prices have dropped a sharpish -US$2.50 to just on US$82.50/bbl in the US while the international Brent price is down at US$87/bbl. Rising US crude stocks as their economy gains energy efficiency is behind the shift lower for oil.The Kiwi dollar starts today at just over 59.1 USc and back up +30 bps from yesterday. Against the Aussie we are firmish at 91.9 AUc. Against the euro we are also firmish at 55.5 euro cents. That all means our TWI-5 starts today just on 69 and back up +20 bps.The bitcoin price starts today lower at US$61,348 and down -1.6% from this time yesterday. Volatility over the past 24 hours has been very high at just under +/- 4.0%.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 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.And today we lead with news the US Fed is telling markets rate cuts from them are not coming soon.First up today, the overnight dairy auction confirmed the recent rises, but didn't add to them in a subdued event. In USD terms overall prices were up +0.1 and in NZD terms up +1.5%. Volumes were seasonally small however. Perhaps of some concern in this data was that foodservice components like butter, cheddar, and mozzarella all fell, by -1.4%, -8.5%, and -3.8% respectively. However, given the overall 'hold', it is unlikely any farmgate payout forecasts will be changed by today's outcomes.US housing starts and new building consents are in the doldrums as this sector continues to fade. March brought steep drops, almost -15% below February levels for new housing starts, -4.3% lower than year-ago levels. The situation isn't going to get much better because residential building consents also fell, down -4.3% from February although marginally up on March a year ago.US retail sales rose +4.9% last week in their Redbook tracker, the tenth week in the past 13 that the rise has bested inflation. The retail expansion is embedded now.US industrial production rose +0.4% from the previous month in March, in line with expectations and following an upwardly revised +0.4% increase in February. A rise in vehicle production was a notable component of the recent up-trend.Meanwhile, Fed boss Powell was out speaking indicating their policy rate will stay elevated for some time yet. They see no pressing need to cut, or in fact make any changes. Meanwhile there was some important Canadian data released overnight. They said consumer inflation rose 2.9% in the year to March with their core rate rising just 2.0%And Canadian housing starts eased slightly in March from February although they were +13.5% higher than year-ago levels.In China, electricity production rose just +2.8% on March from a year ago, a huge retreat from the +8.0% rise in December. This is an important background data that should be reflected in China's economic activity (GDP). But Beijing reported Q1-2024 GDP rose +5.3% (up from 5.2% in Q4-2023) and this was despite retail sales only rising +3.1% and national real estate investment falling -9.5% in official data. They say industry expanded +4.5% (and down from the +6.8% rate in December). While we have raised our eyebrows at how they can deliver a credible GDP result just 16 days after the quarter end (no-one else can), few of the major components show expansions at the level of the claimed overall growth, and readers can draw their own judgements on the credibility of the rising 5.3% growth in Q1. Certainly ex-Premier Li Keqiang did.Meanwhile, China's new home prices dropped by -2.2% in the year to March, faster than the -1.4% fall in February. It was the ninth straight month of decline and the steepest pace since August 2015, despite multiple support measures. For second-hand dwellings none of the 70 largest cities reported any rises, and the average fall over this set is now -5.9% year-on-year.China continues to struggle with youth unemployment. You will recall they withdrew data that reflected badly on them last year and replaced it with 'better data'. But now an official confirms that even this data, the next update yet to be released, shows a situation that "requires a high degree of attention".In Europe, the ECB said that they will likely cut rates soon. She was speaking at the IMF's release of their 2024 growth forecast update, and those revealed that despite gloomy predictions, "the global economy remains remarkably resilient, with steady growth and inflation slowing almost as quickly as it rose". They say: "growth this year and next will hold steady at 3.2%, with median headline inflation declining from 2.8% at the end of 2024 to 2.4% at the end of 2025. Most indicators continue to point to a soft landing."Join us at 10:30am this morning to find out what New Zealand's CPI inflation level came in at in Q1-2024..Ratings agency Moody's said overnight that New Zealand's sovereign credit rating stays at its current maximum Aaa grade. The outlook is Stable. They are the only ratings agency to assign a triple A to New Zealand. The UST 10yr yield is now at 4.66% and up +3 bps from yesterday. The price of gold will start today higher by +US$31 from this time yesterday at US$2394/oz.Despite continuing Middle East tensions and uncertainties, oil prices have changed little at just under US$85/bbl in the US while the international Brent price is also unchanged at US$89.50/bbl.The Kiwi dollar starts today at just over 58.8 USc and down -30 bps from yesterday and a new five month low. Against the Aussie we are firmish at 91.8 AUc. Against the euro we are down another -20 bps to 55.4 euro cents. That all means our TWI-5 start

Kia ora,Welcome to Tuesday’s Economy Watch where we follow the economic events and trends that affect Aotearoa/New Zealand.I'm David Chaston and this is the international edition from Interest.co.nz.And today we lead with news that bullish American consumers are likely pushing back the likelihood the US Fed will cut its policy rate any time soon.Financial markets now price in only two cuts this year, one in September and one in December and far less than the four priced in at the start of the year. And the conviction for these scaled back indications is easing rather fast. The latest pricing suggest the September one might still happen but there in more of a chance the December one will be skipped.And that is because American retail sales posted impressive results in March, and February's results were revised sharply higher. Those revisions means they were up +2.1% in February from a year ago, up 4.0% in March on the same basis. Consumer spending belies consumer sentiment. What they do is way more positive than what they say.Meanwhile, overall February business inventories remain in good control, holding their relative level to sales. There is no buildup of tensions on this front.On this data, the USD rose yet again, bond yields jumped - again - and equity prices packed a sad that they are unlikely to get the rate cuts they were banking on.It is not all positive however. The New York Fed's local factory survey reported that both new orders and shipments fell significantly in March and unfilled orders continued to shrink. Optimism among these businesses is subdued.And we should note that carmaker Tesla is cutting 10% of its global workforce, or -14,000 jobs, on stuttering sales and profitability issues. Its shar price fell another -5% in today's trading to be down -35% so far this year, down -59% from its peak on November 5, 2021.Canada reported manufacturing gains in February from January, and even small gains from year-ago levels. Those gains, tiny as they are, also came out when inflation-adjusted.In China, a new industry report from a corner of their economy details just how tough it has become to make deals there. Pay at China’s private equity and venture capital firms plunged as much as -40% year-on-year in 2023 as the industry’s downturn showed no signs of abating.Just for the record, the People's Bank of China had its monthly review of its benchmark One-Year Medium-Term Lending Facility Rate, which is the main rate at which the central bank lends to big commercial banks, and it held it unchanged at 2.5%.In Japan, machinery orders jumped +7.7% in February from January, reversing the -0.7% fall in January and far exceeding market expectations for just a +0.8% gain. That put them a healthy +9.4% higher than year-ago levels.In the EU, industrial production rose again in February, making it the third rise in the past four months. Analysts were expecting this type of improvement. But despite this month-on-month rise, they still have some way to go to convert that into year-on-year gains.We should also note that the rise and rise of the aluminium price over the past eight weeks too a sharp turn higher yesterday, taking it back to June 2022 levels. This shift is largely due to sanctions biting on Russian supplies.In Australia, employers and unions are close to a national agreement that will allow workers to take double their holiday time off at half their pay. There are still details to be agreed, but the principle for this flexibility is being set.The UST 10yr yield is now at 4.63% and up +11 bps from yesterday. The price of gold will start today higher by +US$20 from this time yesterday at US$2363/oz.Despite continuing Middle East tensions and uncertainties, oil prices have slipped -50 USc overnight to US$84.50/bbl in the US while the international Brent price is unchanged at US$89.50/bbl.The Kiwi dollar starts today at just over 59.1 USc and down -20 bps from yesterday and a five month low. Against the Aussie we are also down -20 bps at 91.7 AUc. Against the euro we are down -20 bps too to 55.6 euro cents. That all means our TWI-5 starts today just under 69 and down its own -20 bps but that is only a ten day low.The bitcoin price starts today marginally firmer at US$64,004 up +0.3% from this time yesterday. Volatility over the past 24 hours has been moderate at just on +/- 2.8%.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.And today we lead with news of an export setback in China that may signal a tougher path for them in the rest of 2024.But first, this week will kick off the US earnings season which will run for a few weeks until the Q1-2024 results are all in. Bank profits will be early in this set, many key ones coming this week. The Americans will also release retail sales results, and some housing updates.Retail sales updates will also come from China, along with their Q1-2024 GDP outcome, tomorrow. It is "impressive" they can report that, well before any other major economy. Eyes will be on their foreign direct investment data too, along with housing market activity results for March.Australia will release its labour market data this week, and CPI inflation data will some from Japan, Canada, and of course New Zealand (on Wednesday).Over the weekend, China reported its new bank lending levels and they picked up in March from February but the results still disappointed. March is usually a strong month for borrowing because banks tend to extend more credit at the end of each quarter to meet lending targets. But the ¥3.1 tln in new March lending was less than the ¥3.6 tln expected and the ¥3.9 tln in March 2023.Meanwhile, China's exports tumbled in March. They dropped -7.5% from a year ago, reversing sharply from a +5.6% growth in the earlier month. This was very much worse than market forecasts, highlighting the Middle Kingdom's uneven recovery and perhaps suggesting global demand won't drive growth there. It may also be a sign that de-risking from China because of its terrible recent signals to investors is biting harder and earlier than anticipated.It is not all difficult news in China. A survey shows that for the first time since the end of 2021, wage growth rates there are picking up again.India's industrial production rose by +5.7% in February from a year ago, the latest data released over the weekend, but that missed analyst forecasts of +6% growth; however it was a faster expansion than in each of the prior three months. A year ago this expansion was running at 5.8%, so little change on that comparison.It is only about 200 days until the November US presidential election and nervousness about that outcome is starting to show up in sentiment surveys. Consumers are apprehensive that the golden run could be crashed by the vote, or that things could destabilise ahead of it. The University of Michigan consumer sentiment poll is now reflecting some of that apprehension. However it is only off a 33 month high so we shouldn't make too much of this April dip and it remains more than +20% higher than year-ago levels. Still, the shift was noticed by financial markets. Wall Street dipped in their Friday session, bond yields slipped slightly, and the USD surged against all-comers on the risk-off mood.The UST 10yr yield is now at 4.52% and unchanged from Saturday's close. A week ago this rate was 4.39%. The price of gold will start today lower by -US$6 from this time Saturday at US$2343/oz. We should note that this price hit its all-time high of US$2432 at about 4am Saturday morning. But it has been sharply down after that.Despite extreme Middle East tensions, oil prices have been surprisingly stable over the weekend and still just on US$85/bbl in the US while the international Brent price is -50 USc lower at US$89.50/bbl. Both levels are about -US$2 less than a week ago. Interestingly, the head of the IEA strongly criticised European energy policy for "two monumental mistakes" - relying on Russian energy, and shifting away from nuclear power.The Kiwi dollar starts today at just over 59.3 USc and down -10 bps from Saturday. Against the Aussie we are unchanged at 91.9 AUc. Against the euro we are little-changed as well at 55.8 euro cents. That all means our TWI-5 starts today just on 69.2 and similar to Saturday and this time last week.The bitcoin price starts today sharply lower at US$63,785 and down -5.6% from this time Saturday. At one point it got as low as US$60,908. Volatility over the past 24 hours has also been extreme at just on +/- 5.2%.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.

Finance spokesperson Barbara Edmonds says a re-elected Labour Government would have been willing to expand its planned public sector cuts to protect key programmes. The tax lawyer turned MP spoke on Interest.co.nz’s Of Interest podcast about the Coalition’s fiscal policy and her role in rebuilding the Labour Party after its election defeat. Part of that project will be rehabilitating the party’s economic credibility after presiding over a massive cost of living crisis. Ipsos’ February issues poll showed inflation, or the cost of living, was the number one issue facing New Zealand voters and only 23% saw Labour as being best able to deal with it. Only 22% thought it was the best party at “managing the economy” down from 31% a year ago and well below the National Party which has climbed from 42% to 47%.The parties which have formed the Coalition Government campaigned on bringing down spending and therefore inflation, as well as cutting taxes for some groups. Edmonds agreed there was a need to consolidate spending—which had got ahead of revenue during the past three years—but tax cuts were a bad investment. Labour’s fiscal plan asked for up to 2% reductions in public sector budgets, while the Coalition Government is asking for up to 7.5%.She admits her party would have had to make further cuts, given new Treasury forecasts showing tax revenue falling below pre-election forecasts. “If we had to make more cuts, or look at different savings, in order to ensure that lunches in schools kept going … we would have had to make those decisions,” she said. “I wouldn't apologize for making those types of choices. But what I wouldn't have done is promised really unaffordable tax cuts”.Edmonds said the limited money available was better invested in infrastructure, schools, healthcare, public and private transport, and climate action.Which tax? Edmonds said she was out meeting with key sector leaders and listening to new ideas she can carry back to Labour's policy council. Her role was to guide her colleagues through the process of developing a manifesto for 2026 and informing them about the costs and tradeoffs involved. “If I need to say no, I’ll say no. I’m a mum of eight, I know how to say no,” she said. “Ultimately, if I believe that it's going to put Labour into a difficult fiscal position going into the next election, I will make those views very clearly known”.Labour recently voted against a bill put forward by Te Pāti Māori, which would have removed the GST from all food, on the basis that it was too expensive.But the big policy question is about tax. Political opposition to taxes on capital has been the unslayable dragon of New Zealand politics.Tax reform is back on the table but Edmonds won’t be drawn on exactly what kind.She said it was necessary to first ask what the party was trying to achieve and then design a tax model that supported those outcomes.The country will be facing some serious fiscal challenges by 2060 when superannuation could cost 10% of GDP and healthcare could absorb another 7%.“2060 looks like ages away, but that’s the next generation. That’s my kids. So, we need to ask, what is the society that we want to leave this generation and how does tax help us get there?” The Treasury and the International Monetary Fund have both made recommendations about possible reforms, but Labour would be starting from scratch based on its long-term vision for New Zealand. Edmonds said political parties don’t win elections based on tax policy, anyway. “You win on committing to a better health system, better education, making sure the vulnerable are supported, and that our businesses are able to grow,” she said.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.And today we lead with news today's data releases in the shadow of yesterday's highish US CPI release, and there is some talk of rate cuts elsewhere.First up in the US, the number of new jobless claims fell last week, consigning the prior week's jump to the 'anomaly' basket. There are now 1.9 mln people still on these benefits, virtually unchanged from the prior week level.The rise in American producer prices was also less than expected in March, coming in just +2.1% higher than a year ago. A year ago they were rising at a +2.7% rate. Producer price rises are not a major factor in their consumer price inflation.The USDA lowered its price estimates for most key agricultural commodities, especially grains, as good harvests worldwide more than cover global food demand. Global food prices were already running at 3 year lows. Specifically, the Americans are expected to import more beef and produce less milk.China's consumer prices edged up a mere +0.1% in March from a year ago and much less that the market forecasts of +0.4%, and after an annual +0.7% rise in February. The extended flirting with deflation is dangerous and highlights the economic challenges they face. Demand is actually quite weak - and this data all comes from the officially approved series.Meanwhile, China's producer prices shrank by -2.8% in March from the same month a year ago. This was the expected drop and compares to February's drop of -2.7%. It was the 18th straight month of contraction in factory gate prices and the steepest decrease since last November, highlighting the persistence of deflationary forces in their economy. In Japan, a lack of intervention in support of the yen after it weakened beyond 152 to the US dollar for the first time since 1990 has financial markets wondering when or even if the Japanese authorities will step in as has been widely expected. There are many market bets that this would have happened by now. But perhaps Tokyo senses that it is more about the rising USD rather than a weak yen. It certainly isn't that weak against most other currencies.The ECB held its policy interest rates at record-high levels for a fifth consecutive time during its April meeting overnight, at 4.5% (and their deposit rate at 4%), both at 22 year highs. However they did signal that a rate cut could come there soon, perhaps in June.Last week global container shipping rates eased only marginally, staying +64% higher than year-ago levels. Bulk cargo rates fell -7.5% in the week however and are now back at long run averages.The UST 10yr yield is now at 4.57% and up a minor +1 bp from yesterday as things settle in at the new higher level. The price of gold will start today higher by +US$20 from this time yesterday at US$2355/oz and off its all-time high.Oil prices have fallen -US$1 to just on US$84.50/bbl in the US while the international Brent price is down a bit less to just on US$89/bbl.The Kiwi dollar starts today at just over 59.9 USc and little-changed from yesterday. Against the Aussie we are softer at 91.7 AUc. Against the euro we are firmer at 55.9 euro cents. That all means our TWI-5 starts today just on 69.4 and up a minor net +10 bps.The bitcoin price starts today firmer at US$70,258 and up +1.3% from this time yesterday. Volatility over the past 24 hours has also been modest at just on +/- 1.6%.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.And today we lead with news it is all about American inflation today, and the consequences of missing expectations.The American annual inflation rate picked up slightly for a second straight month, to 3.5% in March, its highest rate highest six months, and well above the 3.2% rate in February. And also higher than the analyst forecasts of a 3.4% rate. Of some concern is that the month-on-month rate stayed up at +0.4% (and almost a 5% annualised rate). Their core rate (sans food and energy) however, stayed down at 3.8% and unchanged, but a dip was expected here.All up, this shows American inflation is far from beaten. Perhaps the Fed was expecting this because the minutes of its March meeting released today shows them wanting to see progress on the inflation front before they reduce their 5.25% policy rate. They are clearly not there yet as they suspected.The USD rose sharply on the news, as did benchmark bond yields. The S&P500 fell as rate cut hopes for 2024 fade.It may be all about the inflation miss today but there were other indicators out as well.US mortgage applications were barely changed last week from the week prior, holding low to be -23% lower than the year-ago level. No rebound in the American housing markets. Their benchmark fixed 30 year home loan rate moved back up over 7% plus points, a one month high.There was a rise in American wholesale inventories in February, but to be fair these overall levels in relation to sales activity are entirely 'normal' from an historic perspective.As expected, the Bank of Canada rate left its policy rate unchanged at 5% in its overnight review. It says it is confident inflation's trend is easing there.Japanese producer prices rose +0.8% in the year to March, in line with forecasts and marginally higher than in February.Taiwanese exports surged in March, more than making up for the February hesitation. In fact they delivered their best month since July 2022 and their second best March month ever.In the South Korean parliamentary elections, the conservative alliance is suffering a big defeat with the Democratic Party alliance heading for a parliamentary majority.In China, ratings agency Fitch has affirmed their sovereign credit rating as A+, but has shifted its Outlook from Stable to Negative. It cited the growing risks of China's public finance situation as fiscal buffers have eroded, especially from overstretched Local Government Financing Vehicles while Beijing deals with its stuttering property development sector. (Fitch rates New Zealand AA+, Stable. You can see how the various ratings agency codes compare here.)And staying in China, vehicle sales rose a very impressive +9.9% in March from year-ago levels to almost 2.7 mln units in the month, following a -19.9% slump the month before. Consumption recovered following the Lunar New Year holidays and many carmakers slashed prices which has been effective from a sales perspective. China's EV exports, particularly to Europe, continue apace, but there are growing questions about whether these shipments will find buyers. The flood to there is overwhelming local manufacturers and they are not happy.The UST 10yr yield is now at 4.56% and up a sharp +19 bps from yesterday on the US CPI result. The price of gold will start today lower by -US$13 from this time yesterday at US$2335/oz and off its all-time high.Oil prices have risen +US$1 to just on US$85.50/bbl in the US while the international Brent price is up a bit less to just on US$89.50/bbl.The Kiwi dollar starts today at just under 59.8 USc and down -¾c from yesterday all on the USD moves. Against the Aussie we are also +½c firmer at 91.9 AUc. Against the euro we are little-changed at 55.6 euro cents. That all means our TWI-5 starts today just on 69.3 and down -20 bps.The bitcoin price starts today softer at US$69,348 and up almost +1% from this time yesterday. Volatility over the past 24 hours has been modest however 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 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.And today we lead with news business owners are having difficulty matching their sentiment with the conditions around them.And financial markets are in a bit of a pre-dawn shadow as they await the US CPI data tomorrow. Headline CPI is expected to tick up, core inflation tick lower. Both levels will be well above the US Fed's target.American retail sales, as measured by the weekly Redbook index for bricks & mortar stores, rose +5.4% last week from the same week a year ago, far better than inflation. Despite that, SMEs reported slipping sentiment and interestingly, labour shortages were still a key concern. So despite record job creation and high migration, small business still can't get enough people for the roles they need to fill. Twenty-five percent of owners reported few qualified applicants for their open positions and 26% reported none.Investors on the other hand stayed much more optimistic and above average levels over the past 2+ years.There was a US$59 bln UST 3yr bond auction earlier today and that brought slightly higher yields. Today's median yield was 4.49% and that was up from 4.21% a month ago at the last equivalent event. Investors support for this fund-raising remains very strong with offers 2½ times availability. Today almost US$87 bln in bids were unsatisfied.Japan is said to be pondering where-to for their inflation. Wage gains have been strong this year. Since their central bank raised rates for the first time in 17 years last month and ended its massive monetary easing program, market players have been focusing on hints for the timing of the next rate hikes. They may get 2.4% inflation this year, 2% next year. These are much higher levels than they have had for the long period since the GFC.One country making progress on inflation reduction (but not battling deflation) is Taiwan. Their CPI inflation slowed to 2.1% in March from 3.1% in the previous month and coming less than market forecasts of 2.5%.It is election day in South Korea and the main issues are domestic ones. It is hard to predict the outcome because the electorate is split 30/40/30 conservative/moderate/liberal and few know how the moderate voters will swing this time. Anything's possible.In Australia, business confident was little-changed in March according to the widely-respected NAB survey. Both business conditions and confidence were little changed in the month, continuing the trend of above-average activity indicators alongside below-average confidence that has defined this survey for much of the past year.The Westpac-Melbourne Institute Consumer Sentiment index in Australia fell -2.4% to 82.4 points in April, sliding for the second consecutive month as persistent inflation and high interest rates continued to weigh on Australian households. The index has also held below 100 for over two years, the longest since the early-1990s recession.The overnight GDT Pulse dairy auction results for both WMP and SMP basically confirmed the uptick in prices that we first saw in the full GDT event a week ago.The UST 10yr yield is now at 4.37% and down -5 bps from yesterday. The price of gold will start today a little higher by +US$13 from this time yesterday at US$2348/oz and yet another all-time high.Oil prices have slipped another -US$1 to just on US$84.50/bbl in the US while the international Brent price is now down to just on US$89/bbl.The Kiwi dollar starts today at just over 60.5 USc and up another +20 bps from yesterday. Against the Aussie we are also a bit firmer at 91.4 AUc. Against the euro we are firmer too at 55.8 euro cents. That all means our TWI-5 starts today just on 69.5 and up +20 bps.The bitcoin price starts today softer at US$68,790 and down -4.1% from this time yesterday. Volatility over the past 24 hours has been moderate however at just on +/- 2.8%.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.And join us at 2pm today when we will have full coverage of the RBNZ’s monetary policy review.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.And today we lead with news the IMF reckons the way the Aussie home loan market is structured accentuates mortgage rate pain.But first in the US, consumer inflation expectations for the year ahead remained steady at 3% for a third consecutive month in March, holding at three-year lows. For three years ahead they rose marginally to 2.9% whereas for five years ahead they slipped to 2.6%. None of these are 'bad' levels but they are not quite where the US Fed would like them to be.The actual current March US CPI inflation level will be revealed on Thursday, NZTNoticeable improvements recently in German industrial production, the US ISM PMI, and the Caixin factory PMI have combined to shift the expectations for the copper price sharply higher. It is now back to levels we last saw in May 2022, and first saw in November 2010. It is an upswing that has been unexpected.But the same is not true for steel prices. Excess Chinese production and export dumping has driven the cost of rebar down to 2017 levels. Their stuttering domestic construction industry is having world-wide impacts in this important corner of the steel industry. Iron ore prices are now at yearly lows too.In Hong Kong, a winding up order is being sought by its major lender for Shimao Group Holdings, just another Chinese property developer that has hit the debt wall. What is interesting about this is that the lender is China Construction Bank, one of China's four pillar banks and state-owned of course. Shimano has projects across much of China, but only one in Hong Kong. When Beijing turns against you, you are toast.In Australia, February new lending data shows that the number of loans issued for the purchase or construction of a new home over the past year is holding at its lowest level in more than 20 years. Values are up of course, but the number isn't.The IMF has released an analysis that shows Australian households are more sensitive to changes in interest rates than virtually any other consumers globally because of the combination of the dominance of variable-rate mortgages, high levels of household debt and lax lending rules. New Zealand is up there too, but not because of high variable-rate lendingThe UST 10yr yield is now at 4.42% and up +2 bps from yesterday. The price of gold will start today a little higher by +US$6 from this time yesterday at US$2335/oz and yet another all-time high.Oil prices have slipped -US$1 to just on US$85.50/bbl in the US while the international Brent price is now down a bit less at just under US$90/bbl.The Kiwi dollar starts today at just over 60.3 USc and up +20 bps from yesterday. Against the Aussie we are softer at 91.3 AUc. Against the euro we are fractionally firmer at 55.6 euro cents. That all means our TWI-5 starts today just on 69.3 and up slightly.The bitcoin price starts today firmer at US$71,715 and up +2.8% from this time yesterday. Volatility over the past 24 hours has been moderate at just on +/- 2.7%.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.And today we lead with news investors are much less sure rate cuts will come in 2024.This week, given that American jobs growth remained strong in March, all eyes will now turn to their inflation data with CPI due out on Thursday. That is expected to show inflation rising there slightly to 3.5%, but core inflation easing slightly to 3.7%. And variations will likely colour market responses. The Americans will also release PPI data this week, along with consumer sentiment survey results for April.Of course this week our own RBNZ reviews its OCR. And they will be joined by Canada and the EU. Australia will release its NAB business sentiment survey results, along with the Westpac consumer sentiments survey results, both tomorrow (Tuesday).China will release its CPI and PPI data along with new lending data for March, also both on Thursday.Over the weekend China released its March FX reserves level and it was little-changed as it has been over the prior three months.In the US, their economy added many more jobs than expected. Analysts were thinking the expansion would be +200,000 in March from February, but in the end the headline seasonally adjusted gain was +303,000. On an actual, unadjusted basis the gain on employer payrolls was +659,000. The wider household survey saw an even larger rise of more than +1.04 mln in the month to 161.4 mln people employed both on employer payrolls and the self-employed. Adding more than +1 mln paid jobs in a month is very expansionary. Guessing here, but strong immigration (both legal and illegal) is helping fuel the expansion.Average weekly pay rose +4.1%, bolstering this strength although that was slightly lower than the +4.3% rise to February. In any case it is more than inflation and it shows that even after absorbing the migrant flow it remains 'real'.Today investors are looking past the fact that the Fed may delay rate cuts, realising the American economy is in much better shape than they have assumed, and equity prices are rising, even though bond yields are rising too.The US$5 tln US consumer debt market has been expanding marginally recently although it did show a faster than usual rise in January. The February data out today shows a slower rise and one less than expected. This market indebtedness level runs at 17.8% of US GDP, very much higher than the New Zealand equivalent which is only 3.7% of our GDP.Unfortunately, Canada's labour market isn't showing the same robust expansion in March as the US has, essentially marking time with little change after February's good gains.Australian retail sales are rising but slower than their inflation rate. They were up +1.6% in February from a year ago. But in that same time their inflation indicator rose 3.4%. Any way you look at it, that is a volume drop.The Australian goods trade surplus halved in February from the same month a year ago. It came in at a +AU$6.5 bln surplus, down from +AU$12.9 bln in February 2023. The reasons is the combination of falling exports (-2.4%), and import growth staying high (+17.1%). Of particular note is that both rural and non-rural exports fell more than -3%, but that gold exports were up +25% on that basis.An updated KPMG/University of Sydney report shows that China is sharply reducing its investments in Australia in favour of other Belt & Road states - in fact investing in B&R partners so it can wind down exposure to Australia. A prime example is in nickel mining where China has invested in cheaper (and 'dirtier') nickel mining and processing. Overall in 2023 Chinese investment in Australia fell to AU$1.4 bln, and its lowest level in seventeen years (pandemic excepted).The UST 10yr yield is now at 4.40% and up +1 bps from Saturday, up +20 bps in a week. This is its highest since late November, so a strong bond market signal. The price of gold will start today a little higher by +US$3 from this time Saturday at US$2329/oz and yet another all-time high.Oil prices have slipped a minor -50 USc to just on US$86.50/bbl in the US while the international Brent price is now down a bit more at just over US$90.50/bbl.The Kiwi dollar starts today at just on 60.1 USc and unchanged from Saturday. Against the Aussie we are firmer at 91.5 AUc. Against the euro we are unchanged at 55.5 euro cents. That all means our TWI-5 starts today just on 69.2 and unchanged.The bitcoin price starts today firmer at US$69,783 and up +2.9% from this time Saturday. 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 Friday’s Economy Watch where we follow the economic events and trends that affect Aotearoa/New Zealand.I'm David Chaston and this is the international edition from Interest.co.nz.And today we lead with news markets don't seem to be worrying about coming 'bad news' ahead of tomorrow's US March labour markets report.US initial jobless claims recorded a minor +2000 rise last week from the week before taking the total to 1.94 mln. But that was a big -74,000 decrease as more benefits expired than new ones were added. A year ago there was almost the same number of initial claims as last week.Updated American job cut data remains incredibly low even if it is rising. US-based employers announced plans to cut 90,300 jobs in March, the most since January 2023, compared to 84,600 in February.Tomorrow we get the March non-farm payrolls data and markets expect employer payroll jobs growth to rise +200,000. You will recall they rose +275,000 in February.Meanwhile US exports of both goods and services were +2.1% higher in February than in January. Imports were +2.2% higher on the same basis so the overall trade balance grew fractionally in the month, although year-to-date, the goods and services deficit decreased -2.8% and remains about -2.7% of US GDP. (New Zealand's current account deficit is -6.9% of GDP.)Canada also reported trade data for February but only for goods trade and their exports rose +5.8% to a new all-time high. Imports rose +4.6%, so their merchandise trade surplus rose to +C$1.4 bln in February.It is a public holiday in China, Ching Ming Festival, although Hong Kong financial markets will reopen today.Global container freight rates continued their retreat from their late January peak. They are now down -28% since then, down -3% in the past week alone. But that leaves them still +65% higher than year-ago levels. The slowness of the recent easing points out that the twin problems in both the Panama Canal (drought) and Suez Canal (security) are not going away; the decreases are because the global logistics system is adapting. Bulk cargo rates eased -7% in the past week, and are in fact now back to long-run average levels.Steel and iron ore prices are back falling, both near their lowest in the past year, probably an early signal markets don't believe Chinese demand will recover any time soon.And speaking of commodities, a new report says the world's population is shifting in very significant ways in an historical turning point. Also, it is not simply a matter of a static or a declining world population – the nature of that population will also change. It will be much older. The report estimates there will be twice as many people over 80 as under five – nearly 900 million over-80s worldwide by 2100. A period of unprecedented demographic and economic adaption awaits our grandchildren. There seems little doubt that small countries will have many more options than large ones, but that the pressures from 'outside' will be enormous.And speaking of natural stresses, keep an eye on Sydney weather this weekend. They seem to be facing a rather extreme meeting of two wild and wet weather fronts.The UST 10yr yield is now at 4.35% and little-changed from this time yesterday. The price of gold will start today softer by -US$5 from this time yesterday at US$2288/oz. But in between it hit a new all-time high of US$2305/oz.Oil prices have fallen -US$1 to just under US$84.50/bbl in the US while the international Brent price is now up at just under US$89/bbl.The Kiwi dollar starts today at just on 60.4 USc and +¼c firmer than this time yesterday. Against the Aussie we are softer at 91.3 AUc. Against the euro we are firmer at 55.6 euro cents. That all means our TWI-5 starts today just on 69.4 and up +20 bps from this time yesterday.The bitcoin price starts today firmer at US$68,048 and up +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 again on Monday.

The departing Chief Executive of the Insurance Council of New Zealand says if Wellington is hit with an earthquake on a similar scale to the Canterbury quakes, it would “raise some questions” on whether NZ insurers would be able to continue to purchase reinsurance at an affordable cost.“I think reinsurers would still be there. But the ability to purchase reinsurance at a good rate and the degree of capacity that would be available, particularly for property in Wellington, could be really challenging,” he says in a new episode of interest.co.nz’s Of Interest podcast.“Ensuring how we manage that risk is really critical because we're very dependent on offshore capital and reinsurance to help support our insurance programs in New Zealand.”The Insurance Council says to date, private insurers have incurred over $21 billion in expenses due to the Canterbury Earthquakes.Toka Tū Ake EQC has contributed an additional $10 billion, resulting in a total insured cost surpassing $31 billion for the event. The Insurance Council estimates the overall economic losses for the entire sequence are estimated to exceed $40 billion.This week marks the conclusion of Grafton's nearly 12-year tenure as CEO of the Insurance Council and he reflected on his time in the role on the podcast.He says lessons were learnt from the 2010 and 2011 Canterbury Earthquakes, which were then applied to responses to the Kaikōura earthquake in 2016 and the Auckland floods and Cyclone Gabrielle last year as well.“When that [Kaikōura] earthquake struck, which was just a little bit after midnight, I think, on the 14th November, a lot of people were thrown out of bed almost by the earthquake in Wellington. And after the shaking stopped, I rang my counterpart at EQC Ian Simpson [EQC’s Chief Executive at the time] and said, ‘we’ve got to do better than Canterbury and can we meet in a few hours and work out where we go from here’,” he says.“So, within four weeks, we had the foundations of an agreement which enabled insurers to manage and settle claims on behalf of EQC. And that meant that for the customer, there was one point of accountability and responsibility for their claims, their insurer. And so it didn't matter whether it was an EQC claim or an insurer claim, they didn't get bounced around between the two.”“So from that, we then developed a more formal and longer lasting agreement with EQC to be their agents. And I think also the experience of those events from Canterbury through to Kaikōura, meant that when the Auckland anniversary floods and Cyclone Gabrielle came along, we were well seasoned in dealing with these kinds of situations.”Kris Faafoi will be the Insurance Council’s new Chief Executive from next week. Faafoi held a number of portfolios during the Sixth Labour Government before he quit politics in 2022, including Commerce and Consumer Affairs, Broadcasting and Media, Immigration and Civil Defence.You can find all episodes of the Of Interest podcast here.

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.And today we lead with news progress toward lower inflation is underway but the road is bumpy.But first up today we should note that American mortgage application levels decreased again last week. Their mortgage rates moved lower last week, but that did little to ignite overall mortgage application activity which is now -13% lower that the weak year-ago levels. Their overall economy may be in a broad-based and resilient expansion but this does not include their housing market.American employments levels are rising. Private businesses in the US hired an extra +184,000 workers in March following an upwardly revised +155,000 in February, and beating forecasts of +148,000. This is the biggest increase in hiring in eight months, with employment especially strong in services. In this survey, pay was up +5.1%. The US non-farm payrolls are out on Saturday NZ time for March and they are expected to show a +200,000 increase.So it might have been a surprise to see that the ISM services PMI for March ease off a little (even if new order levels expanded strongly). Then again, that was not reflected in the S&P Global (ex-Markit) US services PMI which noted further rises in output and new orders, but rates of growth did ease. They found the pace of job creation moderated and selling price inflation rose to an eight-month high. Nothing here signals imminent recession, but clearly inflation is not beaten.Fed boss Powell spoke earlier today, but kept to his recent script saying a rate cut may come later this year, but they are watching the recent firmer inflation data even if they expect it will ease back soon. A colleague suggested the first cut there won't come until Q4.American vehicle sales were expected to rise in March but they disappointed, coming in at an annualised pace of 15.5 mln. Still, this is about the same pace we have seen since April 2023 so it is holding its rise from the depressed period two years earlier than that.In China, new order levels boosted its Caixin services PMI in March. The expansion isn't swift but it is better than a contraction. It was the 15th straight month of growth in services activity, with new business rising to the fastest pace in the year so far.The Qingming Festival 3 day holiday in China will mean data releases there will be light until next week. Equity markets will be closed. They may be glad of the break; a survey of local economists cast growing doubt that the "about 5%" growth target will be reached this year, and it will be progressively harder in years to come.In Europe, inflation levels fell more than expected, getting closer to the ECB target. It declined to 2.4% in March 2024, matching November's 28-month low and that was lower that market expectations of 2.6%.The UST 10yr yield is now at 4.36% and unchanged from this time yesterday. The price of gold will start today firmer by +US$34 from yesterday at US$2293/oz, and a new all-time high.Oil prices have risen +US$1 to just under US$85.50/bbl in the US while the international Brent price is now up at just under US$89.50/bbl. These are new five month highs.The Kiwi dollar starts today at just on 60.1 USc and +½c firmer than this time yesterday. Against the Aussie we are little-changed at 91.5 AUc. Against the euro we are holding at 55.4 euro cents. That all means our TWI-5 starts today just on 69.2 and up +20 bps from this time yesterday.The bitcoin price starts today firmer at US$66,285 and up +1.2% from this time yesterday. 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 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.And today we lead with news yields are climbing as markets recognise the Fed is serious about wanting to see sustained inflation at 2%, and the US economy just keeps on powering ahead. And that is hurting equity valuations.But first, the overnight dairy auction brought higher prices. In USD terms they were up +2.75% and nearly making back the drop at the prior event. However in NZD terms the gain was +4.2%, so risks to farm gate payout forecasts have faded for now. The rises were pretty much across the board and were led by cheddar cheese, WMP and butter.In the US, the February JOLTS report delivered a little-changed set of results, far better than the expected labour market retreats. Job openings actually rose slightly.Meanwhile US factory orders came in higher than expected. New orders rose by +1.4% from the previous month in February. This was above market expectations of a +1% increase to point to further resilience of the US economy. Year-on-year they rose +3.6%.Adding to the bullish theme, the US Redbook index of retail sales rose +5.2% last week compared to year-ago levels.There's more. The Logistics Manager’s Index rose to its highest reading in four months in March amid broad-based expansions in all metrics and continued progress in the transportation sector and a build-up of inventories upstream at the manufacturing and wholesale levels.But it is not all good news; Tesla missed its delivery targets in Q1-2024 by almost -15%, their least since 2022. Their stock dived -4.8% today.. But to be fair it has been on a slide since its peak in July 2023 and has since shed more than -40%.In China, all the news is about Country Garden's current sales failures. But we have heard that all before.German inflation has eased to 2.2% in March from 2.5% the previous month. This was their lowest rate since May 2021, moving closer to the ECB's target of 2.0%.In March, Australian house prices barely moved in both Sydney and Melbourne from the prior month according to CoreLogic analysis. But they zoomed higher in most other major centers. Brisbane, Adelaide and Perth all booked big gains, and year-on-year, Perth is up almost +20%.The UST 10yr yield is now at 4.36% and up another +3 bps from this time yesterday. The price of gold will start today firmer by +US$19 from yesterday at US$2259/oz, and only -US$7 below its new all-time high reached intra-day yesterday.Oil prices have risen +50 USc to just on US$84.50/bbl in the US while the international Brent price is now up at US$88.50/bbl. These are five month highs.The Kiwi dollar starts today at just on 59.6 USc and +20 bps firmer than this time yesterday. Against the Aussie we are unchanged at 91.6 AUc. Against the euro we are holding at 55.4 euro cents. That all means our TWI-5 starts today just on 69 and actually unchanged from this time yesterday.The bitcoin price starts today softer at US$65,516 and down another sharpish -4.6% from this time yesterday. Volatility over the past 24 hours has been very high at just on +/- 4.1%.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.And today we lead with news that global manufacturing indicators have turned quite positive.First in China, their official March PMIs have set a bullish tone to start the week. Their official factory PMI rose to 50.8 from 49.1 a month earlier and export orders also recovered. The official services PMI rose to its highest since June. These were followed by the private Caixin factory PMI and that broadly confirmed to improved outlook and new expansion, actually a 13 month high.This apparent recovery energised the Shanghai stock exchange yesterday.In Japan, industrial production fell and their jobless rate rose, both not expected. But that data was for February. For March, their central bank sentiment survey of mostly large businesses remained broadly positive.And in South Korea, industrial production rose and by more than expected.Back in China, the slow motion real estate sector crash rolls on with more troubles at both Vanke and Country Garden. It is more than them of course. And banks that responded earlier to Beijing's call for them to support the sector are trapped in growing bad loans. Asset quality pressure is "immense" said one major bank.In India, we should note a new ILO report that shows the jobless rate for Indian graduates at home was a massive 29%, almost nine times higher than the 3.4% for those who can’t read or write. The unemployment rate for young people with secondary or higher education was six times higher at 18.4%. This data reinforces David Hargreaves point that even if New Zealand's local labour market struggles, it will still look attractive to Indian immigrants. It isn't our attractiveness that draws them, it is the job pressure at home that pushes them out.In the US, the widely-watched ISM factory PMI has been shifted into expansion mode on the strength of new order levels. It joins the internationally-benchmarked S&P Global (ex-Markit) one which already moved to expansion the previous month. But it was the size of the ISM shift that got market attention, enough that the view formed it will keep the Fed from cutting any time soon. Both showed prices are no longer falling.It is not all good news in the US. 'Extend & Pretend' is back, especially in US commercial office markets and particularly for office buildings. The US Fed is on watch for financial stability risks although they claim it is an issue for small and mid-sized banks, not the systemically important big banks.And staying in the US, Fed Chair Powell said that PCE inflation data for February was along the lines of what the Fed wants to see and broadly expected. However, the latest readings aren’t as good as what policymakers saw last year and the Fed can wait to become more confident before cutting interest rates. In fact, he said policymakers don't need to be in a hurry to reduce borrowing costs. The Fed's base case is for inflation to come down but if the base case doesn't happen the Fed would hold rates where they are for longer, he said. Today's PMI's reinforce that position.But he was responding to PCE inflation data for February which rose +2.5% and that was following a January 2.4% rate and a December 2.6% rate. Core PCE inflation rose 2.8% after being 2.9% in the prior two months. Powell and his colleagues won't be unhappy with these levels but they aren't seeing downward progress either.Meanwhile American personal incomes were +1.7% higher than a year ago and personal consumption is +2.4% higher on the same basis. This is the first time income growth trailed spending growth in a long time. It is too soon to know whether this is a turning point, or just a data blip.So perhaps it will be a surprise to know that the University of Michigan sentiment index rose more than expected to its highest level since July 2021.In Australia, inflation expectations, which had been suck at 4.5% since December, actually slipped in March to 4.3%. While this may be its lowest since October 2021, it does emphasise just how sticky Aussie CPI inflation has become.Meanwhile, China has dropped its tariffs on Australian wine after years of sanctions that crippled the billion-dollar export industry.The UST 10yr yield is now at 4.33% and up +14 bps from the end of trading last week. The price of gold will start today firmer by +US$7 from yesterday at US$2240/oz, but -US$26 below its new all-time high reached over the past 24 hours.Oil prices have risen +US$1 to just on US$84/bbl in the US while the international Brent price is now just over US$87.50/bbl.The Kiwi dollar starts today at just on 59.4 USc and -35 bps lower than this time yesterday. Against the Aussie we are unchanged at 91.6 AUc. Against the euro we are holding at 55.4 euro cents. That all means our TWI-5 starts today just on 69 and down -20 bps from this time yesterday.The bitcoin pri

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.And today we lead with news natural events will likely have an increasing say in how the international economy operates.But first in the US, mortgage applications were lower last week again, and the good rises in the first two weeks of the month are fading. Even essentially unchanged mortgage interest rates isn't stimulating new loan applications. The talk of an American housing market recovery might be a mirage.There was another UST 7yr bond auction earlier today and that brought rising demand. Today's event delivered a median yield of 4.14% which was lower than the 4.27% at the prior equivalent event a month ago. It is only marginal, but the interest rate load on the US Federal government borrowing is easing.China's industrial profits bounced-back in February, rising by +10.2% from the same month a year ago. They are cheering the 'strong rise'. But we must recall they were especially weak last year. Compared with 2022, the February 2024 result is down -21.2%. And it is -17.7% lower than 2021's result. So they shouldn't be too satisfied. There was almost no recovery in State-owned enterprises - all the current 'recovery' came from the private sector.The central bank of Sweden likes what it sees locally in the track of inflation. It is currently running at 4.5% and has been sticky. But they expect it will fall soon to near 2%. That view encouraged them to signal that their current policy interest rate of 4% will be trimmed soon, starting in May or June.In Australia, their Monthly Inflation Indicator was at 3.4% in February. This is the same rate they reported in December and January. Their core rate fell to 3.9% in February, down from 4.1% in January. Like everyone, they are finding it hard to wring out the last elements of excessive inflation. New Zealand's March quarter CPI rate will be released on Wednesday, April 17, 2024. In Q4-2023 it ran at 4.7%.You know about the West African crisis hitting cocoa production and prices. Now you should know that a cyclone in Madagascar will roil the market for vanilla beans. Vanilla is a main source of foreign currency for the country.And back in the US, warnings are starting to appear that their hurricane season this year could be their biggest and most damaging.Further, we should note that a giant of psychology and a huge contributor to behavioural economics, Daniel Kahneman has died earlier today. He was a Nobel Laureate, and if you haven't read his hugely influential book Thinking, Fast and Slow, which summarises much of his research, you should take the time to do so. The UST 10yr yield will today at 4.19% and down -5 bps from this time yesterday. The price of gold will start today firmer by +US$14 from yesterday at US$2191/oz.Oil prices have fallen -US$1 to just under US$81/bbl in the US while the international Brent price is now at US$85/bbl. American crude oil stocks are running much higher than anticipated.The Kiwi dollar starts today at just on 60 USc and marginally softer than this time yesterday. Against the Aussie we are unchanged at 91.9 AUc. Against the euro we have softened slightly to 55.4 euro cents. That all means our TWI-5 starts today just under 69.3 and again little-changed.The bitcoin price starts today softer at US$68,998 and a full -1.0% dip since this time yesterday. Volatility over the past 24 hours has been moderate at just on +/- 2.4%.Over the Easter holiday break, we will have normal weekend service, and will return with these daily briefings on Tuesday, April 2, 2024.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 Tuesday.

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.And today we lead with news that is increasingly positive in the world's largest economy.First up today, the retail signals in the US are quite positive. Their Redbook survey of bricks-and-mortar store shows sales rose +3.9% last week from the same week a year ago, handily besting inflation again.A bounce back in orders for transport equipment, including aircraft, gave a more-than-expected push to their February durable goods order levels. They came in +8.9% higher than year-ago levels. The capital goods orders came in +11.8% higher on the same basis. Certainly board rooms are giving bullish signals about the future.Meanwhile, February house sales volumes rose in February. They were up a strong +9.5% from January on a seasonally-adjusted basis, but that still left these transaction volumes -3.3% lower than year ago levels. House prices rose marginally, ending a long string of month-on-month retreats that started in July 2023. It's a shift higher that others have noted too.Given this set of positives, it maybe a surprise that consumer sentiment didn't improve in the March Conference Board survey. But it didn't slip either, holding its recent levels. The current mood improved but anxiety about the future did too.The latest US Treasury 5yr note auction was very well supported, delivering a median yield of 4.19% and slightly lower than the 4.25% at the prior equivalent event a month ago. These public debt auctions are not showing any of the expected stress the doomsters anticipated by now. The lower yields are probably driven by normal market expectations of upcoming rate cuts by the Fed. Of course that doesn't mean the outlook is any better - it isn't if no action is taken by Congress to address the deficits.In Canada a measure of their wholesale trade activity rose more than expected in February.In Singapore, they reported a better-than-expected rise in manufacturing production. It grew +3.8% in February from a year ago, easily beating market expectations of a +0.5% rise. The upturn was mainly boosted by a sharp rebound in biomedical manufacturing.The UST 10yr yield will today at 4.24% and down -2 bps from this time yesterday. The price of gold will start today marginally firmer by +US$2 from yesterday at US$2177/oz.Oil prices have risen +50 USc to just under US$82/bbl in the US while the international Brent price is unchanged at US$86/bbl.The Kiwi dollar starts today at just on 60.1 USc and marginally firmer than this time yesterday. Against the Aussie we are also marginally firmer at just over at 91.9 AUc. Against the euro we have firmed slightly to 55.5 euro cents. That all means our TWI-5 starts today over 69.3 and again little-changed.The bitcoin price starts today softer at US$69,695 and a -0.8% slip since this time yesterday. Volatility over the past 24 hours has been modest 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 Tuesday’s Economy Watch where we follow the economic events and trends that affect Aotearoa/New Zealand.I'm David Chaston and this is the international edition from Interest.co.nz.And today we lead with news the American economic juggernaut rolls on, dominating global markets.American new home sales levels in February missed estimates, but ~7% mortgage interest rates basically explain that. They eased by a minor -0.3% from January to an annualised rate of 662,000, and below market expectations of a 675,000 rate.Although the Dallas Fed factory survey eased back a bit in March, it is still at levels better than for most of the past two years. A contracting oil patch doesn't really qualify as 'news' any more.Nationally, the US Chicago Fed's National Activity Index expanded in February and pushing past the January retreat. But to be fair it is in a bit of a yo-yo pattern and has been since the end of the pandemic.Recent estimates of American economic activity generally agree its economy is expanding at about a +2% (real) clip in Q1-2024. For an economy as large as their, this represents the bulk of the global economic expansion, adding more than +US$1 tln in nominal economic activity at an annualised pace. Nowhere else comes close.Interestingly, today's UST 2yr bond auction has brought slightly lower yields. It ended with a median 4.54% yield today, compared with the equivalent event a month ago at 4.64%. Investors are not demanding higher yields from these benchmark bonds despite the rise in issuance. The doomsters are still waiting for their moment – it’s been a very long time for them.In China, the IMF has noted that China needs to take a different path to recovery. It's "fork in the road" comments challenge China's standard paybook to stimulus. Presently they are using their considerable reserves to support the yuan against market challenges.In Taiwan, retail sales grew an eye-catching +9.3% in February from the same month a year ago, a sharp rise from January on the same basis. This was their sharpest growth in retail activity since June 2023. Clothing and food drove the expansion.But things aren't so bullish for Taiwanese industrial production which fell -1% from year-ago levels in February darta released overnight.We have noted the rise and rise in cocoa prices before, but they reached new extreme levels overnight, based on recent poor harvest results in West Africa. US$10,000/tonne (NZ$17/kg) beckons.The UST 10yr yield will today at 4.26% and up +6 bps from this time yesterday. The price of gold will start today firmer by +US$10 from yesterday at US$2175/oz.Oil prices have risen +US$1 to US$81.50/bbl in the US while the international Brent price is now up at US$86/bbl.The Kiwi dollar starts today at just on 60 USc and marginally firmer that this time yesterday. Against the Aussie we are -¼c lower at just over at 91.8 AUc. Against the euro we are still just on 55.4 euro cents. That all means our TWI-5 starts today under 69.3 and little-changed.The bitcoin price starts today up strongly at US$70,247 and a +7.4% rise since this time yesterday. Volatility over the past 24 hours has been very high at just on +/- 4.3%.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.And today we lead with news all eyes are on China to see if they pull the trigger on their old stimulus playbook again.But first this week, the focal point in the United States will revolve around the PCE price indexes, and data on personal income and spending. Other key data include durable goods orders, their final Q4 GDP growth reading, a key consumer confidence survey, and housing market indicators such as new and pending home sales.It will be a busy week in Japan with BoJ minutes, and data on their unemployment rate, industrial production, retail sales, and housing starts. It will be a quieter week for Chinese economic releases but it will include data on industrial profits. And markets will pay close attention to potential stimulus announcements and how authorities will let the yuan’s price shift. In Australia, February’s inflation rate is expected on Wednesday and a rise is expected, inflation expectation survey data may come in before that, while markets also await the Westpac consumer confidence survey results.And staying in Australia, there is plenty of evidence their housing market is back on a roll with an active auction market this past weekend and sales volumes high.Prices seem to be rising. Behind it all is a shortage of housing as their inward migration levels rise fast.Meanwhile the Australian central bank released its half-yearly Financial Stability Report on Friday and it concluded that while conditions will remain challenging for many households and businesses there this year, "strong conditions in the labour market, the large savings buffers accumulated by many borrowers during the pandemic and rising housing prices are helping households to adapt." The Australian financial system has a high level of resilience and is well positioned to continue to support the economy, they say.In China, incoming foreign direct investment fell more than -19% in February from a year ago, the largest fall since the GFC and far more than in the early stages of the pandemic. Recent 'legal' changes and the rise of the MSS in the Middle Kingdom is making it too tough to operate there. The trade disengagement underway isn't ending. Only US$14.3 bln arrived as investment in February about half the stunted levels on one and two years ago.Meanwhile, China is making a concerted effort to qualify for the CPTPP trade group with new 'negative list for cross-border trade in services' management. "We have proactively aligned our policies and legislation with the CPTPP rules in relevant areas and are well-prepared for market access offers in goods trade, trade in services and investment," a spokesperson said over the weekend.The recent visits by Chinese foreign minister Wang Yi to both New Zealand and Australia in an unusual 'charm offensive' by the usually prickly Wolf Warrior needs to be seen in the light of this CPTPP push.In Japan, inflation is finally embedding there. It's been a long slog to get out of deflation. Their inflation rate climbed to 2.8% in February from 2.2% in the prior month, the highest figure since last November. It has been over 2% since March 2022.Across the Pacific, although they eased in January Canadian retail sales rose in February according to an early estimate. But both shifts are minor. Hesitating car sales are behind the lackluster results.Across the Atlantic, German companies are gaining confidence, and rather quicker now. Sentiment for Europe's largest economy reached its highest point since June 2023, fuelled by anticipations of potential interest rate cuts by the European Central Bank and a gradual easing of inflationary pressures. But German consumer sentiment remains stick at low levels, generally unchanged since May 2022.The UST 10yr yield will today at 4.20% and down -2 bps from this time Saturday, and -11 bps from a week ago. The price of gold will start today firmer by +US$6 from Saturday at US$2165/oz. But that is little different to week-ago levels.Oil prices have stayed at US$80.50/bbl in the US while the international Brent price is still at US$85/bbl. These levels are also unchanged in a week.The Kiwi dollar starts today at just under 59.9 USc and marginally lower that this time Saturday. A week ago it was at 60.9 USc so a -1c fall since then. And it is the first time in four months since we have been below 60 USc. Against the Aussie we are marginally firmer at just over at 92.1 AUc. Against the euro we are still just on 55.5 euro cents. That all means our TWI-5 starts today at 69.3 and down -60 bps in a week.The bitcoin price starts today at US$65,430 and up +2.9% from this time Saturday. A week ago this price was US$68,378 so a -4.3% fall since then, 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

In five years' time we would see things we can't imagine today if the Government adopts the Commerce Commission's recommendations to boost competition for personal banking services, Commission Chairman John Small says.Speaking about the Commission's draft report from its banking market study in the latest episode of interest.co.nz's Of Interest podcast, Small says he'll be interested to see what sort of response the Commission gets from the big four banks, ANZ, ASB, BNZ and Westpac, who it says are an oligopoly who don't face strong competition."We haven't accused them of doing anything nefarious. They're responding to the incentives that are in front of them. And we think that they've settled into a particular pattern of conduct that we think should be disrupted. But we don't blame them for that," Small says."I'll be really interested to see what they do have to say about it."The Commission makes 16 recommendations in its draft report, and says they should be considered as a whole. He's optimistic about what the market for personal banking services could look like five years from now if the Government was to adopt them all. "We would see things that we just can't imagine today. So if open banking is operational within a couple of years, if Kiwibank has already been disruptive, then I think we've set the industry up for a really healthy, competitive future that will be greatly beneficial to New Zealanders throughout their economy. And that [interest] rates will be sharper, and the range of services will be much wider and the choice between providers, trusted providers, will be much wider as well. So I would see it as being really positive five years from now," says Small.In the podcast Small also discloses which three of the Commission's 16 recommendations he believes are most important. With the Commission recommending the Reserve Bank review its bank regulatory capital settings, he also discusses dialogue with the Reserve Bank about this, and wanting them to "think really carefully about the competitive aspects of their decisions."He also talks about why the big four banks don't face strong competition, what could be done to make Kiwibank a disruptive competitor, how the banking industry hasn't disrupted itself via open banking, customers moving between banks, the competitive landscape for home loans versus deposits, his take on the idea of a windfall profits tax on banks, and what a parliamentary select committee bank inquiry could probe. *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.And today we lead with that is full of unexpected data and outcomes.US jobless claims fell last week to 190,000 and this was lower than expected. The number of people still on this unemployment insurance is lower too, at just over 2 mln. Neither signals growing labour market stress.The Philly Fed's factory survey was expected to retreat in March following a good rise in February. But it surprised with another good expansion. And these heartland rust-belt manufacturers are looking ahead with surprisingly strong optimism.Existing home sales jumped and by more than expected in February, up +9.5% from January on a seasonally-adjusted basis. But year-on-year, sales declined in all regions.Meanwhile the US economic expansion kicks along. The latest internationally-benchmarked PMIs show their service sector activity growth eased to a three-month low amid reports that price pressures that had restricted customers' ability to commit to new projects, while manufacturing production expanded the most since May 2022. Overall, new orders increased but at a slower pace, while the rate of job creation ticked higher, marking the fastest in 2024 so far.We should also note that a California referendum to raise property taxes to finance 11,000 treatment beds and housing units with health care and social services for homeless people suffering from mental illnesses and addiction, has passed. This is somewhat unexpected given the range of opponents and their well-funded opposition.In Japan, March is delivering their strongest rise in private sector activity in seven months. Their factory PMI 'rose' to a smaller contraction in March while their services PMI expanded much faster. New orders featured as the driver.In India, their March PMIs showed a surging manufacturing sector, but it was still overshadowed by even faster expansion in their services sector. India is on a fast-track.The March 'flash' EU PMI is being held up to a stable level by its services sector which is still expanding and covering a continuing contraction in its manufacturing sector. Things are similar in the UK although their factory sector seems to be in better shape.And there were a set of European central bank decisions out overnight. First Turkey sharply raised its rate unexpectedly, up +500 bps to 50%! (I kid you not.) And Switzerland unexpectedly cut its key policy rate by 25 bps to 1.5%, making it the first major central bank to cut. And in between, the English reviewed and did nothing, holding their rate at its historically high 5.25%.In Australia, their labour market report for February has delivered a big surprise. Analysts were expecting a very good +40,000 rise in the employed workforce, but actually they got an extra +78,000 full time jobs in the month, plus an additional +38,000 part-time roles. Their jobless rate slipped to 3.7%. While this is 'good', we should remember that 31% of their 14.3 mln workers are still part-time, an unusually large proportion. (In New Zealand, that level is less than 20%.)Still, the jobs surge probably means any rate cuts in Australia are now further away.Australia's population is probably now touching 27 mln. It was at 26.8 mln people in September according to official data, and is growing at a record pace, fuelled by immigration and a longer life expectancy among boomers.Global container freight rates eased another -5% last week but remain unusually high because the reasons for the January surge have not gone away - drought in Panama and pirate activity in the Red Sea. Interestingly, trans-Atlantic rates are now rising while the largest falls are Chine-to-Europe. Bulk cargo rates are staying elevated.The UST 10yr yield started today at 4.28% and unchanged from this time yesterday. The price of gold will start today higher by +US$21 from yesterday at US$2157/oz but in between they surged to well over US$2200 and then fell back quickly too.Oil prices are lower today by -50 USc at just on US$80.50/bbl in the US while the international Brent price is now just on at US$85/bbl.The Kiwi dollar starts today at just under 60.5 USc and little-changed from yesterday at this time. Against the Aussie we are down nearly -½c at 92 AUc following their strong labour market news. Against the euro we are still just under 55.7 euro cents. That all means our TWI-5 starts today at just on 69.6 and essentially unchanged.The bitcoin price starts today at US$66,649 and up +3.1% from this time yesterday. Volatility over the past 24 hours has been very high at just on +/- 4.2%.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 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.And today we lead with news the Fed has held its policy rate unchanged at 5.5% but given strong signals cuts are coming - but later than markets were expecting. However they still see three cuts in 2024.The UST 10yr yield fell slightly on the news. The US dollar fell slightly too. Wall Street moved higher.Meanwhile, American mortgage interest rates rose back to just on 7% last week for their benchmark 30 year fixed rate following the prior week's surprise drop. That came as mortgage applications ticked lower again last week and are now -14% lower than the same week a year ago.China held its prime loan rates unchanged at record lows in its review yesterday. You will recall they cut its 5 year prime rate (the reference for mortgage lending) by an outsized -25% bps last month.Taiwanese export orders slumped more than -10% in February, a surprise because markets had expected a +1.3% rise following a +1.9% gain in January. But it was not to be. Orders for heavy equipment fell, especially from the EU, Japan and China, and these falls overwhelmed their rising AI chip exports.The EU sentiment rose to be less negative in its March survey. It is now at its least-weak level since February 2022, amid a gradual slowdown in inflation and optimism surrounding potential interest rate cuts by the ECB later in the year.Britain's inflation rate dropped to 3.4% in February, down from 4% recorded in both January and December and slightly below market expectation of 3.5%. It was their lowest rate since September 2021.In Australia, a recent swell in business failures in construction, hospitality and retail has pushed up the number of monthly insolvencies to the highest in almost a decade. The absolute levels aren't high, but the trend will worry officials.New Zealand has slipped one place in the World Happiness Report rankings, and now sits just outside the top ten (at #11) in 2024. Australia moved up from 12th last year to 10th this year.The UST 10yr yield started today at 4.28% and down -2 bps from yesterday. After the Fed's decision it fell to 4.25%. The price of gold will start today little-changed from yesterday at US$2157/oz.Oil prices are lower today at just on US$81/bbl in the US while the international Brent price is now just on at US$85/bbl. Both are -US$1.50 lower than this time yesterday.The Kiwi dollar starts today at just on 60.4 USc and a small -10 bps dip from yesterday. After the Fed news, it rose to 60.6 USc. Against the Aussie we are still at 92.4 AUc. Against the euro we are still at 55.6 euro cents. That all means our TWI-5 starts today at just on 69.6 and marginally firmer.The bitcoin price starts today at US$64,620 and up +1.6% since this time yesterday. Volatility over the past 24 hours has been moderate at just on +/- 2.8%. There seems to be an outflow rush underway from some key ETFs.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 tomorrow.

With a United States presidential election looming in November, Patrick Watson, Senior Economic Analyst at Mauldin Economics, says it's difficult to say what the key economic battleground will be because many voters are "living in their own realities."Speaking in a new episode of interest.co.nz's Of Interest podcast, Watson says there's not a great deal of agreement on whether the US economy is even in good or bad shape."If you ask Democrats, they mostly say the economy is fantastic. If you ask Republicans, they say the economy is terrible. I think it's somewhere in between. I think that's what the data actually shows," Watson says.The election is expected to be a rematch between incumbent Democrat Joe Biden, and his Republican predecessor Donald Trump."On the Trump side, they have not really announced a great deal of specific policy. So that's kind of a mystery. We know what the Biden administration has done and says they will do. People can like it or not like it, but they at least know. So what we do know from the Republican Trump side is he wants to further restrict immigration. He will probably resume the various trade war and tariff measures that he was doing last time and possibly more aggressively," Watson says."But again, the difficulty is people aren't operating from reality. People are operating from their own predispositions, what they think is happening. So that makes it hard to predict."Asked whether the average American is feeling as if they're doing well at the moment, Watson says this is a really interesting question."The survey data that's out there is really confusing, because when they ask people, how is your situation, how are you doing financially in your own family and household? Most people, pretty solid majorities, over 60% are saying, 'I'm great, I'm in a good spot.' But then if you ask them how do you think the economy is doing overall for everyone else, they become very bearish. They think it's terrible. So it's hard to see how both of those are true at the same time," says Watson.In the podcast Watson also talks about this week's Federal Open Market Committee (FOMC) monetary policy review and the outlook for interest rate cuts, the US inflation picture including housing's role in its stickiness, what's going on in US share markets, regional economic performance in the US, challenges in the US labour market, and the influence of the Inflation Reduction Act.

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.And today we lead with news of a week of big policy announcements with some potentially very big implications.First all eyes will be on Japan's rate review (tomorrow, Tuesday). Strong wage gains in Japan, and by much more than expected, are fueling speculation that that Bank of Japan won't wait any longer and will shift out of its negative policy rate when they meet.And the US Fed meets Thursday NZT with a review that includes economic forecasts and the so-called 'dot plot' interest rate projections. Also, in the US indicators such as Manufacturing and Services PMIs, along with building permits, housing starts, and sales of existing homes will be under review. Australia, Brazil, Turkey, Switzerland, The UK and Norway will all also be be reviewing that monetary policy positions and official interest rates. And this week we get inflation data from Canada, the UK, and Japan. Services PMIs from Australia, Japan, India, the EU are coming too this week. In China, they are scheduled to release data on industrial production, retail sales, their labour market, fixed asset investment. And their loan prime rate (LPR) reviews are on the docket as well.Chinese banks extended ¥1.45 tln in new loans in February, down from the record ¥4.9 tln in January. (January is usually a seasonal high.) The February level was basically as expected. But authorities would be disappointed it is not higher because they had taken action to encourage lending. The central bank had announced its largest-ever reduction in a key mortgage reference rate. And they signaled recently there was still room for cutting banks' reserve ratios, following a 50-basis point cut in January. Banks are finding to tougher to identify lending opportunities.China's house prices are falling, and a bit faster now according to official data. New house prices were down -1.4% from a year ago. In January the decline was -0.7%. Only seven of the 70 largest cities recorded any rise, all tiny, from a month ago. From a year ago only 13 showed rises. For resales, only two of those same 70 cities recorded a rise in February from January, none on a year-ago basis. But prices are -6.3% lower than year-ago levels and the largest fall since these records started in 2011.China's one-year medium-term lending facility (MLF) rate was unchanged at 2.5% in Friday's update.China’s national emissions trading scheme is set to expand to cover their aluminium sector as the compulsory carbon market pushes ahead to expand beyond the power sector and include more heavy emitters.Across the Pacific, American consumer sentiment is holding its recent highs in March, essentially the same as the past three months and back at levels prevailing in mid-2021. And at these current levels it is up a sharp +23% in a year.American industrial production rose (slightly) in February from January following a previous month retreat. Most of the gains were in construction activity. But it is still marginally lower (in real terms) than year ago levels.But March won't be helped by activity in the New York region. They reported a sharpish decline in their latest survey.In Canada, housing starts jumped by +14% in February from January, to 253,500 units and well above market expectations of 230,000 units, according to official data. It was the highest reading in four months.We perhaps should note that the current El Niño weather pattern is changing. The experts are saying La Niña is on its way with its cooler-than-average seawater in the central and eastern Pacific Ocean. In the past La Niña typically delivers northeasterly wind trends, bringing moist, rainy conditions to northeastern areas of the North Island and reduced rainfall to the lower and western South Island. Warmer than average air and sea temperatures can occur around New Zealand during La Niña. In Australia, rural areas typically benefit from more rainfall. But as global temperatures are elevated, maybe 'typical' reactions this time will be different. They were with the current El Niño.The UST 10yr yield starts today at 4.31% and unchanged from Saturday but it is up a sharp +29 bps for the week. The price of gold will start today -US$1 lower than Saturday at US$2156/oz and -US$30 lower than a week ago.Oil prices are little-changed at just on US$80.50/bbl in the US while the international Brent price is now just under at US$85/bbl. That is nearly +4% higher in a week however.The Kiwi dollar starts today at just on 60.8 USc and unchanged from Saturday. But that is a full -1c lower than a week ago. Against the Aussie we are still at 92.8 AUc. Against the euro we are still at 55.9 euro cents. That all means our TWI-5 starts today at just on 69.9 and unchanged as well but -40 bps lower in a week.The bitcoin price starts today at US$67,946 and a mere -0.6% slip

Kia ora,Welcome to Friday’s Economy Watch where we follow the economic events and trends that affect Aotearoa/New Zealand.I'm David Chaston and this is the international edition from Interest.co.nz.And today we lead with news American data supports the Fed's cautious approach to its monetary policy management - pushing away imminent rate cuts. Benchmark rates have risen sharply.US new jobless claims came in less than expected when a rise was anticipated. There were less than 200,000 new actual claims last week, and that takes the number of people on these benefits to under 2.1 mln. At the risk of sounding like a broken record, there is still no sign here of a wavering American labour marketBut American retail sales were up +0.6% in February from January, following an upwardly revised -1.1% fall in January and below market forecasts of a +0.8% gain. The relatively modest increase, combined with a larger decline in January, suggests a potential slowdown in consumer spending. But the February level is in fact +5.5% higher than year ago levels, pointing out the longer-term above-inflation expansion of consumer activity.Also rising are producer prices. They rose by +0.6% in February from January, marking the largest increase since last August and surpassing market expectations of a +0.3% rise. Goods prices rose by +1.2%, the most in six months, primarily driven by a surge in energy and food prices. These are not signals the Fed will likeAlthough they are definitely not at concerning levels and remain at long term average levels, American inventories are rising which will bring increased management attention at firms.We should point out that the official release on China new yuan loans seems to be delayed. Markets had expected a modest rise, but maybe it isn't like that.Meanwhile data is coming to light that the 2023 level of commercial property sales in China were unusually light, and marked by distressed sales. More than 20% of all sales were because of seller stress. And it may be more. Some non-distressed deals were made by stressed developers in need of liquidity. Nearly half of the distressed deals in 2023 were in the industrial sector. It seems the office sector's pain is yet to come.Distressed deals also have make up a high proportion of commercial real estate sales this year. In the first two months of 2024 more than 30% were distressed, and these were dominated by smaller deals.In India, Bloomberg is pointing out a rather sharp fall in their listed small-cap equities. So far in March, they have fallen -7.5% even if yesterday there was a small recovery. More than NZ$100 bln has been 'lost' in this retreat. It does point out that this market has gotten rather over-valued.Container freight rates fell another -4% last week although they remain 77% higher than year ago levels. Trans-Atlantic rates rose, but all others fell. Bulk cargo rates basically held over the past week, with the recent sharp rises ending.The UST 10yr yield starts today at 4.30% and up +11 bps from this time yesterday. We should note that the Tesla share price has fallen a very sharp +3.7% so far today. Over the past week that has compounded to a -10% drop. It is actually down more than a third so far this year.The price of gold will start today -US$15 lower than yesterday at US$2158/oz.Oil prices have risen another +US$1.50 to just over US$81.50/bbl in the US while the international Brent price is now just over US$85/bbl.The Kiwi dollar starts today at just under 61.4 USc and -20 bps softer than this time yesterday. Against the Aussie we are firm at 93.2 AUc. Against the euro we are holding at 56.4 euro cents. That all means our TWI-5 starts today at just on 70.3 and unchanged from yesterday. In fact we have been within a tight range around this level for more than two weeks now.The bitcoin price starts today at US$71,337 and down -2.5% from this time yesterday. Volatility over the past 24 hours has been moderate at just over +/- 2.5%.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 on Monday.

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.And today we lead with news China's inward turn is gathering pace as it fears foreign influence.But first, US mortgage applications rose strongly last week from the week before, up more than +6%. and that was because mortgage interest rates fell rather sharply, down nearly -20 bps in a week to go under 7% for the benchmark 30 year home loan rate for the first time in a month. Still, mortgage applications are running -11% lower than year-ago levels - and they were very weak then too.Today's US Treasury 30yr bond auction was well supported and delivered slightly lower yields than the equivalent auction a month ago, but only fractionally lower. Today's event delivered a median yield of 4.28% whereas the month-ago result was 4.31%.In China, a Beijing-directed rescue of property giant China Vanke is apparently underway. We should all hope it works. But even if it does it will take a tough toll on the Chinese economy, Shenzhen in particular.And more developers there are falling.The downstream impacts are also pretty significant. Excavator sales are down -40% from year ago levels, as an example.China's Ministry of State Security (MSS) is now increasingly focused on "food security". They are banning foreigners traveling the countryside. The MSS says “In recent years, national security agencies have cracked down various espionage activities related to food security, cutting off the "black hands" of foreign espionage targeting China's germplasm resources, preventing and addressing the risks of food security leaks, and ensuring the smooth implementation of the national food security strategy”. That will put paid to the normal global method of sending analysts into the field to assess upcoming grain and crop harvest (something necessary because satellite photos can't yet assess yield prospects - you need to be in the field.) Without that sort of crop intelligence from a major producer (China), global seasonal food planning is going to be far less accurate.EU industrial production plunged -2.1% in January from December, marking a stark reversal from the downwardly revised -1.6% retreat recorded in December and faring much worse than market projections of a -1.5% decline. It was the sharpest contraction in activity since March 2023. Worse, it is now down -5.7% in a year. Anywhere that would be a lot. In an economic bloc as large as the EU, that is enormous. In fact, Ireland recorded an eye-popping -34% decline.Media reports say that PwC Australia is cutting another 5% of its staff and partners, a culling of more than -300 jobs as a result of the tax scandal that engulfed the firm in early 2023. The job cuts come on top of 338 announced in November. And after they hived off its advisory business. About 1,400 PwC Australia staff moved over to the new firm which was renamed Scyne Advisory.And staying in Australia, prudential regulator APRA has cleared NAB (BNZ's parent) of having to hold extra capital due to inadequate governance issues. But is is strangely silent on both Westpac and ANZ who are also facing this capital penalty. CBA (ASB's parent) was never on the APRA radar.China has proposed easing the punitive tariffs on Australian wine, imposed as part of their displeasure at the Morrison government’s foreign policies. But that pullback does not apply to Australian beef - not yet anyway.The UST 10yr yield starts today at 4.19% and up +3 bps from this time yesterday. The price of gold will start today +US$8 firmer than yesterday at US$2173/oz.Oil prices have risen +US$1.50 to just under US$79.50/bbl in the US while the international Brent price is now just over US$83.50/bbl.The Kiwi dollar starts today at just on 61.6 USc and marginally firmer than this time yesterday. Against the Aussie we are soft at 93 AUc. Against the euro we are holding at 56.3 euro cents. That all means our TWI-5 starts today at just on 70.3 and unchanged from yesterday.The bitcoin price starts today at US$73,189 and up +3.7% from this time yesterday. Volatility over the past 24 hours has been high at just under +/- 3.5%.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.

The "cheer squad" make it hard to have a proper debate on housing, especially when looking to address the question of what we want from the housing market from a public policy perspective.So says Cameron Murray, Chief Economist at Fresh Economic Thinking, a new Australian think-tank. In the latest episode of interest.co.nz's Of Interest podcastMurray talks about housing and his new book The Great Housing Hijack. He describes the housing markets and attitudes to housing in Australia and New Zealand as "culturally very similar in terms of the attitude to housing."Murray, who has been a real estate agent, property investor and worked for FKP Property Group, says his book title essentially describes the state of the public debate in housing."There are so many vested interests, so many different groups and hobby horses that have lobbied, professionally or not for many decades, that it is very hard to have a straight conversation about housing in a public forum. So that is the housing hijack," he says."The housing hijack is all about what I call in the book the cheer squad, these noisy people on the sideline distracting us from the game of housing and, rather than understanding the plays and the strategy of the game, we're getting distracted by the noise of the cheer squad."In the podcast Murray talks about why we should acknowledge the post-World War II to mid-1970s period was an unusual golden age in housing, what he sees as the five housing market equilibria, why he doesn't believe simply freeing up land and loosening zoning rules to enable housing supply is the silver bullet, KiwiBuild and the politics of housing.Murray proposes HouseMate, a parallel public homeownership system alongside purchase and rental in the private property market. It would offer non-property owner citizens the option to buy a home from a public provider at a cheap price."The reason to propose this is simply that I couldn't find any examples anywhere in history or anywhere in the world where we'd sold housing for that group, that 10% or 15% of people who are renters, who are getting squeezed every time the market adjusts and people's incomes are rising. I couldn't find any examples where those people's housing had been improved without a public option of some sort. Whether that's regulated rental, like Vienna, where there's massive council housing and it's somewhat universal, anyone can access it. Or whether it's public housing home ownership, which is more of a Singapore type approach. Europeans have long term rental, but I think culturally, the Australians and the Kiwis would go for a home ownership type approach," he says."At the end of the day, we have to accept the economics that there is a subsidy exactly equal to the difference between the market price and what you get people into that home at. There is no sneaking around this economically.""If I could find a way to just change zoning regulations and taxes and make housing cheap for those people, I would do it. Like, who wouldn't? It would be so easy. But I've spent decades looking around trying to understand housing, and in the last four years looking for examples around the world, and I just can't find them. I'm sorry. So we have to do it the hard way," says Murray.*You can find all episodes of the Of Interest podcast here.

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.And today we lead with news the never-ending car crash that is China's residential property development sector, took another bump today.But first in the US, their inflation rate unexpectedly edged up to 3.2% in February, compared to 3.1% in January and above forecasts of 3.1%. The closely-watched core inflation rate slipped to 3.8% when it was expected to come in at 3.7%. And it will not have escaped the market's notice that the +0.4% monthly rise from January was the same as the prior month and the highest since April 2023. That means the recent pressure is building again.These misses bolster the Fed's view that they need to be patient to get conditions where consumer inflation actually will fall into its target range before they start cutting rates.The Redbook index of retail rates in the US rose +3.0% last week from the same week a year ago, and not quite enough to cover inflation..There was a well-supported US Treasury 10yr bond auction today which saw a median yield achieved of 4.10% and that was actually not too different to the same auction a month ago where the median yield was 4.04% pa.India's January industrial production came in lower than expected, rising +3.8% from a year ago when a 4.1% rise was expected , and down from +4.2% in December. The heady growth they reported most months to October now seems to have been exhausted, although expansions at the current lower level will still be looked on with envy by others. India's CPI inflation remained stuck at 5.1% in February.India's car sales rose +9.5% in February from a year ago, also an easing from the +14% rise in January. Over the past year, 3.6 mln passenger vehicles were sold, a far smaller market than the US (18 mln) or China (22 mln).China's property sector has taken another blow. State-backed property development giant Vanke had its investment-grade rating stripped by Moody's overnight who warned of potential further cuts, predicting credit metrics and liquidity will weaken because of falling home sales and funding uncertainties. Immediately, Vanke went into talks with banks (State-owned banks) on a debt swap that should help them stave off it’s first-ever bond default. Earlier this week they felt compelled to announce that they had made the most recent bond repayment. But the obligations ahead look daunting.As expected, the German inflation rate eased to 2.5% in February, down from 2.9% in January and 3.7% in December. Inflation-control progress is coming fast in Europe's largest economy, even if it is at the expense of demand.Not expected was a fall in British employment in January and a rise in their jobless rate.In Australia, the NAB business sentiment survey reported that business conditions rose in February, signalling their economy has remained resilient in the new year but inflation is still a challenge despite slowing growth. Business confidence fell slightly however, as firms struggled to deal with the combination.Russia's invasion of Ukraine caused wheat prices to spike. But that is over now with prices falling to a four year low and back to levels we had in the 2015-2020 period. Buyers rule. And now China is cancelling purchase contracts from the US - and at a rate faster than usual. This is because it can buy supplies cheaper elsewhere.The UST 10yr yield starts today at 4.16% and up +6 bps from this time yesterday in a rising market. The price of gold will start today -US$13 lower than yesterday at US$2165/oz.Oil prices have firmed less than +50 USc just under US$78/bbl in the US while the international Brent price is now just over US$82/bbl. These minimal changes come even after Russia suffers broad strikes on its oil refineries by Ukraine, as Ukraine tries to balance its resources deficit compared to the invader.The Kiwi dollar starts today at just on 61.5 USc and nearly -¼c lower than this time yesterday. Against the Aussie we are soft as well at 93.2 AUc. Against the euro we have slipped to 56.3 euro cents and -20 bps lower. That all means our TWI-5 starts today at just on 70.3 and also -20 bos lower.The bitcoin price starts today at US$70,562 and down -2.6% from this time yesterday. Volatility over the past 24 hours has been moderate at just 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 Tuesday’s Economy Watch where we follow the economic events and trends that affect Aotearoa/New Zealand.I'm David Chaston and this is the international edition from Interest.co.nz.And today we lead with news about how hard it is to get the 'last mile' of above-policy inflation accomplished.American consumer inflation expectations for the year ahead remained stuck and sticky at 3% in February, the same as in the previous two months, and holding at three-year lows. But is it enough for the Fed? Of some concern is that inflation expectations for 3 and 5 years ahead are rising, but only toward that same 3% mark. Clearly there is work to do to quell these expectations. The next big watch is on the actual February inflation and that comes tomorrow. Markets expect 3.1% with a core at 3.7% - in other words, no progress lower.There was a UST 3yr bond auction today and that was very well supported. The median yield came in at 4.15% and only marginally higher than the 4.09% at the equivalent auction a month ago. There seems no sign investors are either pulling back, or demanding sharply higher yields. Demand remains high, yields are as you would expect.The earlier official reports that Japan had slipped in to recession have proven incorrect. Their revised and updated data shows in fact it expanded at a healthy rate, driven by strong capital expenditure in the business sector. Private consumption, which accounts for more than half of Japan's GDP, remained weak at -1.0%, slightly worse than the preliminary -0.9% decline.All eyes are now turning to the next Bank of Japan meeting this time next week. Markets are increasingly expecting them to signal the end of their ultra-low (negative) interest rate policy, one they have had in place for eight years now.China's vehicle sales slumped in February, down -20% from the same month a year ago. But that comes after an exceptionally strong January. Combining the two months, overall vehicle sales in the world's largest market rose +11% to 4 mln units when you look at them both, with the NEV segment rising +29%.Indian vehicle sales for February are now awaited. They too come off very strong gains in January (+14%).In Australia, the peak body representing financial regulators, The Council of Financial Regulators, (The RBA, APRA, ASIC and the Australian Treasury) released the points they are talking about in a quarterly statement. The main issue seems to be the rise of hardship among borrowers, and the increase in the share of households who had fallen behind on loan payments (although from historically low levels).And since the start of 2024, the iron ore price has fallen almost -20% - largely because of falling expectations China will deploy its traditional infrastructure stimulus as a way to reinvigorate its stuttering economy. It's new focus on "high quality development" won't be minerals-intense.The UST 10yr yield starts today at 4.10% and up +2 bps from this time yesterday. The price of gold will start today little-changed from yesterday at US$2178/oz.Oil prices have stayed at just over US$77.50/bbl in the US while the international Brent price is now just under US$82/bbl.The Kiwi dollar starts today at just on 61.7 USc and little-changed from this time yesterday. Against the Aussie we are firmish at 93.4 AUc. Against the euro we have held at 56.5 euro cents. That all means our TWI-5 starts today at just on 70.5 and now unchanged over the past five days.The bitcoin price starts today at US$72,448 and up +4.0% from this time yesterday. Volatility over the past 24 hours has been very high at just under +/- 4.0%.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.And today we lead with news China seems to have managed to arrest its deflationary mood with solid consumer spending in their Lunar New Year holiday.But first, in the week ahead, we get the important US CPI inflation rate on Wednesday, along with retail sales, producer inflation, the Michigan consumer sentiment index, and industrial production data this week.In Japan we will get a Q4-2023 GDPO update and it will likely be more positive than the shrinking first estimate. In Australia, the NAB business confidence index will also come this week. Also, the inflation rate for India is due along with its industrial production data.From China, the focus this week will be on monetary indicators including new yuan loans, car sales, and the house price index. They will also review their one-year medium-term lending facility rate.In China over the weekend they reported February consumer prices and they rose by +0.7% from the same month a year ago, above market forecasts of an expected +0.3% rise and a turnaround from the sharpest drop in over 14 years of -0.8% in January. Seven of their past twelve months have reported zero inflation or deflation. The latest result was the first positive consumer inflation since last August, hitting its highest level in 11 months. This was due to better Lunar New Year holiday spending. Food prices declined the least in eight months. Beef prices fell but lamb prices turned up from the prior month. Milk prices are still falling however.Meanwhile they still have producer price deflation. This sector is wallowing in -2.7% deflation, marginally more in February than January. A year ago their PPI ran at -1.4%.Another large property developer is showing signs of struggle. And they aren't the only one. The issue is spreading into signs of stress in the local government bond market now.Separately China's Ministry of Finance data shows that interest on debt obligations are rising fast for the Chinese government - in fact a jump of +7.8% in interest payments this year is a bigger relative rise than for their defense spending (+7.2%). If, as some expect, Beijing suffers a ratings downgrade this year from "A1", that cost will only grow.Taiwanese exports are still expanding on a year-on-year basis, although not as fast in February as they recorded in January. After a longish run of decreases, this is the fifth month in the past six where exports have risen.Japanese household spending fell more sharply than expected and continuing a run of retreats, this one the largest in six months. Japanese policy makers might be a bit worried about this latest data trend.Across the Pacific and at the headline level, the American economy added +275,000 jobs in February, beating forecasts of +200,000 and higher than a downwardly revised +229,000 in January. But their unemployment rate ticked up as more people joined their labour force, and wage growth slowed.Behind the headline numbers (and looking at actual rather than seasonally adjusted numbers), employer payrolls rose by +1.1 mln to 156.5 mln people now employed. That is +2.7 mln more than a year ago. The household survey, which includes self-employed people, rose +665,000 from the prior month to 160.3 mln, and up +602,000 from a year ago. The shift from self-employment to payroll employment continues.American consumer debt rose by nearly +US$20 bln in January, following a +US$1.6 bln rise in the previous month and way above market expectation of a +US$9 bln rise. Revolving credit, like credit cards, increased by +7.6% on an annualised basis from the previous month. Non-revolving credit, typically auto and student loans, rose by +3.6% on the same basis).According to the USDA's March World Agricultural Supply and Demand Estimates, the Chinese might be back buying soybean in larger volumes, suggesting the Chinese are struggling with expanding their local output. The same report reveals American beef imports are rising. And that American milk production is slowing.Canada also released labour force data over the weekend. They added +40,700 jobs in February, following a +37,300 rise in January. This was double the forecasted +20,000 increase. February brought a notable bounce back (and more) of full-time positions, up + 70,600, while part-time jobs decreased by -29,900..German industrial production rose +1.0% in January (in 'real' terms) from December but that still leaves it -5.5% lower than the same month a year ago.The UST 10yr yield starts today at 4.08% and down -1 bp from Saturday. The price of gold will start today down -US$7 from Saturday at US$2179/oz and just off its record high. But that is a +4.9% rise for the week. Why is the gold price rising just now? Some think it is new demand out of China as investors there start to fret that the economic management by

Kia ora,Welcome to Friday’s Economy Watch where we follow the economic events and trends that affect Aotearoa/New Zealand.I'm David Chaston and this is the international edition from Interest.co.nz.And today we lead with news we seem to be "not far" from getting interest rate cuts from the central banks in the US and Europe - and perhaps an unusual hike from Japan.Tomorrow we get the important February US non-farm payrolls report, and today there are more precursor updates.The number of people claiming unemployment benefits for the first time in the US was 213,000 last week, slightly more than in the previous week. That is down from 238,000 new claims in the same week a year ago. All up, there are now just over 2.1 mln people claiming these benefits, a minor increase from a week ago and a year ago.US-based employers announced plans to cut 84,638 jobs in February, the most in eleven months, compared to 82,307 in January, and 77,770 a year earlier. It is also the highest February total for the month since 2009. But it is still just a rounding error in the perspective of a 161.2 mln employed labour force.American export values were little-changed in January, marginally more than in December but marginally less than in January 2023. Their goods and services deficit rose slightly in the month, but over the past year is a massive -17% lower than in the prior year. It has fallen from a manageable -3.5% of GDP to a much better -2.8% of GDP now. (The New Zealand goods and services trade deficit is -4.1% of our GDP.)There was more Powell testimony to the US Congress today, this time to a Senate committee.In the US, Google may have had its key AI code stolen and passed to China. And sadly, this case will reinforce nationality stereotyping that is growing in the US-vs-China rivalry.In Japan, worker earnings rose by 2.0% in January from the same month a year ago, rising from a +1.0% gain in December and posting the highest reading in seven months. That is triggering talk that a central bank rate hike may be in the offing. It did that last seventeen years ago.China's exports surged higher in the January-February period they report at the start of the year. This is not only good news for them, but it also indicates global demand is rising, and probably by more than we might otherwise have assumed. But we should probably also note it is off a quite low base in the same period in 2023. New Zealand received +7.7% more exports from them, but they bought -14.9% less from us in the period.One consequence? China's FX reserves inched higher.The Malaysian central bank kept its overnight policy rate at 3% in its latest monetary policy review.As expected, the ECB kept its main policy rate unchanged at 4.5%, at its overnight review. And it is keeping up its quantitative tightening program at the same pace. But they lowered their inflation forecast, and their growth forecasts, and signaled that they might cut rates in July.Meanwhile, German reported that factory orders fell worryingly sharply in January to be -12% lower than the same month a year ago.In Australia, lending for housing fell more than expected in January, trimming their year-on-year rise to +8.5%. For owner-occupiers, the monthly drop was -4.6% taking the year-ago change to just +3.4%.Global container freight rates fell another -6% last week but remain +82% higher than year ago levels. The pressures remain even if an easing trend is building. Freight rates for bulk cargoes are still rising however and are now +70% higher than year-ago levels.The UST 10yr yield starts today at 4.12% and up +3 bps from yesterday. The price of gold will start today up another +US$11/oz at US$2156/oz and another new record high.Oil prices are down -US$1 at just over US$78.50/bbl in the US while the international Brent price is now just over US$82.50/bbl.The Kiwi dollar starts today at just on 61.7 USc and another overnight gain of +¼c. Against the Aussie we are still at 93.3 AUc. Against the euro we have firmed slightly to 56.4 euro cents. That all means our TWI-5 starts today at just on 70.5 and up about +10 bps.The bitcoin price starts today at US$67,389 and up +1.0% from this time yesterday. Volatility over the past 24 hours has been modest at +/- 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.And today we lead with news the US Fed says it needs to see more progress on inflation before it considers a rate cut. But they hinted that a cut could be coming later this year. That was enough to see markets worldwide start pricing that in. Benchmark interest rates retreated everywhere.But first in the US, there was actually quite a jump in mortgage applications last week after the prior week's unusual fall. And this latest week more than made up for that prior retreat. That came despite the benchmark 30 year mortgage interest rate staying up above 7%.In its precursor reports, ADP said private businesses in the US hired an extra +140,000 workers in February, following an upwardly revised +111,000 in January, but slightly below forecasts of +150,000. Services companies were responsible for +110,000 of those extra jobs, while goods producers added +30,000.Meanwhile, the number of job openings went down by -26,000 from the previous month to 8.863 mln in January, the lowest in three months and below the market consensus of 8.9 mln. Still, this data lags current conditions in a way the jobs reports don't.These American labour market updates came ahead of Saturday's (NZT) February non-farm payrolls report which is currently expected to deliver a +200,000 increase on top of the very strong +353,000 January rise.It would be appropriate to start reducing the Fed funds rate at some point this year, but only when there is greater confidence that inflation is sustainably moving towards the 2% target, Federal Reserve boss Powell said in his semiannual Monetary Policy Report to Congress. “Reducing policy restraint too soon or too much could result in a reversal of progress we have seen in inflation and ultimately require even tighter policy to get inflation back to 2%,” he noted. But markets moved past that caution almost instantly, with benchmark rates falling, equity prices rising, and the US dollar easing.The Fed releases its February Beige Book survey results at 8am NZT and if there is anything notable in that we will update this item.North of the border, the Bank of Canada delivered the expected no-change rate decision, holding its policy rate at 5% and saying it is in no hurry to cut.We should perhaps note that the South Korean inflation rate ticked up above 3% again in February. They are having "last mile" problems too.China has appointed a known hard-man to head its Securities Regulatory Commission who is determined to stamp out unwanted behaviours. Traders are going to have to be very careful they adopt the Party narrative in their trading actions. Only 'up' is now likely to be tolerated.India says it is looking at a growth rate this year of about +8%.Perhaps surprising some, the volume (ie real) of retail sales in the EU rose in January from December. But they are still lower than year-ago levels.Readers of this column will recall us suggesting the the good Australian current account data was likely enough to ensure a good Q4-2023 growth outcome for economic activity (GDP) in Australia. Well that was a misplaced reading. The GDP data today disappointed many, with real economic activity up just +0.2% in the quarter, up +1.5% over the year. Clearly, the contribution from households was lower than expected amid budget and rate pain. And without that strong current account data they may have had to book a contraction.The global airline industry is claiming that the passenger travel market was nearly fully recovered from the 2020 pandemic in January with 'resilient' growth in both domestic and especially international travel volumes.The UST 10yr yield starts today at 4.09% and down -6 bps from yesterday. The price of gold will start today up +US$19/oz at US$2145/oz and another new record high.Oil prices are up +US$1.50 at just on US$79.50/bbl in the US while the international Brent price is now just under US$83.50/bbl.The Kiwi dollar starts today at just on 61.4 USc and an overnight gain of +½c. Against the Aussie we are down -¼c at 93.3 AUc as the Aussie rose more. Against the euro we have risen to 56.3 euro cents. That all means our TWI-5 starts today at just on 70.4 and up +20 bps.The bitcoin price starts today at US$66,709 and up almost +2.0% from this time yesterday. Volatility over the past 24 hours has been extreme at +/- 6.6%.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 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.And today we lead with news that with a few notable exceptions, commodity prices are soft across the board.The overnight dairy auction brought a -2.3% retreat, principally because the powder prices fell. WMP was down -2.8% and SMP was down -5.2%. However cheese was up +4.0%, that only ingredient to show a gain. The overall decline was the first in the first of the year and the only significant one in the past 15 events. Last week's GDT Pulse event's retreat signaled that this correction was on the cards. One retreat in 15 isn't significant however at this point and it is unlikely it will cause any analyst to change their forecast payout levels.Last week's retail sales in the US rose +3.0% from the same week a year ago, on a same-store basis, just enough to stay ahead of inflation. The American middle class is still creating the core consumer demand that essentially powers the global economy.But the same was not true for factory orders in January, which were down -1.6% on that same basis. From December they fell at a sharper pace.However, the American services sector was still expanding in February, even if it was marginally back off the fast pace in January. And this expansion was confirmed in a separate internationally-benchmarked services survey.And their logistics industry is expanding faster too, indicative of rising commercial demand in February.Encouragingly, American vehicle sales rose to a 15.8 mln annualised rate in February, an almost +6% gain on January's rate. And that puts them above the recent long run average.A major set-piece meeting of the People Congress in Beijing has seen them set an "about +5%" growth target for 2024. But even the Premier who delivered the target acknowledged it will be a reach. But analysts see it as a "target without a Plan". Without such a plan, there is unlikely to be any support for global commodity prices. The sharp retreat of foreign investment is drawing calls for 'action' to reverse the slide.Lower energy costs (and energy intensity) are still driving down EU producer prices. Industrial producer prices in the Euro Area decreased by -8.6% year-on-year in January, but that was a moderation from a revised -10.7% drop recorded in the preceding month.Australia delivered a bumper current account surplus in Q4-2023 or +AU$11.8 bln, much more than was expected. This was their best 2023 quarter, taking the annual current account surplus to +AU$31.9 bln. That probably means their Q4-2023 GDP activity will be positive too, helped by a slump in imports and less Aussies making overseas trips. Australian Q4 GDP results will be released later today.And staying in Australia, their competition authorities have decided not to appeal their loss in the case that overturned their block on the ANZ-Suncorp banking acquisition.January air cargo data was released overnight and it pointed to rising demand and a strong start to 2024. International cargo demand was +20% higher than year ago levels, even better in the Asia/Pacific region.The UST 10yr yield starts today at 4.15% and down -8 bps from yesterday. The price of gold will start today up +US$9/oz at US$2126/oz. That is another new record high.Oil prices are down -50 USc at just over US$78/bbl in the US while the international Brent price is now just over US$82/bbl.The Kiwi dollar starts today at just on 60.9 USc again, marginally softer. Against the Aussie we are holding at 93.6 AUc. Against the euro we have eased fractionally to 56.1 euro cents. That all means our TWI-5 starts today at just on 70.2 and down another -10 bps.The bitcoin price starts today at US$65,430 and down -2.8% from this time yesterday. At one point it did hit a record high in the past 24 hours but has backed off since. Volatility over the past 24 hours has been high at +/- 3.4%.You can find links to the articles mentioned today in our show notes.You can get more news affecting the economy in New Zealand from interest.co.nz.Kia ora. I'm David Chaston. And we will do this again tomorrow.

Kia ora,Welcome to Tuesday’s Economy Watch where we follow the economic events and trends that affect Aotearoa/New Zealand.I'm David Chaston and this is the international edition from Interest.co.nz.And today we lead with news that non-China Asia seems to be on the rebound, and it is not just India driving it.Japanese corporate spending on plant and equipment in Q4-2023 jumped an unprecedented (and surprising) +16.4% from the same period a year earlier. It was very much more than was expected and will ease some concerns about weak domestic demand. Companies are clearly looking ahead with optimism. It is not as though it is off a low base; a year ago they reported a very creditable +8% rise. This latest gain is the largest since this data series started in 2009.In South Korea, their PMI factory survey shows conditions continued to improve during February. They have a sustained expansion in both output and new orders amid the launch and manufacture of new products, while also seeing a boost in confidence. Payrolls are rising too.In Australia, they got some disappointing building consent data for January, particularly for building new houses. Apartments seem ok. Levels were weaker than expected, recording a -1% decline vs expectations of a +4% rise from the prior month. These consent levels were coming off a sharp fall in December which was revised sharply lower. The absence of a rebound and the approvals detail suggest there has been an underlying weakening, although we should to be careful with housing data over the summer holiday period.The IEA released its 2023 Global Emissions Report overnight. Emissions increased by +410 million tonnes, or 1.1%, in 2023 – compared with a rise of +490 million tonnes the year before – taking them to a record level of 37.4 billion tonnes. An exceptional shortfall in hydropower due to extreme droughts – in China, the United States and several other economies – resulted in over 40% of the rise in emissions in 2023 as countries turned largely to fossil fuel alternatives to plug the gap. Had it not been for the unusually low hydropower output, global CO2 emissions from electricity generation would have declined last year, making the overall rise in energy-related emissions significantly smaller.Total advanced economy GDP grew +1.7% but emissions fell -4½%, a record decline outside of a recessionary period. Having fallen by -520 Mt in 2023, emissions are now back to their level of fifty years ago in these advanced economies. Total CO2 emissions from energy combustion in the United States declined by -4.1% (-190 Mt) despite its drought and hydro hesitations, while the economy grew by +2.5%. Two-thirds of the emissions reduction came from the electricity sector. More from the IEA here.The UST 10yr yield starts today at 4.23% and up +4 bps from yesterday. The price of gold will start today up +US$35/oz at US$2117/oz. That is a new record high, eclipsing the previous all-time high of US$2,087 at the end of 2023 by +1.5%.Oil prices are down -US$1 at just over US$78.50/bbl in the US while the international Brent price is now just over US$82.50/bbl.The Kiwi dollar starts today at just on 61 USc again, little-changed. Against the Aussie we are holding at 93.6 AUc. Against the euro we have eased to 56.2 euro cents. That all means our TWI-5 starts today at just on 70.3 and down about -10 bps overnight.The bitcoin price starts today at US$67,311 and up +7.2% from just yesterday. That is another big gain and puts it just about its all-time high in November 2021. Volatility over the past 24 hours has been very high at +/- 4.0%. (It is very volatile as we record this, so it has likely changed again since.)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.And today we lead with news the world's factories are signaling quite varied status indications. But overall February saw global manufacturing show signs of renewed vigour. Output expanded for the second successive month, supported by the first increase in new order intakes since June 2022. The outlook remained broadly positive overall, with optimism regarding the year ahead staying close to January's nine-month high.But first this week, all eyes will be on the US non-farm payrolls report but not until Saturday NZT. Markets currently expect it to expand by another +200,000. Prior to this other American labour market indicators will be release like the JOLTS report and the layoff survey. The US will also deliver factory order data and Fed speakers will be out in force while the Fed itself reports to Congress on monetary policy.Separately the Bank of Canada and the ECB will deliver rate reviews. Others will report trade, inflation and PMI data. Locally there is not much big data released although the Tuesday release of 2023 household expenditure survey results will be interesting, both for what they say, and what they don't.In China there were two PMI surveys out. The official factor one wasn't very optimistic but the private Caixin version reports improving and expanding factory conditions. It is more understandable in China why the two might vary. The official one focuses on large state organisations, the Caixin one more on private businesses. Still, the results are opposite to what you might have expected. The official version also covered their services sector and that part reported an improving expansion.In China, it now seems it is news that a large property developer actually is able to make payments on their bonds. Also in their news is that you can get arrested for asking local government authorities to pay their debts.It will be no surprise, the Indian PMI rose in February, complementing its economic expansion.But the Japanese PMI reported 'deteriorating' factory conditions.After a sharp +18% jump in January, South Korean exports were expected to rise only modestly (less than +2%) in February on that same basis. But they rose almost +5% on the year-on-year basis pointing to resilience in export demand for them. Much lower imports (due to lower oil prices) enabled them to book a sharp rise in their trade surplus.With an unexpected fall in new order levels, the widely watched American ISM PMI dipped deeper in contraction in February. The companion internationally benchmarked Markit PMI (now called the S&P Global PMI) told a very different story however in the same market, swinging up sharply to an expansion, and one this survey hasn't had since mid-2022. The driver? Well, it was a surge in new orders. The two surveys could not have been more different this month, an unusual set of views.The widely-watched University of Michigan consumer sentiment survey for February is clearly upbeat however. Although consumer sentiment moved sideways in the month, slipping just two index points below January, it is holding the gains seen over the past three months. Expected business conditions remained substantially higher than six months ago. And long run expectations are much higher too.EU (Euro Area) inflation fell in February but not by as much as expected. It is now at 2.6% pa on falling energy costs. Like everyone, they are finding the "last mile" hard to achieve. Meanwhile the Euro Area jobless rate fell to a record low 6.2%. But these days, governments get little credit for keeping employment high even when economic activity wavers. But in the sweep of economic history, it is a remarkable factor.However, the Eurozone PMI does not make for happy reading.The UST 10yr yield starts today at 4.19% and up a marginal +1 bp from Saturday but down -6 bps from a week ago. In fact that is near a three week low. The price of gold will start today at Saturday's higher level of US$2082/oz. And that is also up from US$2038/oz a week ago.Oil prices are little-changed at just over US$79.50/bbl in the US while the international Brent price is now just under US$83.50/bbl. Both are +US$3 higher than a week ago. In a bid to try and raise the price, OPEC has extended its production cuts.The Kiwi dollar starts today at just on 61 USc and little-changed from this time Saturday. But that is -1c lower than this time last week. Against the Aussie we are holding at 93.6 AUc. Against the euro we have firmed slightly to 56.4 euro cents. That all means our TWI-5 starts today at just on 70.4 and little-changed from Saturday, but down about -100 bps in a week.The bitcoin price starts today at US$62,810 and up +1.3% from this time yesterday. But it is up more than +US$10,000 in a week or +25%. Volatility over the past 24 hours has been modest at +/

China's economy remains mired in a post-Covid hangover like much of the rest of the world, but the technology, catering and tourism sectors are encouraging, according to David Mahon.Mahon, the Beijing-based Managing Director of Mahon China Investment Management, spoke to interest.co.nz in the latest episode of our Of Interest podcast.The relative weakness of the Chinese economy, compared to its rapid expansion of recent decades, amid ongoing concerns about the property market and deflation, has been making international headlines. Mahon says some of what's going on isn't dissimilar to elsewhere in the world."We're going through a period of the post-Covid hangover that the whole world is still going through. We talk about China in isolation. Look at global consumption, look at New Zealand growth rates. They're not great. This is normal. The pandemic was huge. Even the Second World War didn't touch every human being on the planet with the same hand of fear, with the same uncertainty. So I think we need to be patient with ourselves, we need to be patient with the global economy and therefore a little bit with the Chinese economy," Mahon said."The isolation, the closure of China for three years had a huge impact. And there are losses and there are contradictions in the system that have been highlighted that really are a challenge to the Government."Nonetheless he suggests the technology sector is a good engine for the Chinese economy."And also given the fact that China is being isolated on technology, there is a strategic reason why China will push that further. So I can see some strong engines. The other one is catering and tourism. Catering is very good for New Zealand because it means that Fonterra will be selling its products to the food services sector," said Mahon.I also asked Mahon about New Zealand's new government flirting with joining AUKUS, the Australia-United States-United Kingdom security partnership, and what sort of impact this could have on NZ's relationship with China including our trade relationship. This issue gathered momentum after Foreign Affairs Minister Winston Peters and Defence Minister Judith Collins met with their Australian counterparts in early February."If New Zealand were to join AUKUS in any form, whether it was phase one or two, it would have an impact, definitely, and it would be a major sign of a change in [NZ] policy of perhaps two generations. So I think we have to wait to see what [Prime Minister] Christopher Luxon says rather than what Winston Peters and Judith Collins say," said Mahon. In the podcast Mahon talks further about the NZ-China relationship, the China-US relationship, the Chinese economy, tensions over Taiwan, the Xinjiang region and the Uyghurs, President Xi Jinping's power, Chinese consumers, the middle class, the potential for more monetary and/or fiscal stimulus in China and more.*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.And today we lead with news India is the world's bright economic star at the moment.But first in the US, the actual number of people claiming jobless benefits fell last week, but by less than expected to 194,000. Continuing jobless claims were unchanged at 2.1 mln, still the highest since November. It was a mixed picture. Seasonally these levels are higher than was expected.American PCE inflation for January came in at the expected 2.4% which was a dip from the December 2.6%. Core PCE dipped slightly too. Personal income jumped an outsized +1.0% in January from December which puts it +2.1% higher than a year ago (real), while personal spending rose +0.3% on the same basis, also +2.1% higher than a year ago (also real).The Chicago PMI fell again, its third straight fall. But there was a sharp recovery in the Kansas City Fed factory survey although new order growth was flat.American pending home sales in January dropped -4.9% as the residential sector stays in the doldrums. The Northeast and West posted monthly gains in transactions while the Midwest and South recorded losses. All four U.S. regions registered year-over-year decreases.Canada data for Q4-2023 GDP shows them returning to growth.Japanese industrial production disappointed in January, coming in -1.5% lower than a year ago. Meanwhile, retail sales in Japan rose +2.3% year-on-year in January, slowing slightly from an upwardly revised +2.4% gain in December.Meanwhile, Taiwanese retail sales grew just +0.3% year-on-year in January, the lowest expansion since February 2022. But Taiwanese industrial production surged in January, up +16% from a year ago.India released its Q4 GDP results beating both forecasts and the strong Q3 expansion, to be +8.4% larger than the same quarter a year ago. The Indian economic performance is a strong global highlight. It is impressive given how large it is, a famously difficult place to generate change. (But we probably should be a bit sceptical on this data. The Modi Government has a tight control over their stats, and an election is looming. Just saying ...)But there are never any contested elections in China. China's per capita gross national income declined in US dollar terms for the first time in 29 years in 2023, data released yesterday shows, pulling it further from the World Bank's threshold for a high-income country. The comparison with India will be causing some concern in Beijing now. China's solution to their woes? More state planning and directed SOE activity. They seem a bit lost at the moment.The -1.4% decline in real German retail sales continued in January. But that seems to be the price they are prepared to pay to get inflation back to where they need it. In February it fell to +2.5%, its lowest since mid 2021. In between it peaked at almost +9%.In Australia, the January retail sales brought a modest bounce, but not to a level that satisfied anyone.Container freight rates eased again last week, but remain very high for the usual climate (Panama) and security (Suez) restriction reasons. They are still almost +90% higher than year ago levels. Bulk cargo rates are rising now too, up a sharp +24% in the past week alone.The UST 10yr yield starts today at 4.25% and down -4 bps from this time yesterday. The price of gold will start today up +US$13/oz from yesterday at US$2045/oz.Oil prices are up +US$1 at just under US$79/bbl in the US while the international Brent price is now just over US$82.50/bbl.The Kiwi dollar starts today at just on 60.9 USc and little-changed from this time yesterday. Against the Aussie we are down marginally at 93.7 AUc. Against the euro we have firmed slightly to 56.4 euro cents. That all means our TWI-5 starts today at just over 70.3 and little-changedThe bitcoin price starts today at US$62,275 and up +0.82% from this time yesterday. Volatility over the past 24 hours has been high at +/- 3.9%.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 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.And today we lead with news the New Zealand currency and interest rates have fallen after the RBNZ dovish no-change Monetary Policy Statement as markets removed the factors that had priced in some risk for a rise.Firstly in the US, mortgage applications fell again last week and are now -12% below year-ago levels. Their benchmark 30 year loan interest rate is still over 7% which keeps this market quiet.The American merchandise trade balance in January was little-changed at about -US$90 bln for the month. It is always less when services are included.The second estimate of Q4 US GDP confirmed the early estimate, adjusted an insignificant tick lower. The +3.2% expansion in Q4 came after the +4.9% Q3 expansion and +2.4% expansion for the year prior to that. By any measure that is a very good two year track record. They ended 2023 with an economy generating US$28 tln in economic activity, +US$1.5 tln more than at the same time a year earlier. (For perspective, that rise is about the same as the whole Australian economy for a year. And it is double the expansion of the Chinese economy.)US inventories seem to be in reasonable shape too, overall. But retail inventories crept up solely due to rising unsold car stocks and we should keep an eye on thatIn Hong Kong, a creditor of giant Chinese property developer Country Garden has petitioned a court for a winding up order. Country Garden's fall would be as big an earthquake as that of Evergrande. The implosion of the property development sector in the Middle Kingdom is not done yet.Authorities are working to encourage buyers back into the sector. Success seems far away at present, but a key enticement are historic low mortgage interest rates.EU sentiment was broadly stable in February even if both consumer and industry sentiment is still running below their long term averages. However retail, construction and the services sector are all running at about their long term average levels.In Australia, their monthly CPI indicator in Australia stood at 3.4% in the year to January, unchanged from the previous month and less than market forecasts of 3.6%. Still, the latest reading pointed to the lowest since November 2021.The UST 10yr yield starts today at 4.29% and little-changed from this time yesterday. The NZ Government 10 year bond rate is down a sharpish -9 bps at 4.82% on the changed OCR view.The NZX50 ended its Wednesday trade up +0.6% with a good afternoon session, bolstered by the removed risk of higher interest rates.The price of gold will start today down a mere -US$1/oz from yesterday at US$2032/oz.Oil prices are little-changed at just over US$78/bbl in the US while the international Brent price is now just under US$82/bbl. But that masks considerable volatility over the past 24 hours.The OCR no-change has knocked back our currency. The Kiwi dollar starts today at just under 61 USc and down almost -¾c from this time yesterday. Against the Aussie we are down -½c at 93.8 AUc. Against the euro we are down almost -¾c at 56.2 euro cents. That all means our TWI-5 starts today at just under 70.4 and down more than -60 bps. But to be fair that just takes us back to where we were two and three weeks ago.The bitcoin price starts today at US$61,787 and up another strong +8.2% from this time yesterday. It is now back to where it was more than two years ago. Its record high was US$67,633 in November 2021 - although with the retreat this week in the NZD, the bitcoin price in our current is now over NZ$100,000. And at today's NZ$101,323 that is an all-time high. Volatility over the past 24 hours has been unsurprisingly very high as well at +/- 4.6%.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 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.And today we lead with news American data is weaker today, and China is on a sharp turn inward.But first we should note bitcoin's sharp rise in price. However the surge seems to have run out of steam as you read this. But it is enough to note that prices are back to November 2021 high levels.In the US, durable goods orders slumped in January, primarily driven by sharply lower aircraft orders. That makes them -0.8% lower than the same month a year ago. A pattern of surges and slumps interspersed by 'no-change' months, has developed over the past year. However, non-defense capital goods orders actually rose slightly in January from December but these too were lower year-on-year.American retail sales at physical stores (on a same-store basis) were up +2.7% last week from the same week a year ago, not really enough to account for inflation.Consumer sentiment as measured in the Conference Board survey retreated in February, although they noted it is essentially range-bound. It is in a range that is lower than before the pandemic, but at about the same level as pre-GFC.The US Richmond Fed factory survey reported a sluggish situation in February although expectations for better order levels rose sharply. But the service sector in the same district took a sharpish dip.However the Dallas Fed services survey for February reported a notable improvement.The latest US Treasury bond auction for their 7 year Note again brought very good solid support, but the median yield rose from 4.05% a month ago to 4.27% today.Across the Pacific, Japanese consumer price inflation was expected to slow in January, and that is what happened, falling to 2.2% from 2.6% in December. But core inflation fell slightly less to 2.0% from 2.3%, and that is down from over 3% a year ago. They will be nervous that their long-run deflation tendency is not yet beaten.Taiwanese export orders recovered from their December dip to be +1.9% higher in January than the same month a year ago.China has widened its national security laws to include anything Beijing claims is a 'secret', including company information within a foreign owned company. There are harsh penalties for finding out you have shared such information with company bosses who reside outside the country. Obviously the law is wider than just this, but that is one important aspect and it will cast an even darker pall over foreign investment plans. And through the new 'national security' laws in Hong Kong, which extend Beijing laws into the City, businesses there will be concerned too.The overnight GDP Pulse auctions delivered lower prices for both WMP (down -4.2% from the last full GDT auction and down -3.4% from the prior Pulse event), and SMP (-2.6% and -2.0% respectively). These lower results will have surprised the derivatives market.The UST 10yr yield starts today at 4.29% and little-changed from this time yesterday. The price of gold will start today up +US$6/oz from yesterday at US$2033/oz.Oil prices are up +US$1 at just over US$78/bbl in the US while the international Brent price is now just over US$82/bbl.The Kiwi dollar starts today at 61.7 USc and unchanged from this time yesterday. Against the Aussie we are at 94.3 AUc. Against the euro we are still at 56.9 euro cents. That all means our TWI-5 starts today at just under 71.1 and little-changed.The bitcoin price starts today at US$57,114 and up a spectacular +7.1% from this time yesterday. It is now back to where it was more than two years ago. Volatility over the past 24 hours has been high at +/- 3.9%.Join us at 2pm this afternoon for full coverage of the RBNZ's February Monetary Policy Statement and OCR review. Financial markets don't expect any rate change, but of more interest is hearing how the RBNZ views the medium term inflation risks.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.And today we lead with news ahead of tomorrow's closely-watched RBNZ OCR decision.First in the US, new home sales rose but by less than expected. The tame result continues a now-long trend of sales levels that are not really growing. Of concern in this market is that they now have over eight months of unsold supply at the current sales rate. 'High mortgage rates' are getting the blame.The February update to the Dallas Fed factory survey in America's oil patch turned from being negative to positive, both on the activity index and the outlook index. But both levels remain below their long term levels. A brighter new order level turned this around.Another very well-supported UST 2yr Note auction brought rising yields, now at 4.64% pa (median) which was up from 4.31% a month ago.Industrial production in Singapore shrank -5.7% in January from December, the second large fall in the past three months. From the same month a year ago it was up just +1.1%.In China, their equities markets are in a post-holiday lull. Prices are retreating. There are no scheduled listings and in fact no applicants cleared for stock exchanges’ review. Existing applications to list are being withdrawn. A heavy clamp is going on the private sector, in complete contrast to official speeches extolling the importance of the private sector. Investors notice the disparity. And investors know that home team interventions never last and are wary of having a stake in an essentially rigged market.Also in a lull are business expectations in China. Steel rebar prices fell to their lowest level in nearly four months. We point out there interesting big trends, but that does not necessarily indicate that their whole economy is backsliding - it just explains why the growth impetus in the world's second largest economy is leaking away. The bulk of their SOE-led economy is still active and supporting their huge population and demand.In Australia, the scale of the discounts on CBD office buildings is getting some focus. Values are still falling to entice buyers, and in Sydney insiders think they will bottom out at a -23% retreat. But those insiders are industry boosters, so you would be brave believing their "the bottom is close" talk. The depreciation is less in other main centers, they reckon.The UST 10yr yield starts today at 4.30% and up +5 bps from this time yesterday. The price of gold will start today down -US$8/oz from yesterday at US$2027/oz.Oil prices are up +50 USc at just on US$77/bbl in the US while the international Brent price is now just under US$81.50/bbl.The Kiwi dollar starts today at 61.7 USc and down -¼c from this time yesterday. Against the Aussie we are still at 94.4 AUc. Against the euro we are nearly -½c lower at 56.9 euro cents. That all means our TWI-5 starts today at just on 71.1 and -30 bps lower.The bitcoin price starts today at US$53,313 and up a solid +3.9% from this time yesterday. It is now back to where it was more than two years ago. Volatility over the past 24 hours has been moderate at +/- 2.6%.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 tomorrow.

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.And today we lead with news China is having a tough time sharking off its housing blues.However in the week ahead, the Americans will release PCE data that will be closely watched. They will also release updates for the ISM Manufacturing PMI, the second estimate of GDP growth rate, durable goods orders, consumer sentiment, and housing sales data. There will be CPI inflation updates coming from Japan, Australia, and the EU. GDP growth for India and Canada will be updated. And factory PMIs for China, Russia, and Canada will out. And the RBNZ MPS and OCR interest rate decision will attract international focus on Wednesday afternoon. Locally, it is the key focus this week of course.But today we start first in China. They released official data that showed foreign direct investment in January was down more than -11% from the same month a year ago. That is their biggest retreat since the GFC. And the more recent data is even worse, falling more than -20% from December.It wasn't the only retreat released in official data. China's new house prices fell the most in almost a year in January with prices in 60 of their 70 largest cities retreating. For resales, this official data only showed two of the 70 cities in their survey with a month-on-month gain, none with year-on-year gains. For such pervasive declining prices to show up in official data probably means the situation is much worse, and it is now quite difficult to sell a house. Buyers have vanished, unwilling to buy a depreciating property. It is notable that China does not release official sales volume data.Recall that in February, the Chinese central bank chopped its 5 year MLF rate by a record -25 bps to its lowest ever. This is the rate on which home loans are based. They also cut the reserve ratio earlier in the month, another easing that might help their property sector.EU inflation expectations are essentially holding at 3.3% for the next twelve months. The ECB would have been disappointed at that, and the fact that the "last mile" is proving very sticky. However, it is not a problem that they have alone.The German economy slipped into recession in the second half of 2023 if you buy into the "two negative quarters" rule on GDP changes. The retreat is minor however and was as expected.In Australia, Rio Tinto has given the go-ahead for a big new iron ore mine. It is in West Africa. The iron ore price has held relatively high, encouraging miners, and Rio Tinto's decision is just one of many. But the accumulation worries some. Iron ore prices are not factoring in the wave of new supply, leaving it vulnerable to the same collapse that smashed battery metals like nickel, some say. If that were to happen to iron ore, it would rock Australia.The UST 10yr yield starts today at 4.25% and down -1 bp from Saturday, down -5 bps from a week ago. The price of gold will start today down -US$3/oz from Saturday at US$2035/oz and up +US$25 from a week ago.Oil prices are still lower at just on US$76.50/bbl in the US while the international Brent price is still down to just under US$81/bbl. Both levels are -US$2 lower than a week ago.The Kiwi dollar starts today at just under 62 USc and little-changed from Saturday. But it up more than +¾c from a week ago. Against the Aussie we have settled back to 94.4 AUc. Against the euro we are slightly firmer at 57.3 euro cents. That all means our TWI-5 starts today at just under 71.4 and that is +60 bps higher than a week ago.The bitcoin price starts today at US$51,299 and up a minor +0.5% from this time Saturday. But it is down -1.9% from a week ago. Volatility over the past 24 hours has been low at +/- 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 Friday’s Economy Watch where we follow the economic events and trends that affect Aotearoa/New Zealand.I'm David Chaston and this is the international edition from Interest.co.nz.And today we lead with news that while all the market chatter is about the spectacular rise of Nvidia and the emergence of AI as a "new industry", the rest of the global economy seems to be generally expanding modestly.But first up, we should note it is a public holiday in Japan, the world's fourth largest economy, the Emperor's Birthday.In the US, new jobless claims fell to near their record lows of under 200,000 last week and far below what was anticipated. Continuing claim levels fell too and there are now 2.1 mln people on these benefits out of a 161 mln employed labour force, a tiny fraction. Still no labour market stress to report.US existing home sales rose marginally back to an annual sales rate of 4 mln which it was last at in August 2023. (It peaked at 7.25 mln in 2005 so it remains modest and currently at the level first reached in 1975.) It's a market essentially in hibernation.Canadian retail sales probably slipped in January after they reported a strong December expansion and taking overall 2023 sales volumes up +2.3%.Across the Pacific, the Bank of Korea kept its base rate unchanged at 3.5% during its February meeting. This was as expected. Korea's inflation rate is 2.8%.In China, vehicle shipments are projected to drop almost -16% in February from the same period last year, according to preliminary data released yesterday. Demand for electric vehicles is also slowing.China’s overseas investment in metals and mining as part of its Belt and Road Initiative surged by more than +150% in 2023, hitting US$19.4 bln with energy transition metals the main focus. Total Belt and Road investments now top +US$1 tln, this updated report shows.Some preliminary PMIs for February are starting to come through and the first was from Japan, showing its factory sector contracted more than expected, and its services sector expanded again, but by less than expected. Together they paint a picture of growth stalling in Japan.In the US, there were rising expansions to report in their factory sector, to a 10 month high, even if still modest, and they had a slight easing in their services expansion.In Germany things contracted harder, but for the EU overall their services sector is no longer contracting, helping keep things stable.In India, they are in a quite different space with manufacturing expanding strongly, and their services sector doing even better. India has replaced China as a major source of global growth, bolstering the continuing expansion in the US.Australia said average weekly ordinary time earnings for full-time adults was AU$1,888.80 in November (NZ$2030/week). The annual increase of +4.5%, or AU$81 a week, was the strongest since May 2013, other than a brief spike in average earnings early in the pandemic.There was another small decrease in container freight rates last week from the week before, but they remain unusually high on the insecurity same drivers around the canal choke-points. Bulk cargo rates have started to move modestly higher but are not outside 'normal' ranges.The UST 10yr yield starts today at 4.33% and up +1 bp from this time yesterday. The price of gold will start today down -US$8/oz from yesterday at US$2019/oz.Oil prices are +50 USc/bbl firmer at just over US$78.50/bbl in the US while the international Brent price is up to just under US$83/bbl.The Kiwi dollar starts today at just on 61.9 USc and up nearly +¼c from yesterday. Against the Aussie we are also +¼c firmer at 94.6 AUc. Against the euro we are little-changed at 57.2 euro cents. That all means our TWI-5 starts today at just over 71.3.The bitcoin price starts today at US$51,432 and essentially unchanged from this time yesterday. Volatility over the past 24 hours has remained modest at +/- 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.And today we lead with news markets are awaiting signals from the minutes of the late January Fed meeting.In the US, mortgage applications fell rather sharply last week, down more than -10% from the prior week to be -13% lower than a year ago. A key reason for the sharpish pullback was an unexpected surge in mortgage interest rates which jumped +19 bps to 7.06% (plus points) for the benchmark 30 year fixed loan. That is their highest of 2024. These higher rates reflect the shift in market pricing as the chances of near-term Fed rate cuts recede.Another assessment of Fed rate trajectories will come this morning (8am NZT) when they release the minutes of the FOMC's January meeting. The next Fed meeting isn't until this time next month. (But there is an RBNZ one this time next week.)American retail sales rose +3.0% last week from a year ago at bricks & mortar stores in the Redbook survey. This is barely enough to keep up with inflation, a second straight week like this after nine weeks of significant volume growth. A hesitation was always on the cards.Sharply lower oil prices, and exports at a 14 month high have combined to deliver Japan a sharply lower January trade deficit. Those exports were on the basis of good demand from both the US and China.European consumer sentiment improved marginally in February even if it still remains quite negative - just less negative.In Indonesia, their central bank kept its policy rate unchanged at 6%.In Australia, wages rose +0.9% in the December quarter, and +4.2% for the full year, (marginally more than the CPI rise of +4.1%). That's its highest growth since 2008.The UST 10yr yield starts today at 4.32% and up +6 bps from this time yesterday. Wall Street in its Wednesday trade is down -0.4% on the S&P500. Overnight European markets were very mixed again with Frankfurt up +0.3% and London down -0.7%. Yesterday Tokyo ended its Wednesday session down -0.3%. But Hong Kong rose +1.6% in their Wednesday trade while Shanghai rose +1.0%. The China Securities Regulatory Commission has imposed a restriction that prevents sales in the first and last 30 minutes of trading for prices that are lower, part of increasingly drastic measures to prevent the Chinese stock-market slump from extending into a fourth year. The price of gold will start today down -US$3/oz from yesterday at US$2027/oz.Oil prices are +US$1/bbl firmer at just under US$78/bbl in the US while the international Brent price is up to US$82.50/bbl.The Kiwi dollar starts today at just on 61.7 USc and unchanged from yesterday. Against the Aussie we are marginally firmer at 94.3 AUc. Against the euro we are still at 57.1 euro cents. That all means our TWI-5 starts today at just under 71.2 and little-changed.The bitcoin price starts today at US$51,382 and down another minor -0.4% from this time yesterday. Volatility over the past 24 hours has again been modest at +/- 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.