Economy Watch

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 both the US and China are both back from holiday breaks - to lackluster prospects.But first, the GDT dairy auction earlier today resulted in little overall change (+0.5%), although the strengthening NZD did push the result in local currently lower (-1.1%). This auction did record a big drop in the cheddar cheese price (-7.6%) but a good rise for mozzarella (+5.3%). SMP also rose (+1.3%) but the key WMP price fell (-1.8%. Today's result does not interrupt the general trend of rising prices that started in September last year and is probably an inconsequential hesitation at this point. No farm gate payout prices are likely to be affected by this even if it is the weakest result since November.In the US, the Conference Board's index of leading indicators slipped again in January. It has been slipping slightly for a while, but this update was the least in the series.The FT is pointing out that large banks have more commercial property bad debt than they have reserves for it. The steady discounting of commercial property values as interest rates rise is catching out even the majors now. Their analysis shows that the average reserves at JPMorgan Chase, Bank of America, Wells Fargo, Citigroup, Goldman Sachs and Morgan Stanley have fallen from US$1.60 to 90 cents for every dollar of commercial real estate debt on which a borrower is at least 30 days late, according to filings to the FDIC.Canadian CPI inflation fell to 2.9% in January from 3.4% in December. The Bank of Canada has a formal target to keep inflation at the 2% midpoint of a 1% to 3% range. The move lower is seen as a positive development in their battle against inflation.The Chinese central bank has surprised markets somewhat with its Loan Prime Rate moves. They didn't change their one year rate, holding it at 3.45% when a -15 bps cut was expected. But they did cut their 5 year LPR by -25 bps when a -15 bps cut was expected. That is the biggest cut they have ever made to this rate. The five year rate underpins their home loan market. The one year rate is more of a reference for other consumer and business lending. These changes show that Beijing's worries about their failing property sector are front-of-mind. However, despite its boldness the moves met with yawns in the market.Prices for steel reinforcing bar (rebar) fell in China yesterday, and sharply to their lowest level of the year. These buyers have not returned from their New Year break in a positive mood, it seems. The retreat isn't overly large but it does essentially wipe out the gains built up in the expectation of major new infrastructure stimulus.The UST 10yr yield starts today at 4.26% and down -7 bps from this time yesterday. The price of gold will start today up another +US$11/oz from yesterday at US$2027/oz.Oil prices are -US$1.50/bbl lower at just on US$77/bbl in the US while the international Brent price is down a bit less to US$81.50/bbl.The Kiwi dollar starts today at just on 61.7 USc and up +¼c and it’s highest in more than a month. Against the Aussie we are also firmer at 94.2 AUc. Against the euro we are still at 57.1 euro cents. That all means our TWI-5 starts today at just on 71.1 and up another +20 bps from yesterday.The bitcoin price starts today at US$51,608 and down a minor -0.6% 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 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 global eyes are on how China will manage itself out of its economic funk.First a reminder that it is a public holiday in the US, holiday, Presidents Day, and financial markets are closed there.To the north, Canada said it's producer prices fell marginally in January from December, as expected, and they are now -2.9% lower than a year ago. This is the fourth consecutive month of falls.Across the Pacific, Japanese machinery orders bounced back in December after a terrible November. They came in better that expected (+2.7% vs +2.5%) but nowhere near enough to make up for that November -4.9% fall.Later today the Chinese central bank will reset its Loan Prime Rates. They are widely expected to cut them both to support an economy that seems to be misfiring. The cuts won't be large, probably -15 bps for both the one year and the five year rates. Premier Li is urging officials to do everything they can to support the Chinese economy and "boost confidence".Rivals are becoming concerned that China will dump production resulting from stimulus boosts on world markets. The US has already issued a warning to China on this.In Europe, more evidence inflation is proving quite sticky in the lower ranges, just as it is here. The "last mile" is tough for everyone. Sweden said its rate rose to 5.4% in January, from 4.4% in December. Not exactly what they want or need. A rise was expected, but not by this much. This sort of backsliding affects inflation expectations, a crucial central bank mentric.And European natural gas reserves are at decade highs, and prices have dived. Overall EU gas reserves are currently over 65%, their highest level for the time of year since at least 2011, with Germany at 72%, Italy at 60%, and France at 50%. They started winter with almost 100% of their requirements stored in underground facilities, far above the targets they set for themselves. In the US prices are falling sharply too, now back to levels first seen in 1995. Too much supply, not enough demand. Suppliers using energy as a weapon no longer seems effective.Off the coast of Yemen, although things have quietened recently, there was another serious attack overnight with a South American-registered bulk cargo ship attached and probably sunk. Underwater drone attack weapons were likely used.The UST 10yr yield starts today at 4.33% and up +5 bps from this time yesterday. The price of gold will start today up another +US$3/oz from yesterday at US$2016/oz.Oil prices are still just over US$78.50/bbl in the US while the international Brent price is also still just over US$82.50/bbl.The Kiwi dollar starts today at just on 61.4 USc and up +20 bps overnight. Against the Aussie we are also marginally firmer at 94 AUc. Against the euro we are firmer still 57.1 euro cents. That all means our TWI-5 starts today at just on 70.9 and up +20 bps from yesterday.The bitcoin price starts today at US$51,908 and a mere +0.2% up from this time yesterday. Volatility over the past 24 hours has been low at only 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 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 all eyes will be on China this week, especially its financial markets, as it returns from a week-long holiday.In the week ahead, there will only be second-tier data and events. The Fed's FOMC will drop the minutes of its late January meeting on Thursday, NZT. They will be watched for rate-cut signals. There will be a big set of preliminary PMIs for February released this week for a range of key countries. Canada will release its CPI result for January on Wednesday. And Wednesday is when we will get the results of the latest dairy auction.In China, financial markets return later today after the Chinese New Year break. Authorities will be ready to cover any weaknesses, and investors are likely to take advantage. The 'Beijing put' is going to save many investors. But it might work for Beijing who seem to be engineering a substantial rise in the proportion of SOE control of overall GDP. Private ownership and control of large enterprises is now not seen by Beijing as in the country's best interests.Overnight the People's Bank of China kept the rate of ¥500 bln worth of one-year policy loans to some core state financial institutions, known as the medium-term lending facility, at 2.5%. The 'hold' was seen as an effort to prevent more pressure on the yuan. The operation resulted in a net ¥1 bln injection into their financial system (+NZ$227 mln), the smallest boost since August, because ¥499 bln worth of MLF loans are set to expire over the rest of February. A related Loan Prime Rate cut is still likely in February however.And official data claims that this Chinese New Year activity was the best ever. Total domestic trips for the eight-day long holiday rose more than a third to 474 million, while tourism receipts grew by almost +50% to ¥633 bln. That's +19% more in term of trips and +7.7% more in terms of tourism spending from the equivalent 2019 holiday period.Meanwhile, updated data also released overnight on China's balance of payments transactions shows that inbound investment in 2023 was its lowest since 1995 at just ¥148 bln (NZ$34 bln). In fact that 2023 level is just one tenth of the 2021 level.Singapore's exports rose notably in January from December and were up almost +17% from a year ago. Analysts were expecting a more modest +5% rise so that is a notable change.And as widely expected, the Russian Central Bank held its policy rate unchanged at 16%, a pause to the +850 bps hiking campaign that started in July 2023.We should also note that it is another long holiday weekend in the US. Monday in the US (Tuesday NZT) will be President's Day and markets, both bond and equity markets, will be closed.The next release of a survey on consumer sentiment has it rising and confirming earlier surveys. The University of Michigan version rose slightly to a fresh high since July 2021 even if it was marginally below market forecasts.US residential building consents slipped in January from December, but were +8.6% higher than a year ago.But American housing starts slumped almost -15% in January to an annualised rate of 1.331 mln, lower than year-ago levels and the lowest since August and missing market forecasts by a lot. It is the biggest fall since April 2020.Inflation is clearly not beaten yet even if it is down. US producer prices were up +0.3% in January from December, the biggest month-on-month increase in five months, following a -0.1% decline in December. Analysts expected a rise of +0.1%. Cost of services rose +0.6% m/m, the largest increase since July. But that all means producer prices are only a modest +0.9% higher than a year ago. It is the recent pickup that worries markets.On Wall Street, with the December company results three quarters released by now, they show a modest +3.2% lift from a year ago. Against expectations however the story is more positive; 75% of S&P 500 companies have reported a positive EPS 'surprise' and 65% of S&P 500 companies have reported a positive revenue 'surprise'. This reminds us that late 2023 expectations were low - and unnecessarily so it turns out.Money that shifted out of equities into money market funds is now moving back. Global equity funds racked up significant inflows in the week to February 14 as investor optimism returned for this stock market rally, despite lingering uncertainties over the Federal Reserve's rate cut plans. It is a global thing, including Australia.Earnings reported in Australia have also been better than expected overall. About a third of the major companies have reported earnings for the December half so far; almost a half of those have beaten consensus expectations, an unusually high proportion, and while a third have missed analyst estimates.The UST 10yr yield starts today at 4.28% and down -2 bps from Saturday. The price of gold

The coalition government's select committee banking inquiry could look at how to encourage banks to lend more to "productive" sectors of the economy rather than having such a big focus on "unproductive" housing lending, Commerce and Consumer Affairs Minister Andrew Bayly says.The National-NZ First coalition agreement says the government will establish a select committee inquiry into banking competition "with broad and deep criteria to focus on competitiveness, customer services, and profitability."Speaking in interest.co.nz's Of Interest podcast, Bayly said the government will wait to see what the Commerce Commission has to say in its market study into personal banking services before launching the select committee probe. The Commission's draft report is due on March 21."Why have we seen outflows from the productive sector like small businesses, farming and property development which is really important if you want to build houses in New Zealand? We've seen funding going out of that sector, going into what I would term the unproductive sector which is the mortgage market. That's interesting because it obviously has a big impact on businesses and the productive sector," said Bayly."Then there are things around margin [and] capital adequacy ratios that the Reserve Bank manages. That will help banks determine where they put their money, and whether they want to invest in more mortgages, or whether they want to invest in supporting businesses.""I'm approaching it with an open mind. I want to see where they [the Commerce Commission] have got to with retail [banking], but I think inevitably there's some other areas we want to cover," said Bayly.Under bank regulatory capital rules overseen by the Reserve Bank, banks are required to hold less capital against housing lending than against other types of lending such as business/corporate and agriculture lending. The major lending exposure of all NZ's major banks is housing. ANZ NZ, the country's biggest bank, has 72% of its total lending in housing.Bayly is also Minister of Statistics, plus Small Business and Manufacturing Minister.On Statistics NZ, Bayly said it will deliver the 7.5% annual spending reduction the government has asked for. Decisions and preparation are ahead for the 2028 census, he said, noting the 2023 census cost $326 million, "a lot of money.""I'm wanting to make sure that what we do drives economic growth for New Zealand, how we can power up those businesses. That's the big strategic intent," he said."Do you run another huge census every five years? That's the first question. And if you read the Stats NZ] briefing [to the incoming minister] there's a proposal that you don't run those big things again. Because governments all around the world are having the same issue where if you front up to someone now and say 'can you fill out this long form' most of them tell you to naf off," Bayly said.The next census could look to make more use of administrative data like home addresses or tax returns, he said, information and data that lies within various government entities."Obviously they've got to do it within privacy settings. But that is certainly the trend overseas and we will have to look at it.. that you may move towards more localised, small surveys, targeted surveys, and look to buttress that information using existing data sources that are potentially untapped at the moment."In the podcast Bayly also talks about Stats NZ reporting Consumers Price Index (CPI) data monthly, funding to update the CPI that's overdue, the Credit Contracts and Consumer Finance Act, the conduct of financial institutions (CoFI) regime, buy now, pay later, anti-money laundering rules, and his plans to rewrite the Companies Act.*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 the giant US economy is putting most other major economies in its shadow, expanding while others stumble.But first, the number of people claiming unemployment benefits in the US fell by -12,500 from the prior week to 222,000, firmly below market estimates. It was the lowest reading in nearly one month, adding to the latest jobs report that indicated historical tightness in the US labour market, and so maintaining the leeway for the Federal Reserve to remain hawkish.But American retail sales fell -0.8% in January from December, reversing December's rise, and worse than market forecasts of a -0.1% fall. It is the biggest decrease in retail sales since March last year, primarily driven by the aftermath of the holiday shopping season and cold weather. Car sales were notably weaker.Business inventories rose, but in relation to sales they remain stable and slightly below historical averages.But they need to be cautious; industrial production edged slightly lower in January from December, missing market expectations of an expansion after recording no change in December. And that meant there was zero change from a year ago. Frigid weather got some of the blame for the January result.But things may be on the improve. Both the Philly Fed's factory survey, and a similar one in New York both recorded sharp improvements in their February surveys.Canadian housing starts came in lower than expected in January, and by quite a bit.Official data in Japan suggests their economy was in recession in the second half of 2023. Japan's GDP unexpectedly shrank -0.1% in Q4 from Q3, missing market forecasts of a +0.3% growth and following a revised -0.8% fall in Q3, flash data showed. That is a big miss for the world's third largest economy. That is their first recession in five years, as private consumption, which accounts for more than half of the economy, declined for the third successive quarter. What is off about this is that the granular data that makes up the result was relatively positive in the period.This Japan retreat was enough to sink it from the world's third largest economy, to #4 behind Germany. But while Japan's nominal economic activity slipped below Germany, the country's growth rate has surpassed that of China for the first time in almost half a century (on a nominal basis).India reported very strong growth in car sales in January, driven in large part by sales in rural communities. In fact, they "smashed" the previous record, up almost +14% year-on-year.The British economy contracted -0.3% in Q4 from Q3-2023, following a -0.1% decline the previous period. That was worse than market forecasts of a -0.1% fall. Their economy entered recession (if you use the two-quarter rule) amid a broad-based decline in output, including in services. This is election year in the UK.The euro zone economy will grow slower than expected in 2024 according to updated forecasts from the European Commission. But they also expect to face reduced inflation pressure.For the first time in two years, the Australian jobless rate has risen above 4%. The actual 4.5% rate means they now have 654,000 people without jobs, the highest level since October 2021. (The headline rate is the 4.1% seasonally adjusted rate.)Australian inflation expectations held unchanged in February at 4.5% in this Melbourne Institute survey. Their central bank would have been disappointed in that.Globally, container shipping freight rates slipped slightly last week but are still unusually high. The risks keeping them high are basically unchanged. Bulk cargo rates are again little-changed, and low.The UST 10yr yield starts today at 4.24% and little-changed from yesterday. The price of gold will start today up +US$10/oz from yesterday at US$2001/oz.Oil prices are back up +US$1.50 at just over US$78/bbl in the US while the international Brent price is up a bit less to US$82.50/bbl.The Kiwi dollar starts today at just on 61 USc and little-changed from this time yesterday. Against the Aussie we are still at 93.8 AUc. Against the euro we are still at 57.7 euro cents. That all means our TWI-5 starts today at just under 70.6 and little-changed.The bitcoin price starts today at US$52,232 and another +1.0% from this time yesterday. Volatility over the past 24 hours has been modest at just on +/- 1.5%.You can find links to the articles mentioned today in our show notes.You can get more news affecting the economy in New Zealand from interest.co.nz.Kia ora. I'm David Chaston. And we will do this again 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 supply is rising and demand is shifting away for energy intensity and efficiency reasons, so oil prices are falling.Crude oil prices are falling quite sharply today because the latest US EIA data showed a surge of over +12 mln barrels in American crude oil stocks last week, far higher than the +2.5 mln anticipated. Their economy is expanding in a way that doesn't need as much petroleum and high global supplies have pushed prices down to record lows on an inflation-adjusted basis. Neither Russia's war nor the Middle-East tensions - nor an expanding global economy - are keeping this price elevated.US mortgage applications fell -2.3% last week from the week before, ending the recent and short run of expansions when four of the past six weeks had recorded gains. These levels are -12% lower than a year-ago.Meanwhile, final revisions for American PPI has them falling slightly more than originally estimated for December from November to be only +1.0% higher than a year ago. The January data will be released on Saturday (NZT).In Canada, analysis there now expect their central bank to end its quantitative tightening program much sooner than originally indicated, maybe as soon as April.The EU reported that their industrial production took something of a surge in December, expanding +2.6% (real), to enable it to be +1.2% higher (real) than in the same month a year ago. It was an unexpected bit of good news from them. They weren't able to report any 2023 expansion in economic activity (GDP), calling it "stable". But at least it wasn't a decline. They benchmark themselves against the US, and apart from the pandemic, the gap they suffer now is as wide as it was in the GFC.Staying in the region the UK reported its CPI inflation at 4.0% and core inflation at 5.1%, both unchanged levels in January than December.In Indonesia, former general Prabowo is projected to win Indonesia election on the first round of voting. At first sight, it appears to be a turning away by Indonesia from China to a more Western-friendly stance. But first-looks can sometimes be deceiving in Indonesia.The UST 10yr yield starts today at 4.25% and -4 bps lower. The price of gold will start today down -US$2/oz from yesterday at US$1991/oz.Oil prices are down -US$1 at just over US$76.50/bbl in the US while the international Brent price is now just under US$81.50/bbl. However, prices are still falling as we report this.The Kiwi dollar starts today at just under 60.9 USc and recovering about +¼c from this time yesterday. Against the Aussie we are little-changed at 93.8 AUc. Against the euro we open higher at just over 57.7 euro cents. That all means our TWI-5 starts today at just on 70.5 and up +20 bps.The bitcoin price starts today at US$51,699 and up a very strong +6.6% from this time yesterday. Volatility over the past 24 hours has been high at just under +/- 3.8%.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 a miss on US core inflation has markets moving a lot today.The highly anticipated American inflation rate for January fell back to 3.1% at the headline level following a brief increase to 3.4% in December, but the more important core rate came higher than forecasts of 2.9%. The monthly rate edged up to 0.4%. Markets were expecting better 'progress' than this and have reacted sharply to the news, realising the US Fed may not trim official rates as soon as they expected - and that they should have listened to the Fed's signals that it is a time to be cautious on progress in the fight against inflation. The next FOMC policy meeting is not until March 21 (NZT) however.The USD rose, benchmark bond yields jumped, and Wall Street reacted badly with a sharp selloff. Meanwhile, there was a jolt lower in retail sales growth last week, as measured in same-store bricks & mortar outlets. It was aup, but only by +2.5% from the same week a year ago, the first time it hasn't risen in real terms in five months.Across the Pacific there was another unexpected jolt lower. Japanese machine tool orders slumped in January, coming in at their lowest level since early 2021.The ZEW Indicator of Economic Sentiment for Germany rose for a seventh consecutive month in February, reaching its highest level in a year and bettering market expectations, largely based on hopes that major central banks will start cutting interest rates this year.In Australia, the Westpac-Melbourne Institute Consumer Sentiment Index rose +6.2% to 86 in February, from 81 in January. This is the biggest monthly gain since April last year, when the RBA paused its rapid series of interest rate rises, and takes the Index to its highest level since June 2022.Australian business confidence, as monitored by the NAB survey, rose just 1pt to +1 index point, and still well below its long-run average. The improvement was largely driven by manufacturing and construction, partly offset by falls in wholesale and retail confidence. Confidence remained negative across all the states however.The UST 10yr yield starts today at 4.29% and an +12 bps shift up on the changed views following the US CPI data. In Wall Street's Tuesday trading session, the S&P500 is down a sharp -1.2% on the same driver. The price of gold will start today down -US$21/oz from yesterday at US$1993/oz and a sharp reaction lower after the US CPI data was released.Oil prices are up +US$1 at US$77.50/bbl in the US while the international Brent price is now just over US$82.50/bbl.The Kiwi dollar starts today at just under 60.6 USc and down more than -¾c from this time yesterday. But that is mainly a USD shift up. Against the Aussie we are little-changed at 93.9 AUc. Against the euro we open at just over 57.5 euro cents and a -½c fall. That all means our TWI-5 starts today at just over 70.3 and down -40 bps.The bitcoin price starts today at US$48,482 down -2.0% from this time yesterday but still over NZ$80,000 after the NZD retreat. 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 of a warning of a permanent downgrade on asset quality that will affect banks worldwide.But with Japan, China and Singapore all on holiday, global economic news is a bit thin today.First up, American inflation expectations seem to be easing, even if the changes are small. But for the year ahead they were steady in January at 3%, the lowest in three years. Even though the overall pace is steady and key items are declining, some core elements are still relatively high. They were lower for petrol but at 4.2%, the lowest since December 2022, for food at 4.9%, the lowest since March 2020, and for rent at 6.4%, the lowest since December 2020. Overall, looking ahead three years, they are down to 2.4%.In India, consumer inflation is falling also, even if there are some key elements that remain high. Overall it eased to 5.1% in January, the lowest in three months, from 5.7% in December and matching market expectations. Their central bank has a wide 2-6% target range. The slowdown is mostly due to an ease in food inflation and favourable base effects from last year. But food inflation only fell to 8.3% from 9.5%.Indian industrial production was up +3.8% in December from a year ago, handily more than November's +2.4% and the expected +2.5%Indonesia goes to the polls tomorrow in elections that include one for President. And it is looking like one candidate will win in the first round, current Defense Minister Prabowo Subianto. Prabowo is from the Suharto political dynasty. He also chose the son of very popular outgoing president Jokowi as his running mate. Jokowi is barred from running for a fourth term and many believe he is organising the Prabowo candidacy and will be a major influence in the new leadership.And there was a second round presidential election in Finland over the weekend. Alexander Stubb of the centre-right National Coalition Party narrowly won defeating liberal Green Party member Pekka Haavisto, who conceded defeat. Stubb is pro-European and a strong supporter of Ukraine and someone who has taken a tough stance towards Russia.In China, the January data on new car sales were a disappointment. They reported their first month-on-month decline in vehicle sales since August, despite renewed efforts by some carmakers to offer discounts in the world’s largest auto market. Just on 2.04 million vehicles were sold in the month, down -14% from December. Sales of passenger NEVs fell almost -30% month-on-month to 668,000, also the first such drop since August.In Europe, a new ECB official is worried about structural changes in their banking sector and asset quality is starting to deteriorate. She warned of a permanently changed risk landscape that requires lenders to alter how they operate.The UST 10yr yield starts today at 4.17% and little-changed from yesterday. The price of gold will start today down -US$10/oz from yesterday at US$2014/oz.Oil prices are little-changed, still at US$76.50/bbl in the US while the international Brent price is still just over US$81.50/bbl.Perhaps we should also note the rather stunning fall in natural gas prices worldwide. In the US, these prices are back to levels they first had in 1990. In Europe, back to levels they first had in 2011. Not only is Russia a major exporter and suffering the downturn, so is Australia. In inflation-adjusted terms, natural gas has never been cheaper.The Kiwi dollar starts today at just under 61.4 USc and marginally softer that this time yesterday. Against the Aussie we are down nearly -½c at 93.9 AUc. Against the euro we open at just under 57 euro cents and little-changed. That all means our TWI-5 starts today at just over 70.7 and down -20 bps.The bitcoin price starts today at US$49,598 and up +2.8% from this time yesterday. And at that level it is now over NZ$80,000 for the first time since December 2021. Volatility over the past 24 hours has been moderate at just over +/- 2.3%.You can find links to the articles mentioned today in our show notes.You can get more news affecting the economy in New Zealand from interest.co.nz.Kia ora. I'm David Chaston. And we will do this again tomorrow.

Kia ora,Welcome to Monday’s Economy Watch where we follow the economic events and trends that affect Aotearoa/New Zealand.I'm David Chaston and this is the international edition from Interest.co.nz.And today we lead with news bank lending distortions are catching attention in both China and the US.But first in the week ahead, all eyes will be on the American CPI data which comes out on Wednesday - and the following Fed speaker reactions. The US also releases retail sales data and PPI data this coming week along with a big sentiment survey. And the final big earnings reports are due for Q4. There will be the GDP result for Japan, CPI for India, and Australia will chime in with their January labour market update and the NAB January business sentiment report.China is now on a full national holiday for a week (春节, Year of the Wood Dragon) and authorities managed to stave off a share market crisis before they closed in Shanghai (even if Hong Kong got the wobbles again on Friday).In China, under official pressure banks are shovelling out the loans. Banks extended more than ¥4.9 tln in new yuan loans in January, a record high since comparable records began in 2004 and beating forecasts of ¥4.5 tln jump. Mortgages rose to ¥980 bln in new lending and corporate loans jumped by ¥3.86 tln. Meanwhile, "total social financing" which is a broad measure of credit and liquidity, also reached a record high level of ¥6.5 tln (NZ$1.5 tln), well above forecasts of ¥5.55 tln. But while the levels may be high watermarks, the growth isn't. In fact these expansions from a year ago are the least since 2004. That has led to calls to "do more".In Japan, the Nikkei 225 Index jumped as much as 1.1% before settling only marginally higher at 36,897 on Friday, its highest level in 34 years as strong corporate earnings, a weakening yen and a dovish outlook on Bank of Japan monetary policy pushed the markets to these new heights. On Thursday, a Bank of Japan Deputy Governor said the central bank would not aggressively tighten its monetary policy even if it eventually decides to end negative interest rates.In the US, the S&P500 closed above the 5000 index level for the first time. It was up +0.6% on Friday their time, up +1.4% for the week, and up +6% so far this year. And all this is in the face of rising bond yields which makes it a bit unusual. The Fed's 'win' in its battle against inflation while keeping employment growing is a key factor that profits remain robust. Investors seem impressed.Meanwhile, lending by commercial banks to shadow banks ("Loans to nondepository financial institutions" in official language - line #26 in this data) topped $1 tln in January for the first time. It was up +12.2% in a year, although the big expansion came mid-2023. However, that surge caught the eye of the Fed who are watching for system risks from the big non-bank mortgage component.In January, Canada added +37,000 new jobs in the month, a surprise because a decrease was anticipated. But +49,000 were part time positions and full time employment fell -12,000. Their jobless rate eased slightly on this data, also not expected. Unfortunately for them, their population grew faster than employment.With China largely closed for its New Year holidays, commodity prices are likely to just meander along with little direction. But that won't stop chocolate prices racing higher on climate-related supply challenges. Cocoa prices were up +17% last week alone, to be up +42% so far this year alone, up +123% in a year and up +160% since this surge started in mid-2022. Chocolate is back only as a luxury item. Meanwhile sugar prices, which maxed out in 1975, aren't showing any similar acceleration.Staying with commodities, the price of palladium fell below that of platinum for the first time since April 2018 as growing demand concerns and bets on stable supply weighed on the metal. The price of palladium is now at its lowest since mid-2017. Palladium (and/or platinum) is mostly used in catalytic converters for ICE cars.Household spending rose +2.3% in December from a year ago in Australia. This was the smallest growth in household spending since February 2021. But that is before inflation was accounted for. Discretionary spending actually fell -0.6% (also before accounting for inflation). This data highlights how their cost-of-living crisis is affecting them.The UST 10yr yield starts today at 4.18% and down -1 bp from Saturday. The price of gold will start today up +US$1/oz from Saturday, holding at US$2024/oz.However oil prices are still at US$76.50/bbl in the US while the international Brent price is still just over US$81.50/bbl.The Kiwi dollar starts today at just on 61.5 USc and marginally firmer that this time Saturday. Against the Aussie we are unchanged at 94.3 AUc, and a 14 month high. Against the euro we open at just over 57 euro cents and also firmish. That all means our TWI-5 starts today at just on 70.9 and at its 2024 highs.The bitcoin price starts today at U

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 the rest of the world doesn't actually need an expanding China. Their financial market struggles are - so far at least - having little impact elsewhere even as some investors take sharp losses in the Middle Kingdom, especially on bonds.The strength of the US labour market is on display again with jobless claims falling more than expected last week. There were 233,000 new claims last week a decrease of -32,000 from the week before. There are now still 2.1 mln people on these temporary benefits but that is slightly above year ago levels - although not when you account for the growth of their labour force over that time.Overnight, the USDA released its February World Agricultural Supply and Demand Estimates (WASDE) report. They raised ending stock estimates for American corn, soybeans, and wheat more than traders expected. And they noted a bumper Brazilian soybean harvest. For 2024, beef import estimates were raised largely on higher expected imports from Oceania. 2024 milk production forecasts were lowered and the US expects to export less.The US Treasury had a big 30 year bond auction earlier today, one that was well supported. But the median yield rose to 4.31% from the 4.16% at the prior equivalent tender a month ago. Increases like this are evidence that global rates are still pushing higher.The Reserve Bank of India held its benchmark policy rate at 6.5% for the sixth consecutive meeting at its overnight meeting. This was as widely expected and comes amid persistent price pressure. Indian inflation rose to a four-month high of 5.69% in December due to rising food prices. But that is still within the RBI's generous 2-6% target range "in the medium term". However, dominating this review were questions about how they handled the blocking of Paytm.China released its January CPI data and it isn't calming nerves. Consumer prices fell by -0.8% in January from a year ago, marking the fourth straight month of decline which was the longest streak of drop since October 2009. This data came worse than market forecasts of a -0.5% fall, and is the steepest retreat in more than 14 years. Food prices declined at a record pace with beef prices down -7.7% in a year and lamb prices down -5.9%. Milk prices were more insulated, down just -0.8% in the year.Meanwhile the -2.5% drop in producer prices is actually an easing of the declines in the factory sector, even if it is running more deflationary than consumer prices.Global container freight rates dropped by a marginal -1% last week to remain very high on the shipping crisis induced by military actions and droughts. This minor shift overall masks big changes both ways on many key routes. Meanwhile bulk cargo rates are little-changed again at historically low levels.The UST 10yr yield starts today at 4.17% and up +6 bps from yesterday. The price of gold will start today down -US$8/oz from Monday at just on US$2031/oz.However oil prices are on the move up, up +US$2.50 to just under US$76/bbl in the US while the international Brent price is now just over US$81/bbl.The Kiwi dollar starts today at just under 60.9 and down a bit less than -¼c from this time yesterday. Against the Aussie we are up nearly +¼c at 93.9 AUc. Against the euro we open at 56.5 euro cents and down -20 bps. That all means our TWI-5 starts today at just on 70.4 and essentially unchanged from yesterday at this time.The bitcoin price starts today at US$44,991 and up a notable +4.2% from this time yesterday. Volatility over the past 24 hours has been moderate at just on +/- 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 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 global trade seems to be less of a driving feature of the international economy even if it remains important and there are plenty of shifts. And despite that, the NZD is rising.But first up today, US mortgage applications bounced back last week after the prior week's large -7.2% fall, to rise +3.7% year-on-year. And that was even though mortgage interest rates were virtually unchanged.Also rising strongly was the US logistics managers index (LMI), driven by freight rates. It been almost two years since the rising cost of freight has been a factor in this monitoring.Meanwhile, as expected US exports rose a bit more than imports but their overall trade deficit (goods & services) was little-changed in December. But for the whole of 2023 the deficit was the lowest in three years at 2.7% of GDP. (That is down from -3.0% in 2020.) The 2023 deficit with China shrank to the smallest total since 2010 while trade gaps hit records with Mexico, the EU, Mexico, South Korea, Taiwan, and India. In fact the US imports more from Mexico now than China. Logistics are easier and safer too.China's foreign exchange reserves slipped in January to just over US$3.2 tln, but the slip was less than expected.Although they were up year-on-year, Chinese January vehicle sales fell more than expected from December, especially NEVs which were down almost -39% in the month. The recent economic travails are biting car demand quite hard now in China. Having said that they are running at a 24 mln pa pace, and still easily the world's largest car market.We should perhaps note that the price of lithium, cobalt and nickel are now all at multi-year lows.Meanwhile, Beijing is replacing some senior officials in its struggle to control the economic gloom enveloping parts of their economy. But still no word yet of the expected big stimulus.In Europe, German industrial production fell in December from November to be a full -3.0% lower than year ago levels on a volume (real) basis. The December retreat was its seventh straight month of falls.And staying in Europe, ex-coal company and now renewables giant Ørsted, the world's largest offshore wind farm developer, has cut 800 jobs, lowered renewable development targets and suspended a dividend after a difficult year of trading. It will also withdraw from the Norwegian, Spanish and Portuguese markets and its chair is to stand down after a decade in the role. Its transition has not gone well.The UST 10yr yield starts today at 4.11% and up +2 bps from yesterday. The price of gold will start today up +US$2/oz from Monday at just on US$2039/oz.However oil prices are little-changed at just over US$73.50/bbl in the US while the international Brent price is now just over US$78.50/bbl. The Kiwi dollar starts today at just on 61.1 USc and and up a bit less than +½c from this time yesterday. Against the Aussie we are up nearly +½c too at 93.7 AUc. Against the euro we open at 56.7 euro cents and almost a +¼c gain. That all means our TWI-5 starts today at just on 70.4 and up +40 bps from yesterday at this time.The bitcoin price starts today higher at US$43,161 and essentially unchanged from this time yesterday. Volatility over the past 24 hours has been low at just on +/- 0.6%.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 the US economy is powering a global expansion, covering a weakening Chinese economy.But first up, the overnight dairy auction was a good one. Prices rose another +4.2% and are now up +5.4% since the start of the year and up +3.3% above year-ago levels, the largest year-on-year rise since July 2022. In New Zealand dollars the rise is +5.4%. WMP was up +3.4% and SMP was up +4.6%. But the most encouraging signals are from the foodservice commodities like cheddar cheese, up +6.3%, and butter, up +10.3%. This is the ninth good rise in the past twelve auctions so analysts will be reaching for their calculators on this one to look at a possible raising of their farmgate milk payout price forecasts.Elsewhere, the weekly monitoring of American retail sales at bricks & mortar stores revealed a strong rise last week, up more than +6% from a year ago and showing excellent above-inflation growth. It is an impressive signal that Q1-2024 is developing positively for them.American household debt is also rising, and although it hit a new record high, the rise was a modest +US$212 bln in Q4-2023 from Q3-2023 to US$17.5 tln. Home loan balances accounted for half the rise (up +0.9%) boosted more by rising interest rates than activity. Credit card balances however rose +4.6% in a quarter (+US$50 bln) but car loans rose only +0.8% in the same period. Of some concern is that delinquency rates rose for all debt types - except for student loans.The ISM services PMI jumped much more than expected, continuing the strong data we have had in 2024. It validates the strong labour market data we have had recently. The result was led by a healthy jump in both new orders and the level of order backlogs. American service industry companies are however cautious about lingering inflation and the associated cost pressures.In Japan, Toyota has raised its profit forecasts as it hybrid business soars. That is notable because EV makers are going the other way with shrinking margins and profits.In China, it is clear Beijing is rattled by their economic stutter. Markets are betting big that some major short-term stimulus is about to be announced. It is also backed up by announcements that home team financials will be big buyers in stock markets, a manipulation that will benefit traders - and give them a profitable lifeline to quit markets. It seems like a naive strategy by Beijing. But you never know, it might work. China is also expecting interest rate cuts soon.China is also struggling with a major cold weather snap, right at the start of their major New Year travel season. It is widespread and a big weather event.The level of "de-risking" from China is expected to be on display in export data due out very soon from China and import data from the US. Analysts are expecting the trade deficit to be its lowest between the two countries since 2003 (when George W Bush was president). It has retreated fast in the past three years.In Taiwan, inflation is easing, coming it at only 1.8% in January, a sharpish fall from 2.7% in the previous month. They were expecting a sharp easing, but only to 2.2% so this shift is an outsized one.EU retail sales volumes declined in December from November, and rather sharply too. That puts them down about the same year-on-year.But they are getting an unexpected boos from a rise in German factory orders in December, boosted by orders for major capital equipment. It was an impressive turnaround from November and recorded a creditable +2.7% gain in real terms from a year ago.Across the ditch, the Aussie central bank held it policy rate in its Tuesday review. This was as expected. Perhaps the only observation worth noting is that they didn't wholeheartedly signal that they are done raising rates, something markets were perhaps expecting. They are still looking for reassurance that recent trends are sustained. The Aussie dollar rose on that thought; true not by much, but it did rise. The RBA has kept the option open to raise rates if inflation's retreat doesn't pan out.And staying in Australia, retail sales barely rose in their Q4-2023 period in real, inflation adjusted terms. But on a per-capita basis retail volumes fell for a sixth straight quarter, down -3.5% compared to the same period in 2022.The UST 10yr yield starts today at 4.09% and up +5 bps from Monday. The price of gold will start today down -US$3/oz from Monday at just on US$2037/oz.However oil prices are +US$1 higher at just over US$73.50/bbl in the US while the international Brent price is now just over US$78.50/bbl. But they are still in this tight range that have been in for a while.The Kiwi dollar starts today at just on 60.7 USc and holding its lower Monday level. Against the Aussie we are still at 93.2 AUc. Against the euro we open at

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 economic conditions in China are in focus today.But first looking ahead, this week we get second tier American data around trade and PMIs (especially for services). It is the same in many other countries including China and Australia. Chinese CPI and PPI data is due this week. Canadian labour market data and EU retail sales data are coming too. Australia (tomorrow) and India (late Thursday) will have interest rate decisions. And StatsNZ will release our labour market data for Q4 on Wednesday which will be closely watched.First up today we can report that the IMF has been reviewing China's economic prospects and it sees growth slowing relentlessly. GDP will slip to +4.6% in 2024 they say and keep retreating to 3.4% by 2028. The IMF sees them stuck paying the price for low quality development in the past, and now demographics limits their ability to up their game in a meaningful way. The seeds for this growth retreat were planted years ago.And China’s real estate market is having a rough start to the year, with January new property sales plunging to a monthly low not seen in five years, despite government measures to boost the ailing sector as it grapples with a liquidity crisis. New property sales were down -34% in January from a year ago and down -48% from December.Last week, Chinese stock markets fell sharply, with Shanghai down a startling -6.2% for the week. And this is presumably after 'home team' intervention. Investors are unhappy. Authorities are nervous. Voices for major emergency stimulus are growing. It isn't helping that the pessimistic mood is spreading just as millions disperse to their villages for Chinese New Year, potentially spreading uncertainty across the country quickly. It also isn't helping that authorities are claiming all is well, nor that the Ministry of State Security has made it a crime to say things aren't going well in the economy.Across the Pacific, the US economy added many more jobs in January than expected. Equity markets rose on the news, the US dollar strengthened, and bond yields rose on the view that the Fed may not cut rates as soon as they expected if the US economy is in a stimulatory phase.At the headline level, American payroll employment rose +355,000 in January and that is almost double the expected +180,000 rise the market was expecting. It is the second consecutive very strong result.Behind this result we see that on an actual basis employer payrolls are +2.9 mln higher than a year ago at 155.6 mln at the end of January, maintaining the "about +2%" annual growth pace they have had since July, which is an eased pace from the "about 2½%+" pace earlier.Looking more broadly, the household survey increase isn't as fast. There are now just under 160 mln people employed, the difference from the payrolls report being the unincorporated self-employed. It is quite clear more people are transitioning into company payrolls now, so the overall growth isn't quite as strong as the payrolls data suggests.Average weekly earnings, which had been rising at about a +4% page in 2023, slipped to +3% from a year ago in January. However markets focused on average hourly earnings which rose more than they expected, up +4.5% in a year. But they are looking at the wrong data - the broader average weekly data is what they should be looking at because that encompasses working hours.After a strong rise in November, American factory orders rose only modestly in December from a month ago to be +1.4% higher than year ago levels. There is nothing encouraging about that although the January PMIs suggested the pace picked up in the next month.Consumers in this market are clearly feeling better however. The University of Michigan sentiment survey reported a big improvement and its highest level in 2½ years. They called the change a "surge".The American earnings season for Q4 results is in full swing now and the news is 'good'. Investors are responding to better-than-expected results and have pushed the S&P500 up to an all-time record high. Wall Street is about halfway through the expected corporate reports and so far earnings growth is +7.8% reported. If that is maintained that would be the best of any 2023 quarter. However we should note that is "above expectations" - and expectations weren't high. Sure, cost control and productivity drives are helping - and effective - but in mid 2023 expectations were higher and have been scaled back considerably since. It is against this scaled-back version that things look good. And most companies are not signaling forward momentum from here. They are cautious, saying if they can hold the line they will count that as a success. So be wary about "better-than-expected results".In Australia, mortgage approvals rose almost +12% over all of 20

New Zealand should be working towards a 100-year planning horizon when it comes to infrastructure, and viewing planning as "an exercise in dynamism and inquisition" rather than a "bureaucratic exercise."That's the view of Geoff Cooper, General Manager of Strategy at the New Zealand Infrastructure Commission.Speaking in interest.co.nz's Of Interest podcast, Cooper argues planning gets a bad rap."It's seen as a bureaucratic exercise and it should be seen as an exercise in dynamism and inquisition. I think we need to see more of this planning expertise coming into government, and planning happening from a much earlier period of time, front footing the needs rather than waiting for them to be in front of us," Cooper says."Getting ahead of the planning cycle is a really obvious place to start. And start identifying options before we get into solutions because the moment a project is announced you've created interests. The moment you announce a project all of a sudden there's interested parties. And once there are interested parties, whatever the project is, it's very difficult to do optioneering, almost impossible.""So what we would say here is think slow, act fast. Go through a slow, rigorous planning process, identify your problem definition first ... then once you've got a preferred solution which you've stress tested, then you get on with it and do it as fast as you can," says Cooper.In terms of the sort of timeframes we should be thinking about for infrastructure planning in New Zealand, Cooper says there's no firm answer."But certainly I would be thinking [a] 100-year [time]frame personally."In the podcast Cooper also talks about the five key drivers of infrastructure demand, NZ's infrastructure deficit, how our infrastructure needs are changing, project selection and delivery, why big projects always seem to cost more and take longer than expected, funding, financing, contestable infrastructure priorities, plus the resilience and sustainability of infrastructure."What we're dealing with here is uncertainty and risk. As we're building our new infrastructure what we're seeing are the risks associated with climate change, and the level of resilience that we need, is far higher than what we thought. In fact a lot of our infrastructure is simply not designed for the level of resilience that we need today. And it's going to take decades to get it there as you've seen with things like the earthquake strengthening. The difficult thing with resilience, of course, is out of sight out of mind. It's very difficult to get the acceptance that we need to invest in something that you may or may not need in the future. So it becomes a very difficult thing to sell," Cooper 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 there are some significant jitters being felt in a widening range of banks globally as debt maturities for commercial property spook everyone.But first in the US, the number of peopleclaiming for jobless benefits rose for a second consecutive week to the highest level in eleven weeks. There are now almost 2.2 mln people on these benefits and that is the highest in more than a year. Still these overall levels are low in historical context, and compared to the size of their workforce. We will get an update on that tomorrow when the non-farm payrolls data is released. Analysts are expecting a gain of +180,000.However, there was a sizable rise in the number of job cuts reported in January. They typically spike in January so it is hard to assess whether this is out of the ordinary. But this year the spike was more than usual, in fact the highest January since 2009. Job cuts in the financial and tech sectors were prominent in this latest data.But the factory sector might be turning a corner, up. The widely watched ISM factory PMI improved to in January to its 'best' level since October in a sharp and unexpected change. The sector is still contracting although at a much softer pace, as demand moderately improved and output remained stable. The improved bit was that new order levels expanded sharply.The internationally-benchmarked S&P/Markit PMI version delivered a very similar story for Fanuary, but was more positive, suggesting the overall sector is actually now expanding.In India, their central bank has ordered Paytm to immediately cease trading. The ubiquitous payments app and its related bank have ignored regulator warnings about the risks it has been taking. Paytm is backed by both Japan's Softbank, and China's Ant Group.As expected, the EU euro-area inflation report for January came in at 2.8%, holding the lower levels it has reported for the past four months. Again it is lower energy costs that is keeping a lid on rising food prices (+5.7%) but they will be encouraged by the 2.0% rate for other goods.The Bank of England also acknowledged that inflation risks are "more balanced" there when they held their 5.25% policy rate unchanged today in another split decision.Internationally, there were a wide range of factory PMIs released by S&P/Markit for January and they showed an overall improving trend - in fact this sector is no longer contracting globally, the best it has been since mid 2022. And that supports the recent improvements to future global growth prospects that the IMF released recently and we reported yesterday.It is also supported by global passenger air travel data for December which was up strong from a year ago. However, compared to pre-pandemic levels it is not quite there yet. Domestic air travel is higher but international travel is not. In large part that is because the Chinese travellers are staying home still.But the global commercial property market looks like it is just starting a serious downward spiral. Lower valuations are squeezing leveraged owners, many of whom have large maturities imminent. And that is rocking banks. In the past few days banks from Europe (Deutsche), the US (New York Community Bancorp) and Japan (Aozora) have signaled serious consequences from these revaluations. Although it has been long-foreshadowed we may be entering a very rough patch for banks exposed to the sector. About NZ$1 tln is immediately involved.The peaking of container shipping freight rates may be underway because these rates fell -4% last week, the first fall late November. And this is despite no resolution to either the Red Sea crisis or the Panama drought. Rates from China to Europe mostly fell. And freight rates for bulk cargoes remain modest even from a long 50+ year perspective.The UST 10yr yield starts today at 3.87% and down -9 bps from this time yesterday as bond markets price in more anticipated Fed rate cuts. The price of gold will start today up another +US$13/oz from yesterday at just on US$2063/oz.But oil prices are little-changed at just over US$76.50/bbl in the US while the international Brent price is now just under US$81.50/bbl.The Kiwi dollar starts today at just on 61.3 USc and -10 bps softer than yesterday. Against the Aussie we are up +30 bps at 93.4 AUc. Against the euro we are a touch softer at 56.5 euro cents. That all means our TWI-5 starts today at 70.3 and unchanged from yesterday.The bitcoin price starts today softer. It is now at US$42,627 down -2.0%% from this time yesterday. Volatility over the past 24 hours has been moderate at just on +/- 2.2%.You can find links to the articles mentioned today in our show notes.You can get more news affecting the economy in New Zealand from interest.co.nz.Kia ora. I'm David Chaston. And we will do this again on

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 financial markets are now more convinced rate cuts will be coming in 2024 as inflation transitions away.First up today we should note that the US Fed will announce the results of its latest FOMC meeting soon, at 8am NZT. No-one is expecting them to change any rates today, leaving their policy rate at 5.5%. But markets have increasing expectations that some sort of signals will emerge about how and when they will start cutting that rate in 2024. Of course that is almost all to do with how they see inflation tracking in the US and where they think it may settle. Benchmark bond yields have sunk in anticipation of those meeting details. There seems little pressure on the employment mandate they have, and little indication that their jobs market is about to change, so that is now only a background factor.After rising strongly for the prior three weeks, last week these was a correction in the number of mortgage applications in the US, dropping -7.2% from the prior week. This was despite no change in benchmark mortgage interest rates.The ADP employment report showed private businesses in the US added +107,000 jobs this month, below forecasts of +145,000. It also showed that the pay premium for those switching jobs has now evaporated. This is the report that comes just before the US non-farm payrolls report for January that is out this weekend. That is expected to show a gain of +180,000 jobs in the month, although analysts have consistently underrated the strength of the US labour markets recently.China's official PMIs for January were out yesterday. The factory PMI was unchanged at 49.2 maintaining the December contraction. It was their fourth consecutive month of decline and the ninth in the past ten months. Their services PMI expanded slightly more than in December at 50.9 and up from 50.4. Their services sector has never slipped into contraction in these official surveys. So overall these surveys record a slight expansion in January.Yesterday, China moved to merge more than 2,100 rural banks with about NZ$11 tln in loans (assets) in a move to contain growing financial risks. These banks have been hit by by bad loans, shrinking margin, and slowing growth.And staying in China, it has been reported that investors sold out of ¥14.5 bln (NZ$3.3 bln) worth of mainland equities (net), a sixth month international investors have pulled back. This is the longest and strongest retreat from Chinese equities in a decade. Meeting notes from the last Bank of Japan review shows that more members are coming to the view that they need to shift their unusually low rate up soon. This will be a very big deal when it happens.Singapore is in the sights of Chinese regulators cracking down on illicit money flows. Oddly, the crackdown is on money flowing in to China, not out.Inflation in Germany fell below 3% in January, its lowest since June 2021. Lower costs of energy enabled the drop to 2.9%. Without food & energy, their rate was 3.4% and also its lowest since mid-2022.In Australia, the Federal Court has declared that Westpac engaged in unconscionable conduct in October 2016 when executing a AU$12 bln interest rate swap transaction, the largest of its kind in Australian financial market history. It did pre-hedging ahead of an interest rate swap transaction with some large customers. Westpac will pay a fine of AU$1.8 mln as a penalty and reimburse ASIC $8 mln for its investigation and litigation costs. No one will go to jail though, and the costs of the behaviour are a rounding error compared to Westpac's profits. Lessons are probably not learned here.Australia's inflation rate came in lower than expected at the end of 2023. The quarterly CPI was 4.1% from a year ago (a two year low) and well below the 5.4% in Q3-2023. Markets expected 4.3%. And their Monthly Inflation Indicator for December alone came in at 3.4%, a big drop from 4.3% in November and well below the expected 3.7% analysts were expecting. Both are substantial shift lower and paint a picture of fast-easing price pressures.These results sparked a rise in the local equities market, and a sharpish fall in bond yields as markets start to price in a 0.25% cut in official interest rates by August. (For reference, markets have priced in almost two -0.25% cuts by then here in New Zealand.)Global air cargo volumes rose +10.8% in December from a year ago, meaning 2023 volumes fell only -1.9% over the whole year. But the year ended with December volumes +2.3% higher than December 2019 volumes, pre-pandemic.The UST 10yr yield starts today at 3.96% and down -12 bps from this time yesterday as bond markets start pricing in anticipated Fed rate cuts. The price of gold will start today up another +US$15/oz from yesterday at just on US$2050/oz.Oil prices are down

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 IMF now expects a global soft landing in 2024 and 2025 after authorities seem to have successfully quelled inflation.But first, an update on dairy prices. We mistakenly signaled a full GDT dairy auction overnight in our report yesterday. But we got that wrong; it is next Wednesday, February 6, 2025. But there was a GDP Pulse even overnight instead and that delivered higher prices. WMP prices were +1.1% higher that the last equivalent event a week ago. SMP prices were +0.3% higher. These gains were less than anticipated in the dairy futures markets, but both continue the recent trend of rising prices.Meanwhile, the US Redbook retail index of bricks & mortar stores came in +5.0% higher last week than a year ago, maintaining the recent gains. And don't forget these are off heady rises a year ago, so there isn't any indication yet American consumers are flagging under household budget pressures in these results.And the widely-watched Conference Board survey of consumer confidence rose in its January edition, largely as expected. Consumers are feeling the most upbeat in two years.And there has been a trifecta of good American data out overnight with the US JOLTS report surprising with a rise in job openings in December. They surged by +101,000 from the previous month to over 9 mln, the highest in three months and above the market consensus which expected to hear of a retreat.The only American data out overnight that was negative was the Dallas Fed's survey on the service sector in the oil patch. Like the factory survey, it retreated.In China, market optimism for an economic rescue package is fading. China’s stock and bond markets are giving a clear signal to policymakers that they need to take more steps to revive investor confidence. Stocks fell for a third day on Tuesday, pulling back from last week’s rebound. Their benchmark 10-year bond yield dropped to the lowest level in more than twenty years, as traders now expect the central bank will release additional monetary stimulus to boost growth. But direct solutions for the troubled sectors still seem unaddressed. The IMF may agree with Beijing that current approaches will be enough, but financial markets remain sceptical.In Europe, sentiment was broadly stable in December.And the EU released it's Q4-2023 GDP result overnight - and it looks like they have avoided a recession, even if the result was weak. The stalled in the last three months of 2023, following a -0.1% contraction in the previous quarter. Analysts had expected Q4 to decline too. But these are preliminary estimates. They avoided a recession because of better-than-expected growth in Spain and Italy while the French economy stalled and Germany, which is the largest one, contracted. They will be relieved at the overall result, but in fact it doesn't really paid an encouraging picture.Australia said that December retail sales were weaker than expected, falling -2.7% from November to be just +0.8% higher than year ago levels. That was the steepest drop since August 2020. This follows a revised rise of +1.6 in November and a fall of -0.2% in October 2023. Meanwhile inflation ran at about 4.3% over the same time, so retail volumes in 2023 shrank about -3.5%.Overnight, the IMF chimed in with an updated 2024 growth forecast, one they raised (which was a bit of a surprise). They now expect 2024 global economic activity to expand +3.1%, and improvement from 2.9% seen in October while keeping the forecast for 2025 unchanged at 3.2%. The key improver came from greater-than-expected resilience in the US and several large emerging market and developing economies, as well as anticipated fiscal support in China. 2024 growth forecasts were revised higher for the US (2.1% vs 1.5%), China (4.6% vs 4.2%) and India (6.5% vs 6.3%) but the institution expects lower growth for the Euro Area (0.9% vs 1.2%) and Japan (0.9% vs 1%). They foresaw small improvements in Australia over the next two years but at modest levels, but forecasts for New Zealand were not included.The UST 10yr yield starts today at 4.08% and down -2 bps from this time yesterday. The price of gold will start today up another +US$8/oz from yesterday at just on US$2035/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$82.50/bbl.The Kiwi dollar starts today at just on 61.2 USc and marginally firmer than yesterday. Against the Aussie we are up +20 bps at 92.9 AUc. Against the euro we are unchanged at 56.5 euro cents. That all means our TWI-5 starts today at 70.2 and up +10 bps from yesterday.The bitcoin price starts today firmer yet again. It is now at US$43,177 which is up +2.1% from this time yesterday. Volatility over the past 24 hours has been moderate at just o

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 world's largest property developer is to be dismembered and liquidated.First up today, while you may already know the headline, we must note that Evergrande has been forced into liquidation by a Hong Kong court. While this may not strictly qualify as a 'surprise' it is still a very big deal, for a number of reasons. First it is a spectacular crash-to-earth by a very well connected company - one that rapidly lost favour. Second, it heightens the risk of all other Chinese large property developers, some of whom (like Country Garden) may have assumed there would be bailouts underpinning their industry. And third, it shows Hong Kong courts are now under the direct control of Beijing, handing down verdicts in big sensitive cases in the way Beijing wishes to signal. President Xi is not happy with his billionaire 'friends'. One reason he will be livid is that Evergrande has liabilities to others of over US$300 bln. Unless there is some sort of rescue package, it is hard to see how there won't be a cascading impact. After all, US$300 bln is 1.7% of China's 2023 GDP.Sadly for China, this won't be a quick crash from which everyone can pick themselves up and carry on. It will be a slow lingering process from here. Evergrande claims assets of US$240 bln, but that valuation must be very suspect. If China dumps on international creditors in this case, it will accentuate the de-risking pullback underway.And we should also perhaps note that the share price of EV maker BYD took a tumble yesterday (-4%) missing profit forecasts despite massive sales gains, and a big jump in profit from a year ago. Shareholders have been highly sceptical about the investment prospects of the company recently, making down its share price by -36% over the past year. Also weaker than expected were international sales of its vehicles; it has strength in the Chinese domestic markets however.Meanwhile in the US, the Dallas Fed factory survey contracted rather sharply in January, falling to its lowest level in eight months, basically on weak order levels. This is a sentiment isurvey in the heart of America's oil patch.Across the Pacific, Taiwan's consumer sentiment rose and has now reached its highest level since March 2022. For them the pleasing thing about this survey was that improvement came across the board. The resolution of their Presidential election clearly helped.Singapore's producer prices ended up -1.1% lower in December than in the same month a year earlier capping a full 12 months of declines. Singapore does go through these producer deflation periods on a regular basis, but the last one (apart from the pandemic) was back in 2015-2016. The current one might only have lasted half that time however.In contrast to China, India claimed that it will grow at a 7%+ rate for the next few years. It says "the strength of the financial sector and other recent and future structural reforms" ensure growth at a fast clip. But independent observers are more sceptical that the official confidence.In Finland, they have just had a presidential election, a serious and civilised affair. A 'conservative' (for Finland) ex-prime minister won of the first round, beating out an independent Green candidate. The key issues weren't economic however, rather focused on its new role as a NATO front-line border state, spooked by the Ukraine invasion. But neither candidate won outright so there will be a runoff election in two weeks.The UST 10yr yield starts today at 4.10% and down -4 bps from this time yesterday. The price of gold will start today up another +US$8/oz from yesterday at just on US$2027/oz.Oil prices are down -US$1 at just over US$77/bbl in the US while the international Brent price is now just over US$82/bbl.The Kiwi dollar starts today at just on 61.1 USc and up +20 bps from yesterday. Against the Aussie we are unchanged at 92.7 AUc. Against the euro we are up nearly +½c at 56.5 euro cents. That all means our TWI-5 starts today at 70.1 and up +20 bps from yesterday.The bitcoin price starts today firmer yet again. It is now at US$43,177 which is up +2.1% from this time yesterday. Volatility over the past 24 hours has been moderate at just on +/- 2.0%.You can find links to the articles mentioned today in our show notes.You can get more news affecting the economy in New Zealand from interest.co.nz.Kia ora. I'm David Chaston. And we will do this again tomorrow.

Kia ora,Welcome to Monday’s Economy Watch where we follow the economic events and trends that affect Aotearoa/New Zealand.I'm David Chaston and this is the international edition from Interest.co.nz.And today we lead with news China's debt problems are just growing and more investors are worried.But first, in the week ahead we will get some key data. In the US, they have a Fed rate review on Thursday and markets will be eyeing signals about when rates might move. Some think a March cut is coming. Then on Saturday, the January non-farm payrolls report on their labour market is out. And PMIs, consumer sentiment data, and factory order data will round out their big economic signals. Their earnings season is in its third week and there are some very large companies reporting, including most of the FAANGs (or now more accurately, MAMAAs). EU GDP will come this week too along with CPI updates from them, South Korea and Australia (on Wednesday). Locally it will be building consent data and the large end of month stats dump from the RBNZ that will interest us.Over the weekend we got data on Chinese industrial profits which rose +16.8% in December above the same month last year. And that was the fifth straight month they have risen. But the bar is low. The year ended with overall profits -2.3% lower over the whole twelve months, and in calendar 2022 they had fallen -4.0%.2024 is going to be a tough year for Chinese corporates. They are facing a record obligation to pay bond debt maturities, which will total ¥6.8 tln, (or NZ$1.55 tln). Their problem is that creditors are either increasingly unwilling to roll it over, or will demand significantly higher interest rates to do so. Both scenarios will hurt, and the pain will grow as the year progresses. Debt obligations have been growing much faster than GDP, making creditors skittish. And in the three years to 2026 the redemption obligation rises to ¥20 tln, so the problems won't fade with time.In the recent past, investors have continued buying Local Government financing bonds (LGFVs) which are part of the overall corporate debt, assuming that they are guaranteed by the government. And none have failed outright yet. But these LGFV bonds linked to "infrastructure" (read, their property development sector) are based on unprofitable enterprises, and maturities are jumping 40% in 2024, accentuating the pressures. Recently, institutions have been dealing with this pressure with very high interest rates (8+%) and much shorter maturities (less than 3 years). It doesn't take a rocket scientists to see what is about to happen. This will only work out if Beijing underwrites everyone, which does seem increasingly unlikely. Xi won't be happy in the trap and will probably want to 'teach' the financial markets a lesson.The scale of the problem is highlighted in an updated report on the country's macro leverage ratio. It rose +13.5 percentage points in a year to 288% in 2023 as a measure of non-financial debt to GDP.To put off the reckoning, last week China rolled out some very large and unexpected stimulus, much of it targeted. Their central bank now seems to have an outsized role in these efforts and the signals are more is to come, with the central bank providing cheap funds via its "Pledged Supplemental Lending" programs. These recent moves cost about ¥3 tln in total.But investors from well-known global institutions and local icon firms at a Hong Kong Government promotion event last week cast doubts on how effective the policies would be. The event was supposed to talk things up, but in fact it just allowed participants to confirm that others share their gloom. So far, key concerns such as China's property crisis and low confidence appear unaddressed.Singapore was expecting to report a bounce-back in industrial production in December after the November fall. But it didn't happen. They reported another, albeit smaller, retreat. Analysts there aren't anticipating any significant improvement in the first half of 2024.American inflation seems to be cooling, and in a way that the US Fed will like. While overall PCE inflation was unchanged at 2.6%, their core PCE rate came in lower than expected at 2.9%, down from 3.2% in November. Remember this was running at almost 5% a year ago.And all this happened while personal spending rose in the December quarter, and by more than anticipated. Higher activity and lower inflation is a goldilocks outcome. 'Real' personal consumption is +3.2% higher than a year ago - that's after inflation!And to add to the vibe, personal income has come in +4.2% higher that year-ago levels on the same 'real' basis, showing households are more than keeping up with inflation.Markets are back thinking this might give the Fed an opportunity to reduce policy rates by mid-2024; some think as early as March. One thing on their mind with falling inflation and a policy rate at 5.5% is that real interest rates are effectively rising now.December American pending home sales a

Kia ora,Welcome to Friday’s Economy Watch where we follow the economic events and trends that affect Aotearoa/New Zealand.I'm David Chaston and this is the international edition from Interest.co.nz.And today we lead with news the giant US economy grew by +US$1.4 tln in 2023, shrugging off all recession predictions.US initial jobless claims rose last week, and by more than expected, but were still at near the bottom of their ranges. There are now 2.06 mln people on these benefits, lower than last week but there were 1.86 mln on these same benefits a year ago. The seasonal retreat isn't as strong as last year, so the overall level is creeping up.US durable goods orders came in in December less than expected and continuing their recent yoyo pattern. They were virtually unchanged in December 2023, after a +5.5% rise in November and missing market expectations of a +1.1% rise. Excluding aircraft, new orders increased +0.6%. Capital goods orders however were up a very strong +9.8% in December from a year ago, and holding November' very good level.The big news however is that the US economy expanded at a +3.3% rate in Q4-2023, much better than forecasts of a +2% rise, and following a stellar +4.9% rate in Q3. Consumer spending on goods slowed while consumption of services rose faster. Also helping were a rise in exports. For all of 2023, the giant American economy rose +2.5% in real terms and generated US$27.9 tln in economic activity in the year, up an additional +US$1.4 tln or +5.8% more nominally, +2.5% in real terms. That is a larger expansion in volume terms than China's in the same period and is like adding two thirds of Australia over the past twelve months.The current manufacturing sector isn't delivering its share of this expansion however. The Chicago Fed's National Activity Index fell slightly in December, after being downwardly revised slightly in November, indicating activity contracted during the last month of the year. All four broad categories of indicators decreased from November, and three of them made actually contracted.And the Kansas City Fed manufacturing survey retreated rather sharply in January too.US new home sales came in +4.4% higher in December than a year ago, and residential building consents were up +1.8% in the same monthChina is going through a crisis of confidence, one triggered by tightening State control and lackluster economic performance. Their 'security' push to suppress news that isn't positive for the Party is corroding confidence inside and outside the country. It is particularly obvious in a transformed and chilled Hong Kong.South Korea reported a GDP expansion of +2.2% in Q4-2023 over the same quarter a year ago. This was better than expected and the +1.4% rate in Q3-2023.As expected, the ECB kept its hawkish hold position in the face of continuing inflation pressures, and it kept its quantitative tightening program. It claims credit for reducing inflation however due to its set of 2023 rate hikes.Today is a public holiday in Australia, "Australian Day". (Monday is a public holiday in Auckland.)Globally, container freight rates rose by another +5% last week as the latest supply chain pressures in the Red Sea (and the Panama drought) continue to bite. A feature of the latest changes is that trans-Pacific shipping rates are making a sharp catchup even though they are not directly involved. But still, there is no equivalent rise in rates for bulk cargoes.The UST 10yr yield starts today at 4.14% and down -2 bps from this time yesterday. The price of gold will start today up +US$2/oz from yesterday at just on US$2014/oz.Oil prices are up another +US$1 at just over US$76.50/bbl in the US while the international Brent price is now just over US$81/bbl.The Kiwi dollar starts today at 61.1 USc and unchanged from this time yesterday. Against the Aussie we are little-changed at 92.9 AUc. Against the euro we are marginally firmer at 56.4 euro cents. That all means our TWI-5 starts today just on 70.1 and essentially unchanged in a day.The bitcoin price starts today a little lower. It is now at US$39,703 and down -1.1% from this time yesterday. Volatility over the past 24 hours has been low to 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 Monday.

Although the war on inflation is being won, there are still battles to come and it's too soon to expect Reserve Bank interest rate cuts, says Kiwibank Chief Economist Jarrod Kerr.Speaking to interest.co.nz for the first 2024 episode of our Of Interest podcast, Kerr says the cost of living crisis is improving for households and businesses."We are winning the war on inflation but there are a few battles ahead and a few wins that we need over this year. We think inflation will fall to 3% quite quickly, but the move from 3% to 2% might be a bit awkward later this year and into next year," says Kerr.On Wednesday Statistics New Zealand's latest Consumers Price Index (CPI) showed annual inflation down to 4.7% in the December quarter from 5.6% in the September quarter. Hot on the heels of the latest inflation data, Reserve Bank Chief Economist and Monetary Policy Committee member Paul Conway is due to give a speech next Tuesday. This will include comments on NZ data released since the central bank's last Monetary Policy Statement in November.These will be the first public comments from a senior Reserve Bank figure this year. "I think we have to have an acknowledgement [from Conway] that the overly hawkish commentary from November is no longer. When you look at what they told us in November, they basically told us they've got no tolerance for upside surprises. We've had nothing but downside surprises since that statement... The GDP report came out much weaker than what the central bank [expected]," Kerr says."They gave us a clear indication that if everything goes wrong to the upside that they will hike [the Official Cash Rate] again, and they gave us a 60% probability that they would hike again. I think that was wrong at the time and it has been proven wrong now. And I think Paul may hint that suggestions of another hike in this cycle have evaporated. But equally talk of rate cuts, I think they'll be coming out and say that's premature, that's a conversation for later in the year."A key area of concern remaining for the Reserve Bank will be non-tradeable inflation, relating to inflation from domestic goods and services. This came in at an annual rate of 5.9% in the December quarter versus the Reserve Bank's 5.7% forecast. Kerr notes much of this is coming from housing related costs such as rents, helped higher by record net migration levels, insurance, and construction costs. In reality the Reserve Bank doesn't have a great deal of influence in the areas of insurance, rates and rents, Kerr says.In the podcast he also talks about the next OCR review on February 28, whether the Reserve Bank's Monetary Policy Remit to; "achieve and maintain future annual inflation between 1% and 3% over the medium-term, with a focus on keeping future inflation near the 2% mid-point," may need to change in an era of climate change and other challenges, when he expects the Reserve Bank to cut the OCR, the US interest rate outlook, the outlook for the NZ dollar, the inflationary threat from Middle East conflict, and concerns about China.*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 China has rolled out what might be the first in a set of ¥1 tln stimulus/recovery moves.But first, American mortgage applications rose for a third consecutive week last week, up +3.7% even though there was little movement on benchmark interest rates. Perhaps this market is emerging from its slumbers.The 'flash' January PMI data for the US is also quite strong. Service sector activity expanded the most in seven months, while manufacturing firms continued to experience a moderate drop in output. New business expanded for the third consecutive month and at the sharpest pace since June, despite the second consecutive monthly decline in new export orders. This is not a description of a struggling economy - maybe not firing on all cylinders yet but certainly on the up.The Bank of Canada held its policy rate at 5% for the fourth consecutive time overnight. This was as widely expected, leaving benchmark borrowing costs at a 22-year high. Like its southern neighbour, it is still selling down its bond holdings via its quantitative tightening program.Japanese exports are firing impressively. They were up +9.8% in December from the same month a year ago, more than expected. And with the sharp drop in oil prices, the cost of their imports fell equally impressively, down -6.8% on the same basis. That enabled them to log an unexpected trade surplus in December. (They can probably thank the missteps from Xi and Putin for this result.)And Japan's January PMI's were all stronger, which is no surprise.In China, their central bank announced they will reduce the reserve requirement ratio (RRR) for all banks by 50 basis points to just 10% starting from February 5, releasing up to ¥1 tln to the market to try and get an economic recovery going. (They seem to have a penchant for 1 tln policy moves at present - and they are adding up.) This would be the lowest RRR level since March 2007. The PBOC had previously cut its RRR by 25 bps in both March and September last year. Additionally, starting today, they have lowered re-lending and re-discount interest rates by -25 bps, targeting the rural sector and small businesses. These announcements certainly boosted equity markets.They need a boost. German companies operating in China are less than positive even if they remain committed to staying. 83% of the 566 respondents in a survey released overnight said China “is facing a downward trajectory” economically. Nearly two-thirds said they expected a recovery to take one to three years.Although China's GDP grew by +5.2% in 2023, achieving Beijing's target of "around 5%", its nominal GDP in US dollar terms fell for the first time in 29 years as its share of the global economy shrank for the second straight year.In Europe, business activity fell at the slowest rate for six months in January, according to 'flash' PMI survey data. But downturns are persisting in both the manufacturing and service sectors as they get further falls in new orders. The overall contraction of new orders was however the smallest recorded since last June, helping stabilise employment levels and lift business optimism about the year ahead to an eight-month high.Meanwhile, the ECD has reportedly asked some banks to closely monitor activity on social media to detect a worsening in sentiment which could lead to a deposit run. While early detection might not stop a bank run like SVB or Credit Suisse, regulators and banks are eager not to be caught off guard, according to the people familiar with the regulators' thinking.In Australia, their 'flash' January PMIs were similarly underwhelming. Activity continued to decline but the pace of reduction eased alongside a slower fall in new orders. However there were improvements in business sentiment while employment levels also continued to rise. Inflation pressure fell.The UST 10yr yield starts today at 4.16% and little-changed from this time yesterday. The price of gold will start today down +US$12/oz from yesterday at just on US$2012/oz.Oil prices are up +US$1at just over US$75.50/bbl in the US while the international Brent price is still just over US$80/bbl.The Kiwi dollar starts today at 60.2 USc and -½c lower from this time yesterday (and a new two month low). Against the Aussie we are firmer at 92.8 AUc. Against the euro we are also firmer at 56.2 euro cents. That all means our TWI-5 starts today just under 70.1 and up +30 bps in a day.The bitcoin price starts today a little higher. It is now at US$40,126 and up +2.5% from this time yesterday. Volatility over the past 24 hours has been modest to 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. A

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 reports of an impending large Chinese share market rescue that were enough to stop falls there yesterday.But first, it is an important day here in New Zealand because we get the Q4-2023 inflation data at 10:45am. That will set the tone for our OCR direction for the first half of the year and the related monetary policy decision-making. Financial markets expect a headline rate of 4.7%, down from the Q3-2023 level of 5.6%. Anything about these levels is still far too high, and with the RBNZ back to having a single inflation-control mandate, they have less room for patience. But as always, the detail (core, or tradable/nontradable) will be what markets are watching.In the US, their weekly monitoring of bricks & mortar retail trade by the Redbook index shows stronger gains, up +5.2% last week from the same week a year ago, notably more than accounted for by inflation. That caps the best four week run since late 2022.But another Fed district has delivered a dour factory survey, this one from the Richmond Fed. But the sluggish manufacturing situation there contrasts with a more upbeat services survey in the same region, although little-changed to be fair.In Japan, their central bank kept its key short-term interest rate unchanged at -0.1% and that of 10-year bond yields at around 0% during its January meeting. This was as expected. Meanwhile, in a quarterly outlook, they trimmed their 2024 CPI estimate to 2.4% from October's projections of 2.8%, reflecting a recent decline in oil prices. For 2025, they expect core inflation to hit 1.8%, slightly higher than its earlier estimates of 1.7%. Policymakers also cut their 2023 GDP growth forecast to 1.8% from 2.0%.Data released in Taiwan yesterday for December wasn't good. Retail sales rose only +1.1% in December from a year ago, a weak result. And industrial production actually fell -4.0% on the same basis. But this is consistent with the weak new order data we reported yesterday.In an effort to stabilise local equity markets as they head into the Chinese Luna New Year holiday (which starts on February 9), Bloomberg is reporting that Beijing is trying to mobilise ¥2.3 tln (NZ$525 bln) for a home team buying spree. Just the rumour brought a turnaround in Hong Kong, Shanghai and Shenzhen yesterday, but the big question is will it be sustained and change attitudes of investors, or will they just take the opportunity to lock in prices they wouldn't otherwise be offered. China has a history of these types of emergency responses, but few of them work. During the 2015 rout, the home team spent about ¥1.7 tln in a summer support drive but stock prices fell anyway after the state buying wound down. It was never clear how the losses were absorbed.And in their property market, newly released data for 2023 shows that foreclosures in the residential market jumped a lot from 2022, up more than +35%. There were 796,000 foreclosure auctions monitored nationwide in 2023 and 389,000 were for residential units. Non-auction foreclosures will be on top of that. The expected small improvement in EU consumer sentiment has not eventuated in January. But to be fair, it is only a minor hesitation in the broader perspective.In Australia, the NAB business confidence index climbed to -1 in December from a downwardly revised -8 in the prior month. It was the third straight month of negative readings but the softest figure in the sequence, supported by a pick-up in the mining and retail sectors.And staying in Australia, it looks like the "stage three" Morrison tax cuts for high earners are to be revised so that they shift to help those on middle and low incomes, including people earning less than AU$45,000 pa, a level ignored in the prior version. High earners who were counting on the tax break are not happy. The 37% tax bracket for workers earning more than AU$135,000 pa is likely to be retained. (Meanwhile, Scott Morrison is quitting the Australian parliament to go work for some ex-Trump Administration officials.)The UST 10yr yield starts today at 4.15% and up +5 bps from this time yesterday. The price of gold will start today little-changed, up a mere +US$1/oz from yesterday at just on US$2024/oz.Oil prices are down -50 USc at just over US$74.50/bbl in the US while the international Brent price is still just over US$79.50/bbl. Not much net change but it has been volatile in between.The Kiwi dollar starts today at 60.7 USc and -¼c lower from this time yesterday (and a two month low). Against the Aussie we are softish at 92.5 AUc. Against the euro we are holding at 56 euro cents. That all means our TWI-5 starts today just under 69.8 and down -15 bps in a day.The bitcoin price starts today lower, again. It is now at US$39,145 and down another -3.4% from this time yesterday.

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 investors are marking down Chinese equities in a brutal retrenchment Beijing doesn't seem to be able to arrest. Funds are fleeing to Tokyo and the US both of which reached modern record highs.But first in the US, a closely-watched leading indicator metric slipped marginally in December even though more components rose than fell. However the improving metrics were more than offset by weak conditions in manufacturing, relatively high interest-rates, and lowish consumer sentiment. But the magnitude of monthly declines has lessened, and the LEI’s six-month and twelve-month growth rates have turned upward even if they remain negative. The 'recession; signal from this data is weakening.China's Loan Prime Rates were unchanged yesterday, not a surprise given last week's unchanged Medium-Term Lending Facility rate. The unchanged LPR rates are because their central bank is in a very tough position, having already prioritised keeping up the value of the yuan to try and hold back the equity market retreat. Lower interest rates would make it almost impossible to hold the yuan's value - and they are prepared to take the risk on economic expansion.The declining prospects for the Chinese economy can't now be avoided, even in China itself, it seems. Rare stories are surfacing about a 'deflationary nosedive'.In Taiwan, export orders fell a sharp -16% in December from the same month a year ago to under US$44 bln, far worse than market forecasts of a -0.3% fall and reversing a +1% gain in the previous month. This was the largest annual decline since June, as demand decreased for all product groups. It is a big change, but one magnified by high orders a year ago, so a base effect is in play here. A significant share of these export orders are for production in China by Taiwanese companies, so the decline won't all be felt in Taiwan.The almost halving of the nickel price over the past year is causing a messy shakeout among miners in Western Australia (and globally in fact). Mines are closing and those running are loosing big money. High inventories and very weak demand from China are behind the retrenchments. Nickel is mainly used in making alloys such as stainless steel. Among other technical industrial applications, it is used in batteries as a "critical mineral", including rechargeable nickel-cadmium batteries and nickel-metal hydride batteries used in EV and hybrid vehicles. The lithium price has fallen even further and its miners are taking a cold bath too.The UST 10yr yield starts today at 4.10% and down -3 bps from this time yesterday. Wall Street has opened its week modestly higher, with the S&P500 up +0.2% but that is a new record high. Overnight European markets were up a bit more, up +0.6% on average. Yesterday Tokyo surged again ending up +1.6% apparently driven by offshore demand. Hong Kong fell -2.3% and Shanghai a very large (for them) -2.7%. Singapore was little-changed. The ASX200 ended its Monday session up +0.8% which the NZX50 ended up a more modest +0.2%.The price of gold will start today down -US$6/oz from yesterday at just on US$2023/oz.Oil prices are up +US$1.50 at just under US$75/bbl in the US and the international Brent price is up +US$1 just over US$79.50/bbl.The Kiwi dollar starts today at just under 61 USc and marginally lower from this time yesterday. Against the Aussie we are softish at 92.6 AUc. Against the euro we are also soft at 56 euro cents. That all means our TWI-5 starts today just under 69.9 and down -10 bps in a day.The bitcoin price starts today lower. It is now at US$40,511 and down -2.6% from this time yesterday. Volatility over the past 24 hours however 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 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 good economic news that just keeps coming even as fears don't abate.First, for those returning to work, welcome back. For those still on holiday, lucky you.This coming week we will get some grunty American data along with the meat of their earnings reports for December results. (Tesla's will be particularly interesting.) They will report their first estimate for Q4-2023 GDP, December PCE, and personal income & spending data, as well as durable goods order data. Outside the US, Japan has a rate decision, as does the ECB, Canada, Norway, Turkey and Malaysia. We will get PMIs from Australia and their NAB Business Sentiment update for December.Over the weekend, data from China showed investors are still withdrawing funds from the country on a net basis. Foreign direct investment into the Middle Kingdom fell by -8% in 2023. But although the transparency on this data is limited, there is a suggestion that there was a small improvement in the month of December from a year ago.But that may be a data mirage. Bloomberg is reporting that things are getting grimmer in Chinese equity markets. Tokyo has overtaken Shanghai as Asia’s biggest equity market, while India’s valuation premium over China has hit a record. The meltdown in Chinese share values is wreaking havoc on the nation’s asset management industry, pushing mutual fund closures to a five-year high. But you won't find any of this in Hong Kong or other Chinese analysis.Japan's December CPI inflation rate came in at 2.6%, down from 2.8% in November. And their core rate was at 2.3%, down from 2.5% in November. That is the 21st consecutive month it has been above the Bank of Japan's 2% target. But with this slippage, the central bank will likely remain very cautious that Japanese inflation is really back. 2.3% is a 17 month low even if over all of 2023 inflation was at a 41 year high in Japan. To help ensure that inflation stays embedded, Japan's government is urging businesses to raise wages ahead of annual spring negotiations between employers and labour unions. The largest union is demanding a 5% rise.In the US, consumer sentiment as measured by the widely-watched University of Michigan survey surged in January, and inflationary expectations retreated. This was a combo that was not expected, or at least, not as decisively. Sentiment is now suddenly its highest in 2½ years. Year-ahead inflation expectations softened to 2.9% after plunging in December. That current reading is the lowest since December 2020. Few analysts saw such a sharp improvement in both measures coming although it is reflective of the steady progress in the American economy in other data, especially labour market data.But American existing home sales activity dropped by -1.0% in the December month from a month earlier to an annualised rate of under 3.8 million, reaching the lowest level since August 2010 and falling below the market's anticipated 3.82 million units. For all of 2023, they sold 4.1 mln, the lowest level in nearly 30 years.North of the border, Canadian retail sales jumped in December (but after a drop in November), the sharpest increase in 11 months.Across the Atlantic, German producer deflation got "worse" in December with producer prices falling a whopping -8.6% from the same month a year ago. On an annual average basis, industrial producer prices were -2.4 % lower in 2023 than in 2022. But the December result is not all bad because a lot is due to extreme base effects. And energy prices in December were down more than -23% from the same month in 2022. Basically it is a gift from Russia. Germany is surviving a cold winter with plenty of gas and low prices.Closer to home, in Australia the IMF released the results of its annual staff review. The IMF wants to see meaningful tax reform there, and doesn't like that the markets pricing interest rate cuts in 2024. They [rightly] point out that inflation and inflation expectations are still far too high. The IMF's call for tax reform in Australia is a long-standing position - but one Canberra ignores.The UST 10yr yield starts today at 4.13% and down -3 bps from this time Saturday. In a global market that has been rising since the start of 2023, investment grade corporates have just issued a record $150 bln in debt in January - so far. It's a head-turning pace. Corporate treasurers are voting with their deals, trying to stay away from the upcoming Trump uncertainties, and betting rates will rise sharply in the future. There is also pent-up rollover demand.The price of gold will start today up +US$4/oz from Saturday at just on US$2029/oz.Oil prices are little-changed at just on US$73.50/bbl in the US and the international Brent price is still just over US$78.50/bbl.The Kiwi dollar starts the week at 61.1 USc and little-ch

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 supply-chain pressures are about to hit global trading patterns again.But first, US jobless claims were relatively low last week. In fact, seasonally, new claims fell to levels we last saw in September 2022, and continuing claims down to October 2023 levels. Those losing jobs in the US are clearly having a relatively easier time in finding new positions. No sign of labour stress here yet.US December housing starts have come in better than expected although not quite to the November levels. But they were +7.6% higher than year-ago levels. And there was a big jump (+6.1%) in residential building consents being issued, so the future looks ok for this sector.But the latest Philly Fed factory survey was downbeat, a bit like from some other regions. New order levels are shrinking but perhaps at a slower pace than previously. But shrinking all the same. This report covers an important and very large heartland manufacturing region.Yesterday the US Fed released its Beige Book summary of all these surveys for December and overall it reported little-change from an uninspiring position.In China, analysts are waiting for the official December foreign direct investment data - to see how 'bad' it is. But we have to keep in mind it is not career-enhancing in China these days to report news that doesn't show the Party in a good light.Australia shed -65,000 jobs in December from November, with a huge -107,000 retreat in full time jobs and only +41,000 extra part time jobs replacing them. Their December jobless rate stayed at 3.9%. (NZ releases its December quarter labour force data on Wednesday, February 7. The September level was 3.9%)Australian inflation expectations have settled in at 4.5%, the same in December as November. It has been sticky between 4.5% and 5% since March 2023 - at a level that the RBA is unlikely to feel comfortable with given their target is "between 2% and 3%" and there is no evidence they are moving toward that.The IEA has updated its forecasts for oil demand and they are higher for 2024, both from the Suez supply chain disruption, and from rising demand by China. Global inventories are lowish at present, especially in the US. This report, and a similar outlook from OPEC, raised oil prices today.And in China, despite the official rhetoric about becoming carbon-neutral, their coal mining output hit a new record high again in 2023, and they have plans to boost it much larger than present levels.The spreading of Middle-East tensions and fights has resulted in another very sharp rise in ocean container freight rates. They were up a stunning +23% last week and have now increased by +82% when compared with the same week last year. That is now even affecting outbound trans-Pacific routes where they rose +38% last week. Capacity demand for avoiding the Suez Canal and Red Sea have jerked things around a lot. China's factories won't be enjoying the cost consequences. Meanwhile, bulk cargo rates continue to ease.The UST 10yr yield starts today at 4.14% and up another +2 bps from this time yesterday. The price of gold will start today up +US$9/oz from yesterday at just on US$2014/oz.Oil prices are a lot firmer, up +US$2.50 at just under US$74/bbl in the US and the international Brent price is now at just over US$78.50/bbl and up US$2.The Kiwi dollar starts today at 61.1 USc and little-changed from this time yesterday. Against the Aussie we are down -¼c at 93 AUc. Against the euro we are unchanged at 56.2 euro cents. That all means our TWI-5 starts today just on 70.1 and virtually unchanged.The bitcoin price starts today lower again, now at US$41,808 and down another -1.2% from yesterday. Volatility over the past 24 hours however has remained modest at +/-1.4%.You can find links to the articles mentioned today in our show notes.You can get more news affecting the economy in New Zealand from interest.co.nz.Kia ora. I'm David Chaston. And we will do this again 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 strains in the Chinese economy are grabbing market attention today.But first, it is mostly upbeat economic news from the US. American mortgage applications were up +10% last week as this market shows signs of stirring again. Benchmark mortgage rates slipped with the key 30 year fixed rate down to 6.89% plus points.So it won’t be a surprise to know that the NAHB/Wells Fargo Housing Market Index rose, extending the rebound from a near-on-year low touched in November and its best level since August 2023December retail sales came in much better than expected. They were up +0.6% from the prior month, following a +0.3% rise in November and beating forecasts of +0.4%. It is the biggest increase in three months, led by sales of cars. Year on year they were up +5.6% and handily beating inflation which rate at 3.4% over the same period.Adding to today's positive vibe, US industrial production also rose more than expected in December although the bar wasn't high here. On a volume basis, it is +1% higher than a year ago.The UST 20yr bond auction today was well supported, with a median yield of 4.36%, up from the prior equivalent event a month ago at 4.15%. That is a notable rise.There was a big set of important Chinese economic releases late yesterday. As foreshadowed in Davos, China recorded a Q4-2023 GDP expansion of 5.2% which was marginally less than the +5.3% expected. The official 2023 target was "around 5.5%" so they undershot slightly. Disappointing analysts was that this was only achieved by outsized public-sector spending. Consumer spending was a drag on this result.China's industrial production grew by +6.8% year-on-year in December 2023, after a +6.6% gain in the previous month and beating market forecasts of +6.6%. It was the fastest recorded pace of expansion in industrial production since February 2022 and electricity production rose +8.0% which supports the industrial production claim.However their housing development retreat deepened in December. And new house prices fell at their fastest pace since March. Prices for pre-owned units fell faster and everywhere.Meanwhile, China's population is declining faster now, as deaths rise above norms. The number of people in the world’s second-largest economy fell for a second year to 1.41 billion in 2023. The Chinese population started shrinking in 2022 for the first time since 1961.We should also note the Chinese Lunar New Year runs this year from January 26 to March 5. It is the Year of the Wood Dragon. It is also the first post Covid period where family travel is high. In the middle, Spring Festival, China's biggest festival, will fall on February 10. Passenger trips via railway, highway, waterways, and civil aviation are expected to hit 1.8 billion during the period officials predicted. About 80% of the trips will be by car, which are likely to hit a new high. They also expect Covid to spike and spread during this gigantic travel and intermingling.Both S&P and Moody's issued separate global reports overnight for 2023 that showed sharply higher funding costs are resulting in many more corporate defaults. The 12 month trailing corporate default rate rose to 4.8% in December, the highest rate since May 2021. Although almost half the defaulters they rated were in the US, Europe was where the biggest increase came from. And in 2024 it is the "media and entertainment" industry that is the most vulnerable.In Australia, they are getting to realise that rate cuts may not be on the agenda as soon as they had priced in. And in Canberra yesterday at a long press conference, the Chinese ambassador took a tough line over Australia's complimentary comments about the free and fair democratic voting in Taiwan. There seems to be a cooling underway in China-Australia relations not long after a thawing had started.Locally, the REINZ will release its December transaction data at 9am this morning. We will have full coverage.The UST 10yr yield starts today at 4.12% and up +4 bps from this time yesterday. The price of gold will start today down another -US$22/oz from yesterday at just on US$2005/oz.Oil prices are softer at just under US$71.50/bbl in the US and down by another -50 USc. The international Brent price is now at just over US$76.50/bbl and down almost -US$1.The Kiwi dollar starts today at 61 USc and down almost another -½c from this time yesterday. Against the Aussie we are holding at 93.3 AUc. Against the euro we are lower at 56.2 euro cents. That all means our TWI-5 starts today just under 70.1 and -30 bps lower.The bitcoin price starts today lower, now at US$42,308 and down -1.9% from yesterday. Volatility over the past 24 hours however has remained modest at +/-1.5%.You can find links to the articles mentioned today in our show notes.You c

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 expectations for US Fed rate cuts in 2023 were scaled back by financial markets overnight on Fed-speak commenting. Benchmark bond yields rose.But first, the overnight dairy auction was a 'good' one with prices up +2.25% in USD terms, and boosted by a falling NZD to be +4.1% higher on the local basis. Most products got better prices, especially butter which was up +5.8% from the prior event two weeks ago. The key WMP was to +1.7%, but that was enough to take it back to a level that we had not seen in more than a year. SMP was up +1.2%. Today's event helps underpin the better farmgate payout levels analysts had expected late in 2023.In the US, the New York Fed's Empire State factory survey delivered a fierce blow, diving sharply. New orders and shipments also posted sharp declines. The headline general business conditions index fell twenty-nine points, its lowest reading since May 2020. Perhaps oddly however, their expectations of future activity rose just as sharply and while still subdued, clearly firms don't expect the current drop-off to continue into 2024.Meanwhile a national household survey, also released by the New York Fed, showed a continuation of the recent declining trend in monthly household spending growth, even though spending growth remains well above pre-pandemic levels.In Canada, December inflation rose to 3.4% in December from 3.1% in the previous month, a rise that was expected - but probably not welcomed by their central bank all the same.They would have been pleased by the very good rise in housing starts in December, however.In China, Bloomberg is reporting that China is considering ¥1 trillion (NZ$225 bln) of new debt issuance under a so-called special sovereign bond plan, only the fourth such sale in the past 26 years, as authorities seek more money to finance intensifying efforts to shore up the world’s second-largest economy.Meanwhile in Davos, a senior Chinese official said the 2023 GDP economic expansion would come in at 5.2% for his country. Apparently there are no inhibitions there for officials releasing market sensitive data early.The ECB survey of inflation expectations shows it trending in the desired direction there. Median consumer expectations for inflation over the next 12 months dipped to 3.2% in November, marking the lowest rate since February 2022 and down from the previous month's 4.0%.Also better than expected, the German ZEW sentiment survey rose again for a fifth consecutive time to its highest level since February 2023.In Australia, the Westpac-Melbourne Institute Consumer Sentiment index fell -1.3% in January from December, remaining in negative territory now for nearly two years. A surge in the cost of living and high interest rates continued to dominate sentiment. The index has been below the 100 mark since February 2022, the longest streak since the early 1990s recession.The UST 10yr yield starts today at 4.08% and up +10 bps from this time yesterday. The price of gold will start today down -US$28/oz from yesterday at just on US$2027/oz.Oil prices are marginally softer at just under US$72/bbl in the US and down by -50 USc. The international Brent price is still at just under US$77.50/bbl.The Kiwi dollar starts today at 61.4 USc and down another -½c from this time yesterday. Against the Aussie we are holding at 93.2 AUc. Against the euro we are almost unchanged at 56.5 euro cents. That all means our TWI-5 starts today just under 70.4 and -10 bps lower.The bitcoin price starts today having turned up, now at US$43,116 and up +1.5% from yesterday. Volatility over the past 24 hours however has remained modest at +/-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 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 in the shadow of closed American markets.First, remember today is a public holiday in the US - Martin Luther King Birthday. Both the bond and stock markets are closed.First we should note that the Davos talkfest is underway again. It will have no impact this year despite the headlines it generates, just as it hasn't had for years. But both China and Hong Kong senior officials will be there to try and divert attention from Taiwan's free elections and Hong Kong's recent clampdown moves.In China, their central bank did not cut its medium term lending facility rate as was expected. It held it at 2.5%. But it did add much more to banking system liquidity, a +¥216 bln (+NZ$47 bln) net injection from its overall ¥995 bln (NZ$222 bln) offering yesterday. This was a surprise (unexpected) move. Markets are now absorbing the implications of these two policy actions.In Canada, the Business Outlook survey run by their central bank reported further declines in sentiment and now there is barely more 'positive' views than 'negative' ones. If anything the negative momentum is building. Almost 40% of firms surveyed said that are suffering sales declines. The same survey found that price pressures are easing however.Japanese machine tool orders revealed a recent recovery in December, up +9.2% from November driven by strong local orders, up more than +15% on the same basis. These recent gain a reduced the year-on-year deficit to under -10% and its least since late 2022.Indian exports rose strongly in December from November, up +13% on that basis, but were only +1% higher than the same month a year ago. The Red Sea choke effects haven't hit them yet.EU industrial production withered further in November, down -0.3% from October to be -5.8% lower than the same month a year ago. It is not a healthy track overall, but was particularly hurt by Ireland, Belgium and the Netherlands. Showing good gains were Denmark especially, but also Sweden. Even France managed a year-on-year rise. But not so Germany. (If the UK was still included, it would have been a drag too, although not by as much as the average.)Meanwhile, Germany released its full year 2023 GDP result which recorded a small -0.3% drop. That was far worse than the +1.8% expansion in 2022 although it was what was expected. The 10 year long-run annual gain has been +1.2% so 2023 was disappointing all round for them and they had the dubious distinction of being the worst performing major economy in 2023. But they are not yet in "recession" if your definition is two straight declining quarters; despite the -0.3% drop in Q4 from Q3, their Q3 change was revised to be flat.In Australia, there has been a rather remarkable legal decision handed down relating to a gas pipeline proposal and "cultural heritage". Justice Natalie Charlesworth rejected claims on behalf of a group of Tiwi Islanders that the proposed pipeline would damage Sea Country and anger two creatures of their Dreaming stories – Ampiji, the rainbow serpent and the Crocodile Man. Her judgment slammed the evidence based on “cultural mapping” presented by the taxpayer-funded Environmental Defenders Office as “so lacking in integrity that no weight can be placed” on it and said there was “a significant degree of divergence” in the evidence given by Tiwi Islanders. She called the EDO positions "confection" and "made up" by their lawyers, and not supported by the Tiwi Islanders themselves.The UST 10yr yield starts today at 3.98% and up +4 bps from this time yesterday. The price of gold will start today up another +US$6/oz from yesterday at just on US$2055/oz.Oil prices are marginally softer at just under US$72.50/bbl in the US and down by -50 USc. The international Brent price is now at just under US$77.50/bbl.The Kiwi dollar starts today at just under 62 USc and down almost -½c from this time yesterday. Against the Aussie we are down -¼c at 93.1 AUc. Against the euro we are almost -½c lower at 56.6 euro cents. That all means our TWI-5 starts today just on 70.5 and -40 bps lower.The bitcoin price starts today lower again, now at US$42,485 and down another -1.0% from yesterday. Volatility over the past 24 hours however has been modest at +/-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 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 inflation's impulse seems to be easing worldwide.In the week ahead, the big international data will focus on the Q3 Chinese GDP result on Wednesday. In the US, the data will be second tier this coming week, although Q4 earnings reports will be released in a swelling tide. We will get some European CPI data and the same from Japan.Locally, we could get REINZ December data this week too depending on how fast agencies got their reports in over the holiday period.Over the weekend, China's new yuan lending for December came in well short of what was expected. Beijing is clearly having trouble getting funding out of its large policy banks. The December +¥1.17 tln was marginally higher than in November but well short of the expected +¥1.4 tln. In their context ¥1.4 tln isn't large by historic standards. And the +10.4% rise from a year ago is very low by Chinese standards - in fact a record low expansion on that annualised basis. China's exports rose from US$292 bln in November to US$304 bln in December, a +4.0% rise and a bit more than expected. They were up +2.3% from the same month a year ago. But the good December result - aided by a depreciated currency - masks that for all of 2023 exports dropped -4.6% from the record 2022 level.Helping the December result was that producer prices fell -2.7% in China, quite a different pressure than the virtual no change in December 2022.And as expected, consumer inflation was negative - that is, deflation - with prices -0.3% lower in December than the same month a year ago. This was slightly "less worse" than expected, and is the third month in a row of year-on-year deflation. But that is their longest deflation streak in 14 years. Overall food prices rose +0.6% in the month to be -2.0% lower than a year ago. But beef prices are -6.0% below year ago levels, lamb -5.7% down, and milk down a lesser -0.9%.The Taiwan election result delivered a tough outcome for the winner, the China-sceptic DPP candidate. Lai Ching-te won by a comfortable margin though with less than half the vote, but his party lost control of parliament on which the president-elect will have to rely to pass legislation and spending.Indian industrial production momentum fell away in November. It was up +2.4% from a year ago, marking the lowest reading since March last year, following a downwardly revised +11.6% growth in October. Analysts had expected November to expand by 4%. Output decelerated sharply across all key sectors. Meanwhile consumer inflation ticked up slightly in December, up to 5.7%, above the November 5.4% but less than the expected 5.9% rate.American producer prices unexpectedly fell in December from November but only by a tiny amount. That means that their producer prices were up only 1.0% in the year, up from a rise of +0.8% in November on that basis. A year ago US PPI was rising at a +6% rate. This latest PPI data was less than expected.The January edition of the USDA's WASDE report forecasts lower American beef exports in 2024 and higher imports from Australia and New Zealand. The American milk production forecast is lowered too.We should also note that for all states and the US Federal Government, it will be a holiday tomorrow, Martin Luther King Day. American stock and bond markets will be closed. In Australia, they set their milk price for dairy farmers at AU$9.44/kgMS once a year in June. That is a mandated, government policy. Since then international prices for dairy products have dived significantly. In New Zealand, our June price was NZ$8.75/kgMS. But as prices retreated it has been eased back to NZ$7.50/kgMS. However the Aussie price is still AU$9.44/kg. That makes Australian dairy products very expensive locally, makes exporting from there near impossible - and it encourages imports. In fact because we have full access to the Aussie market under CER, our exports dairy to have surged, for some products by more than +60%. More is to come. Some local Australian dairy facilities are in threat of closing, some already have. It is all a lesson in the folly of a government-mandated price "to protect farmers". It will end up hurting them more. It is clearly much better to have market signals all the way down the supply chain.The RBNZ reported that the total value of our housing stock as at the end of September rose by +$27.6 bln from June to $1.59 tln. That was the first quarter-on-quarter rise since December 2021, although a year ago this value was $1.63 tln, so it is still some way down on that basis and still -$172 bln lower than the peak in December 2021. Over that time we have been building new houses, aggressively in some places (Auckland), so that data shows the per-dwelling value down more than -13% from that peak, nationally, a retreat of -$118,000 per dwell

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 have a quick news wrap-up so you can get back to your 'time-off'.First, American inflation has proved more sticky than markets had hoped, up to 3.4% in December, a rise from a five-month low of 3.1% in November. Market had expected a 3.2% rate. Energy prices went down at a slower pace as did food prices and rents. Core inflation came in only marginally lower than the prior month at 3.9% when a fall to 3.8% from the prior 4.0% was expected.US equities retreated in the news and bond yields rose marginally, with investors less certain a US Fed rate cut is coming soon.Meanwhile the signals from their labour market remain strong. US jobless claims fell last week from the low seasonal level the prior week. This data is still not revealing the long-expected labour market stress market bears have been warning about.Meanwhile we should note that Hertz is selling down its EV rental fleet in the US, reverting to ICE cars. Hertz previously set a target for 25% of its fleet to be electric by the end of 2024 but high operating costs mainly related to collision damage, and very weak resale values have them reassessing the move. They will take a -US$250 mln witeoff related to the move.The latest US 30 yr bond auction brought a median yield of 4.16%, down from the prior 4.28% a month ago. Both were well supported with competitive bidding.In China, December vehicle sales data for December is out revealing a record high 3.15 mln units sold in the month, and taking the annual total to just over 30 mln and also a new record high. NEVs accounted for 9.5 mln units for the year (no, China is not an all-electric market yet). Even for December NEVs sold almost 1.2 mln but that was only just over a third. (You may recall, New Zealand NEV car sales in December were more than 80%.)We will get China's December CPI inflation rate today at 3pm. Expect deflation again of -0.4% for the year after a -0.5% retreat in November.In Norway, with an 80:20 approving vote, their parliament pushed ahead with commercial plans to open the Arctic Ocean to seabed mineral exploration. That was despite environmental groups and the fishing industry’s warnings that the move would put the biodiversity of vulnerable ecosystems at risk.Globally, containerised shipping freight rates rose again last week to be +15% higher than the surge the prior week, again all about the Red Sea risks. China to Europe rates were up almost +25%. Transpacific rates to the US barely changed. Going the other way, bulk cargo rates retreated rather sharply this week.Australian exports rose to AU$46.3 bln in November, +1.7% higher than October but -8.2% lower than a year ago. Meanwhile imports slipped rather sharply, down almost -8% from October, so their trade surplus got a boost to +AU$11.4 for the month.Locally we should note that the new head of the Insurance Council is Kris Faafoi, replacing retiring Tim Grafton. Faafoi is an ex-minister in the previous Labour Government. He will start in the role in April.The UST 10yr yield starts today at 4.03% and up +3 bps from this time yesterday. The price of gold will start today down another -US$9/oz at just on US$2017/oz.Oil prices have risen +US$1 to be now just over US$73/bbl in the US. The international Brent price is now just over US$78/bbl.The Kiwi dollar starts today at 62.1 USc and -10 bps softer from yesterday. Against the Aussie we are little-changed at 93.3 AUc. Against the euro we are marginally softer at 56.7 euro cents. That all means our TWI-5 starts today still just under 70.7.The bitcoin price starts today slightly firmer, now at US$46,017 and up +1.1% from this time yesterday. Volatility over the past 24 hours however has been very high at +/-4.3%. At one point bitcoin got up to US$49,000 but has retreated most of that since. In a 3-2 split vote, the SEC has approved the establishment of Bitcoin exchange traded funds. Now rather than storing Bitcoin in online wallets, speculators in Bitcoin ETFs would own shares in funds containing the digital currency.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 have a quick news wrap-up so you can get back to your 'time-off'.First, after the sharp fall in the two week Christmas holiday period, American mortgage applications recovered as strongly last week. Average mortgage rates were little-changed at 6.81%, plus points.More generally, Bloomberg is reporting that most large economies are about to issue very large volumes of bonds in 2024, almost US$2.1 tln worth and a +7% rise from 2023. This comes at the same time central banks are selling down their own holdings. It will be up to private investors to take up these unprecedented volumes and there is likely to be strong upward pressure on interest rates as a consequence. European bond sales have already hit a record this week at more than €108 bln, and there’s still two days of issuance to go.Meanwhile, an ECB official says the eurozone needs to be ready for another downturn.Tomorrow we will get the US CPI data and that is expected to come in little-changed at 3.2% and well above its policy targets. This, along with still-strong labour markets probably means the bond market pricing of five -25 bps rate cuts in 2024 might be somewhat aggressive.And we are also likely to get China's new bank loan data for December which is widely expected to come it at +¥1.4 tln (+NZ$315 bln) and a sharp increase from the November ¥1.1 tln. That would take the 2023 bank debt increase to a massive +¥23 tln (+NZ$5.2 tln) which incidentally is more bank debt issued than the 2023 GDP of countries like the UK. Beijing is pushing out new debt at scale as a way to keep its economic activity expanding, using its five big policy banks as the funnel for most of it.In Australia, they released their November monthly CPI indicator which rose at a 4.3% rate. That however is down from 4.9% on October and 5.6% in September; going the right way but still far above where they need it to be.Interestingly, the fastest rises were for insurance premiums, up more than +16%. And a new report out overnight noted that more than 0.5 mln Aussie homes will be uninsurable by 2030.That same report identified the top five risks for New Zealand, in order, as the cost-of-living crisis, rapid and/or sustained inflation, natural disasters and extreme weather events, an asset bubble burst, and a debt crisis.Locally, we will get November building consent data later this morning. Yesterday, ANZ said 2023 ended with a little momentum in card spending in their monitoring of customer card use. However they noted that spending on durables and clothing was particularly weak, while spending on utilities and miscellaneous spending is growing faster than other types of spending. However they put some of this 'strength' down to outsized inflation.Meanwhile commodity prices ended the year on the up. The ANZ World Commodity Price Index gained +2.4% in December from November, seeing it end the year down just -1.8% from a year ago. Dairy prices improved to drive the index higher, more than offsetting weaker aluminium prices. In New Zealand dollar terms, the index lifted a lesser +1.9% from November as the NZ dollar gained +2.4% against the trade weighted index.With job ads falling rather quickly locally it is perhaps surprising that the latest employment data for November reveals an expanding workforce. Most of the recent growth was from the primary and factory sectors, also somewhat unexpectedly given the economic struggles in both. The slowdown in earnings per filled job growth reflects a labour market that is loosening from its tight stance earlier in 2022 and early 2023, with the war for talent more or less over and reducing the pressure for higher wages from “high” to “moderate”.Globally, demand for air cargo seems to be recovering well. No doubt it will be getting a further boost with the Red Sea / Suez problems. Volumes were up +8.1% in November from a year ago and now down only -3.1% from November 2019. Asia Pacific volumes are up +9.8% from a year ago, but have more to climb to get back to equivalent 2019 levels.Global passenger traffic seems fully recovered. Total traffic in November rose almost +30% compared to a year ago. And that almost matches its November 2019 levels. But there is still some way to go in the Asia/Pacific region where we still lag -17% for international travel, almost all due to Chinese tourists staying at home.The UST 10yr yield starts today at 4.00% and down a mere -1 bp from this time yesterday. The price of gold will start today down another -US$4/oz at just on US$2026/oz.Oil prices have slipped -50 USc to be now just over US$72/bbl in the US. The international Brent price is now just over US$77/bbl.The Kiwi dollar starts today at 62.2 USc and -20 bps softer from yesterday. Against the Aussie we are down -¼c at 93.3 AUc. Against the euro we

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 have a quick news wrap-up so you can get back to your 'time-off'.First, American retail is still rising at an increasing rate, up +5.9% last week on a bricks & mortar same-store basis. The gains above inflation are mounting, with Q4-2023 putting in an impressive performance and this latest data for the first full week of January continuing that trend.It looks like the American economy will post another solid expansion in Q4-2023.Meanwhile the consumer debt data we were awaiting yesterday has been released, and it expanded far more than we were expecting, driven in large part by "a big jump" in the use of credit cards. To be fair the "big jump" is only the seasonally adjusted change from October; year on year it is +9.5% higher and that is its slowest gain in 22 months. The dollar rise actually isn't anything special either with single month rises in 2022 and 2021 outshining November 2023. There is actually a slowing in credit card debt rises, not the quickening that some 'analysts' jumped to when they saw the s.a. result.The US logistics managers index (LMI) rose into expansion in December, led by better warehousing utilisation and prices and rising transport utilisation.But both US exports and imports fell in November (goods and services), with imports falling a bit more so narrowing their trade deficit situation and an improvement that has been evident all year.Canadian goods exports slipped -0.6% in December from November to be +3% higher than a year ago, ending a strong run of monthly rises starting mid-2023. Their exports to the US and China held up, but to other countries - mostly the EU - were for almost -5% lower in the month.Taiwanese goods exports soared almost +12% in December from the same month a year ago, driven by good demand for its electronics of course. That was a shar0p gain from November’s 3.8% rise and well above market expectations of a 5% increase. It is the largest growth since July 2022.Australia posted good retail sales data for November yesterday. Retail sales in Australia rose by +2.2% from the same month a year ago and although this exceed market estimates it is still undershooting inflation. Despite that, it was the strongest pace in retail trade since November 2021, boosted by Black Friday events.Overall Australian building consent levels came in at modest levels in November but were still better than expected. But house building is a real drag; it is the multi-unit projects that are still being consented quickly. Year on year, overall consents were down -4.6% from the same month in 2022. Houses were down -6.2% on that same basis, but multi-units were up +0.8%. Month on month, multi units were up +6.7%. It is not a happy time for Aussie housebuilders, but ok for the big apartment builders.Elsewhere in Australia, their resources industry it taking some lumps. Plant closures at both aluminium and nickel refineries have been announced and it just seems a matter of time before lithium miners will retrench too. But at least the iron ore price is holding.On their domestic front, their peak financial complaints system said they feel overwhelmed by the current levels, with more than 100,000 complaints received in 2023, up +23% from 2022. Compensation they awarded exceeded AU$300 mln, up +38%.Globally, food prices eased substantially in 2023, and ended with dairy prices rising and meat prices falling. Global food security wasn't as stressed in 2023 as many were expecting.And staying global, the World Bank says the global economy is set to grow at its slowest pace since the pandemic, up just +2.4% in 2024. They said higher interest rates were a major factor in stunting expansion and that trade and investment would continue to be stifled by wars. At +2.4% it would be the weakest since the GFC (pandemic excepted). The also said that the good expansion in the US meant that 2023 expanded +2.6% globally.The UST 10yr yield starts today at 4.01% and up +3 bps from this time yesterday. The price of gold will start today down -US$3/oz at just on US$2030/oz.Oil prices have recovered from yesterday's drop, up +US$2.50 at just over US$72.50/bbl in the US. The international Brent price is now just under US$77.50/bbl.The Kiwi dollar starts today at 62.4 USc and marginally softer from yesterday. Against the Aussie we are up at 93.3 AUc. Against the euro we are firmer too at 57.1 euro cents. That all means our TWI-5 starts today just under 70.9 and marginally firmer from this time yesterday.The bitcoin price starts today much higher, rising to US$46,831 and a jump of +4.1% from this time yesterday. Volatility over the past 24 hours has been moderate at just over +/- 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 Zeal

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 have a quick news wrap-up so you can get back to your 'time-off'.Firstly, for those who missed yesterday's update, we now expect the Barfoot December results tomorrow (Wednesday).We start today in the US, with lower inflation expectations for both food and rent that are depowering price increases there. Consumer inflation expectations for the year ahead fell for a third consecutive month to 3% in December from 3.4% in November and the lowest level since January 2021.American consumer debt levels are due later this morning and only a modest +US$9 bln rise is anticipated.Meanwhile, the US Fed balance sheet was reduced by a net -10% to US$7.7 tln in 2023, and this was despite the emergency addition of almost US$400 bln in March to cover their SVB/regional banking crisis. That lost them three months of progress.And we should perhaps note that in the wake of the latest Boeing 737MAX troubles and fleet grounding, Air New Zealand does not have any of these aircraft. Boeing's stock suffered a sharp -10% fall yesterday but no more today.In the EU, overall sentiment recorded a moderate gain in December, perhaps a surprise given their lackluster recent economic performances. The rises were driven by higher confidence among consumers, and managers in retail trade, services, and construction, while confidence in industry remained broadly unchanged.Maybe part of that improvement can be attributed to a good rise in November exports from Germany, and a modest rise in November factory orders there.We should also note that from the start of 2024, all Chinese tariffs on New Zealand dairy products expired and these exports are duty-free into China now. China is our largest export market, taking more than 34% of dairy exports. Likewise, New Zealand is China’s largest source of dairy imports, accounting for 46% of China's total dairy imports. Chinese firms have bought up Westland Milk, Oceania Dairy, as well as being involved in exporting both fresh milk and infant milk powder products, and these direct ownership links have powered these exports.The UST 10yr yield starts today at 3.98% and down -7 bps from this time yesterday. The price of gold will start today down -US$12/oz at just on US$2033/oz.Oil prices are sharply lower, down -US$4 at just over US$70/bbl in the US. The international Brent price is now just under US$75.50/bbl. A surprise price cut by Saudi Arabia has jolted this market - mainly because the Saudi's feel they have been gamed by Iran, Russia, and a number of other intermediate producers like Angola and Nigeria.The Kiwi dollar starts today at 62.5 USc and marginally firmer from yesterday. Against the Aussie we are holding at 93 AUc. Against the euro we are softer at 56.9 euro cents. That all means our TWI-5 starts today just under 70.8 and little-changed from this time yesterday.The bitcoin price starts today higher again, rising to US$44,972 and a further gain of +2.4% from this time yesterday. Volatility over the past 24 hours has been moderate at just over +/- 2.4%.You can find links to the articles mentioned today in our show notes.You can get more news affecting the economy in New Zealand from interest.co.nz.Kia ora. I'm David Chaston. And we will do this 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 have a quick news wrap-up so you can get back to your 'time-off'.In the week ahead, we will be on the lookout for the Barfoot December sales result. It in fact may come later this morning if last year's schedule is any indication.In the United States this week, the main focus will be on December inflation rates, followed by exports, producer prices, and speeches by Fed officials. Also, Switzerland, Mexico, Brazil, Australia and India will unveil their CPI figures.It will be a busy week in China who will release consumer and producer inflation updates, export data, and new yuan lending data. Germany will release factory orders, industrial production, and exports data too. And a range of countries will update their jobless rates for December, including the Euro Area, Italy, Turkey, South Korea, and the Philippines.In China, they released their December foreign exchange reserve data over the weekend and it showed a big jump, rising +US$66 bln to US$3.24 tln. This was more than expected, and is now at its highest level since December 2021 and the second highest since December 2015. Much of this change however was because of exchange rate changes rather than inflows. The yuan rose +0.5% against the US dollar, while the dollar fell by -2% against a basket of other major currencies. At the same time, China's gold reserves increased by +US$2.5 bln to just over $148 bln.On Friday, a Beijing court placed Zhongzhi Enterprise Group (ZEG) into bankruptcy. It has been a major player in their US$3 tln shadow banking sector and has lent billions to real estate firms. Zhongzhi has US$64 bln in debt and now far more than its fast-depreciating property loan base. It will not end well for its managers (some of whom have skipped town).And they may be joined by some carmakers in 2024. Bloomberg is reporting that only four of the 13 brands that have disclosed annual sales figures accomplished their 2023 targets, with many missing by wide margins. A consolidation is due, but for those that aren't picked up, it could be a messy end. Overall, momentum loss is affecting one of China's big three economic regions.In Japan, consumer sentiment rose in December and to its best level in two years.Singapore retail sales made some sort of recovery in November after falling in October. They are now +2.5% higher than in November 2022.In the US their giant labour market has impressed with more job gains than expected. The headline expansion was +216,000 when a gain of about +170,000 was anticipated. This is the employer payroll data. They also survey households and that reported a fall, something unusual in the November to December period. For the full year, payrolls rose +2.7 mln, whereas the household survey reported a gain in employment of +1.9 mln for the year. It seems workers are shifting out of self-employment on to employer payrolls.Average weekly earnings rose +3.8% for the year in this survey, enough to best inflation but not by much. But the pace slowed in December from November, so this is one to watch.Meanwhile, the ISM services PMI delivered only a minor expansion in December, although new order growth was good. Prices rose slower, a +0.9-percentage point decrease from the November. But that wasn't as fast a decline as the ISM factory survey showed, a -4.7 percentage point decrease.But overall American factory order growth recorded its best rise in three years, a +2.6% expansion pace in November from October, and +3.3% year-on-year.This weekend data probably pushes back when the US Fed will feel a need to start trimming rates. The current sanguine situation may well have them keep current levels for some time. But this is not the scenario that bond markets have assumed.Canada disappointed in its labour market change in December, with virtually no change from November when a +13,500 rise was expected and after a +24,500 rise in November. Worse, full-time employment fell -24,000 jobs and part-time employment rose +24,000 jobs. They will be quite disappointed in that.European inflation seems sticky above levels they want to see, according to the December data. While lower energy costs are certainly helping, food costs are not. Their +6.9% pa rise in food costs and -11.9% fall in energy costs balanced out to a +2.9% rise in overall inflation in December, up from +2.4% in November. In Germany, inflation is running at 3.7%.A sharper than expected pullback in November German retail sales won't hep either as those price pressure mount.The UST 10yr yield starts today at 4.05% and up another +2 bps from this time Saturday. The price of gold will start today up +US$4/oz at just on US$2045/oz.Oil prices are +50 USc higher at just under US$74/bbl in the US. The international Brent price is still just over US$78.50/bbl.The Kiwi dollar st

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 a quick news wrap-up so you can get back to your 'time-off'.We are still seeing geopolitics and great power rivalry upending some parts of the global economy, and oil prices as a consequence, but generally conditions are quite stable-to-positive which is perhaps a bit of a surprise in the circumstances. The latest set of US Fed meeting minutes set the scene for more 'normal' market conduct.First up, markets are turning their attention to the US labour market again, a market the bears have thought would be tanking by now (they have expected a rise in joblessness there monthly for more than two years now). But they may be disappointed yet again and have to reach deeper into their excuse box. The December non-farm payrolls report is out tomorrow and analysts now expect a +150,000 gain.Today, US jobless claims came in lower than expected and a decrease from the prior week. Seasonal factors had anticipated a rise in claims, but it was not to be. There are now 1.89 mln people on these benefits, and insured jobless rate of 1.3%.American employers announced the fewest job cuts since July, just 34,817 in December, down -24% from 45,510 in November. Announced layoffs fell -20% from December 2022.The pre-cursor ADP employment report anticipated a payroll gain of +115,000 in December, but delivered a +164,000 rise in filled jobs, driven by big gains in California which accounted for about half the rise. This same December report shows that pay rose +5.4% for people who stayed in their jobs, and by +8.0% for people who changed jobs. This is more evidence that workers are making real pay gains in this labour market.The first of the two reports on the services sector in the US in December is out and it underpins the stronger labour market data. It reports the fastest upturn in new business since June which is spurring the rise in activity, and employment growth rose its quickest in six months. The ISM services report will be out tomorrow. From an historic perspective the pace of this expansion isn't notable, but it certainly isn't a contraction.But sadly, Canada cannot claim the same. Its services sector was shrinking in December and at a faster pace.In China, the Caixin services PMI reported an activity expansion at its quickest pace for five months in December (52.9). This is in marked contrast to the official services PMI which found barely any expansion (50.4) in the firms they surveyed. The Caixin survey found better underlying market conditions and greater intakes in new business.Germany reported its December inflation rate at 3.7% which was up from 3.2% in November. But this was basically because of base effects on energy costs, and their core inflation rate continues to track lower, now at 3.5% and its lowest rate since mid-2022.In Australia, insurer IAG said they have more than 17,000 severe weather claims from recent Queensland and Northern NSW storms. This will hit the insurer and others like Suncorp who say they have 19,000 claims from the same events. The blowback could well accelerate premium rises and coverage restrictions in future that include New Zealand. The effect of climate change at work.And staying in Australia, evidence is mounting that CBA's stand against home loan rate cutting can't be sustained as rivals eat away at their market share. You will recall this reticence drove ASB to avoid low margin deals, and that too saw its share shrink. Now there appears to be a change of heart within CBA that has them actively defending their portfolio. ASB will no doubt fall into line as well and now be more active.The Suez Canal / Red Sea shipping risks are roiling global container freight rates. These jumped an outsized +61% last week. Even trans-Pacific rates rose a sharplish +30%. But the really big increases were for China to Europe routes where prices rose more than +110% in a week. However, it is equally notable that bulk cargo rates have moved little over this same period.The UST 10yr yield starts today at 4.01% and up +11 bps from this time yesterday. The price of gold will start today up +US$10/oz at just on US$2043/oz.Oil prices are -50 USc softer at just under US$72.50/bbl in the US. The international Brent price is now just over US$77.50/bbl.The Kiwi dollar starts today at 62.2 USc and +20 bps lower than this time yesterday. Against the Aussie we are holding higher at 92.9 AUc. Against the euro we are more than -¼c lower at 56.9 euro cents. That all means our TWI-5 starts today just on 70.6 and down -10 bps.The bitcoin price starts today higher, bouncing back up to US$44,085 and a gain of +2.7% from this time yesterday. Volatility over the past 24 hours has been extreme at just under +/- 5.7%.You can find links to the articles mentioned today in our show notes.You can get more new

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 a quick news wrap-up so you can get back to your 'time-off'.First, the closely-watched US ISM factory PMI contracted again in December, but by less than expected and less than in November. But the number of months in contraction is now mounting; now its 14th straight month, the longest string since 2000-2001. New order levels remained weak.But despite a key strike, and chip shortages earlier in the year, America's General Motors came out on top in their 15.5 mln vehicle sales market in 2023, edging out Toyota for the top spot - again.US job openings eased slightly in November from October to 8.8 mln. This caught the attention of financial markets because this is now a 13 month low, but to be fair it is very little changed from October and has been hovering at this level since July.Also falling, and quite sharply, were mortgage application levels in the US. And that was even after adjusting for the holiday period. Mortgage interest rates were stable at 6.76% plus points.But expanding, and at a faster pace now were retail sales at traditional outlets. They were up +5.6% from the same week a year ago in a rising pace, solid real increases and much more than can be accounted for by inflation.India's factories ended 2023 with a good but easing expansion. However that expansion remains above its long-run trend levels. They had substantial rises in new orders and production, and managed to keep its input cost inflation down, now its weakest rise in more than three years.In China, it is now very tough being a new graduate and looking for work. Average starting pay offered to new hires in 38 key Chinese cities fell -1.3% to ¥10,420 per month (NZ$2,350/month) in Q4-2023 from a year ago. That was their worst drop since at least 2016 when this data started to be collected, according to data from a national online recruitment platform. And it is worse in some very big centers. In Beijing, starting salaries decreased -2.7% from a year ago and they have been falling all year. In Guangzhou they fell -4.5%.In Australia, the house price juggernaut seemed to run out of steam in December. Sydney prices were little-changed and Melbourne prices actually fell. But for all of 2023 they did manage an +8.1% rise overall, with Sydney up +11.1%, Melbourne up a much more modest +3.5%, Brisbane was up +13.1% and Perth roaring ahead, up more than +15% for the year. Although Brisbane, Adelaide and Perth maintained the pace in Q4, that was not the case in either Sydney or Melbourne and questions are rising about a 2024 reversal.Rising, and at a faster pace is the price of iron ore, now up at US$145/tonne, a gain of +18% in a little over a month, and up +30% in six months. Australia's budgets (state and federal) are all being fattened by this rise.The UST 10yr yield starts today at 3.90% and down -5 bps from this time yesterday. Wall Street has started today down -0.3% in Wednesday trade on the S&P500. The Nasdaq is down another -0.6% so far. Overnight European markets all fell sharply, with London down -0.5%, Frankfurt down -1.4% and Paris down -1.6%. Yesterday Tokyo did not trade as it is a standard holiday there. They should be back today. Hong Kong fell another -0.9%. Shanghai however rose +0.2% as the home team came out to stabilise things. On the other hand, the ASX200 fell -1.4% yesterday. In its first day of trading this year, the NZX50 closed down a more modest -0.3%.The price of gold will start today down -US$29/oz at just on US$2033/oz.Oil prices are +US$2.50 higher at just under US$73/bbl in the US. The international Brent price is now just over US$78/bbl.The Kiwi dollar starts today at 62.4 USc and only marginally different from this time yesterday. Against the Aussie we are nearly +½c higher at 92.8 AUc. Against the euro we are marginally firmer at 57.2 euro cents. That all means our TWI-5 starts today just on 70.7 and up +10 bps.The bitcoin price starts today much lower at US$42,945 and retreating -4.8% from this time yesterday, suggesting yesterday's surge was overdone. Volatility over the past 24 hours has been extreme at just under +/- 5.7%.You can find links to the articles mentioned today in our show notes.You can get more news affecting the economy in New Zealand from interest.co.nz.Kia ora. I'm David Chaston. And we will do this again tomorrow.

Kia ora,Welcome to Wednesday’s Economy Watch where we follow the economic events and trends that affect Aotearoa/New Zealand.I'm David Chaston and this is the international edition from Interest.co.nz.And today we lead with a quick news wrap-up so you can get back to your 'time-off'.First, we kick off the New Year with another dairy auction, this one again modestly positive. The key WMP price was up +2.5% from the prior event. Butter was up +2.1%. But both cheddar cheese and SMP eased. Overall the result was +1.2% higher than the prior event in USD terms, up +1.5% in NZD terms as the Kiwi dollar slipped in its first trading of the New Year. Volumes sold were modest. Demand from China for WMP and butter was ok, but these buyers were quiet for SMP indicating their foodservice demand remains subdued.There were final December factory PMI's released everywhere over the past few days and these paint an overall picture of weaker demand and both output and employment levels slipping lower. Of more of a worry perhaps is that neither input nor output prices are receding, suggesting price inflation will be hard to contain.In the key US economy, their factory PMI was weak with a renewed contraction in output as orders fall at sharper pace. They also reported a rise in producer inflation.As has become standard recently, there are mixed signals coming out of China. The private Caixin factory PMI is expanding but barely and didn't show the retreat expected. But it is displaying a yo-yo tendency around a steady state. However the official PMI does show an extended contraction by their factory sector. The Caixin survey tends to focus on mid-sized private companies. The official survey is more attuned to larger State-owned factories. And that is now contracting at the same rate as June 2023, and has contracted consistently since April 2023.Unfortunately for them, their services sector isn't picking up the slack. Yes, it is expanding - just - but not be enough that anyone would notice. December is the third month in a row that the official services PMI has failed to fire.The Chinese central bank has used its controversial Pledged Supplemental Lending program to inject NZ$80 bln extra into property lending support.South Korean exports rose +5.1% from a year earlier to a 17-month high of US$58 bln in December. Shipments to the US rose +21% but they fell -3% to China, Korea's top export market. But the overall result was lower than expected and lower than the +7.7% gain in the previous month. But it was the third consecutive month of increase in exports, and has been driven by a rise in semiconductor exports. Meanwhile, South Korean imports fell rather sharply, down -11% mainly on lower oil prices. Compared to the recent nine straight months, imports are tracking a stable path.It has been a very tough few days in Japan, first with having to deal with a deadly earthquake mid-winter. Now an Airbus aircraft from a domestic flight caught fire on a Tokyo airport after crashing with a Coast Guard plane on quake-aid duties. Fortunately everyone escaped from the passenger plane, but there were deaths on the Coast Guard plane.Singapore released its 'flash' Q4 GDP result overnight. That is fast - we have to wait until mid-March for ours. The Singaporeans have current data for their policy makers to absorb and respond to already. They report the city-state's GDP grew by +2.8% in Q4, accelerating from a marginally revised +1.0% in Q3. This was their 12th straight quarter of economic expansion and the strongest pace since Q3 2022. The service sector contributed most to this recovery, modest by their usual standards. In the 20 years to 2018 it averaged +5%.A new analysis for 2023 shows that compared to 2022, investments by sovereign wealth funds fell -20% to US$125 bln in 324 transactions; while investments by Public Pension Funds fell -26% to US$ 80 blnin 268 deals. Of the sovereign wealth fund investing, about a quarter can be accounted for by activity by Saudi Arabia's Public Investment Fund. Sovereign wealth funds had a tough year - in fact in the six months through October our own NZ Super Fund has posted negative returns in four of the last six months, and in six of the past twelve months.One reason for poor performance generally might be exposures to commercial real estate. In the US, of the 605 buildings with mortgages expiring soon, there are 224 that Moody’s Analytics estimates owners will have trouble refinancing this year, either because the properties carry too much debt or because their rental performance is poor. There are now roughly US $800 bln in American commercial mortgage-backed securities and delinquencies on office loans financed by them topped 6% at the end of November, up from 1.7% a year earlier. The expectation is that a lot of pain and write-downs will happen in 2024 and the pattern will be repeated worldwide, made worse because most of the "long term funding" that expires this year was on interest-only terms.Shipp

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 generally positive news in the US, but extended worries about China's property sector.After quite a jump in the prior week, American mortgage application levels slipped last week and for the first time in six weeks, despite a hefty retreat in benchmark 30 year mortgage interest rates. Those came in at 6.83% plus points, down from 7.07% the prior week, the first time they have been below 7% since early August.All that was despite an impressive rise in American consumer sentiment and optimism in December, as tracked by the respected Conference Board survey. It hasn't been this high since mid-year. This rise mirrors the recent parallel University of Michigan survey. To be fair, both are back in the range from 2021, but there is a rising optimism about future expectations.Perhaps reflecting that, US existing home sales rose in November, and for the first time in five months.Also positive, the American current account deficit shrank to -US$200 bln in Q3-2023, 'only' -2.9% of GDP. That's its lowest level since Q2-2021 in dollar terms and its lowest since pre-GFC. For comparison, the New Zealand current account deficit is -7.6% of our GDP.Australia and New Zealand are not the only countries facing record high immigration; Canada is as well. The post-pandemic surge seems to have caught many countries by surprise.Japan's exports shrank in November when a small gain was expected. Data released today shows they fell -0.2% from the same month a year earlier mainly because China-bound chip shipments dived, underscoring worries that slowing overseas economies may deal another blow to the trade-reliant economy just as their domestic demand slows. At the same time imports dived significantly and that meant their trade deficit shrank rather quickly.Taiwan's export orders didn't bounce back in November as expected, rising just +1% from a year ago and well short of the +4.3% rise expected. But that was their first rise in more than a year.Another large Chinese property developer has filed for bankruptcy in the US, using its protections while it "restructures". (Evergrande was the last major Chinese property developer to try that manoeuver.) Interestingly, it didn't notify investors in stock exchange filings, of the move. This may be behind the chunky drop on the Shanghai stock exchange yesterday. But they aren't the only listed company facing existential pressures.In the EU they are 'reforming' their fiscal rules which have become a straightjacket for some countries. EU finance ministers have bowed to German pressure for tough debt-reduction rules, as part of a deal to phase in a sweeping overhaul of their budget framework. After months of haggling, the new rules gives member states greater independence on debt and deficit plans, but only within tight spending limits demanded by fiscal hawks.German inflation is likely to return to target ranges if their producer prices are any indication. Those remain in deflationary mode, falling -7.9% from a year ago driven primarily by much cheaper energy costs. The sizable retreat is essentially a base effect.British consumer inflation is falling from the same energy cost retreat, now down to +3.9% in the year to November. But without those energy effects, their core inflation is still running at +5.1% - a small retreat but far above its neighbours and far above their central bank's target still. (Locally, they fudge the international standards of reporting inflation, but it is still high on their local basis.)In Australia, the Melbourne Institute leading index has stopped falling which is a good way for them to end their year.The UST 10yr yield has slipped -3 bps today, now at 3.89%.The price of gold will start today down -US$9 at just on US$2034/oz.Oil prices are +50 USc higher at just on US$74.50/bbl in the US although they have been higher in between. The international Brent price is now at US$80/bbl.The Kiwi dollar starts today at 62.8 USc and marginally firmer than yesterday. Against the Aussie we are also firmer at 92.9 AUc. Against the euro we are unchanged at 57.1 euro cents. That all means our TWI-5 starts today just on 71, up +20 bps from yesterday and the highest since May 23, 2023 - just before the RBNZ's MPS signaled that its rate-hiking cycle was over.The bitcoin price starts today at US$43,770 and up another +3.4% from this time yesterday. Volatility over the past 24 hours has been moderate-to-high at just under +/- 3.0%.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.We will be taking a short break from these podcasts. Enjoy your summer holiday break.Kia ora. I'm David Chaston. And we will do this again starting on Wednesday after the New Year.

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 should note some more suggestions that the global hard landing may be even further away. The 'soft landing' has actually happened and that's despite wars, China's stumbles and trade tussles.But we start today with the results of the final dairy auction of the year and the results are somewhat mixed. The headline change is a good +2.25% rise overall in USD terms. The key WMP price rose +2.9% and the foodservice commodities rose much more with cheddar cheese up +6.9% and butter up a strong +9.9%. But volumes offered and sold were on the lowish side. And the whole event was somewhat undermined by a sharp rise in the NZD at the same time so that in NZD terms there was essentially no change from the last auction. Overall, the story is somewhat similar - from a year ago prices are now little-changed which isn't that great when you realise that prices this time last year were -20% lower than the prior year (even if they were unusually high in 2021). At least today's result is better than another retreat.In the US, housing data has surprised with new housing starts soaring. Bolstered by low inventories and now lower mortgage rates, they jumped unexpectedly by almost +15% in November from October to an annualised rate of +1.56 mln starts, the highest rate in six months, and well above market forecasts of 1.36 mln. Starts for single-family homes jumped +18%, the highest level since April 2022, and those for buildings with five units or more went up +8.9%. It is certainly an eye-catching move. But we should note that residential building consent levels did not jump, so the housing start data may just be a one-off catch-up.American retail sales last week rose +3.6% at bricks & mortar stores on same-store basis, so those gains above inflation are holding and a good sign for holiday retailing. Early indications however are that online shopping is performing better than in-store this year.Meanwhile, consumer inflation in Canada eased in November to be +3.1% higher than a year ago. A year ago it was running at well over double that. Still, that is stubbornly above their central bank's inflation target. Canadian producer prices are still falling however, down -2.3%, so perhaps the Canadian CPI has more falls to go.The Bank of Japan maintained its key short-term interest rate at -0.1% and that for 10-year bond yields at around 0% in a final meeting of the year and by unanimous vote. There are no surprises here and that was widely expected. The central bank also left unchanged a loose upper bound of 1.0% set for the long-term government bond yield. The yen fell -½% after the announcement, vs both the USD and the NZD.Yesterday the release of the RBA minutes brought a fresh perspective to their 'warning' that rate rises may be needed if inflation doesn't cool further there. However those warnings are being ignored in wholesale markets, who are pricing in rate cuts in late 2024, not rises. And that is because the RBA also has an employment mandate, so markets don't believe its hawkish inflation-fighting talk.We should also note that the Icelandic volcano near Grindavik has suddenly exploded. But this time there are no major ash emissions. Still, natural events like this (and the 2022 Tongan explosion) can have lingering global atmospheric implications.Of more immediate concerns are the security issues for shipping in the Red Sea. An international military effort to keep the routes open is underway. Now giant Chinese shipping company COSCO is avoiding the area. Freight rates and the cost of many essential raw materials will likely rise because of all this.The UST 10yr yield has slipped -4 bps today, now at 3.92%. The price of gold will start today up +US$21 at just on US$2043/oz.Oil prices are holding higher at just on US$74/bbl in the US although they had been lower in between. The international Brent price is now at US$79.50/bbl.The Kiwi dollar starts today at 62.7 USc and up more than +½c from yesterday. Against the Aussie we are holding at 92.7 AUc. Against the euro we are up at 57.1 euro cents. That all means our TWI-5 starts today just on 70.8, up +40 bps from yesterday and back to more than a six month high.The bitcoin price starts today at US$42,329 and up +2.1% from this time yesterday. Volatility over the past 24 hours has been moderate at +/- 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 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 2023 is winding down with mixed outlooks in what may look like second tier data and events, but some of which could blow up over the holiday period.In the US, house builder sentiment has turned higher. The closely-watched Housing Market Index has risen from its lowest in nearly a year, beating forecasts. It was the first improvement in sentiment in five months, driven by declining mortgage rates that sparked increased interest among potential buyers and raised expectations for sales.But the iconic US Steel business is to be sold, ending a 122 year run, and it will be acquired by Japan's Nippon Steel. They beat out other local and offshore bids and have acquired the business for less than US$15 bln.Meanwhile, more Fed officials are coming out says they are surprised by the outsize market reaction to the Fed’s updated quarterly economic projections last week. They think the market is getting ahead of itself in expecting significant 2024 rate cuts.In China, their property crisis is getting worse, A developer in the southern city of Shenzhen (and partly owned by the City authorities) has warned it can’t pay interest due tomorrow, raising the risk of its first default. China South City Holdings said that it doesn’t have the resources to pay the interest of its 9% notes due July 2024, citing "liquidity and cash flow constraints from a deteriorating operating environment". That developer stress is now infecting local government-owned companies is an increased worry, especially as Shenzhen is an icon city featuring China tech prowess.In Singapore, (non-oil) exports rose +1.0% in November from a year ago but that was off a low base in 2022. Their export of electronic goods decreased rather sharply (down -12.7%) while the much larger group of non-electronics exports grew +5.7% from a year agoIn Germany, the widely watched Ifo Business Climate indicator slipped to a three-month low in December from a downwardly revised November adjustment, but to be fair the shifts were minor and this sentiment index is bouncing along in a trough after a good start to the year. The Bundesbank released its Monthly Report today and that noted much lower inflation, but they are not "all clear" yet on the inflation front, they said.In the Red Sea, now BP says it will cease using the Suez Canal for tanker transit while the security situation deteriorates.The UST 10yr yield has risen +4 bps today, now at 3.96%. The price of gold will start today down -US$11 at just on US$2022/oz.Oil prices are +US$2 higher from yesterday at just on US$74/bbl in the US. The international Brent price is now at US$78.50/bbl.The Kiwi dollar starts today at 62.1 USc and unchanged from yesterday. Against the Aussie we are still at 92.7 AUc. Against the euro we are still at 56.9 euro cents. That all means our TWI-5 starts today just on 70.4, essentially unchanged from yesterday.The bitcoin price starts today at US$41,443 and down -1.1% from this time yesterday. Volatility over the past 24 hours has been moderate at +/- 2.3%.You can find links to the articles mentioned today in our show notes.You can get more news affecting the economy in New Zealand from interest.co.nz.Kia ora. I'm David Chaston. And we will do this again tomorrow.

Following COP28's call for a transition away from fossil fuels, a key test will be how quickly a rethink of the market capitalisation of oil and gas companies starts emerging, says Rod Oram.Fresh from attending COP28 in Dubai, Newsroom journalist Oram spoke to interest.co.nz for the latest episode of our Of Interest podcast.COP28, or the 28th meeting of the Conference of the Parties to the United Nations Framework Convention on Climate Change, was overseen by its president Sultan Ahmed al-Jabar, managing director of Abu Dhabi National Oil Company, or ADNOC, the United Arab Emirates' state owned oil company.Fossil fuels did, however, make it into the final agreement in a substantial way for the first time at a COP, Oram says. Whilst it's "weaker and slower and less specific [language] than is actually required," it's still significant progress.The "UAE Consensus" text agreed by 198 countries also includes a global renewables and energy efficiency pledge."That does start to send a signal. Not only to governments as they prepare their next commitments under the Paris Agreement, by 2025 countries have to come back with an improved commitment, but it sends a powerful signal to them that they must be working more on fossil fuel reductions in consumption and production, and it also starts to send a stronger message to financial markets," says Oram.The Paris Agreement is a legally binding international treaty on climate change."I think the key test in financial markets, both of that language on fossil fuels but then [also] on this language of a big increase in renewables, is how quickly we start to see a reappraisal of the market cap of oil and gas companies. And how quickly we'll see an appraisal that says 'oh, maybe they aren't going to be producing as much as we thought, say over the next 10 years, because people won't be burning as much because governments have started to shift, consumers have started to shift, renewables are escalating at a rapid pace.' And that to me is going to be the acid test as how soon we start to see that revaluation in the stock market of oil and gas companies," Oram says.In terms of the annual COP meetings, Oram points out they require consensus across all 198 countries so it's not the place for really big breakthroughs. Instead COP, once a year, provides "a really good scorecard about what the state of play is on all of these issues.""This isn't anymore just about negotiations between government officials and politicians. This is very much an all-of-society meeting, and that's why the numbers [of delegates attending] were so big this year."In the podcast Oram also talks about the New Zealand presence at COP28, NZ winning fossil of the day, the first official recognition of and finance mechanism for helping developing countries cope with economic losses and physical damage from storms, droughts, and other climate impacts, the first time there has been a COP declaration on agriculture, and the "deeply, deeply, deeply fascinating" experience of attending a COP in person. Oram also addresses criticism of people flying across the world to discuss climate change, and his hopes for COP29 next year in Azerbaijan.*You can find all episodes of the Of Interest podcast here.

Kia ora,Welcome to Monday’s Economy Watch where we follow the economic events and trends that affect Aotearoa/New Zealand.I'm David Chaston and this is the international edition from Interest.co.nz.And today we lead with the 'final' week of shopping is here for the holiday season and most analysts are focussed on what that reveals about economies worldwide.Also in the coming week the American data releases are mostly second-tier but there will be special interest in their PCE inflation, durable goods order levels, and a set of housing data. Japan has a big set of releases including from the Bank of Japan, and their inflation rate. Canada and the UK will also release inflation data. But of course everywhere hints about retail sales activity levels will be sought outBut first, China released a wide set of national data over the weekend. In the official data none of their 70 largest cities reported any house price growth based on housing resales. Overall their housing index was said to fall -0.2%, but sales of new units are low and now quite problematic. Sales of used units are showing much larger declines than the index they released, both month-on-month and year-on-year. In fact they are now heading for a multi-year retreat, the first they have had.Going the other way, China reported that electricity production was up +8.4% in November from the same month in 2022. That supports the better than expected industrial production data they also reported, up +6.6%.And also gaining were retail sales. Although very little changed from October, the jump from a year ago is an eye-catching +10.1% - at least until you realise the base was very stunted and they were just contemplating easing Covid restrictions. Correcting for that, the year-on-year gain seems to be about +4%.China is getting ultra-sensitive about talk of economic problems - and their Ministry of State Security is on the case warning officials and commentators about not holding the Party line about the country's "bright future". And in Hong Kong the Party is putting on a show trial for an imprisoned publisher.Meanwhile, foreign patent holders are finding that Chinese courts side with local companies and will chop royalties agreed in existing deals that they subsequently don't like.In the US, retail shopping this year is even more focussed on the online sector. Turnover in traditional bricks & mortar stores is expected to just be level in volume terms.Meanwhile an early look at their PMIs shows services rising while factory activity is contracting. The sharpest increase in new orders since July is pushing their dominant service sector to a quicker expansion, but the reverse is the case for manufacturing where new order levels are retreating.The NY Fed Empire factory survey sank sharply in December from its unusual rise in November. But the longer term trend is still in place for a gradual move up from its deep negatives at the start of the year.Meanwhile, overall American industrial production made a minor gain on November from October but is still slightly lower than year ago levels. Manufacturing output (led by business equipment), which accounts for 78% of total production, rose by +0.3% from October, marginally missing market expectations of +0.4%.Canadian housing starts took an unseemly dive in October as they dropped to just an 213,000 annual pace and far below the expected 257,000 pace, or the 272,000 pace in October. For them, this is a huge and unusual miss probably reflecting the impact higher interest rates have on multi-family housing units.And in Australia, the extent of bribery and corruption in China's environmental regulatory system is laid bare in the collapse of a public company there.In India, export levels are neither growing nor retreating significantly. They were up in November marginally from October but down -2.9% from year-ago levelsIn the eurozone, the early PMI surveys show activity is falling at an increasing rate in December and that is true for both their factory and services sectors.Two of the world's largest container shipping groups stopped using the Red Sea and the Suez Canal. Germany's Hapag-Lloyd and Denmark's Maersk both said the dangers are too great at the moment and have instituted temporary halts. They have now been followed by two more European shipping lines, MSC, and CMA-CGM. This will put a giant spoke in global trade as more than 10% of world trade depends on the Suez canal.The UST 10yr yield has fallen slightly today as things settle down in the new levels, now at 3.92% and little-changed from Saturday. The price of gold will start today also unchanged at just on US$2033/oz and that is up +US$36/oz from a week ago.Oil prices are marginally firmer from Saturday at just on US$72/bbl in the US. The international Brent price is now at US$77/bbl.The Kiwi dollar starts today at 62.1 USc and little-changed from Saturday. but it is up more than +1c from a week ago. Against the Aussie we are still at 92.6 AUc. Against t

By Gareth VaughanThe first-half of 2024 is likely to be tough with rising unemployment and more businesses failing as the economy "bounces along the bottom," says BNZ Head of Research Stephen Toplis. In a new episode of interest.co.nz's Of Interest podcast, Toplis delves into the swathe of domestic economic data from the past week including Gross Domestic Product, migration, Statistics New Zealand's Selected Price Indexes, the Real Estate Institute's latest monthly housing data, the current account deficit, the dovish US Federal Reserve monetary policy review, China and more.It's tough times for businesses and households are under the cosh, Toplis says."Our view has long been that the second-half of 2023 and first-half of 2024 would be the trough in the economic cycle. And I think this [recent data] is confirming evidence of it," says Toplis."We're just bouncing along the bottom. And we'll continue to bounce along the bottom, probably until the central bank starts lowering interest rates. So there's more of this really, probably until the second-half of next year."He notes the economy would look even worse without surging migration, but this is becoming problematic."We knew prior to Covid that we were having difficulty as an economy absorbing more than about 50,000 or 60,000 people in a given year. Now we're trying to absorb double that, and that's resulting in things like pressure on your rents, pressure on your housing market, and a pick up in demand in some places that will be difficult to meet," Toplis says.Thus it's time to "look very closely at tweaking the [migration] settings to moderate those inflows."Meanwhile, with the new coalition government planning to reduce government consumption aggressively, the reduction in the size of government "is going to be a headwind to New Zealand for some time to come.""There are quite strong multiplier effects of that because government consumption is largely people employed. So if you reduce the size of the state sector, particularly its employment, it will have multiplier impacts on spending throughout the economy.""If you think about the last time we had a massive correction in the size of government, that was actually in the early 1990s when Ruth Richardson ran her mother of all budgets as she called it. The sort of decline in government consumption that we're talking about now is of a similar magnitude. Back then it had a very, very big impact on both the unemployment rate and economic activity generally. The broader environment was quite different so it would be remiss to suggest it would be exactly the same impact, but it will be meaningful," Toplis says.In the podcast he also talks about the inflation outlook, including why we "need to be a little bit careful in being overly concerned about non-tradeables" inflation, the housing market, the labour market, the outlook for interest rates, and more. (See more on tradeable versus non-tradeable inflation here)."Volatility remains the order of the day unfortunately, and we still have the worst of this economic recovery to get through."*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 global interest rates are on the move.The big news is the sharp dive in wholesale benchmark interest rates. And American benchmark mortgage interest rates have fallen below 7% for the first time since August.But first, American jobless claims fell last week and by more than expected, and back to the low end of the range over the past year. There are now less than 1.8 mln people on this support, also a drop from last week but less than expected, but not enough to change the shallow rising trend.As earlier indicators had suggested, the US holiday season retail impulse was good. Now the official retail sales data for November is out and that confirms the earlier data. Value levels were up +4.1% from a year ago, so there has likely been an expanding retail volume too.And you can see the impact of that demand on business inventories, which fell - a small slip from October, true, but one that wasn't expected. From a year ago they were up +0.5% in value terms, so clearly falling in volume terms.In Canada, their housing market sales are retreating, even if the shrinkage is still small.Taiwan's central bank kept its policy rate at 1.875%.In Hong Kong, 38% of people polled said they want to quit the City, mainly because of oppressive 'freedom' restrictions. That was up from a 29% in the same poll a year ago.Overnight the ECB was clear that it will keep its rates at multi-year highs for a long time yet in its battle to get on top of inflation. In contrast to the US Fed signals that softenings are coming in 2024, the ECB was staunch. However Norway's central bank raised its policy rate by +25 bps to 4.5%. But the Swiss National Bank held its rates unchanged, as did the Bank of England which also conveyed a tough line against price pressures. The ECB and English pushbacks had the effect of bolstering their currencies.And staying in Europe, the EU has "unanimously" agreed to open talks with Ukraine to join the bloc.Australian inflation expectations fell from 4.9% in November to 4.5% in December, according to the latest update of the Melbourne Institute survey. At these levels, the RBA will also likely remain staunch in its monetary policy positions, even it it is at its lowest level since early 2022.Although the Aussie jobless rate rose to 3.9% in November, the number of new jobs rose more than expected and most of them were full-time positions. The number of unemployed increased by +18,800 to 572,000. But the labour force rose +61.500 to 14.3 mln of which +57,000 were full-time. Their participation rate edged up.Global container shipping freight rates rose another +4% last week as the world adjusts to the two big canal pressures, mainly on routes out of China. Meanwhile bulk cargo rates remain high but are coming off their early December peak.The UST 10yr yield has fallen sharply in the wake of the Fed meeting, now at 3.93% and down -23 bps from yesterday. And the last time we were at this level was in July. The price of gold will start today just on US$2037/oz and up a very sharp +US$55/oz from this time yesterday.Oil prices are up +US$3/bbl from yesterday at just over US$72.50/bbl in the US. The international Brent price is now up at just on US$77/bbl.The Kiwi dollar starts today at 62.2 USc and up a full +1c from yesterday. Against the Aussie we are -¼c lower at 92.7 AUc. Against the euro we are down -10 bps at 56.6 euro cents. With falls against the Yen and Pound, that all means our TWI-5 starts today just on 70.3, just +10 bps firmer than yesterday at this time.The bitcoin price starts today at US$42,617 and up +1.8% from this time yesterday. Volatility over the past 24 hours has been moderate at +/- 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 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 we are waiting on the US Fed.Financial markets are in limbo, cautious ahead of the US central bank's monetary policy meeting results that will be released at 8am NZT today. We will update our webside when these details are released. They are widely expected to keep the fed funds rate steady at 5.5% for a third consecutive meeting and push back against expectations of rate cuts early next year. Back in September, the Fed's dot plot indicated two cuts in 2024, but Chairman Powell recently deemed it premature to discuss rate decreases. They will release new economic and rate forecasts which will be closely watched and parsed.Meanwhile American producer prices were unchanged in November from October to be just +0.9% ahead of year-ago levels - and that was a lower increase than expected. Consumer inflation might be stubborn but producer prices are now rising at very modest levels. Recall, US PPI peaked at more than +11% pa in early 2022.American mortgage applications rose an unexpected +7.4% last week from the week before, a sixth consecutive weekly and driving applications to their highest level in over four months, thanks to the continuous decline in interest rates. The benchmark 30 year fixed home loan rate is now down to 7.07% in this survey, it lowest since July.In China, the expected bounce-back from October's weak new lending levels came but it wasn't as robust as expected. China's banks extended almost ¥1.1 trillion in new yuan loans in November, a good rise from October's weak level but falling short of market expectations of ¥1.3 tln. Household loans, including mortgages, rose by almost +¥300 bln after shrinking in October, while corporate loans also rose by +¥300 bln from October.In their Capital Flows Report, the IIF says China will suffer net outflows from Chinese stocks and bonds of -US$65 bln in 2024 from foreign investors, extending the 2023 trend of de-risking. In November alone, foreign investors pulled a net -US$3.7 bln from Chinese equities and bonds. Other emerging markets are not getting this cold shoulder.China's delayed but important 2 day Central Economic Work Conference has wrapped up, but you would hardly know. The readouts of decisions and goals are in special Beijing-speak and opaque to most. Most of the released goals are platitudes.The newly-elected Argentine government devalued the peso’s official exchange rate by -54% to 800 to the greenback on their second day in office, firmly above market expectations that ranged from a 27%-44% devaluation, marking a new record-low for the battered currency. The decision also narrowed the gap between the official rate and dollar prices for individuals available in parallel markets, which have approached 1,100 pesos per USD. It followed a group of aggressive economic measures passed by the new administration, the so-called “shock treatment” pledged by newly-elected President Milei that aims to battle inflation that approaches 150%, a plunging peso, and elevated levels of money creation to service spiraling debt. The new government stated it will cut an equivalent of -2.9% of GDP in spending, including reductions in social subsidies and pensions, while implementing a +2.2% increase in taxes over the next year. As a consequence, official forecasts for monthly inflation rose to over 20%.Australia's Mid Year Economic & Fiscal Outlook (MYFEO) was released yesterday and it was surprisingly positive, signaling that they may in fact get another surplus this year - making it two years in a row Canberra has achieved that. It is built on the "usual suspects" - very high mining profits and delaying infrastructure spending. The tax receipt uplift is due predominantly to personal income taxes being +$30 bln higher than forecast, including +$9 bln for this financial year, and company tax. Tax relief for bracket-creep may be coming soon.The UST 10yr yield is softer on secondary markets at 4.16% and down -5 bps from yesterday at this time ahead of the Fed. The price of gold will start today just on US$1982/oz and up +US$2/oz from this time yesterday.Oil prices are up +US$1/bbl from yesterday at just over US$69.50/bbl in the US. The international Brent price is now down at just under US$74.50/bbl.The Kiwi dollar starts today at 61.2 USc and little-changed from yesterday. Against the Aussie we are -¼c lower at 93.1 AUc. Against the euro we are down -10 bps at 56.7 euro cents. That all means our TWI-5 starts today just on 70.2, -20 bps softer than yesterday at this time.The bitcoin price starts today at US$41,856 and up +1.4% from this time yesterday. Volatility over the past 24 hours has been modest at +/- 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 fr

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 financial markets are now turning their eyes to the US Fed meeting results tomorrow after it became clear today that while still easing, wringing the last bit of inflation's impulse from their economy could be tougher than first thought.The US Fed targets 2%.The American November inflation rate came in exactly as expected, at 3.1% and down marginally from 3.2% in October. Their core rate (without food or energy) was unchanged at 4%. This unchanged result has markets reassessing those 2024 rate-cut bets. Inflation in the world's largest economy is sticky at the end of its cycle and getting it back to 2% isn't going to be as straight forward as anticipated by financial markets. The Fed's caution is being justified.Food prices rose +2.9% and fuel prices fell -5.4% so they are not weighing on the overall level. But rent is, up +6.5%. And airfares are up more than +10% in the year.The Redbook index of bricks & mortar retail store sales on a same-store basis rose +3.4% last week, so the engine of American retail sales is still expanding on a volume basis.American small business owners are still feeling the pressure however, but more from a tight labour market than from demand. 40% of all owners reported job openings they could not fill in the current period, keeping them glum even if business is expanding faster.In Canada, they have a housing crisis - and perhaps a back-to-the-future solution. Home prices and rents have soared in part because housing starts have not kept pace with record immigration, and the official estimate is that 3.5 million more dwellings will be needed by 2030 to restore affordability. A 'new' policy has been announced, one with echoes of the housing-building boom after WWII. Standardised units will get blanket building consent approval with the idea that this will speed construction. This time however, the focus will be on density.In India, the monsoon has been weak this year and that is affecting food prices. Overall, consumer prices rose 5.6% in November, the first increase in four months, up from 4.9% in October. Food inflation however went up to 8.7%, the highest in three months, up from 6.6% in October so the pressure is on, on that front.India also reported October industrial production which was up +11.7% from a year ago, a much stronger rise than in the prior month and more than expected.In China, a couple of random points to note: it seems banks are reluctant to ease loan conditions for home buyers in distress. Only a handful of Beijing controlled banks have shown any sympathy.Also, the child walking pneumonia crisis apparently became a national issue due to very widespread antibiotic resistance, making a mild condition very much worse.In Germany, sentiment as measured by the widely-watched ZEW survey rose in December. It is now at a new high since March. Despite their current budget crisis, the assessment of the situation and economic expectations have improved again, as more respondents expect interest rate cuts by the ECB in the medium term, and inflation to stay down.In Australia there were two sentiment surveys out yesterday. The Westpac MI consumer survey found low but improving sentiment in December as the holiday season approaches. The icon NAB business survey recorded a sharp dip in sentiment in November to its lowest level since the pandemic in early 2020.The UST 10yr yield is softer on secondary markets at 4.21% and down -6 bps from yesterday at this time. The price of gold will start today just on US$1980/oz and down -US$2/oz from this time yesterday.Oil prices are down -US$2.50/bbl from yesterday at just over US$68.50/bbl in the US. The international Brent price is now down at just over US$73/bbl.The Kiwi dollar starts today at 61.3 USc and little-changed from yesterday. Against the Aussie we are up +10 bps at 93.4 AUc. Against the euro we are down -10 bps at 56.8 euro cents. That all means our TWI-5 starts today just under 70.4, +10 bps higher than yesterday at this time.The bitcoin price starts today at US$41,298 and down -1.1% from this time yesterday. Volatility over the past 24 hours has been moderate at +/- 2.3%.You can find links to the articles mentioned today in our show notes.You can get more news affecting the economy in New Zealand from interest.co.nz.Kia ora. I'm David Chaston. And we will do this again tomorrow.

Kia ora,Welcome to 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 we have some major set piece central bank meetings this week and there is a growing feeling they will each try to challenge investors' expectations of 2024 interest rate cuts.But first, American consumer inflation expectations for the year ahead fell to 3.4% in November, the lowest since April 2021. That is down from 3.6% in the previous month, and aligns with a number of separate private consumer surveys that have picked up a disinflation trend in the US economy. (Disinflation is falling positive inflation, deflation is where prices are falling.)It is not only inflation that is reducing, US Treasury bond yields are too. Today there were two major auctions. The three year Note was well supported with $121 bln offered for the $50 bln available. Investors won that with a median yield of 4.43% pa which was down from 4.65% at the previous equivalent auction a bit more than a month ago.It was a similar story for their ten year bond. Today $94 bln was bid for $37 bln available, so again well supported. Today's median yield was 4.22% pa and that compares to the 4.44% at the prior equivalent auction 5 weeks ago when US$40 bln was available.In Japan, the latest official sentiment survey for large businesses there has revealed fast rising optimism, their best in two years.Locally, inflation pressures are easing too. The Infometrics/Foodstuffs grocery cost index monitoring reports prices rose +4.8% in November from a year ago, the first sub-5% annual increase since March 2022. There are some categories (bulk foods and meat) that are now well under +3%, although some others still around +6%. Recall for the three year period 2019 to 2022, grocery prices rose overall less than +2%, so the current levels remain unusually high even if they are moderating fast.And we should note that the aluminium price has fallen to its lowest level since April 2021.The UST 10yr yield is firmer on secondary markets at 4.27% and up +4 bps from yesterday at this time. You will note that is a premium to today's US Treasury auction (above). The price of gold will start today just on US$1982/oz and down -US$23/oz from this time yesterday.Oil prices are down -50 USc from yesterday at just over US$71/bbl in the US. The international Brent price is now just over US$75.50/bbl.The Kiwi dollar starts today at 61.2 USc and unchanged from yesterday. Against the Aussie we are up +10 bps at 93.3 AUc. Against the euro we are still at 56.9 euro cents. That all means our TWI-5 starts today just on 70.3, +10 bps higher than yesterday at this time.The bitcoin price starts today at US$41,753 and down a sharpish -4.7% from this time yesterday. Volatility over the past 24 hours has been very high at +/- 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 that a lot happened so let's get into it.In the week ahead we will get the US Fed's interest rate decision, and American inflation and retail sales data. We will also get central bank updates from the ECB, the Bank of England, the Swiss National Bank, Norges Bank, and Brazil’s central bank.But first up we need to report that China is now in deflation again. Consumer prices fell -0.5% in November from a year ago, steeper than a -0.2% drop in the prior month and compared with market forecasts of a moderated -0.1% fall. It was the fastest decline in Chinese inflation since November 2020, driven my faster falling food costs, at the strongest pace in over two years and the biggest impact here was from a sharper fall in pork prices. Beef, lamb and milk prices are also falling although nothing like the pork prices. Meantime, non-food inflation slowed notably from +0.4% from +0.7%.Chinese producer prices also fell faster and by more than anticipated.But even in the face of current and obvious economic restraints, Beijing looks set to launch an ambitious growth target for 2024. Maybe as high as +5%. But there is no indication that huge stimulus programs are about to be launched. New debt support however will be a part of it. One thing is becoming clearer however, Hong Kong's days as a financial center are drawing to an end with mainland policies undermining its judicial independence and court transparency. Contracts entered into there have to meet Beijing's control measures. This sort of window dressing doesn't apply when it puts the CCP in a bad light.Across China, presale properties are taking a hit as homebuyers fear that financially distressed developers will not be able to deliver despite upfront payments. The share of presale properties between January and October this year slumped to the lowest point since 2017.Meanwhile, Taiwan's export growth was expected to have turned positive in November and that is how it turned out - although the year-on-year gain wasn't quite what was expected even if the miss was minor. It has been a year and a half since they have had a gain like this, however.Across the Pacific, the US economy added +199,000 jobs in November, more than the +150,000 added in October and better than the expected +180,000 gain. The strength was across the board, including for manufacturing.Away from the headline seasonally-adjusted data, the actual employer payrolls came in at a record 158.5 mln, up a strong +488,000 from October. For the broader household survey of employment which includes the unincorporated self-employed, it rose to 162.1 mln and also an all-time record, swelling +473,000 in the month (revealing a small shift to company payrolls). Either way you look at it there were many more workers getting paid in November than October, +3.4 mln more in a year (+2.8 mln more on company payrolls). It is a significant shift (and achievement).The golden jobs run is lifting confidence. The University of Michigan's consumer sentiment survey surged to 69.4 in December, rising from 61.3 in the previous month and surpassing market expectations set at 62.0. It was the highest level recorded since August, largely driven by positive shifts in the expected path of inflation. They dropped to 3.1% from November's 4.5%, marking the lowest level recorded since March 2021.And there doesn't seem to be any stress showing up in American consumer debt levels. They rose a much tamer (and minor) +US$5.1 bln in October from September to US$4.968 tln or just 18.1% of US GDP. A modest +US$9 bln rise was expected and that too would have been low. Rising employment and solid pay increases (+4.0%, so higher than inflation) are helping consumers keep a lid on their consumer (non-housing) debt. If the global economy does wobble, it won't be because of US household finances in the current state.All this run of positive data has markets pulling back on their enthusiastic expectation that the Fed will be cutting rates in 2024. Again, it is the Fed that is getting the future view right, not the commentariat. They are meeting this week and will announce the results of its policy deliberations on Thursday (NZT) along with their closely watched and highly anticipated quarterly Summary of Economic Projections. Markets expect no change in their policy rate at 5.5%, and holding at its 20+ year high. (Remember, markets have priced in American rate cuts starting in Q2-2024.)The release of the December version of the USDA WASDE report caused barely a ripple, mainly because they report a sanguine crop and livestock situation worldwide with adequate stocks and balanced demand and supply. US beef import estimates are raised for 2024 on expectations of demand for processing-grade beef. US milk production is retreating so

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 are in the shadow of tomorrow's US non-farm payrolls report which will give an important steer on where the world's largest economy is heading.But there were some labour market indicators out today ahead of that report. First, jobless claims rose last week. However, this was the usual seasonal increase, but little more, and were basically at the same level as the same week a year ago.Secondly, the Challenger job cut report noted a tiny rise in November from the tiny level a month ago. But these levels very much less than the same month a year ago. There is nothing here to suggest labour market stress is building.In Japan, there are a series of subtle signals coming out that the Bank of Japan is about to end its negative interest rate policy. These moves are expected over the New Year period. That saw the yen rise.Exports from China unexpectedly rose by +0.5% in November from the same month a year ago, after a -6.4% fall in the previous month and beating market forecasts of a -1.1% drop. It was their first increase in exports since April. But it isn't the gains that were expected and essentially dashes any hopes for an economic rebound in China. Among key trading partners, exports increased to the US (+7.3%) and Taiwan (+6.4%), while shrinking to Japan (-8.3%), South Korea (-3.6%), Australia (-9.1%), New Zealand (-15.2%), and the EU (-14.5%).The spread of the dangerous respiratory infection illness in China seems to be bringing back their mobile "health code" apps - in at least two provinces so far, as officials struggle to contain it spreading nationwide.Australian exports were -11.9% lower in October than the same month a year ago, down -0.4% from September.But global freight rates for containerised cargoes rose +6% last week, no doubt due to the difficulties in traversing both the Suez and Panama canals. China to Europe rates rose +15% in a week, whereas China to the US West Coast actually fell. Meanwhile, bulk cargo rates peaked on Monday, but have eased marginally since.The UST 10yr yield is unchanged from yesterday at 4.11% in a basic holding pattern.The price of gold will start today just on US$2,020/oz and down -US$10 from yesterday.Oil prices are staying down, unchanged from yesterday at just on US$69.50/bbl in the US. The international Brent price is now at US$74/bbl. These are 5 month lows, and on an inflation-adjusted basis, decade-lows. It is fair to wonder if the OPEC cartel has lost its influence.The Kiwi dollar starts today at 61.7 USc and +10 bps firmer from yesterday. Against the Aussie we are down -20 bps at 93.5 AUc. Against the euro we are up fractionally to 57.2 euro cents. That all means our TWI-5 starts today just on 70.6 and -10 bps lower from this time yesterday.The bitcoin price starts today at US$43,637 and down -0.4% from this time yesterday. Volatility over the past 24 hours has been modest at +/- 1.4%.You can find links to the articles mentioned today in our show notes.You can get more news affecting the economy in New Zealand from interest.co.nz.Kia ora. I'm David Chaston. And we will do this again on Monday.