Economy Watch

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 today will be dominated by the RBA rate review, especially as US financial markets are on holiday (Presidents Day).Meanwhile, Canadian housing starts rose in January from December and came in +3.7% higher than year ago levels. Montreal and Vancouver demand drove the increases.Across the Pacific, the Japanese economy continues its good rebound with their growth rate beating estimates, and by quite a bit. Japan’s GDP grew by +0.7% qoq in Q4-2024, accelerating from an upwardly revised +0.4% expansion in Q3. This marked the third consecutive quarterly growth, on the back of a strong rebound in business investment. Year on year it is up +2.8% which was very much better than the +1.0% expected. This is very good for Japan, who has struggled to expand for a long time. And don't forget this is the world's fourth largest economy. (Japan is als one of those economies that looks better in PPP terms.)Singapore's exports actually fell in January and by -3.3% - and that was much more than the -0.3% dip expected.Chinese new vehicle sales slipped in January from December. Not only was it the usual seasonal dip, it was more than expected, and the year-on-year change also dipped slightly which is not something we have seen since the pandemic.It was a similar story for Indian exports, which fell in January from December, to be -1.3% lower than the same month a year earlier. India is not a powerhouse exporter, with theirs only about 10% of China's, and less than Taiwan. They export at about the same level as Australia and Vietnam. Those weak exports meant its trade deficit widened.At 4:30pm we will get the latest update to the RBA's cash rate target. Markets expect a -25 bps cut to 4.10% but you have to say the conviction in the market is not high. All three possibilities are still live; a cut, no change, or even a hike given their highish inflation levels. We will know soon enough.The UST 10yr yield is at 4.49%, up +1 bps from yesterday at this time.The price of gold will start today at just under US$2898/oz and up +US$15 from yesterday.Oil prices are up +50 USc at just over US$71/bbl in the US and the international Brent price is unchanged at US$75/bbl.The Kiwi dollar is now at 57.4 USc and unchanged from yesterday. Against the Aussie we are down -10 bps at 90.1 AUc. Against the euro we are up +20 bps at 54.8 euro cents. That all means our TWI-5 starts today just over 67.2, and down -10 bps from this time yesterday.The bitcoin price starts today at US$95,470 and down another -1.7% from this time yesterday. Volatility over the past 24 hours has been modest at +/- 1.0%.You can find links to the articles mentioned today in our show notes.You can get more news affecting the economy in New Zealand from interest.co.nz.Kia ora. I'm David Chaston. And we will do this again tomorrow.

Kia ora,Welcome to Monday’s Economy Watch where we follow the economic events and trends that affect Aotearoa/New Zealand.I'm David Chaston and this is the international edition from Interest.co.nz.And today we lead with news the messy international outlook continues but so far the changes are more in prospect than real.First however, this will be a big week of data and policy releases. Not only will Australia review its policy rate tomorrow (a -25 bps cut is anticipated taking their cash rate target to 4.10%), our own RBNZ has its first monetary policy review of 2025 and it is widely expected they will deliver a -50 bps cut to 3.75%. China also reviews rates this week on Thursday, but no change is expected from them.On Wednesday, there is another full dairy auction.Canada and Japan will release January CPI data. And there will be many January PMI releases this week.In data out over the weekend from China, banks lent a record +¥5.22 tln in new loans in January, far above the +¥990 bln in December and easily beating forecasts of +¥800 bln. It is a spectacular show of support by banks for the push by Beijing to juice up its economy via more debt.Foreign direct investment in China plunged -99% over the past three years, Chinese government data shows, as their economic slowdown and concerns about their 'everything is national security' approach drove investors away. China only recorded a net inflow in 2024 of +US$4.5 bln and that is their lowest in more than 30 years. In two of the four quarters of 2024 there was in fact a net outflow.Up from +1.8% in 2023, Singapore's economy grew +4.4% in 2024 on the back of stronger-than-expected rebounds in exports and tourism. This was an upward revision from the preliminary +4.0% rate reported by them earlier. By itself, Singapore's Q4 rose at a +5.0% rate.Malaysia downgraded its growth in its Q4-2024 update to +5.0% from a year ago. This was due to weak progress in Q4 from Q3.In the US, retail sales were +4.2% higher in January from a year ago, a slightly slower pace than in December (+4.4%). This official data backs up the Redbook survey we report weekly. But we should note that the good January data came despite a sharpish fall-off in car sales in the month. That fall-off contributed to seasonally adjusted retreat in January from December and one that was notably more than expected.Business inventory data out for December actually shows lower levels, and their inventory-to-sales ratio improved unexpectedly. This shift might be due to public-policy uncertainty around tariffs.With inventories lower than expected, it therefore won't be a surprise to know that US industrial production in January rose on a year-on-year basis, and by more than expected. But the January rise from December wasn't as strong. But at least it was a riseIt is Presidents Day in the US on Monday (tomorrow NZT), a Federal holiday, but only inconsistently observed by business and many states.Across the border, Canada said its manufacturing sales rose, and for a third consecutive month in December.Canada also released its Q4-2024 senior loan officer survey which revealed a sharpish tightening in credit conditions in the period.The UST 10yr yield is at 4.48%, unchanged from Saturday at this time.The price of gold will start today at just under US$2882/oz and down -US$6 from Saturday.Oil prices are down -50 USc at just over US$70.50/bbl in the US and the international Brent price is still just under US$75/bbl.The Kiwi dollar is now at 57.4 USc and unchanged from Saturday. Against the Aussie we are also unchanged at 90.2 AUc. Against the euro we are still at 54.6 euro cents. That all means our TWI-5 starts today just under 67.3, unchanged from Saturday but its highest since Christmas Eve.The bitcoin price starts today at US$97,094 and down -1.6% from this time Saturday. Volatility over the past 24 hours has been low at +/- 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 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 it is expected that the US will announce reciprocal tariffs today, although the phase-in time might be months. To be revealed. This will be seen as the formal start of a global trade war. New Zealand won't be any focus but it won't be immune. The tariffs will be on goods. But the retaliatory tariffs will likely come on services where the US runs large surpluses. Both will tend to drive countries away from US influence.Every country is going to learn how to play hard-ball in a zero-sum struggle. None of this will be good for trade, or any sense of cooperation for mutual benefit.Meanwhile, US initial jobless claims came in at 231,000 last week, almost exactly as expected. There are now just under 2.2 mln people on these benefits, quite similar to this time last year.The expected easing in the rise in American producer prices didn't happen in January. They were up +3.5% in December and that was expected to ease to a +3.2% January rise. But in the end the pace of cost increases stayed unchanged at +3.5%. Although it is not a key metric, it is more data that will encourage the Fed to hold its settings and put off a rate cut. Tariffs are likely to make matters worse for them.US household debt pushed on up through US$18 tln at the end of Q4-2024 in new data released today. That is 62% of US GDP, so compared with other countries, not a huge load. In fact it rose only +3.1% from a year ago, basically keeping pace with inflation.There was a UST 30 year bond auction earlier today and that brought a median yield of 4.68%. That compared with the 4.87% at the equivalent eventa month ago.Across the Pacific, Japanese producer priceswere expected to rise in January from December's 3.9% to 4.0%. In fact it came in at 4.2% for the year to January in a broad-based trend higher. And apart from the pandemic period, this is a ten year high for them.It may seem an odd economic 'win' but EU industrial production fell -2.0% in December. This was marginally more than the November -1.8% drop, but very much less than the -3.1% fall expected. It was toughest in Austria, Italy and Hungary, all countries ruled by right-wing populists. So far they are not making their countries great again.Container freight rates fell -5% last week to be +118% higher than pre-pandemic but -19% lower than the same time a year ago. Outbound freight rates from China brought the largest retreats. Bulk cargo rates remained near all-time low levels, but were unchanged over this past week.The UST 10yr yield is at 4.54%, back down -9 bps from yesterday at this time.The price of gold will start today at just under US$2913/oz and up +US$18 from yesterday.Oil prices are down nearly -US$1.50 at just over US$71.50/bbl in the US and the international Brent price is now just on US$75/bbl.The Kiwi dollar is now at 56.5 USc and up +20 bps from this time yesterday. Against the Aussie we are unchanged at 89.8 AUc. Against the euro we are down -10 bps at just on 54.2 euro cents. That all means our TWI-5 starts today just on 66.7, essentially unchanged from yesterday at this time.The bitcoin price starts today at US$95,526 and virtually unchanged from this time yesterday. Volatility over the past 24 hours 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 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 instability feared over the new US tariff approach is hitting their economy.First up today, we need to note that US headline CPI inflation rose in January to 3.0% when no change from the December 2.9% was anticipated. Core inflation was expected to fall to 3.1% from December's 3.2%. But in fact it rose to 3.3%. Rents were a key factor. This has set financial markets on edge.Although not as aggressive, this official data confirms the University of Michigan consumer sentiment survey that reported a sharp jump in consumer inflation expectations.US mortgage applications rose slightly, almost all on refinancing demand. So it was driven by churn, rather than new demand. But overall levels remain very low; in the past two-plus years these levels have remained static, and down to levels last seen 25 years ago.All this unwelcome data had a big effect on benchmark interest rates with the UST 30 year yield jumping +11 bps. Clearly the Fed is right to wait before cutting its policy rate. Markets aren't pricing any rate cut until December now. Wall Street equities turned negative after this news too. The USD firmed on risk aversion. None of this was liked by the US President who vented on social media. But behind it all are building fears about the effect of his very misguided tariff policies which everyone but him sees as sharply inflationary.While all this was going on, there was a UST 10yr bond auction and that delivered a yield today of 4.56%, lower than the 4.63% at the prior equivalent event a month ago. Investor support isn't wavering but bids here were made before the CPI data release. There will be some large paper losses by these bidders now.(And we should probably also note that with the new Administration kneecapping the Justice Departments monitoring and enforcement of the area, foreign lobbyists are pouring into Washington DC to plead their cases for special treatment. It's open slather.)Across the Pacific, Japanese machine tool orders came in at an average level in January, up +4.7% from the same month a year ago, but nothing like the spurt in December.In China, it won't be news to regular readers, but their property development sector woes are now in crisis territory. The fundamental problem has never been sorted and many companies can no longer hang on. They are going from the zombie phase to actual liquidation now.India's industrial production is leaking growth and at a faster rate than expected. It was up +4.3% in December, down from +5.0% in November and well below what was anticipated. You can see why their recent Union Budget moved into stimulus mode, and the central bank cut its policy rate. India needs a boost to keep the expansion going.Meanwhile, India's CPI inflation rate is easing, down to 4.3% in January from 5.2% in December. Food inflation fell sharply, but it is still at 6.0%.In Australia, December home loan data revealed modest changes. The total number of new loan commitments for dwellings fell -0.4% in the December quarter while the value rose +1.4%. Owner occupier activity was positive, but investors pulled back. The number of new investor loan commitments for dwellings fell -4.5% in the quarter while the value fell -2.9%.And staying in Australia, we should probably note the recently-retired NAB CEO, kiwi-Ross McEwan, has been appointed chairman of the board of Aussie heavyweight miner BHP. That is a long way up for an ex-ASB banker.The UST 10yr yield is at 4.63%, up +9 bps from yesterday at this time.The price of gold will start today at just under US$2894/oz and down -US$10 from yesterday..Oil prices are down nearly -US$1 at just on US$73/bbl in the US and the international Brent price is now just under US$76/bbl.The Kiwi dollar is now at 56.3 USc and down -30 bps from this time yesterday. Against the Aussie we are down -10 bps at 89.8 AUc. Against the euro we are also down -40 bps at just on 54.3 euro cents. That all means our TWI-5 starts today just on 66.7, down -10 bps from yesterday at this time, limited because we rose sharply against the yen.The bitcoin price starts today at US$95,555 and again down -0.9% from this time yesterday. Volatility over the past 24 hours has been modest at +/- 1.3%.You can find links to the articles mentioned today in our show notes.You can get more news affecting the economy in New Zealand from interest.co.nz.Kia ora. I'm David Chaston. And we will do this again 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 USD is wavering (down -1.7%) as policy missteps especially on the impact of the trade war hostilities. Benchmark interest rates are rising as risk premiums rise. Estimates for US growth are getting downgraded, while estimates for US inflation are being raised. These latest shifts will have global echoes.And in a shameless move, the US President has ended enforcement of the Foreign Corrupt Practices Act, saying bribing foreign officials is now a part of US diplomacy. Previous you could go to jail for that, and many people did. The lack of enforcement will probably only apply to Trump's supporters.The US Fed boss Powell is testifying before Congress, newly hostile because Trumps troops are gunning for lower policy interest rates. He also pushed back on 'being rushed' on rate cuts. At the accusation the Fed is overstaffed, he countered that they aren't, but they are overworked.Last week's American retail Redbook index rose +5.3% above year-ago levels, a slowing but still a notable rose.Also at a good level is SME business optimism. But uncertainty is on the rise. This January survey by the NBIB was expected to rise from December, but it fell.There was another large, but well-supported US Treasury three year bond auction earlier today and that went for a yield of 4.26%. This was slightly below the prior equivalent event a month ago at 4.29%. Fear is being priced in more than uncertainty.The February USDA WASDE report has been released. It shows the US will likely produce more beef in 2025, and import levels will remain unchanged. But prices are rising they say on rising demand. They also so US milk production is in a declining phase with fewer cows milking. They see prices holding, in USD terms of course.In Canada, December building permit levels rise sharply and by much more than expected. They were +11% more than in November and a massive +30% higher than in December 2023. Although this metric does tend to jump around a bit, there are some substantial gains here.In India, their central bank has intervened in currency markets frying to stop the fall and speculative shorting of the rupee. It had ballooned out to almost 88 to the USD and the intervention brought it back to 87. However even that level is a notable devaluation. The RBI probably doesn't have the resources to fight market shorters.In China, President XI is out visiting the regions, and emphasising the importance of food security. Beijing must be worried if they give it this much repeated exposure.And yet another large property developer is throwing in the towel, not opposing its winding up.The social-media-recorded pushback during the Covid lockdowns in China that "we are the final generation" is continuing to echo, and echo loudly there. After rising slightly in 2023, marriages fell sharply in 2024 and to their lowest since China's public records began in 1986. This means the public efforts to stop the sharp fall in births are not working. (And yes, if you try to follow the link to the data, you may well find yourself blocked. But it is the source data for this item.)In Australia, the Westpac-Melbourne Institute consumer sentiment survey reported no improvement in January from the flat levels that have been around for the two prior months. But the NAB Business Sentiment survey is reporting that their responders are finding a more positive mood.The UST 10yr yield is at 4.54%, up +5 bps from yesterday at this time.The price of gold will start today at just under US$2904/oz and up +US$4 from yesterday.Oil prices are up +50 USc at just on US$73/bbl in the US and the international Brent price is now just under US$77/bbl and back to week-ago levels.The Kiwi dollar is now at 56.6 USc and up +10 bps from this time yesterday. Against the Aussie we are down -10 bps at 89.9 AUc. Against the euro we are also down -10 bps at just under 54.7 euro cents. That all means our TWI-5 starts today just on 66.8, essentially unchanged from yesterday at this time.The bitcoin price starts today at US$96,409down -0.9% from this time yesterday. Volatility over the past 24 hours has been modest at +/- 1.2%.You can find links to the articles mentioned today in our show notes.You can get more news affecting the economy in New Zealand from interest.co.nz.Kia ora. I'm David Chaston. And we will do this again tomorrow.

Kia ora,Welcome to 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 more signaled tariffs on imports into the US, specifically on metals. A new inflation surge seems inevitable, as does less trade and low growth - in other words we need to prepare for a new bout of stagflation.But first, American consumer inflation expectations for the year ahead remained at 3% for a third consecutive month in January, according to the NY Fed national survey. This is far more sanguine than the University of Michigan survey we noted yesterday which reported a 4.3% year ahead level. The NY Fed survey noted that households now expect to pull back their spending in the year ahead, however.The Musk takeover of US spending priorities is leaving many losers, including US farmers. In Canada, a survey by their central bank of about 30 significant financial "market participants" at the end of 2024 showed that those polled expect the Canadian 3% current policy interest rate still has another -50 bps of cuts to come, but that it will level out at 2.5% from mid-year for the next long period. This survey also showed an expectation of a +1.8% or +1.9% economic growth rate over the next two years, although the largest risk to that is from policy uncertainty in the US.And staying in Canada, falling residential values are leaving some very tough positions for buyers who bought off the plan, and now find the contract price now far exceeds what a bank would value their purchase for a mortgage.In India, the one-two public policy push to "go for growth" with tax cuts and a lower policy interest rate, isn't getting plaudits from financial markets. They have driven the Indian currency to a record low against the USD, although it has come off that in the past few hours. (But of course some of that is due to the overall strength of the USD.)In the face of new US tariff threats, some targeted metals prices have risen. Essentially they are pricing in the higher prices American buyers will have to pay. Aluminium is at a two year high and running at long term high levels, steel comes in may varieties, but rebar steel hasn't moved much because that has China-focused demand. Other commodity-metals are flat, but specialty metal prices are rising. And copper is back near its all-time highs suddenly at just over US$10,000/tonne (NZ$17,750). These shifts higher will underpin global inflationary impulses that no-one can avoid.And we should probably note that the new aggressive new US Gaza policies probably mean there will be no end to the risks of using the Suez Canal, extending its inflationary impact.The UST 10yr yield is at 4.49%, down -1 bp from yesterday at this time.The price of gold will start today at just under US$2900/oz and up +US$40 from yesterday. This will be a new record closing if it holds this level.Oil prices are up +US$1.50 at just under US$72.50/bbl in the US and the international Brent price is now at US$76/bbl and back to week-ago levels.The Kiwi dollar is now at 56.5 USc and down -10 bps from this time yesterday. Against the Aussie we are down -20 bps at 90 AUc. Against the euro we are unchanged at just under 54.8 euro cents. That all means our TWI-5 starts today just on 66.8, down -10 bps from yesterday at this time.The bitcoin price starts today at US$97,281 and up +0.7% slip 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 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 it doesn't look like our trading partners are going to be that helpful getting us out of recession.This week we will be watching for the Selected Prices inflation indications on Friday. And financial markets will be doing their final jostling for the following week's set of monetary policy decisions, first from the RBA on the Tuesday of that week, and the RBNZ the next day. But this coming week the US will release its CPI and PPI reports, and the Fed will face a partisan Congress to explain the Monetary Policy Report they released over this past weekend. India will release updated inflation data, and the EU its Q4 GDP growth result. And this week a set of sentiment surveys will be released in Australia.Over this weekend there were some major releases from the US.First, the Fed released its semi-annual Monetary Policy Report. Although it got almost no wider media coverage, it does point to some very interesting stresses they are going to have to work their way through. And they are issues that could have global consequences. While they see banks having 'ample' liquidity at present (previously they saw 'abundant' levels, so a shift), in fact as a proportion of their economy it is historically low. If banks have low liquidity, that puts the Fed in a tough spot if it want to keep shrinking its balance sheet. The Fed's 'normalisation' is an economic tightening process that only works without consequences if the banking system has excess liquidity. When that shrinks, as it seems it is, then overall low liquidity could jerk benchmark interest rates higher. Something will give, and the Fed may have to stop its QT process. Announcing that is a big market signal and this MPR suggests it is close.Secondly, total US consumer credit surged by almost +US$41 bln in December, far exceeding the forecasted +US$$12 bln. In fact it was the largest increase in the history of this metric. Revolving credit, which includes credit cards and personal lines of credit, jumped by +US$23 bln. Meanwhile, non-revolving credit, which covers car loans and student debt, increased by +US$18 bln. The overall +2.4% year-on-year rise suggests consumers are only modestly taking on more debt however, similar to inflation's rise. Third, US January non-farm payrolls growth came in less that expected, up +144,000 when the average of market estimates was +170,000. In 2024 that would have been regarded as a "big miss'.The data collectors said that wildfires in LA and severe winter weather in other parts of the country, had “no discernible effect” on employment in the month.Their jobless rate ticked down to 4.0% and average weekly earnings rose +4.2% from a year ago, so overall a mixed picture.And fourth, the University of Michigan consumer sentiment survey for February fell from January and quite sharply. It's the second straight month of retreat and is now its lowest reading since July 2024. Both the 'conditions' and 'expectations' measures fell. There was also a large slide in buying conditions for durables, in part due to a perception that it may be too late to avoid the negative impact of their tariff policy. In addition, inflation expectations for the year ahead soared to 4.3%, the highest since November 2023, from 3.3%. This is only the fifth time in 14 years we have seen such a large one-month rise in year-ahead inflation expectations. Many consumers appear worried that high inflation will return within the next year.Not only is this measure of sentiment down in February from January (-4.6%), it is down even more sharply from February a year ago (-12%).And it is not going to get better. Trump is signaling 'reciprocal tariffs' on many countries, also expected to raise costs for Americans. It will be a major international escalation. No indication here on how that will affect New Zealand that basically doesn't have any tariffs with anyone. (In his alternate reality, he may just invent that we have some, of course.)An uncertain and fearful American middle class may have a much bigger impact on the global economy than even their new public policy direction. Of course the two are related.North of the border, Canada turned in a very strong jobs report again, it's second consecutive big gain. +76,000 new jobs were added in January, far higher than the +25,000 expected. Their jobless rate fell to 6.6%. Of course, this too is much more uncertain when looking ahead, for the same US-based reasons.As the New Zealand dairy industry knows, Canada has an [illegal] trade protection scheme operating for its dairy industry, a system of "supply management". Their industry leaders "don't think it [is] being threatened" in the current stoush with the US.And while we are reporting about dairy, we should note that American milk consumption rose +

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 American rich get insulated from legal scrutiny, while the US economic data loses its shine.First in the US, their services sector expanded slower in January than expected, according to the widely-watch ISM survey. It is still a good expansion, just with lower new order flows and business activity than they have had over the past five months. And the internationally benchmarked S&P/Markit version essentially told the same story, although that one had a faster retreat.We get the US labour market report for January on Saturday. The precursor ADP Employment Report showed a rise of +183,000 private jobs in January, better than the +150,000 expected. The good momentum was based on customer-facing payrolls; the business services and production sectors shrank in the month. Tomorrow’s non-farm payrolls are expected to rise by +170,000 in January.Announced job cuts were modest in January.We should perhaps note that as part of the revenge purges of US government agencies, the FBI white-collar crime division has been virtually closed down. Not only are ethics out the door, corporate and financial activities that are illegal won't be investigated by them. Even national security cases are on the back burner. It open slather.But US initial jobless claims rose slightly more than expected with 240,000 more claims added last week. Seasonal factors had suggested this level should have fallen slightly. There are now 2.25 mln people on these benefits, well above the 2.1 mln at this time last year.US mortgage interest rates were little-changed last week, although now just shy of 7%. And mortgage applications moved little, still bumping along the low levels that have existed for the past five years.As is usual in the US, vehicle sales fell sharply in January from December, but this year the retreat was it bit more pronounced than last year. Prior to that, sales 'usually' rose. Having noted that, they were up +4.9% from January 2024, although the 2025 level is still -4.9% lower than in January 2020 and just before the pandemic.Later today, the Reserve Bank of India will release the results of its monetary policy review and is widely expected to cut rates by either -25 bps or -50 bps, maybe to 6%. They have a new governor who is de-emphasising inflation control and re-emphasising growth. He was appointed by PM Modi for that shift. Currently inflation is running at 5.2% and the 4% goal is no longer a priority.As widely anticipated, the Bank of England cut its policy rate for a third consecutive time, taking it down to 4.50%. No surprises here and this time it was a unanimous decision.Australia's merchandise trade surplus fell in December and November's surplus was revised lower, both to levels less than markets expected. The December result was the smallest trade surplus since last September, as exports rose less than imports.The pullback on global trading volumes are showing up in container freight rates. They fell another -3% last week with general softness. They are now below year-ago levels, but still +130% higher than pre-pandemic. Trans-Atlantic rates outbound from the US are very low. Bulk cargo rates remained very low, still at about the level that prevailed more than 50 year ago.The UST 10yr yield is at 4.44%, up +2 bps from yesterday at this time. The price of gold will start today at US$2850/oz and down -US$16 from yesterday and from its record high record high.Oil prices are down -US$1.50 at just on US$71/bbl in the US and the international Brent price is now US$74.50/bbl.The Kiwi dollar is now at 56.7 USc and down -20 bps from this time yesterday. Against the Aussie we are down -20 bps at 90.3 AUc. Against the euro we are up +10 bps at just on 54.7 euro cents. That all means our TWI-5 starts today just on 67, and down -10 bps from yesterday.The bitcoin price starts today at US$96,526 and down -1.4% from this time yesterday. Volatility over the past 24 hours 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 on Monday.

Kia ora,Welcome to Wednesday’s Economy Watch where we follow the economic events and trends that affect Aotearoa/New Zealand.I'm David Chaston and this is the international edition from Interest.co.nz.And today we lead with news it remains unclear what happens next after the chaotic round of US tariffs on their closest trade partners, and then their unexpected suspension.But first up this morning, we can report a strong dairy auction result, with prices up +3.7% in USD terms and up +4.0% in NZD terms. The key WMP price was up +4.1% in USD terms and is now sitting much higher than the anticipated US$4000 level. There were a couple of key factors at play today. First, despite rising NZ production, the volume of product on offer was down, and along with lower US and Australian milk production, there is a supply squeeze. And secondly, there was strong pre-Ramadan buying although not so much from China as anticipated. Where each component has landed can be checked in our dual-currency charts that also interleave the Pulse results for SMP and WMP as well. There are some new high benchmarks achieved today, especially the WMP price in NZD.And, yes, the strength of this auction will have analysts reassessing their payout forecasts. But they will probably hold back because of where we are in the season. However, the base is now quite strong.US job openings fell by -556,000 to 7.6 million in December, to a lot less than anticipated and indicating a definite cooling of the American labour market. Clearly employers were uncertain about how the post-election landscape would play out. And this came well before the aggressive purging of Federal government jobs now underway.Perhaps worse, new orders for manufactured goods sank -0.9% in December from November, extending the revised -0.8% drop in the previous month, and firmly below market expectations of a lesser decline. It was the sharpest monthly drop since June.But retail sales were up +5.7% last week from the same week a year ago on a same-store basis and that was an improvement. However you have to wonder whether this rise was motivated by buying ahead of expected price rises flowing from the signaled tariff increases.Surging inventory levels has seen the US Logistics Manager’s Index jump in January from December to its fastest expansion of the logistics since June 2022. Underlying growth and the uncertainty surrounding trade regulations, particularly the tariffs on Mexico, Canada, and China, drove the defensive inventory moves.On the trade war front, the US delayed its tariff imposition in both Mexico and Canada by a month, but China set in motion is retaliation, a mixture of its own countervailing tariffs especially on coal, oil and natural gas, plus major 'investigations' of Google, Nvidia and Intel. It also banned exports of some key minerals. But analysts thing there is more symbolism here than hard penalties. They are being saved for later in the game.In Canada, consumer boycotts may have a bigger effect than official retaliation. Other major economies are also readying their retaliation, including Japan and the EU. If all of them act in unison, the impact of just these five big trading blocs will be substantial for the US (and themselves of course).China thinks it can win the trade war with the US just by letting the yuan sink. In fact, all currencies vs the USD are falling. That way imports become cheaper for US buyers, and US exports become more expensive (and less attractive) to overseas customers. It is lose-lose for the US. Trump is fighting natural market forces with unnatural tariffs.Join us at 10:45am this morning when we will report the Q4-2025 unemployment rate. Markets expect it to have risen to 5.1% from the Q3 4.8%. Any variance from that will have implications for the February OCR review due on the 18th of this month.The UST 10yr yield is at 4.52%, unchanged from yesterday at this time.The price of gold will start today at US$2840/oz and up +US$23 from yesterday and another new record high.Oil prices are virtually unchanged again at just on US$72.50/bbl in the US and the international Brent price is now US$76/bbl and a tad firmer.The Kiwi dollar is now at 56.2 USc and up +20 bps from this time yesterday. Against the Aussie we are down -20 bps at 90.3 AUc. Against the euro we are up +10 bps at just on 54.4 euro cents. That all means our TWI-5 starts today just on 66.9, and up +20 bps from yesterday.The bitcoin price starts today at US$99,502 and up another minor +0.6% from this time yesterday. Volatility over the past 24 hours has been moderate at +/- 2.2%.We should finally note that tomorrow (Thursday, February 6, 2025) is a public holiday in New Zealand and there won't be a Breakfast Briefing edition. It will return on Friday.You can find links to the articles mentioned today in our show notes.You can get more news affecting the economy in New Zealand from interest.co.nz.Kia ora. I'm David Chaston. And we will do this again on Friday.

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 Trump's tariffs are bringing the same level of global uncertainty back as we had from China's pandemic. This time however, officials in charge lack the credibility or the instinct to change policy for the common good, or the courage to withstand the nutters. In fact, the nutters are in charge of this latest mess.However their tariff policy took a jerk overnight with the US announcing a one month delay to the start of them against goods from Mexico. Meanwhile, Canada released the list of products that they will hit with counter-tariffs for US products. Probably more importantly, there is widespread evidence Canadians are already boycotting US products, tariffs or not. That will have a more immediate impact that official actions.But the effects have yet to show up in the data, and there was a lot of PMI data out today for surveys that pre-dated the tariff news.The ISM factory PMI for the US rose to a modest expansion in January from a downwardly revised small contraction in December. This was a better result than expected and is the first expansion in the factory sector by this survey after 26 consecutive months of contraction. New orders increased at a faster pace and that drove the change.Separately the globally-benchmarked S&P/Markit factory PMI came in with a similar recovery recorded, and slightly better than the ISM one.In Canada, their factory expansion slowed slightly in January. But it is still at a level higher than either of the US surveys.Although the internationally-benchmarked China Caixin factory PMI slipped to a no-expansion/no-contraction state in January, the underlying data did feature a rise in new orders. Prices eased and at their fastest pace since July 2023. Looking ahead will be difficult now given the unknowable impacts of the impending tariff war.The Singapore Manufacturing PMI for January slipped to a marginal expansion but it was the 17th consecutive month of expansion, even if it was the weakest in three months. Slower increases were recorded in new orders, new exports, factory output and employment.EU inflation in January rose marginally, to 2.5% from 2.4% in December. What is interesting about this is that it is the first where energy prices weren't the restraining factor they were in 2024. But it is the 3.9% rise in services costs that is keeping this elevated.EU PMIs were contracting for their large economies, expanding in the smaller ones. Overall the contraction was less in January than December.And the S&P Global Australia Manufacturing PMI was revised higher to 50.2 in January from a flash of 49.8, and compared to 47.8 in December. It's their first expansion in the manufacturing sector in a year, as output returned to growth. New orders fell at a softer rate and employment levels increased, supporting the clearance of backlogged work.Retail sales in Australia fell by -0.1% in December from November, the first such retreat in nine months, though the drop was milder than the forecasted -0.7% contraction. The result points to weakening consumer spending, fueling expectations that the RBA may start cutting interest rates at their February 18 meeting. Year-on-year, retail sales only rose 3.0%, barely more than inflation's 2.5%.And staying in Australia, building consent levels were essentially unchanged in December from November to be more than +12% higher than in the same month in 2023. For all of 2024, they were +4.7% higher than in 2023. Despite those gains, the powerful construction lobby is calling for a "$12 billion injection into infrastructure" to have the taxpayer subsidise its activities.CoreLogic reported that Australian house prices and sales activity were weaker than usual in January. They had a -0.2% price dip in January, the same as December and the fourth consecutive monthly decline. Annual price growth has continued to slow, dropping below +4% now.The UST 10yr yield is at 4.52%, down -2 bps from yesterday at this time. The price of gold will start today at US$2817/oz and up +US$18 from yesterday and back to a record high.Oil prices are virtually unchanged again at just on US$72.50/bbl in the US and the international Brent price is now US$75.50/bbl and also holding.The Kiwi dollar is now at 56 USc and down -40 bps from this time yesterday. It fell -60 bps lower during the day but recovered some of that. Against the Aussie we are down -20 bps at 90.5 AUc. Against the euro we are down -10 bps at just under 54.3 euro cents. That all means our TWI-5 starts today just on 66.7, and down -50 bps from yesterday.The bitcoin price starts today at US$98,885 and up a minor +0.8% from this time yesterday. Volatility over the past 24 hours has been high though at +/- 3.9%.You can find links to the articles mentioned today in our show notes.You can get mo

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 about the start of a tariff trade war, a reprise of a 1930s effort, also started by the US, and one that ended badly for everyone.The week ahead was supposed to be basically about jobs, both here and in the US with our HLFS data for December out on Thursday, and the US non-farm payrolls report out for January on Saturday. But Trump's imposition of 25% tariffs on Canada and Mexico, and 10% tariffs on China will no doubt dominate the news with its consequences.However there will be other economic data news coming, including key Wall Street earnings reports, January PMIs, central bank decisions from India and the UK, and China's financial markets will return to work after their CNY break on Wednesday. Also, Chinese buyers may be back at Wednesday's GDT dairy auction on Wednesday, which will be an important event after last week's sharp run-up in the WMP price at the Pulse event.And don't forget, this will be an interrupted week with a public holiday in New Zealand on Thursday, Waitangi Day. So Friday is likely to be a day many people also take off to get a four-day weekend. (But not us, of course.)The big news over the weekend was the US imposing 25% tariffs on its neighbours Canada and Mexico. Worryingly, these mean the US has unilaterally broken its (Trump-imposed) CUSMA (or NAFTA 2.0) trade treaty obligations. And more of an issue for any country contemplating making a treaty with the new US Administration is that the basis for these new tariffs are essentially jingoistic and trumped-up, that pretend anecdotes are "common sense" when they are just raw self-servicing prejudice.Mexico and Canada hit back immediately. Canada also imposed a 10% tariff on their oil exports to the US. China is going through the WTO dispute process.An easy way to keep an eye on US inflation is to watch the daily US petrol price. As at today it is US$3.10/gal. We will check back regularly to watch how tariffs impact that. Of course demand will impact that too.How will this affect New Zealand? Here are some early thoughts.Earlier the alternate US inflation measure, "the one the Fed watches", their personal consumption expenditures price index, rose +0.3% in December from November, the highest gain in eight months, but it was the rise expected. That means their year-on-year PCE inflation came in at 2.6% and it’s highest in seven months by this measure. The new tariffs are likely to mean higher inflation, something Trump acknowledged in a Fox interview.There were no surprises in any of the income, consumption, or savings data in the PCE release. This may turn out to be the low point in their inflation cycle.The January Chicago PMI recovered from the weak December result on the back of better new order inflows and higher production levels. But it remains in deep contraction territory. The outlook responses in this regional survey weren't very bright.In Canada, apart from the new tariffs from the US, they are wrestling with what the 25 year 'extreme' difference means between their policy interest rate, 3.00% and the US Fed's "4.25% to 4.50%". In market terms that is a 140 bps discount the Canadians carry. It has been thought that +/-100 bps is in the comfort zone for financial markets, so we may start to see reactions and implications. There could be lessons for other economies, although Canada may be facing extra pressures from the tariffs.Japanese industrial production rose in December from November and that limited the year-on-year decrease to less than expected.Japanese retail sales rose +3.7% in December from the same month in 2023, up from a +2.8% gain in November, and better than market expectations of a +3.2% rise. This is the 33rd straight month of expansion in retail sales and the fastest growth since June 2024. Rising pay levels are getting the credit for the expansion.In India, a new Union (national) Budget has cut income taxes (see pages 28 and 29), in the hope it will arrest the cooling of their economic activity by enhancing domestic demand. Those earning about NZ$24,000 pa will pay no tax, and the tax bands above that have been indexed higher. They will still run a deficit of -4.4% of GDP if they can maintain a +6.8% growth rate. They will pay for the tax cuts by restraining their spend on updating their infrastructure. India also cut tariffs.In Argentina, their central bank cut its policy interest rate by -300 bps to 29% on Friday NZT, as inflation eased again. But annual inflation in Argentina was still at 118% in December, the softest increase since July 2023, down from 166% in November.EU inflation expectations rose to 2.8% in the ECB's December survey, taking it back to early 2024 levels. In the ECB MPS, they noted there is still more work to do to quash these expectations. Actual EU inflation

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 of some all-time high benchmarks that are impressive.The first estimate of Q4-2024 GDP was out earlier today and it came in at a +2.3% growth rate, less than the +3.1% in Q3. It was also lower than most market analysts had anticipated. Consumption came in at the 3% level, the trade deficit had no material impact, but it was the -1.0% fall in investment activity that capped the result. For all of 2024, the US economy grew +2.8%. That all means that the US economy grew by a nominal +US$1.46 tln in 2024. (To put that in perspective, the NZ economy probably shrank to US$238 bln and that total economic activity here for the year represents just 15% of their growth, 1/125th of their total economic activity in one year.) No-one else comes close either. Per capita, nominal US GDP rose +4.1% in 2024. Across all these factors, 2024 was the best year ever for them.That is the third year in a row that US growth has outstripped China's who is now falling behind in absolute terms. The EU is an also-ran with virtually no expansion. Japan and India are still in the game however.US initial jobless claims fell back sharply on an actual basis because of seasonal effects, to 227,000, and that was a larger fall than those seasonal trends would have indicated. There are now 2.18 people on these benefits, almost exactly the same level as a year ago. No special labour market stress is showing in this data tracking.But there was a sharp, and unexpected fall in pending home sales for December, down -5.0% from a year ago and down at a slightly faster rate from November. The still-high home loan rates are getting the blame from the industry, but they would say that wouldn't they?As expected, the ECB cut its policy rates by -25 bps with the main one now 2.90%. It was its fifth consecutive cut.The January update of the EU business sentiment survey reveals a pickup in confidence, a rise in inflation expectations, and an improvement - and a rather sharp one - in in their expected jobless rate.And we should note that the South African Reserve Bank cut it policy rate by -25 bps too, to 7.50%.Global container freight rates fell -2% last week as the pre-tariff rush faded. But they remain +137% higher that per-pandemic. The US adventure in Panama may now pose a new threat to shipping risks. Bulk cargo rates fell -18% and are now down near all-time lows.Global passenger demand for air travel reached an all-time record high in December, leaving the pandemic hesitation behind it. Apparently we don't care about the climate implications enough to curb our wanderlust.The UST 10yr yield is at 4.53%, down -2 bps from yesterday at this time.The price of gold will start today at US$2788/oz and up +US$7 from yesterday to bump up near its all-time high.Oil prices are down -50 USc at just under US$73/bbl in the US and the international Brent price is now at US$77/bbl.The Kiwi dollar is now at 56.5 USc and unchanged from this time yesterday. Against the Aussie we are down -10 bps at 90.7 AUc. Against the euro we are little-changed at just under 54.3 euro cents. That all means our TWI-5 starts today just on 67, and down -10 bps from yesterday.The bitcoin price starts today at US$105,710 and up +3.6% 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 on Monday.

Kia ora,Welcome to Thursday’s Economy Watch where we follow the economic events and trends that affect Aotearoa/New Zealand.I'm David Chaston and this is the international edition from Interest.co.nz.And today we lead with news markets are all quiet ahead of the US Fed monetary policy review and results will be announced at 8am NZT. Markets do not expect any rate change, but given the aggressive start to the Trump Administration, markets will be watching for any Fed reaction. It seems unlikely to come today however.US mortgage applications were a little softer last week through the Washington swamp burp, down -2%. And the benchmark 30 year interest rate stayed just above 7% and little changed as lenders assessed the risk implications.Both wholesale and retail American inventory levels fell in the latest accounting out overnight.But as expected, the American trade deficit rose sharply in December as traders rushed to beat the aggressively-signaled tariffs threatened by the incoming Administration. That is entirely consistent with what we had reported for trans-Pacific freight rates. In fact exports fell rather sharply too with buyers fulling back on the risk of capricious American actions. And imports jumped - in fact they were +15% higher than the same month a year ago. The biggest increases were for food, industrial supplies and capital goods; imports of vehicles actually fell. Substituting these for local supply, which seems to be the plan, will probably create distortions that will be inflationary.Global air cargo demand ended 2024 on a high too, with a surge in international air cargo to and from North America.The Fed will be watching for the actual inflationary reactions, but they may not show up for a few months yet. But by the time they do show up, the impulse may be embedded already. They have a tough watch-wait-react conundrum ahead of them - well aware that if they get it wrong, Trump will blame them.In Canada, they have already announced their rate decision earlier today, and as expected they cut by -25 bps to 3.00%. They face the same pressures from their neighbour, but from the other side. They are in the unique position of not having a friendly neighbour any more. They also signaled that they will no longer reduce their balance sheet, so the end of their qualitative tightening program. From here on, their balance sheet will be set to grow at the same rate as their economy. 'Normalisation' is returning at a much higher level that pre-pandemic. Back then they had a balance sheet of C$117 bln. They are 'normalising' now at C$280 bln.In Russia, after some successful 2024 central bank moves to keep a lid on inflation, producer prices are taking off again, up +7.9% in December. The Kremlin-pressured back-tracking on those moves is having the anticipated effect, and they are heading into a period of high inflation again.In Australia, there were some mixed signals in the Q4 CPI data released there yesterday, along with their Monthly Inflation Indicator for December. The Q4 CPI rate fell to 2.4% from 2.5% in Q3, and slightly better than expected. Underlying inflation fell to 3.2%. But the month inflation indicator rose to 2.5% in December, up from 2.3% in November and 2.1% in October, and actually the highest in four months, so tracking the "wrong way". Markets however focused on the "good" quarterly result, anticipating this will open the door for a RBA rate cut on February 18. But you have to wonder if that is actually how Bullock & Team see it.Markets have reacted very little to the Aussie CPI data, signaling that all the risks are priced in. Politically, some think a February RBA rate cut could mean an April federal election there.The UST 10yr yield is at 4.55%, down -1 bp from yesterday at this time awaiting the US Fed decision.The price of gold will start today at US$2752/oz and down a minor -US$6 from yesterday.Oil prices are up +50 USc at just over US$73.50/bbl in the US and the international Brent price is now at US$77.50/bbl.The Kiwi dollar is now at 56.5 USc and down -10 bps from this time yesterday. Against the Aussie we are up +20 bps at 90.8 AUc. Against the euro we are little-changed at just under 54.3 euro cents. That all means our TWI-5 starts today just under 67.1, and also little-changed from yesterday.The bitcoin price starts today at US$101,997 and down a minor -0.3% from this time yesterday. Volatility over the past 24 hours has been modest at +/- 1.4%.You can find links to the articles mentioned today in our show notes.You can get more news affecting the economy in New Zealand from interest.co.nz.Kia ora. I'm David Chaston. And we will do this again tomorrow.

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 US equity markets have made a comeback from yesterday's tech rout. But it isn't a full comeback yet in the tech space. In addition, general economic sentiment is more sober about the 2025 prospects.But first, last week's US retail sales were up +4.9% from the same week a year ago.However, new orders for manufactured durable goods fell -2.2% in December from November, following a downwardly revised -2% drop in November and far below market expectations of a +0.6% rise. Year on year, the December month was -3.8% lower than in 2023 and that dragged the full year result lower. Basically it held until December, and then there is this unexpected drop.Also at a level less than expected and less than the prior month is the January survey results from the Conference Board for consumer sentiment.The regional Richmond Fed factory survey remained soft in January, and their services sector survey softened too.And the Dallas Fed services survey also 'moderated' in January.Things are likely to get more uncertain. Brutal dawn raids are underway on undocumented workers, and the Whitehouse has stopped almost all Federal assistance programs. At the same time, access to the OMB website that can give details on this action has been disabled. Confusion reigns. Most at risk is funding for education, disaster aid, and housing. All up, it is a war on "poor people" in support of billionaires. The US Labor Board has been eviscerated. All foreign aid is halted too as the US gifts the world to China's influence, backed up by bullying of other nation's leaders. US public policy has suddenly become an ethical wasteland.There was a slightly less-well-supported UST 7yr bond auction today and that brought a median yield of 4.41%. That was less than the 4.49% yield at the prior equivalent event a month ago.In China, the Spring Festival migration is underway, and they expect a mammoth 9 billion trip events over the period. It will also be a test of their facial recognition tracking system (or "ticket verification system".)In Malaysia, inflation seems well contained. But there is a 'but'. Their PPI fell -0.4% year-on-year in November, but it rose +0.5% on the same basis in December. While both levels are low that is a month-on-month rise of +0.8%, which is on top of a quite fast month-on-month rise in November. On a producer basis, they need to keep an eye on this momentumIn Australia, the December NAB business sentiment survey remained negative, but a little less so. The same survey shows businesses think conditions are positive, and a little more so.And staying in Australia, we should probably note that the ATO, their federal tax authority, is now targeting landlords for undeclared income. They think more than AU$1 bln is being undeclared. The NZ IRD is running a similar campaign. Both have new data-matching capabilities. But what makes the Aussie effort interesting is that because they have a means-tested age pension program, it is a magnet for hiding income so that a claim on it qualifies. It is a vulnerability that doesn't apply in New Zealand. Aussies at risk will not only have to pay back the under-declared rental income, plus interest, plus penalties, but they will also then have to pay back the super they weren't entitled to, plus interest, plus penalties. It will be a very expensive tax dodge for them.Later today, there will be an important release in Australia on their inflation levels. They will disclose both their Q4 level, plus their monthly December level. Both are expected to ease to about a 2.5% level from 2.8% in Q3. Some think to 2.2%. An under-shoot will encourage the RBA to move by reducing their 4.35% cash rate target. But a hold (or a rise) will likely put that off the table. The RBA next reviews its policy rate on February 18.The UST 10yr yield is lower at 4.56%, up +2 bps from yesterday at this time. The price of gold will start today at US$2757/oz and up +US$24 from yesterday.Oil prices are up +50 USc at just over US$73/bbl in the US and the international Brent price is now at US$77/bbl.The Kiwi dollar is now at 56.6 USc and down -20 bps from this time yesterday. Against the Aussie we are up +10 bps at 90.6 AUc. Against the euro we are also up +10 bps at 54.3 euro cents. That all means our TWI-5 starts today just on 67.1, and unchanged from yesterday.The bitcoin price starts today at US$102,256 and a +2.5% partial bounceback from this time yesterday. Volatility over the past 24 hours has been modest, also 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 with news Wall Street is reassessing its valuation basics, and there is a general pullback across the board. It started with questions about an AI valuation bubble, but is extending to others now. "Risk-off" is the mood today.But first, yesterday's reporting of China's official PMIs for January all took a step lower, now recording virtually no expansion. This was weaker than expected. Their factory PMI fell into a contraction state (49.1), while their services PMI retreated to only a weak expansion (50.2). It wasn't the result policymakers there would have wanted given they have been trying to stimulate their economy for more than three months now. It that effort is working, the core must have been quite compromised.Chinese industrial profits were reported to be -3.3% lower in the year to December than the same period in 2023. But perhaps there are some reason to be positive for December alone, they were +7.0% higher than the same month a year ago - and that might have been their best December on record. Hard to tell how much Beijing stimulus was part of that late effort however. However, the January PMIs probably mean they have got off to a weak start in 2025.China's tax take grew +1.3% in 2024 following a 6.4% rise in 2023. The sharp slowing followed slowing domestic demand and a slump in their property market, all consistent with the overall economic challenges they have.Bloomberg is pointing out that current commercial real estate activity in Hong Kong is crystalising some very large losses. This re-rating will have loud echoes in many places. It is one of Hong Kong's worst slumps in history, with no end in sight. Average prices of office buildings, shopping malls and other properties have fallen more than 40% from their highs in 2018, eroding the value of the collateral backing many bank loans. Defaults are also rising as more property owners and developers run into severe cash flow difficulties.None of these China-based news data items will be helping the Spring Festival mood in the business sector.In the US, the Dallas Fed's Texas manufacturing survey picked up pace in January to its highest since October 2021. New orders hit their highest since April 2022, while capacity utilisation and shipments also rose.Meanwhile, there was also a rise in new home sales in the US in December, taking them back to mid-range for any 2024 month.And the Chicago Fed's National Activity index improved in December. All this gritting economic activity bodes well for the 2024-Q4 GDP result due out on Friday.The UST 10yr yield is lower at 4.53%, down -9 bps from yesterday at this time. Wall Street is down sharply today with the S&P500 down -2.0% to start its week. The price of gold will start today at US$2733/oz and down -US$37 from yesterday.Oil prices are down -US$2 at just over US$72.50/bbl in the US and the international Brent price is now under US$76.50/bbl.The Kiwi dollar is now at 56.8 USc and down -30 bps from this time yesterday. Against the Aussie we are unchanged at 90.5 AUc. Against the euro we are down -20 bps at 54.2 euro cents. That all means our TWI-5 starts today just on 67.1, and down -30 bps from yesterday.The bitcoin price starts today at US$99,190 and down -5.5% from this time yesterday. Volatility over the past 24 hours has been high at +/- 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 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 we will be watching for China holiday demand signals, and watching how the US Fed handles new sharp political interference.Also, this week will bring a slew of big economic announcements in many places, but not China which is starting its Lunar New Year week-long holiday after their PMI data is released (later today). Elsewhere it will be a big week of central bank policy reviews, capped by the US Fed, although they are expected to deliver no rate change. However both Canada and the ECB are expected to cut rates by -25 bps. Sweden (-25 bps?) and Brazil (no-change?) will also be meeting.We will also get GDP results for the US (+3%?) and many key countries in the EU. Australia will release its Q4 CPI result. And of course the Wall Street earnings season results will continue.But first, the early 'flash' release of the globally-benchmarked S&P/Markit PMI for the US for January shows that their factory sector is back expanding with a small gain to a 7-month high. But there was a notable pullback in their services sector, still expanding but quite a bit slower than in December. So the composite PMI is at a nine-month low. (In January 2024 is was even, neither expanding nor contracting. In January 2023 is was contracting.)US existing home sales were up +2.2% in December from November to an annualised rate of 4.38 mln units, the most since February 2024 and despite mortgage interest rates over 7%. But in a long term perspective, this level is still very low, similar to what they had in the mid-1990sThere was an update to the University of Michigan sentiment survey for January out over the weekend, and it was revised lower. But the inflation tracking in this survey was unchanged at 3.3%, an eight month high.Across the Pacific, Japanese inflation jumped to 3.6% in December from 2.9% in the November, the highest level since January 2023 and well above the 3.2% level expected. Food prices were a notable driver, up 6.4%. Their core inflation rate climbed to a 16-month high of 3%, in line with market estimates.This bolstered the case for the Bank of Japan to raise its policy by +25 bps to 0.5% at their review on Friday, and that is exactly what they did.Meanwhile the Japanese factory PMI contracted a bit more in January than the very minor contraction in December. But their services PMI expanded more in January than in December, and by much more than expected.Singapore's central bank loosened its monetary policy on Friday, it’s first such move in more than four years. Rather than interest rates, their monetary policy centers on exchange rates, via the S$NEER, allowing the Singapore dollar to rise or fall against the currencies of major trading partners to stabilise prices.In China, we should remind readers that their week-long 'Spring Festival' holiday will start tomorrow, Tuesday, January 28 and run until Monday, February 3, 2025. Only after that will they be back to normal. Chinese New Year is on Wednesday January 29, which ushers in the Year of the Snake.In India, their January PMIs show 2025 beginning with the private sector slowing and services losing steam. Having noted that, the expansion there is still very strong. But inflation pressure, especially in their services sector, is rising, suggesting growth at this level is creating distortions which will take the edge off it for most people.In Europe, their January PMIs showed they "returned to growth". That came with the combination of their factory sector contracting less and their services sector expanding more.Australia's factory PMI contracted noticeably less in January, and now is barely contracting at all. New orders rose, but prices rose faster too. Their service sector however expanded at a slower pace in the month.And staying in Australia, Westpac is pointing out that tax cuts there are not boosting consumer spending in the way expected. Three quarters of these cuts are being used by households to either pay down debt or increase savings.The UST 10yr yield has held 4.62% unchanged from Saturday at this time. Reporting of Wall Street's Q4 earnings is well under way and is off to a strong start. Both the percentage of S&P 500 companies reporting positive earnings surprises and the magnitude of earnings surprises are above their 10-year averages. As a result, the index is reporting higher earnings for the fourth quarter today relative to the end of last week and relative to the end of the quarter. In addition, the index is reporting its highest year-over-year earnings growth rate for Q4 2024 in three years. So it is no surprise that the S&P500 is near its record high.The price of gold will start today at US$2771/oz and down -US$5 from Saturday, but up +US$55 for the week.Oil prices are holding at just over US$74.50/bbl in the US an

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 living in a new world of imposed distortions. Ethical politics or business dealing is out the window. Trust is being replaced by force. It is hard to see how this will end well. After all, business relies on trust, honesty and integrity. Without it, why would you make a deal? The result can only be higher risk premiums.First, the annual Davos meetings are underway, and today they were dominated by US Presidential bluster where we claimed he would force interest rates down, force the oil price down, and force other countries to "put America First". He also threatened any country who challenged the American FANGs with taxes on their activities in their own countries. Billionaires don't see the need to pay taxes - their fair share, or any share - to anyone.US jobless claims fell back sharply from last week's big seasonal increase. But the fall was not as much as seasonal factors would have anticipated. On a seasonally-adjusted basis they rose. There are now 2.24 mln people on these benefits, which is actually the highest since the last Trump Administration. (Interestingly, the new US-DOL leadership 'hid' this data, shifting it to a 'new' location.)In the regions, the December factory survey from the Kansas City Fed revealed a further contraction. New order levels were low, and despite improved manager sentiment, they actually don't expect new order levels to rise much.In Canada, retail sales rose much more than expected in December, their best December rise since 2019, and the biggest any-month gain since May.Japan said its exports rose +2.8% in December from a year ago, meaning that eleven of the past twelve months recorded export growth. Only nine of the past twelve recorded import growth.And all eyes turn to the Bank of Japan and their expected +25 bps rate hike, later today.A rise in South Korean business sentiment in January comes after authorities there reported a quite soft Q4-2024 GDP growth outcome.Singapore's CPI inflation was up +1.6% in December, the same as November and slightly more than the +1.5% expected.Taiwanese retail sales rose +2.9% in December with a modest performance. But Taiwanese industrial production surged +20% in December from the same month a year ago which itself wasn't especially soft.In China, they are directing insurers to buy equities, a move designed to put a floor under the pressure on those markets.After 'peaking' in October at their long-run average, the EU consumer sentiment survey has slipped to be more net-negative since. But the latest January 2025 survey essentially held the December level to be almost 2 percentage points better than year-ago levels.In Turkey, their central bank claimed overnight that inflation there is under control at 44% and heading in the right direction. So it cut 2.5% from its policy interest rate taking that benchmark down to 45%.Driven by rates out of China, container shipping freight rates fell a sharpish -11% last week, although they are still 140% higher than pre-pandemic levels. The Baltic Dry index for bulk cargoes fell a sharp -16% in the past week, now at the very lower end of its long-run average level since 1969.The UST 10yr yield is up at 4.65% with a +4 bps rise from this time yesterday.The price of gold will start today at US$2757/oz and down -US$1 from yesterday.Oil prices are down down -US$1 at just over US$75.50/bbl in the US and the international Brent price is now under US$78.50.The Kiwi dollar is now on 56.8 USc and up +20 bps from this time yesterday and more than a one month high. Against the Aussie we basically unchanged at 90.3 AUc. Against the euro we are up +10 bps at 54.5 euro cents. That all means our TWI-5 starts today just on 67.2 and also essentially unchanged from yesterday. A fall against the Yen offset the USD rise.The bitcoin price starts today at US$106,275 and up +2.6% from this time yesterday. Volatility over the past 24 hours has been moderate at +/- 2.8%.Monday is the Auckland Anniversary holiday, and Australia Day, so the newsflow will be light. But we will have continuing regular service on Monday.You can find links to the articles mentioned today in our show notes.You can get more news affecting the economy in New Zealand from interest.co.nz.Kia ora. I'm David Chaston. And we will do this again on Tuesday – Monday is a public holiday in much of New Zealand.

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 the cost of the Trump capricious bulldozing is going to be much higher interest rates - and the bond market have a key signal today.But first, US mortgage applications were virtually unchanged last week, up only +0.1% to be +2% higher than the same weak week a year ago. Mortgage interest rates eased very slightly but they are still above 7% so a six month high. No sign here that some political enthusiasm in part of their community extends to the residential real estate sector.And the current US retail impulse extended its more modest tone last week, up +4.5% from the same week a year ag, basically holding last week's pullback. This expansion level is near the bottom of the range compared to all weeks in 2024.And also falling back post-election is the Conference Board's Leading Index survey tracking series for December. It actually is quite a big move from November.The bond market got another chance to price long term US Treasury yields, again in the shadow of federal debt authorisation stress. This morning's tender for the UST 20 year bond was again well supported but that showed a sharp rise in the median yield at 4.86%. This was notably higher than the 4.62% at the also well-supported prior equivalent event a month ago. And it is a shift that will undoubtedly move the secondary market later today. The bond markets are worried.Uncertainty is at the heart of what the Whitehouse is doing. Yesterday, the President announced a US$500 bln AI initiative to be funded by billionaires. Today, it seems clear that the project "might" be US$100 bln, but then one of the billionaires, Elon Musk, said none of them have the funds for the announced initiative.Meanwhile, Canadian producer prices rose less than expected in December from November, but it still means Canadian PPI is +4.1% higher than year ago levels.Korean consumer confidence took a hiding in December in the midst of their political crisis (one that is still playing out). But the latest survey has consumer sentiment bouncing back - not quite to the pre-crisis levels (and still net negative) - but a notable recovery anyway. We will get their updated survey of business sentiment later today.In Australia, they are getting a small uptick in economic activity. While the growth signal from the Westpac-Melbourne Institute Leading Economic Index is not particularly strong, it has shown a clear improvement from the persistently negative, below-trend reads recorded over the previous two years.And staying in Australia, new data out today for the September 2024 quarter shows that residential dwelling construction is rising. New dwellings commenced rose in Q3 from Q2 at an annualised rate of +4.2%, driven by new house building, up +5.2%. Overall these dwelling starts were almost +14% higher in Q3-2024 than in Q3-2023. But their rental market "has well and truly past the peak". Real estate offices that specialise in the rental market are hurting now. Overall inventory for sale is up sharply and investors are quitting, especially in Victoria. A lot of the investor sales are to FHBs there.And we should probably note that today the prices of many commodities are falling and under pressure from building economic uncertainty.The UST 10yr yield was at just on 4.61% prior to the US Treasury tender, and up +3 bps from this time yesterday. The price of gold will start today at US$2758/oz and up +US$10 from yesterday.Oil prices are down another -50 USc at just over US$75.50/bbl in the US and the international Brent price is now just on US$79.The Kiwi dollar is now under 56.6 USc and little-changed from this time yesterday and holding its recent gain. Against the Aussie we also unchanged at 90.3 AUc. Against the euro we are up +10 bps at 54.4 euro cents. That all means our TWI-5 starts today just under 67.2 and up +20 bps from yesterday.The bitcoin price starts today at US$103,539 and down -1.7% 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 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 dominated by Trump's shows of 'power' and theatrics. Toxic tech-bro masculinity is on full display. Senior female leaders are getting the chop or side-lined. But so far, also backtracks on trade threats. So we will stand back to await any real impacts.But first up today, there was another full dairy auction today and it was a modestly positive one, although volumes sold were seasonally lower, the least since July 2024. Overall prices rose +1.4% from the last full auction two weeks ago, and perhaps the detail is more interesting than the overall result. WMP was up +5.0%, SMP was up +2.0%, and both butter and cheddar cheese had better than +2% rises from that last full auction. That takes the WMP price to its highest since June 2022. Stronger demand from China is part of the reason for today's rise, but better demand out of Europe helped too. In NZD terms, overall prices were up only +1.0% as the NZD rose and is higher than two weeks ago.From the US, the flurry of Presidential executive orders is creating an opening for China to lead some key global initiatives, from health and the WHO, to climate change. While the US is becoming more isolationist, China is finding openings to be less so. The world's power blocs are getting new boundaries.In Canada, their December CPI data brought few surprises, up 1.8% when a 1.9% rise was expected. But overall December prices actually fell from November and by slightly more than anticipated. Some sales tax relief had a part to play as well. With this result, inflation remained within or below the Bank of Canada’s midpoint target 2% for the fifth consecutive month, adding to current expectations of further rate cuts this year. They next review that official rate on Thursday next week NZT and their current rate is 3.25%. But trade relations with their suddenly unfriendly southern neighbour will dominate how they approach this.In China, 15 of their 31 regional governments have set growth targets for 2025 less than they had for 2024. Only one raised its target. Basically soft domestic demand and an uncertain global trade outlook is motivating the pullbacks.In Germany, any green shoots they may have been seeing have been snuffed out by households in defensive mode. The ZEW Indicator of Economic Sentiment fell in January from December, and by more than expected as inflationary pressure perceptions persist. But to be fair, this sentiment index is still positive, and has been since October, just less so.Later this morning, we will get the December REINZ results, and the Q4-2024 New Zealand inflation result. The RBNZ's February 19 OCR review will be influenced by that.The UST 10yr yield is now at just on 4.58%, and unchanged from this time yesterday.The price of gold will start today at US$2740/oz and up +US$33 from yesterday.Oil prices are unchanged at just over US$76.50/bbl in the US although the international Brent price is down -50 USc to now just on US$79.50.The Kiwi dollar starts today just under 56.6 USc and unchanged from this time yesterday and holding its recent gain. Against the Aussie we unchanged at 90.4 AUc. Against the euro we are also unchanged at 54.4 euro cents. That all means our TWI-5 starts today just on 67.1 and again unchanged from yesterday.The bitcoin price starts today at US$105,307 and down -1.3% from this time yesterday. Volatility over the past 24 hours has been high at +/- 3.3%.You can find links to the articles mentioned today in our show notes.You can get more news affecting the economy in New Zealand from interest.co.nz.Kia ora. I'm David Chaston. And we will do this again tomorrow.

Kia ora,Welcome to Tuesday’s Economy Watch where we follow the economic events and trends that affect Aotearoa/New Zealand.I'm David Chaston and this is the international edition from Interest.co.nz.And today we lead with news the US is today moving from a prosperous and strong four years into an unknown future; the age where billionaires get all the gains. Markets are showing caution, especially the bond market which is likely to be the most reliable predictor of what is to come. And the USD fell. It is all very fluid.And in the US, it seems the 'promise' of immediate tariffs on his first day in office isn't going to happen. The Trump team now says it plans to direct federal agencies to study trade relations with China and other countries without imposing new tariffs on his first day in office. But the tariff uncertainties and their threats to inflation control remain.One thing he did re-promise in his speech today is war with Panama, committing to seize the Panama Canal. (Almost certainly, that will start work on a wider, more efficient alternative canal in another country.)In Canada and in a central bank survey of firms taken in mid-November, after the Trump victory and before the Trudeau resignation, Canadian businesses were girding for a rocky relationship with the US marked by higher costs and new tariffs. But they were seeing improved demand. And if they can navigate the new US policies, they seem confident businesses there will improve.Across the Pacific, Japanese released machinery order data yesterday for November and that brought a much stronger result than expected. Excluding volatile items like ships and power companies, they rose +9.5% from the same month a year ago to a nine month high. And for the first time in more than a year, that propelled the annual levels to a small +1.2% gain. The recent strength comes on top of a good result for October as well.China held its loan prime rates unchanged yesterday at its January review. The one year LPR, the benchmark for most corporate and household loans, remains at a record low 3.10% and their 5 year, the benchmark for mortgages, stays at a record low 3.60%.In Australia, and following its pull-out of personal banking in New Zealand, HSBC is said to be considering doing the same there for its much larger retail banking operation.The UST 10yr yield is now at just on 4.58%, and down -4 bps from this time yesterday.The price of gold will start today at US$2707/oz and up +US$5 from yesterday.Oil prices are down -US$1.50 at just over US$76.50/bbl in the US while the international Brent price is now just under US$80.The Kiwi dollar starts today just under 56.6 USc and up +70 bps from this time yesterday. Against the Aussie we up +30 bps at 90.4 AUc. Against the euro we are unchanged at 54.4 euro cents. That all means our TWI-5 starts today just on 67.1 and up +30 bps from yesterday.The bitcoin price starts today at US$106,643 and up +1.9% from this time yesterday. Volatility over the past 24 hours has been very high at +/- 4.8%.You can find links to the articles mentioned today in our show notes.You can get more news affecting the economy in New Zealand from interest.co.nz.Kia ora. I'm David Chaston. And we will do this again tomorrow.

Kia ora,Welcome to Monday’s Economy Watch where we follow the economic events and trends that affect Aotearoa/New Zealand.I'm David Chaston and this is the international edition from Interest.co.nz.And today we lead with news the world seems to be bracing for the uncertainties of the incoming US Administration, but it is starting from a generally resilient position (although that doesn't seem to include New Zealand).But first, the week ahead will be dominated locally by our Q4 CPI release. Markets expect a 2.1% year-on-year rate, only marginally less than the Q3 rate of 2.2%. We will also get another full dairy auction on Wednesday too. The REINZ will release its December data sometime, maybe Tuesday. And we can expect other banks to react to ASB's home loan rate reductions.Elsewhere, there will be more PMI releases, GDP releases for South Korea and Taiwan, and rate decisions from Norway, Turkey, Malaysia, and the big one from Japan at the end of the week. Data out of Australia will be minor this coming week. But all the while, important earnings reports will flow on Wall StreetOver the weekend, China said new home prices in 70 cities dropped by an average -5.3% in December from a year ago, slowing from a -5.7% decline in the previous month. This was the softest fall since August but is the 18th consecutive month of decreases. "Second hand home" prices fell faster, and there were no cities where prices rose. The string of decreases come despite efforts from Beijing to reduce the impacts of a prolonged property weakness, efforts such as lowering mortgage rates and cutting home buying costs.China released data that showed electricity production was only up +0.6% from a year ago in December. For the whole of 2024 the rise was +4.6%. The year ended weakly with neither November nor December rising more than +1%. This is a telling indicator of real activity. (This is the metric then-to-be Premier Li Keqiang famously referred to after dismissing their GDP results.)But they said industrial production was up +6.2% in December. Retail sales were up +3.7%. And through all this they claimed Q4-2024 GDP rose +5.4% and its fastest pace of the year. Frankly, that is hard to see based on the components that make it up. Apparently it is based on export growth, but as good as that is, it is hard to see that behind the claimed growth. But the links here, plus this one, and they should be enough to inspect their data and for you to make your own judgement.Singapore’s exports surged +9% in December from the same month a year ago, after a +3.4% gain in November. This exceeded the +7.4% rise in November and is the fastest pace in export growth since August. A key driver is a sharp rebound in non-electronic product sales.Globally, the January update of the IMF's World Economic Outlook estimated global growth to be +3.3% in 2025, a slight increase from the 3.2% forecast in October. The rise was driven by the US which offset downgrades in other major economies. Growth for 2026 is also expected at 3.3%, unchanged from the previous projection.They say the US faces upside risks that could bolster growth in the near term, but other nations remain exposed to downside risks amid heightened policy uncertainty. The US economy is now forecast to grow by 2.7% in 2025 (vs 2.2% in October), and China's GDP growth was revised slightly higher to 4.6% (vs 4.5%).Conversely, the Euro Area's growth projection was downgraded to 1% (vs 1.2%), while Japan's growth forecast remains steady at 1.1%. Projections for India’s GDP growth were maintained at 6.5%. Australia is expected to grow +2.1% in 2025 and +2.2% in 2026. New Zealand doesn't get a mention in these forecasts.Underscoring the US growth upgrade, American housing starts surged by almost +16% from the previous month to an annualised rate of 1.5 mln units in December, the most since March 2021 and well above the expected 1.32 mln level.And industrial production in the US was up an outsized +0.9% in December and well above the +0.3% expected rise to the strongest increase since February. It was helped by the end of strikes, and a jump in the production of aircraft.But there is a bump in the road about to start: the latest US debt limit deal is about to expire very soon. The new US Administration will have to grapple with that in its early days. Trump wants no debt limits to constrain his tax cuts and spending plans, but his hardline conservative supporters won't agree to more deficits. This will be interesting.Trump has already had an effect on the US Federal Reserve, getting them to withdraw from the 144 member NGFS. of which the RBNZ.And separately, we should probably note that the aluminium price is at a two month high, and heading toward a two year high.The UST 10yr yield is now at just on 4.62%, and up +2 bps from this time Saturday.The price of gold will start today at US$2702/oz and down -US$14 from Saturday.Oil prices are down -50 USc at just under US$78/bbl in the US while the internationa

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 despite it rising to its highest since June - to +2.9% and fourth monthly increase - financial markets have concluded US inflation is under control and Fed rate cuts are imminent. The key benchmark rates are easing back now.But first, although seasonal factors push up American jobless claims at this time of the year, they actually rose more than those factors can account for last week. On a seasonally adjusted basis, initial jobless claims rose last week to 217,000 and above expectations of 210,000 and well above the 11-month low touched in the first week of January. There are now 2.3 mln people drawing these benefits now and well above the 2.1 mln at this time last year.US retail sales were up +3.9% in December from the same month a year ago, and the fourth consecutive month-on-month rise. That takes it to US$795 bln for the month, a new record high for any month.Yesterday we noted the unusually large drop in the New York Empire State factory survey. Today we can note an unusually large rise in the Philly Fed factory survey, the outsized surge driven by new orders and the biggest jump since June 2020 and the pandemic distortions. Prior to that, it is the biggest one-month jump ever, taking the level to its highest since 1984 so a 40 year high.In Canada, December housing starts came in at a disappointing level and undershooting the 2024 average.The Bank of Korea unexpectedly held its key interest rate steady at 3% during its January 2025 meeting, defying market expectations of a -25 bps cut. This decision followed back-to-back rate cuts in previous meetings, made in response to a slowing economy, moderating inflation, decelerating household debt growth, and growing political uncertainty. The move also occurred against the backdrop of a weak currency.In China, leading property developer during China's boom years, Country Garden has now taken a place among the largest money losers in the country and the world, marking another grim milestone in their real estate meltdown. They have finally just reported their 2023 loss as -¥174 bln (NZ$43 bln) - although to be fair that is 'minor' compared to the giant -¥476 loss (-NZ$115 bln) that Evergrande reported in 2021.The December labour force data for Australia brought a +56,000 gain in jobs. But there was apparently a tough twist. +80,000 of these were part time, and full-time jobs shrank -24,000. But these are the seasonally-adjusted numbers. In actual fact, total new jobs (actual) were +119,000 with +72,000 full-time and +46,000 part-time. So on the ground there was actually no backsliding and many more people were actually in paid employment. Their jobless rate ticked up to 4.0% s.a. and 3.8% actual. The strength of this data has some doubting they will ever see an RBA rate cut.And Australia said that in the year to October (their latest update), +161,000 permanent and long term people arrived into the country. That is +12.3% more that the same 2023 year. But another 149,300 citizens returned in the year, although that was more than -6% less that the year before.Containerised freight rates slipped -3% last week with the heat right out of the China to USWC trade now that the new US Administration with its threatened tariffs is about to take office. Bulk cargo rates rose +8% in the week to be -22% lower than year-ago levels. They seem to be settling in at an historically low level.The UST 10yr yield is now at just on 4.61%, and down another -5 bps from this time yesterday.The price of gold will start today at US$2719/oz and up +US$31 from yesterday, and moving back toward its record high of US$2790 it reached at the end of October.Oil prices are little-changed from yesterday at just under US$79/bbl in the US while the international Brent price is now just over US$81.The Kiwi dollar starts today just on 56.2 USc and up +10 bps from this time yesterday. Against the Aussie we are unchanged at 90.3 AUc. Against the euro we are down -10 bps at 54.5 euro cents. That all means our TWI-5 starts today just on 66.9 and down -10 bps from yesterday.The bitcoin price starts today at US$99,264 and up a mere +0.2% from this time yesterday. Volatility over the past 24 hours has been modest at +/- 1.8%.You can find links to the articles mentioned today in our show notes.You can get more news affecting the economy in New Zealand from interest.co.nz.Kia ora. I'm David Chaston. And we will do this again on Monday.

Kia ora,Welcome to Thursday’s Economy Watch where we follow the economic events and trends that affect Aotearoa/New Zealand.I'm David Chaston and this is the international edition from Interest.co.nz.And today we lead with news the relief is palpable in financial markets today.First up today we can report that the American CPI inflation rate came in at 2.9% in December, almost exactly as expected and shrugging off some market fears of an upside to those expectations. The monthly change came in at 0.2% and also as expected. Their annual core rate came in at 3.2% and a tick less than expected. Still these levels are nine-month highs - but markets have ignored that fact.There were no real surprises in any of the detail and this triggered a relief rally across equity, bond and currency markets. They are hoping an interest rate cut by the Fed is back on the agendaBut there was a big surprise in home loan activity during the week, built on growing interest rate fears. Mortgage applications surged by a third last week from the previous week and erasing the declines in application volumes from four prior weeks. It was the largest increase in weekly applications since 2020. And the surge occurred despite benchmark mortgage rates pushing through the 7% threshold. Potential house-buyers attempted to lock in borrowing ahead of fears that interest rates will rise even further. Applications to refinance a mortgage, which are more sensitive to short term changes in interest rates, soared by +43% from the earlier week. But still, applications for a loan to purchase a house rose by +27%. These are enormous moves.There was also a large surprise in the New York Empire State factory survey, and a negative one. It was the result of a set of small shifts in all the components, none of them by themselves worrisome, but together they shifted the overall index. However, firms there don't think this month's result will last.But that isn't holding back their big banks. Overnight the first three of them, JPMorgan Chase, Wells Fargo and Goldman Sachs, announced Q4 earnings, and they were "bumper".In Japan, some central bank remarks from its Governor are raising the possibility that their might raise their policy interest rate at their meeting next week on Friday, January 24. The current policy rate is 0.25%. His remarks indicated he liked the current round of sharp wage increases in Japan.In Indonesia their central bank unexpectedly cut its benchmark interest rate by -25 bps to 5.75% during its overnight meeting. Markets had expected no-change. The regulator said it moved to ensure their exchange rate and related inflation rate stayed within targets.In Europe, November industrial production data released overnight showed a small +0.1% rise from October, but that still left it -1.7% lower than year ago levels.There was inflation data out for Russia overnight too and their war economy is becoming increasingly unbalanced. They now have a CPI of 9.5%, a falling ruble, and a central bank cutting rates on Moscow's orders when they know this is the wrong thing to do. The imbalances will only worsen.The UST 10yr yield is now at just on 4.66%, and down -15 bps from this time yesterday. The price of gold will start today at US$2687/oz and up +US$16 from yesterday.Oil prices are up +US$1.50 from yesterday at just on US$79/bbl in the US while the international Brent price is now just over US$81.The Kiwi dollar starts today just on 56.1 USc and up +10 bps from this time yesterday. Against the Aussie we are down -20 bps at 90.3 AUc. Against the euro we are up +20 bps at 54.6 euro cents. That all means our TWI-5 starts today still just on 67 and unchanged from yesterday.The bitcoin price starts today at US$99,057 and up another +3.7% from this time yesterday. Volatility over the past 24 hours has been moderate at +/- 2.2%.You can find links to the articles mentioned today in our show notes.You can get more news affecting the economy in New Zealand from interest.co.nz.Kia ora. I'm David Chaston. And we will do this again tomorrow.

Kia ora,Welcome to Wednesday’s Economy Watch where we follow the economic events and trends that affect Aotearoa/New Zealand.I'm David Chaston and this is the international edition from Interest.co.nz.And today we lead with news long term rates just keep on rising ahead of the change in the US Administration. And now the USD is slipping back.First up however, the overnight GDT dairy Pulse auction brought the expected changes. The SMP price extended its recent rises, and the WMP price essentially held its full auction recovery. This event didn't signal any changes or concerns.In the US, their Redbook retail pulse index rose 'only' +5% last week from the same week a year ago, but to be fair the base was strong. No unusual signals here either.There were tow January sentiment surveys out overnight. The NFIB one for SMEs was quite bullish and at a six year high. But the RCM/TIPP investor one went backwards unexpectedly, although it was off a 40 month high.As expected, overall American producer prices rose, rising +3.3% from a year ago, although the rise wasn't quite as much as the +3.4% expected. While the lid was kept on by the unchanged services component, we need to keep an eye on the goods rise in December from November, which jumped +0.6% in the month, an unusually high shift. They won't want that to repeat.In a new report, the US Congressional Budget Office is projecting a sharp change in American demographics if the cap in migration is enforced. American will join Japan, China and Europe by growing older quicker - and much quicker than previously expected. And while this aging is going on, population growth will stall out at 370 mln in 2055. The viability of safety net programs will involve difficult choices.In China, their December new yuan loan data was released overnight and there is some impact from their recent stimulus efforts showing up here. It was expected to show a weak borrowing impulse, and it did, just not as weak as was anticipated. Chinese banks extended ¥990 bln in new loans in December, above ¥580 bln in November (which was the lowest since 2012) and above forecasts of ¥850 bln. Still this was the lowest rise since 2017.China is making a "stable yuan" a core policy objective. It is a stability against the USD they are managing.A sidebar update for once highflying Evergrande Property development company; A Chinese court has ruled it must make payments it hasn't the resources to make. And a Hong Kong court has ordered its liquidation. The next saga will be the legal proceedings against its auditor PwC by the liquidator.And we should note that today is the start of their enormous internal annual migration. January 14 is the kickoff of their Spring Festival travel rush, as workers begin to head home for the long vacation over the Lunar New Year. The Golden Week holiday around this event formally starts on January 28 and runs until February 4. But people are on the move now - including for international vacations.After slipping in December, the Westpac consumer sentiment survey for Australia slipped again in January. Homeowners and renters got more pessimistic about current conditions. But they are better than year-ago levels. And their forward looking views are positive now.The UST 10yr yield is now at just on 4.81%, and up +4 bps from this time yesterday. This level is threatening their October 2023 high, and prior to that it is the highest since 2007.The price of gold will start today at US$2671/oz and up +US$6 from yesterday.Oil prices are down -US$1 from yesterday at just over US$77.50/bbl in the US while the international Brent price is now just on US$80.The Kiwi dollar starts today just on 56 USc and up +½c from this time yesterday. Against the Aussie we are up +30 bps at 90.5 AUc. Against the euro we are unchanged at 54.4 euro cents. That all means our TWI-5 starts today at just on 67 and up +40 bps from yesterday.The bitcoin price starts today at US$95,517 and back up +3.7% from this time yesterday. Volatility over the past 24 hours has remained high at +/- 3.3%.You can find links to the articles mentioned today in our show notes.You can get more news affecting the economy in New Zealand from interest.co.nz.Kia ora. I'm David Chaston. And we will do this again tomorrow.

Kia ora,Welcome to Tuesday’s Economy Watch where we follow the economic events and trends that affect Aotearoa/New Zealand.I'm David Chaston and this is the international edition from Interest.co.nz.And today we lead with news the week has started tentatively. But there was an eye-catching housing affordability proposal in Spain,But first, there were no real surprises in the latest survey of American inflation expectations. Consumers still see a 3% rate for the year ahead, more for food (+4.0%), less for petrol (+2.0%), but still high for rent (+5.5%). For three years ahead, expectations are for no relief, up from +2.6% to +3.0% per year.But more than expected, Chinese exports surged +10.7% in December from year-ago levels, much more than the market forecasts of +7.3% and accelerating from a +6.7% rise in November. Traders are clearly front-loading orders in anticipation of new aggressive tariffs from the incoming US administration. But Chinese exports to New Zealand were down -1.8% in the month, their imports from us down -7.9%.Chinese imports only rose +1.0%.China's new vehicle sales rose to 3.5 mln units in December, spurred by those taxpayer discounts to encourage spending. They were more than +10% higher in the month than the same month a year earlier. NEVs took a record 45% share of these latest sales. Traditionally, December is their peak sales month of the calendar year.India's CPI inflation rate eased from +5.5% in November to +5.2% in December. Food prices, which account for nearly half on their survey, rose +8.4%. If there is good news among this data it is that prices fell in December from November.Meanwhile, the Indian currency fell to more than 86.7 rupee to the USD. At the start of the year it was 'only' 85.5 so that is -1.4% in two weeks. At the start of 2024 it was at 83 so -4.3% since then. (Still, that is nothing like the -10.4% fall by the NZD against the USD since the start of 2024.)In Australia, the Melbourne Institute's Monthly Inflation Gauge rose by +0.6% in December 2024, sharply accelerating from a +0.2% increase in November and marking the highest level since December 2023. It was also the fourth consecutive month of gain.The ANZ-Indeed Australian Job Ads survey rose by +0.3% in December from November, swinging from a revised -1.8% drop in the prior month. The latest level suggests their labour market is still resilient on a short-term basis despite elevated interest rates. On an annual basis however, job ads dropped -12.5% from December 2023. They have dropped almost -28% from their peak in 2022.In Europe, Spain like many others is facing a housing crisis. They fear a "rich owner / poor tenant" split that is developing elsewhere. Their government has twelve measures proposed to deal with the issue, one of which is a 100% tax on non-EU house buyers.And for the record, the coal price fell further overnight. Oddly, demand is up in China, but so is output - more so - and they have fast-building inventories.The UST 10yr yield is now at just on 4.77%, and up just +1 bp from this time yesterday. The price of gold will start today at US$2665/oz and down -US$25 from yesterday.Oil prices are up +US$2 from yesterday at just over US$78.50/bbl in the US while the international Brent price is now just over US$81.The Kiwi dollar starts today just on 55.5 USc and down -10 bps from this time yesterday. Against the Aussie we are down -20 bps at 90.2 AUc. Against the euro we are up +10 bps at 54.4 euro cents. That all means our TWI-5 starts today at just over 66.6 and down less than -10 bps from yesterday.The bitcoin price starts today at US$92,068 and down -3.0% from this time yesterday. Volatility over the past 24 hours has been high at +/- 3.5%.You can find links to the articles mentioned today in our show notes.You can get more news affecting the economy in New Zealand from interest.co.nz.Kia ora. I'm David Chaston. And we will do this again tomorrow.

Kia ora,Welcome to Monday’s Economy Watch where we follow the economic events and trends that affect Aotearoa/New Zealand.I'm David Chaston and this is the international edition from Interest.co.nz.And today we lead with news the rise in long term benchmark rates is echoing everywhere, including in New Zealand.But first, if you are just back from your summer break, welcome back to work. Those benchmark interest rates have been on the move up while you have been away.The week ahead will be focused locally on early indications of Q4-2024 inflation. We get the 'selected price indicators' for December this week on Thursday, to be followed by the full Q4 CPI next week on Wednesday. In Australia, their December labour market report is also due out Thursday. In the US the main focus will be on earnings reports from the big banks.And the US will be releasing their CPI data, and given rising inflation fears and rising interest rates, that could well be a significant market mover. Currently markets expect it to run at 2.8% (from 2.7% in November), but you have to say there are upside risks here and financial markets are pricing those in now. They will release their influential inflation expectations survey on Wednesday NZT.China is set to release a suite of economic indicators this coming week, including Q4 GDP growth figures, as well as data on exports, imports, industrial production, and retail sales. Later today we expect their new yuan loan data for December, anticipated to be weak again.But first over the weekend, the US economy added +256,000 jobs in December, much more than the +212,000 in November, and way more than the market expectations of +160,000. Their jobless rate fell. These are the headline rates. The actual change was a tiny fall to 160.5 mln employed workers, but actually a much less reduction than seasonal factors would have indicated.For all of 2024, they had a rise of +2.2 mln payroll jobs and for the four years of the Biden presidency a rise of +16.9 mln new jobs. In the prior four years, there was a loss of -2.6 mln jobs.The wider employed labour force only grew by +11.7 mln in the past four years as many people transitioned from unincorporated self-employment back on to company payrolls. In the prior four years, the wider employed labour force shrank by -2.2 mln people. Any way you cut it, the past four years has been a golden period for American employment.Average weekly earnings rose +3.5% in 2024, up +20.0% over the past four years. In the prior four years they rose +18.0%.But Americans are increasingly fearful of the year ahead. The latest University of Michigan consumer sentiment survey in January dropped because of surging worries over the future path of inflation. Year-ahead inflation expectations jumped to 3.3%, the highest in eight months, from 2.8% in December. This is only the third time in the last four years that long-run expectations have shown such a large one-month rise. Consumers know they will be paying much more if tariffs are jerked higher soon.The financial markets also reacted to the jobs data and the impending impact of tariffs. Wall Street equities were -1.5% lower on Friday, bond yields have jumped, and a risk-off defensive tone spread which saw the USD rise. That's all because the strong jobs data argues for a Fed rate cut pause. Their bar for rate cuts has risen noticeably with this data. The Fed next meets on January 30 (NZT).Prior to this jobs data release, the latest Atlanta Fed Q4-2024 economic growth estimate was +2.7%. The subsequent strong labour market data may see some upside to that.Canada also reported their December labour force data today and that was strong too. Employment there rose +90,900 with more than half that as full-time jobs. Their jobs growth was far higher than the +25,000 expected and the +50,700 in November. This surge also calls into question whether the Bank of Canada will actually cut rates when they next meet, also on January 30 (NZT).The latest Japanese household spending survey indicated another fall in November, part of a pattern of monthly falls since early 2023. But this one was a little different because it was the smallest surveyed fall in the series and a much 'improved' result that from both prior months and from what was expected. Some see a turning point.In China, in a surprise move, their central bank said it would suspend treasury bond purchases in the open market due to a supply shortage, effective immediately. They will "resume purchases at an appropriate time based on market conditions". The move comes amid repeated warnings from them about bubble risks in their overheated bond market, where long-term yields have plummeted to record lows. Over the past year, yields on key bonds, including the benchmark 10-year government bond, have reached unprecedented lows as investors flock to safe-haven assets. This shift is largely driven by ongoing economic uncertainties linked to a prolonged property market slump. In December, 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 China and Japan seem to be in the process of swapping places.But first, following a much better than expected rise in October, and driven by fast-rising credit card debt, the November American consumer debt levels corrected in November, falling -US$7.5 bln. Again, it was a sharpish pullback in credit card debt that drove the surprise November result. On the other hand, nonrevolving credit, which includes car loans and mortgages, saw a still-modest +2% rise, after small increases of +0.7% in October and +0.4% in September.There were announced job cuts involving 39,000 American workers in December, much lower than November and only marginally different to December a year ago. For the full year employers announced 761,500 job cuts, the most since 2020, and prior to that pandemic year, the most since 2009. In 2024, 134,000 of those cuts were in the tech sector. But in terms of the 160 mln US labour market, these announced annual cut levels are a truly tiny 0.4%.Across the Pacific in China, we noted yesterday that authorities there seem to have instituted a hard peg for the official yuan exchange rate to the USD. Now they have to defend that in open markets. Overnight they announced a massive ¥60 bln bill issue in Hong Kong in an effort to build demand for their under-pressure currency.The battle against deflation is far from over too. China’s annual consumer inflation rate edged down to +0.1% in December from +0.2% in November, aligning with estimates and marking the lowest rise since March. It is now at a nine-month low. The latest result came amid a slight decline in food prices and a modest rise in non-food costs. But beef prices were down -13.8% for the year, lamb prices down -6.1%, and milk prices were down -1.6%.Meanwhile, producer prices fell by -2.3% in December from a year ago, but that was their softest fall in four months. It was the expected fall.And perhaps we should also note that, although there was little movement in the past 24 hours, the 30 year Chinese bond yield at 1.89% is now lower than the equivalent Japanese government bond at 2.30%. While it is not the case for other tenors, the shifting directions are the same - China down and Japan up. China is turning Japanese, and Japan is shifting out of its hard deflationary cycle.In Japan, wages rose +3% in November from the same month a year ago, rising from the +2.6% increase seen in October and higher than market forecasts of a +2.7% gain. However, real wages adjusted for inflation and a key indicator of consumers' purchasing power fell by -0.3% year-on-year in November.In India, they have downgraded their fast economic growth estimates. After growing +8.2% in the year to June 2024, they now say that will 'slow' to +6.4% in the year to June 2025. Apart from the pandemic period, that will be their slowest expansion in more than a decade. While these expansion rates are still high by any standard, the worrying component for them is the fast slowdown in private investmentFrom the EU there was some positive economic news. Retail sales volumes - that is, after considering inflation's impact - were up +1.5% in November and to their best level since September 2022.In the UK, there are bond yield shifts too, some of them sharp. Their 30 yr Government bond is up to 5.46%, their 10 year up to 4.88%. That is more than +100 bps higher than a year ago. In just the past month their 10 yr is up from 4.37%. These 10 year benchmark levels are higher than either New Zealand or Australian equivalents now, and the shift up has caught financial market attention.Australian retail sales rose +4.1% in November from the same month a year ago, a positive 'real' gain. They were up stronger than that national average in Victoria, Queensland, and Western Australia. But the were only up +2.9% in NSW.Australian exports rose to AU$43.8 bln in November from October in a recent rising trend and boosted by strong rural exports. But at that level they are still -5.0% lower than in November 2023. Imports were also lower in November from a year ago. And their merchandise trade surplus was -AU$4.5 bln lower than in November 2023.The rush to get product from China to the US is in full swing now and commanding a premium on containerised freight rates. Those routes saw a +13% jump last week, which pushed the overall market up +2% for the week. Freight rates for other key routes are not on the move however. This special situation is expected to reverse within the next two weeks, and the global trade system's immediate outlook is quite uncertain. Bulk cargo rates fell -8% last week, and are now back to levels that prevailed in the mid-1980s.And an update on the US East Coast and Gulf waterfront labour dispute. The automation issue is settled and another strike is a

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 long term interest rates are rising and have much further to go.But first, American private businesses added +122,000 workers to their payrolls in December, the least in four months, compared to 146,000 in November, according to the precursor ADP Employment Report. That was below forecasts of +140,000. Hiring slowed in several industries and employment in manufacturing shrank for the third straight month. Employment growth was strong among large businesses in the West. Pay gains slowed slightly but are actually quite high, up +4.6% for those who stay in a job, up +7.1% for those who change jobs.Meanwhile, initial jobless claims rose on the expected seasonal basis to 305,000 last week, but much less than those seasonal factors would have indicated. 2.175 mln people are on these jobless benefits now, almost exactly the same level as a year ago. (On a headline, seasonally-adjusted basis, initial claims 'fell', and by more than expected.)Also falling were American mortgage applications, the fourth straight weekly retreat. Their benchmark 30 year fixed home loan rate almost touched 7% last week, deterring potential borrowers. Until the Trump risk goes out of long term benchmark rates, this is going to be a problem for the American housing market - and in fact all real estate transactions and other asset purchases that are valued based in yield.And those rising yields are now extending to very long-dated maturities. The US Treasury 30 year bond auction today came in with a yield of 4.87%, up from the 4.48% at the prior equivalent event just a month ago. The auction was well supported, but less to than that earlier one.The rise in longer term bond yields and interest rates is a global one. At its core is a demographic shift and ageing populations. But the Trump return has focused investors on the long term risks and they are back demanding a premium for that. Companies are also issuing more longer term debt, so there is a supply element to the trend. The Biden Treasury tended to prioritise shorter maturities in its fund raising, but the incoming Trump Treasury has already signaled it will go long. That will add to the supply pressure, and will spill out internationally. Pity American homeowners with 30 year mortgages.In China, they are getting more proactive ahead of the expected Trump Tariffs, and reactive about their stuttering economy. They announced an expanded set of taxpayer subsidies for a wider range of consumer products, hoping to spur sluggish consumer spending. They have expanded the eight-category subsidy program to now twelve categories, now including dishwashers, rice cookers and microwaves, which will get a 20% discount from existing sales prices.Overall, it is a program that has grown to NZ$2.8 bln, and still expanding.In fact, this announcement was part of a much wider stimulus effort. They are battling consumer anxiety, a tougher challenge than the previous democratic yearnings.Meanwhile, China is aggressively defending the yuan. It has held the official rate to the USD fixed since early November at 7.19. It last had a fixed peg in 2008-2010. Unfortunately for them offshore trading has it now at 7.35 and depreciating.In the EU, producer prices rose +1.7% in November from October, the biggest monthly rise since September 2022. A seasonal rise in energy costs was the cause. Year on year, the EU PPI was -1.1% lower.And staying in the EU, economic sentiment which had been stable for most of 2024, fell in December. Not a huge dip, but a notable one.In Australia, their monthly CPI indicator rose +2.3% in November from a year ago, after a +2.1% rise in the prior two months. Analysts estimates were for a +2.2% rise and the November since August, partly due to the timing of government electricity rebates. Most households received a single rebate payment instead of two in November. Still, the latest inflation level has remained within the central bank's target range of 2 to 3% for the 4th month in a row.And in maybe something of a surprise, there were 344,000 job vacancies in November in Australia, up by +14,000 from August. That is up by +4.2% and was was the first rise since May 2022, when job vacancies reached their historical peak. However, year-on-year the declines is almost -10%.In New Zealand we got the benefit of strong commodity price gains in 2024. ANZ reports that overall commodity prices finished 2024 up 15% from a year ago. All sectors except forestry achieved gains during the year but the largest were made by dairy (+19%) and meat (+23%). However, these sectors were more subdued in the December month. In NZD the rises were even more impressive, up +29% for dairy and up +35% for meat, year on year.The UST 10yr yield is now at just on 4.68%, and little-changed from yeste

Kia ora,Welcome to Wednesday’s Economy Watch where we follow the economic events and trends that affect Aotearoa/New Zealand.I'm David Chaston and this is the international edition from Interest.co.nz.And today we lead with news American economic data continues to impress.But first up today there was a full dairy auction, one that brought slightly lower prices overall in USD terms (-1.4%), and slightly higher results in NZD terms (+0.6%). The milk powders slipped -2.2% while the milk fats (cheese and butter) were firmer. Demand was lighter despite lower production reports in both the US and China. Although analysts will have noted these softer results, it seems unlikely the high farmgate payout forecasts will be altered by this result alone. But prices today are on the downside from recent highs.In the US, their Redbook monitoring of retail sales continued its very elevated rise from a year ago, up +6.8% and off a positive base. So this metric is still quite impressive.US exports continued their rise, up +5.2% in November from a year ago for goods, up +9.3% for services. Imports were up too, but probably distorted by a pre-tariff surge, a surge that will continue into December.US ISM services PMI was very expansionary, and more so that the internationally benchmarked S&P/Markit one. New order growth was strong, but it was current business activity levels that drove this rise.And that is reflected in the November JOLTS report. Analysts had expected a slip back, but in fact a surge in job openings was found in this survey, and quits were lower than expected. We are just three days away from getting the December non-farm payrolls report and today's release suggests there may be upside coming to the +154,000 gain expected.So it will be no surprise to know that their logistics sector is expanded fast in December. But an effort by firms to keep inventories under control meant that the latest fast expansion was less than in November.Today's UST 10yr bond auction brought a median yield of 4.62% at the well supported event, although less so than last time. But that was much higher than the 4.19% at the prior equivalent event a month ago.The Canadian Ivey PMI came in strong too with a solid expansion reported and its best in six months, although not quite up to the expansion analysts had expected.Canadian exports rose too in November.In China, an update by major developer Country Garden shows just how damaged the property sector is. In December it sold only 50% of the level it sold in the same month a year ago, itself a very weak benchmark. Beijing's stimulus efforts haven't helped this developer yet.And lower Chinese activity is seeing quite sharpish dips for both coal and rebar steel prices now.And staying in China, their foreign exchange reserves fell in December but their gold reserves rose for a second straight month. However, year on year those reserves are only -0.2% lower, and unchanged for the gold holdings.In Europe, their CPI inflation rate has been rising since October, and is now up to 2.4%, largely driven by the German inflation rise we reported yesterday. Europe-wide it is the rise in the cost of services that are the driver here; energy costs are the restrainer.Australian building consents came in less than expected in November. Year-on-year consents for new housebuilding rose +3.8% but multi-unit dwellings fell -6.4%. Month-on-month both fell more than expected. They may still be in an overall recent rising trend, but it that trend is weakening faster now.The UST 10yr yield is now at just on 4.69%, and up +6 bps from yesterday.The price of gold will start today at US$2651/oz and up +US$12 from this time yesterday.Oil prices are also little-changed from this time yesterday at just on US$74/bbl in the US while the international Brent price is up +50 USc at just under US$77.The Kiwi dollar starts today still at 56.5 USc and unchanged from this time yesterday. Against the Aussie we are up +10 bps to 90.4 AUc. Against the euro we are down -10 bps at 54.2 euro cents. That all means our TWI-5 starts today at just on 67.1 and up +10 bps from this time yesterday.The bitcoin price starts today at US$97,785 and down -4.2% from this time on yesterday. Volatility over the past 24 hours has been moderate at +/- 2.8%.You can find links to the articles mentioned today in our show notes.You can get more news affecting the economy in New Zealand from interest.co.nz.Kia ora. I'm David Chaston. And we will do this again tomorrow.

Kia ora,Welcome to 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 China's financial markets are flashing some unwelcome signals.But first up today, there were a range of services PMIs for December released overnight. And the most interesting one (for us) is the Aussie one. Their service sector expanded in the month, with new business growth accelerating, inflation rising, and business confidence at its highest level in 2½ years. This got the attention of financial markets who promptly downgraded the chance of ab RBA rate cut when they next meet on February 18. Australian benchmark Government bond yields rose sharply across the board with their 10 year up an outsized +14 bps.In China, you mar recall we reported that their official services PMI jumped from a no-change growth position in November to an outsized positive 52.2 expansion in December - and we counselled to wait for confirmation by the private Caixin services PMI. Well, that Caixin services report is in and it also recorded an 52.2 expansion, an improvement although not as sharp as the official version reported. So we can be confident the Chinese services sector is expanding now at a good pace. And it does seem to confirm that the Beijing stimulus measures are having a positive impact.In Japan, their December services PMI improved to a better expansion, although to be fair it was only a marginal gain.In India, they also reported an uptick with faster growth and softer inflationary pressures. They still have a very strong expansion, although the December gain wasn't quite as strong as analysts had expected.In Canada they slipped from a November expansion to a December contraction in their services sector. (And we should probably note, unrelated to that, Pierre Trudeau has resigned as prime minister today, ending a long political career. He has been their prime minister since 2015. They alternate the role between Conservatives and Liberals and their successful leaders seem to remain in office for about nine years each.)In the US, their S&P/Markit services PMI rose in December to a good expansion, although not quite as strong as was expected. Their widely-watched local ISM services PMI is due out tomorrow and is also expected to report a modest improvement.Meanwhile, US factory orders slipped marginally in November from October to be only a marginal +0.1% higher than the same month in 2023.The US Treasury had a well-supported three year bond auction earlier today. That came in with a median yield of 4.29%, substantially higher than to the 4.07% yield at the prior equivalent event a month ago.In the EU, their service sector expanded in December after being neutral in November. But it may not last because the gains did not include rising new orders.And in Germany, there was a bit of a surprise overnight when they reported 2.6% CPI inflation (2.9% EU harmonised). Both levels were unexpectedly higher. Excluding food and energy it came in at 3.1%, and driven by higher services costs. They still have work to do to get inflation's impulse down to the target 2% level.Back in China, yesterday we noted the bond bubble they are having as sentiment about their economic policies takes a hit in financial markets. All eyes will be on these markets today, but the official pressure is being ramped up to quell the "wrong moves" by bond traders. Local media is saying "the worst of the de-rating is over" - although local media just parrot official narratives.The UST 10yr yield is now at just on 4.63%, and up +3 bps from yesterday.The price of gold will start today at US$2639/oz and little-changed from this time yesterday.Oil prices are also little-changed from this time yesterday at just on US$74/bbl in the US while the international Brent price is still just on US$76.50.The Kiwi dollar starts today just on 56.5 USc and up +40 bps from this time yesterday. Against the Aussie we are up +10 bps to 90.3 AUc. Against the euro we are down -10 bps at 54.3 euro cents. That all means our TWI-5 starts today at just on 67 and up +20 bps from this time yesterday.The bitcoin price starts today at US$102,103 and up +4.1% from this time on 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 Monday’s Economy Watch where we follow the economic events and trends that affect Aotearoa/New Zealand.I'm David Chaston and this is the international edition from Interest.co.nz.And today we lead with news the economic world its returning after the end of year holiday season, and finding the 2024 worries are still here in 2025.First up however, the first post-New Year holiday week back will be a relatively quiet one, but there are still some important things to cover, and few of the key ones are local. But the week culminates with the December US non-farm payrolls report in the US, and that will increasingly dominate how the week goes. Markets currently expect a modest +150,000 rise in US jobs. That is close to 'average' over the past ten years. But don't forget that is the seasonally-adjusted result. Actual payroll shrink in the month usually, and that average over the past ten years is by -160,000. That is what we will be watching, because fewer actual people employed could have an outsized impact on metrics like retail sales and the like.The US will also release December services PMIs. A slightly softer expansion is expected. And China will release its important new yuan loan data, and the expectations are for another weak result. Eyes will also be on India's industrial production data, something that has been softish recently.Just as important for us, we will get more December real estate activity data this week. We will also get another full dairy auction on Wednesday, and the intervening Pulse results for both SMP and WMP have shown a marked softness since the last full auction event. And Barfoots are likely to release their December results later in the week.Over the weekend, the FAO World Food Price Index reported a -0.5% fall in December from an upwardly revised November. Dairy prices fell -0.7% but meat prices rose +0.4%. Overall this index is +6.6% higher than year-ago levels with dairy up +17% and meat up +7.0% on that annual basis.On the commodity front, both lithium and iron ore prices slipped on concerns about the prospects for the Chinese economy. The Shanghai stock exchange fell yet again, by -1.6% on Friday to be down a very sharp -5.5% for the week. And the benchmark yield for Chinese government bonds slumped to a new record low of 1.60% for the 10 year. The yuan fell, testing its lowest level since 2007 after their central bank stopped defending 7.3 to the USD.So China is ramping up its subsidy program for consumer durables, trying to spark some extra consumption activity.And China's central bank said late Friday during a quarterly meeting of its monetary policy committee that it will cut banks’ reserve requirement ratio and interest rates at the “proper time”.So China is starting the New Year on the back foot.Across all reporting countries, the global factory PMI contracted slightly in December, shifting from the slight expansion in November. Good expansions in India, Taiwan, Canada, and China (among eight others) was offset and more by retreats in the US, Australia and especially the Europe (among seven others). On balance, it was soft new order levels that is turning the global tide.In the US, a good rise in new orders saw the widely-watched ISM factory PMI rise by 0.9 points in December from the previous month to record only a very minor contraction and very much better than was expected. The result reflected the softest pace of contraction in the US manufacturing sector since March. Oddly, the narrative for the internationally-benchmarked S&P/Markit PMI was the inverse with weaker new orders and slipping output. However, both surveys landed at the same spot, reporting a very minor contraction.US vehicle sales ended the year on a strong note, running at a 16 mln annualised rate. EV sales accounted for 9.0% of those, and a surge in demand for EVs helped heavyweight GM claim the top spot for all cars and now second only to Tesla in EVs. Tesla slipped back in the final quarter. (For reference, NZ EV sales in 2024 were 7.3%.)Over the weekend, two Fed governors (Daly and Kugler) both reiterated that the battle to control US inflation is not yet won. Another was more positive, but thought restrive rates should still stay in place until things are clearer.In Canada, their factory PMI delivered a solid performance with good new order levels and rising output contributing to a rising expansion.In Australia, SE NSW and NE Victoria have been hit by a headwave with temperatures as high as 45oC. But a wind-change has relieved things today. Bushfire season is well underway there.Containerised freight rates rose marginally last week (+3% overall), built on a +7% surge on Trans Pacific rates from China to the USWC. Traders are trying to beat what are expected to be new tariffs from the incoming US Administration. Bulk cargo rates stopped falling this week, essentially holding at an 18 month low.The UST 10yr yield is now at just on 4.60%, and up +1 bp from Saturday. The price of g

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 2024 has brought some huge and surprising changes. But in other sectors, not as much change as you might have expected. And through it all profits and wealth growth have been strong.But first in the US and based on a rise in new orders, the Dallas Fed's Texas manufacturing indexmoved up into positive territory in December, its first positive reading since April 2022. Forward sentiment was positive in that state for a second month in a row.Also driven by new order inflows, but the lack of them in this case, the Chicago PMI fell further in December from November and missing market forecasts. This is their 13th consecutive month of retreats, recording its steepest decline since May.US pending home sales in November grew a strong +6.9% from a year ago, their best rise since May 2021. To be fair however, it is off a weak base, but it is the fourth straight month of gains in sales volumes. Sellers seem to be capitulating on price expectations, and it has become a buyers market, according to the peak US realtor group.In China, a Reuters poll suggests factory activity there expanded in December, capping a three month gain.In Japan, their 10-year government bond yield edged up to around 1.11%, its highest since 2011, as investors continued to assess their latest inflation data.South Korean retail sales rose more than expected. Even so the gain was minimal. Korean industrial production undershot in November. But it is their political crisis that is hurting their currency, falling to its lowest against the USD since 2009.Other countries are depreciating too against the US dollar. The Turkish lira is at a record, all-time low. Ditto the Russian ruble. And the Chinese yuan is almost its lowest since 2007.The US dollar index is ending the year its highest since 2022, and prior to that, its strongest since 2002.Back on Wall Street, the Wall Street Journal is reporting the investment in exchange traded funds now exceeds US$10 tln, with a 2024 rise in these investment vehicles up +30% from 2023 or up +US$2½ tln in 2024.The UST 10yr yield is now at just on 4.55%, and down -8 bps from yesterday. The price of gold will start today at US$2298/oz and down -US$22 from yesterday. We started the year with this price at just on US$2,050/oz, so a +27% net rise for 2024.Oil prices are a bit more than +50 USc firmer at just over US$71/bbl in the US while the international Brent price is still just over US$74. We are ending 2024 almost exactly where we started.The Kiwi dollar starts today just on 56.4 USc and unchanged from yesterday. We started the year at 63.4 USc, peaked at 63.6 USc at the end of September, but the net devaluation until now has been -11.1% in USD terms. Against the Aussie we are up +10 bps at 90.7 AUc. Against the euro we are up +20 bps at 54.3 euro cents. That all means our TWI-5 starts today at just over 67 to be little-changed from yesterday. The TWI-5 started the year at 71.1, (it peaked at 71.4 mid February) for an overall devaluation of -5.8%.The bitcoin price starts today at US$91,907 and down -2.0% from this time on Saturday. Volatility over the past 24 hours has been modest at +/- 1.5%. It started the year at US$44,204 and rose to US$73,095 by mid-March. It was still at just US$69,391 just prior to the US election, and has risen since that result. It peaked by closing at US$106,169 on December 18, 2024.You can find links to the articles mentioned today in our show notes.You can get more news affecting the economy in New Zealand from interest.co.nz.Kia ora. I'm David Chaston. And we will do this again on Monday, January 6.Happy New Year everyone !

Kia ora,Welcome to Monday’s Economy Watch where we follow the economic events and trends that affect Aotearoa/New Zealand.I'm David Chaston and this is the international edition from Interest.co.nz.And today we lead with news of a major airplane crash in South Korea, probably due to a birdstrike.In the global economy, the situation is dominated by market fears of what the incoming Trump Administration will do. Bond yields are pricing in that risk by raising them to near their highest since 2007. Equity markets are down, with the S&P500 down -2% since its peak close on December 6. The Nasdaq is down -2.2% since its peak on December 16.Rising bond yields depress bond prices. And some finance professionals think the shift higher has only just begun and the risks will accelerate as the capricious Trump agenda takes shape. Bond investors are in for steep losses in 2025, they say.The type of flipflops from Trump, like going from campaigning to ban Ticktock to now telling the Supreme Court to leave it alone, from campaigning to ban immigrant H-1B visas to now saying they are essential, mean markets don't trust his positions anymore. They are late to this realisation. And perhaps it mattered little when he was just a candidate, but now he will be in power again, they sense chaos.We should also keep an eye on trade disputes between Canada and the US. A Trump penchant for tariffs on Canadian softwood exports to Canada could see a rise in competition in other markets for New Zealand logs and milled pine as a fallout.Meanwhile, US inventories, both retail and wholesale were little-changed in November. But they are likely to rise from here as traders rush to beat the impending tariffs.US exports rose +6.0% in November compared with the same month a year ago. But US imports are zooming higher on the expectation of those rising tariffs, up +7.3%. That caused a Trump-induced trade deficit of -US$99 bln in the month, up from -US$90 bln in the same month a year ago.Across the Pacific, Japanese retail sales rose +2.8% in November from year-ago levels, up from a downwardly revised +1.3% rise in October, and easily beating market expectations of a +1.7% gain. This marked the 32nd straight month of expansion in retail sales there and the fastest growth since August, with rising wages continuing to support consumption.However, Japanese industrial production fell by -2.3% in November from October, compared with market expectations of a -3.4% fall. The latest result followed a +2.8% growth in October and is the first contraction in industrial output since August. Year-on-year the November decline was -2.8%. A dip in machinery orders took the blame.Taiwanese consumer sentiment dipped in December from November, but remains sharply higher than year-ago levels, and still in the high recovered range after the low point in late 2022. However, it isn't yet back to pre-pandemic levels.In China, local observers now expect "outsized stimulus" from Beijing policymakers in 2025.Perhaps that is because Chinese industrial profits fell -7.0% in November, compared to the same month a year ago. Even the Chinese habit of only reporting year-to-date results shows a decline now of -4.4%, so the recent months are coming in weaker than earlier. After peaking in 2021, these profits have fallen each year since. Interestingly, state-owned enterprises, which tend to be very large businesses are doing the weakest, down -8.4%. Private foreign-owned businesses are doing the least-worst (-1.0%). And other private sector businesses are down -4.7%. It is hard to see private investors happy in this environment.China’s commerce ministry said on Friday that it has launched an investigation into imported beef at the request of representatives from its struggling domestic industry. New Zealand is one source, including through the Silver Fern Farms link. But the main focus is on imports from Brazil and Australia.In Tibet, and in an area China controls but is disputed with India, China just committed to build a vast hydro-electric river dam, so large it is expected to take a decade to finish, and then deliver three times the output of their famous Three Gorges Dam. But they are damming the Yarlung Tsangpo River, which is known as the Brahmaputra River in India and one of India's great rivers. Expect a rise in tension between India and China because of this, although the main impact will be on Bangladesh.In Iran, their currency is under severe pressure and energy shortages are growing. The country is bracing for a spike in civil unrest.We should also note that coffee prices are soaring again, now higher than all the prior peaks in 2011, 2007, and 1997. Droughts in Brazil and Vietnam are getting the blame. Cocoa prices are staying very high too, and for similar reasons although they have pulled back a bit since mid December.The UST 10yr yield is now at just on 4.63%, and up +2 bps from Saturday, and up +12 bps from this time last week. It is up from 3.86% a year ago, but

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 China is clamping down harder on negative views about their economic prospects. Chinese economists are now required to be cheerleaders for their economy.But first up today, sales of new single-family homes in the United States rose by +5.9% from the previous month to an annualised rate of 664,000 in November, above market expectations of 650,000. However, this just takes it back to the 2024 average level.November durable goods orders were lower than expected, down a rather sharp -6.3% from the same month in 2023. But this is largely due to a drop in aircraft and defence orders. And non-defence, non-aircraft capital goods orders also held at the same as the year-ago level. They could be better, but there is no collapse either.That tame result fed into the US Chicago Fed's National Activity Index which reported a small expansion, and a much better result than the prior month.The latest estimate of the US economy has it still expanding at a +3.1% rate in Q4-2024, a strong way to finish the year.But consumers are more wary about what 2025 will bring, no doubt hit by the unsettling signs in their national politics. The rise in consumer sentiment over all of 2024 took quite a hit in this latest December survey.There was another US Treasury 2yr bond auction earlier today for US$70 bln and it was very well supported again and delivered a median yield of 4.29% which was only marginally more than the 4.24% median yield at the prior equivalent event a month ago.North of the border, Canadian producer prices rose +2.2% year-on-year in November, following a +1.1% rise in the previous month. But this just returns it to the growth rate it has had for most of 2024.Across the Pacific, Singapore's November inflation rate was expected to rise, and it did, but not by as much as was anticipated. It is up to just 1.6% from the three-year-low October 1.4%. It's core inflation rate however eased lower in a way that was not expected.In Japan, carmakers Nissan and Honda have agreed to merge, targeting mid 2026 to get all the US$58 bln pieces together. And they are trying to get Mitsubishi Motors to join them. It would create the world's third largest carmaker. A lot will depend on whether Nissan can execute a successful restructuring of its stumbling business before the merger.Staying in Japan, they do an annual review of their National Accounts, an that now shows that low economic growth and demographic shifts meant that per capita GDP was higher in South Korea now than Japan in 2023 (see page 17). It is close, so it may switch back in 2024 as Japan has expanded faster this year. But the rise of South Korea will come as no surprise to many even if it is a surprise they have caught up with Japan.In China, the warnings against economists and analysts having negative views about their economy are growing more strident. If individuals have "repeatedly triggered reputational risk over inappropriate commentaries or behaviours" within a certain period of time or caused "major negative impacts," their employer must "severely deal with the person until termination of employment," they said, without explaining the definition of inappropriate comments.They are trying to head off a noticeable "slump" in consumer spending in the icon cities of Beijing and Shanghai. If the trend is being reported there, it will be likely be worse elsewhere.The UST 10yr yield is now at just on 4.58%, and up +5 bps from this time yesterday, its highest since the brief spikes in April 2024 and October 2023, and its highest prior to that since 2007.The price of gold will start today at US$2614/oz and down -US$8 from yesterday.Oil prices are down -US$1 at just on US$68.50/bbl in the US while the international Brent price is still just on US$72.The Kiwi dollar starts today just on 56.5 USc and down -20 bps from this time yesterday. Against the Aussie we are up +10 bps at 90.5 AUc. Against the euro we are holding at 54.3 euro cents. That all means our TWI-5 starts today at just on 67 to be down -10 bps from yesterday.The bitcoin price starts today at US$93,628 and down another -2.1% from this time yesterday. Volatility over the past 24 hours has been modest however 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 from interest.co.nz.Kia ora. I'm David Chaston. And we will do this again on Monday, December 30.Merry Christmas everyone !

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 we are ending the year with mostly a strong international economy, but worries are growing about prospects for 2025. If both China and the US turn down together, then all bets are off.But right now, it's going to a relatively quiet week ahead as you would expect with major holidays in some of the largest financial markets. But we will get data from Singapore (CPI), Thailand (exports), Taiwan (retail sales and industrial production), China (industrial profits and their MLF interest rate), Canada (PPI), and the US (durable goods orders, new home sales, jobless claims and some regional factory surveys). So enough to keep an eye on while we relax. Nothing locally of course except the November data dump from the RBNZ tomorrow.In the US, there was a last-minute avoidance of their shutdown as conservative Republicans were not prepared to give the incoming President the blank cheque of a suspension of their debt limit. Trump lost that one by quite a wide margin, so it may not be plain-sailing for the Trump/Musk presidency.Meanwhile, the widely-watched US PCE measure of inflation came in at 2.4% in November, up a tick and to its highest since July. Core PCE inflation stayed even higher at 2.8%. But these results were actually a tick less than expected. The 2.8% inflation level is what the University of Michigan consumer survey also reported.American personal disposable income rose +2.6% from a year ago, a slight undershoot. But personal spending remained strong, up +2.9% and similar to the gains over the past six months. Personal saving as a percent of disposable income rose marginally to 4.4% from the prior month and ending the longish decline from the start of the year when it ran at 5.5% of personal disposable income. The 4.4% level is where it ran for most of 2023.Across the Pacific, Taiwanese export orders stayed elevated, up +3.3% from the same month a year ago which itself was elevated.China reviewed its loan prime rates on Friday and kept them unchanged - at record lows. It's MLF rate will be announced this coming week.In China, there have been recent reports of officials calling in bond traders to lecture them about 'responsible trading' - and the consequences for not. Chinese bond yields had fallen to record lows, as readers here who tracked our monitoring of the Chinese 10yr yield below will know. But today, the fear of losing money is winning out over the fear of officialdom's wrath.China’s one-year bond yields broke below levels last seen in the GFC to the lowest since 2003, driven by bets on aggressive policy easing and demand for haven assets. The yield on one-year government debt plunged 17 bps yesterday to just 0.85%. The ten year is down to 1.69%. While it might be too harsh to call it 'panic mode' there is certainly a hard edge here, in fear of where the Chinese economy is headed.Japan reported November CPI inflation, and that rose again, now at 2.9%, with the widely-watched core inflation rate at 2.8%.Japan also said its population fell to just under 124 mln, a fall of -325,000 in a year, and -3.1 mln in a decade. Now 29.3% of that population is 65 year and older, with only 11.1% under 15 years. In China, which is also thought of as having a similar demographic problem, those spread details are 14.3% over 65 years and 16.8% under 15 years.Following the recent +200 bps out-of-cycle interest rate rise in Russia and the central bank guidance then, they were expected to raise their policy rate by another +200 bps again overnight to 23%. But they didn't. Apparently the Kremlin isn't keen on the independence of the Russian central bank governor any more.And perhaps we should note that nickel prices have hit a four-year low, on the combination of low demand and surging Indonesian supply. Russia is no longer a force in nickel supply. Prices for rough-cut diamonds are also plunging, this time on low demand out of China and their acceptance of artificial alternatives.The UST 10yr yield is now at just on 4.53%, and up +2 bps from this time Saturday but that is a net +16 bps rise for the week. The price of gold will start today at US$2622/oz and down -US$3 from Saturday. But that is down -US$36 from this time last week.Oil prices are unchanged at just on US$69.50/bbl in the US while the international Brent price is still just under US$73. A week ago these prices were US$71 and US$74.50 respectively.The Kiwi dollar starts today just on 56.7 USc and unchanged from Saturday. But that is down almost -1c from a week ago (57.6c USc). Against the Aussie we are holding 90.4 AUc. Against the euro we are still at 54.3 euro cents. That all means our TWI-5 starts today at just on 67.1 to be unchanged from Saturday at this time but down -50 bps from a week ago.The bitcoin price starts today at US$95

Stats NZ’s final data release for the year revealed the economy has been shrinking at its fastest rate in three decades. While this may not be a very Merry Christmas, there is still hope for a Happy New Year.Treasury, the Reserve Bank, and most economists expect growth to resume in 2025 as interest rates fall. Consumer spending should pick back up and cheaper credit should make business investments more worthwhile. But while private New Zealanders open up their wallets, the Government will continue to tighten its belt. Core Crown expenses are predicted to fall from almost 34% of GDP in 2025 to 31.5% by the end of the decade.This would be enough to balance the books—if you ignore annual losses at the supposedly self-funded Accident Compensation Corporation—and halt net core Crown debt at 45%.But Finance Minister Nicola Willis told Interest.co.nz this wasn’t her top priority. “Our view is you can never ignore sensible fiscal policy, and it's irresponsible to indebt future generations to an extent that they won't be able to have the services that we have today,” she said in an interview.“But at the same time, you also need to make sure that you're maintaining today's services, that you're keeping the foundations for productivity, and that you are ensuring that your measures make sense—not just in the short term for coloring the books and making them look pretty—but will actually generate a sustainable basis for growth in the medium term”.Many left-leaning critics of the Finance Minster would like to see greater Government investment to support the growth forecasts next year. They worry a withdrawal in spending will hamstring the recovery and leave the economy less productive in the future.It may surprise you to hear that Willis agrees with them. She says it is “factually incorrect” to accuse her of austerity, as the Coalition’s fiscal policies are still stimulating demand. “We have a government that is actually continuing to increase its overall levels of spending, both in absolute terms, but also as a proportion of the economy. And actually, the fiscal impulse will be positive.”“But the point that we are making is this does need to unwind over time, and so we've set out a path of gradual fiscal consolidation, which we think is the responsible way to go”.She says policies which deregulate the economy, open New Zealand up to more foreign investment, and crack down on uncompetitive industries will be more important to future growth than fiscal stimulus. Banking is one of these uncompetitive sectors in which she wants reform. She's already told Kiwibank to raise $500 million and the Reserve Bank to put more weight on competition when setting regulation policies, and is more than willing to go further. “When I read through the Commerce Commission report on our banking sector, it couldn't have been any clearer to me that we have a major problem,” she said.“I have put the banks on notice and made it clear that if they want to do more of their nice talk about how they're going to be really good … that won't wash with us. They need to be acting or we will take further action, and there are a lot of options for what we can do there”. She’s open to charging banks a special levy or tax, like in the United Kingdom and Australia, which recognises they benefit from an implied Crown guarantee and earn very high risk-adjusted returns as a result. Big banks beware!

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 of deliberate chaos being constructed in Washington DC with a much higher prospect of a US Federal Government shutdown likely. Authorised funding expires later today / Friday, US time. Financial risks are sharply elevated today, and markets are pricing these in.Elsewhere, US jobless claims fell sharply last week and by more than can be accounted for by seasonal factors. There are now a bit less than 1.9 mln people on these benefits.The PhillyFed survey of factories in America's traditional rust belt turned very negative, the worst result since April 2023. Soft demand was behind this shift. Optimism about the future took a hit too.The Kansas City Fed's equivalent survey in its region wasn't so negative, but it wasn't positive either. Optimism was a bit better there however.American existing home sales in November rose, but to be fair it is still stuck in the very low range it has had post-pandemic which is even lower than the post-GFC range, and back to levels first seen in 1995. So the November rise in that perspective is kind of irrelevant, no matter what the industry peak body says.The US Conference Board leading index tracking rose in November. Higher building permits, high equity prices, rising average hours worked in manufacturing, and fewer initial jobless claims boosted the November result. But the December result will no doubt take a hit from the current Washington shenanigans.The final estimate for US Q3-2024 GDP raised the expansion to +3.1% and extending the good run they have had since mid-2022. The US economy delivered US$29.4 tln of economic activity in the past year, with the expansion of +US$1.4 tln and the most ever. And that describes what is at risk from bad policy.Elsewhere there were many central bank rate reviews.In Japan, the Bank of Japan held its key short-term interest rate unchanged at 0.25%, keeping it at the highest level since 2008. That was what financial markets expected. But the vote was split 8-1, with one board member wanting a +25 bps increase. Essentially they are waiting to see how destabilising the incoming American Administration will be. But the bank boss seems to have turned dovish in the circumstances, and that turn moved markets.In Taiwan, they kept their policy rate unchanged at 2%In the Philippines, they cut their rate by -25 bps to 5.75%.In Sweden, they cut by -25 bps to 2.5%.In Norway, they held at 4.5%.In England, they held unchanged at 4.75% with a split 6:3 vote with the dissenters wanting a cut. This is a pause as inflation starts to rise there again.In something of a surprise, Australian inflation expectations rose to 4.2% in December, ending their encouraging falls that started in September. It is not a result either the RBA or the Australian Treasury would have wanted.Container freight rates rose +8% last week but to be fair that was only because of a +26% rise in teh China-to-USWC route and a +17% rise in Chin-to-New York as traders raced to get ahead of the impending tariff threat. Other routes saw small declines. Bulk cargo rates fell another -7% last week to be less than half what they were a year ago and back to levels last seen in July 2023.Many mineral commodities are retreating in price in expectation 2025 will be tough, with copper down -2%.The UST 10yr yield is now at just on 4.59%, up a very sharp +19 bps from this time yesterday as markets digested the Fed's move and the deliberate mess being created by the incoming President.The price of gold will start today at US$2592/oz and down -US$42 from yesterday.Oil prices are down -US$2.50 to be just on US$69.50/bbl in the US while the international Brent price is now just under US$73.The Kiwi dollar starts today just on 56.5 USc and down -60 bps from yesterday. Against the Aussie we are down -40 bps to 90.3 AUc. Against the euro we are also down -10 bps to 54.5 euro cents. That all means our TWI-5 starts today at just on 67.1 to be down another -25 bps from yesterday at this time.The bitcoin price starts today at US$100,994 and down -3.1% from this time yesterday. Volatility over the past 24 hours has been high at +/- 3.1%.You can find links to the articles mentioned today in our show notes.You can get more news affecting the economy in New Zealand from interest.co.nz.Kia ora. I'm David Chaston. And we will do this again 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 all markets have been waiting for the US Fed decision.And as expected, they have cut their key policy rates by -25 bps with the targeted range now 4.25%-4.50%. Progress on taming inflation gets the main credit from them. As we publish, Chairman Powell has yet to hold his press conference, so more about their thinking will be revealed then. But this move takes their rollback to -100 bps since August, and back to the level they had at the start of 2023. A slower pace of cuts are expected in 2025.Meanwhile US mortgage applications slipped slightly last week, ending a run of five straight weeks of gains to be +6% higher than year-ago levels and a bit more activity on the purchase side.US housing starts however unexpectedly fell in November and by -1.8% to an annualised rate of 1.3 million units, the lowest in four months. Only in one month since the pandemic has it been this low. American consumers may say they are feeling more optimistic, but they aren't showing it in their housing markets.Japanese exports rose in November and by more than expected to be at the upper end of the monthly range in 2024. It was a rise that beat expectations. But imports fell, and by much more than expected, to a three-month low, and about the average level in 2024.In Malaysia their exports also rose much more than expected, and like Japan their imports, which were also expected to surge, didn't. Obviously not every country can have rising exports and falling imports but those that do count themselves 'winners' in the international trade arena. For Malaysia however, this is a rare monthly result, a small balance for a long period when imports exceeded exports.The Indonesian central bank kept its policy rate unchanged at 6% in a meeting late yesterday.In Hong Kong, major builder New World Development, which recently posted a large and unusual loss, is reportedly trying to renegotiate its loan obligations with banks. Not a great sign for them, and indications China's property sector woes are impacting Honk Kong directly now (rather than juts Chinese companies listed in Hong Kong).And in Australia, a major builder there, APH Holdings, has gone under. This notable because it too is Chinese-owned.Staying in Australia, ASIC is suing crypto company Binance Australia Derivatives for consumer protection failures. More than 500 retail clients of Oztures Trading, trading as Binance Australia Derivatives, were denied important consumer protections after being misclassified as wholesale clients, ASIC alleges in documents filed in the Australian Federal Court.And still in Australia, their Mid-Year budget update by the federal government shows a slightly smaller deficit in the 2024-25 financial year than what was presented in May, but larger deficits over the next three years. All up, that is a cumulative deficit increase of A$22 bln.In Brazil, their currency, the real, depreciated to a record low of 6.16 to the USD, as mounting fiscal concerns, inflationary pressures, and political uncertainty drove an investor loss of confidence. Investor confidence has been shaken by fiscal measures deemed insufficient to stabilise Brazil’s rising debt trajectory, as President Lula’s tax breaks and modest spending cuts prioritise growth over fiscal discipline. The central bank aggressively tightened monetary policy, raising the interest rate to 12.25% from 11.25%, with two further hikes signaled.The UST 10yr yield is now at just on 4.40%, up +1 bp from this time yesterday.The price of gold will start today at US$2634/oz and down -US$7 from yesterday.Oil prices are back up +US$1.50 to be just on US$71/bbl in the US while the international Brent price is now just on US$74.And the IEA says coal consumption hit a record high in 2024, led by China and capping a 30 year surge. They also say this is probably 'peak-coal' and that the transition to renewables. But that is not certain, because India's use is rising fast. In the meantime, Australia is set to become the fourth largest producer by 2027, surpassing the United States and Russia.The Kiwi dollar starts today just on 57.2 USc and down -40 bps from yesterday. That makes it the lowest level in more than two years. Against the Aussie we are down -20 bps at 90.7 AUc. Against the euro we are also down -20 bps to 54.6 euro cents. That all means our TWI-5 starts today at just on 67.35 to be down -25 bps from yesterday at this time. And that is also more than a two year low, since October 2022.The bitcoin price starts today at US$104,225 and down -2.5% from this time yesterday. Volatility over the past 24 hours has been moderate at +/- 2.1%.Today is the final day our Auckland office is open in 2024. It will be our holiday service until then. Our daily and weekly free email newsletters are taking

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 commodity prices are facing some headwinds, and that may get worse as trade prospects dim and the de-risking from China builds.Today's full dairy auction brought lower prices from both last week's Pulse event, and the prior week's full event. But the dips were largely as expected and foreshadowed in the derivatives market. In the event, overall prices were -2.8% lower than the last full event, but with the NZD weaker, in NZD the decline was just -0.7%. Today's retreat doesn't interrupt the 2024 rising trend so it seems unlikely any farm gate pay out forecasts will be adjusted because of this.Demand from China was lighter today, but that may just because they have already built their requirements for their upcoming CNY holiday season.US retail sales as monitored by their Redbook survey were a healthy +4.8% higher last week than the same week a year ago.And November retail sales as reported by their official data were up +3.8% from the same month a year ago, the best gain of 2024. And that was driven by strong car sales. Business inventories remain at very manageable levels, so not building stress there.Meanwhile US industrial production actually slipped in November, down -0.9% from a year ago, although there were signs of stabilising in the November month. Factory production actually rose, undermined by both mining and utility production.For a second event in a row, demand for the latest US Treasury bond eased again. This 20 year auction was still well supported, just not as much as usual. The median yield at 4.62% was actually slightly higher than the 4.60% at the prior equivalent event a month ago. While that night seem insignificant, it reverses the recent pattern of falling yields at these Treasury fund-raising events.Canada's November CPI inflation rate came in at 1.9%, pretty much as expected. Their central bank will be happy with that, because it allows them to continue to unwind their policy rate which is at 3.25% and next reviewed at the end of January.Across the Pacific, we should note that Nissan and Honda have begun merger talks.In China, new official data shows that capital flight by foreign investors reached a record level in November as the de-risking trend rose to a new urgency. And international airlines are also pulling back on their China routes.One of the things to come out of the recent Central Economic Work Conference is that Chinese leaders reportedly agreed to raise their budget deficit to -4% of GDP in 2025, its highest on record. (For reference, the New Zealand equivalent is -2.4% of our GDP. In the US, it is -6.3%.) They are holding on to an economic growth target of around 5%.Singapore's exports rose more than expected in November, up +3.4% and a better-than-expected comeback after their weak October result. Imports also rose, by +2.8% on the same basis.And we should probably note that there was a general easing of commodity prices generally overnight, not just dairy products.The UST 10yr yield is now at just on 4.39%, down -1 bp from this time yesterday.The price of gold will start today at US$2641/oz and down -US$10 from yesterday.Oil prices are down -US$1 to be just on US$69.50/bbl in the US while the international Brent price is down almost -US$1 to be just over US$72.50.The Kiwi dollar starts today just on 57.6 USc and down -20 bps from yesterday. Against the Aussie we are up +20 bps at 90.9 AUc. Against the euro we are also down -20 bps to 54.8 euro cents. That all means our TWI-5 starts today at just on 67.6 to be down -20 bps from yesterday at this time.The bitcoin price starts today at US$106,952 and up les that +0.1% from this time yesterday. Volatility over the past 24 hours has been modest at +/- 1.3%.You can find links to the articles mentioned today in our show notes.You can get more news affecting the economy in New Zealand from interest.co.nz.Kia ora. I'm David Chaston. And we will do this again 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 analysts are now starting to estimate the costs to the US economy of some upcoming tariff policy.But first, the S&P Global American services PMI rose in December to its strongest expansion since March 2022. But their manufacturing downturn deepened with manufacturers reporting falling output and higher prices. New factory orders fell sharply, extending the decline to a sixth consecutive month. The divergence makes the services sector jump look like a sugar-rush, one that could come with a hangover.The December factory survey in the New York region reflects the factory pullback - although that is from an unusually strong November.A New York Fed study of whether large tariff hikes protect US firms has found the opposite in a detailed survey. This is no surprise to economists, and they suggest that the next round is also likely to hurt American firms further. Further own-goals for American manufacturing are on their way. Others say it will shrink US GDP by -1%. That would be a US$300 bln hit.North of the border, Canadian housing starts came in particularly strong in November, and surprisingly so.And Canadian house prices are on an extended uptrend, boosted by more sales activity as interest rates come down there.But in a surprise political move in Canada, their Finance Minister has suddenly resigned, "throwing its economic agenda into a tailspin". Disagreement on how to frame Canada's policies when Trump comes to power in the US seems to be at the heart of the matter.Across the Pacific in Japan, their November PMIs revealed that their factory sector is now barely contracting (an improvement from October), and their services sector is now expanding faster. They had their strongest rise in private sector activity in the past three months. So perhaps it is no surprise to know that machinery orders are on the rise, after a lean period.China’s new house prices in 70 cities shrank by -5.7% year-on-year in November, following the steepest decline in over nine years of 5.9% in the previous month. This marked the 17th consecutive month of decreases, suggesting that Beijing’s extended attempts to mitigate the prolonged downturn in the property sector, such as reducing mortgage rates and slashing home buying costs, have yet to have the effect they are looking for. Prices for second-hand houses were even weaker.China’s industrial production rose +5.4% in November from the same month a year ago, mildly exceeding market estimates and October's growth rate of +5.3%. The expansion was due to a good +6.0% rise in manufacturing. At the same time electricity production only rose +0.9% in the same basis, so that does undermine somewhat the validity of the industrial gains. And that low gain does match the 'headwinds' narrative they have been talking about. Their industrial production data seems to ignore that, and their weak PMIs. Something's not quite right.China's retail sales rose by +3.0% year-on-year in November, slowing from a +4.8% growth in the previous month and below market expectations of a +4.6% gain. This marked the weakest growth in retail activity since August. But compared with many other countries, this 'weak' expansion is better than inflation.The Indian PMI for December recorded an improving factory sector, and a services sector that is still expanding fast.India exports in November however fell to their lowest level since October 2022, down -5.2% from the same month a year ago. India is not much of a trading nation relative to the size of their economy, so the rise in economic activity is all about internal demand. However, imports surged +28% on that same year-on-year basis, and to an all-time record high.It might seem a tad ironic for a major oil producer, but Iran is proposing sweeping closures of public facilities, a move officials attribute to icy winter temperatures and the need for energy management while the country suffers massive shortages due to infrastructure failures. “Iran is on the brink of a 40% blackout in just 18 days,” said one local analyst.In Europe, Moody’s unexpectedly downgraded France’s credit rating from Aa2 to Aa3, citing concerns over deteriorating public finances amid political instability. For reference, Moody's rates New Zealand and Australia, each separately Aaa (although perhaps they will review ours after Thursday's GDP result).In Australia, financial system regulator ASIC is suing HSBC Australia alleging failures to adequately protect customers from scams.And AML regulator AUSTRAC is taking Entain to court over "serious" money laundering compliance breaches in its gambling/betting operations. Entain operates the TAB in New Zealand.The UST 10yr yield is now at just on 4.40%, little-changed from this time yesterday.The price of gold will start today at US

Kia ora,Welcome to Monday’s Economy Watch where we follow the economic events and trends that affect Aotearoa/New Zealand.I'm David Chaston and this is the international edition from Interest.co.nz.And today we lead with news of a large number of key new releases to end the year.It might be the final full week before the summer holidays (in New Zealand), but there will be a lot going on and a lot to follow. Here of course it is the week when corporates and the government release their 'bad news' stories in the hope people are distracted. Then the REINZ will release its November data. And there will be a full dairy auction on Wednesday morning. Thursday will bring our Q3 GDP, expected to confirm we have been in recession.But there is not a lot on the card from Australia this week, other than a consumer sentiment survey from Westpac which we need to keep an eye on.Globally, the big set piece will be the US Fed's monetary policy review on Thursday NZT. A -25 bps cut is expected there. And that comes in the middle of a large raft of important US data updates. China has a good chunky set too. Japan will chime in with its own, including their rate review where now, no change is anticipated. There are other central bank reviews as well, from Sweden (uncertain), Norway (no change), Indonesia (-25 bps), Taiwan (no change), Thailand (no change) and the Philippines (-25 bps). Russia is also expected to push its policy rate up by +200 bps to 23%. Canada and the EU will have their own key data releases.In the meantime we start the week with global interest rates on the move up and the US rate inversions have now vanished. Except in China where there is a rush on for the safety of Government bonds which is driving down yields to record lows. And positive-sloping yield curves are returning.As we noted, the US Fed is expected to cut rates by -25 bps at its December meeting next week on Thursday NZT, bringing the benchmark range to 4.25%-4.50%, and a full percentage point drop since September. Economists anticipate slower cuts ahead, with only three reductions projected for 2025. Those cuts may be delayed if inflation remains above the Fed's target.As the Trump team prepares for the transition, its anti-regulation focus is coming into view. They are seeking candidates to eliminate or eviscerate the FDIC (sought by big banks), and rid themselves of car-crash reporting (as sought by Elon Musk). The billionaire sharks are going after consumer protections.Canadian manufacturing sales were up strongly in October, their best growth spurt in nearly two years. That made them +1.4% higher than the same month a year ago. While that isn't quite besting inflation, the recent moves up will be encouraging them.Across the Pacific, Chinese banks extended just ¥580 bln in new yuan loans in November, less than half the same month a year ago, and nearly half of what was expected. This is the lowest new lending for a November since 2012. The decline took place despite the aggressive monetary stimulus measures from the PBoC in late September in an attempt to halt the property market downturn. There have also been much higher levels of local government debt issued in that time too. Poor credit demand in China is saying a lot about Beijing's management of their economy and its prospects.President Xi and his top team have been meeting in their big set-piece Central Economic Work Conference, and what is glaringly obvious from this so far, is that they don't know what to do, and financial markets are sensing that with their pullbacks.But it sounds like they are preparing to cut both key policy rates and their reserve requirement ratio in 2025, according to a report here.EU industrial production is still in its decline phase, now stretching to 18 consecutive months. It will be little comfort to them that the October decline was smaller than the prior month.In Australia, a report suggest that auction clearance rate in Sydney have fallen sharply over the weekend to be just on 50%, a long way lower than the about-80% level of just a few weeks ago.The UST 10yr yield is now at just on 4.40%, up +1 bp from this time Saturday. But that is quite a move for the week, up +26 bps.The price of gold will start today at US$2647/oz and down -US$11 from Saturday.Oil prices are firmish but still just over US$71/bbl in the US while the international Brent price is still just on US$74.50. The Kiwi dollar starts today still just under 57.6 USc and unchanged from Saturday, but down -70 bps from a week ago. Against the Aussie we are unchanged at 90.6 AUc. Against the euro we are up +10 bps at 54.9 euro cents. That all means our TWI-5 starts today at just on 67.6 to be unchanged from yesterday, and down -40 bps from a week ago.The bitcoin price starts today at US$103,011 and up +1.5% from this time Saturday. A week ago it was at US$101,044. 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

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 cost cutting and raising prices are key themes in US business at present - sure to challenge the Fed's policy path.First in the US, there was an outsized jump in the number of people making initial jobless claims, +310,000 for the week. That pushed up the number of people on these benefits to 1.94 mln. Employers now seem emboldened to cut staff before the holiday season with the incoming Administration likely to be very permissive on employment policies.US producer prices also came in higher than expected, rising in November from October, and from year-ago levels, but more than expected, up from +2.6% year-on-year in October (which was also the November expectation) to +3.0%. Inflation isn't beat.Canadian building consents were expected to fall back in October from the big September jump - and they did, although not by as much as expected.Key data from India came in pretty much as expected. Their November consumer inflation rate was 5.5% and a small reduction, and their October industrial production rose +3.5%, also a slowing. Food prices are rising much more than the overall level, but they are responsible for the most of the decline in the November rate.China's vehicle sales jumped by almost +12% to 3.3 million units in November from a year ago, accelerating sharply from a +7% rise in October. Beijing incentives seem to be working as intended, although they might be at the cost of spending in other sectors.China intends to ramp up economic support next year including measures to boost domestic consumption, as it braces for a fresh trade war with the U.S., a closely watched leadership meeting signaled on Thursday.At their annual Central Economic Work Conference, which sets the tone for the coming year's agenda, China's leaders pledged to "implement more proactive macro policies" and "expand domestic demand". Their statement listed supporting consumption and investment as top priorities for the economy next year. It is bracing for a fresh trade war with the US, and starting the adjustment now.As expected, the ECB cut its policy rates by -25 bps overnight, the fourth time this year, on a more favourable inflation outlook - their disinflation "is well on track".Meanwhile the Swiss central bank cut their policy rate by double that - by 50 bps - in an unexpectedly large cut. This marks the fourth straight rate reduction and the steepest since January 2015, bringing borrowing costs to their lowest since November 2022, returning them to just 0.5%.In Australia, their employment rose by +35,600 in November from October, up +334,500 in a year. That is a +2.1% annual rise. Monthly, full-time employment rose +52,600 while part-time employment fell -17,000. These gains were enough to push their jobless rate down from 4.1% to 3.9%, and unexpected improvement. (New Zealand's jobless rate was 4.8% in September.) For some, this is a good-news-is-bad-news item because it probably pushes back an RBA rate cut even further. The ASX200 fell on the news.Meanwhile, Australia's population rose +2.1% in the year to June, adding +552,000 and taking the total to 27.2 mln. Victoria, Queensland and Western Australia all rose faster than the national average. Victoria grew the most, up +165,000 to just shy of 7 mln. NSW was next, growing +143,000 to 8.5 mln. Bulk cargo freight rates fell another -5% last week from the prior week. And container freight rates were largely unchanged last week. Meanwhile, air cargo volumes grew almost +10% in October from the same month a year ago. International airfreight rose more than +10%, with Asia/Pacific volumes up more than +13%.The UST 10yr yield is now at just on 4.31%, uup +7 bps from this time yesterday.The price of gold will start today at US$2681/oz and down -US$33 from yesterday.Oil prices are down -50 USc to just on US$69.50/bbl in the US while the international Brent price is up +50 USc to now just under US$73/bbl. Following OPEC, the IEA is warning of a potential supply overhang in 2025 as demand remains modest and energy efficiency rises.The Kiwi dollar starts today at just under 57.9 USc and down -10 bps from this time yesterday. Against the Aussie we are down -30 bps at 90.6 AUc. Against the euro we are down -10 bps at 55.1 euro cents. That all means our TWI-5 starts today at just over 67.7 to be down another -10 bps from yesterday.The bitcoin price starts today at US$101690 and up +1.1% from this time yesterday. Volatility over the past 24 hours has been high 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 Australia has been assessing their exposure risks to upcoming Trump tariffs - and they are nervous.But first in the US, their November CPI rate came in without any surprises. It rose for a second consecutive month to 2.7% in November from 2.6% in October. But the rise is partly influenced by low base effects from last year. Core inflation, without food and energy, was stable at 3.3%. Food prices rose +2.4% and rents +4.7% (which will please landlords, like The Trump Organisation). Petrol costs fell -8.1%.For a fifth straight week, US mortgage applications rose, and by +5.4% from the week before, driven by a surge in refinancing (loans for new homes actually fell), putting them +4% higher than year-ago levels. At the same time, mortgage interest rates dipped, but it was a minor move.Another very well-supported UST 10yr bond auction this morning delivered a median yield of 4.19%, down from 4.29% at the prior equivalent event a month ago.As expected, the Bank of Canada cut its key interest rate by -50 bps for a second consecutive time in its December meeting, to 3.25% and make -175 bps of cumulative rate cuts from this cycle’s peak of 5%. Still, rhetoric from policymakers suggested that there will not be any more outsized rate cuts next year, and officials dropped the statement that borrowing costs are due to be lowered should their base case hold. The sharp interest rate cut followed data showing that the Canadian GDP grew an annualised +1% in the third quarter, below the central bank’s projections, and shrank on a per capita basis, and growth in the fourth quarter poses the risk of also missing forecasts.In Japan, producer prices rose +3.7% in November from a year ago, higher than in October and exceeding market estimates of +3.4%. It was the 45th straight month of producer inflation, marking the highest figure since July 2023. These pressures will eventually show up in consumer prices. And that in turn will encourage the Bank of Japan to raise its +0.25% policy interest rates. They next review it on Thursday, December 19, 2024, when a +25 bps rise is anticipated by financial markets.In China, Reuters is reporting that officials are open to let the value of the yuan slide in 2025 as a way to push back against the expected Trump tariffs.In Malaysia, retail sales rose +7.1% in October from the same month a year ago, rising from a +5.5% rise in the previous month. It was the strongest growth in retail sales there since June. Malaysian CPI inflation is running at +1.9% pa.In Australia, their policymakers have been reviewing their risks from upcoming Trump tariffs. They found direct risks were low - in fact very low. But indirect risks were unusually high and cited some startling analysis from the BIS. (See graph 6.) The more China is affected, the more Australia is.The UST 10yr yield is now at just on 4.24%, unchanged from this time yesterday.The price of gold will start today at US$2713/oz and up +US$20 from yesterday, and a two-week high.Oil prices are up +50 USc to just under US$70/bbl in the US while the international Brent price is unchanged at just under US$72.50/bbl. OPEC has cut its forecasts for global oil demand growth in 2024 and 2025.The Kiwi dollar starts today at just under 58 USc and unchanged from this time yesterday. Against the Aussie we are down -10 bps at 90.9 AUc. Against the euro we are unchanged at 55.2 euro cents. That all means our TWI-5 starts today at just over 67.8 to be down -10 bps from yesterday.The bitcoin price starts today at US$100,588 and up +6.0% from this time yesterday. Volatility over the past 24 hours has been high at +/- 3.6%. You can find links to the articles mentioned today in our show notes.You can get more news affecting the economy in New Zealand from interest.co.nz.Kia ora. I'm David Chaston. And we will do this again 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 expected glow following the Chinese stimulus signals is surprising in its absence. Markets have turned quite sceptical and the Chinese bond yields have sunk sharply.But first up today, we can report that the overnight GDT dairy Pulse auction brought slightly lower prices for SMP and WMP, but that the fall in the NZD maintained the results in NZD. SMP fell -1.5% from the prior week's full auction (in USD), and WMP fell -1.6% on the same basis. But in that same week the NZD fell -1.3%, so call it quits in NZD. Although they will have noticed this overnight event, the analysts are unlikely to alter their farmgate payout forecasts based on this recent activity, although the ones who still have forecasts lower than the Fonterra mid-point will be feeling a little safer.Also overnight, the Redbook index of US retail activity there rose only +4.2% from the same week a year ago, a much lesser rise than the +7.2% gain the previous week. In fact it was the least gain since March. A bit of a levelling off, it seems.But jumping a lot is the latest survey of small business sentiment. The NFIB Small Business Optimism Index jumped in November to the highest reading since June 2021,and well above what was expected. It is also the first time in 34 months that the reading is above the 50-year average of 98. The election result is said to be the reason for this rise.The latest USDA WASDE report points out new restrictions of cattle imports to the US from Mexico because of an outbreak of screwworm (NWS) and the ban may be long-lasting. US imports of beef from other sources (including Oceania) are likely to rise. They also note that US milk production will likely turn up on higher milk prices.There was another very well supported US Treasury 3 year bond auction earlier today, and that resulted in a median yield of 4.07%, very similar to the 4.09% at the prior equivalent event a month ago. No risk-rise signaled here.In Japan, machine tool orders rose +3.0% in November from the same month a year earlier, slowing from +9.3% growth in October. Local orders were up +5.0%. The larger export order set was up only +2.2% as orders from China dragged.China's export growth underwhelmed in November. It rose +12.7% in October and an +8.5% rise was expected in November (some thought +10%) due to front-loaded US demand ahead of 2025 tariffs. But in fact the gain was 'only' +6.7% from a year ago. Imports actually fell, a signal about their internal economic activity. Chinese imports from New Zealand are down -8.6% so far in 2024.Interestingly, China's stimulus announcements have barely registered in international markets yet. Markets do expect them to cut rates and raise spending, but the feeling seems to be that this will just help them stay little-changed. So far it has been a very underwhelming event.In Australia, the November NAB business confidence index fell to -3 from a near two-year peak of +5 in the prior month, falling below its long-term average. We haven't seen such a big one-month negative shift since the pandemic. And relief from their central bank doesn't seem about to happen.As expected, the Reserve Bank of Australia kept its cash rate target at 4.35%. "Taking account of recent data, the Board’s assessment is that monetary policy remains restrictive and is working as anticipated. Some of the upside risks to inflation appear to have eased and while the level of aggregate demand still appears to be above the economy’s supply capacity, that gap continues to close." Analysts say this signals they remain confident they will get inflation back under control with the current policy rate and settings. Taking a while, however.And we should perhaps note that coffee prices have surged to their highest level since 1972, driven by low production affected by drought in some parts, excessive rainfall in others. It is similar with chocolate (cocoa) prices, heading back to their unusual March peaks.The UST 10yr yield is now at just on 4.24%, up +5 bps from this time yesterday. The China 10 year bond rate is at 1.88% and down a very sharp -8 bps and to a new record low.The price of gold will start today at US$2693/oz6 and up +US$24 from yesterday.Oil prices are up +50 USc to just over US$69/bbl in the US while the international Brent price is unchanged at just on US$72.50/bbl.The Kiwi dollar starts today at just under 58 USc and down -80 bps from this time yesterday. Against the Aussie we are unchanged at 91 AUc. Against the euro we are down -40 bps to 55.2 euro cents. That all means our TWI-5 starts today at just under 67.9 to be down -50 bps from yesterday.The bitcoin price starts today at US$94,850 and down -3.3% from this time yesterday. Volatility over the past 24 hours has been modest at +/- 1.9%.You can find li

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 China has dropped the word "prudent" as it changes tack in its approach to economic support. Commodity currencies, including the NZD, got a boost from the shiftBut first, US consumer inflation expectations for the year ahead increased to 3% in November from 2.9% in October which was the lowest since October 2020. Inflation expectations also increased for the three-year-ahead (2.6% vs 2.5%) and the five-year outlook (2.9% vs 2.8%).The same survey shows increasing confidence their pay will increase, driven by those without any college education.Across that Pacific, Japan's Q3-2024 GDP expansion was revised up, which was a surprise even if it was only a minor gain. The growth was still small however.China’s annual CPI rate fell to 0.2% in November from 0.3% in the prior month, missing market forecasts. China's producer prices dropped by -2.5% year-on-year in November, following a 2.9% fall in the previous month and a softer decline than market expectations of a -2.8% fall.Meanwhile, the Chinese Politburo met and told the People’s Bank of China to adopt a “moderately loose” strategy for monetary policy in 2025. The Central Economic Work Conference is about to meet. The move marked an aggressive shift from the previous “prudential” stance since 2011. Along with wording that indicates more fiscal stimulus, they also said they will directly support property and equity markets next year. They are going all-in on new stimulus to try and move their economic needle.Taiwanese exports continue to rise aggressively, up +9.7% in November from the same month a year ago. We get China's November export data later today and it is also expected to show a sharp rise from a year ago, although that may only to try and beat upcoming tariffs from the US.In India, the rupee dropped to nearly 85 to the USD and a record low as evidence of fresh capital outflows magnified the impact of dovish monetary policy and signs that their economy is slowing more than expected.Meanwhile, they are about to change out the Governor of their central bank.Also in India, the close ties between corruption-accused Gautam Adani and Prime Minister Modi were on full display yesterday.In Australia, new data out yesterday shows the median weekly earnings of those in full-time employment rose +6.3% to AU$1700/week (AU$88,400 per year). For women the rise was faster, up +6.5%, for men slower, up +5.2%. In 2022, men had a +18% pay advantage over women. By 2024 this had shrunk to +12%. That current advantage is worth AU$191/week (AU$9,900 per year).The UST 10yr yield is now at just on 4.20%, up +5 bps from this time yesterday.The price of gold will start today at US$2636/oz and up +US$36 from yesterday.Oil prices are aup +US$1.50 to just over US$68.50/bbl in the US while the international Brent price is now just on US$72.50/bbl.The Kiwi dollar starts today at 58.8 USc and up +50 bps from this time yesterday. Against the Aussie we down -30 bps to 91 AUc. Against the euro we are up +40 bps to 55.6 euro cents. That all means our TWI-5 starts today at just under 68.4 to be up +35 bps from yesterday.The bitcoin price starts today at US$97,373 and down -2.4% from this time yesterday. Volatility over the past 24 hours has been moderate at +/- 2.6%.You can find links to the articles mentioned today in our show notes.You can get more news affecting the economy in New Zealand from interest.co.nz.Kia ora. I'm David Chaston. And we will do this again tomorrow.

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 central bank rate cuts are expected this week - from some, but not all. And Shayne Elliott may be about to end his time at ANZ.But first in the week ahead, most eyes will be on the American Consumer Price Index, Then tomorrow (Tuesday) the RBA will review its cash rate target, and is expected to make no change a 4.35% and staying above the RBNZ's 4.25%. Central banks in Canada and the EU as well as Switzerland will review as well. The Canadians are expected to cut by -25 bps, the ECB by -50 bps and the Swiss by -25 bps. Inflation data from India is due too. In China, they deliver CPI, PPI, trade data, and New Yuan Loans data. Back in Australia, we will follow their November labour report and the NAB business confidence report. And perhaps we will get our own REINZ real estate market report for November at the end of this week (although no actual date is set yet).Over the weekend, the headlines say the US economy added +227,000 jobs in November, compared to upwardly revised +36,000 in October which was heavily influenced by Boeing strikes and the disruptions caused by Hurricanes Helene and Milton. The November rise was above market expectations of +200,000. Employment trended up in health care, leisure and hospitality, government, and social assistance while the retail trade lost jobs. Meanwhile, the jobless rate inched up to 4.2%. (This move probably raised the chance of a -25 bps rate cut at the Fed's next meeting, next week, and taking the lower bound top 4.25%.)Looking behind these headlines, total employer payrolls rose to 160.6 mln, a +525,000 rise from October and a +2.2 mln rise from a year ago. This is a significant swelling of employer payrolls. More broadly, their household survey has the employed workforce at 161.5 mln (which includes the unincorporated self-employed). But that survey is not growing in 'actual' terms even if it is in seasonally-adjusted terms.Average hourly pay is up +4.0% in November from a year ago. Average weekly earnings were up +3.7% as overtime worked slipped. These are better gains than expected.This overall bullish labour market report was reinforced by the University of Michigan sentiment survey for December which rose for a fifth consecutive month to its highest level since April. Current conditions sentiment drove this. But rather than a sign of strength, this rise was primarily due to a perception that purchasing now would enable buyers to avoid future price increases. Consumers see inflation trouble ahead.So perhaps they bought more using personal debt? Total American consumer debt jumped +$19.2 bln in October, when a +$10 bln rise was expected. It accelerating from a downwardly revised +$3.2 bln rise in a month earlier. This marked the fastest pace of growth since July, equating to an annual growth rate of +4.5%, up from just +0.8% in September. Revolving credit, including credit card debt, saw a notable +14% increase, the largest since February, following a smaller +1.4% gain in September. Meanwhile, non-revolving credit, which includes car and student loans, grew by just +1.1%, up only slightly from +0.5% the prior monthCanada also released employment data for November overnight. Their employment rose +54,000, almost all of it full-time jobs. But their jobless rate rose to 6.8% and a seven year high, as more people entered their labour market as their participation rate rose.India reviewed its policy rate late Friday and made no change, although they did cut their reserve ratio for liquidity support reasons.In China, home loan interest rates are being driven down into the 3% range (depending on borrower financials) and there is talk that they may fall below that in coming months. There is widespread 'news talk' about how their housing market (and land sales to developers) are recovering, but the real evidence is yet to emerge.But their logistics index indicates improvements in their overall economic activity, reaching a seven year high.In Australia, media reports suggest that Shayne Elliott will step down this week as CEO of ANZ, after nine years in the role.The OECD has released its latest update of its Economic Outlook. While it doesn't specifically cover New Zealand, it does point out in a release note that tensions are creating headwinds for international trade in both advanced and emerging markets, and it will probably get worse. They have a rather stunning chart about trade policy uncertainty, here.The UST 10yr yield is now at just on 4.15%, unchanged from Saturday. The price of gold will start today at US$2633/oz and little-changed from this time Saturday, and down -US$25 in a week.Oil prices are another -50 USc lower at just over US$67/bbl in the US while the international Brent price is now just over US$71/bbl. A week ago these price

Kia ora,Welcome to Friday’s Economy Watch where we follow the economic events and trends that affect Aotearoa/New Zealand.I'm David Chaston and this is the international edition from Interest.co.nz.And today we lead with news all eyes are on the US non-farm payrolls report due out tomorrow, and market activity is hesitant in advance of that.US jobless claims came in at +210,000 last week, a good decrease from the prior week. But it was not as large a drop as the seasonality suggests it should have been, so it counts as a 'rise' on the headline basis. Continuing claims were 1.66 mln and that fall was more than the seasonal effects expected.There are still very few announced job cuts in this huge labour market.So that will probably mean the US November non-farm payrolls report will be a positive one when it is released tomorrow morning. Markets currently expect +200,000 more jobs filled.The US Fed's November Beige Book describes a moderately expanding overall economy.US exports came in at US$266 bln in October, about the 2024 monthly average even though they slipped from the prior month. But they were +1.9% higher than the same month a year ago, in a rising trend that started in June 2023. Imports slipped in October too from the prior month, but these also stayed at about the 2024 monthly average. The US trade deficit in both goods and services reduced in October and runs at under -3% of GDP, a level easily absorbed in such a large country, especially one whose currency is the standard for international trade.Canadian exports and imports both rose in October, and their trade deficit - although on a rising trend - has an even smaller impact on their economy.In Europe, although it slipped in October from September, the volume of EU retail trade was up +2.1% from the same month a year ago. This is perhaps a surprising show of resilience for an economy that is being widely panned as struggling.On the global logistics front, perhaps we should note the Global Supply Chain Pressure Index that the NY Fed monitors. In November, it eased slightly. After the sharp pandemic pressures it eased noticeable in April 2023 and has seen no return since then, despite the ups and downs of things like the major canal stresses. The global logistics network has been remarkably resilient, the pandemic excepted.And last week, global container freight rates rose +6% from the prior week to be +150% higher than pre-pandemic levels still. There were sharp rises in the China-to-Europe trade, more than enough to offset sharp fall in the Chine-to-USWC trade. Going the other way there was a very sharp drop in bulk cargo rates, down -22% from the prior week to their lowest since September 2023 and actually back to levels first reached in 1987.The UST 10yr yield is now at just on 4.18%, down -2 bps from yesterday.The price of gold will start today at US$2637/oz and down -US$15 from this time yesterday.Oil prices are -US$1 lower at US$69.50/bbl in the US while the international Brent price is now just under US$72.50/bbl. These low prices forced OPEC to delay its planned output hike in January.The Kiwi dollar starts today at 58.7 USc and unchanged from this time yesterday. Against the Aussie we up +10 bps at 91.2 AUc. Against the euro we have dipped -10 bps to 55.6 euro cents. That all means our TWI-5 starts today at just on 68.3, and again unchanged from yesterday.The bitcoin price starts today at US$100,825 and up +6.0% from this time yesterday. Volatility over the past 24 hours has been very high at +/- 4.7%. At one point it reached US$103,000, at another back under $100,000.You can find links to the articles mentioned today in our show notes.You can get more news affecting the economy in New Zealand from interest.co.nz.Kia ora. I'm David Chaston. And we will do this again on Monday.

Kia ora,Welcome to Wednesday’s Economy Watch where we follow the economic events and trends that affect Aotearoa/New Zealand.I'm David Chaston and this is the international edition from Interest.co.nz.And today we lead with news the world's services sector seems to be holding its ownAhead of this weekend's November non-farm payrolls report, the private ADP Employment report out today reveals American private businesses added +146,000 workers to their payrolls in the month, slightly below forecasts of 150,000. This is a reversion to the mean for 2024. Currently analysts are expecting the non-farm payrolls to rise +200,000 when they are reported in Saturday (NZT).New factory orders inched up in October to be +3.4% higher than year ago levels.US mortgage applications rose again and for the fourth consecutive week. This was driven by new purchase activity, helped by a fall in benchmark mortgage interest rates (to 6.69%), but undercut by a fall in refi activity.The giant US service sector expanded at a good solid rate in November, but not as fast as in October, according to the widely-watched ISM survey. The November expansion was also a reversion to the 2024 mean. But the internationally-benchmarked S&PGlobal/Markit version reported a rising expansion in the sector, and to its fastest clip since March 2022. They say it was based on a rise and rise in new orders.The bullish of those two reports is likely to be the more realistic because American vehicle sales rose to an annualised rate of 16.5 mln in November, its strongest pace since May 2021There were services sector reports out for a number of economies overnight and they were mixed.In Canada, their small expansion grew again in the month. In Japan, that sector shifted from contraction to expansion. The Caixin version for China stayed at a modest expansion. But it will be disappointing that all their stimulus efforts so far haven't really moved the needle, and deflationary pressure grow. In India, theri expansion stayed strong, but is being marred by fast-rising inflation. It is inflation fuelled by food and wages and is now running at a twelve year high.In South Korea, the president's martial law move has backfired spectacularly. The stage is now set for an historic vote to impeach him. Democratic forces have prevailed over authoritarian ambition.As we publish, it seems that the French government will fall to a no-confidence vote supported by both far-right and far-left political opposition parties. (But a little history might be helpful for some French parliamentarians. Only one motion of no confidence has ever been passed in France since 1958. It was in 1962 and it was aimed at PM Georges Pompidou, and through him President Charles de Gaulle. A month and a half later, the two men found themselves more secure than ever.)In Australia, their services PMI slipped from a very minor expansion to no expansion in November. But the same survey recorded business confidence rising to its highest level since May 2022, which in the circumstances seems odd. However other Australian confidence surveys report a similar disconnect.The Aussies also released their Q3-2024 GDP result yesterday and it came in with a somewhat surprising miss. Some analysts had expected a surprise, but to the high side given recent data (based largely on the spending surge by their Federal government). But few saw this downside miss coming. The Australian economy grew by +0.3% in Q3-2024, following a +0.2% increase in the prior three quarters. This marked the 12th straight period of quarterly growth but fell short of market expectations of +0.4%. And year-on-year the rise was +0.8% instead of the expected +1.0%. These are still minor moves and given the stimulus in effect, it does lead to a view the Aussie economy is stagnating. But at least it isn't contracting.The UST 10yr yield is now at just on 4.19%, down -1 bp from yesterday. The price of gold will start today at US$2652/oz and up +US$2 from this time yesterday.Oil prices are -50 USc softer at US$69.50/bbl in the US while the international Brent price is little-changed at just under US$73.50/bbl.The Kiwi dollar starts today at 58.7 USc and down -15 bps from this time yesterday. Against the Aussie we up +30 bps at 91.1 AUc. Against the euro we have dipped -20 bps to 55.7 euro cents. That all means our TWI-5 starts today at just on 68.3, and unchanged from yesterday.The bitcoin price starts today at US$95,114 and virtually unchanged from this time yesterday. Volatility over the past 24 hours has remained modest at +/- 1.1%.You can find links to the articles mentioned today in our show notes.You can get more news affecting the economy in New Zealand from interest.co.nz.Kia ora. I'm David Chaston. And we will do this again tomorrow.

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 of an unexpected development in South Korea.But first, dairy prices edged up slightly again in this morning's latest full dairy auction, but that doesn't really tell the story of this event properly. With the local milk production season now past its peak, lesser volumes were on offer. And buyers seem to have already stocked up for Christmas and Chinese New Year. So it will be no surprise to know that most commodities slipped in price today - apart from a +4.1% surge in the WMP price. Almost alone, this twisted the overall index to a +1.2% rise in USD terms, and a +1.6% rise in NZD termsIn the US last week there was something of a surge in retail sales with the benchmark Redbook index rising 7.4% from the same week a year ago. Buying before Trump's tariff-tax seems to be becoming a thing. Black Friday was in both weeks, this year and last year.Also rising more than expected were US job openings in the US. Their JOLTS report seems to show that October data ends a longish easing in the rising in hiring. It also shows that employees are less afraid to quit to find another job.And more optimism is found in the RealClear Markets/TIPP survey for November.And the US logistics industry seems to be settling into a positive phase with another good expansion in November.Across the Pacific, we should not a rather stunning development in South Korea, our fourth largest trading partner. Martial law has been declared by their embattled President. It seems the 'anti-state forces' he is battling are internal ones in labour unions. Even members of his own party are opposing the declaration. Apparently his wife is a key influencer in this decision. His move looks very uncertain at this time, and legislators have voted against the move.The South Korean currency, the Won, fell hard, back near GFC and Asian Financial Crisis levels.In China, State media is talking up the rise in real estate sales transactions, both by households in some cities, and by developers.And later today in Paris, French legislators will vote on whether to topple the Barnier government.And later today, the Aussie will release their Q3-2024 GDP result - which is expected to show a +1.1% expansion from the same quarter a year ago. That would be about the lowest since the pandemic.The UST 10yr yield is now at just on 4.20%, up +2 bps from yesterday.The price of gold will start today at US$2650/oz and up +US$10 from this time yesterday.Oil prices are +US$2 higher at US$70/bbl in the US while the international Brent price is +US$1.50 higher at just over US$73.50/bbl.The Kiwi dollar starts today at 58.8 USc and unchanged from this time yesterday. Against the Aussie we down -20 bps at 90.8 AUc. Against the euro we have dipped -10 bps to 55.9 euro cents. That all means our TWI-5 starts today at just on 68.3, and down -10 bps from yesterday.The bitcoin price starts today at US$95,045 and down -1.4% from this time yesterday. Volatility over the past 24 hours has remained 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 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 all about the state of the world's factories. Globally, manufacturing stabilised in November with a rise in new orders.First up today, there were two factory PMI surveys out for the US for November. Both reported their sector contraction eased noticeably. The widely-watched local ISM version reported that new orders are now back expanding, even if the overall sector isn't. They also found that customer inventories are currently "too low", so that could well indicate an expansion is on the cards soon. And the internationally-benchmarked S&P Global/Markit version was upgraded from their 'flash' report showing similar improvements in new order flows.In Canada, their factory sector expanded with its strongest result in nearly two years.In China, the private Caixin factory PMI was noticeably more positive for November than the official version. New orders drove that improvement too, and they were led by new export orders.The same survey of Japanese factories wasn't as positive and they reported a slightly larger contraction in November.In Singapore, their PMI rose to a small expansion. But it was equal best since December 2018.In Malaysia, their PMI eased in November, only slightly, but it remained under pressure with fewer new orders.Back in China, their 10-year government bond yield has dropped to 2%, a multi-decade low. Modern records for this paper only go back to 2002, but it is easily the lowest since then. The fall comes amid expectations of expanded stimulus from Beijing to support the economy. But expected announcements haven't surfaced so far.There was quite a bit of data released in Australia yesterday. First, their building consent data for October rose but only because of a catchup in apartment consents. It was a big jump. Consents for houses continued to slip however. But they have had overall rises consistently since the start of the year.On the retail sales front, Victoria, Queensland and South Australia saw good gains, but retail sales gains in NSW and WA were weak. However, it seems their Black Friday sales were quite positive, giving retailers there hope that the run to Christmas will be a better trading period.On the factory front, their internationally-benchmarked November PMI contracted at a much slower pace in November, hardly at all, which counts as an improvement for them.The UST 10yr yield is now at just on 4.18%, unchanged from yesterday.The price of gold will start today at US$2640/oz and down -US$9 from this time yesterday.Oil prices are -50 USc lower at US$68/bbl in the US while the international Brent price is -US$1 lower at just over US$71.50/bbl.The Kiwi dollar starts today at 58.8 USc and down -50 bps from this time yesterday. Against the Aussie we up +20 bps at 91 AUc. Against the euro we unchanged at 56 euro cents. That all means our TWI-5 starts today at just on 68.4, and down -20 bps from yesterday.The bitcoin price starts today at US$96,401 and down -1.0% from this time yesterday. Volatility over the past 24 hours has been modest at +/- 1.7%.You can find links to the articles mentioned today in our show notes.You can get more news affecting the economy in New Zealand from interest.co.nz.Kia ora. I'm David Chaston. And we will do this again tomorrow.