Economy Watch

Kia ora,Welcome to Wednesday’s Economy Watch where we follow the economic events and trends that affect Aotearoa/New Zealand.I'm David Chaston and this is the international edition from Interest.co.nz.Today we lead with news that financial markets are being rattled somewhat by the isolationist rhetoric from the incoming US President on tariffs, especially as they will apply to Canada, Mexico and China. However, despite the incendiary nature of the talk, the market reactions have been relatively mild with the expectation the adults in the room will calm things in January.But these reactions have hit commodity currencies.One reason restraining Trump might work is that his mind is still in the 2020 past. In fact the Biden Administration has been particularly successful in restraining drug importation, fentanyl in particular, that overdose deaths are falling rather fast now. And restraining the drugs trade from China and Mexico is a motivating reason for those tariff threats. (It was during the last Trump Administration that those deaths spiked.)Anyway, away from the ramblings of a bitter old man, first up today, we can report higher dairy prices for two key commodities at the overnight GDT Pulse auction event. SMP rose +0.5% in USD terms and was up +1.8% in NZD terms. WMP rose another +2.2% in USD terms to be up +3.5% in NZD terms. This will give upside to all the analyst farmgate payout forecasts, and it seems likely they will coalesce around the $10/kgMS mark now. That, of course, would be a record high.In the US, their retail impulse is staying 'healthy' as measured by the Redbook survey, and last week it rose +4.9% above the same week a year ago, holding the expansion we have observed for the past eight months.This was supported by a rise in consumer sentiment, as measured by the Conference Board survey. It is now at the top of the range that has prevailed over the past two years. November’s increase was mainly driven by more positive consumer assessments of the present situation, particularly regarding their labour market.Further, there was an improvement in the Texas services sector in November, taking into an expansion. And a return to expansion was also reported for the service sector in the mid-Atlantic states.But none of this has spilled over into confidence in home buying, yet anyway. New home sales in October dropped more than 17% from the previous month to at a seasonally adjusted annualised rate of 610,000. And that takes it -9% lower than the same month a year ago.Singapore’s factory production rose by only +1.2% in October from a year ago, slowing sharply from a downwardly revised +9% rise in the previous month and disappointing analysts. Activity slowed significantly for biomedical manufacturing.Here's something we rarely report on, but is an indication of the tight ASEAN economies. Car sales in Thailand sank -36% in October from a year ago to be the seventeenth consecutive month of decline, driven primarily by high household debt and significant tightening of loans.Later today in Australia, we will be following the October CPI indicator and it is expected to reveal a small rise from the prior month.Join us at 2pm for the RBNZ's Monetary Policy Statement and the OCR review. A -50 bps rate cut is widely expected. But it will be a twelve week gap until the February 19, 2025 MPS, so this review has to carry them through a period which may have considerable international uncertainty attached to it.The UST 10yr yield is now at just on 4.32% and rising +3 bps from this time yesterday.The price of gold will start today at US$2629/oz and down -US$2 from this time yesterday.Oil prices are little-changed at just under US$69.50/bbl in the US while the international Brent price is just under US$73.50/bbl.The Kiwi dollar starts today at 58.3 USc and down a minor -10 bps from this time yesterday. Against the Aussie we are +20 bps higher at 90.2AUc. Against the euro we down -20 bps at 55.6 euro cents. That all means our TWI-5 starts today at just on 68.1, down another -10 bps from yesterday.The bitcoin price starts today at US$94,496 and down another -1.2% from this time yesterday. Volatility over the past 24 hours has been moderate at +/- 2.5%.You can find links to the articles mentioned today in our show notes.You can get more news affecting the economy in New Zealand from interest.co.nz.Kia ora. I'm David Chaston. And we will do this again tomorrow.

Kia ora,Welcome to Tuesday’s Economy Watch where we follow the economic events and trends that affect Aotearoa/New Zealand.I'm David Chaston and this is the international edition from Interest.co.nz.Today we lead with news the market pressure on US benchmark interest rates is easing now.First, an updated Dallas Fed survey showed the Texan manufacturing sector contracted less in November, the least in 2½ years. This was driven by the outlook mood which improved sharply, post election. But this may just be a partisan hope. New order levels actually fell to their worst shrinkage in a year, and continuing a two year trend of shrinkage in this oil-patch region.And the broader Chicago Fed National Activity Index decreased in October from September to its lowest in nine months in a surprise result that was much worse than market forecasts. This index suggested US economic growth decreased. Current forecasts are that the US economy is growing at just under +2%, although the Atlanta Fed's GDPNow model has it at +2.6%. Anywhere else that sort of expansion would be considered very good for a developed economy.There was another large US Treasury bond auction this morning, again very well supported. The yield was 4.24% at this event, and higher than the 4.07% median yield at the prior equivalent event a month ago - but not the sort of rise we have seen recently in other maturities.Singapore’s inflation rate eased to 1.4% year-on-year in October from 2% in the previous month, and below market expectations of 1.8% gain. This marked the lowest inflation rate since March 2021, as prices moderated for housing and utilities.Taiwanese retail stopped expanding in October after a long run of expansion that started in August 2021.But Taiwanese industrial production is still growing at a healthy rate, although that rate of growth is slowing. It was up +8.5% in October from a year ago, down from an +11% rise in the year to September. A year ago in October 2023 it was falling +2.3%, so they have come a long way since then.In China, their central bank injected ¥900 bln into financial institutions via a one-year medium-term lending facility yesterday at an unchanged rate of 2.0%. That compared with the ¥1.45 tln of MLF loans due this month, marking a net cash withdrawal of ¥550 bln.After the March to August rises, the German IFO sentiment survey returned to its lows for other than the GFC or the pandemic. Analysts see a fading of strength in an economy that was only recently an engine of Europe. And overnight, ThyssenKrupp, the largest steel maker in Germany, said it would cut its workforce by up to 11,000 from the current 98,000, by 2030.The UST 10yr yield is now at just on 4.29% and down -12 bps from this time yesterday.The price of gold will start today at US$2631/oz and down -US$85 from this time yesterday.Oil prices are down -US$2 at just over US$69/bbl in the US while the international Brent price is just over US$73/bbl.The Kiwi dollar starts today at 58.4 USc and up a minor +10 bps from this time yesterday. Against the Aussie we are +20 bps higher at 89.9 AUc. Against the euro we down -20 bps at 55.8 euro cents. That all means our TWI-5 starts today at just on 68.2, down -10 bps from yesterday.The bitcoin price starts today at US$95,648 and down -1.1% 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 on tomorrow.

Kia ora,Welcome to Monday’s Economy Watch where we follow the economic events and trends that affect Aotearoa/New Zealand.I'm David Chaston and this is the international edition from Interest.co.nz.Today we lead with news the US and India are driving global demand currently.First, in the week ahead, the major even for us will of course be the Wednesday RBNZ Monetary Policy Review, the last one for 2024. And markets have priced in a full -50 bps cut in the OCR, a setting that will have to last them though to mid-February.South Korea will also review its policy interest rate benchmark this week.In the US, they will release a packed set of data until Thursday (NZT) because for them the week ends with their major Thanksgiving holiday, and the related major retail activity that kicks off the period until the end of year. Coming this week from them are October PCE inflation data, and update of their Q3 GDP, durable goods order data, and some more sentiment surveys.There is not much economic data due from China this week, but Japan will have a set including updates for retail sales and industrial production. Canada and India will deliver GDP updates, and Australia and the EU will come up with inflation data updates.Over the weekend the US manufacturing PMI for November stayed in contraction territory, hardly moving from the prior two months. But their services PMI rose strongly to a much faster expansion, and a 32 month high. There were no inflationary signals in this survey. Business expectations were the highest level since May 2022, reflecting optimism about potential interest rate cuts, stronger economic growth, and pro-business policies.On the consumer front however, the November University of Michigan sentiment for November was down-graded from its 'flash'-reported rise, so that in fact little improvement was evident in the month. These sentiment levels remain about -30% lower than pre-pandemic levels.Canadian retail sales rose unexpectedly in October and now for a fourth straight month. Excluding car sales, which were strong in September, a small correction was expected. But in fact the non-car retail activity rose very strongly. Perhaps the recent Bank of Canada interest rate cuts are working? They have trimmed -125 bps since May this year and now have an official cash rate of 3.75%.Japanese inflation fell again in October, now running at an annual rate of +2.3%. That is sharply lower than the 3% rate they had in August but it is still within their central bank's target range.And staying in Japan, their November PMI stayed positive, also bolstered by the service sector, but manufacturing output contract less - in fact hardly at all - in November which was a good improvement for them.In India, they again reported strong expansions in both their factory and service sectors. But worryingly, there are tangible signs of serious economic over-heating with cost inflation pressures near extreme levels. Something will break soon. And climate over-heating could also leave the economic situation in a messy place.In China, a selloff in Chinese stocks deepened on Friday as disappointing tech earnings hurt sentiment already weakened by concerns over Trump’s imminent return.In Europe, their PMIs were disappointing again, with the expansion in their services sector ending, and it joining the contraction they have had for a while in their factory sector. New orders slipped for a sixth month running. Although still modest, the rate of contraction in November was the most marked since January.In Australia, their November PMIs were also again disappointing. Business activity slipped as services activity joined manufacturing output in contraction. The reduction in activity coincided with a slowdown in new order growth while external demand remained subdued. But despite this, business sentiment was resilient as confidence in future conditions reached a 15-month high. Go figure.The UST 10yr yield is now at just on 4.41% and little-changed from Saturday at this time. A week ago it was +4 bps higher.The price of gold will start today at US$2716/oz and up another +US$10 from this time Saturday. That makes the weekly gain +US$149 or up +5.8%.Oil prices are holding at just over US$71/bbl in the US while the international Brent price is still just under US$75/bbl. A week ago these prices were -US$3.50 lower respectively.The Kiwi dollar starts today at 58.3 USc and unchanged from this time Saturday but down -40 bps in a week. Against the Aussie we are still lower at 89.7 AUc. Against the euro we still at 56 euro cents. That all means our TWI-5 starts today at just on 68.3, little-changed from Saturday but down -40 bps in a week.The bitcoin price starts today at US$96,743 and down -2.3% from this time Saturday. Volatility over the past 24 hours has been moderate at +/- 2.3%.You can find links to the articles mentioned today in our show notes.You can get more news affecting the economy in New Zealand from interest.co.nz.Kia ora. I'm David Chaston. And we will do this again on tomorrow.

Kia ora,Welcome to Friday’s Economy Watch where we follow the economic events and trends that affect Aotearoa/New Zealand.I'm David Chaston and this is the international edition from Interest.co.nz.Today we lead with news about separate corruption cases involving Gautam Adani, and Matt Gaetz.But first today, the US labour market is maintaining its strength, despite strikes and tropical hurricanes. Last week only +213,000 people filed for initial jobless claims, well below the prior week, below what seasonal factors would have brought, and below the same week last year. This was a seven month low. Continuing claims inched up the prior week to 1.67 mln but that was about the same level as last year.Those job gains are helping their housing market. Existing home sales rose in October by +3.5% from the previous month to an annualised rate of just under 4 mln. While this level is pretty tame for them, it is off the September low which had the distinction of being a q14 year low. Industry insiders are hoping October's rise signals a trend turnaround. But it is hard to see with mass layoffs in the US Federal workforce imminent, it might be a vain hope.In contrast to the big jump in the New York region, the Philly Fed's factory survey dipped in November, but new order levels remained positive, and sentiment ahead did too. It was similar in the same report by the Kansas City Fed, where firms expect increases in production, new orders, and employment in the next six months.In Canada, producer prices turned up in October after easing in the prior month, to continue a trend that started in April. But the rises are not inflationary.In India, the depth and pervasiveness of corruption is on display in a case that is gripping the country. The BSE fell -0.5% on the news. And PM Modi is annoyed by the revelations as Adani has been important in his rise. In New York, Indian billionaire Gautam Adani was indicted on bribery charges in a US federal court yesterday, with prosecutors alleging the 62-year-old tycoon and other Indian executives promised more than US$250 mln to Indian government officials to win contracts. Bribery is also at the heart of a Swiss case against the same people. And Indian steel makers have faced similar allegations. But given the pervasiveness of corruption in India at the top level, there is probably little that will change there, especially as the BJP controls their government. The Americans are prosecuting because Adani did not disclose the bribes in documentation for fundraising in US markets, and it was considered to be a material factor for the investments.Ending a long series of improvement, the EU consumer sentiment survey reported a fall to a more negative result in November. Despite this, data out for EU car sales was quite positive, putting the August and September say behind it and returning to levels that have been 'normal' since mid-2022.In Turkey, they reviewed their policy rate and held it at 50%. Turkey has inflation running at 48%.In South Africa, they also reviewed theirs and cut it by -25 bps to 7.75%. South Africa has inflation running at 2.8% and falling quickly now. It is back within its target range.Container shipping freight rates were little-changed last week. Bulk cargo rates spiked during the week, but ended up basically unchanged from last week.The UST 10yr yield is now at just on 4.42% and up +1 bp from yesterday at this time. Wall Street started its Thursday little-changed, but then rose +0.7% on the S&P500 and rising when Matt Gaetz said he won't be the US Attorney General.The price of gold will start today at US$2649/oz and up another +US$26 from this time yesterday.China has found new gold reserves in central Hunan province, state outlet Xinhua News reported yesterday. China is the world's largest gold producer, accounting for around 10% of global outputOil prices are again little-changed, up just +50 USc to just over US$69.50/bbl in the US while the international Brent price is now just over US$73.50/bbl.The Kiwi dollar starts today at 58.6 USc and down -10 bps from this time yesterday. Against the Aussie we are -40 bps lower at 90 AUc. Against the euro we unchanged at 55.8 euro cents. That all means our TWI-5 starts today at just over 68.3, and down -20 bps from yesterday.The bitcoin price starts today at US$97,247 and up +3.7% from this time yesterday. Volatility over the past 24 hours has been moderate at +/- 2.7%.You can find links to the articles mentioned today in our show notes.You can get more news affecting the economy in New Zealand from interest.co.nz.Kia ora. I'm David Chaston. And we will do this again on Monday.

Kia ora,Welcome to Thursday’s Economy Watch where we follow the economic events and trends that affect Aotearoa/New Zealand.I'm David Chaston and this is the international edition from Interest.co.nz.Today we lead with news both China and the EU seem to be facing banking & debt pressures, different of course, but each challenging in its own way.But first in the US, mortgage applications edged slightly higher last week from the week before to be -30% lower that at the end of September and about the same weak level as a year ago. Rising mortgage interest rates are holding them back with the latest rise to 6.90% the fourth week in a row and the highest since early July. Trump and market expectations that the new Administration policies will be inflationary, is getting the blame for the higher interest rates.Yesterday we noted the bullish outlook for Walmart, as part of stronger American retail activity. But today we also need to note the downbeat assessments from another major retailer, Target.After the unexpected September dip, Japanese exports rose again in October even if the rise of +3.1% from a year ago was less than the rises they had in 2024 to August. Imports rose too, but even more modestly (+0.4%).Taiwanese export orders remain very buoyant, up +4.9% in October from a year ago and a rising pace. The ris was mainly driven by increased export orders for electronic products.The Chinese central bank left its November Loan Prime Rates unchanged at the new lower October levels of 3.10% for the one year LPR, and 3.60% for the five year LPR.And chickens are coming home to roost for Chinese banks that went along with emergency lending during the pandemic. A government-encouraged surge in lending designed to be a lifeline for small businesses during the pandemic has started to worry their banks, as misappropriation has caused the loans to go bad at an increasing rate due in part to China’s stubborn real estate slump. The official response to the problem? ease back on lending standards.The Indonesian central bank reviewed its policy rate yesterday and left it unchanged at 6%, as expected. Although they trimmed -25 bps in mid-September, they haven't really started their easing cycle yet. Inflation is running at a very low +1.7% pa, and within their policy target band so they must be close. But a big factor for them in currency stability and a high real interest rate is keeping the rupiah from depreciating at a faster rate. Global tensions, both trade and geopolitical tensions, are the main factors here.In its latest financial stability review the ECB is warning that the combination of low growth and high debt is about to play out there with some severe economic stress.In Australia, employers paid more than AU$103.7 bln in wages and salaries in the September month, up +6.3% from a year ago, and the first time it has exceeded AU$100 bln an any month. It part of a longer trend and is up +14.1% from September 2022 levels.The UST 10yr yield is now at just on 4.41% and up +2 bps from yesterday at this time.The price of gold will start today at US$2649/oz and up another +US$26 from this time yesterday.Oil prices are little-changed, still just over US$69/bbl in the US while the international Brent price is still just over US$73/bbl.The Kiwi dollar starts today at 58.7 USc and back down -30 bps from this time yesterday. Against the Aussie we are -10 bps lower at 90.4 AUc. Against the euro we unchanged at 55.8 euro cents. That all means our TWI-5 starts today at just over 68.5, and down -10 bps from yesterday.The bitcoin price starts today at US$93,816 and up +1.6% from this time yesterday. Volatility over the past 24 hours has again 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.Today we lead with news dairy prices are still rising.We got an increase in dairy prices at the overnight GlobalDairyTrade auction from the prior event, but it was a small pullback from prices at last week's Pulse event. Overall prices were up +1.9% in USD terms, up +3.6% in NZD terms, so a good result. WMP let the rises with a +3.2% gain, but the main pullbacks were in the cheeses with cheddar down -3.1% and mozzarella down -6.6%. SMP rose +0.9% from the prior full event but was down -1.1% from last week's Pulse event.This is still a good result and will probably encourage some analysts to update their new season payout forecasts, just as BNZ analysts did last week. The possibility of a $10/kgMS payout is still in play after these results.Holding the WMP prices up is the unexpectedly sticky fall in Chinese milk production (due to low profitability) and a rather steep and unexpected fall in their WMP inventories. This will underpin WMP demand for a while and rising New Zealand production will bring a virtuous tone to the party as well.In the US, although the average American voter may have voted 'negative', they are acting 'positive' in their spending with the Redbook retail sales growth up +5.1% last week from the same week a year ago. And those sort of gains are what giant Walmart is racking up. (Presently, these gains are essentially volume gains. But of course, if the US gets aggressive tariffs, price rises will drive these numbers higher with inflation.)US housing starts hit a bump in the road in October, down -3.1% to just over a +1.3 mln starts (annualised rate), but the fall was because construction activity fell sharply in the South due to their hurricanes. Obviously that will recover soon for the same reason. But in the background it is generally challenging for house builders because mortgage interest rates are remaining high. Still, sales at a 1.3 mln is about average for 2024.A big question hangs over the US housing markets, both for new and used houses. The incoming Administration seems committed to quitting the two big institutions that make the market for 30 year fixed mortgages, Fannie Mae and Freddie Mac. They tried in the last Trump Administration and were thwarted by Congress, but they seem more determined this time. If that happens it will be an earthquake for housing finance in the US, and probably be the demise of their unique long-term fixed rates.September data released yesterday by the US Treasury shows a huge inflow of foreign funds into the US. There was +US$341 bln of private net flows in the month, plus another +US$57 bln by "official" (government) transactions. This is easily the largest single monthly inflow ever. (For reference, the US Federal Government deficit averaged -US$153 bln monthly in the year to September.)Canadian CPI inflation was up +2.0% in October, a blip up from September's +1.9%. Their food prices were up +2.7% within that, rents up +7.3%. But these were offset by much lower energy costs.After growing rather well in the April to August months, Malaysian export growth as pulled back in September and October with only modest changes. Malaysian import growth is pulling back too, but it this is still expanding at twice the export growth rate.In Hong Kong, the clampdowns on freedoms of expression are getting fiercer. And it is no longer 'legal' to mention Jimmy Lai, let along the umbrella freedom protests.And China is moving to make it an offense to operating in financial markets unless pricing is "rational".In India, they are again battling seasonal air pollution, and it is particularly bad this year, especially in the north.The UST 10yr yield is now at just on 4.39% and down -6 bps from yesterday at this time.The price of gold will start today at US$2623/oz and up another +US$13 from this time yesterday.Oil prices are little-changed, still at US$69/bbl in the US while the international Brent price is still just on US$73/bbl.The Kiwi dollar starts today at 59 USc and up +30 bps from this time yesterday. Against the Aussie we are unchanged at 90.5 AUc. Against the euro we up +20 bps at 55.8 euro cents. That all means our TWI-5 starts today at just over 68.6, and up another +10 bps from yesterday.The bitcoin price starts today at US$92,318 and up +0.3% 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.

Kia ora,Welcome to Tuesday’s Economy Watch where we follow the economic events and trends that affect Aotearoa/New Zealand.I'm David Chaston and this is the international edition from Interest.co.nz.Today we lead with news that long term benchmark bond interest rates are still rising, even if the rising trend is variable.It is a quiet economic data day in the US, with a housing building confidence index the only release of note. The NAHB/Wells Fargo Housing Market Index rose in November to it highest level in seven months, as its gets an election relief rally of sorts, modest to be fair.In Canada, housing starts rose back to their 2024 average level but it was a three-month high for them.Across the Pacific, Japan's core machinery orders, which exclude those for ships and electric power companies, slipped by -0.7% in September from August, in the red for the third straight month and missing market expectations for a +1.9% gain. Year on year, these are -4.8% lower. Export orders held up relatively well, however.Singaporean exports turned down in October. The fell by -4.6% from the same month a year ago, reversing from a downwardly revised +0.9% rise in September. It marked the first decline in since June, due to a fall in non-electronic exports. Non-electronic shipments slumped -6.7%.In China, new Bloomberg analysis shows more detail on their population problem. Within 20 years, deaths are set to be double the number of births. The old-age dependency ratio may reach 52%, meaning there would be just two working-age individuals for every person over 65 years. The rapid aging and falling birth rate has the United Nations projecting China's population could shrink to half its current size by the end of the century - that's 700 mln people less, a decline double the current size of the US population. Even Japan's population isn't shrinking like that (although it may do in time).In Australia, regulator ASIC has taken NAB (BNZ's parent) to court alleging it ignored hardship support for 345 "vulnerable customers" between 2018 and 2023 (about 60 per year), saying the failure to respond broke the Australian credit code. NAB has about 10 mln customers and about 35,000 staff. The chances it got something wrong for 60 of their customers in a year is almost a certainty.The UST 10yr yield is now at just on 4.45% and up +1 bp from yesterday at this time.The price of gold will start today at US$2610/oz and up +US$47 from this time yesterday.Oil prices are +US$2 higher at US$69/bbl in the US while the international Brent price is now just on US$73/bbl.The Kiwi dollar starts today at 58.7 USc and up +10 bps from this time yesterday. Against the Aussie we are down -30 bps at 90.5 AUc. Against the euro we unchanged at 55.6 euro cents. That all means our TWI-5 starts today at just over 68.5, and up +10 bps from yesterday.The bitcoin price starts today at US$92,065 and up +2.0% 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 Monday’s Economy Watch where we follow the economic events and trends that affect Aotearoa/New Zealand.I'm David Chaston and this is the international edition from Interest.co.nz.Today we lead with news the focus is turning to Q1-2025 now and the twists & turns the world's largest economy will deliver. It is probably no coincidence that post-election, Warren Buffett is selling.But first, in the week ahead we will get data on our producer price inflation, and an update on our population, not to forget a full GDT dairy auction on Wednesday which should confirm the recent higher USD prices are extending. And remember, in a week from Wednesday, the RBNZ will review the OCR for the final time in 2025. This review has to hold them until February 19, 2025, so the look ahead will dominate.We have had a 4% one year swap rate, essentially unchanged, for seven straight weeks now. The 90 day bank bill rate has been stable at about 4.5% for three straight weeks. On one hand OIS pricing sees a -50 bps OCR cut coming. On the other, some short markets aren't flagging any change. Our longer rates have been rising (in response to expected Trump inflation), so our 1-5 swap curve is suddenly no longer inverted. And our 1-5 NZGB curve has also turned positive for the first time since 2022. It isn't known what the RBNZ thinks of the ending of inverted rate curves although it is unlikely they will be disappointed.In Australia, expect their 'flash' November PMI on Friday, but not much light is expected in that.This week will also deliver more US regional activity updates. China will review its official interest rate benchmarks. Japan will get some flash PMI data too, as well as its export data. And there will be a range of rather meaningless European data out too.And financial markets will continue digesting what Trump 2.0 will mean for them. They seemed to have a reality check on Friday; coming inflation, sharp job losses, and a capture of the regulatory rules for a few in their favoured elite isn't a recipe for the current healthy American economy to continue.And in the US, it seems the Fed is in no hurry to cut interest rates. “The economy is not sending any signals that we need to be in a hurry to lower rates,” Powell said on Friday in Dallas. “The strength we are currently seeing in the economy gives us the ability to approach our decisions carefully.” And NY Fed boss Williams said essentially the same thing.Retail sales in the US rose +4.6% (actual) in October from year-ago levels, following a +0.2% rise in September. Reported seasonally adjusted levels were less that these. Rising car sales (+6.6% actual) were a large part of this gain.But US industrial production actually decreased -0.3% in the same year to October. This is a volume-based survey. The Boeing strike got most of the blame for this, and was expected in the data.In the New York region, the Empire State factory survey surprised analysts with strong new order flows, and rising optimism, far greater than expected. Factory activity rose sharply too.In Canada they also released factory data but it was for September and the Boeing strike squished its data too. But Canadian car sales rose +2.6% in volume and +5.7% in value in the same periodIn an economy that faces slowly rising central bank interest rates, Japan reported Q3-2024 GDP growth of just +0.9% and down from a +2.2% annualised rate in the previous quarter, which was itself revised down from the previous +2.9%.In China, average house prices for new homes fell -5.9% in the year to October. That's this official data's largest drop in nine years. But for the first time in a while there were a few cities where they actually rose. For used house sale transactions the October price change was -8.8% lower from a year ago. Interim November data indicates sales volumes will be lower than October. Construction of housing is still deeply negative, even if marginally less so in October.China reported slightly lower industrial production growth for October, but it was still good at +5.3% even if it was less than the expected improvement from September. However, electricity production only rose +2.1% in October from a year ago, undercutting the veracity of the industrial production data. They reported better than expected retail sales growth at +4.8% from a year ago, suggesting some of their stimulus moves are working. But much of this is the previously noted rise in car sales (which involved incentives).Aluminium prices surged on Friday after China said it would cancel export tax rebates on this and other commodities, raising the prospect that their heavy flow of subsidised export shipments abroad may quickly fade. Also falling were copper, zinc, nickel (to a 4 year low), and tin. Aussie mining shares tumbled too, its largest one-week fall in a year. Layoffs are underway and some mines are closing. None of this would be happening if the view was that the US economy will still be booming in 2025.The UST 10yr yield is now at just on 4.44% and up +2 bps from Saturday, up +17 bps for the past week.The price of gold will start today at US$2562/oz and down another -US$4 from Saturday. But that is down more than -US$120 or -4.5% from a week ago.Oil prices are -50 USc lower at US$67/bbl in the US while the international Brent price is now just on US$71/bbl. These levels are about -US$2.50 lower than week-ago levels.The Kiwi dollar starts today at 58.6 USc and down -10 bps from Saturday. A week ago it was at 59.7 USc so a full -1c drop since then. Against the Aussie we are little-changed at 90.8 AUc. Against the euro we unchanged at 55.6 euro cents. That all means our TWI-5 starts today at just over 68.4, and down-10 bps from Saturday, but down -40 bps in a week.The bitcoin price starts today at US$90,296 and up +0.7% from this time Saturday. A week ago it was at US$76,099, so a sharp +18% rise since then. Volatility over the past 24 hours has been 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 Friday’s Economy Watch where we follow the economic events and trends that affect Aotearoa/New Zealand.I'm David Chaston and this is the international edition from Interest.co.nz.Today we lead with news the slowing Chinese economy is keeping the oil price low, and it might stay that way because supply is rising, and quite quickly.But first, although there were no surprises in US initial jobless claim levels, they did rise last week to 229,000 on seasonal factors so there are now 1.65 mln people on these benefits, maintaining the low recent levels. No labour market stress signs yet still.But there are signs of lingering inflation pressures in their producer prices for October with them up +2.3%, a rise from the +1.9% year on year rate in September. The October rise was slightly more than analysts were expecting. Higher prices in their booming logistics sector caused the twist higher.The August improvement in EU industrial production was not maintained in September and it ended down-2.0% from the same month a year ago.But despite that disappointment, Q3-2024 EU GDP came in +0.9% higher than the same quarter a year ago, and employment was up +1.0%. These are the expected levels, so no surprises here. While these levels are low and benchmark poorly with other major economies, there are still positive.The Australian labour market update for October shows employment rising by +16,000 when a +25,000 rise was expected. Their participation rate slipped slightly, allowing their jobless rate to hold at 4.1%. But this also means their employed workforce is +387,000 higher than a year ago, a healthy +2.7% rise. But almost 40% of that rise was for part-time work; a year ago part-time jobs made up only 31%, so the shift away from full-time positions is rising.And staying in Australia, their largest bank has concluded that the 2024 "stage 3 tax cuts" are not flowing through to more consumer spending, rather being used to build resilience (or build back some capacity) by paying debt down faster, especially mortgages.Container shipping freight rates were virtually unchanged last week, 2.4 times higher than a year ao, and 140% higher than pre-pandemic levels in early November.Bulk cargo rates rose +13% last week from the week before in a sharpish move up, to be almost the same as the same week a year ago.The UST 10yr yield is now at just on 4.40% and down -5 bps from yesterday.And we should probably note that the share price for Xero hit AU$171 yesterday, a record high.The price of gold will start today at US$2574/oz and down -US$15 from this time yesterday.Oil prices are +50 USc firmer at US$68.50/bbl in the US while the international Brent price is now just under US$72.50/bbl.In its November update, the IEA says that with surging supply, and cooling demand in China, even if the OPEC+ cuts remain in place, global crude oil supply will exceed demand by more than 1 mb/d in 2025.The Kiwi dollar starts today at 58.8 USc and down -10 bps from yesterday. Against the Aussie we are -10 bps softer at 90.7 AUc. Against the euro we have also slipped -10 bps to 55.6 euro cents. That all means our TWI-5 starts today at just on 68.5, and unsurprisingly down -10 bps from yesterday.The bitcoin price starts today at US$88,820 and down -4.0% from this time yesterday. Volatility over the past 24 hours has been high at just on +/- 3.2%. Despite the slip, the price in NZ dollars is still above NZ$150,000.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 Thursday’s Economy Watch where we follow the economic events and trends that affect Aotearoa/New Zealand.I'm David Chaston and this is the international edition from Interest.co.nz.Today we lead with news markets are starting to price in the return of US inflation in 2025, and perhaps the end of US Fed rate cuts (although there could still be a last hurrah in December).In the US, their CPI inflation rate rose to 2.6% in October from 2.4% in September. This is the expected rise but is the first rise in seven months. In March it was running at 3.5%. Energy costs fell in October but by less than expected. Rents rose 4.9%. Food inflation slowed to 2.1% and transportation (airfares) to 8.2%. Prices continued to fall for new vehicles. The closely-watched core inflation rate held at 3.3%.Given that the new US Administration policies are expected to be strongly inflationary, the US Fed will have a challenge on its hands to retain the gains they have won post-pandemic. But it seems that markets are still pricing the US Fed to cut rates again when they next meet on December 19 (NZT).After falling in each of the past six weeks, US mortgage applications were little-changed last week (up +0.5%) to be little-changed from the same week a year ago. We probably should note that during all of October, they fell -35% from the prior month. And more falls are anticipated because benchmark interest rates are rising quickly now, in anticipation of a resurgence of inflation in 2025. At least, that is what markets are pricing.US household debt rose on a gross basis to US$17.9 tln in Q3-2024, half of the increase in mortgage debt on rising home loan rates. Delinquency rates edged up marginally but remain historically nowAcross the Pacific, Japan reported rising producer price inflation, with PPI up +3.4% in October, the highest since August 2023, and the 44th month of PPI gains.In India, they had record passenger car sales in October, helped by unusually having two major festivals in the month, each with a history of higher consumer spending.Although it is now slowing, wage cost growth in Australia in the September year was up +3.5%, a cost pressure on businesses that isn't being matched in output prices or rising productivity. It is the expected moderation, but they need it to slow much faster or there will be growing economic issues.The UST 10yr yield is now at just on 4.45% and up +2 bps from yesterday.The price of gold will start today at US$2589/oz and down -US$10 from this time yesterday.Oil prices are -50 USc softer at US$68/bbl in the US while the international Brent price is unchanged at just on US$72/bbl.The Kiwi dollar starts today at 58.9 USc and down -30 bps from yesterday as the USD rises further. The inflationary effect will now start to appear on imports because it has fallen -7.5% since the start of October. Against the Aussie we are +10 bps firmer at 90.8 AUc. Against the euro we have slipped -20 bps to 55.7 euro cents. That all means our TWI-5 starts today at just on 68.6, and down -20 bps from yesterday.The bitcoin price starts today at US$92,520 and up another +6.2% from this time yesterday. Volatility over the past 24 hours has been very high at just on +/- 4.2%. The price in NZ dollars has now exceeded NZ$150,000 for the first time.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.