Economy Watch

Kia ora,Welcome to Friday’s Economy Watch where we follow the economic events and trends that affect Aotearoa/New Zealand.I'm David Chaston and this is the international edition from Interest.co.nz.And today we lead with news 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 and the international Brent price is now under US$78.50/bbl.The Kiwi dollar is now at 57.1 USc and down -10 bps from this time Saturday but still near a one month high. Against the Aussie we are unchanged at 90.5 AUc. Against the euro we are also unchanged at 54.4 euro cents. That all means our TWI-5 starts today just on 67.4, the same as they were on Saturday, but up +60 bps for the week.The bitcoin price starts today at US$104,928 and down -1.4% from this time Saturday. Volatility over the past 24 hours has been quite low at +/- 0.5%.Monday is the Auckland Anniversary holiday and most businesses in the northern half of the North Island are closed. It is also Australia Day. 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 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 international Brent price is now just under US$81.The Kiwi dollar starts today just under 55.9 USc and down -10 bps from this time Saturday. Against the Aussie we unchanged at 90.1 AUc. Against the euro we are down -10 bps at 54.4 euro cents. That all means our TWI-5 starts today just on 66.8 and down -10 bps from yesterday, but up +20 bps from a week ago.The bitcoin price starts today at US$104,704 and down -0.3% from this time Saturday. 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.