Economy Watch

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.

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 while we were all distracted by the 'culture-war' US election, in fact the world's economy was expanding well, except perhaps in China (but even they are still expanding, just not like the they need).In the US Redbook retail index rose +4.8% last week from the same week a year ago, extending its positive run that started way back in August 2023. This is still not a sign of household financial stress.US consumer inflation expectations for the year ahead edged down to 2.9% in October, a four year low, and dipping from 3% in each of the previous four months. All indications are the US Fed has won its 'soft landing' in its inflation fight.The NFIB Small Business Optimism Index rose in October to its highest in three months in a survey carried out prior to the election result.The RealClearMarkets/TIPP Economic Optimism Index, another measure of US consumer confidence, jumped in November to its highest in over three years. It was a survey carried out after the election result was known.But all this might change if today's trend of sharp rises in both benchmark interest rates and the USD continue. Certainly Wall Street is having second thoughts with a reversal that now puts it lower than election day.In Canada, the value of building consents surged in September to be +11.8% higher than the same month a year ago, rebounding from a drop in the previous month. Residential consents rose +7.5% while non-residential building consents rose +18%.In Japan, machine tool orders resumed their strong expansion in October after the September hesitation. They were up +9.3% from the same month a year ago, and bolstered by strong export orders.In China, policymakers are still trying to find the key to unlock real estate optimism. Their latest move looks like it will be to cut transfer taxes on housing sales from 3% to 1%. The hope is that people will sell and upgrade their residences.And of course, it was the Singles Day/Double 11 big retail event in China this week, and it is going off without special notice in the Chinese media. Given that Beijing is looking to boost consumption, you might have thought it would be getting wall-to-wall coverage, but it isn't. However, despite that, it is still an economically significant sales event.India's industrial production rose +3.1% in September from the same month a year ago, exceeding expectations of a +2.5% growth and rebounding from a -0.1% contraction in the previous month. While this is quite good, it is not back to the average rise for 2024, and even those increases don't really explain why their GDP is rising faster than +7%. India's expansion isn't really based on rising manufacturing prowess.And India is battling inflation and inflation seems to be winning. In October CPI inflation came in at +6.2%, in a rising trend to its highest since August 2023. Worse, food price inflation rose +10.9% over the same period and almost back to the level they had in 2019. Vegetable price inflation is running at +42%. Unless this is curbed, at some point this will cause social unrest.Although it has been negative for nearly three years, the Westpac-Melbourne Institute Consumer Sentiment index in Australia rose in November to its highest level in two-and-a-half years as the outlook on the economy and finances finally turned optimistic.Australia’s NAB business confidence index climbed into positive territory in October 2024, the first positive reading in three months and reaching its highest level since January 2023. There were notable improvements across most industries, except construction and retail. However those surveyed said their business conditions were largely unchanged.The UST 10yr yield is now at just on 4.43% and up +8 bps from yesterday.The price of gold will start today at US$2599/oz and down -US$17 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 on US$72/bbl.The Kiwi dollar starts today at 59.2 USc and down -40 bps from yesterday as the USD rises. Against the Aussie we are unchanged at 90.7 AUc. Against the euro we have slipped -10 bps to 55.9 euro cents. That all means our TWI-5 starts today at just on 68.8, and down -10 bps from yesterday.The bitcoin price starts today at US$87,134 and up another +3.4% from this time yesterday. Volatility over the past 24 hours has been high at just on +/- 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 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 there was little economic data released overnight, so this report will be quite thin - and short.First up today we should note that China's October vehicle sales surged by +7% from a year ago to just over 3 million units in in the month. This contrasted with the -1.7% drop on that basis in September, and shows that recent government policy measures aimed at boosting the retail market are in fcat having an impact. Domestic NEV penetration exceeded 50% for a third straight month.That is a bright spot because the wider new yuan loan data for October was weak - again. In fact, very weak. At ¥500 bln new lending in October was the least since 2009. It was well below the low bar analysts had expected of ¥700 bln and emphasises just how little real-economy 'investment' is taking place at present. So far, their stimulus model has been a fizzer.In the US we should probably note that Q3 earnings for Wall Street have come in very positively with most companies having now reported. And most delivered better-than-expected results. So it will be no surprise that indexes like the S&P500 are running at record high levels.Following the US election, bitcoin is having a moment, spurred by the perceived influence the crypto-bros will have in the incoming Administration. Bitcoin hasn't changed. It is still not a unit of account, not a medium of exchange, and hardly even a store of value. It's not anonymous either (which makes it an odd choice for the libertarian crypto crowd), and is a clunky transaction device that holders notice when they try to buy (with fiat currencies). But its speculation attributes are currently making holders seem wealthy in fiat terms.In the real world, we should probably note that Malaysia is going through quite a construction boom, largely for residential buildings. Construction activity rose by +23% in the third quarter of 2024 from a year ago, the tenth consecutive period of heady growth. Construction of non-residential building is booming too.The UST 10yr yield is now at just on 4.35% and up +4 bps from yesterday. The price of gold will start today at US$2616/oz and down -US$68 from this time yesterday.Oil prices are -US$2.50 lower at US$68/bbl in the US while the international Brent price is now just over US$71.50/bbl.The Kiwi dollar starts today at 59.6 USc and unchanged from yesterday. Against the Aussie we are up +10 bps at 90.7 AUc. Against the euro we have risen +40 bps to 56 euro cents. That all means our TWI-5 starts today at just on 68.9, and up +20 bps from yesterdayThe bitcoin price starts today at US$84,265 and up +5.6% from this time yesterday. Volatility over the past 24 hours has been very high at just on +/- 4.1%.You can find links to the articles mentioned today in our show notes.You can get more news affecting the economy in New Zealand from interest.co.nz.Kia ora. I'm David Chaston. And we will do this again tomorrow.

Kia ora,Welcome to 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 China's battle with deflationary pressures shows no sign of being won.But first, in the week ahead locally, we will get the REINZ result for October some time this week. And September migration data on Wednesday. Internationally, all eyes will be on American consumer and producer inflation data, retail sales, and speeches by Fed officials, as investors seek clues on their monetary policy outlook in the wake of 2nd Trump Presidency.In China, new yuan loans, fixed asset investment, industrial production, retail sales, and the house price index will be all be released this week. In Australia, their October labour force data will come out, the NAB business confidence survey, and Westpac consumer confidence indexes are expected. Finally, we should watch Indian inflation data.Over the weekend, China said its inflation rate came in at +0.3% in the year to October (and half the modest August level), still giving them disinflation as they stare deflation in the face. Deflation is already in producer prices, and it got slightly worse in October, at -2.9%. That's their fastest fall in almost a year. Both movements were small but they are going the wrong way for them.Among the CPI items, we can see that food prices rose +2.9% in the year to October, so households are feeling some noticeable inflation pressure. Costs eased for fresh vegetables but they are still +22% higher than a year ago, fresh fruit was up +4.7% on that same basis, and pork up +14%. Prices fell however for eggs (-2.5%), milk (-1.7%), beef (-13%), and lamb (-5.9%). So not much for us to be encouraged about here..And China has sharply raised (+40%) their local governments’ debt ceiling to ¥35.5 tln (NZ$8.3 tln) when they announced the total value of the current program increase will by ¥10 tln (NZ$2.3 tln). But officials did not announce additional measures to directly stimulate domestic demand, probably disappointing markets that had been hoping the package would also help consumers. They did say however they are 'studying' such moves, probably waiting to see the impact of the challenge from Trump.Japanese households aren't feeling all that great either. Household spending fell by -1.1% in September from a year ago, a smaller decline than the -1.9% drop in August and better than market expectations for a -2.1% decrease. This marks the seventh month of reduced household spending in 2024.Foreigners love the place however, not only as tourists, but as investors too, raising their equity investment stakes in each of the past six months.Taiwanese exports rose +8.4% from a year ago in October, building from a +4.5% rise in the previous month. Imports were up +6.5%, a slower rate of increase than we have seen in the prior four months. Robust Taiwanese trade contrasts with what its unfriendly and jealous neighbour is able to achieve,Across the Pacific, Americans remain cautious taking on new personal debt. That rose by only +US$6 bln in September, a slowdown from the almost +$9 bln rise in August and well below the expected +US$14.5 bln increase. Now the average balance is US$23,087, up from US$18,008 four years ago. These are not actually high levels. (The divisor we used is the total population 18 years and older.)For the first time since May 2020, the US Fed saw its balance sheet assets fall below US$7 tln last week. That is a -US$53 bln fall in a month, a -US$2 tln fall since it peaked at US$8.96 tln in April 2022.Before their election, consumer sentiment as tracked by the University of Michigan survey, rose for the fourth consecutive month, rising 3.5% to its highest reading in six months. While current conditions were little changed, the expectations index surged across all dimensions, reaching its highest reading since July 2021.The November WASDE report from the USDA sees 2025 with more world wheat, slightly less coarse grains, and more rice. The world's ability to feed itself seems stable, without unusual price pressures. They expect to import more beef from Oceania. In a change they now expect more US milk production even though cow herd numbers might slip slightly. Access to this market now depends on the incoming capricious Administration.The October Canadian labour market report showed a +14,500 rise in jobs, less than expected. But full-time jobs rose more than +25,500 and part-time jobs slipped -11,000, a virtuous twist.The UST 10yr yield is now at just on 4.31% and up +1 bp from Saturday. A week ago it was at 4.37%.The price of gold will start today at US$2684/oz and down -US$1 from this time Saturday.Oil prices are +50 USc firmer at US$70.50/bbl in the US while the international Brent price is now just under US$74/bbl.The Kiwi dollar starts today at 59.6 USc and and down -10 bps from this time Saturday. Against the Aussie we are down -10 bps at 90.6 AUc. Against the euro we have dipped -10 bps as well to 55.6 euro cents. That all means our TWI-5 starts today at just on 68.7, and down -10 bps from Saturday but unchanged from a week ago..The bitcoin price starts today at US$79831 and up +4.9% from this time Saturday. Volatility over the past 24 hours has been moderate at just on +/- 2.9%.You can find links to the articles mentioned today in our show notes.You can get more news affecting the economy in New Zealand from interest.co.nz.Kia ora. I'm David Chaston. And we will do this again 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 with a special eye on unpredictable American policy instability. The Trump win unhinges many things, including the path for central bank rate cuts. The ones announced today may be the last until after the direction of US fiscal policy is revealed for certain.In the shadow of the Trump election win, a range of billionaires are lining up key roles in his administration to extract payback for their support. It is all very unseemly, but should be no surprise. The current estimate is that just six of them have gained more than +US60 bln in the first day. And that will be just the start.The US Fed is about to release the results of its November meetings. A -25 bps rate cut is anticipated, to 4.75%. It may be too soon to expect them to have assessed how they need to prepare for Trump 2.0 policies that are expected to swell the US Federal deficit in a significant way, and re-ignite serious inflation. Their options may be discussed more at their December 19 (NZT) meeting. And that will all be clouded by Trump's expectations of subservience, although he has few options to fire Powell who is safe in the role until mid-2026, and as a governor until 2028.Meanwhile US initial jobless claims came in at 212,300 (actual) last week, almost exactly as expected. There are now 1.65 mln people on these benefits, almost exactly as it was in the same week a year ago and back to pre-pandemic levels even though the employed labour force is now +7.5 mln people larger than pre-pandemic. The US labour market remains unchanged, and stays strong .China is getting an export boost from orders that are anticipating a clampdown on trade with the Middle Kingdom - from both the US and the EU. Exports surged in October by +12.7% from the same month a year ago to a 27-month high, much faster than the forecasted +5% and up from a five-month low of +2.4% growth in September.More reflective of the state of their economy, imports fell -2.3% in October from a year ago to a four month low. Imports fell from ASEAN countries, the EU, and even best-bud Russia, but grew from the US as China hoarded soybean and other grains. Imports from Australia are down -8.7% and from New Zealand -11.1% so far in 2024. Both of us are being weaned from the Chinese economy quite quickly now.Since June, European retail sales have been rising, which you may find counter-intuitive given most of their data is dull and unimpressive. The rise in retail sales is more impressive when you realise that it is volume based, after inflation is accounted for. It was up +2.8% in September from a year ago on that volume basis. There is life left yet in the EU economy.With CPI inflation back down to 1.7% pa, the Bank of England trimmed its policy rate by -25 bps to 4.75% overnight, its second cut since August, and exactly as expected.Both exports and imports fell in Australia in September, something of a surprise. Their export levels fell back to December 2021 levels, and their import levels retreated when September is usually when they peak. The China trade is at the heart of that undershoot.Container freight rates rose +7% last week from the week earlier to be +240% higher than a year ago and +140% higher than pre-pandemic levels. Demand from China to Europe drove these rises, but as we have noted before, this is probably just in anticipation of trade clampdown. Bulk cargo rates were up +2.0% over the past week to be -6.6% lower than the same week a year ago.The UST 10yr yield is now at just on 4.35% and down -7 bps from this time yesterday. The price of gold will start today at US$2693/oz and back up +US$26 from this time yesterday.Oil prices are unchanged at US$72/bbl in the US while the international Brent price is now just under US$75.50/bbl.The Kiwi dollar starts today at 60.2 USc and up +80 bps from this time yesterday. Against the Aussie we are down -20 bps at 90.3 AUc. Against the euro we are up another +40 bps at 55.8 euro cents. That all means our TWI-5 starts today at just on 69, and up +30 bps from yesterday at this time.The bitcoin price starts today at US$75,858 and up +2.2% from this time yesterday. Volatility over the past 24 hours has been modest at just on +/- 1.5%.You can find links to the articles mentioned today in our show notes.You can get more news affecting the economy in New Zealand from interest.co.nz.Kia ora. I'm David Chaston. And we will do this again on Monday.

Kia ora,Welcome to Thursday’s Economy Watch where we follow the economic events and trends that affect Aotearoa/New Zealand.I'm David Chaston and this is the international edition from Interest.co.nz.Today we lead with news it was a night of celebration in the US, especially for billionaires, and those pushing extreme social and religious views. The decisive second coming of a Trump Administration will free up new divisive narratives that will spill over globally. It is a great time to be a crony capitalist because your influence on a morally bankrupt president will be easy.There will be global economic consequences - almost all of them bad for trade and small countries. Markets have reacted that way already. Impending isolationism is raising the US currency (which will hurt their exporters significantly), commodity prices are already getting a twist, Bond yields are rising, and sharply. And equity markets are rising on the sugar hit of expected lower taxes, ignoring for now the longer term costs of much higher interest rates and much higher inflation as new tariffs essentially impose taxes on US consumers.The change in culture from a free and open society to one that will be bitter and vengeful will drive global consequences we won't like. But we will have to find our way in a renewed thicket of imposed and imported bile. For a while we will have to live in a fact-free world.Economically, US mortgage applications fell -10.6% last week from the prior week, and that is their sixth consecutive retreat. They are now back to level-pegging with the low levels of 2023 at this time. Mortgage interest rates rose sharply last week, and are now likely to rise much faster in the future.Trump's spending plans could add US$7.5 tln to American deficits over 10 years, according to one estimate, far greater than the current track. US Treasury yields rose almost +50 bps in October, when markets were pricing in a higher likelihood of a Trump win. Inflationary pressures from Trump's policies will leave the Fed with less room to cut rates, and keep Treasury yields elevated. The US housing market will be a loser. In fact, that is likely to be generally the case elsewhere because of sharply swelling US deficits.American car sales rose in October to over a 16 mln annual rate. This is another metric likely to be challenged by higher future borrowing costs.There was a UST 30yr bond auction earlier this morning, again well supported. The median yield jumped to 4.57% pa, sharply higher than the 4.32% at the prior equivalent event a month ago. Secondary market yields jumped as well (see below) as investors foresee chaotic and unprincipled public policy starting in 2025.The Central Bank of Malaysia held its overnight policy rate steady at 3% for the ninth consecutive meeting. This was what was expected.The easing of deflation pressures in the EU turned in September to be worse, with their PPI down -3.3% from a year ago.In Australia, the Ai Group Industry Index retreated again in October with a sharp drop, especially for new orders. This index has indicated contraction for the last thirty months.The UST 10yr yield is now at just on 4.42% and up +8 bps from this time yesterday. The price of gold will start today at US$2667/oz and down -US$71 from this time yesterday.Oil prices are down -50 USc at US$72/bbl in the US while the international Brent price is now at US$75.50/bbl.The Kiwi dollar starts today at 59.4 USc and down -60 bps from this time yesterday. Against the Aussie we are unchanged at 90.5 AUc. Against the euro we are up +40 bps at 55.4 euro cents. That all means our TWI-5 starts today at just under 68.7, and actually little-changed again from yesterday at this time.The bitcoin price starts today at US$74,244 and up +5.9% from this time yesterday. Volatility over the past 24 hours has been very high at just on +/- 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 on 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 that is surprisingly positive today.Even though there are likely large influences on New Zealand from events halfway around the world, there are some locally too. Later this morning the Q3-2024 labour market report will be released. And we will have full coverage. But before that we have had another dairy auction, and this one will have analysts reaching for their pencils. It was a good one, with overall prices rising +4.8% in USD terms, up +6.2% in NZD terms. That takes them to their best level since late 2022.The gains were widespread, led by butter's +8.3% jump. Demand out of China is the extra push this market got, and it could well bring upside to farm-gate payout forecasts. In the background, animal health concerns in both the US and EU, and weak domestic raw milk prices in China, are driving lower production expectations globally, just when New Zealand production is in an expansion state.But the economic good news didn't stop there.The Redbook tracking of retail sales in the US delivered a +6.0% rise last week from the same week a year ago. That was its best since mid 2022.The American logistics report for October revealed a small rise from a strong September, taking this index to its best expansion since September 2022. Growth is increasing at an increasing rate in all the right metrics.The ISM services PMI for October was sharply positive too, and its most expansionary level since August 2022. Encouragingly, this sharp turnaround was driven by strong new order growth. This survey basically confirmed the expansion in the S&P/Markt services PMI version and its drive in new order growth.US merchandise exports slipped slightly in September from August, but we need to recall that the August level was a record high - and that Boeing's strikes and production woes will have had an effect here. US imports were strong, as you would expect with most sectors of their economy firing on all cylinders.We should note that the strike at Boeing is over, with a startling +44% pay hike over four years (+38% plus compounding). The catch-up will no doubt drive future export results.There was a well-supported UST 10yr bond auction earlier this morning, and that delivered a yield of 4.29%, which compares with the 4.01% at the equivalent event a month ago.Not to be outdone, the Canadian services PMI turned up sharply to expansion as well, also driven by new order growth.In China, the October Caixin services PMI largely mirrored the official version, but recording a better expansion than the official version, in a better-than-expected result.In Australia, as expected their was no change by the RBA to their policy interest rate. But they warned that another interest rate rise was still a possibility, conceding they had been surprised by the scale of the rise in government spending. They are also surprised that housing demand is staying up, despite their highish interest rates.The UST 10yr yield is now at just on 4.34% and up +4 bps from this time yesterday.The price of gold will start today at US$2738/oz and up +US$5 from yesterday.Oil prices are up almost +US$1 at US$72.50/bbl in the US while the international Brent price is now at US$76/bbl.The Kiwi dollar starts today at 60 USc and up another +20 bps from this time yesterday. Against the Aussie we are down -30 bps at 90.5 AUc. Against the euro we are up +10 bps at 55 euro cents. That all means our TWI-5 starts today at just on 68.7, littel-changed from yesterday at this time.The bitcoin price starts today at US$70,108 and up +3.5% from this time yesterday. Volatility over the past 24 hours has been moderate at just on +/- 2.8%.You can find links to the articles mentioned today in our show notes.You can get more news affecting the economy in New Zealand from interest.co.nz.Kia ora. I'm David Chaston. And we will do this again on 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 financial market traders are bracing for volatility over the US election-counting period.But elsewhere, global manufacturing remains subdued as new order intakes contract for a fourth successive month. The global factory PMI is dominated by large countries, especially the US and China. But at the positive end are healthy expansions in India, Spain and Brazil. At the other end however is the Eurozone, Turkey and Australia. (New Zealand would be too if it was included in these benchmarked surveys.)New orders for manufactured goods in the US fell by -0.5% in September from the previous month, extending the revised -0.8% decline in August and loosely in line with market expectations of a -0.4% drop. They rose if you exclude aircraft however. Year on year this retreat is -2.1%. But if you exclude defence orders, there is a fall in private sector orders of -3.2% year-on-year.There was a popular UST 3 year bond auction earlier this morning where the median yield came in at 4.09%. But despite high demand, that was +27 bps higher than the 3.82% median yield at the prior equivalent event a month ago.In China, banks are foreclosing on a growing number of apartments after homeowners could not pay their mortgages, as the country’s housing crash threatens the financial system. And the surge is overwhelming their legal system in some places. Bank balance sheets are being weakened by the trend.But maybe this will pass soon? Their housing market got year-on-year growth in October for the first time since February, after a raft of recently introduced supporting measures, according to the latest data released by the Ministry of Housing and Urban-Rural Development. Sales of newly built and pre-owned homes climbed +3.9% in October from the same period last year.India’s factory sector came in with an improvement in performance in October with their PMI rising marginally and regaining momentum. Output growth rose, fuelled by faster increases in total new orders and especially export orders.In Europe, their factory sector remains in a deflationary funk. But at least it isn't getting worse. As measured by the overall Eurozone PMI, October brought a lesser retreat. There is expansion going on in Spain, Greece and Ireland, but Germany, France and Italy are all contracting, even if less so.In Australia, the Melbourne Institute Monthly Inflation Gauge recorded a rise in both monthly and annual inflation during October. The monthly rise (+0.4%) was the most since July. But the annual rise (+2.1%) is still within the RBA's desired range. The monthly and annual cost of living also rose across selected household types (age pensioners, pensioners and beneficiaries, employees, government transfer recipients, and self-funded retirees).Later today, the RBA will review its cash rate target. Almost everyone expects them to hold that rate unchanged at 4.35%.The UST 10yr yield is now at just on 4.33% and down -4 bps from this time yesterday in fairly volatile shifts.The price of gold will start today at US$2733/oz and down -US$3 from yesterday and still well off its high.Oil prices are up almost +US$2 at US$71.50/bbl in the US while the international Brent price is now at US$74.50/bbl.The Kiwi dollar starts today at 59.8 USc and up +20 bps from this time yesterday. Against the Aussie we are down -10 bps at 90.8 AUc. Against the euro we are down -10 bps at 54.9 euro cents. That all means our TWI-5 starts today at just under 68.7, marginally softer from yesterday at this time.The bitcoin price starts today at US$67,740 and down -0.6% from this time yesterday. Volatility over the past 24 hours has been modest at just on +/- 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.