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.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.

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

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

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

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

Kia ora,Welcome to Monday’s Economy Watch where we follow the economic events and trends that affect Aotearoa/New Zealand.I'm David Chaston and this is the international edition from Interest.co.nz.And today we lead with news the rise in long term benchmark rates is echoing everywhere, including in New Zealand.But first, if you are just back from your summer break, welcome back to work. Those benchmark interest rates have been on the move up while you have been away.The week ahead will be focused locally on early indications of Q4-2024 inflation. We get the 'selected price indicators' for December this week on Thursday, to be followed by the full Q4 CPI next week on Wednesday. In Australia, their December labour market report is also due out Thursday. In the US the main focus will be on earnings reports from the big banks.And the US will be releasing their CPI data, and given rising inflation fears and rising interest rates, that could well be a significant market mover. Currently markets expect it to run at 2.8% (from 2.7% in November), but you have to say there are upside risks here and financial markets are pricing those in now. They will release their influential inflation expectations survey on Wednesday NZT.China is set to release a suite of economic indicators this coming week, including Q4 GDP growth figures, as well as data on exports, imports, industrial production, and retail sales. Later today we expect their new yuan loan data for December, anticipated to be weak again.But first over the weekend, the US economy added +256,000 jobs in December, much more than the +212,000 in November, and way more than the market expectations of +160,000. Their jobless rate fell. These are the headline rates. The actual change was a tiny fall to 160.5 mln employed workers, but actually a much less reduction than seasonal factors would have indicated.For all of 2024, they had a rise of +2.2 mln payroll jobs and for the four years of the Biden presidency a rise of +16.9 mln new jobs. In the prior four years, there was a loss of -2.6 mln jobs.The wider employed labour force only grew by +11.7 mln in the past four years as many people transitioned from unincorporated self-employment back on to company payrolls. In the prior four years, the wider employed labour force shrank by -2.2 mln people. Any way you cut it, the past four years has been a golden period for American employment.Average weekly earnings rose +3.5% in 2024, up +20.0% over the past four years. In the prior four years they rose +18.0%.But Americans are increasingly fearful of the year ahead. The latest University of Michigan consumer sentiment survey in January dropped because of surging worries over the future path of inflation. Year-ahead inflation expectations jumped to 3.3%, the highest in eight months, from 2.8% in December. This is only the third time in the last four years that long-run expectations have shown such a large one-month rise. Consumers know they will be paying much more if tariffs are jerked higher soon.The financial markets also reacted to the jobs data and the impending impact of tariffs. Wall Street equities were -1.5% lower on Friday, bond yields have jumped, and a risk-off defensive tone spread which saw the USD rise. That's all because the strong jobs data argues for a Fed rate cut pause. Their bar for rate cuts has risen noticeably with this data. The Fed next meets on January 30 (NZT).Prior to this jobs data release, the latest Atlanta Fed Q4-2024 economic growth estimate was +2.7%. The subsequent strong labour market data may see some upside to that.Canada also reported their December labour force data today and that was strong too. Employment there rose +90,900 with more than half that as full-time jobs. Their jobs growth was far higher than the +25,000 expected and the +50,700 in November. This surge also calls into question whether the Bank of Canada will actually cut rates when they next meet, also on January 30 (NZT).The latest Japanese household spending survey indicated another fall in November, part of a pattern of monthly falls since early 2023. But this one was a little different because it was the smallest surveyed fall in the series and a much 'improved' result that from both prior months and from what was expected. Some see a turning point.In China, in a surprise move, their central bank said it would suspend treasury bond purchases in the open market due to a supply shortage, effective immediately. They will "resume purchases at an appropriate time based on market conditions". The move comes amid repeated warnings from them about bubble risks in their overheated bond market, where long-term yields have plummeted to record lows. Over the past year, yields on key bonds, including the benchmark 10-year government bond, have reached unprecedented lows as investors flock to safe-haven assets. This shift is largely driven by ongoing economic uncertainties linked to a prolonged property market slump. In December, Chinese leaders signaled further rate cuts, fueling another surge in bond market activity. This pushed the 10-year treasury bond yield to an all-time low of 1.6% earlier this month, exacerbating concerns over market exuberance.Their yields recovered after this move but the recovery didn't hold. But at least they arrested the decline and the day ended unchanged.Chinese analysts are expecting bad news coming from the series of large zombie property developers that have been holding on with government funding support. But most of them seem to have reached the end of the line, and a series of default-into-administration events are now anticipated. Investors will take a bath. None of this will help the economic mood.In India, their industrial production showed a small improvement in November, up +5.2% from a year ago with manufacturing up +5.8%. Both results were better than October and better than expected.In Australia, their Federal Government accounts for the five months to November show that tax receipts are surging. That is cutting into their budget deficit for the year quickly. At the current rate the full year budget deficit may halve. If the trend continues, they even have a chance of posting a surplus. The reason for the improved outlook is twofold: their jobs market is buoyant generating higher income tax deductions than expected. And their currency is falling vs the USD, and as their mineral exports are sold in USD that is generating an unexpected rise in royalty receipts (and higher corporate income tax receipts).And we should probably note that coal prices are falling still, now down to a three year low and where they were in May 2021. And that is despite a very cold spell in the Northern Hemisphere at present.The UST 10yr yield is still at just on 4.76%, and up +7 bps from Friday in the jobs-data reaction. A week ago it was at 4.59% so a +16 bps rise from then.The price of gold will start today at US$2690/oz and up +US$1 from Saturday and up +US$50 from a week ago.Oil prices are unchanged from Saturday at just on US$76.50/bbl in the US while the international Brent price is now just over US$79.50. That is the same as the weekly gain. The recent rise comes from fear of the effect of new sanctions activity.The Kiwi dollar starts today just on 55.6 USc and unchanged from Saturday but down -50 bps for the week. Against the Aussie we are still at 90.4 AUc. Against the euro we are also little-changed at 54.3 euro cents. That all means our TWI-5 starts today at just under 66.7 and up +10 bps from Saturday.The bitcoin price starts today at US$94,909 and up +1.4% from this time Saturday. Volatility over the past 24 hours has been low at +/- 0.9%.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.And today we lead with news China and Japan seem to be in the process of swapping places.But first, following a much better than expected rise in October, and driven by fast-rising credit card debt, the November American consumer debt levels corrected in November, falling -US$7.5 bln. Again, it was a sharpish pullback in credit card debt that drove the surprise November result. On the other hand, nonrevolving credit, which includes car loans and mortgages, saw a still-modest +2% rise, after small increases of +0.7% in October and +0.4% in September.There were announced job cuts involving 39,000 American workers in December, much lower than November and only marginally different to December a year ago. For the full year employers announced 761,500 job cuts, the most since 2020, and prior to that pandemic year, the most since 2009. In 2024, 134,000 of those cuts were in the tech sector. But in terms of the 160 mln US labour market, these announced annual cut levels are a truly tiny 0.4%.Across the Pacific in China, we noted yesterday that authorities there seem to have instituted a hard peg for the official yuan exchange rate to the USD. Now they have to defend that in open markets. Overnight they announced a massive ¥60 bln bill issue in Hong Kong in an effort to build demand for their under-pressure currency.The battle against deflation is far from over too. China’s annual consumer inflation rate edged down to +0.1% in December from +0.2% in November, aligning with estimates and marking the lowest rise since March. It is now at a nine-month low. The latest result came amid a slight decline in food prices and a modest rise in non-food costs. But beef prices were down -13.8% for the year, lamb prices down -6.1%, and milk prices were down -1.6%.Meanwhile, producer prices fell by -2.3% in December from a year ago, but that was their softest fall in four months. It was the expected fall.And perhaps we should also note that, although there was little movement in the past 24 hours, the 30 year Chinese bond yield at 1.89% is now lower than the equivalent Japanese government bond at 2.30%. While it is not the case for other tenors, the shifting directions are the same - China down and Japan up. China is turning Japanese, and Japan is shifting out of its hard deflationary cycle.In Japan, wages rose +3% in November from the same month a year ago, rising from the +2.6% increase seen in October and higher than market forecasts of a +2.7% gain. However, real wages adjusted for inflation and a key indicator of consumers' purchasing power fell by -0.3% year-on-year in November.In India, they have downgraded their fast economic growth estimates. After growing +8.2% in the year to June 2024, they now say that will 'slow' to +6.4% in the year to June 2025. Apart from the pandemic period, that will be their slowest expansion in more than a decade. While these expansion rates are still high by any standard, the worrying component for them is the fast slowdown in private investmentFrom the EU there was some positive economic news. Retail sales volumes - that is, after considering inflation's impact - were up +1.5% in November and to their best level since September 2022.In the UK, there are bond yield shifts too, some of them sharp. Their 30 yr Government bond is up to 5.46%, their 10 year up to 4.88%. That is more than +100 bps higher than a year ago. In just the past month their 10 yr is up from 4.37%. These 10 year benchmark levels are higher than either New Zealand or Australian equivalents now, and the shift up has caught financial market attention.Australian retail sales rose +4.1% in November from the same month a year ago, a positive 'real' gain. They were up stronger than that national average in Victoria, Queensland, and Western Australia. But the were only up +2.9% in NSW.Australian exports rose to AU$43.8 bln in November from October in a recent rising trend and boosted by strong rural exports. But at that level they are still -5.0% lower than in November 2023. Imports were also lower in November from a year ago. And their merchandise trade surplus was -AU$4.5 bln lower than in November 2023.The rush to get product from China to the US is in full swing now and commanding a premium on containerised freight rates. Those routes saw a +13% jump last week, which pushed the overall market up +2% for the week. Freight rates for other key routes are not on the move however. This special situation is expected to reverse within the next two weeks, and the global trade system's immediate outlook is quite uncertain. Bulk cargo rates fell -8% last week, and are now back to levels that prevailed in the mid-1980s.And an update on the US East Coast and Gulf waterfront labour dispute. The automation issue is settled and another strike is averted. On balance, employers lost. Markets have repriced equities lower for listed port operators. So US waterfront costs will stay higher than in most other port jurisdictions.The UST 10yr yield is now at just on 4.69%, and up +1 bp from yesterday.The price of gold will start today at US$2669/oz and up +US$18 from this time yesterday.Oil prices are back up +50 USc from this time yesterday at just on US$74/bbl in the US while the international Brent price is now just under US$77.The Kiwi dollar starts today just under 56 USc and down -10 bps from this time yesterday. Against the Aussie we are unchanged at 90.3 AUc. Against the euro we are down -10 bps at 54.3 euro cents. That all means our TWI-5 starts today at just under 66.9 but really little-changed from this time yesterday.The bitcoin price starts today at US$94,218 and down -0.5% from this time on 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 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 long term interest rates are rising and have much further to go.But first, American private businesses added +122,000 workers to their payrolls in December, the least in four months, compared to 146,000 in November, according to the precursor ADP Employment Report. That was below forecasts of +140,000. Hiring slowed in several industries and employment in manufacturing shrank for the third straight month. Employment growth was strong among large businesses in the West. Pay gains slowed slightly but are actually quite high, up +4.6% for those who stay in a job, up +7.1% for those who change jobs.Meanwhile, initial jobless claims rose on the expected seasonal basis to 305,000 last week, but much less than those seasonal factors would have indicated. 2.175 mln people are on these jobless benefits now, almost exactly the same level as a year ago. (On a headline, seasonally-adjusted basis, initial claims 'fell', and by more than expected.)Also falling were American mortgage applications, the fourth straight weekly retreat. Their benchmark 30 year fixed home loan rate almost touched 7% last week, deterring potential borrowers. Until the Trump risk goes out of long term benchmark rates, this is going to be a problem for the American housing market - and in fact all real estate transactions and other asset purchases that are valued based in yield.And those rising yields are now extending to very long-dated maturities. The US Treasury 30 year bond auction today came in with a yield of 4.87%, up from the 4.48% at the prior equivalent event just a month ago. The auction was well supported, but less to than that earlier one.The rise in longer term bond yields and interest rates is a global one. At its core is a demographic shift and ageing populations. But the Trump return has focused investors on the long term risks and they are back demanding a premium for that. Companies are also issuing more longer term debt, so there is a supply element to the trend. The Biden Treasury tended to prioritise shorter maturities in its fund raising, but the incoming Trump Treasury has already signaled it will go long. That will add to the supply pressure, and will spill out internationally. Pity American homeowners with 30 year mortgages.In China, they are getting more proactive ahead of the expected Trump Tariffs, and reactive about their stuttering economy. They announced an expanded set of taxpayer subsidies for a wider range of consumer products, hoping to spur sluggish consumer spending. They have expanded the eight-category subsidy program to now twelve categories, now including dishwashers, rice cookers and microwaves, which will get a 20% discount from existing sales prices.Overall, it is a program that has grown to NZ$2.8 bln, and still expanding.In fact, this announcement was part of a much wider stimulus effort. They are battling consumer anxiety, a tougher challenge than the previous democratic yearnings.Meanwhile, China is aggressively defending the yuan. It has held the official rate to the USD fixed since early November at 7.19. It last had a fixed peg in 2008-2010. Unfortunately for them offshore trading has it now at 7.35 and depreciating.In the EU, producer prices rose +1.7% in November from October, the biggest monthly rise since September 2022. A seasonal rise in energy costs was the cause. Year on year, the EU PPI was -1.1% lower.And staying in the EU, economic sentiment which had been stable for most of 2024, fell in December. Not a huge dip, but a notable one.In Australia, their monthly CPI indicator rose +2.3% in November from a year ago, after a +2.1% rise in the prior two months. Analysts estimates were for a +2.2% rise and the November since August, partly due to the timing of government electricity rebates. Most households received a single rebate payment instead of two in November. Still, the latest inflation level has remained within the central bank's target range of 2 to 3% for the 4th month in a row.And in maybe something of a surprise, there were 344,000 job vacancies in November in Australia, up by +14,000 from August. That is up by +4.2% and was was the first rise since May 2022, when job vacancies reached their historical peak. However, year-on-year the declines is almost -10%.In New Zealand we got the benefit of strong commodity price gains in 2024. ANZ reports that overall commodity prices finished 2024 up 15% from a year ago. All sectors except forestry achieved gains during the year but the largest were made by dairy (+19%) and meat (+23%). However, these sectors were more subdued in the December month. In NZD the rises were even more impressive, up +29% for dairy and up +35% for meat, year on year.The UST 10yr yield is now at just on 4.68%, and little-changed from yesterday.The price of gold will start today at US$2669/oz and up +US$18 from this time yesterday.Oil prices are down -50 USc from this time yesterday at just on US$73.50/bbl in the US while the international Brent price is at just under US$76.50.The Kiwi dollar starts today still at 56.1 USc and down -40 bps from this time yesterday. Against the Aussie we are down -10 bps to 90.3 AUc. Against the euro we are up +20 bps at 54.4 euro cents. That all means our TWI-5 starts today at just on 66.9 and down -20 bps from this time yesterday.The bitcoin price starts today at US$94,646 and down -3.2% from this time on 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 Wednesday’s Economy Watch where we follow the economic events and trends that affect Aotearoa/New Zealand.I'm David Chaston and this is the international edition from Interest.co.nz.And today we lead with news American economic data continues to impress.But first up today there was a full dairy auction, one that brought slightly lower prices overall in USD terms (-1.4%), and slightly higher results in NZD terms (+0.6%). The milk powders slipped -2.2% while the milk fats (cheese and butter) were firmer. Demand was lighter despite lower production reports in both the US and China. Although analysts will have noted these softer results, it seems unlikely the high farmgate payout forecasts will be altered by this result alone. But prices today are on the downside from recent highs.In the US, their Redbook monitoring of retail sales continued its very elevated rise from a year ago, up +6.8% and off a positive base. So this metric is still quite impressive.US exports continued their rise, up +5.2% in November from a year ago for goods, up +9.3% for services. Imports were up too, but probably distorted by a pre-tariff surge, a surge that will continue into December.US ISM services PMI was very expansionary, and more so that the internationally benchmarked S&P/Markit one. New order growth was strong, but it was current business activity levels that drove this rise.And that is reflected in the November JOLTS report. Analysts had expected a slip back, but in fact a surge in job openings was found in this survey, and quits were lower than expected. We are just three days away from getting the December non-farm payrolls report and today's release suggests there may be upside coming to the +154,000 gain expected.So it will be no surprise to know that their logistics sector is expanded fast in December. But an effort by firms to keep inventories under control meant that the latest fast expansion was less than in November.Today's UST 10yr bond auction brought a median yield of 4.62% at the well supported event, although less so than last time. But that was much higher than the 4.19% at the prior equivalent event a month ago.The Canadian Ivey PMI came in strong too with a solid expansion reported and its best in six months, although not quite up to the expansion analysts had expected.Canadian exports rose too in November.In China, an update by major developer Country Garden shows just how damaged the property sector is. In December it sold only 50% of the level it sold in the same month a year ago, itself a very weak benchmark. Beijing's stimulus efforts haven't helped this developer yet.And lower Chinese activity is seeing quite sharpish dips for both coal and rebar steel prices now.And staying in China, their foreign exchange reserves fell in December but their gold reserves rose for a second straight month. However, year on year those reserves are only -0.2% lower, and unchanged for the gold holdings.In Europe, their CPI inflation rate has been rising since October, and is now up to 2.4%, largely driven by the German inflation rise we reported yesterday. Europe-wide it is the rise in the cost of services that are the driver here; energy costs are the restrainer.Australian building consents came in less than expected in November. Year-on-year consents for new housebuilding rose +3.8% but multi-unit dwellings fell -6.4%. Month-on-month both fell more than expected. They may still be in an overall recent rising trend, but it that trend is weakening faster now.The UST 10yr yield is now at just on 4.69%, and up +6 bps from yesterday.The price of gold will start today at US$2651/oz and up +US$12 from this time yesterday.Oil prices are also little-changed from this time yesterday at just on US$74/bbl in the US while the international Brent price is up +50 USc at just under US$77.The Kiwi dollar starts today still at 56.5 USc and unchanged from this time yesterday. Against the Aussie we are up +10 bps to 90.4 AUc. Against the euro we are down -10 bps at 54.2 euro cents. That all means our TWI-5 starts today at just on 67.1 and up +10 bps from this time yesterday.The bitcoin price starts today at US$97,785 and down -4.2% from this time on yesterday. Volatility over the past 24 hours has been moderate at +/- 2.8%.You can find links to the articles mentioned today in our show notes.You can get more news affecting the economy in New Zealand from interest.co.nz.Kia ora. I'm David Chaston. And we will do this again tomorrow.

Kia ora,Welcome to Tuesday’s Economy Watch where we follow the economic events and trends that affect Aotearoa/New Zealand.I'm David Chaston and this is the international edition from Interest.co.nz.And today we lead with news China's financial markets are flashing some unwelcome signals.But first up today, there were a range of services PMIs for December released overnight. And the most interesting one (for us) is the Aussie one. Their service sector expanded in the month, with new business growth accelerating, inflation rising, and business confidence at its highest level in 2½ years. This got the attention of financial markets who promptly downgraded the chance of ab RBA rate cut when they next meet on February 18. Australian benchmark Government bond yields rose sharply across the board with their 10 year up an outsized +14 bps.In China, you mar recall we reported that their official services PMI jumped from a no-change growth position in November to an outsized positive 52.2 expansion in December - and we counselled to wait for confirmation by the private Caixin services PMI. Well, that Caixin services report is in and it also recorded an 52.2 expansion, an improvement although not as sharp as the official version reported. So we can be confident the Chinese services sector is expanding now at a good pace. And it does seem to confirm that the Beijing stimulus measures are having a positive impact.In Japan, their December services PMI improved to a better expansion, although to be fair it was only a marginal gain.In India, they also reported an uptick with faster growth and softer inflationary pressures. They still have a very strong expansion, although the December gain wasn't quite as strong as analysts had expected.In Canada they slipped from a November expansion to a December contraction in their services sector. (And we should probably note, unrelated to that, Pierre Trudeau has resigned as prime minister today, ending a long political career. He has been their prime minister since 2015. They alternate the role between Conservatives and Liberals and their successful leaders seem to remain in office for about nine years each.)In the US, their S&P/Markit services PMI rose in December to a good expansion, although not quite as strong as was expected. Their widely-watched local ISM services PMI is due out tomorrow and is also expected to report a modest improvement.Meanwhile, US factory orders slipped marginally in November from October to be only a marginal +0.1% higher than the same month in 2023.The US Treasury had a well-supported three year bond auction earlier today. That came in with a median yield of 4.29%, substantially higher than to the 4.07% yield at the prior equivalent event a month ago.In the EU, their service sector expanded in December after being neutral in November. But it may not last because the gains did not include rising new orders.And in Germany, there was a bit of a surprise overnight when they reported 2.6% CPI inflation (2.9% EU harmonised). Both levels were unexpectedly higher. Excluding food and energy it came in at 3.1%, and driven by higher services costs. They still have work to do to get inflation's impulse down to the target 2% level.Back in China, yesterday we noted the bond bubble they are having as sentiment about their economic policies takes a hit in financial markets. All eyes will be on these markets today, but the official pressure is being ramped up to quell the "wrong moves" by bond traders. Local media is saying "the worst of the de-rating is over" - although local media just parrot official narratives.The UST 10yr yield is now at just on 4.63%, and up +3 bps from yesterday.The price of gold will start today at US$2639/oz and little-changed from this time yesterday.Oil prices are also little-changed from this time yesterday at just on US$74/bbl in the US while the international Brent price is still just on US$76.50.The Kiwi dollar starts today just on 56.5 USc and up +40 bps from this time yesterday. Against the Aussie we are up +10 bps to 90.3 AUc. Against the euro we are down -10 bps at 54.3 euro cents. That all means our TWI-5 starts today at just on 67 and up +20 bps from this time yesterday.The bitcoin price starts today at US$102,103 and up +4.1% from this time on yesterday. Volatility over the past 24 hours has been moderate at +/- 2.5%.You can find links to the articles mentioned today in our show notes.You can get more news affecting the economy in New Zealand from interest.co.nz.Kia ora. I'm David Chaston. And we will do this again tomorrow.

Kia ora,Welcome to Monday’s Economy Watch where we follow the economic events and trends that affect Aotearoa/New Zealand.I'm David Chaston and this is the international edition from Interest.co.nz.And today we lead with news the economic world its returning after the end of year holiday season, and finding the 2024 worries are still here in 2025.First up however, the first post-New Year holiday week back will be a relatively quiet one, but there are still some important things to cover, and few of the key ones are local. But the week culminates with the December US non-farm payrolls report in the US, and that will increasingly dominate how the week goes. Markets currently expect a modest +150,000 rise in US jobs. That is close to 'average' over the past ten years. But don't forget that is the seasonally-adjusted result. Actual payroll shrink in the month usually, and that average over the past ten years is by -160,000. That is what we will be watching, because fewer actual people employed could have an outsized impact on metrics like retail sales and the like.The US will also release December services PMIs. A slightly softer expansion is expected. And China will release its important new yuan loan data, and the expectations are for another weak result. Eyes will also be on India's industrial production data, something that has been softish recently.Just as important for us, we will get more December real estate activity data this week. We will also get another full dairy auction on Wednesday, and the intervening Pulse results for both SMP and WMP have shown a marked softness since the last full auction event. And Barfoots are likely to release their December results later in the week.Over the weekend, the FAO World Food Price Index reported a -0.5% fall in December from an upwardly revised November. Dairy prices fell -0.7% but meat prices rose +0.4%. Overall this index is +6.6% higher than year-ago levels with dairy up +17% and meat up +7.0% on that annual basis.On the commodity front, both lithium and iron ore prices slipped on concerns about the prospects for the Chinese economy. The Shanghai stock exchange fell yet again, by -1.6% on Friday to be down a very sharp -5.5% for the week. And the benchmark yield for Chinese government bonds slumped to a new record low of 1.60% for the 10 year. The yuan fell, testing its lowest level since 2007 after their central bank stopped defending 7.3 to the USD.So China is ramping up its subsidy program for consumer durables, trying to spark some extra consumption activity.And China's central bank said late Friday during a quarterly meeting of its monetary policy committee that it will cut banks’ reserve requirement ratio and interest rates at the “proper time”.So China is starting the New Year on the back foot.Across all reporting countries, the global factory PMI contracted slightly in December, shifting from the slight expansion in November. Good expansions in India, Taiwan, Canada, and China (among eight others) was offset and more by retreats in the US, Australia and especially the Europe (among seven others). On balance, it was soft new order levels that is turning the global tide.In the US, a good rise in new orders saw the widely-watched ISM factory PMI rise by 0.9 points in December from the previous month to record only a very minor contraction and very much better than was expected. The result reflected the softest pace of contraction in the US manufacturing sector since March. Oddly, the narrative for the internationally-benchmarked S&P/Markit PMI was the inverse with weaker new orders and slipping output. However, both surveys landed at the same spot, reporting a very minor contraction.US vehicle sales ended the year on a strong note, running at a 16 mln annualised rate. EV sales accounted for 9.0% of those, and a surge in demand for EVs helped heavyweight GM claim the top spot for all cars and now second only to Tesla in EVs. Tesla slipped back in the final quarter. (For reference, NZ EV sales in 2024 were 7.3%.)Over the weekend, two Fed governors (Daly and Kugler) both reiterated that the battle to control US inflation is not yet won. Another was more positive, but thought restrive rates should still stay in place until things are clearer.In Canada, their factory PMI delivered a solid performance with good new order levels and rising output contributing to a rising expansion.In Australia, SE NSW and NE Victoria have been hit by a headwave with temperatures as high as 45oC. But a wind-change has relieved things today. Bushfire season is well underway there.Containerised freight rates rose marginally last week (+3% overall), built on a +7% surge on Trans Pacific rates from China to the USWC. Traders are trying to beat what are expected to be new tariffs from the incoming US Administration. Bulk cargo rates stopped falling this week, essentially holding at an 18 month low.The UST 10yr yield is now at just on 4.60%, and up +1 bp from Saturday. The price of gold will start today at US$2639/oz and little-changed (-US$1) from this time Saturday.Oil prices are unchanged from this time Saturday at just on US$74/bbl in the US while the international Brent price is still just on US$76.50. Both are up +US$2.50 since this time last week and at a two-month high.The Kiwi dollar starts today just on 56.1 USc and unchanged from yesterday, but down -20 bps from a week ago. Against the Aussie we are down -10 bps to 90.2 AUc. Against the euro we are also down -10 bps at 54.4 euro cents. That all means our TWI-5 starts today at just over 66.8 and down -10 bps from this time Saturday - but essentially unchanged from a week ago.The bitcoin price starts today at US$98,070 and up +0.1% from this time on Saturday. Volatility over the past 24 hours has been low at +/- 0.8%.You can find links to the articles mentioned today in our show notes.You can get more news affecting the economy in New Zealand from interest.co.nz.Kia ora. I'm David Chaston. And we will do this again tomorrow.

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

Kia ora,Welcome to Monday’s Economy Watch where we follow the economic events and trends that affect Aotearoa/New Zealand.I'm David Chaston and this is the international edition from Interest.co.nz.And today we lead with news of a major airplane crash in South Korea, probably due to a birdstrike.In the global economy, the situation is dominated by market fears of what the incoming Trump Administration will do. Bond yields are pricing in that risk by raising them to near their highest since 2007. Equity markets are down, with the S&P500 down -2% since its peak close on December 6. The Nasdaq is down -2.2% since its peak on December 16.Rising bond yields depress bond prices. And some finance professionals think the shift higher has only just begun and the risks will accelerate as the capricious Trump agenda takes shape. Bond investors are in for steep losses in 2025, they say.The type of flipflops from Trump, like going from campaigning to ban Ticktock to now telling the Supreme Court to leave it alone, from campaigning to ban immigrant H-1B visas to now saying they are essential, mean markets don't trust his positions anymore. They are late to this realisation. And perhaps it mattered little when he was just a candidate, but now he will be in power again, they sense chaos.We should also keep an eye on trade disputes between Canada and the US. A Trump penchant for tariffs on Canadian softwood exports to Canada could see a rise in competition in other markets for New Zealand logs and milled pine as a fallout.Meanwhile, US inventories, both retail and wholesale were little-changed in November. But they are likely to rise from here as traders rush to beat the impending tariffs.US exports rose +6.0% in November compared with the same month a year ago. But US imports are zooming higher on the expectation of those rising tariffs, up +7.3%. That caused a Trump-induced trade deficit of -US$99 bln in the month, up from -US$90 bln in the same month a year ago.Across the Pacific, Japanese retail sales rose +2.8% in November from year-ago levels, up from a downwardly revised +1.3% rise in October, and easily beating market expectations of a +1.7% gain. This marked the 32nd straight month of expansion in retail sales there and the fastest growth since August, with rising wages continuing to support consumption.However, Japanese industrial production fell by -2.3% in November from October, compared with market expectations of a -3.4% fall. The latest result followed a +2.8% growth in October and is the first contraction in industrial output since August. Year-on-year the November decline was -2.8%. A dip in machinery orders took the blame.Taiwanese consumer sentiment dipped in December from November, but remains sharply higher than year-ago levels, and still in the high recovered range after the low point in late 2022. However, it isn't yet back to pre-pandemic levels.In China, local observers now expect "outsized stimulus" from Beijing policymakers in 2025.Perhaps that is because Chinese industrial profits fell -7.0% in November, compared to the same month a year ago. Even the Chinese habit of only reporting year-to-date results shows a decline now of -4.4%, so the recent months are coming in weaker than earlier. After peaking in 2021, these profits have fallen each year since. Interestingly, state-owned enterprises, which tend to be very large businesses are doing the weakest, down -8.4%. Private foreign-owned businesses are doing the least-worst (-1.0%). And other private sector businesses are down -4.7%. It is hard to see private investors happy in this environment.China’s commerce ministry said on Friday that it has launched an investigation into imported beef at the request of representatives from its struggling domestic industry. New Zealand is one source, including through the Silver Fern Farms link. But the main focus is on imports from Brazil and Australia.In Tibet, and in an area China controls but is disputed with India, China just committed to build a vast hydro-electric river dam, so large it is expected to take a decade to finish, and then deliver three times the output of their famous Three Gorges Dam. But they are damming the Yarlung Tsangpo River, which is known as the Brahmaputra River in India and one of India's great rivers. Expect a rise in tension between India and China because of this, although the main impact will be on Bangladesh.In Iran, their currency is under severe pressure and energy shortages are growing. The country is bracing for a spike in civil unrest.We should also note that coffee prices are soaring again, now higher than all the prior peaks in 2011, 2007, and 1997. Droughts in Brazil and Vietnam are getting the blame. Cocoa prices are staying very high too, and for similar reasons although they have pulled back a bit since mid December.The UST 10yr yield is now at just on 4.63%, and up +2 bps from Saturday, and up +12 bps from this time last week. It is up from 3.86% a year ago, but most of that is since the November US election.This will be tough for yield-linked investments like real estate. After hanging on through the pandemic, commercial property values are especially at risk. The sector cleanout could be a feature of 2025, internationally.The price of gold will start today at US$2620/oz and up +US$6 from Saturday.Oil prices are little-changed at just over US$70.50/bbl in the US while the international Brent price is now just over US$74. A week ago these prices were -US$1 lower.The Kiwi dollar starts today just on 56.4 USc and up +10 bps from Saturday. Against the Aussie we are down -10 bps at 90.6 AUc. Against the euro we are also up +10 bps at 54.1 euro cents. That all means our TWI-5 starts today at just on 67 to be up +10 bps from Saturday and down -10 bps from this time last week.The bitcoin price starts today at US$93,747 and down -0.3% from this time on Saturday. A week ago it was at US$97,137 do down -3.5% since then. Volatility over the past 24 hours has been modest at +/- 1.1%. Most of the annual rise in the bitcoin price has been after the November US election.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.Happy New Year everyone !

Kia ora,Welcome to Tuesday’s Economy Watch where we follow the economic events and trends that affect Aotearoa/New Zealand.I'm David Chaston and this is the international edition from Interest.co.nz.And today we lead with news China is clamping down harder on negative views about their economic prospects. Chinese economists are now required to be cheerleaders for their economy.But first up today, sales of new single-family homes in the United States rose by +5.9% from the previous month to an annualised rate of 664,000 in November, above market expectations of 650,000. However, this just takes it back to the 2024 average level.November durable goods orders were lower than expected, down a rather sharp -6.3% from the same month in 2023. But this is largely due to a drop in aircraft and defence orders. And non-defence, non-aircraft capital goods orders also held at the same as the year-ago level. They could be better, but there is no collapse either.That tame result fed into the US Chicago Fed's National Activity Index which reported a small expansion, and a much better result than the prior month.The latest estimate of the US economy has it still expanding at a +3.1% rate in Q4-2024, a strong way to finish the year.But consumers are more wary about what 2025 will bring, no doubt hit by the unsettling signs in their national politics. The rise in consumer sentiment over all of 2024 took quite a hit in this latest December survey.There was another US Treasury 2yr bond auction earlier today for US$70 bln and it was very well supported again and delivered a median yield of 4.29% which was only marginally more than the 4.24% median yield at the prior equivalent event a month ago.North of the border, Canadian producer prices rose +2.2% year-on-year in November, following a +1.1% rise in the previous month. But this just returns it to the growth rate it has had for most of 2024.Across the Pacific, Singapore's November inflation rate was expected to rise, and it did, but not by as much as was anticipated. It is up to just 1.6% from the three-year-low October 1.4%. It's core inflation rate however eased lower in a way that was not expected.In Japan, carmakers Nissan and Honda have agreed to merge, targeting mid 2026 to get all the US$58 bln pieces together. And they are trying to get Mitsubishi Motors to join them. It would create the world's third largest carmaker. A lot will depend on whether Nissan can execute a successful restructuring of its stumbling business before the merger.Staying in Japan, they do an annual review of their National Accounts, an that now shows that low economic growth and demographic shifts meant that per capita GDP was higher in South Korea now than Japan in 2023 (see page 17). It is close, so it may switch back in 2024 as Japan has expanded faster this year. But the rise of South Korea will come as no surprise to many even if it is a surprise they have caught up with Japan.In China, the warnings against economists and analysts having negative views about their economy are growing more strident. If individuals have "repeatedly triggered reputational risk over inappropriate commentaries or behaviours" within a certain period of time or caused "major negative impacts," their employer must "severely deal with the person until termination of employment," they said, without explaining the definition of inappropriate comments.They are trying to head off a noticeable "slump" in consumer spending in the icon cities of Beijing and Shanghai. If the trend is being reported there, it will be likely be worse elsewhere.The UST 10yr yield is now at just on 4.58%, and up +5 bps from this time yesterday, its highest since the brief spikes in April 2024 and October 2023, and its highest prior to that since 2007.The price of gold will start today at US$2614/oz and down -US$8 from yesterday.Oil prices are down -US$1 at just on US$68.50/bbl in the US while the international Brent price is still just on US$72.The Kiwi dollar starts today just on 56.5 USc and down -20 bps from this time yesterday. Against the Aussie we are up +10 bps at 90.5 AUc. Against the euro we are holding at 54.3 euro cents. That all means our TWI-5 starts today at just on 67 to be down -10 bps from yesterday.The bitcoin price starts today at US$93,628 and down another -2.1% from this time yesterday. Volatility over the past 24 hours has been modest however at +/- 1.9%.You can find links to the articles mentioned today in our show notes.You can get more news affecting the economy in New Zealand from interest.co.nz.Kia ora. I'm David Chaston. And we will do this again on Monday, December 30.Merry Christmas everyone !

Kia ora,Welcome to Monday’s Economy Watch where we follow the economic events and trends that affect Aotearoa/New Zealand.I'm David Chaston and this is the international edition from Interest.co.nz.And today we lead with news we are ending the year with mostly a strong international economy, but worries are growing about prospects for 2025. If both China and the US turn down together, then all bets are off.But right now, it's going to a relatively quiet week ahead as you would expect with major holidays in some of the largest financial markets. But we will get data from Singapore (CPI), Thailand (exports), Taiwan (retail sales and industrial production), China (industrial profits and their MLF interest rate), Canada (PPI), and the US (durable goods orders, new home sales, jobless claims and some regional factory surveys). So enough to keep an eye on while we relax. Nothing locally of course except the November data dump from the RBNZ tomorrow.In the US, there was a last-minute avoidance of their shutdown as conservative Republicans were not prepared to give the incoming President the blank cheque of a suspension of their debt limit. Trump lost that one by quite a wide margin, so it may not be plain-sailing for the Trump/Musk presidency.Meanwhile, the widely-watched US PCE measure of inflation came in at 2.4% in November, up a tick and to its highest since July. Core PCE inflation stayed even higher at 2.8%. But these results were actually a tick less than expected. The 2.8% inflation level is what the University of Michigan consumer survey also reported.American personal disposable income rose +2.6% from a year ago, a slight undershoot. But personal spending remained strong, up +2.9% and similar to the gains over the past six months. Personal saving as a percent of disposable income rose marginally to 4.4% from the prior month and ending the longish decline from the start of the year when it ran at 5.5% of personal disposable income. The 4.4% level is where it ran for most of 2023.Across the Pacific, Taiwanese export orders stayed elevated, up +3.3% from the same month a year ago which itself was elevated.China reviewed its loan prime rates on Friday and kept them unchanged - at record lows. It's MLF rate will be announced this coming week.In China, there have been recent reports of officials calling in bond traders to lecture them about 'responsible trading' - and the consequences for not. Chinese bond yields had fallen to record lows, as readers here who tracked our monitoring of the Chinese 10yr yield below will know. But today, the fear of losing money is winning out over the fear of officialdom's wrath.China’s one-year bond yields broke below levels last seen in the GFC to the lowest since 2003, driven by bets on aggressive policy easing and demand for haven assets. The yield on one-year government debt plunged 17 bps yesterday to just 0.85%. The ten year is down to 1.69%. While it might be too harsh to call it 'panic mode' there is certainly a hard edge here, in fear of where the Chinese economy is headed.Japan reported November CPI inflation, and that rose again, now at 2.9%, with the widely-watched core inflation rate at 2.8%.Japan also said its population fell to just under 124 mln, a fall of -325,000 in a year, and -3.1 mln in a decade. Now 29.3% of that population is 65 year and older, with only 11.1% under 15 years. In China, which is also thought of as having a similar demographic problem, those spread details are 14.3% over 65 years and 16.8% under 15 years.Following the recent +200 bps out-of-cycle interest rate rise in Russia and the central bank guidance then, they were expected to raise their policy rate by another +200 bps again overnight to 23%. But they didn't. Apparently the Kremlin isn't keen on the independence of the Russian central bank governor any more.And perhaps we should note that nickel prices have hit a four-year low, on the combination of low demand and surging Indonesian supply. Russia is no longer a force in nickel supply. Prices for rough-cut diamonds are also plunging, this time on low demand out of China and their acceptance of artificial alternatives.The UST 10yr yield is now at just on 4.53%, and up +2 bps from this time Saturday but that is a net +16 bps rise for the week. The price of gold will start today at US$2622/oz and down -US$3 from Saturday. But that is down -US$36 from this time last week.Oil prices are unchanged at just on US$69.50/bbl in the US while the international Brent price is still just under US$73. A week ago these prices were US$71 and US$74.50 respectively.The Kiwi dollar starts today just on 56.7 USc and unchanged from Saturday. But that is down almost -1c from a week ago (57.6c USc). Against the Aussie we are holding 90.4 AUc. Against the euro we are still at 54.3 euro cents. That all means our TWI-5 starts today at just on 67.1 to be unchanged from Saturday at this time but down -50 bps from a week ago.The bitcoin price starts today at US$95,659 and down another -1.5% from this time Saturday. A week ago it was at US$101,536, so down -5.8% from then. Volatility over the past 24 hours has been modest however at +/- 1.5%.You can find links to the articles mentioned today in our show notes.You can get more news affecting the economy in New Zealand from interest.co.nz.Kia ora. I'm David Chaston. And we will do this again tomorrow.

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

Kia ora,Welcome to Friday’s Economy Watch where we follow the economic events and trends that affect Aotearoa/New Zealand.I'm David Chaston and this is the international edition from Interest.co.nz.And today we lead with news of deliberate chaos being constructed in Washington DC with a much higher prospect of a US Federal Government shutdown likely. Authorised funding expires later today / Friday, US time. Financial risks are sharply elevated today, and markets are pricing these in.Elsewhere, US jobless claims fell sharply last week and by more than can be accounted for by seasonal factors. There are now a bit less than 1.9 mln people on these benefits.The PhillyFed survey of factories in America's traditional rust belt turned very negative, the worst result since April 2023. Soft demand was behind this shift. Optimism about the future took a hit too.The Kansas City Fed's equivalent survey in its region wasn't so negative, but it wasn't positive either. Optimism was a bit better there however.American existing home sales in November rose, but to be fair it is still stuck in the very low range it has had post-pandemic which is even lower than the post-GFC range, and back to levels first seen in 1995. So the November rise in that perspective is kind of irrelevant, no matter what the industry peak body says.The US Conference Board leading index tracking rose in November. Higher building permits, high equity prices, rising average hours worked in manufacturing, and fewer initial jobless claims boosted the November result. But the December result will no doubt take a hit from the current Washington shenanigans.The final estimate for US Q3-2024 GDP raised the expansion to +3.1% and extending the good run they have had since mid-2022. The US economy delivered US$29.4 tln of economic activity in the past year, with the expansion of +US$1.4 tln and the most ever. And that describes what is at risk from bad policy.Elsewhere there were many central bank rate reviews.In Japan, the Bank of Japan held its key short-term interest rate unchanged at 0.25%, keeping it at the highest level since 2008. That was what financial markets expected. But the vote was split 8-1, with one board member wanting a +25 bps increase. Essentially they are waiting to see how destabilising the incoming American Administration will be. But the bank boss seems to have turned dovish in the circumstances, and that turn moved markets.In Taiwan, they kept their policy rate unchanged at 2%In the Philippines, they cut their rate by -25 bps to 5.75%.In Sweden, they cut by -25 bps to 2.5%.In Norway, they held at 4.5%.In England, they held unchanged at 4.75% with a split 6:3 vote with the dissenters wanting a cut. This is a pause as inflation starts to rise there again.In something of a surprise, Australian inflation expectations rose to 4.2% in December, ending their encouraging falls that started in September. It is not a result either the RBA or the Australian Treasury would have wanted.Container freight rates rose +8% last week but to be fair that was only because of a +26% rise in teh China-to-USWC route and a +17% rise in Chin-to-New York as traders raced to get ahead of the impending tariff threat. Other routes saw small declines. Bulk cargo rates fell another -7% last week to be less than half what they were a year ago and back to levels last seen in July 2023.Many mineral commodities are retreating in price in expectation 2025 will be tough, with copper down -2%.The UST 10yr yield is now at just on 4.59%, up a very sharp +19 bps from this time yesterday as markets digested the Fed's move and the deliberate mess being created by the incoming President.The price of gold will start today at US$2592/oz and down -US$42 from yesterday.Oil prices are down -US$2.50 to be just on US$69.50/bbl in the US while the international Brent price is now just under US$73.The Kiwi dollar starts today just on 56.5 USc and down -60 bps from yesterday. Against the Aussie we are down -40 bps to 90.3 AUc. Against the euro we are also down -10 bps to 54.5 euro cents. That all means our TWI-5 starts today at just on 67.1 to be down another -25 bps from yesterday at this time.The bitcoin price starts today at US$100,994 and down -3.1% from this time yesterday. Volatility over the past 24 hours has been high at +/- 3.1%.You can find links to the articles mentioned today in our show notes.You can get more news affecting the economy in New Zealand from interest.co.nz.Kia ora. I'm David Chaston. And we will do this again on Monday.

Kia ora,Welcome to Thursday’s Economy Watch where we follow the economic events and trends that affect Aotearoa/New Zealand.I'm David Chaston and this is the international edition from Interest.co.nz.And today we lead with news all markets have been waiting for the US Fed decision.And as expected, they have cut their key policy rates by -25 bps with the targeted range now 4.25%-4.50%. Progress on taming inflation gets the main credit from them. As we publish, Chairman Powell has yet to hold his press conference, so more about their thinking will be revealed then. But this move takes their rollback to -100 bps since August, and back to the level they had at the start of 2023. A slower pace of cuts are expected in 2025.Meanwhile US mortgage applications slipped slightly last week, ending a run of five straight weeks of gains to be +6% higher than year-ago levels and a bit more activity on the purchase side.US housing starts however unexpectedly fell in November and by -1.8% to an annualised rate of 1.3 million units, the lowest in four months. Only in one month since the pandemic has it been this low. American consumers may say they are feeling more optimistic, but they aren't showing it in their housing markets.Japanese exports rose in November and by more than expected to be at the upper end of the monthly range in 2024. It was a rise that beat expectations. But imports fell, and by much more than expected, to a three-month low, and about the average level in 2024.In Malaysia their exports also rose much more than expected, and like Japan their imports, which were also expected to surge, didn't. Obviously not every country can have rising exports and falling imports but those that do count themselves 'winners' in the international trade arena. For Malaysia however, this is a rare monthly result, a small balance for a long period when imports exceeded exports.The Indonesian central bank kept its policy rate unchanged at 6% in a meeting late yesterday.In Hong Kong, major builder New World Development, which recently posted a large and unusual loss, is reportedly trying to renegotiate its loan obligations with banks. Not a great sign for them, and indications China's property sector woes are impacting Honk Kong directly now (rather than juts Chinese companies listed in Hong Kong).And in Australia, a major builder there, APH Holdings, has gone under. This notable because it too is Chinese-owned.Staying in Australia, ASIC is suing crypto company Binance Australia Derivatives for consumer protection failures. More than 500 retail clients of Oztures Trading, trading as Binance Australia Derivatives, were denied important consumer protections after being misclassified as wholesale clients, ASIC alleges in documents filed in the Australian Federal Court.And still in Australia, their Mid-Year budget update by the federal government shows a slightly smaller deficit in the 2024-25 financial year than what was presented in May, but larger deficits over the next three years. All up, that is a cumulative deficit increase of A$22 bln.In Brazil, their currency, the real, depreciated to a record low of 6.16 to the USD, as mounting fiscal concerns, inflationary pressures, and political uncertainty drove an investor loss of confidence. Investor confidence has been shaken by fiscal measures deemed insufficient to stabilise Brazil’s rising debt trajectory, as President Lula’s tax breaks and modest spending cuts prioritise growth over fiscal discipline. The central bank aggressively tightened monetary policy, raising the interest rate to 12.25% from 11.25%, with two further hikes signaled.The UST 10yr yield is now at just on 4.40%, up +1 bp from this time yesterday.The price of gold will start today at US$2634/oz and down -US$7 from yesterday.Oil prices are back up +US$1.50 to be just on US$71/bbl in the US while the international Brent price is now just on US$74.And the IEA says coal consumption hit a record high in 2024, led by China and capping a 30 year surge. They also say this is probably 'peak-coal' and that the transition to renewables. But that is not certain, because India's use is rising fast. In the meantime, Australia is set to become the fourth largest producer by 2027, surpassing the United States and Russia.The Kiwi dollar starts today just on 57.2 USc and down -40 bps from yesterday. That makes it the lowest level in more than two years. Against the Aussie we are down -20 bps at 90.7 AUc. Against the euro we are also down -20 bps to 54.6 euro cents. That all means our TWI-5 starts today at just on 67.35 to be down -25 bps from yesterday at this time. And that is also more than a two year low, since October 2022.The bitcoin price starts today at US$104,225 and down -2.5% from this time yesterday. Volatility over the past 24 hours has been moderate at +/- 2.1%.Today is the final day our Auckland office is open in 2024. It will be our holiday service until then. Our daily and weekly free email newsletters are taking a break until then. But our databases and rate tables will continue to be updated as changes are reported. And this podcast will continue through the holiday period. We wish you all a fun, safe, and relaxing break.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 commodity prices are facing some headwinds, and that may get worse as trade prospects dim and the de-risking from China builds.Today's full dairy auction brought lower prices from both last week's Pulse event, and the prior week's full event. But the dips were largely as expected and foreshadowed in the derivatives market. In the event, overall prices were -2.8% lower than the last full event, but with the NZD weaker, in NZD the decline was just -0.7%. Today's retreat doesn't interrupt the 2024 rising trend so it seems unlikely any farm gate pay out forecasts will be adjusted because of this.Demand from China was lighter today, but that may just because they have already built their requirements for their upcoming CNY holiday season.US retail sales as monitored by their Redbook survey were a healthy +4.8% higher last week than the same week a year ago.And November retail sales as reported by their official data were up +3.8% from the same month a year ago, the best gain of 2024. And that was driven by strong car sales. Business inventories remain at very manageable levels, so not building stress there.Meanwhile US industrial production actually slipped in November, down -0.9% from a year ago, although there were signs of stabilising in the November month. Factory production actually rose, undermined by both mining and utility production.For a second event in a row, demand for the latest US Treasury bond eased again. This 20 year auction was still well supported, just not as much as usual. The median yield at 4.62% was actually slightly higher than the 4.60% at the prior equivalent event a month ago. While that night seem insignificant, it reverses the recent pattern of falling yields at these Treasury fund-raising events.Canada's November CPI inflation rate came in at 1.9%, pretty much as expected. Their central bank will be happy with that, because it allows them to continue to unwind their policy rate which is at 3.25% and next reviewed at the end of January.Across the Pacific, we should note that Nissan and Honda have begun merger talks.In China, new official data shows that capital flight by foreign investors reached a record level in November as the de-risking trend rose to a new urgency. And international airlines are also pulling back on their China routes.One of the things to come out of the recent Central Economic Work Conference is that Chinese leaders reportedly agreed to raise their budget deficit to -4% of GDP in 2025, its highest on record. (For reference, the New Zealand equivalent is -2.4% of our GDP. In the US, it is -6.3%.) They are holding on to an economic growth target of around 5%.Singapore's exports rose more than expected in November, up +3.4% and a better-than-expected comeback after their weak October result. Imports also rose, by +2.8% on the same basis.And we should probably note that there was a general easing of commodity prices generally overnight, not just dairy products.The UST 10yr yield is now at just on 4.39%, down -1 bp from this time yesterday.The price of gold will start today at US$2641/oz and down -US$10 from yesterday.Oil prices are down -US$1 to be just on US$69.50/bbl in the US while the international Brent price is down almost -US$1 to be just over US$72.50.The Kiwi dollar starts today just on 57.6 USc and down -20 bps from yesterday. Against the Aussie we are up +20 bps at 90.9 AUc. Against the euro we are also down -20 bps to 54.8 euro cents. That all means our TWI-5 starts today at just on 67.6 to be down -20 bps from yesterday at this time.The bitcoin price starts today at US$106,952 and up les that +0.1% from this time yesterday. Volatility over the past 24 hours has been modest at +/- 1.3%.You can find links to the articles mentioned today in our show notes.You can get more news affecting the economy in New Zealand from interest.co.nz.Kia ora. I'm David Chaston. And we will do this again tomorrow.

Kia ora,Welcome to Tuesday’s Economy Watch where we follow the economic events and trends that affect Aotearoa/New Zealand.I'm David Chaston and this is the international edition from Interest.co.nz.And today we lead with news analysts are now starting to estimate the costs to the US economy of some upcoming tariff policy.But first, the S&P Global American services PMI rose in December to its strongest expansion since March 2022. But their manufacturing downturn deepened with manufacturers reporting falling output and higher prices. New factory orders fell sharply, extending the decline to a sixth consecutive month. The divergence makes the services sector jump look like a sugar-rush, one that could come with a hangover.The December factory survey in the New York region reflects the factory pullback - although that is from an unusually strong November.A New York Fed study of whether large tariff hikes protect US firms has found the opposite in a detailed survey. This is no surprise to economists, and they suggest that the next round is also likely to hurt American firms further. Further own-goals for American manufacturing are on their way. Others say it will shrink US GDP by -1%. That would be a US$300 bln hit.North of the border, Canadian housing starts came in particularly strong in November, and surprisingly so.And Canadian house prices are on an extended uptrend, boosted by more sales activity as interest rates come down there.But in a surprise political move in Canada, their Finance Minister has suddenly resigned, "throwing its economic agenda into a tailspin". Disagreement on how to frame Canada's policies when Trump comes to power in the US seems to be at the heart of the matter.Across the Pacific in Japan, their November PMIs revealed that their factory sector is now barely contracting (an improvement from October), and their services sector is now expanding faster. They had their strongest rise in private sector activity in the past three months. So perhaps it is no surprise to know that machinery orders are on the rise, after a lean period.China’s new house prices in 70 cities shrank by -5.7% year-on-year in November, following the steepest decline in over nine years of 5.9% in the previous month. This marked the 17th consecutive month of decreases, suggesting that Beijing’s extended attempts to mitigate the prolonged downturn in the property sector, such as reducing mortgage rates and slashing home buying costs, have yet to have the effect they are looking for. Prices for second-hand houses were even weaker.China’s industrial production rose +5.4% in November from the same month a year ago, mildly exceeding market estimates and October's growth rate of +5.3%. The expansion was due to a good +6.0% rise in manufacturing. At the same time electricity production only rose +0.9% in the same basis, so that does undermine somewhat the validity of the industrial gains. And that low gain does match the 'headwinds' narrative they have been talking about. Their industrial production data seems to ignore that, and their weak PMIs. Something's not quite right.China's retail sales rose by +3.0% year-on-year in November, slowing from a +4.8% growth in the previous month and below market expectations of a +4.6% gain. This marked the weakest growth in retail activity since August. But compared with many other countries, this 'weak' expansion is better than inflation.The Indian PMI for December recorded an improving factory sector, and a services sector that is still expanding fast.India exports in November however fell to their lowest level since October 2022, down -5.2% from the same month a year ago. India is not much of a trading nation relative to the size of their economy, so the rise in economic activity is all about internal demand. However, imports surged +28% on that same year-on-year basis, and to an all-time record high.It might seem a tad ironic for a major oil producer, but Iran is proposing sweeping closures of public facilities, a move officials attribute to icy winter temperatures and the need for energy management while the country suffers massive shortages due to infrastructure failures. “Iran is on the brink of a 40% blackout in just 18 days,” said one local analyst.In Europe, Moody’s unexpectedly downgraded France’s credit rating from Aa2 to Aa3, citing concerns over deteriorating public finances amid political instability. For reference, Moody's rates New Zealand and Australia, each separately Aaa (although perhaps they will review ours after Thursday's GDP result).In Australia, financial system regulator ASIC is suing HSBC Australia alleging failures to adequately protect customers from scams.And AML regulator AUSTRAC is taking Entain to court over "serious" money laundering compliance breaches in its gambling/betting operations. Entain operates the TAB in New Zealand.The UST 10yr yield is now at just on 4.40%, little-changed from this time yesterday.The price of gold will start today at US$2651/oz and up +US$4 from yesterday.Oil prices are down -50 USc to be just on US$70.50/bbl in the US while the international Brent price is down almost -US$1 to be just over US$73.50.The Kiwi dollar starts today still just on 57.8 USc and up +20 bps from yesterday. Against the Aussie we are up +10 bps at 90.7 AUc. Against the euro we are also up +10 bps to 55 euro cents. That all means our TWI-5 starts today at just on 67.8 to be up +20 bps from yesterday at this time.The bitcoin price starts today at US$106,866 and up +3.7% from this time yesterday. Volatility over the past 24 hours has been moderate at +/- 2.2%.You can find links to the articles mentioned today in our show notes.You can get more news affecting the economy in New Zealand from interest.co.nz.Kia ora. I'm David Chaston. And we will do this again tomorrow.