Economy Watch

Kia ora,Welcome to Thursday’s Economy Watch where we follow the economic events and trends that affect Aotearoa/New Zealand.I'm David Chaston and this is the international edition from Interest.co.nz.Today we lead with news both China and the EU seem to be facing banking & debt pressures, different of course, but each challenging in its own way.But first in the US, mortgage applications edged slightly higher last week from the week before to be -30% lower that at the end of September and about the same weak level as a year ago. Rising mortgage interest rates are holding them back with the latest rise to 6.90% the fourth week in a row and the highest since early July. Trump and market expectations that the new Administration policies will be inflationary, is getting the blame for the higher interest rates.Yesterday we noted the bullish outlook for Walmart, as part of stronger American retail activity. But today we also need to note the downbeat assessments from another major retailer, Target.After the unexpected September dip, Japanese exports rose again in October even if the rise of +3.1% from a year ago was less than the rises they had in 2024 to August. Imports rose too, but even more modestly (+0.4%).Taiwanese export orders remain very buoyant, up +4.9% in October from a year ago and a rising pace. The ris was mainly driven by increased export orders for electronic products.The Chinese central bank left its November Loan Prime Rates unchanged at the new lower October levels of 3.10% for the one year LPR, and 3.60% for the five year LPR.And chickens are coming home to roost for Chinese banks that went along with emergency lending during the pandemic. A government-encouraged surge in lending designed to be a lifeline for small businesses during the pandemic has started to worry their banks, as misappropriation has caused the loans to go bad at an increasing rate due in part to China’s stubborn real estate slump. The official response to the problem? ease back on lending standards.The Indonesian central bank reviewed its policy rate yesterday and left it unchanged at 6%, as expected. Although they trimmed -25 bps in mid-September, they haven't really started their easing cycle yet. Inflation is running at a very low +1.7% pa, and within their policy target band so they must be close. But a big factor for them in currency stability and a high real interest rate is keeping the rupiah from depreciating at a faster rate. Global tensions, both trade and geopolitical tensions, are the main factors here.In its latest financial stability review the ECB is warning that the combination of low growth and high debt is about to play out there with some severe economic stress.In Australia, employers paid more than AU$103.7 bln in wages and salaries in the September month, up +6.3% from a year ago, and the first time it has exceeded AU$100 bln an any month. It part of a longer trend and is up +14.1% from September 2022 levels.The UST 10yr yield is now at just on 4.41% and up +2 bps from yesterday at this time.The price of gold will start today at US$2649/oz and up another +US$26 from this time yesterday.Oil prices are little-changed, still just over US$69/bbl in the US while the international Brent price is still just over US$73/bbl.The Kiwi dollar starts today at 58.7 USc and back down -30 bps from this time yesterday. Against the Aussie we are -10 bps lower at 90.4 AUc. Against the euro we unchanged at 55.8 euro cents. That all means our TWI-5 starts today at just over 68.5, and down -10 bps from yesterday.The bitcoin price starts today at US$93,816 and up +1.6% from this time yesterday. Volatility over the past 24 hours has again been modest at +/- 1.9%.You can find links to the articles mentioned today in our show notes.You can get more news affecting the economy in New Zealand from interest.co.nz.Kia ora. I'm David Chaston. And we will do this again tomorrow.

Kia ora,Welcome to Wednesday’s Economy Watch where we follow the economic events and trends that affect Aotearoa/New Zealand.I'm David Chaston and this is the international edition from Interest.co.nz.Today we lead with news dairy prices are still rising.We got an increase in dairy prices at the overnight GlobalDairyTrade auction from the prior event, but it was a small pullback from prices at last week's Pulse event. Overall prices were up +1.9% in USD terms, up +3.6% in NZD terms, so a good result. WMP let the rises with a +3.2% gain, but the main pullbacks were in the cheeses with cheddar down -3.1% and mozzarella down -6.6%. SMP rose +0.9% from the prior full event but was down -1.1% from last week's Pulse event.This is still a good result and will probably encourage some analysts to update their new season payout forecasts, just as BNZ analysts did last week. The possibility of a $10/kgMS payout is still in play after these results.Holding the WMP prices up is the unexpectedly sticky fall in Chinese milk production (due to low profitability) and a rather steep and unexpected fall in their WMP inventories. This will underpin WMP demand for a while and rising New Zealand production will bring a virtuous tone to the party as well.In the US, although the average American voter may have voted 'negative', they are acting 'positive' in their spending with the Redbook retail sales growth up +5.1% last week from the same week a year ago. And those sort of gains are what giant Walmart is racking up. (Presently, these gains are essentially volume gains. But of course, if the US gets aggressive tariffs, price rises will drive these numbers higher with inflation.)US housing starts hit a bump in the road in October, down -3.1% to just over a +1.3 mln starts (annualised rate), but the fall was because construction activity fell sharply in the South due to their hurricanes. Obviously that will recover soon for the same reason. But in the background it is generally challenging for house builders because mortgage interest rates are remaining high. Still, sales at a 1.3 mln is about average for 2024.A big question hangs over the US housing markets, both for new and used houses. The incoming Administration seems committed to quitting the two big institutions that make the market for 30 year fixed mortgages, Fannie Mae and Freddie Mac. They tried in the last Trump Administration and were thwarted by Congress, but they seem more determined this time. If that happens it will be an earthquake for housing finance in the US, and probably be the demise of their unique long-term fixed rates.September data released yesterday by the US Treasury shows a huge inflow of foreign funds into the US. There was +US$341 bln of private net flows in the month, plus another +US$57 bln by "official" (government) transactions. This is easily the largest single monthly inflow ever. (For reference, the US Federal Government deficit averaged -US$153 bln monthly in the year to September.)Canadian CPI inflation was up +2.0% in October, a blip up from September's +1.9%. Their food prices were up +2.7% within that, rents up +7.3%. But these were offset by much lower energy costs.After growing rather well in the April to August months, Malaysian export growth as pulled back in September and October with only modest changes. Malaysian import growth is pulling back too, but it this is still expanding at twice the export growth rate.In Hong Kong, the clampdowns on freedoms of expression are getting fiercer. And it is no longer 'legal' to mention Jimmy Lai, let along the umbrella freedom protests.And China is moving to make it an offense to operating in financial markets unless pricing is "rational".In India, they are again battling seasonal air pollution, and it is particularly bad this year, especially in the north.The UST 10yr yield is now at just on 4.39% and down -6 bps from yesterday at this time.The price of gold will start today at US$2623/oz and up another +US$13 from this time yesterday.Oil prices are little-changed, still at US$69/bbl in the US while the international Brent price is still just on US$73/bbl.The Kiwi dollar starts today at 59 USc and up +30 bps from this time yesterday. Against the Aussie we are unchanged at 90.5 AUc. Against the euro we up +20 bps at 55.8 euro cents. That all means our TWI-5 starts today at just over 68.6, and up another +10 bps from yesterday.The bitcoin price starts today at US$92,318 and up +0.3% from this time yesterday. Volatility over the past 24 hours has been modest at +/- 1.7%.You can find links to the articles mentioned today in our show notes.You can get more news affecting the economy in New Zealand from interest.co.nz.Kia ora. I'm David Chaston. And we will do this again tomorrow.

Kia ora,Welcome to Tuesday’s Economy Watch where we follow the economic events and trends that affect Aotearoa/New Zealand.I'm David Chaston and this is the international edition from Interest.co.nz.Today we lead with news that long term benchmark bond interest rates are still rising, even if the rising trend is variable.It is a quiet economic data day in the US, with a housing building confidence index the only release of note. The NAHB/Wells Fargo Housing Market Index rose in November to it highest level in seven months, as its gets an election relief rally of sorts, modest to be fair.In Canada, housing starts rose back to their 2024 average level but it was a three-month high for them.Across the Pacific, Japan's core machinery orders, which exclude those for ships and electric power companies, slipped by -0.7% in September from August, in the red for the third straight month and missing market expectations for a +1.9% gain. Year on year, these are -4.8% lower. Export orders held up relatively well, however.Singaporean exports turned down in October. The fell by -4.6% from the same month a year ago, reversing from a downwardly revised +0.9% rise in September. It marked the first decline in since June, due to a fall in non-electronic exports. Non-electronic shipments slumped -6.7%.In China, new Bloomberg analysis shows more detail on their population problem. Within 20 years, deaths are set to be double the number of births. The old-age dependency ratio may reach 52%, meaning there would be just two working-age individuals for every person over 65 years. The rapid aging and falling birth rate has the United Nations projecting China's population could shrink to half its current size by the end of the century - that's 700 mln people less, a decline double the current size of the US population. Even Japan's population isn't shrinking like that (although it may do in time).In Australia, regulator ASIC has taken NAB (BNZ's parent) to court alleging it ignored hardship support for 345 "vulnerable customers" between 2018 and 2023 (about 60 per year), saying the failure to respond broke the Australian credit code. NAB has about 10 mln customers and about 35,000 staff. The chances it got something wrong for 60 of their customers in a year is almost a certainty.The UST 10yr yield is now at just on 4.45% and up +1 bp from yesterday at this time.The price of gold will start today at US$2610/oz and up +US$47 from this time yesterday.Oil prices are +US$2 higher at US$69/bbl in the US while the international Brent price is now just on US$73/bbl.The Kiwi dollar starts today at 58.7 USc and up +10 bps from this time yesterday. Against the Aussie we are down -30 bps at 90.5 AUc. Against the euro we unchanged at 55.6 euro cents. That all means our TWI-5 starts today at just over 68.5, and up +10 bps from yesterday.The bitcoin price starts today at US$92,065 and up +2.0% from this time yesterday. Volatility over the past 24 hours has been moderate at +/- 2.2%.You can find links to the articles mentioned today in our show notes.You can get more news affecting the economy in New Zealand from interest.co.nz.Kia ora. I'm David Chaston. And we will do this again tomorrow.

Kia ora,Welcome to Monday’s Economy Watch where we follow the economic events and trends that affect Aotearoa/New Zealand.I'm David Chaston and this is the international edition from Interest.co.nz.Today we lead with news the focus is turning to Q1-2025 now and the twists & turns the world's largest economy will deliver. It is probably no coincidence that post-election, Warren Buffett is selling.But first, in the week ahead we will get data on our producer price inflation, and an update on our population, not to forget a full GDT dairy auction on Wednesday which should confirm the recent higher USD prices are extending. And remember, in a week from Wednesday, the RBNZ will review the OCR for the final time in 2025. This review has to hold them until February 19, 2025, so the look ahead will dominate.We have had a 4% one year swap rate, essentially unchanged, for seven straight weeks now. The 90 day bank bill rate has been stable at about 4.5% for three straight weeks. On one hand OIS pricing sees a -50 bps OCR cut coming. On the other, some short markets aren't flagging any change. Our longer rates have been rising (in response to expected Trump inflation), so our 1-5 swap curve is suddenly no longer inverted. And our 1-5 NZGB curve has also turned positive for the first time since 2022. It isn't known what the RBNZ thinks of the ending of inverted rate curves although it is unlikely they will be disappointed.In Australia, expect their 'flash' November PMI on Friday, but not much light is expected in that.This week will also deliver more US regional activity updates. China will review its official interest rate benchmarks. Japan will get some flash PMI data too, as well as its export data. And there will be a range of rather meaningless European data out too.And financial markets will continue digesting what Trump 2.0 will mean for them. They seemed to have a reality check on Friday; coming inflation, sharp job losses, and a capture of the regulatory rules for a few in their favoured elite isn't a recipe for the current healthy American economy to continue.And in the US, it seems the Fed is in no hurry to cut interest rates. “The economy is not sending any signals that we need to be in a hurry to lower rates,” Powell said on Friday in Dallas. “The strength we are currently seeing in the economy gives us the ability to approach our decisions carefully.” And NY Fed boss Williams said essentially the same thing.Retail sales in the US rose +4.6% (actual) in October from year-ago levels, following a +0.2% rise in September. Reported seasonally adjusted levels were less that these. Rising car sales (+6.6% actual) were a large part of this gain.But US industrial production actually decreased -0.3% in the same year to October. This is a volume-based survey. The Boeing strike got most of the blame for this, and was expected in the data.In the New York region, the Empire State factory survey surprised analysts with strong new order flows, and rising optimism, far greater than expected. Factory activity rose sharply too.In Canada they also released factory data but it was for September and the Boeing strike squished its data too. But Canadian car sales rose +2.6% in volume and +5.7% in value in the same periodIn an economy that faces slowly rising central bank interest rates, Japan reported Q3-2024 GDP growth of just +0.9% and down from a +2.2% annualised rate in the previous quarter, which was itself revised down from the previous +2.9%.In China, average house prices for new homes fell -5.9% in the year to October. That's this official data's largest drop in nine years. But for the first time in a while there were a few cities where they actually rose. For used house sale transactions the October price change was -8.8% lower from a year ago. Interim November data indicates sales volumes will be lower than October. Construction of housing is still deeply negative, even if marginally less so in October.China reported slightly lower industrial production growth for October, but it was still good at +5.3% even if it was less than the expected improvement from September. However, electricity production only rose +2.1% in October from a year ago, undercutting the veracity of the industrial production data. They reported better than expected retail sales growth at +4.8% from a year ago, suggesting some of their stimulus moves are working. But much of this is the previously noted rise in car sales (which involved incentives).Aluminium prices surged on Friday after China said it would cancel export tax rebates on this and other commodities, raising the prospect that their heavy flow of subsidised export shipments abroad may quickly fade. Also falling were copper, zinc, nickel (to a 4 year low), and tin. Aussie mining shares tumbled too, its largest one-week fall in a year. Layoffs are underway and some mines are closing. None of this would be happening if the view was that the US economy will still be booming in 2025.The UST 10yr yield is now at just on 4.44% and up +2 bps from Saturday, up +17 bps for the past week.The price of gold will start today at US$2562/oz and down another -US$4 from Saturday. But that is down more than -US$120 or -4.5% from a week ago.Oil prices are -50 USc lower at US$67/bbl in the US while the international Brent price is now just on US$71/bbl. These levels are about -US$2.50 lower than week-ago levels.The Kiwi dollar starts today at 58.6 USc and down -10 bps from Saturday. A week ago it was at 59.7 USc so a full -1c drop since then. Against the Aussie we are little-changed at 90.8 AUc. Against the euro we unchanged at 55.6 euro cents. That all means our TWI-5 starts today at just over 68.4, and down-10 bps from Saturday, but down -40 bps in a week.The bitcoin price starts today at US$90,296 and up +0.7% from this time Saturday. A week ago it was at US$76,099, so a sharp +18% rise since then. Volatility over the past 24 hours has been modest at +/- 1.1%.You can find links to the articles mentioned today in our show notes.You can get more news affecting the economy in New Zealand from interest.co.nz.Kia ora. I'm David Chaston. And we will do this again tomorrow.

Kia ora,Welcome to Friday’s Economy Watch where we follow the economic events and trends that affect Aotearoa/New Zealand.I'm David Chaston and this is the international edition from Interest.co.nz.Today we lead with news the slowing Chinese economy is keeping the oil price low, and it might stay that way because supply is rising, and quite quickly.But first, although there were no surprises in US initial jobless claim levels, they did rise last week to 229,000 on seasonal factors so there are now 1.65 mln people on these benefits, maintaining the low recent levels. No labour market stress signs yet still.But there are signs of lingering inflation pressures in their producer prices for October with them up +2.3%, a rise from the +1.9% year on year rate in September. The October rise was slightly more than analysts were expecting. Higher prices in their booming logistics sector caused the twist higher.The August improvement in EU industrial production was not maintained in September and it ended down-2.0% from the same month a year ago.But despite that disappointment, Q3-2024 EU GDP came in +0.9% higher than the same quarter a year ago, and employment was up +1.0%. These are the expected levels, so no surprises here. While these levels are low and benchmark poorly with other major economies, there are still positive.The Australian labour market update for October shows employment rising by +16,000 when a +25,000 rise was expected. Their participation rate slipped slightly, allowing their jobless rate to hold at 4.1%. But this also means their employed workforce is +387,000 higher than a year ago, a healthy +2.7% rise. But almost 40% of that rise was for part-time work; a year ago part-time jobs made up only 31%, so the shift away from full-time positions is rising.And staying in Australia, their largest bank has concluded that the 2024 "stage 3 tax cuts" are not flowing through to more consumer spending, rather being used to build resilience (or build back some capacity) by paying debt down faster, especially mortgages.Container shipping freight rates were virtually unchanged last week, 2.4 times higher than a year ao, and 140% higher than pre-pandemic levels in early November.Bulk cargo rates rose +13% last week from the week before in a sharpish move up, to be almost the same as the same week a year ago.The UST 10yr yield is now at just on 4.40% and down -5 bps from yesterday.And we should probably note that the share price for Xero hit AU$171 yesterday, a record high.The price of gold will start today at US$2574/oz and down -US$15 from this time yesterday.Oil prices are +50 USc firmer at US$68.50/bbl in the US while the international Brent price is now just under US$72.50/bbl.In its November update, the IEA says that with surging supply, and cooling demand in China, even if the OPEC+ cuts remain in place, global crude oil supply will exceed demand by more than 1 mb/d in 2025.The Kiwi dollar starts today at 58.8 USc and down -10 bps from yesterday. Against the Aussie we are -10 bps softer at 90.7 AUc. Against the euro we have also slipped -10 bps to 55.6 euro cents. That all means our TWI-5 starts today at just on 68.5, and unsurprisingly down -10 bps from yesterday.The bitcoin price starts today at US$88,820 and down -4.0% from this time yesterday. Volatility over the past 24 hours has been high at just on +/- 3.2%. Despite the slip, the price in NZ dollars is still above NZ$150,000.You can find links to the articles mentioned today in our show notes.You can get more news affecting the economy in New Zealand from interest.co.nz.Kia ora. I'm David Chaston. And we will do this again on Monday.

Kia ora,Welcome to Thursday’s Economy Watch where we follow the economic events and trends that affect Aotearoa/New Zealand.I'm David Chaston and this is the international edition from Interest.co.nz.Today we lead with news markets are starting to price in the return of US inflation in 2025, and perhaps the end of US Fed rate cuts (although there could still be a last hurrah in December).In the US, their CPI inflation rate rose to 2.6% in October from 2.4% in September. This is the expected rise but is the first rise in seven months. In March it was running at 3.5%. Energy costs fell in October but by less than expected. Rents rose 4.9%. Food inflation slowed to 2.1% and transportation (airfares) to 8.2%. Prices continued to fall for new vehicles. The closely-watched core inflation rate held at 3.3%.Given that the new US Administration policies are expected to be strongly inflationary, the US Fed will have a challenge on its hands to retain the gains they have won post-pandemic. But it seems that markets are still pricing the US Fed to cut rates again when they next meet on December 19 (NZT).After falling in each of the past six weeks, US mortgage applications were little-changed last week (up +0.5%) to be little-changed from the same week a year ago. We probably should note that during all of October, they fell -35% from the prior month. And more falls are anticipated because benchmark interest rates are rising quickly now, in anticipation of a resurgence of inflation in 2025. At least, that is what markets are pricing.US household debt rose on a gross basis to US$17.9 tln in Q3-2024, half of the increase in mortgage debt on rising home loan rates. Delinquency rates edged up marginally but remain historically nowAcross the Pacific, Japan reported rising producer price inflation, with PPI up +3.4% in October, the highest since August 2023, and the 44th month of PPI gains.In India, they had record passenger car sales in October, helped by unusually having two major festivals in the month, each with a history of higher consumer spending.Although it is now slowing, wage cost growth in Australia in the September year was up +3.5%, a cost pressure on businesses that isn't being matched in output prices or rising productivity. It is the expected moderation, but they need it to slow much faster or there will be growing economic issues.The UST 10yr yield is now at just on 4.45% and up +2 bps from yesterday.The price of gold will start today at US$2589/oz and down -US$10 from this time yesterday.Oil prices are -50 USc softer at US$68/bbl in the US while the international Brent price is unchanged at just on US$72/bbl.The Kiwi dollar starts today at 58.9 USc and down -30 bps from yesterday as the USD rises further. The inflationary effect will now start to appear on imports because it has fallen -7.5% since the start of October. Against the Aussie we are +10 bps firmer at 90.8 AUc. Against the euro we have slipped -20 bps to 55.7 euro cents. That all means our TWI-5 starts today at just on 68.6, and down -20 bps from yesterday.The bitcoin price starts today at US$92,520 and up another +6.2% from this time yesterday. Volatility over the past 24 hours has been very high at just on +/- 4.2%. The price in NZ dollars has now exceeded NZ$150,000 for the first time.You can find links to the articles mentioned today in our show notes.You can get more news affecting the economy in New Zealand from interest.co.nz.Kia ora. I'm David Chaston. And we will do this again tomorrow.

Kia ora,Welcome to Wednesday’s Economy Watch where we follow the economic events and trends that affect Aotearoa/New Zealand.I'm David Chaston and this is the international edition from Interest.co.nz.Today we lead with news that while we were all distracted by the 'culture-war' US election, in fact the world's economy was expanding well, except perhaps in China (but even they are still expanding, just not like the they need).In the US Redbook retail index rose +4.8% last week from the same week a year ago, extending its positive run that started way back in August 2023. This is still not a sign of household financial stress.US consumer inflation expectations for the year ahead edged down to 2.9% in October, a four year low, and dipping from 3% in each of the previous four months. All indications are the US Fed has won its 'soft landing' in its inflation fight.The NFIB Small Business Optimism Index rose in October to its highest in three months in a survey carried out prior to the election result.The RealClearMarkets/TIPP Economic Optimism Index, another measure of US consumer confidence, jumped in November to its highest in over three years. It was a survey carried out after the election result was known.But all this might change if today's trend of sharp rises in both benchmark interest rates and the USD continue. Certainly Wall Street is having second thoughts with a reversal that now puts it lower than election day.In Canada, the value of building consents surged in September to be +11.8% higher than the same month a year ago, rebounding from a drop in the previous month. Residential consents rose +7.5% while non-residential building consents rose +18%.In Japan, machine tool orders resumed their strong expansion in October after the September hesitation. They were up +9.3% from the same month a year ago, and bolstered by strong export orders.In China, policymakers are still trying to find the key to unlock real estate optimism. Their latest move looks like it will be to cut transfer taxes on housing sales from 3% to 1%. The hope is that people will sell and upgrade their residences.And of course, it was the Singles Day/Double 11 big retail event in China this week, and it is going off without special notice in the Chinese media. Given that Beijing is looking to boost consumption, you might have thought it would be getting wall-to-wall coverage, but it isn't. However, despite that, it is still an economically significant sales event.India's industrial production rose +3.1% in September from the same month a year ago, exceeding expectations of a +2.5% growth and rebounding from a -0.1% contraction in the previous month. While this is quite good, it is not back to the average rise for 2024, and even those increases don't really explain why their GDP is rising faster than +7%. India's expansion isn't really based on rising manufacturing prowess.And India is battling inflation and inflation seems to be winning. In October CPI inflation came in at +6.2%, in a rising trend to its highest since August 2023. Worse, food price inflation rose +10.9% over the same period and almost back to the level they had in 2019. Vegetable price inflation is running at +42%. Unless this is curbed, at some point this will cause social unrest.Although it has been negative for nearly three years, the Westpac-Melbourne Institute Consumer Sentiment index in Australia rose in November to its highest level in two-and-a-half years as the outlook on the economy and finances finally turned optimistic.Australia’s NAB business confidence index climbed into positive territory in October 2024, the first positive reading in three months and reaching its highest level since January 2023. There were notable improvements across most industries, except construction and retail. However those surveyed said their business conditions were largely unchanged.The UST 10yr yield is now at just on 4.43% and up +8 bps from yesterday.The price of gold will start today at US$2599/oz and down -US$17 from this time yesterday.Oil prices are +50 USc firmer at US$68.50/bbl in the US while the international Brent price is now just on US$72/bbl.The Kiwi dollar starts today at 59.2 USc and down -40 bps from yesterday as the USD rises. Against the Aussie we are unchanged at 90.7 AUc. Against the euro we have slipped -10 bps to 55.9 euro cents. That all means our TWI-5 starts today at just on 68.8, and down -10 bps from yesterday.The bitcoin price starts today at US$87,134 and up another +3.4% from this time yesterday. Volatility over the past 24 hours has been high at just on +/- 3.6%.You can find links to the articles mentioned today in our show notes.You can get more news affecting the economy in New Zealand from interest.co.nz.Kia ora. I'm David Chaston. And we will do this again tomorrow.

Kia ora,Welcome to Tuesday’s Economy Watch where we follow the economic events and trends that affect Aotearoa/New Zealand.I'm David Chaston and this is the international edition from Interest.co.nz.Today we lead with news that there was little economic data released overnight, so this report will be quite thin - and short.First up today we should note that China's October vehicle sales surged by +7% from a year ago to just over 3 million units in in the month. This contrasted with the -1.7% drop on that basis in September, and shows that recent government policy measures aimed at boosting the retail market are in fcat having an impact. Domestic NEV penetration exceeded 50% for a third straight month.That is a bright spot because the wider new yuan loan data for October was weak - again. In fact, very weak. At ¥500 bln new lending in October was the least since 2009. It was well below the low bar analysts had expected of ¥700 bln and emphasises just how little real-economy 'investment' is taking place at present. So far, their stimulus model has been a fizzer.In the US we should probably note that Q3 earnings for Wall Street have come in very positively with most companies having now reported. And most delivered better-than-expected results. So it will be no surprise that indexes like the S&P500 are running at record high levels.Following the US election, bitcoin is having a moment, spurred by the perceived influence the crypto-bros will have in the incoming Administration. Bitcoin hasn't changed. It is still not a unit of account, not a medium of exchange, and hardly even a store of value. It's not anonymous either (which makes it an odd choice for the libertarian crypto crowd), and is a clunky transaction device that holders notice when they try to buy (with fiat currencies). But its speculation attributes are currently making holders seem wealthy in fiat terms.In the real world, we should probably note that Malaysia is going through quite a construction boom, largely for residential buildings. Construction activity rose by +23% in the third quarter of 2024 from a year ago, the tenth consecutive period of heady growth. Construction of non-residential building is booming too.The UST 10yr yield is now at just on 4.35% and up +4 bps from yesterday. The price of gold will start today at US$2616/oz and down -US$68 from this time yesterday.Oil prices are -US$2.50 lower at US$68/bbl in the US while the international Brent price is now just over US$71.50/bbl.The Kiwi dollar starts today at 59.6 USc and unchanged from yesterday. Against the Aussie we are up +10 bps at 90.7 AUc. Against the euro we have risen +40 bps to 56 euro cents. That all means our TWI-5 starts today at just on 68.9, and up +20 bps from yesterdayThe bitcoin price starts today at US$84,265 and up +5.6% from this time yesterday. Volatility over the past 24 hours has been very high at just on +/- 4.1%.You can find links to the articles mentioned today in our show notes.You can get more news affecting the economy in New Zealand from interest.co.nz.Kia ora. I'm David Chaston. And we will do this again tomorrow.

Kia ora,Welcome to Monday’s Economy Watch where we follow the economic events and trends that affect Aotearoa/New Zealand.I'm David Chaston and this is the international edition from Interest.co.nz.Today we lead with news China's battle with deflationary pressures shows no sign of being won.But first, in the week ahead locally, we will get the REINZ result for October some time this week. And September migration data on Wednesday. Internationally, all eyes will be on American consumer and producer inflation data, retail sales, and speeches by Fed officials, as investors seek clues on their monetary policy outlook in the wake of 2nd Trump Presidency.In China, new yuan loans, fixed asset investment, industrial production, retail sales, and the house price index will be all be released this week. In Australia, their October labour force data will come out, the NAB business confidence survey, and Westpac consumer confidence indexes are expected. Finally, we should watch Indian inflation data.Over the weekend, China said its inflation rate came in at +0.3% in the year to October (and half the modest August level), still giving them disinflation as they stare deflation in the face. Deflation is already in producer prices, and it got slightly worse in October, at -2.9%. That's their fastest fall in almost a year. Both movements were small but they are going the wrong way for them.Among the CPI items, we can see that food prices rose +2.9% in the year to October, so households are feeling some noticeable inflation pressure. Costs eased for fresh vegetables but they are still +22% higher than a year ago, fresh fruit was up +4.7% on that same basis, and pork up +14%. Prices fell however for eggs (-2.5%), milk (-1.7%), beef (-13%), and lamb (-5.9%). So not much for us to be encouraged about here..And China has sharply raised (+40%) their local governments’ debt ceiling to ¥35.5 tln (NZ$8.3 tln) when they announced the total value of the current program increase will by ¥10 tln (NZ$2.3 tln). But officials did not announce additional measures to directly stimulate domestic demand, probably disappointing markets that had been hoping the package would also help consumers. They did say however they are 'studying' such moves, probably waiting to see the impact of the challenge from Trump.Japanese households aren't feeling all that great either. Household spending fell by -1.1% in September from a year ago, a smaller decline than the -1.9% drop in August and better than market expectations for a -2.1% decrease. This marks the seventh month of reduced household spending in 2024.Foreigners love the place however, not only as tourists, but as investors too, raising their equity investment stakes in each of the past six months.Taiwanese exports rose +8.4% from a year ago in October, building from a +4.5% rise in the previous month. Imports were up +6.5%, a slower rate of increase than we have seen in the prior four months. Robust Taiwanese trade contrasts with what its unfriendly and jealous neighbour is able to achieve,Across the Pacific, Americans remain cautious taking on new personal debt. That rose by only +US$6 bln in September, a slowdown from the almost +$9 bln rise in August and well below the expected +US$14.5 bln increase. Now the average balance is US$23,087, up from US$18,008 four years ago. These are not actually high levels. (The divisor we used is the total population 18 years and older.)For the first time since May 2020, the US Fed saw its balance sheet assets fall below US$7 tln last week. That is a -US$53 bln fall in a month, a -US$2 tln fall since it peaked at US$8.96 tln in April 2022.Before their election, consumer sentiment as tracked by the University of Michigan survey, rose for the fourth consecutive month, rising 3.5% to its highest reading in six months. While current conditions were little changed, the expectations index surged across all dimensions, reaching its highest reading since July 2021.The November WASDE report from the USDA sees 2025 with more world wheat, slightly less coarse grains, and more rice. The world's ability to feed itself seems stable, without unusual price pressures. They expect to import more beef from Oceania. In a change they now expect more US milk production even though cow herd numbers might slip slightly. Access to this market now depends on the incoming capricious Administration.The October Canadian labour market report showed a +14,500 rise in jobs, less than expected. But full-time jobs rose more than +25,500 and part-time jobs slipped -11,000, a virtuous twist.The UST 10yr yield is now at just on 4.31% and up +1 bp from Saturday. A week ago it was at 4.37%.The price of gold will start today at US$2684/oz and down -US$1 from this time Saturday.Oil prices are +50 USc firmer at US$70.50/bbl in the US while the international Brent price is now just under US$74/bbl.The Kiwi dollar starts today at 59.6 USc and and down -10 bps from this time Saturday. Against the Aussie we are down -10 bps at 90.6 AUc. Against the euro we have dipped -10 bps as well to 55.6 euro cents. That all means our TWI-5 starts today at just on 68.7, and down -10 bps from Saturday but unchanged from a week ago..The bitcoin price starts today at US$79831 and up +4.9% from this time Saturday. Volatility over the past 24 hours has been moderate at just on +/- 2.9%.You can find links to the articles mentioned today in our show notes.You can get more news affecting the economy in New Zealand from interest.co.nz.Kia ora. I'm David Chaston. And we will do this again tomorrow.

Kia ora,Welcome to Friday’s Economy Watch where we follow the economic events and trends that affect Aotearoa/New Zealand.I'm David Chaston and this is the international edition from Interest.co.nz.Today we lead with news with a special eye on unpredictable American policy instability. The Trump win unhinges many things, including the path for central bank rate cuts. The ones announced today may be the last until after the direction of US fiscal policy is revealed for certain.In the shadow of the Trump election win, a range of billionaires are lining up key roles in his administration to extract payback for their support. It is all very unseemly, but should be no surprise. The current estimate is that just six of them have gained more than +US60 bln in the first day. And that will be just the start.The US Fed is about to release the results of its November meetings. A -25 bps rate cut is anticipated, to 4.75%. It may be too soon to expect them to have assessed how they need to prepare for Trump 2.0 policies that are expected to swell the US Federal deficit in a significant way, and re-ignite serious inflation. Their options may be discussed more at their December 19 (NZT) meeting. And that will all be clouded by Trump's expectations of subservience, although he has few options to fire Powell who is safe in the role until mid-2026, and as a governor until 2028.Meanwhile US initial jobless claims came in at 212,300 (actual) last week, almost exactly as expected. There are now 1.65 mln people on these benefits, almost exactly as it was in the same week a year ago and back to pre-pandemic levels even though the employed labour force is now +7.5 mln people larger than pre-pandemic. The US labour market remains unchanged, and stays strong .China is getting an export boost from orders that are anticipating a clampdown on trade with the Middle Kingdom - from both the US and the EU. Exports surged in October by +12.7% from the same month a year ago to a 27-month high, much faster than the forecasted +5% and up from a five-month low of +2.4% growth in September.More reflective of the state of their economy, imports fell -2.3% in October from a year ago to a four month low. Imports fell from ASEAN countries, the EU, and even best-bud Russia, but grew from the US as China hoarded soybean and other grains. Imports from Australia are down -8.7% and from New Zealand -11.1% so far in 2024. Both of us are being weaned from the Chinese economy quite quickly now.Since June, European retail sales have been rising, which you may find counter-intuitive given most of their data is dull and unimpressive. The rise in retail sales is more impressive when you realise that it is volume based, after inflation is accounted for. It was up +2.8% in September from a year ago on that volume basis. There is life left yet in the EU economy.With CPI inflation back down to 1.7% pa, the Bank of England trimmed its policy rate by -25 bps to 4.75% overnight, its second cut since August, and exactly as expected.Both exports and imports fell in Australia in September, something of a surprise. Their export levels fell back to December 2021 levels, and their import levels retreated when September is usually when they peak. The China trade is at the heart of that undershoot.Container freight rates rose +7% last week from the week earlier to be +240% higher than a year ago and +140% higher than pre-pandemic levels. Demand from China to Europe drove these rises, but as we have noted before, this is probably just in anticipation of trade clampdown. Bulk cargo rates were up +2.0% over the past week to be -6.6% lower than the same week a year ago.The UST 10yr yield is now at just on 4.35% and down -7 bps from this time yesterday. The price of gold will start today at US$2693/oz and back up +US$26 from this time yesterday.Oil prices are unchanged at US$72/bbl in the US while the international Brent price is now just under US$75.50/bbl.The Kiwi dollar starts today at 60.2 USc and up +80 bps from this time yesterday. Against the Aussie we are down -20 bps at 90.3 AUc. Against the euro we are up another +40 bps at 55.8 euro cents. That all means our TWI-5 starts today at just on 69, and up +30 bps from yesterday at this time.The bitcoin price starts today at US$75,858 and up +2.2% from this time yesterday. Volatility over the past 24 hours has been modest at just on +/- 1.5%.You can find links to the articles mentioned today in our show notes.You can get more news affecting the economy in New Zealand from interest.co.nz.Kia ora. I'm David Chaston. And we will do this again on Monday.

Kia ora,Welcome to Thursday’s Economy Watch where we follow the economic events and trends that affect Aotearoa/New Zealand.I'm David Chaston and this is the international edition from Interest.co.nz.Today we lead with news it was a night of celebration in the US, especially for billionaires, and those pushing extreme social and religious views. The decisive second coming of a Trump Administration will free up new divisive narratives that will spill over globally. It is a great time to be a crony capitalist because your influence on a morally bankrupt president will be easy.There will be global economic consequences - almost all of them bad for trade and small countries. Markets have reacted that way already. Impending isolationism is raising the US currency (which will hurt their exporters significantly), commodity prices are already getting a twist, Bond yields are rising, and sharply. And equity markets are rising on the sugar hit of expected lower taxes, ignoring for now the longer term costs of much higher interest rates and much higher inflation as new tariffs essentially impose taxes on US consumers.The change in culture from a free and open society to one that will be bitter and vengeful will drive global consequences we won't like. But we will have to find our way in a renewed thicket of imposed and imported bile. For a while we will have to live in a fact-free world.Economically, US mortgage applications fell -10.6% last week from the prior week, and that is their sixth consecutive retreat. They are now back to level-pegging with the low levels of 2023 at this time. Mortgage interest rates rose sharply last week, and are now likely to rise much faster in the future.Trump's spending plans could add US$7.5 tln to American deficits over 10 years, according to one estimate, far greater than the current track. US Treasury yields rose almost +50 bps in October, when markets were pricing in a higher likelihood of a Trump win. Inflationary pressures from Trump's policies will leave the Fed with less room to cut rates, and keep Treasury yields elevated. The US housing market will be a loser. In fact, that is likely to be generally the case elsewhere because of sharply swelling US deficits.American car sales rose in October to over a 16 mln annual rate. This is another metric likely to be challenged by higher future borrowing costs.There was a UST 30yr bond auction earlier this morning, again well supported. The median yield jumped to 4.57% pa, sharply higher than the 4.32% at the prior equivalent event a month ago. Secondary market yields jumped as well (see below) as investors foresee chaotic and unprincipled public policy starting in 2025.The Central Bank of Malaysia held its overnight policy rate steady at 3% for the ninth consecutive meeting. This was what was expected.The easing of deflation pressures in the EU turned in September to be worse, with their PPI down -3.3% from a year ago.In Australia, the Ai Group Industry Index retreated again in October with a sharp drop, especially for new orders. This index has indicated contraction for the last thirty months.The UST 10yr yield is now at just on 4.42% and up +8 bps from this time yesterday. The price of gold will start today at US$2667/oz and down -US$71 from this time yesterday.Oil prices are down -50 USc at US$72/bbl in the US while the international Brent price is now at US$75.50/bbl.The Kiwi dollar starts today at 59.4 USc and down -60 bps from this time yesterday. Against the Aussie we are unchanged at 90.5 AUc. Against the euro we are up +40 bps at 55.4 euro cents. That all means our TWI-5 starts today at just under 68.7, and actually little-changed again from yesterday at this time.The bitcoin price starts today at US$74,244 and up +5.9% from this time yesterday. Volatility over the past 24 hours has been very high at just on +/- 4.8%.You can find links to the articles mentioned today in our show notes.You can get more news affecting the economy in New Zealand from interest.co.nz.Kia ora. I'm David Chaston. And we will do this again on tomorrow.

Kia ora,Welcome to Wednesday’s Economy Watch where we follow the economic events and trends that affect Aotearoa/New Zealand.I'm David Chaston and this is the international edition from Interest.co.nz.Today we lead with news that is surprisingly positive today.Even though there are likely large influences on New Zealand from events halfway around the world, there are some locally too. Later this morning the Q3-2024 labour market report will be released. And we will have full coverage. But before that we have had another dairy auction, and this one will have analysts reaching for their pencils. It was a good one, with overall prices rising +4.8% in USD terms, up +6.2% in NZD terms. That takes them to their best level since late 2022.The gains were widespread, led by butter's +8.3% jump. Demand out of China is the extra push this market got, and it could well bring upside to farm-gate payout forecasts. In the background, animal health concerns in both the US and EU, and weak domestic raw milk prices in China, are driving lower production expectations globally, just when New Zealand production is in an expansion state.But the economic good news didn't stop there.The Redbook tracking of retail sales in the US delivered a +6.0% rise last week from the same week a year ago. That was its best since mid 2022.The American logistics report for October revealed a small rise from a strong September, taking this index to its best expansion since September 2022. Growth is increasing at an increasing rate in all the right metrics.The ISM services PMI for October was sharply positive too, and its most expansionary level since August 2022. Encouragingly, this sharp turnaround was driven by strong new order growth. This survey basically confirmed the expansion in the S&P/Markt services PMI version and its drive in new order growth.US merchandise exports slipped slightly in September from August, but we need to recall that the August level was a record high - and that Boeing's strikes and production woes will have had an effect here. US imports were strong, as you would expect with most sectors of their economy firing on all cylinders.We should note that the strike at Boeing is over, with a startling +44% pay hike over four years (+38% plus compounding). The catch-up will no doubt drive future export results.There was a well-supported UST 10yr bond auction earlier this morning, and that delivered a yield of 4.29%, which compares with the 4.01% at the equivalent event a month ago.Not to be outdone, the Canadian services PMI turned up sharply to expansion as well, also driven by new order growth.In China, the October Caixin services PMI largely mirrored the official version, but recording a better expansion than the official version, in a better-than-expected result.In Australia, as expected their was no change by the RBA to their policy interest rate. But they warned that another interest rate rise was still a possibility, conceding they had been surprised by the scale of the rise in government spending. They are also surprised that housing demand is staying up, despite their highish interest rates.The UST 10yr yield is now at just on 4.34% and up +4 bps from this time yesterday.The price of gold will start today at US$2738/oz and up +US$5 from yesterday.Oil prices are up almost +US$1 at US$72.50/bbl in the US while the international Brent price is now at US$76/bbl.The Kiwi dollar starts today at 60 USc and up another +20 bps from this time yesterday. Against the Aussie we are down -30 bps at 90.5 AUc. Against the euro we are up +10 bps at 55 euro cents. That all means our TWI-5 starts today at just on 68.7, littel-changed from yesterday at this time.The bitcoin price starts today at US$70,108 and up +3.5% from this time yesterday. Volatility over the past 24 hours has been moderate at just on +/- 2.8%.You can find links to the articles mentioned today in our show notes.You can get more news affecting the economy in New Zealand from interest.co.nz.Kia ora. I'm David Chaston. And we will do this again on tomorrow.

Kia ora,Welcome to Tuesday’s Economy Watch where we follow the economic events and trends that affect Aotearoa/New Zealand.I'm David Chaston and this is the international edition from Interest.co.nz.Today we lead with news financial market traders are bracing for volatility over the US election-counting period.But elsewhere, global manufacturing remains subdued as new order intakes contract for a fourth successive month. The global factory PMI is dominated by large countries, especially the US and China. But at the positive end are healthy expansions in India, Spain and Brazil. At the other end however is the Eurozone, Turkey and Australia. (New Zealand would be too if it was included in these benchmarked surveys.)New orders for manufactured goods in the US fell by -0.5% in September from the previous month, extending the revised -0.8% decline in August and loosely in line with market expectations of a -0.4% drop. They rose if you exclude aircraft however. Year on year this retreat is -2.1%. But if you exclude defence orders, there is a fall in private sector orders of -3.2% year-on-year.There was a popular UST 3 year bond auction earlier this morning where the median yield came in at 4.09%. But despite high demand, that was +27 bps higher than the 3.82% median yield at the prior equivalent event a month ago.In China, banks are foreclosing on a growing number of apartments after homeowners could not pay their mortgages, as the country’s housing crash threatens the financial system. And the surge is overwhelming their legal system in some places. Bank balance sheets are being weakened by the trend.But maybe this will pass soon? Their housing market got year-on-year growth in October for the first time since February, after a raft of recently introduced supporting measures, according to the latest data released by the Ministry of Housing and Urban-Rural Development. Sales of newly built and pre-owned homes climbed +3.9% in October from the same period last year.India’s factory sector came in with an improvement in performance in October with their PMI rising marginally and regaining momentum. Output growth rose, fuelled by faster increases in total new orders and especially export orders.In Europe, their factory sector remains in a deflationary funk. But at least it isn't getting worse. As measured by the overall Eurozone PMI, October brought a lesser retreat. There is expansion going on in Spain, Greece and Ireland, but Germany, France and Italy are all contracting, even if less so.In Australia, the Melbourne Institute Monthly Inflation Gauge recorded a rise in both monthly and annual inflation during October. The monthly rise (+0.4%) was the most since July. But the annual rise (+2.1%) is still within the RBA's desired range. The monthly and annual cost of living also rose across selected household types (age pensioners, pensioners and beneficiaries, employees, government transfer recipients, and self-funded retirees).Later today, the RBA will review its cash rate target. Almost everyone expects them to hold that rate unchanged at 4.35%.The UST 10yr yield is now at just on 4.33% and down -4 bps from this time yesterday in fairly volatile shifts.The price of gold will start today at US$2733/oz and down -US$3 from yesterday and still well off its high.Oil prices are up almost +US$2 at US$71.50/bbl in the US while the international Brent price is now at US$74.50/bbl.The Kiwi dollar starts today at 59.8 USc and up +20 bps from this time yesterday. Against the Aussie we are down -10 bps at 90.8 AUc. Against the euro we are down -10 bps at 54.9 euro cents. That all means our TWI-5 starts today at just under 68.7, marginally softer from yesterday at this time.The bitcoin price starts today at US$67,740 and down -0.6% from this time yesterday. Volatility over the past 24 hours has been modest at just on +/- 1.3%.You can find links to the articles mentioned today in our show notes.You can get more news affecting the economy in New Zealand from interest.co.nz.Kia ora. I'm David Chaston. And we will do this again on tomorrow.

Kia ora,Welcome to Monday’s Economy Watch where we follow the economic events and trends that affect Aotearoa/New Zealand.I'm David Chaston and this is the international edition from Interest.co.nz.Today we lead with news that, while it may be a pivotal week regarding the US election, we are staying away from that event. There are plenty of other places to get whatever slant suits you.In the coming week, the highlight will be Friday morning's US Fed rate decision. Analysts have pencilled in a -25 bps cut to 4.75%. They won't be the only central bank to review their interest rate settings this week. We will also get them from Norway, Brazil, Poland, and the UK, Plus of course Australia tomorrow where analysts expect no change at 4.35%.Back in the US there will be important factory order data, more services PMI results, and more sentiment surveys. There's also German data upcoming. And in China, they will release CPI, PPI, trade data and services PMI results this week.But the big weekend news was the undershoot in the US labour market. The US economy added just +12,000 jobs in October on a seasonally-adjusted basis, well below a slightly downwardly revised +223,000 in September and forecasts of +113,000. It is the lowest job growth since December 2020 on this basis, and it is this one that sets the narrative.The 'reasons' for the low result are said to be a combination of the hurricane effects (they had two), plus the on-going Boeing strike.Regular readers will know that we also look at the actual data, in addition to the seasonally adjusted data. Somewhat surprisingly, that rose a very strong +826,000 to 160 mln people on company payrolls, the highest ever. And that is a gain for the year of +2.1 mln jobs. (The seasonally adjusted data shows essentially the same on an annual basis.)The broader household measure (which includes the unincorporated self-employed) continued its reporting of large shifts away from self-employment and back on to company payrolls. So the overall year-on-year employed gain isn't as large, just under +300,000.Average weekly earnings rose +4.0% in the year to October, the best since March, and far better than current inflation. In the past four years average weekly earnings rose at the rate of +4.5%; in the prior four it was +2.7%.Market reactions to the low headline jobs number suggests they see it as an outlier. Fears were in check, and there seems to be a build-back of the view that the Fed may cut after all at its meeting later this coming week.The widely-watched American ISM Manufacturing PMI unexpectedly fell in October from September and came in below forecasts. This survey pointed to another contraction in the manufacturing sector and the worst since July 2023. In contrast, the globally-benchmarked S&P/Markit version reported an improvement, although it too still records a contraction, just less so. Some are doing well, but some are finding it tough.North in Canada, there was a factory expansion. A rise in new orders pushed their result to a 20 month high.In China, the Caixin factory PMI turned minorly positive, pretty much confirming the official factory PMI there released earlier.In Australia, CoreLogic reports that Sydney has now followed Melbourne and recorded a month-on-month house price drop. Nationally, prices inched ahead because of continuing gains in Brisbane, Adelaide and Perth. But the pace is slowing everywhere now. Affordability limits seem to have been reached.Meanwhile, there was essentially no growth in home loan activity in September from August, and for investors those levels slipped. Both recent trends were weaker than expected, especially for first home buyers.The internationally-benchmarked Australian factory PMI reported that their factory sector contraction eased in October but it still remains in a deep contraction.The UST 10yr yield is now at just on 4.39% and up +2 bps from this time Saturday, up +14 bps in the past week. We should note that Warren Buffett's Berkshire Hathaway reported its Q3 results over the weekend, and that included that its 'cash' pile had grown to US$320 bln/NZ$538 bln (page 2) - most of it in short-term US Treasury Bills. It has swelled because Buffett is selling equity positions, including in Apple. (Fun fact for us; New Zealand's nominal GDP is 'only' NZ$413 bln.)The price of gold will start today at US$2736/oz and down -US$1 from Saturday and still well off its high, and -US$9 lower than a week ago.Oil prices are holding at US$69.50/bbl in the US while the international Brent price is still at US$73.50/bbl. These levels are about -US$2.50 lower than a week ago.The Kiwi dollar starts today at 59.6 USc and down -10 bps from this time Saturday. A week ago it was at 59.8 USc so little-changed. Against the Aussie we are unchanged at 90.9 AUc. Against the euro we are down -10 bps at 55 euro cents. That all means our TWI-5 starts today at just on 68.7, unchanged from Saturday at this time and unchanged from this time last week.The bitcoin price starts today at US$68.139 and down -2.3% from this time Saturday. A week ago it was at US$66,267. Volatility over the past 24 hours has been modest at just on +/- 1.6%.You can find links to the articles mentioned today in our show notes.You can get more news affecting the economy in New Zealand from interest.co.nz.Kia ora. I'm David Chaston. And we will do this again on tomorrow.

Kia ora,Welcome to Friday’s Economy Watch where we follow the economic events and trends that affect Aotearoa/New Zealand.I'm David Chaston and this is the international edition from Interest.co.nz.Today we lead with news the American economy continues its remarkable run, although corporate earnings guidance is showing some hesitation.US jobless claims last week came in at +200,000, a decrease and more than expected. Interestingly, this is the same level it was a year ago for the same week. There are now 1.62 mln people on these benefits, also lower than expected.Tomorrow's US non-farm payrolls are expected to grow just +113,000, but today's data on initial jobless claims, job cut data, and yesterday's ADP data all suggests the analyst estimates are well undercooked. Certainly markets think so and see the strong labour market and the pressure it puts on the economy as a reason the US Fed may defer its next rate cut.Today's release of personal income, and personal spending levels both indicate faster rises than expected, also a flag for Fed caution. Core PCE inflation is still running at 2.7%. Real disposable personal income is up +3.1% from the same month a year ago. Real personal consumption expenditures are up the same. It is surprise 'strength' and markets are wary.But not showing strength however was the October edition of the Chicago PMI.The latest update in Canada for average earnings has them rising a rather remarkable +4.6% from a year ago. That is its highest rate since the pandemic, and before that since before the GFC in 2007. This was also quite a data surprise.China's manufacturing activity snapped a five-month contraction in October, as the recent fresh stimulus measures boosted production. But only just. The country's official PMI came in at 50.1 for the month. Their services sector came in at 50.2, also only a minor expansion. It may only just be the start of their expansion, but they are probably disappointed at these early indicators.And a new stimulus measure has been announced in China. Home loan borrowers have been given the right to renegotiate their loan interest rate lower as/if interest rates fall. It's China; a contract is only enforceable if Beijing says it is.The Bank of Japan left its policy rate unchanged at 0.25% on Thursday as political uncertainties hang over the economy after an inconclusive national election result. They also kept their three-year inflation projections unchanged, confident their economy is expanding as they want. They say inflation should stay near 2%.Japanese September retail sales were quite a disappointment, rising just +0.5% from a year ago when a +2.3% rise like they have had for a while, was expected. One to watch.In the EU, the Euro Area CPI inflation rate ticked up slightly to 2.0% in October, again restrained by lower energy costs.In a piece of humourous dystopian theatre, a Russian court has fined Google more than there is money in the world, because YouTube won't disseminate their state misinformation. The amount (in US dollars) is US$$20,000,000,000,000,000,000,000,000,000,000,000. I have no idea how to pronounce that.Breaking a 17 week trend, container shipping freight rates actually rose last week, up +4% from the prior week, to be +126% above pre-pandemic levels. Bulk cargo rates fell -3.5% on the same prior-week basis, to be very similar to what they were a year ago.The UST 10yr yield is now at just under 4.27% and down -2 bps from this time yesterday. Wall Street has started its Thursday with the S&P500 down -1.7%. Earnings guidance from some majors is causing the re-think.The price of gold will start today at US$2739/oz and down -US$37 from yesterday and well off its high.Oil prices are up +50 USc US$69/bbl in the US while the international Brent price is unchanged, still at US$72.50/bbl.The Kiwi dollar starts today at 59.6 USc and down -20 bps from this time yesterday. Against the Aussie we are also down -20 bps at 90.8 AUc. Against the euro we are down -20 bps too at 54.9 euro cents. That all means our TWI-5 starts today at just on 68.6, and - no surprise - down -20 bps from yesterday at this time.The bitcoin price starts today at US$70,389 and down -2.4% from this time yesterday. Volatility over the past 24 hours has been modest at just on +/- 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.Today we lead with news consumers may be anxious about their political future, but they are spending like they are in healthy financial shape.In the US, their economy expanded an annualised +2.8% in Q3-2024, below the 3% in the previous quarter and forecasts of 3%. Holding it back was essentially no growth of inventories and slow expansion of capital investment. But personal spending rose at its fastest pace in more than a year. The US economy is running at a nominal pace of US$29.35 tln of annual economic activity. That is +US$1.4 tln more in a year, or +4.9% more, in nominal terms. (Their increase is about five times New Zealand's total activity, three-quarters of Australia's total annual pace.)The ADP employment report for October delivered a very positive signal, adding +233,000 paid private-sector jobs, when only +115,000 were expected. This will have analysts raising their forecasts for US non-farm payrolls.US pending home sales - a forward-looking indicator of home sales based on contract signings - rose an outsized +7.4% in September and the rise was broad-based, across the nation. But last week's mortgage applications were little-changed, but that level is +10% higher than year-ago levels (which to be fair were weak). Higher benchmark mortgage rates inhibited recent activity.In China, eyes are on the level of interest payments that local government is paying, as they borrow much more, replacing the 'revenue' that has dried up from land sales.Pushed by an unexpectedly positive German result, the EU Q3-2024 GDP rose much faster than expected (even if it is still low).EU sentiment is broadly stable, although there was a small rise in inflation expectations in these surveys.In Australia, their Q3-2024 CPI rate was expected to come in at 2.9%, and their September monthly inflation indicator was expected at 2.4%. They actually came in at 2.8% and 2.1% respectively (a 3 year low), so that eases the pressure on the RBA, although only slightly. Next week, the RBA will be reviewing its 4.35% policy rate, and these results are likely to be seen as an unexpected faster cooling, but largely resulting from the impact of the Canberra's government's Energy Bill Relief Fund rebate. It seems unlikely this distortion will prove enough for the RBA to cut rates.The UST 10yr yield is now at just on 4.25% and down -4 bps from this time yesterday. The price of gold will start today at US$2786/oz and up +US$21 from yesterday and a new high.Oil prices are up +US$1 US$68.50/bbl in the US while the international Brent price is up to US$78.50/bbl.The Kiwi dollar starts today at 59.8 USc and back up +20 bps from this time yesterday. Against the Aussie we are up +10 bps at 91 AUc. Against the euro we are down -10 bps at 55.1 euro cents. That all means our TWI-5 starts today at just on 68.8, and up +0 bps from yesterday at this time.The bitcoin price starts today at US$72,121 and down -0.7% from this time yesterday. Volatility over the past 24 hours has been modest at just on +/- 1.5%.You can find links to the articles mentioned today in our show notes.You can get more news affecting the economy in New Zealand from interest.co.nz.Kia ora. I'm David Chaston. And we will do this again tomorrow.

Kia ora,Welcome to Wednesday’s Economy Watch where we follow the economic events and trends that affect Aotearoa/New Zealand.I'm David Chaston and this is the international edition from Interest.co.nz.Today we lead with news the fiscal bazooka is reportedly in place in China. And it is bigger than expected.But first, US retail sales remain strong. The Redbook index rose +5.6% last week, its biggest gain since early September, and better than the +5.3% in the same week last year.The number of job openings in the US fell by -418,000 to 7.4 mln in September from a downwardly revised 7.9 million in August and below market expectations of just on 8 mln. It is the lowest level since January 2021, indicating their labour market is cooling. Quits fell to levels last seen four years ago. Just how fast this labour market cooling is going will be known on Saturday NZT when we get the US non-farm, payroll for October. That is expected to show a +115,000 gain. It might be better than that.The US Conference Board consumer sentiment index bounced back in October, confirming the similar University of Michigan survey earlier in the month. This wasn't expected however. Also surprising was the rise in future expectations. Consumers’ assessments of current business conditions turned positive. Views on the current availability of jobs rebounded after several months of weakness, potentially reflecting better labour market data in the month.And here's another positive signal. The Dallas Fed services survey rose in October after being negative in the past, the first positive reading after being negative in the past 30 months. Ahead, firms there are optimistic, even if election uncertainty shows up in this survey.The US merchandise trade deficit widened sharply in October to -US$108 bln, the widest since the disruptions around Russia's Ukraine invasion onslaught. As a proportion of US GDP, it isn't overly significant. This time, it is higher demand for consumer goods driving imports.There was another US Treasury bond auction earlier today, this one for their seven year bond, again very well supported. But the yield rose to 4.17%, up sharply from 3.61% at the prior equivalent event a month ago.Reuters is reporting that China is considering issuing a massive ¥10 tln (NZ$2.3 tln) in extra debt in the next few years to revive its fragile economy. This fiscal package is expected to be further bolstered if Trump wins the American election, they say. This is far more money printing that was originally expected.In Singapore things aren't great. Their PPI plunged -7.1% year-on-year in September, following -3.4% decline in the previous month. This was the steepest drop since August 2023.In Germany, their GfK Consumer Climate Indicator rose to a much less negative level in October. It was the highest reading since April 2022, with sentiment improving for the second month and exceeding market expectations. Income expectations strengthened and consumer propensity to buy reached its highest level in nearly three years.And the EU is pressing ahead with a sharp tariff rise on Chinese EV's to counter state subsidies.The UST 10yr yield is now at just on 4.29% and unchanged today. The price of gold will start today at US$2767/oz and up +US$24 from yesterday.Oil prices are little-changed at just under US$67.50/bbl in the US while the international Brent price is down to under US$71.50/bbl. That there is essentially no-change is impressive because the US is buying to restock its strategic reserves.The Kiwi dollar starts today at 59.6 USc and down -20 bps from this time yesterday. Against the Aussie we are up +10 bps at 90.9 AUc. Against the euro we are down -10 bps at 55.2 euro cents. That all means our TWI-5 starts today at just on 68.7, and down -10 bps from yesterday at this time.The bitcoin price starts today at US$72,595 and up a sharp +5.5% from this time yesterday. Volatility over the past 24 hours has been high at just on +/- 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 tomorrow.

Kia ora,Welcome to Tuesday’s Economy Watch where we follow the economic events and trends that affect Aotearoa/New Zealand.I'm David Chaston and this is the international edition from Interest.co.nz.Today we lead with news China is having trouble getting its economic mojo back. In fact most signals are suggesting they are slipping further behind.But first, this coming week is a very busy one in the US. Not only will they release key labour market data (JOLTS, non-farm payrolls) and PMI data (ISM), they will also release their Q3-2024 GDP result (expect +3%), all this while some megacap companies release Q3 earnings results, any one of which could be market-moving.Japan will release its policy interest rate decision this week. China will publish is official PMIs. And the EU will chime in with PMIs and its GDP result too.Australia will release its Q3-2024 CPI result in Wednesday, expected to come in at 2.9% which would be lower than the 3.8% in Q2. The RBA next reviews its policy rate a week from today and all indications are that it will hold it at 4.35%.Over the weekend there were two democratic election results of interest to us, and in both cases, long-governing parties were defeated. This wasn't unexpected however, although the results were a lot closer in both cases than pundits expected. In Japan, the current Prime Minister may be able to hang on by adding a third party to his current two-party coalition. In Queensland, the switch was clearer although not as brutal as was widely expected.In China official weekend data showed that industrial profits were -3.5% lower in the nine months to September than in the same period a year earlier. This comes amid persistent weak demand, deflation risks, and their property downturn. But just looking at September alone, profits dropped -22% from the same month a year ago. So the bite is on. It seems unlikely that Thursday's October PMIs will be very encouraging.Foreign direct investment into China for the year to September slumped too, down -30% from the previous year although on the year-to-date basis they favour that was a slight easing from the -31.5% fall in August. For the month of September, the inflow was +NZ$14.2 bln and a huge step down than the +NZ$540 bln that flowed in in September 2023. But at least it is positive.Leading Chinese economist Zhang Yu has raised the alarm over falling consumption in the Chinese domestic economy. Consumption is under pressure even though Beijing seems to be making big efforts to boost it. In Q3-2024, retail growth came in at just +2.5%, while in the mega-cities of Beijing and Shanghai it turned negative in the months of July and August. He points out that domestic consumption's economic contribution ratio dropped to 49.9% in the first three quarters of 2024, as compared to 60.5% for the first half. That is a very rapid shift. Exports have held their growth level up so far, but that isn't continuing. The shriveling consumption puts China's economy in some sort of peril and Beijing seems to have no answers so far. They have used half of their support measures already. Hopefully the next half will work better.Across the Pacific, American durable goods orders slipped slightly in September from August, but by less than analysts had expected. But that takes them -2.9% lower than a year ago. Capital goods orders retreated -6.5% year-on-year, but non-defense capital goods orders other than aircraft were higher (although only by +0.6%).The University of Michigan consumer sentiment index was revised up in October from their earlier 'flash' result, marking a third consecutive month of rises and reaching the highest level in six months. And this same survey found little concern about future inflation, with expectations at 2.7% and that is its lowest level in almost four years.The Dallas Fed's factory survey was much improved in October, its mildest contraction since the sag that started in May 2022. It was driven by a sharp improvement in production activity. However the recovery in new orders was much weaker.A very well supported UST 5yr bond auction earlier today brought a median yield of 4.07%. But that was an unusually large rise from the 3.46% at the prior equivalent event a month ago. There was a two-year UST bond auction as well, also well supported but also at a median yield that jumped just as much.In Canada, retail sales rose again in August mainly on the back of more optimistic car buying. While the overall gain is still low, it is a third month in a row they have reported a year-on-year rise.The UST 10yr yield is now at just on 4.29% and up +4 bps today. Wall Street earnings results for Q3 so far have stayed strong.The price of gold will start today at US$2743/oz and down -US$5 from yesterday.Oil prices are down a very sharp -US$4 at just on US$67.50/bbl in the US while the international Brent price is now just under US$72/bbl.The Kiwi dollar starts today at 59.8 USc and unchanged from this time yesterday or Saturday. Against the Aussie we are up +30 bps at 90.8 AUc. Against the euro we are down -10 bps at 55.3 euro cents. That all means our TWI-5 starts today at just on 68.8, and up +10 bps from yesterday at this time, and from Saturday.The bitcoin price starts today at US$68,821 and up +1.6% from this time yesterday. Volatility over the past 24 hours has been modest at just on +/- 1.3%.You can find links to the articles mentioned today in our show notes.You can get more news affecting the economy in New Zealand from interest.co.nz.Kia ora. I'm David Chaston. And we will do this again tomorrow.

Kia ora,Welcome to Friday’s Economy Watch where we follow the economic events and trends that affect Aotearoa/New Zealand.I'm David Chaston and this is the international edition from Interest.co.nz.Today we lead with news we need to get ready for a +3o future and start adapting for it.But first, initial jobless claims in the US came in at just 203,000 last week, much lower than expected. There are now 1.635 mln on these benefits. We are about a week away from getting the US non-farm payrolls report and current estimates are that it expanded just +140,000 in October. That may be conservative.But the Chicago Fed's monitoring of their National Activity Index reveals a slip in September.But in October that may have picked up, and substantially. The S&P/Markit US factory PMI contracted its least in three months, and their services PMI is still expanding at a good pace and has been for six months now. This helps explain why employment has been stronger than expected for some time.The other encouraging feature of these PMI reports is that inflation pressures seem absent now.The Kansas City Fed's regional factory survey showed these trends; factory activity barely contracting now which was a sharp improvement from September. And their services sector was expanding still.Although firms in both regional and national surveys are increasingly optimistic about the future, they seem to be ignoring - or looking past - the damage the extended Boeing strike will cause. More here.Also encouraging for them is that American new home sales were on the rise in September, rising to a 738,000 annual rate, its highest since the outlier May 2023 spike. The September level is +6.3% higher than a year ago. This time, new home sales seems to be on a rising trend.In Japan their flash October PMI report shows a contraction too in their factory sector, but also only a minor one. But output and new order levels slipped at a slightly faster rate. Their services sector isn't expanding either according to this same report, a slip from the prior month. Apparently Japanese businesses are struggling to adapt to their modest inflation pressures.Korea reported its Q3-2024 GDP yesterday, revealing a +1.5% growth rate, lower than the +2% expected at the +2.3% in Q2-2024.India's October PMIs stayed strongly expansionary. New order levels were high. But there are signs of serious overheating, and inflation in India is a building concernThere is no overheating in the EU with everything ticking lower in October. But at least their service sector is still expanding.In Australia, their October PMI survey reveals that their factory sector is at a 53 month low with a moderate contraction. Their services sector however is holding its own - just.An updated UN report shows that we have essentially run out of time to cut greenhouse gas emissions. We are on track for a +3% rise in global temperatures and that will radically change how the planet operates, most of it not good. The difference between rhetoric and action is stark. China (+5.2% rise in emissions) and India (+6.1%) are overwhelming the US (-1.4%) and EU (-7.5%) restraint. Together China and India released 20,140 MtCO2e of greenhouse gas, 38% of the global total. Together the US and the EU released 9,200 MtCO2e or 17%. Neither China nor India are likely to heed the evidence, and if Trump is elected, the US will likely switch sides - so it will now be all up to how we adapt. Fortunately, New Zealand is in a relatively good position (or less-bad position).Container freight rates fell another -4% last week but are still +118% higher than the 2019 pre-pandemic average. Again it was outbound China routes that fell but there was also a slip in rates from the US to China. Bulk cargo rates fell a sharper -12.5% last week, to be -28% lower than a year ago and back to pre-pandemic levels.The UST 10yr yield is now at just on 4.19% and down -6 bps from this time yesterday.The price of gold will start today at US$2732/oz and up +US$12 from yesterday.Oil prices are -50 USc softer at just on US$70/bbl in the US while the international Brent price is now just over US$74/bbl.The Kiwi dollar starts today at 60.1 USc and up +10 bps from this time yesterday. Against the Aussie we are also up +10 bps at 90.6 AUc. Against the euro we are down -10 bps at 55.6 euro cents. That all means our TWI-5 starts today at just on 68.9, and down -10 bps from yesterday at this time.The bitcoin price starts today at US$67,558 and up +2.5% from this time yesterday. Volatility over the past 24 hours has been moderate at just on +/- 2.1%.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.Today we lead with news that while officials cut policy interest rates, markets are bidding up benchmark bond rates.But first, there was another aggressive fall in the level of American mortgage applications last week, down almost -7% from the prior week, and extending the -17% plunge from that earlier period. But they are +3% higher than year-ago levels. Mortgage interest rates have been rising although they held last week at 6.73%. But they are still well down on the year-ago 7.16% level.Perhaps the fall in mortgage applications is due to the weak state of their housing demand. Existing-home sales fell -1.0% in September from August to an annual rate of 3.84 mln. That is a -3.5% dip from one year ago. And they are on track for their worst year since 1995. American money isn't 'invested' in housing, it is in financial markets.There was a well-supported US Treasury 20 year bond auction earlier today which delivered a median yield of 4.53%. But that was an outsized hike from the 3.97% at the prior equivalent event only one month ago.The US Fed released its October Beige Book review of the surveys in all its districts and it was unremarkable, only finding modest improvements.American petrol prices keep on easing at the pump, now -11.1% lower than year-ago levels.And as widely anticipated, Canada cut its official interest rate by -50 bps to 3.75% overnight. They signaled that they will continue to chop the rate should their economy develop as expected. The decision increased the pace of rate cuts following three -25 bps reductions, and this aligns with their recent sharp slowdown in Canadian inflation. Some expect another -50 bps cut at their December meeting.Singapore's core inflation rate rose again but only to 2.8%. This central bank version is different to the normal CPI because it is the one most influential on their rate settings.Taiwanese retail sales were up +3.2% in the year to September. And their industrial production was up +12.1% on the same basis.In China, it is still a long way off, but the retail event known as "Singles Day, or "11-11" (November 11) has kicked off early promotions and by some [official] reports is building momentum. It is a world-scale retail event, probably larger than "Black Friday" in the US and elsewhere.And staying in China, they are raising petrol prices again, their ninth rise of 2024. They blame "rising crude oil prices" which is a bit of a reach given they have fallen -13.3% over the past year.Consumer confidence in the Euro Area improved in October to its highest since February 2022. This was as expected. However, it remains negative but has now risen back to its long-term average for the first time in 32 months.The UST 10yr yield is now at just on 4.25% and up +5 bps from this time yesterday.The price of gold will start today at US$2720/oz and down -US$22 from yesterday.Oil prices are -US$1.50 lower at just on US$70.50/bbl in the US while the international Brent price is now just over US$74.50/bbl.The Kiwi dollar starts today at 60 USc and down -40 bps from this time yesterday. Against the Aussie we are unchanged at 90.5 AUc. Against the euro we are back down -20 bps at 55.7 euro cents. That all means our TWI-5 starts today at just on 69, down -10 bps from yesterday at this time.The bitcoin price starts today at US$65,928 and down -1.5% from this time yesterday. Volatility over the past 24 hours has been modest at just under +/- 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.