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 of an unexpected development in South Korea.But first, dairy prices edged up slightly again in this morning's latest full dairy auction, but that doesn't really tell the story of this event properly. With the local milk production season now past its peak, lesser volumes were on offer. And buyers seem to have already stocked up for Christmas and Chinese New Year. So it will be no surprise to know that most commodities slipped in price today - apart from a +4.1% surge in the WMP price. Almost alone, this twisted the overall index to a +1.2% rise in USD terms, and a +1.6% rise in NZD termsIn the US last week there was something of a surge in retail sales with the benchmark Redbook index rising 7.4% from the same week a year ago. Buying before Trump's tariff-tax seems to be becoming a thing. Black Friday was in both weeks, this year and last year.Also rising more than expected were US job openings in the US. Their JOLTS report seems to show that October data ends a longish easing in the rising in hiring. It also shows that employees are less afraid to quit to find another job.And more optimism is found in the RealClear Markets/TIPP survey for November.And the US logistics industry seems to be settling into a positive phase with another good expansion in November.Across the Pacific, we should not a rather stunning development in South Korea, our fourth largest trading partner. Martial law has been declared by their embattled President. It seems the 'anti-state forces' he is battling are internal ones in labour unions. Even members of his own party are opposing the declaration. Apparently his wife is a key influencer in this decision. His move looks very uncertain at this time, and legislators have voted against the move.The South Korean currency, the Won, fell hard, back near GFC and Asian Financial Crisis levels.In China, State media is talking up the rise in real estate sales transactions, both by households in some cities, and by developers.And later today in Paris, French legislators will vote on whether to topple the Barnier government.And later today, the Aussie will release their Q3-2024 GDP result - which is expected to show a +1.1% expansion from the same quarter a year ago. That would be about the lowest since the pandemic.The UST 10yr yield is now at just on 4.20%, up +2 bps from yesterday.The price of gold will start today at US$2650/oz and up +US$10 from this time yesterday.Oil prices are +US$2 higher at US$70/bbl in the US while the international Brent price is +US$1.50 higher at just over US$73.50/bbl.The Kiwi dollar starts today at 58.8 USc and unchanged from this time yesterday. Against the Aussie we down -20 bps at 90.8 AUc. Against the euro we have dipped -10 bps to 55.9 euro cents. That all means our TWI-5 starts today at just on 68.3, and down -10 bps from yesterday.The bitcoin price starts today at US$95,045 and down -1.4% from this time yesterday. Volatility over the past 24 hours has remained modest 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.

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 all about the state of the world's factories. Globally, manufacturing stabilised in November with a rise in new orders.First up today, there were two factory PMI surveys out for the US for November. Both reported their sector contraction eased noticeably. The widely-watched local ISM version reported that new orders are now back expanding, even if the overall sector isn't. They also found that customer inventories are currently "too low", so that could well indicate an expansion is on the cards soon. And the internationally-benchmarked S&P Global/Markit version was upgraded from their 'flash' report showing similar improvements in new order flows.In Canada, their factory sector expanded with its strongest result in nearly two years.In China, the private Caixin factory PMI was noticeably more positive for November than the official version. New orders drove that improvement too, and they were led by new export orders.The same survey of Japanese factories wasn't as positive and they reported a slightly larger contraction in November.In Singapore, their PMI rose to a small expansion. But it was equal best since December 2018.In Malaysia, their PMI eased in November, only slightly, but it remained under pressure with fewer new orders.Back in China, their 10-year government bond yield has dropped to 2%, a multi-decade low. Modern records for this paper only go back to 2002, but it is easily the lowest since then. The fall comes amid expectations of expanded stimulus from Beijing to support the economy. But expected announcements haven't surfaced so far.There was quite a bit of data released in Australia yesterday. First, their building consent data for October rose but only because of a catchup in apartment consents. It was a big jump. Consents for houses continued to slip however. But they have had overall rises consistently since the start of the year.On the retail sales front, Victoria, Queensland and South Australia saw good gains, but retail sales gains in NSW and WA were weak. However, it seems their Black Friday sales were quite positive, giving retailers there hope that the run to Christmas will be a better trading period.On the factory front, their internationally-benchmarked November PMI contracted at a much slower pace in November, hardly at all, which counts as an improvement for them.The UST 10yr yield is now at just on 4.18%, unchanged from yesterday.The price of gold will start today at US$2640/oz and down -US$9 from this time yesterday.Oil prices are -50 USc lower at US$68/bbl in the US while the international Brent price is -US$1 lower at just over US$71.50/bbl.The Kiwi dollar starts today at 58.8 USc and down -50 bps from this time yesterday. Against the Aussie we up +20 bps at 91 AUc. Against the euro we unchanged at 56 euro cents. That all means our TWI-5 starts today at just on 68.4, and down -20 bps from yesterday.The bitcoin price starts today at US$96,401 and down -1.0% 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 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 China is still stuck in its rut, the US twisted by tariff talk, Japan sees progress, and Russia's currency gets a big downgrade.But first, this coming week will end with the US non-farm payrolls report, and analysts expect a sharp recovery to +183,000 added jobs, far higher than the unusual (pre-election) October report of just +12,000. Before that they will deliver their JOLTs report, and there will be factory order data, more PMIs, and more sentiment surveys.India will review its official interest rate. South Korea and Turkey will report CPI inflation rates. Australia will report its Q3-GDP on Wednesday. And there will be many other PMI reports.In fact, over the weekend, China said its official factory PMI made a tiny improvement to maintain its small expansion. It was its second 'positive' result in a row and its best since April. At the same time the minor positive reading for its services sector disappeared. Taken together, this paints a picture of an economy without any expansion. We will get the Caixin PMI data tomorrow, and that has tended to be marginally more positive recently.In Japan, their central bank boss said they are "approaching" a decision with a view they will raise their policy rate from the current 0.25% to 0.50%. They like their current data track, but they hesitate because they don't have a firm fix on the damage the incoming US Administration will do."I am not worried much about Japan's financial system because ample capital, stable deposits and access to liquidity have been ensured," he said. In contrast, he noted that "non-bank financial institutions are posing a grave problem" in the US and added that "they deserve to be closely monitored."Japanese consumer sentiment recovered somewhat in November, still positive, but nothing like what they had from December to March earlier in the year.Japanese retail sales rose +1.6% in October, recovering from the weak September expansion, but still much lower than what they have achieved monthly since early 2022. At least it is back heading in the "right" direction.And Japanese industrial production rose +1.6% in October from a year ago, ending two months of retreatSouth Korea's industrial production rose in October at a very strong +6.3% pace from a year ago, after the unusual stumble in September, returning to the average expansion they have had since September 2023. So it will be no surprise to learn that their exports kept rising strongly in October, as did their imports.However Korean retail sales slipped in October to be -0.8/% lower than a year agoIndia's economic expansion is 'consolidating', delivering a somewhat disappointing Q3-2024 result. Their economy rose +5.4% from the previous year, slowing from the +6.7% expansion in Q2-2024 and well below market expectations of a +6.5% increase. It was their softest pace of growth since Q4-2022. Still, even at the latest lower rate, it is rising on a per capita basis.This miss adds pressure on the Reserve Bank of India to cut its policy interest rate which currently stands at 6.5%. They review it next on Friday.The Indian currency fell on the news to a record low against the USD. Although not a record low against the NZD, it is has been close to that since the whole period from end of 2020.In the US, early reports from card companies and industry monitors show that in-store retail sales growth for Back Friday sales was quite modest - even disappointing - and up only +0.7% from the same day a year ago. But online sales activity burst higher, up more than +14% on the same basis.In Canada, their Q3-2024 GDP growth came in +1.0% higher than a year ago, up +0.3 for the quarter. This was not enough to prevent a fall in per capita GDP. On that basis it fell -0.4% in the third quarter, which was the sixth consecutive quarterly decline.In Europe, inflation expectations in the euro zone for the year ahead edged up slightly in October to 2.5%, and stayed steady for three years out at 2.1%, the ECB's monthly Consumer Expectations Survey showedEU CPI inflation rose to 2.3% in October, up from 2.1% in September, but still clearly in a down-trend that started in November 2022.In Russia, their currency suddenly fell over the weekend to near record lows (a record if you exclude the full invasion spike in 2022). The falls were not only vs the USD, but the Chinese yuan as well. The economic pressure on the Russian economy is mounting as it suffers severe distortions and indigestion, the longer it presses its invasion of Ukraine.In Australia, private sector debt rose +6.1% in October from a year ago, driven primarily by business debt growth, up +8.3% on the same basis, but housing debt growth was up +5.3% too. Other personal debt only rose +2.2% in October. (From a Kiwi perspective, these are relatively fast rises. Late last week equivalent RBNZ data showed business debt rising only +1.1%, housing debt rising only +3.5%, and personal debt up only +1.7% in the year to October.)In Australia there is some scepticism that their debt tide rise will be maintained.And their housing market is showing signs of exhaustion. November data shows sales volumes -4.6% lower than a year ago. The largest drop in the volume of home sales has been in Sydney, where sales over the rolling quarter were estimated by CoreLogic to be more than -15% lower than a year ago. But that isn't easing their rental crisis where the vacancy rate is less than 1%.The UST 10yr yield is now at just on 4.18%, unchanged from Saturday but down -23 bps from this time last week. The price of gold will start today at US$2649/oz and down -US$10 from this time Saturday, and down -US$56 from this time last week.Oil prices are little-changed, still just over US$68.50/bbl in the US while the international Brent price is just under US$72.50/bbl. A week ago these levels were $2.50/bbl higher, so a retreat from then.The Kiwi dollar starts today at 59.3 USc and up +10 bps from this time Saturday. But it is up +1c from this time last week. Against the Aussie we up +60 bps at 90.8 AUc. Against the euro we unchanged at 56 euro cents. That all means our TWI-5 starts today at just over 68.6, and little-changed from Saturday, up +50 bps from a week ago.The bitcoin price starts today at US$97,372 and up a minor +0.3% 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 the world's dominant financial market is closed today, so this will be a thin report. Wall Street will be back in a limited capacity tomorrow (their Friday).In the US, a record 80 mln people are expected to travel at least 100 kms this holiday weekend.But the Canadians are not on their Thanksgiving holiday break. They have it on the second Monday in October, so it has already been for them.And new data shows on average, Canadians work 33.5 hours per week. But payroll earnings are rising, up +5.2% in September from a year ago. That is a faster pace than recently. The growth in average weekly earnings can reflect a range of factors, including changes in wages, composition of employment, and hours worked.The Bank of Korea cut its base rate by -25 bps yesterday to 3.0% during its November meeting. It was a cut not expected and was the second straight month of rate reductions, bringing borrowing costs to their lowest level since October 2022.In Hong Kong, prices for private residences stopped falling in October. The smallest units, 40m2 and smaller, saw a +4.3% rise from September, ending a long decline that started in 2019. But those are still -7.8% lower than a year ago, and down -27% since mid 2019. The brader market is down -9.9% in the year. The interruption of the decline was due to the cancellation of some stamp duties and the opening up the market to mainland Chinese buyersThe EU sentiment surveys were broadly stable in November.In Australia, private capital investment rose +1.1% in Australia in Q3-2023. And that was despite a -1.9% drop in the mining sector. And you can see that in the distribution by State. New South Wales led the way with a +3.6% rise followed by Victoria's +3.2% gain. The largest falls were in South Australia (-11%) and the Northern Territory (-17%). WA was down too, but a lesser -1.3%. Large building projects involving large scale upgrades in the manufacturing sector, and large data centre projects, were the drivers. Many companies in this survey say they plan an investment surge in 2025. Westpac described the trend as a "once in a generation structural change".As part of a last-minute set of deals to get most of its agenda passed in preparation for their 2025 federal election, their government has accepted a Green Party inspired compromise to split the RBA board in two, one for rate setting, and another for governance. The Green's goal was to force the RBA to cut rates, killing the RBA's independence, but it is not clear this aspect was achieved.Container freight rates are down another -2% last week from the week before. Outbound China to the USWC saw the largest fall, down -5% in the week. Bulk cargo rates are down -7% in a week. That now puts them -34% lower than a year ago, but a year ago was when they suddenly spiked.The UST 10yr yield is now at just on 4.24% and unchanged from this time yesterday.The price of gold will start today at US$2642/oz and virtually unchanged, down just -US$1 from this time yesterday.Oil prices are little-changed, still just over US$68.50/bbl in the US while the international Brent price is just over US$72.50/bbl.The Kiwi dollar starts today at 58.9 USc and down -20 bps from this time yesterday. Against the Aussie we down -30 bps at 90.6 AUc. Against the euro we unchanged at 55.8 euro cents. That all means our TWI-5 starts today at just under 68.4, and down -20 bps from yesterday.The bitcoin price starts today at US$95,260 and down -0.8% from this time yesterday. Volatility over the past 24 hours has been modest at +/- 1.4%.You can find links to the articles mentioned today in our show notes.You can get more news affecting the economy in New Zealand from interest.co.nz.Kia ora. I'm David Chaston. And we will do this again 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 rising consumer demand in the world's largest economy is still driving the world's economy, a trend that started nearly a century ago - and still, it shows no sign of ending anytime soon.First we should note that the American Thanksgiving holiday starts tomorrow, so there is a big data dump today. Most Americans will have a four day 'holiday' (although the bond market will trade on their Friday). That frees them up for the start of the end-of-year retail rush. Given the good shape their economy is in, it is likely to be a positive retail season.US jobless claims rose last week but by less than seasonal factors would have accounted for, so the headline change was regarded positively. The level of continuing claims rose too, but not as sharply as they did in the same week a year ago. So no early signs of labour market stress here.And there was a good rise in mortgage applications last week from the week before (+6.3%), and slightly better that can be accounted for by seasonal factors (+1.7%). Perhaps more impressive is that these rises came despite benchmark mortgage interest rates rising to their highest level since July.And the October pending home sales rose +2.0% to be +5.4% higher than a year ago. This is a further sign the US housing market may have touched bottom.US durable goods orders rose in October, up +5.3% from the same month in 2023, but by less than expected. And that was because the 2023 level was slightly weaker than normal. Capital goods orders rose +5.4% although non-defence capital goods orders were only up +2.9%.The Chicago area PMI came in weak in November, continuing its year-long retreat in a result that would have disappointed everyone.There were no surprises in the second estimate of the American Q3-2024 GDP growth rate, coming in unchanged from the first estimate at +2.8%, and a consistent expansion since Q3-2022. This is an expansion fuelled by consumer spending.But the same data showed core PCE rose to +2.8%, up a tick from +2.7% in Q2. Although this was as expected, this inflation measure is the one favoured by the US Fed, so it is a shift that they will take into account.Today's UST bond auction of seven year paper was very well supported, and for the first time in a long while, the median yield fell from the prior equivalent event. Today it came in at 4.14%, whereas a month ago it was at 4.17%.China industrial profits were expected to fall -3.0% in the nine months to September and in the end they came in down -4.3% on that same basis. Not a huge slip, you may think. But ytd comparisons hide a lot and for September alone, they were -23% lower than in the same month a year ago. There is a definite profit squeeze going on in China.In India, their parliament was suspended so that debate on the links between the ruling BJP political party, and the American-indicted Adani Group could not proceed.In France, their government is close to collapse.In the EU, the European Parliament is moving to get the bloc to “revoke Hong Kong’s special customs treatment” and review the status of its economic and trade office in Brussels over a long-running national security trial that last week saw 45 opposition figures jailed for between four and 10 years.Markets thought the October CPI indicator in Australia would report a rise from the September level of 2.1%. But in the end there was no change. (Food, however, was up +3.3%, and also unchanged from September.) This overall result eased financial market fears that the RBA would have to weight harder against inflation. However, the 'hold' puts rate cuts there back in the frame earlier than otherwise assumed.Australian construction work completed in Q3-2024 also came with a positive surprise, up +3.2% from, the same quarter a year ago. Dragging on this result was virtually no change in residential construction. But unlike in the June quarter, every sector made some positive contribution to the overall gain. The actual result was way better than the limp +0.3% expectation.The UST 10yr yield is now at just on 4.24% and falling -8 bps from this time yesterday.The price of gold will start today at US$2642/oz and up +US$13 from this time yesterday.Oil prices are down -US$1 at just over US$68.50/bbl in the US while the international Brent price is just on US$72.50/bbl.The Kiwi dollar starts today at 59.1 USc and up a full +80 bps from this time yesterday. Against the Aussie we are +70 bps higher at 90.9AUc. Against the euro we up +20 bps at 55.8 euro cents. That all means our TWI-5 starts today at just under 68.6, and up +50 bps from yesterday.The bitcoin price starts today at US$96,058 and up +1.7% 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 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 financial markets are being rattled somewhat by the isolationist rhetoric from the incoming US President on tariffs, especially as they will apply to Canada, Mexico and China. However, despite the incendiary nature of the talk, the market reactions have been relatively mild with the expectation the adults in the room will calm things in January.But these reactions have hit commodity currencies.One reason restraining Trump might work is that his mind is still in the 2020 past. In fact the Biden Administration has been particularly successful in restraining drug importation, fentanyl in particular, that overdose deaths are falling rather fast now. And restraining the drugs trade from China and Mexico is a motivating reason for those tariff threats. (It was during the last Trump Administration that those deaths spiked.)Anyway, away from the ramblings of a bitter old man, first up today, we can report higher dairy prices for two key commodities at the overnight GDT Pulse auction event. SMP rose +0.5% in USD terms and was up +1.8% in NZD terms. WMP rose another +2.2% in USD terms to be up +3.5% in NZD terms. This will give upside to all the analyst farmgate payout forecasts, and it seems likely they will coalesce around the $10/kgMS mark now. That, of course, would be a record high.In the US, their retail impulse is staying 'healthy' as measured by the Redbook survey, and last week it rose +4.9% above the same week a year ago, holding the expansion we have observed for the past eight months.This was supported by a rise in consumer sentiment, as measured by the Conference Board survey. It is now at the top of the range that has prevailed over the past two years. November’s increase was mainly driven by more positive consumer assessments of the present situation, particularly regarding their labour market.Further, there was an improvement in the Texas services sector in November, taking into an expansion. And a return to expansion was also reported for the service sector in the mid-Atlantic states.But none of this has spilled over into confidence in home buying, yet anyway. New home sales in October dropped more than 17% from the previous month to at a seasonally adjusted annualised rate of 610,000. And that takes it -9% lower than the same month a year ago.Singapore’s factory production rose by only +1.2% in October from a year ago, slowing sharply from a downwardly revised +9% rise in the previous month and disappointing analysts. Activity slowed significantly for biomedical manufacturing.Here's something we rarely report on, but is an indication of the tight ASEAN economies. Car sales in Thailand sank -36% in October from a year ago to be the seventeenth consecutive month of decline, driven primarily by high household debt and significant tightening of loans.Later today in Australia, we will be following the October CPI indicator and it is expected to reveal a small rise from the prior month.Join us at 2pm for the RBNZ's Monetary Policy Statement and the OCR review. A -50 bps rate cut is widely expected. But it will be a twelve week gap until the February 19, 2025 MPS, so this review has to carry them through a period which may have considerable international uncertainty attached to it.The UST 10yr yield is now at just on 4.32% and rising +3 bps from this time yesterday.The price of gold will start today at US$2629/oz and down -US$2 from this time yesterday.Oil prices are little-changed at just under US$69.50/bbl in the US while the international Brent price is just under US$73.50/bbl.The Kiwi dollar starts today at 58.3 USc and down a minor -10 bps from this time yesterday. Against the Aussie we are +20 bps higher at 90.2AUc. Against the euro we down -20 bps at 55.6 euro cents. That all means our TWI-5 starts today at just on 68.1, down another -10 bps from yesterday.The bitcoin price starts today at US$94,496 and down another -1.2% from this time yesterday. Volatility over the past 24 hours has been moderate at +/- 2.5%.You can find links to the articles mentioned today in our show notes.You can get more news affecting the economy in New Zealand from interest.co.nz.Kia ora. I'm David Chaston. And we will do this again tomorrow.

Kia ora,Welcome to Tuesday’s Economy Watch where we follow the economic events and trends that affect Aotearoa/New Zealand.I'm David Chaston and this is the international edition from Interest.co.nz.Today we lead with news the market pressure on US benchmark interest rates is easing now.First, an updated Dallas Fed survey showed the Texan manufacturing sector contracted less in November, the least in 2½ years. This was driven by the outlook mood which improved sharply, post election. But this may just be a partisan hope. New order levels actually fell to their worst shrinkage in a year, and continuing a two year trend of shrinkage in this oil-patch region.And the broader Chicago Fed National Activity Index decreased in October from September to its lowest in nine months in a surprise result that was much worse than market forecasts. This index suggested US economic growth decreased. Current forecasts are that the US economy is growing at just under +2%, although the Atlanta Fed's GDPNow model has it at +2.6%. Anywhere else that sort of expansion would be considered very good for a developed economy.There was another large US Treasury bond auction this morning, again very well supported. The yield was 4.24% at this event, and higher than the 4.07% median yield at the prior equivalent event a month ago - but not the sort of rise we have seen recently in other maturities.Singapore’s inflation rate eased to 1.4% year-on-year in October from 2% in the previous month, and below market expectations of 1.8% gain. This marked the lowest inflation rate since March 2021, as prices moderated for housing and utilities.Taiwanese retail stopped expanding in October after a long run of expansion that started in August 2021.But Taiwanese industrial production is still growing at a healthy rate, although that rate of growth is slowing. It was up +8.5% in October from a year ago, down from an +11% rise in the year to September. A year ago in October 2023 it was falling +2.3%, so they have come a long way since then.In China, their central bank injected ¥900 bln into financial institutions via a one-year medium-term lending facility yesterday at an unchanged rate of 2.0%. That compared with the ¥1.45 tln of MLF loans due this month, marking a net cash withdrawal of ¥550 bln.After the March to August rises, the German IFO sentiment survey returned to its lows for other than the GFC or the pandemic. Analysts see a fading of strength in an economy that was only recently an engine of Europe. And overnight, ThyssenKrupp, the largest steel maker in Germany, said it would cut its workforce by up to 11,000 from the current 98,000, by 2030.The UST 10yr yield is now at just on 4.29% and down -12 bps from this time yesterday.The price of gold will start today at US$2631/oz and down -US$85 from this time yesterday.Oil prices are down -US$2 at just over US$69/bbl in the US while the international Brent price is just over US$73/bbl.The Kiwi dollar starts today at 58.4 USc and up a minor +10 bps from this time yesterday. Against the Aussie we are +20 bps higher at 89.9 AUc. Against the euro we down -20 bps at 55.8 euro cents. That all means our TWI-5 starts today at just on 68.2, down -10 bps from yesterday.The bitcoin price starts today at US$95,648 and down -1.1% from this time yesterday. Volatility over the past 24 hours has been modest at +/- 1.3%.You can find links to the articles mentioned today in our show notes.You can get more news affecting the economy in New Zealand from interest.co.nz.Kia ora. I'm David Chaston. And we will do this again on tomorrow.

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

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

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

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

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

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

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

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

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.

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 global bond selloff has eased, but the reasons for it don't seem to have changed.First up today, the IMF has lowered its global growth forecast and warned of increasing risks ahead. The growth they see is from the stronger-than-expected performance in the US despite slowdowns in China and Japan. They still see 2024 expanding 3.2% this year in spite of all the supply-chain disruptions. Five years from now, global growth should reach 3.1%, a mediocre performance compared with the pre-pandemic average.It sees zero growth in New Zealand in 2024, a +1.9% expansion in 2025 and only rising to +2.4% by 2029. Still, that would be better than it sees for most advanced economies - and slightly better than in Australia.The US Treasury Secretary Yellen claimed that the US rejection of "Made in America" isolationism had made the world a better place than if it had continued, and was the basis of the current global expansion.The decline in inflation worldwide is helping to keep growth momentum steady, with headline inflation projected to slow to 3.5% by the end of 2025, below the average of 3.6% between 2000 and 2019, they said. Australia is the laggard on progress in taming inflation, they observe.The new threats they see relate to the rise and rise of trade wars.Meanwhile, the US retail pulse as measured by the Redbook monitoring eased slightly last week to be +4.6% higher than a year ago. This is better than inflation but at the lower end of the gains since March.The Richmond Fed's factory survey recorded a small improvement in October, a shift that was not expected. But it remains negative all the same. Their arguably more important services survey turned positive in October, and although also minor it was a shift that was also better than expected.Although it had been positive since April, Canadian producer prices sank in September, resuming the trend that has started in March 2023.Here is something we don't normally follow, but it helps explain why the EU manufacturing base remains in the doldrums. EU car registrations came in just over 810,000 in September, a bounce-back from August but well below the 1.1 mln June level. Since the pandemic, the average has been about +800,000 per month. But that is a long way down from the pre-pandemic average of about +1.4 mln per month. It a radical step lower.The UST 10yr yield is now at just on 4.20% and up +2 bps from this time yesterday.The price of gold will start today at US$2742/oz and up +US$22 from yesterday.Oil prices are +US$2 higher at just under US$72/bbl in the US while the international Brent price is now just on US$76/bbl.The Kiwi dollar starts today at 60.4 USc and up a minor +10 bps from this time yesterday. Against the Aussie we are down -10 bps at 90.5 AUc. Against the euro we are back up +20 bps at 55.9 euro cents. That all means our TWI-5 starts today at just on 69.1, up +10 bps from yesterday at this time.The bitcoin price starts today at US$66,933 and down -0.3% from this time yesterday. Volatility over the past 24 hours has been modest at just under +/- 1.0%.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 investors seem to be having second thoughts about Q3 earnings prospects in light of the supposedly close US election race. Wall Street is retreating and US Treasury yields are rising.But first, the US Conference Board said its Leading Economic Index fell by -0.5% in September following a -0.3% decline in August. Over the six-month period between March and September 2024, this leading indicator fell by -2.6% which was more than its -2.2% decline over the previous six-month period. Weakness in factory new orders continued to be the major drag, along with the yield spread.Canada is getting ready for a -50 bps rate cut on Thursday. Sentiment about where their economy is headed seems to be fractured there depending on age. Older Canadians are increasingly optimistic. Younger Canadians remain pessimistic.Across the Pacific, Malaysia said its economy grew +5.3% in Q3-2024 which is at the upper end of its quarterly growth rates since the start of 2023. A year ago it was expanding at a +3.1% rate.Taiwanese export orders rose to their highest level in two year in September, even though the pace of that growth slowed to +4.6%. All this is happening while it large neighbour is trying the squeeze it into submission.That large neighbour's central bank has pushed through cuts to its Loan Prime Rates by its big state-owned banks and by more than expected, cutting the 1 year by -25 bps to 3.10% and the five year by the same amount to 3.60%. These are record lows. The one year rate is the benchmark for most corporate and household loans, the five year rate the benchmark for mortgages.All this is part of its stimulus plan to prevent a dangerous slowdown from occurring in their economy.At the same time Chinese banks cut -25 bps from their deposit rates to prevent deterioration in their margins. This will impact huge amounts of Chinese household savings. This may become a factor in some shift of savings into their equity markets.The UST 10yr yield is now at just on 4.18% and up +10 bps from this time yesterday.The price of gold will start today at US$2720/oz and unchanged from yesterday.Oil prices are +US$1.50 higher at just on US$70.50/bbl in the US while the international Brent price is now just over US$74/bbl.The Kiwi dollar starts today at 60.3 USc and down -40 bps from this time yesterday. Against the Aussie we are unchanged at 90.6 AUc. Against the euro we are down -20 bps at 55.7 euro cents. That all means our TWI-5 starts today at just on 69, down -20 bps from yesterday at this time.The bitcoin price starts today at US$67,130 and down -2.1% from this time yesterday. Volatility over the past 24 hours has been moderate at under +/- 2.0%.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 that signs of economic under-achievement seem to be cropping up everywhere.First though, at the end of this week we have the long weekend holiday, for Labour Day. But first, the week ahead will feature October 'flash' PMIs from all over and the third week of Wall Street Q3 earnings results. In the US they will release September durable goods order data. Canada will chime in with a central bank rate decision (probably a -50 bps cut), and there will be confidence survey results from all over. Finally South Korea will release its Q3-2024 GDP growth rate, expected to be a bit north of +2%.Over the weekend there were no surprises in US housing start data for September, coming in just as expected and the general level it has been at for most of 2024.And Wall Street's Q3 earnings season reporting is building with 14% of S&P500 companies reporting so far, and the results are quite positive, reinforcing investor risk appetites.The US also reported its federal budget deficit for September over the weekend. It was a surplus of US$64 bln for the month. For the month, receipts jumped +13% from a year earlier, while outlays sank by -23%. But for the full fiscal year, it ended -US$1.8 tln in deficit (with interest costs exceeding US$1 tln for the first time). At that level the total deficit is equivalent to -6.3% of one year's economic activity in the country. This is up from -6.1% of GDP in 2023.Across the Pacific, China’s new home prices in their 70 major cities fell -5.7% in September from a year ago, more than the -5.3% fall in the previous month. It was the 15th straight month of decrease and the steepest pace since May 2015. Second hand houses seem to have fallen by much more, by -10.7%. This sector won't be helping China's "wealth effect".Meanwhile China said its Q3-2024 GDP expanded by +4.6%, marginally better than the +4.5% expected but less than Beijing's 5% target. They also said industrial production improved by +5.4% and retail sales were up +3.2%, on the same basis. Their jobless rate fell slightly, to 5.1%.Later today, China is expected to cut its Loan Prime Rates by -20 bps, their tenth consecutive cut since the pandemic, and to a record low. The have never raised these rates since they introduced them on 2019 - only ever cuts.And China's support of equity markets has almost hit ¥2 tln. With the Beijing 'put' in play, it is now not possible to read anything into Chinese equity market signals, especially when they rise. That may only indicate the size of the manipulation.Japan said its inflation rate fell to 2.5% in September from 3.0% in August. This was its lowest level since April. (It was also 3.0% in September 2023.)The regular ECB survey of professional forecasters shows that expectations are low for the bloc over the next two years to 2026. They see inflation staying under control, economic expansion rising to only modest levels, and their jobless rate staying little-changed.And in Australia, suddenly their housing market seems quite fragile. This past weekend, they may have had only a 40% auction clearance rate in Sydney, a very sharp and fast fall from their 'usual' levels of about 70%.The UST 10yr yield is now at just on 4.08% and unchanged from yesterday.The price of gold will start today at US$2720/oz and up +US$3 from Saturday - and yet another new all-time high.Oil prices are -50 USc lower at just over US$69/bbl in the US while the international Brent price is now just on US$73/bbl. These levels are -US$6/bbl lower than a week ago.The Kiwi dollar starts today at 60.7 USc and little-changed from this time Saturday. Against the Aussie we are +10 bps firmer at 90.6 AUc. Against the euro we are unchanged to 55.9 euro cents. That all means our TWI-5 starts today still just under 69.2, unchanged from Saturday at this time and little-changed from a week ago.The bitcoin price starts today at US$68,582 and down -0.4% from this time Saturday. Volatility over the past 24 hours has been low at under +/- 0.5%.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.

This is a test of the podcast generator on Google Notebook LLM

US data mixed. Japanese exports fall. China stimulus unconvincing. ECB cuts. Aussie labour market rises. Freight rates weaker.

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 economic data is light today and we await signals from the building Wall Street earnings season. Markets seem positive about what is ahead.Meanwhile in the US, mortgage applications fell very sharply last week from the prior week, down -17% and the most in nine years (excluding the pandemic). And that was on top of the more than -5% drop last week. The reason is that benchmark mortgage interest rates have been rising for three weeks and are now at a 2 month high of 6.52% for the standard 30 year mortgage.Canadian housing starts came in at a 224,000 annual rate in September, 18,806 for the month, less than expected but more than in August.Japanese machinery orders, excluding those for ships and electric power companies, fell -3.4% in the year to August from the same period a year ago. This is a large miss because they were expected to rise +3.6% on that same basis. It was the fifth drop so far this year. Orders for those excluded items (ships and electric power companies) were quite good however, mitigating the fall.The Bank of Thailand unexpectedly cut its key interest rate by -25 bps to 2.25% during its October meeting late yesterday, marking the first rate cut since early 2020. It was a move long advocated by the government but it was still not expected. They have a sluggish economy and inflation is now below the lower end of its target range of between 1% to 3%.Indian exports remained quite lackluster in September at US$34.6 bln and virtually unchanged from a year ago. India is no export powerhouse yet. Imports were US$55.4 bln, so they ran yet another trade deficit and they have been doing that now since 1997 (with one exception in one month in the 2020 pandemic).British CPI inflation fell to 1.7% in September, its lowest level since April 2021. It was down from 2.2% in August. But much of this sharply lower level came from sharply lower airline ticket prices, something that may be a bit of a one-off.In Australia, they reported an unusually low birth rate yesterday, with a record low fertility rate. (But it is similar to New Zealand's.) High housing costs are getting the blame.The UST 10yr yield is now at just on 4.01% and down -3 bps from yesterday. The price of gold will start today at US$2670/oz and up +US$p from this time yesterday - and a new all-time high.Oil prices are holding lower at just on US$70.50/bbl in the US while the international Brent price is still just under US$74.50/bbl.The Kiwi dollar starts today at 60.6 USc and down -25 bps from this time yesterday. Against the Aussie we are up +20 bps at 90.9 AUc. Against the euro we have dipped -10 bps to 55.7 euro cents. That all means our TWI-5 starts today now just under 69.2, and marginally lower that at yesterday at this time.The bitcoin price starts today at US$67,639 and up another +0.9% from this time yesterday. Volatility over the past 24 hours has been modeST at under +/- 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.Today we lead with news China is dusting off some unused regulations to shore up its deteriorating financial situation.But first, at the overnight dairy auction, prices were little-changed, down -0.2% in USD terms but up +2.8% in NZD terms. The dominant WMP price was essentially unchanged, but the foodservice commodities like SMP were down -1.8%, mozzarella down -8.2% and butter down -0.3%. Going the other way, cheddar cheese was up +4.2% and the only bright spot. No farm gate payout forecasts will be changed because of this event.Last week's US retail impulse survey shows a strong rise of +5.6% from a year ago. And this is not only well ahead of inflation, it is built on a strong +4.6% gain in the same week a year ago.Meanwhile, American consumer inflation expectations in September were little-changed at 3% for the year ahead. In fact consumer labour market and household finance expectations are largely stable too. Given it is an election period with its share of weirdness, perhaps this is not quite the result you might have expected.But it is not all good. Business activity contracted modestly in New York State, according to firms responding to the October 2024 Empire State Manufacturing Survey. After climbing into positive territory last month, the headline general business conditions index retreated rather sharply. New order levels fell, and shipments edged lower.Canada's CPI inflation rate fell to 1.6% in September, from 2.0% in August. It is now at its lowest level since February 2021. Lower fuel costs drove the retreat. It seems more likely now that Canada's central bank will cut its 4.25% policy rate when it next meets on Thursday, October 24 (NZT). Maybe outsized cuts are coming there.Japan industrial production is becoming quite volatile with big jumps followed by bit dips. The August data revealed a big dip, year-on-year. It is hard to know what to make of this new volatility. But overall it represents a sag.In a bit of a surprise, EU industrial production jumped in August and by enough to take the year-on-year level above August 2023, a rare event. It was the best month-on-month jump in more than a year. The European service sector is doing better and enabling local factories with more orders.In China, Bloomberg is reporting that tax authorities there are cracking down on offshore income earned by their wealthy. It has begun enforcing a long-overlooked tax on overseas investment gains. Some wealthy individuals in major Chinese cities were told in recent months to conduct self-assessments or summoned by tax authorities for meetings to evaluate potential payments, including those in arrears from past years, they reported. The move underscores growing urgency in Beijing to expand its sources of revenue as land sales tumble and growth slows.And we probably should note that those grain commodity price falls we noted yesterday have gathered steam today.The UST 10yr yield is now at just on 4.04% and down -8 bps from yesterday. The price of gold will start today at US$2661/oz and up +US$14 from this time yesterday.Oil prices are down a sharpish -US$3.50 at just on US$70.50/bbl in the US while the international Brent price is now just under US$74.50/bbl.The Kiwi dollar starts today at 60.8 USc and down -10 bps from this time yesterday. Against the Aussie we are little-changed at 90.7 AUc. Against the euro we are also little-changed at 55.8 euro cents. That all means our TWI-5 starts today now just over 69.2, and marginally lower from yesterday at this time.The bitcoin price starts today at US$67,003 and up another +1.9% from this time yesterday. Volatility over the past 24 hours has been moderate at under +/- 2.4%.Join us at 10:45am today when we will have full coverage of the Q3-2024 New Zealand CPI result, a crucial factor in setting monetary policy.You can find links to the articles mentioned today in our show notes.You can get more news affecting the economy in New Zealand from interest.co.nz.Kia ora. I'm David Chaston. And we will do this again tomorrow.

Kia ora,Welcome to Tuesday’s Economy Watch where we follow the economic events and trends that affect Aotearoa/New Zealand.I'm David Chaston and this is the international edition from Interest.co.nz.Today we lead with news the world's second largest economy shows more signs of losing its expansion mojoChina's exports rose in September but at an unexpectedly slowish pace. They were expected to rise +6% from a year ago, but only rose +2.4%. This was the fifth consecutive month of export growth, though at the slowest pace since April. Cut price (dumped) steel exports were a factor, a trade that is worrying may countries. And as expected import growth was weak, barely more than a year ago and well less than the +0.6% rise expected.China's new yuan loan growth also came in less than expected, rising almost +¥1.6 tln and much better than the 'modest' +¥1 tln in August. Banks are making more debt available. But it was a slower rise than the +¥1.9 tln expected. And in September 2023 they rose +¥2.3 tln, so well down on that basis too.A lot now depends on issuing a lot more debt. Some this is an additional +¥9 tln is on the way, but to be fair much of that won't be direct commercial bank lending. But sovereign money-printing (bond issuance) may well flow though to this channel.In a side note for China, we can report that their ETS carbon price rose to its highest-ever level yesterday, ¥103.5/tonne. The reason is that 'tougher' emissions standards are on the way there. But this ETS tax is low by New Zealand standards, equivalent to just NZ$24.40/tonne. Currently our ETS is pricing carbon at NZ$63/tonne. In the EU, that same price is €64.60/tonne (NZ$116). China's disincentive to pollute is cheap by comparison.Singapore said it's economy grew +4.1% in Q3-2024 from a year earlier. That is its fastest pace in two years and accelerated from +2.9% growth in the Q2-2024 quarter.Meanwhile in India, consumer inflation rose sharply in September to 5.5%, much higher than the August 3.7%. Driving this change were food prices, up at the rate of +9.2% in September and a far faster jump than the already-high +5.4% rise in August. This data may inhibit their central bank from starting an expected rate cut cycle. They have a mid-point inflation target of 4%.In the US, recent days have brought sharpish falls in food commodity prices as it becomes clearer that US and international grain harvests will be very good this year. Wheat, soybean and corn prices are all falling on excess supply worries.Overnight, the Nobel Prize in Economics was awarded. The prize was given to Daron Acemoglu, Simon Johnson and James Robinson for work that advanced the understanding of differences in prosperity between countries. Two are the authors of a book, 'Why Nations Fail'.The UST 10yr yield is now at just on 4.12% and up +5 bps from yesterday. The price of gold will start today at US$2647/oz and down -US$10 from this time yesterday.Oil prices are down -US$1.50 at just on US$74/bbl in the US while the international Brent price is now at US$77.50/bbl.The Kiwi dollar starts today at 60.9 USc and down -20 bps from this time yesterday. Against the Aussie we are little-changed at 90.6 AUc. Against the euro we are also little-changed at 55.8 euro cents. That all means our TWI-5 starts today now just under 69.3, and marginally lower from yesterday at this time.The bitcoin price starts today at US$65,786 and up +5.0% from this time yesterday. Volatility over the past 24 hours has been high at just on +/- 3.2%.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 China's deflation Pressures keep on coming. And in the US disinflation rolls on, which they hope will end soon.This coming week will be another one with chunky data releases. The biggest will be on Wednesday, our own CPI result for the Q3-2024 period (Markets expect 2.0%). That that will follow the Tuesday's update of the September REINZ results.We won't be the only country reporting inflation data; we also get that from Canada, India and Japan this week. At the end of the week, the ECB will be reviewing its policy interest rate. And all week we will be getting American Q3 earnings reports.China will report its Q3-2024 GDP result on Friday, likely to fall well short of its 5% target.Over this weekend, China released sets of key data. The tiny bit of consumer price inflation they had disappeared in September, up now only +0.4% from a year ago. Beef, lamb, and milk prices all went backwards again. Their producer prices deflated at a faster rate. And we are now waiting for their new yuan loan data which isn't expected to be very strong (about +¥1 tln, and less than half the June level. So far, debt-induced growth hasn't worked).Meanwhile Chinese Ministry of Finance officials announced some more modest steps to "support the economy" and signaled much more is to come. It was a much-anticipated set-piece that left observers, and markets, underwhelmed.Key banks made simultaneous coordinated moves - signaled a while ago to be fair - to cut mortgage borrowing costs, as a practical measure to reduce the pressure on homeowner household budgets. They will come into effect in the last week of October.And coming up some time this week, the Chinese central bank is expected to signal lower wholesale borrowing costs in its 1-Year MLF announcement.In South Korea, they have started cutting their policy rates too, although not as aggressively as New Zealand. The Bank of Korea policy rate is now 3.25% after its first rate cut (-25 bps) since May 2020. That came after data showed their GDP shrank in Q2-2024 and their September inflation slowed to 1.6%, the lowest since February 2021.India's industrial production took a surprise drop in August from a year ago, its first retreat since October 2022. Few saw that coming. And they downwardly revised the +4.7% rise in July.Interestingly, the Indian currency is under pressure, and outflow levels have been high. The Indian rupee has hit a record low against the US Dollar, (but against the NZD it has been pretty flat since 2020).In the US, producer prices hardly rose in September. US factory gate prices were flat in the month from August and missing expectations of a +0.1% rise. On an annual basis, PPI inflation eased to a 7-month low of 1.8%.US consumer sentiment was little-changed in October according to the University of Michigan survey, holding at a level it has broadly been at since May. There was a slight dip from the prior month, something that is probably just related to election uncertainties.For those who follow such things, we can report no surprises in the October update of the USDA WASDE report. But they did raise their beef import forecasts marginally again, and lowered their US milk production forecasts, again.Canada reported a good +47,000 rise in employment in September, almost double what was expected. Better still, full-time jobs rose +112,000 while part-time roles shrank -65,000. Their jobless rate slipped to 6.5% when a rise was anticipatedRatings agency Fitch has downgraded their sovereign rating for France from 'Stable' to 'Negative', but still at AA-. They say “Fiscal policy risks have increased since our last review". (Fitch have New Zealand at AA+, Stable.)The UST 10yr yield is now at just on 4.07% and unchanged from Saturday. A week ago it was at 3.99% so up +8 bps since then.The price of gold will start today at US$2657/oz and down -US$3 from this time Saturday. That is up +US$8 from a week ago.Oil prices are holding at just on US$75.50/bbl in the US while the international Brent price is still at US$79/bbl. A week ago these prices were at these same levels, so no-change in a week.The Kiwi dollar starts today at 61.1 USc and downa minor -10 bps from this time Saturday. Against the Aussie we are unchanged at 90.5 AUc. Against the euro we are also unchanged at 55.9 euro cents. That all means our TWI-5 starts today now at 69.3, and unchanged from Saturday at this time. But that is -40 bps lower than a week ago.The bitcoin price starts today at US$62,627 and up +0.6% from this time Saturday. Volatility over the past 24 hours has been modest at just on +/- 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.

The Government could run a second retirement income scheme alongside NZ Superannuation as part of a transition to a new system, but according to Andrew Coleman, this couldn't be done without an increase in taxes on older people, or more general tax increases.Fresh from his 13 part interest.co.nz series on NZ's government retirement income system and associated taxes, Coleman spoke to myself and Terry Baucher on a combined episode of the Of Interest podcast and the New Zealand Tax Podcast.Coleman is currently a visiting professor at the Asia School of Business in Kuala Lumpur while on extended leave from the Reserve Bank. He has also worked for Treasury and the Productivity Commission. The views expressed are his own.Coleman says the urgency for making change isn't just down to an ageing population and the increasing taxes he says young people will have to pay. It's also because those under 45 are inheriting a very costly system, which might not be what they like or want.He uses an analogy of a 22 year-old who recruits help from their father or uncle to buy a car."And he says, 'oh, cars, I'm good at cars. You know, when I was a kid we had these great Holdens and you could put six people in them, everyone in the whole family would fit in them. And they had a big six litre engine'... And you say, 'oh, well that's maybe not what I wanted.' But he says 'oh look, I'll go and get you the car, just give me the money and I'll get you the car.' And so you give him ten grand and [he] comes back [with an] old Holden, which is a gas guzzler and not particularly safe.""And you've only got a girlfriend or a boyfriend and no kids and it's nothing like the car that you want and yet you've paid for it. And it's got these high ongoing costs because it's chewing down the petrol," Coleman says."You wanted a little hybrid or electric car or maybe just a Toyota Corolla, which was quite small and fits in your little parking place. And it's a bit like that. Young people today are inheriting a [retirement income] system designed in the seventies when Holdens ruled. And it may not be what they want and it's very costly."In his series Coleman suggests a new pension system, which he calls KiwiSaver 2.1, which would be a shift from pay-as-you-go funded pensions to save-as-you-go funded pensions. I asked him whether a transition could be made to the new system for those under 45, with the current system kept in place for older people, without higher taxes on older people which he suggested in his series would be required to change to a new system."There's no reason why you can't have two systems going. And one of the reasons is that your entitlement would depend on your birth date...that's very straightforward. We would just at some point introduce the second system for people under 45 and build it up and keep old people on the current system," says Coleman."Can we do it without an increase in taxes on older people, or more generally? No.""There is a transition issue. It's like digging a hole. Once you've dug the hole, if you want to get out of the hole, you have to do some work to fill it in again. And so when we adopted a pay as you go system or expanded it significantly back in the 1970s, it meant that to reverse it, some future generations are going to have to be worse off than they otherwise would have been. And that's the political difficulty here. It's like there's this beautiful thing that you want over there, a beautiful island that you can go to, but you can't get there for free.""But there's goodwill out there. I think a lot of people my age... recognise that young people are paying a disproportionate amount of the costs and that if we can find a way of increasing taxes on ourselves in order to make the system better for younger people, that's something that a lot of people would be prepared to do now. It won't have to be a permanent increase in taxes. It's a transitory phenomenon," Coleman says."Once we've got the new system up and running, taxes would come down and we would have a much better tax system. There should be, if we do this, a statue to the unknown 75 year-old who paid a few more taxes so that all the young New Zealanders of the future could be better off and have a better system."In terms of what tax(es) are used, Coleman says a transitional social security tax on older people is an option. Social security taxes, such as Accident Compensation Corporation levies, are paid on labour income.There's much more detailed discussion in the podcast audio including on taxes.*You can find all episodes of the Of Interest podcast here.

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 China is wrestling with how to respond to its slowdown, with the measures announced so far causing volatility.But, first up today, and as expected, the American CPI inflation rate fell in September but by less than expected. It came in at 2.4%, down from August's 2.5%, but above the expected 2.3% rate. For three consecutive months. the month-on-month rise has been +0.2%, so it is tracking at the annual rate as well.Rents dipped to that +0.2% month-on-month rise but from a year ago they remain +4.9% higher. But food prices were up +0.4% in September from August, the most in a year, even though the year-on-year change was only +2.3%. So one to watch.However, the overall inflation situation remains pretty benign. No-one will be overly worried about this data. But it will reinforce the Fed that outsized rate cuts at this time are probably not warranted.Initial US jobless claims however spiked sharply last week, coming in at +235,000 actual (more on a seasonally adjusted basis). There are now 1.62 mln people on these benefits, and virtually no increase from the prior week. The spike probably has more to do with the Florida storm impacts, and perhaps the Boeing strike, than any meaningful slowdown in the US labour market.In China, money flows around their surging equity markets are creating issues for policymakers. Huge amounts have flowed out of WMP (wealth management products) chasing the expected equity market gains. But foreigners and some local professionals seem to have taken the opportunity to cash out in the rising market. And as the rises haven't been sustained, there may be a lot of very disappointed local investor/speculators.But help may be on the way. The central bank yesterday announced the start of a key operation to prop up the stock market. That put a floor under the market, embedding the Beijing 'put'.And all eyes will be on an announced weekend briefing by Beijing authorities on their next economic policy moves.The rise in Japanese producer prices in August matched the pace in the prior four months, and is embedding at about a +2.5% annual rate. Again, little to morrow policymakers here.German retail sales unexpectedly rose in August for a second straight month to now be +2.1% higher than year-ago levels, something few saw coming. That is actually their best year-on-year growth since April 2022. Further, this is a 'real', after inflation result. So it is quite strong. Food and travel volumes rose the strongest.In Australia, it seems that the stage is being set for a new Federal election. On emust be held before the end of September 2025 anyway, but it may well come earlier in 2025 now.Container shipping rates fell again last week to be down another -4% from the prior week, which takes them back to levels at the start of 2024. They are still elevated because they are +135% higher than pre-pandemic levels, and the reasons still relate to Middle-East security pressures. But clearly the world, and the industry, are finding ways to adapt. All the current weaknesses are China outbound rates.Bulk cargo rates fell a sharpish -9% last week from the week before, and are now also -9% lower than at the same time a week ago. But there is nothing special about these levels, which are similar to the long run 35 year average. However, on an inflation-adjusted basis, they are remarkably low. It isn't great for shipowners.The UST 10yr yield is now at just on 4.10% and up another +3 bps from yesterday.The price of gold will start today at US$2621/oz and up +US$12 from this time yesterday.Oil prices are +US$3 higher at just under US$76/bbl in the US while the international Brent price is now just over US$79/bbl.The Kiwi dollar starts today at 60.8 USc and up +20 bps from this time yesterday. Against the Aussie we are also up +20 bps at 90.4 AUc. Against the euro we are up +30 bps at 55.7 euro cents. That all means our TWI-5 starts today now at 69.1, and up +30 bps from yesterday at this time.The bitcoin price starts today at US$60,422 and down -2.2% 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 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 commodity prices go into reverse as the Chinese post-holiday rally stumbles after only a brief shine. It is an ominous sign.But first in the US there was a sharp fall in mortgage applications last week, down -5.5% from the prior week. That was because interest rates moved sharply higher after the strong non-farm payrolls report. But current application levels are running +55% higher than a year ago.Those higher interest rates also showed up in the latest (well supported) US Treasury bond auction, this one for their ten year bond. The median yield came in today at 4.01% and well above the 3.61% at the prior equivalent event a month ago.Hurricane Milton is about to hit just south of Tampa and Florida more generally. Analysts say it could cause US$60 bln in insurance losses apart from the far greater uninsured damage. Milton and Helene may be trigger events for widespread change in the way insurance cover is offered. Risks are rising fast for those who underpin these coverages.US Fed minutes for their September 19 (NZT) meeting were released earlier this morning and they show the Fed's -50 bps rate cut was well supported (page 9) and seen as a quicker way to align it with the progress on inflation and their labour market. It suggests this was a one-off move and future moves will be more 'regular'. Remember, the September CPI data for the US will be released tonight and it is expected to slip from 2.5% to 2.3%.Japanese machine tool orders rose in September from the weak August level but they remain -6.5% lower than year-ago levels - which it should be noted were unusually high at the time.Taiwanese inflation fell to near its lowest since the pandemic, down much more than expected to a 1.8% rate.In India, their reserve bank also reviewed its policy rate yesterday and left it unchanged at 6.5%, as expected. They see their economic expansion continuing and inflation broadly in line with the midpoint of their target rate of 4%. Inflation is currently running at 3.65%. However, their commentary does open the door for the next move to be down, which would be their first rate cut since May 2020.In China yesterday, the Shanghai stock market lost steam rapidly after the post-holiday euphoria. It was down -6.6% on the day as scepticism grew about what Beijing is doing - and not doing - to recover China's expansion mojo. It is a telling signal.In Australia, they reported Q2 dwelling commencement data yesterday and it continues to retreat as apartment building remains especially weak. Of course, low supply coming onstream isn't helping housing affordability. Rent inflation is still running at over 7% there.The UST 10yr yield is now at just on 4.07% and up +4 bps from yesterday. The price of gold will start today at US$2609/oz and down -US$2 from this time yesterday.Oil prices are -50 USc lower at just over US$72.50/bbl in the US while the international Brent price is now just over US$76/bbl.The Kiwi dollar starts today at 60.6 USc and down -60 bps from this time yesterday. Against the Aussie we are also down -60 bps at 90.2 AUc. Against the euro we are down -40 bps at 55.4 euro cents. That all means our TWI-5 starts today now at 68.9, and down -50 bps from yesterday at this time.The bitcoin price starts today at US$61,782 and down -1.1% from this time yesterday. Volatility over the past 24 hours has been low at just on +/- 0.7%.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.Today we lead with news China has not announced the new stimulus that investors were expecting, rather just re-hashing existing measures. Equity and commodity markets reacted negatively to the disappointment.But first, the American retail Redbook index rose marginally last week to be +5.4% above year-ago levels, and well ahead of inflation.The US SME optimism index rose slightly in September even though uncertainty levels remained high as the US election gets closer, less than a month away now.Meanwhile the RCM/TIPP optimism index for investors rose to a 19 month high. But again, the change was small.And the US trade deficit in both goods and services fell in August from July in a better-than-expected result driven by stronger exports that were +5.2% higher than a year ago.There was yet another very well supported US Treasury bond auction overnight, this one for their 3 year Note. It resulted in a 3.82% median yield, but up sharply from the 3.40% median yield at the prior equivalent event a month agoCanada also posted its August trade result and its deficit came in a bit more than expected, mainly on a -1% fall in exportsIn China, the closely anticipated National Development and Reform Commission (NDRC) briefing was a damp squib, essentially not announcing anything new in the way of economic support for their economy. All they did was front-load existing measures. A rally in Chinese stocks on their return from the week-long holiday fizzled quickly as traders questioned Beijing’s resolve to add more effective stimulus.After rising strongly in anticipation over the past week or so, the iron ore price sank sharply after this briefing.And China said it will impose tariffs on European bandy in retaliation for EU tariffs on EVs.German industrial production rose in August from July and by more than expected to be 'only' -2.7% lower than a year ago, it least year-on-year decline in a year and a big improvement from July.In Australia, business sentiment became less negative in September. The NAB business confidence index 'rose' to -2 from August’s revised -5, amid notable improvements in retail and recreation & personal services.And the consumer mood is improving too. Australia's Westpac-Melbourne Institute consumer sentiment jumped to a 2½ year high in October, a sharp turnaround from the fall in September. This followed interest rate cuts in other countries and more signs that inflation is easing locally.We should also note that overnight Pulse dairy auction for just WMP and SMP came in less robust than the minor gains expected. The dips were small and most for SMP, but essentially both products are retaining their recent higher levels even if they are slipping slightly.On the weather front, Hurricane Milton isn't easing, still a category 5 event and heading straight for Tampa, Florida. Urgent evacuation orders are in place. Expected landfall is in about 24 hours. Even if it does ease somewhat, it will be a powerful event.The UST 10yr yield is now at just on 4.03% and up +1 bp from yesterday. The price of gold will start today at US$2611/oz and down -US$33 from this time yesterday.Oil prices are sharply lower, down -US$4 at just on US$73/bbl in the US while the international Brent price is now just on US$76.50/bbl.The Kiwi dollar starts today at 61.2 USc and unchanged from this time yesterday. Against the Aussie we are up +20 bps at 90.8 AUc. Against the euro we are still at 55.8 euro cents. That all means our TWI-5 starts today still just on 69.4, and up a minor +10 bps from yesterday at this time.The bitcoin price starts today at US$62,417 and down -1.9% from this time yesterday. Volatility over the past 24 hours has remained modest at just on +/- 1.6%.Join us at 2pm today when we will have full coverage of today's Monetary Policy Review and the expected rate cut to the OCR.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 of powerful forces at work in both the US and China.All eyes today will be on the opening of the Shanghai equity markets after their week-long holiday. Many think outsized gains are likely. Over that same period the Hong Kong index rose +12%. And those changes will be in anticipation of the yet-to-be announced fiscal stimulus program that Beijing has signaled. There are high expectations. But investors are probably sensing they can't lose with the central bank's logic-changing ¥800 bln (US$115 bln) capital market support measure in place.But with 'buy-the-rumour-sell-the-fact' mentality of many investors, who knows what will happen. Some fund managers will feel they don't want to miss a unique profit opportunity, others are more sceptical the economic fundamentals are not getting proper attention.China can afford to throw money at their issues. Their foreign exchange reserves rose by +US$28 bln to US$3.316 tln (¥23 tln) in September, slightly more than expected. And it built to its highest level since late 2015. Their gold holding rose in value too, but only because of the rising price.Japan's leading economic index, which was expected to rise slightly, in fact fell and by quite a dip. In fact it was their lowest reading since 2020. They will be hoping this is a rogue result.European retail sales were expected to rise in August and they did, coming in +0.8% higher in 'real' terms than a year ago for the Euro Area. But that undershot expectations of a +1.0% rise. For the wider EU bloc, things were slightly better.Germany factory orders were weak in August, down -3.9% from a year ago. But that was a correction from the +4.6% rise in July.In the US, Hurricane Milton strengthened into a monster Category 5 hurricane as races towards Florida’s west coast. Cat 5 storms are rare. Given what Helene did recently (Cat 4), residents have begun to flee inland in large numbers. Hopefully it will lose strength before it hits Florida. It is still deep in the western Caribbean Sea about 1000 kms from landfall.After a +US$25 bln rise in July, American consumer debt was expected to rise another +US$12 bln in August. In fact this expected data wasn't available when we published, so we will update this item when it is released.The UST 10yr yield is now at just on 4.02% and up +5 bps from yesterday. The price of gold will start today at US$2644/oz and down -US$9 from this time yesterday.Oil prices are up +US$2.50 at just on US$77/bbl in the US while the international Brent price is still just on US$80.50/bbl.The Kiwi dollar starts today at 61.2 USc and down -40 bps from yesterday. Against the Aussie we are still at 90.6 AUc. Against the euro we are down -30 bps to 55.8 euro cents. That all means our TWI-5 starts today still just over 69.3, and down -30 bps from yesterday at this time.The bitcoin price starts today at USA$63,601 and up +1.3% from this time yesterday. Volatility over the past 24 hours has been modest at just on +/- 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 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 world's economy is expanding in most places despite some 'hot' pressures.The week ahead will crescendo on Wednesday with the RBNZ Monetary Policy Review and OCR decision. But there will be a lot else going on too. India and South Korea will also have rate decisions this week. In the US, they get their September CPI result along with PPI data. Japan will release sentiment survey updates, along with Australia. The EU will release retail sales data and factory order updates will come in Germany.But first, we should note that today is the final day of the Chinese Mid-Autumn Festival and normal work will restart tomorrow. And in Australia, most of their eastern states will be on holiday today (except Victoria). NSW and Victoria have also moved on to summer time, so are back to 2 hours behind us.But the big news over the weekend was the eye-catching headline (s.a.) rise in US non-farm payrolls (NFP) of +254,000, almost double the expected +130,000 rise. And as regular readers will know, we also check the actual change, which was almost double that, at +460,000. All very impressive. There are now 162 mln people employed in their civilian labour force. There is momentum here and the impact of +460,000 more paid workers will be widespread and impact the whole global economy.Both their unemployment rate, at 4.1%, and the number of unemployed people, at 6.8 million, changed little in September.And the East Coast/Gulf port strike has been settled. So that is no longer an economic irritant.This result is of outsized change and it had an impact on the financial markets. While the equity markets didn't react, the bond markets did, juicing up benchmark UST yields noticeably. The USD rose sharply too.The US Fed may well be restrained by this labour market surge. Cutting rates into a fast-rising economy would be inflationary and they have only just gotten things back on an even keel. By any measure, they have achieved a 'soft landing'. They seem set up for a solid 2025 expansion (provided their economic management stays professional of course).The latest Q3 estimate of US economic activity is +2.5% which would take their nominal GDP to US$29.4 tln and +US$1.4 tln more than a year ago. It is impressive. However, given today's labour market surge, there are upside 'risks' to these estimates.And we should note that all this is going on while the US Federal Reserve shrinks its balance sheet. It is now down to just over US$7 tln, a -US$76 bln drop in one month, a -US$900 bln drop in a year, and an almost -US$2 tln drop since its 2022 peak. Monetary policy resilience is being built back up. Yes, US Federal debt held by the public is rising in dollar terms but not as a proportion of overall economic activity (GDP). But a stock-to-flow ratio like that is a bit of a junk sideline stat. You will hardly ever see that ratio in the commercial world.China may still be on holiday. And by official accounts, travel-related activity is 'normal' but other aspects of their economy are still a worry. When they return tomorrow we will likely start to see the rollout of their signaled fiscal 'bazooka'.Singapore delivered good retail results for August, to be up +0.6% from a year ago and almost all of that in the latest month.And Vietnam surprised observers by releasing data that showed their economy grew +7.4% in Q3-2024, driven by exports, even though production was hit by Typhoon Yagi. That is up from 7.1% in Q2-2024 and expectations it would only expand by +5.5%. Along with India, they have wrestled the mantle from China of the fastest growing developing economies.More broadly, world food prices in September rose much more than expected, and across the board. In fact, it was the largest month-on-month increase since March 2022. Rising dairy prices were among the gainers, but not so much meat prices.The UST 10yr yield is now at just on 3.97% and down -2 bps from Saturday. But that is up +20 bps from this time last week.The price of gold will start today at US$2653/oz and up +US$4 from Saturday.Oil prices are down -US$1 at just under US$74.50/bbl in the US while the international Brent price is still just on US$78/bbl. A week ago these prices were US$7 lower at US$67.50 and US$71.50 respectively.The Kiwi dollar starts today at 61.6 USc and unchanged from Saturday. That is a big -2c fall from a week ago however. Against the Aussie we are still at 90.6 AUc. Against the euro we are down -10 bps to 56.1 euro cents. That all means our TWI-5 starts today still just under 69.7, and unchanged from Saturday, but down -100 bps from a week ago.The bitcoin price starts today at US$62,760 and up +0.8% from this time Saturday. Volatility over the past 24 hours has been low at just under +/- 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 global economic attention should have shifted to tomorrow's labour market report for September, but the US waterfront strike, and the Middle East tensions has sidelined it.However first in the US, there was a minor dip in the actual number of initial jobless claims last week, but a lesser dip than expected. There are now 1.62 mln people on these benefits, the lowest level since November 2023.And as you would expect, the level of job cuts in the US has remained very low.Tomorrow's non-farm payrolls labour market reports is expected to show a rise in payroll jobs of +130,000.Perhaps in something of surprise after the wavering factory PMI, the ISM services PMI came in much better than expected. It revealed the strongest growth in this sector since February 2023, amid faster increases in business activity and new orders. And that was mirrored by the internationally benchmarked version.US factory orders in August weren't as strong, little changed from the prior month to be -0.6% lower than the same month a year ago.The US East Coast & Gulf port strike is entering its third day, unresolved. But there are signs of progress in negotiations. The Canadian port strike has ended now.With China closed for holidays, all the equity market signals are being squeezed into Hong Kong which remains open. And that is not good for their property stocks which have had a heady run-up based on the stimulus signals. Now those property stocks are falling just as sharply as investors realise the fundamentals are just not there. And the expected ¥10 tln fiscal 'bazooka' has still be be launched. It is still being talked about and is still expected, but it won't happen till after the holiday week at the earliest.In the EU, there are signs that producer prices are rising again, up +0.4% in the bloc in August from July, but down -2.3% for the year to August which was a lesser rate of decline from the prior month.And later today, the EU is expected to approve an increase in tariffs to as much as 45% on electric cars imported from China, a move that officials said would help protect European carmakers from a glut of cheaper vehicles directly subsidised by Beijing.Those same subsidies have caused Toyota to pull back on developing EVs, because they are no longer commercial to produce.In China, price cuts along with those government subsidies helped the likes of BYD to boost monthly deliveries to all-time highs in September.Australian exports retreated slightly in August, but their imports retreated more, so their monthly merchandise trade surplus stayed at about AU$5.6 bln. But that was only because gold exports stayed strong boosted by sharply rising gold prices. Without those, their surplus would have halved.The latest IMF review of Australia isn't entirely convinced they have a sustainable disinflation trend underway and they warn them to prepare to do more to get price stability. They also say Australia needs to build many more houses in its efforts to tackle unaffordable housing and its pressures.Container freight rates fell another -5% last week as weak demand overcame the costs of the security issues in the Middle East. But that only dipped prices to 146% of pre-pandemic levels. Last week's weakness was mainly outbound China to Europe. The transpacific rate levels were unchanged. (Backhaul prices are now very low.) Bulk cargo freight rates slipped -2% last week after a long runup. They are now about +13% higher than year-ago levels, the same from the pre-pandemic period.The UST 10yr yield is now at just on 3.84% and up another +6 bps from yesterday. The price of gold will start today at US$2655/oz and up +US$5 from yesterday.Oil prices are up +US$3.50 at just on US$73.50/bbl in the US while the international Brent price is still just under US$77.50/bbl. Middle-East tensions are now starting to affect these prices as the never-ending 'retaliation' cycle shows no sign of ending.The Kiwi dollar starts today at 62.2 USc and down -½c from this time yesterday. Against the Aussie we are -20 bps lower at 90.8 AUc. Against the euro we are down -40 bps to 56.4 euro cents. That all means our TWI-5 starts today at just under 70, and down -30 bps from yesterday.The bitcoin price starts today at US$61,134 and down another -2.9% from this time yesterday. Volatility over the past 24 hours has stayed 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 Hong Kong is gripped by an unusual stock market frenzy, up +6.6% on the day.But first, US mortgage applications fell slightly last week after the best two consecutive weeks previously. The benchmark mortgage interest rate was unchanged and still at a recent low.This weekend (NZT) we get the important September non-farm payrolls report and it is expected to show +130,000 more jobs added in the month. Today the precursor ADP Employment Report came out showing a rise of +143,000 which was much more than the +90,000 anticipated. And their August data was revised higher. There was good job creation in both the factory sector (+42,000) and the service sector (+101,000) reported in this ADP data.Japanese consumer sentiment improved again in September, the fourth straight gain. However it isn't yet back to levels they had at the beginning of 2024.In Singapore, there was an unusually weak PMI result released overnight. Apart from the pandemic period, it fell to a record low in September, and is now in a deepish contraction.In Hong Kong, a wild stock market frenzy was underway yesterday, overwhelming brokerages with buying demand. Oddly, it is mainly about the expectation that the Chinese housing market will return to its old self and buyers will emerge to allow that. But that seems to be in the face of troubling demographics, and recent memories of steep losses for buyers. And the latest data still shows continuing steep losses for second-hand housing, continuing a 29 month trend. Maybe yesterday's Hong Kong rally was just FOMO.One thing is for certain, the Beijing government is going to print huge amounts of money to try and make a recovery happen. There will be winners, just not sure property will be one of them. But the price of key construction metals like zinc, iron ore and steel rebar are rising. The focus now turns to the late-October National People's Congress meeting and decisions to see if there really is a workable way out of their structural problems.In Australia, the widely-watched local PMI by the Australian Industry Group saw its factory PMI dive to its worst level ever at -33 (April 2020 excepted). This was far worse than expected where a much smaller contraction (-13) was forecast. Low order levels while inflation and labour pressures persist are making manufacturing there very tough. This AiG report pretty much mirrors the earlier S&P/Markit version.The UST 10yr yield is now at just on 3.78% and up +3 bps from yesterday.The price of gold will start today at US$2650/oz and down -US$20 from yesterday.Oil prices are down -US$1 at just on US$70/bbl in the US while the international Brent price is still just over US$73.50/bbl. It turns out American inventories are high so demand from this source won't be strong.The Kiwi dollar starts today at 62.7 USc and down a minor -10 bps from this time yesterday. Against the Aussie we are -40 bps lower at 91 AUc. Against the euro we are unchanged 56.8 euro cents. That all means our TWI-5 starts today at just under 70.3, and little-changed from yesterday.The bitcoin price starts today at US$61,919 and down another -0.2% from this time yesterday. Volatility over the past 24 hours has stayed modest at just on +/- 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 of an expansion and the inevitable retaliations in the Israel/Gaza/Lebanon/Yemen flashpoints are now having an impact on global oil prices. It is also casting a pall over global sentiment as fears mounts for an even wider conflict. The shift toward safe-haven currencies has hurt the NZD.But first, the overnight dairy auction brought a +1.2% rise in USD terms, on the back of a +3.0% rise in WMP. There were good (+3.8%) gains for cheddar cheese as well. But most other products fell. In NZD terms, overall prices slipped -0.3%. Volumes sold were good. But this full auction broadly reflected last week's Pulse event for SMP and WMP.In the US, their retail impulse bounced back last week to be +5.3% higher than the same week a year ago.The September ISM factory PMI is still contracting slightly, little-changed from August. The dockworker strike isn't helping sentiment by American manufacturers. The S&P Global/Markit PMI for the US was more negative. Both report lower new order levels.But the Logistics Managers Index (LMI) jumped to its highest growth rate in the logistics sector in two years. They see rising demand for these services, but the transportation component was unchanged.Job openings rose in August from the July lower levels, but even though that rise was more than expected they are still in an easing trend, one that started in early 2022. Their quit rate fell.Yesterday we reported a soft factory report for the Texas manufacturing sector and its oil patch in September. Today we can note that the region's service sector was expanding, and by a bit more than expected.And we should note that Fed boss Powell yesterday emphasised that the recent 50 bps rate cut was probably just a one-off and that future changes will be "a more neutral stance" after that 'recalibration'.China is now on holiday, and will be for the next week.Eurozone inflation fell quite quickly in September, to just 1.8%, its lowest level since April 2021. Mostly this was driven by sharply lower energy costs.In Australia, retail sales rose in August more than expected to be +3.1% higher than a year ago - which is their best result for more than a year. But it is not that great because inflation is running at 2.7% there. But at least is is better than inflation finally. Sanguine weather conditions is getting the credit for this improvementMarket confidence in new home building in Australia has improved in recent months, as investors and owner occupiers return to the market. And that is now showing up in residential building consent data, which was +3.6% above year-ago levels.But CoreLogic says their housing market lost momentum in September, with insignificant overall changes in prices. Even Perth's monthly change was less than 2%, and that had been the epicenter of frothy housing prices.Globally, the market for corporate bond debt rose sharply in September. Bloomberg is reporting that more than 1200 issuers sold more than US$600 bln of bonds in the month, the most since these records began 20 years ago. The rush seems to have been driven by lower interest rates and rising uncertainty including of the US presidential election.The UST 10yr yield is now at just on 3.75% and down -3 bps from yesterday.The price of gold will start today at US$2670/oz and up +US$32 from yesterday, a new high.Oil prices are up +US$2.50 at just over US$71/bbl in the US while the international Brent price is still just over US$74.50/bbl. The crazy Middle-East situation is now affecting this commodity.And there have been moves higher for the price of many commodities, especially coal and steel. Zinc and nickel too. Some key food prices are turning up as well.The Kiwi dollar starts today at 62.8 USc and down almost -1c from this time yesterday. Against the Aussie we are -40 bps lower at 91.4 AUc. Against the euro we have fallen -30 bps to 56.8 euro cents. That all means our TWI-5 starts today at just over 70.2, and down -70 bps from yesterday.The bitcoin price starts today at US$62,020 and down another -2.3% from this time yesterday. Volatility over the past 24 hours has been modest at just on +/- 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.

New Zealanders should be grateful insurance companies remain committed to New Zealand given the country's risk exposure, John Lyon of Ando Insurance says.In the latest episode of the Of Interest podcast I asked Lyon how well general insurers are serving New Zealanders, how competitive the market is, and how the public should judge strong financial results from their insurers. As well as being CEO of Ando, an underwriting agency, he's also the former CEO of Lumley Insurance. Statistics NZ's Consumers Price Index shows insurance costs rose 14% in the June year, making them a key contributor to households' cost of living pressures and the stubbornly high non-tradable inflation that meant the Reserve Bank held the Official Cash Rate at 5.50% for as long as it did."I think we should be grateful that there are insurance companies who are still committed to the New Zealand market, because what we need is a healthy, strong insurance market because the risks are so great in New Zealand," Lyon says."When you think about the risks we're exposed to from volcanoes that are overdue, to the well known earthquake exposures, the evolving cyclone and climate change issues, [and] we don't really fully understand tsunami risk. There's lots of evidence that there have been major tsunamis along the coast of New Zealand. At what frequency would we expect something like that to happen? We don't know. That's not been particularly well modelled. That's a major risk to the country.""There's a whole bunch of factors in there that we can talk about in terms of what New Zealand Inc needs to do to protect itself from the environment we live in. And climate change is a big part of that. But it's also all of the other generic risks that are there in front of us. So we have to think about how we manage them as well," says Lyon.With the likes of IAG, Suncorp and Tower having recently reported strong financial results, how should we judge how well they're doing financially?"One of the things that the reinsurers did [last year], as well as putting prices up, was they went to the insurance companies and they said, 'you now need to hold more of the risk to your own account'.""The Suncorps and IAGs, and indeed our business, was faced with a situation where if we had been holding, say, $100 million of the risk to our own account before reinsurance comes in, the reinsurers might have put that up to $500 million. So if you think about that, then if you've got an exposure of $500 million for any one event, you're not going to get $500 million every year.""So typically what insurance companies will do is they say, 'well, maybe over five years, we'd expect to have $100 million on average. So it'll be one big event every five years. That's $500 million. We'd spread that cost over five years.' So in every year you'd put a cat allowance [catastrophic event allowance] in of $100 million. If you don't have a cat event, you've got $100 million profit and then the next year you might have no event and you got another $100 million profit. But in year five you've got a $500 million event and you lose $500 million.""That's the market that we have moved to. The insurance companies need to be very profitable in the good years because the cost of managing the bad years is a lot higher. So it's not just reinsurers that suffer when there is a big event. The insurance companies hold more to their bottom line and that's a challenge for all the businesses in that respect," Lyon says."So it's hard to judge insurance on a year on year basis."Lyon suggests the most significant barrier to enter the general insurance market is New Zealand's risk profile, noting a number of international insurers look at NZ and see the economy is relatively small."It'll never be a major strategic value add to a global company in terms of incremental growth. So all you're going to have is a problem when a big thing happens like an earthquake."In the podcast audio Lyon also talks about what he believes should be done that would be more beneficial to customers' insurance costs than a market study, how the insurance industry is lagging from a transparency perspective, the perception of choice created by the big companies being behind numerous brands, how competitive the market is, the level of market power the big players have, climate adaptation, managed retreat and uninsurable areas, whether the general insurance market is a duopoly, insurance policies being used as a taxation device, risk-based pricing, parametric insurance, what the insurance equivalent of open banking could mean, and more.*You can find all episodes of the Of Interest podcast here.

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 we are into Q4 now and it is starting out modestly in most places, despite an eye-popping rise on the Shanghai stock exchange.First in the US, the Chicago PMI improved marginally in September although the gain was probably insignificant.Meanwhile the Dallas Fed factory survey for the US oil patch in September eased further, although again, not a significant change.But in October, this may all be affected by a looming East Coast and Gulf waterfront strike. And there is similar strike action underway in Canada. Workers are reacting to productivity changes from a new automation push.China's National Day Golden Week holiday period starts today, kicking off one of the year's busiest travel periods as the country marks the 75th anniversary of its founding as a communist state. But their tourism industry is bracing for sluggish activity with bookings down -20%, even as regional governments begin to distribute cash vouchers to boost flagging consumer spending.It is not only discretionary travel that is soft. The official Chinese factory PMI contracted at a lesser pace in September. And the companion Caixin factory PMI slipped from a minor expansion into a minor contraction.Further, the official services PMI expansion ended in September with their lowest reading since December 2022.But not everyone is looking ahead with trepidation there. Investors in Shanghai drove their equity markets up a remarkable +8.1% yesterday. After that exchange touched its lowest level in a decade on September 13, it has now suddenly shot up to its highest since April 2023. It is all about how Beijing is rolling out its stimulus - essentially guaranteeing investors that they won't lose (the Beijing 'put'). And they are all-in, filling their boots.Much of this is driven by a belief that Chinese construction will be getting a big boost. The steel rebar price rebound shows that.In the EU, the German CPI inflation rate fell to just 1.6% in September, its lowest since February 2021 when it was about to go on a tear, peaking at 8.8% in October 2022.In Australia, they are claiming its 'first back‑to‑back surpluses in nearly two decades'.The UST 10yr yield is now at just on 3.78% and up +2 bps from yesterday. The price of gold will start today at US$2638/oz and down -US$20 from yesterday.Oil prices are +50 USc firmer at just over US$68.50/bbl in the US while the international Brent price is still just on US$72/bbl.The Kiwi dollar starts today at 63.7 USc and up +30 bps from this time yesterday. Against the Aussie we are little-changed at 91.8 AUc. Against the euro we have risen +30 bps to 57.1 euro cents. That all means our TWI-5 starts today at just under 70.9, and up almost +30 bps from yesterday.The bitcoin price starts today at US$63,502 and down -3.3% from this time yesterday. Volatility over the past 24 hours has been moderate at just on +/- 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.