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 some eyes are on the cliff-hanger election is Argentina. It is turning out to be very close.

But first, in the week ahead, the main focus will be on the Fed meeting minutes followed by American durable goods orders, manufacturing PMIs, and some housing market data. We will also get flash MPI manufacturing and services PMIs for Australia, the EU, the UK, and Japan. Upcoming are policy interest rate decisions for Turkey, and Sweden. And CPI inflation rates will be released Canada, and Japan.

However, first up over the weekend, China released its October foreign direct investment data that was only +¥106.5 bln (+$24.5 bln), continuing the run of weak inflows. In fact these are now -9.4% below year-ago levels.

In the US, housing starts rose by +1.9% in October from September, above market expectations as limited supply in the resale market has boosted new construction. Also, residential building consents, a forward-looking indicator of future construction, moved +1.1% higher. However, these might be recent trend increases but both are still lower than year-ago levels. And completions are now running higher than new housing starts.

A new Boston Fed research paper released over the weekend examined how much labour market surveys undercount gig-workers. It could be by a lot, and answer the question about why the US participation rate seems so low. US employment is already at a record high. It may well be very much higher than those official levels, and that has monetary policy implications.

In Canada, producer prices are falling, essentially due to the much lower fuel prices. They fell by more than -1% in October from September, the steepest decline in producer prices since August 2022. Year-on-year they are down -2.7% on the same oil-cost retreat.

In Europe, the euro area recorded a current account surplus of €41 bln in September, the fourth consecutive one and the largest since July 2021. That is an improvement from a deficit of €5.40 billion in the same period of the previous year.

In Argentina, final voting is underway in their presidential election, one making headlines because one of the candidates is an out-there libertarian outsider. A key driver of his appeal is that inflation has spiralled to over 140% pa, up more than 8% in October alone. Voters are frustrated.

Separately, we should note that nickel prices have dived and continue to be pressured downwards. The price for this key commodity is down -44% since the start of 2023. Poor demand, especially by EV manufactures is weighing more than some short-term supply challenges by one large producer. This market is facing the largest supply-demand surplus in at least a decade. It does seem specific to nickel; zinc, tin, copper and lead are all holding their own on price at present.

The UST 10yr yield is little-changed from Saturday, now at 4.44% and +1 bps firmer.

The price of gold will start today at US$1981/oz and up just +US$1/oz from where we left it on Saturday. A week ago the yellow metal was at US$1936/oz so a weekly gain of +2.3%.

Oil prices have held their Saturday rise to be just on US$76/bbl in the US. The international Brent price is also still at US$80.50/bbl. These are week-ago levels.

The Kiwi dollar starts today at 59.9 USc and and little-changed from Saturday. But it is up almost +1c from a week ago. Against the Aussie we are up marginally at 92 AUc. Against the euro we are little-changed at 54.9 euro cents. That all means our TWI-5 starts today at just on under 69.1.

The bitcoin price starts today at US$36,375 and virtually unchanged since this time Saturday. A week ago however it was at US$37,215. Volatility over the past 24 hours has also been low at just on +/- 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.