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 dominated by idiot-managers - Trump, Musk, and Bankman-Fried. Fortunately away from that there is real economic news. Not a lot, but some.

In Canada, November producer prices fell by -0.4% from October, after a +2.4% rise in the prior month. This was in line with market forecasts. Much of the fall can be attributed to declining oil prices. But remember, year-on-year they are up a massive +9.7%, although that is the first time this year-on-year increase has been below +10% since early 2021.

In China, US bank Citigroup said it was winding down its consumer business there, just the next of a broad pullback by western companies keen to lower their exposure to China.

In Germany, business sentiment improved in December, which was a bit of a surprise - and more so because it is the third consecutive month of improvement in this Ifo survey. To be fair, many sentiment indicators are 'improving' in Germany, so a trend is developing. That is no doubt because of growing confidence they will get through the winter without too much difficulty from Russia's attempted energy strangulation. Later in the week we get the December GfK consumer sentiment survey and that is expected to be less negative too.

But it has taken some very large calls to get here. After setting aside almost €450 bln to date tackling its energy crisis, Germany is also poised to take on the risks associated with more than €200 bln of derivatives built up by energy giant Uniper. Germany is nationalising Uniper in what is the biggest corporate bailout in the country's history, after Russia's move to choke off oil and gas.

In Australia, there are official efforts underway to repair their diplomatic and trade relationships with China. The surprise part is that China seems to welcome these, even if the Australians have indicated there will be no retreat from its tight security relationship with the US. At least Australia and China are again on speaking terms. Perhaps this indicates more of a change in Beijing.

The UST 10yr yield started today at 3.58%, and up +9 bps from this time yesterday and still re-building after the recent big drop. 

The price of gold will open today at US$1789/oz and down -US$4.

And oil prices start today up +US$1 from this time yesterday at just over US$76/bbl in the US while the international Brent price is just over US$80.50/bbl.

The Kiwi dollar opened today at 63.7 USc and little-changed. Against the Australian dollar we are down -½c at 94.9 AUc. Against the euro we are lower at 60 euro cents. That all means our TWI-5 starts today at 72.4 and down -20 bps.

The bitcoin price is now at US$16,642 and virtually unchanged from this time yesterday. Volatility over the past 24 hours has again been low at just +/- 0.7%.

You can find links to the articles mentioned today in our show notes.

And 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.