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 we again need to keep an eye on an outbreak of respiratory illness in China that has rapidly filled hospitals there.

But first, with both the US and Japan on holiday, data from other countries are getting a chance to shine through today. But holiday season retail sales are underway and observers around the world will be looking at the American demand impulse. Any weakness will echo worldwide. Strength will have similar echoes.

Taiwanese retail sales came in +5.1% higher in October than a year ago, although the expansion was slightly less than in the prior month. And after a year of sharpish declines, Taiwan's industrial production is almost back to year-ago levels. It is up +20% from its low point in April. Taiwan's inflation is running at 3.0%.

Singapore reported October inflation and that rose to 4.7%, a sharpish and unexpected increase from the September 4.1%. It is being pushed up by transport and healthcare costs.

As expected, Indonesia kept its official interest rate benchmark at 6% overnight; inflation is low there running at only 2.6%.

The Swedes reviewed their official interest rate overnight and they were expected to raise it +25 bps to 4.25% because inflation is running at 6.5%. But they surprised markets and made no change. They also said inflation is falling and inflationary pressures have eased. But they threatened more increases if that easing doesn't continue.

South Africa reviewed their rate as well and as expected made no change at 8.25%. They have inflation running at 5.9%

And Turkey also reviewed rates overnight. In their case they surprised with a much larger rate hike than expected, taking their official policy rate up by +500 bps to 40%. They have inflation running at 61%.

We should perhaps note that the WHO is casting a wary eye on China over fast-spreading respiratory illnesses and reported clusters of pneumonia in children. China has 48 hours to respond to the WHO request for details. The main area of concern is in northern China. More here. Hospitals in Beijing, Shanghai, Wuhan and Guangzhou, have recorded a spike in mycoplasma pneumoniae infections, with some facilities in the capital already at full capacity.

In Hong Kong, CCP indoctrination has started in primary schools with the release of a new curriculum.

The OECD said G20 merchandise trade contracted again in Q3-2023 from the prior quarter with exports -5.5% lower than a year ago, while the services trade growth appeared to flatten.

So it will be no surprise to learn that container freight rates fell a sharpish -6% last week, taking them back to near their October lows. Rates out of China were particularly hard hit. Bulk cargo rates are unchanged from a week ago, but that hides a rise and then a reversal in between.

European bond yields have pushed higher overnight. And the UST 10yr yield is up +2 bps from yesterday, now at 4.45%. 

The price of gold will start today just on US$1991/oz and up a mere US$1/oz from this time yesterday.

Oil prices have firmed back up +US$2 to be just over US$76/bbl in the US. The international Brent price is now at just under US$81/bbl.

The Kiwi dollar starts today at 60.7 USc and unchanged from this time yesterday. Against the Aussie we are softish at 92.2 AUc. Against the euro we are also unchanged at 55.5 euro cents. That all means our TWI-5 starts today still just on 69.6.

The bitcoin price starts today at US$37,129 and up +2.0% from this time yesterday. Volatility over the past 24 hours has also been moderate at just on +/- 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 on Monday.