Economy Watch

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 concern

There 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.