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 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.

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 markets are ending the year mired in uncertainty.

So markets are looking for signals, especially about inflation's track. Ahead this week, there will be more indications from the November PCE measures in the US, along with sentiment indicators from the Conference Board, and separately from the University of Michigan survey. Both will give updated indications of inflation expectations.

In the meantime, an economic slowdown is coming. The first of the December PMIs are now available, on a 'flash' basis, and the American factory sector is now at its lowest ebb in 31 months, and now contracting. Their giant services sector is actually shrinking at a faster pace. The demand retreat the Fed wants is here.

And there are signs inflation is easing too.

American petrol prices are falling noticeably now. From a year ago, this week's national average price is -3.8% lower. More importantly for consumers there it is -15% lower than just a month ago. 

Import activity at some key US west coast ports are down sharply. There were steep declines in November and they are extending into December too. The US import engine is stuttering and many economies across the Pacific will feel the impact in an outsized way.

There were flash PMIs out for other countries too. In Japan, the Markit survey shows factory activity is now contracting at a similar rate to the US. But they still have an expanding services sector, and interestingly a faster expansion than in November. That may surprise a few analysts.

In the EU, everything is still contracting however. Their factory sector is shrinking at a lesser rate however, and their services sector is shrinking at a lesser rate too. These 'improvements' weren't expected. Germany provided the moderation here, a turnaround from November when it was France, but France is weakening faster now.

The German central bank sees a mild recession in 2023, and a moderate recovery after that. For them, it will be a soft landing, they say.

In Australia, private sector activity slowed amid higher interest rates in December. The service sector is still contracting and the wind has gone right out of the expanding factory sector, and that expansion has disappeared now.

In China, the week ahead will bring a central bank review of their loan prime rates.

Meanwhile, Beijing policymakers suggested that anti-pandemic restrictions could be loosened further as the government seeks to stabilise flagging growth. At their Central Economic Work Conference officials said they will "optimise and adjust" pandemic control policies. But cities are grappling with the consequences of very fast spread now. The streets of key cities are eerily quiet and people stay home, either to self- quarantine, or avoid infection. New supply chain chaos is coming. Foreign investors see a very tough 2023 ahead in China, especially American investors.

And that negative view is showing up in the Chinese government bond market. Foreign holdings of yuan-denominated bonds traded in China's interbank market declined further in November, marking the 10th consecutive month of outflows.

In Japan in the coming week, their central bank will review its policy positions. Now that inflation seems to be building there, these reviews have more interest. Japan will also release updated inflation data this coming week.

Locally, we will get November trade data (sure to be weak) and business confidence data for December, which may not be too flash either.

The UST 10yr yield started today at 3.49%, and up +1 bp from this time Saturday and re-building after the recent big drop. 

The price of gold will open today at US$1793 and up +US$3 from Saturday.

And oil prices start today little-changed from this time Saturday at just under US$75/bbl in the US while the international Brent price is just over US$79/bbl.

The Kiwi dollar opened today at 63.8 USc and little-changed. A week ago it was at 64.1 USc. Against the Australian dollar we are holding up at 95.4 AUc. Against the euro we are at 60.3 euro cents and also folding firm. That all means our TWI-5 starts today at 72.6 and back to week-ago levels.

The bitcoin price is now at US$16,695 and down 0.7% from this time Saturday. Volatility over the past 24 hours has been low at just +/- 0.4%.

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’ll 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 have a big sell-off underway, induced by markets fearful of a united central bank resolve, who all remain focused on tackling inflation, and a growing understanding that this may require an economic recession to achieve that outcome.

The trigger from both the US and EU is that policy makers have indicated interest rates may have to go much higher before the inflation battle is won.

In the US, their data releases aren't helping the investor mood either. American retail sales fell in November from October and by much more than expected. Car sales were the big problem here. The year-on-year rise is down to +6.5%.

American industrial production came in lower than expected in November too, falling from October when a rise was expected. The year-on-year gain is down to +2.5%.

Inventories however didn't surprise with a small rise in wholesale stocks as expected and a small fall in retail stocks, also as expected. But wholesale inventories are +14% above year-ago levels, and retail inventories are a massive +20% above on the same basis. This is very much more than can be accounted for by inflation.

In the regions, the Philly Fed factory survey stayed quite negative, while the NY Fed's similar survey turned equally negative. Firms in the New York region expect little improvement, but in the Philly Fed region future indicators turned positive.

Despite all this growing negativity, the American labour market rolls on in a positive vein. There were 249,000 new jobless claims last week, a decrease from the prior week, taking the number on these benefits to 1.5 mln, also a fall, and more than -230,000 less than year-ago levels. The insured unemployment rate has stayed at a very low 1.0%.

In Canada, housing starts stayed high in November, bringing no surprises. They have generally been elevated since mid 2020, so perhaps this is the new normal for them.

There was a set of official data released in China yesterday, much of it weak. Retail sales fell and by much more than anticipated, to be a massive -5.9% below year-ago levels in October. Given their pervasive lockdowns, analysts had though a massive -3.7% fall was coming. In fact it was almost twice that. Electricity production was unchanged in November from a year ago. But they claimed industrial production rose +2.2% on the same basis even though that was half the claimed October rise. It hardly makes sense when electricity use is unchanged. They also said house prices fell -1.6% in November from a year ago, a brave estimate when these markets are largely a shadow of themselves.

And we should note that the official Chinese unemployment rate rose to 5.7% in November from 5.5% in October, which for a labour market of 79.2 mln, that is a huge extra number now jobless, 1.14 million. Given most Western countries have jobless rates in the 3-4% range now (Europe excepted), China's labour market is an outlier.

Meanwhile, China's Covid response is careening off the rails. A sudden surge in Covid infections has stoked public anxiety and created huge demand for medical supplies, and even food delivery in Beijing. But pharmacies are running short on medicines and delivery drivers are falling sick, meaning many are now struggling to purchase daily necessities. Now estimates are that more than 1 mln people will die nationwide in this new situation. Their inability to vaccinate enough people with proper vaccines has left them horribly exposed. Even their online delivery systems are wavering.

In Taiwan, their central bank raised its policy rate by a small +12 bps to 1.75%. Hong Kong mirrored the US Fed, as they always to, with a +50 bps rise to 4.75%.

In Europe, there were a string of central bank rate rises. The ECB raised their policy rate by +50 bps to 2.5%. Norway raised their rate to 2.75% with a +25 bps change, as expected. England raised theirs by +50 bps to 3.50% also as expected and mirroring both the US Fed and the ECB. And Switzerland made the same +50 bps change, taking theirs to 1.0%. All suggested more hikes were on their way in 2023.

In Australia, a higher participation rate is powering their labour market, whose jobless rate stayed at 3.4% in November. Their jobless fell by -7,400 to 491,700. Total employment increased by +64,000 to a fresh record peak of 13.8 mln, beating market forecasts of a rise of +19,000.

Global containerised shipping freight rates didn't fall mast week, and unusual situation, indicating the 40 week run of decreases may be over and we are reaching the bottom. Bulk cargo rates inched up, but to their highest in six week.

The UST 10yr yield started today at 3.43%, and down -7 bps from this time yesterday and building on the recent big drop. 

As we noted earlier, Wall Street's Thursday session is very negative with the S&P500 down -2.9%. 

The price of gold will open today at US$1778 and down -US$33 from yesterday.

And oil prices start today down -US$1 from this time yesterday at just under US$76/bbl in the US while the international Brent price is just over US$81/bbl.

The Kiwi dollar opened today at 63.5 USc and down more than -1c overnight. Against the Australian dollar we are up more than +½c to 94.6 AUc. Commodity currencies are not in favour today. Against the euro we are at 59.7 euro cents and also down almost -1c. That all means our TWI-5 starts today at 72.2 and down -20 bps.

The bitcoin price is now at US$17,396 and down -4.0% from this time yesterday. Volatility over the past 24 hours has been moderate at just +/- 2.9%.

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’ll 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 markets have reacted to the latest US Fed policy review which wasn't dovish enough for them.

All eyes have been on the US Federal Reserve who today unanimously raised rates by +50 bps as expected to 4.5% which is a 15 year high. That increase may be less than the +75 bps in November, but they now say they will keep going to take this policy rate to about 5.1% in 2023, which is higher than previously indicated. They are trying to slow the rate of increase, as inflation slows, but not lose sight of the fact inflation is well embedded in expectations still, and well above its target range still. A soft landing would be 'nice', but inflation is the declared enemy.

They have a friend in a strong US labour market that has stayed resilient. That labour market strength is expected to wane, but neither the markets nor them know how-or-when. This strength has proven many pundits wrong for a long time now.

2023 rate changes may be far less regular than what we got in 2022, and mostly of the +25 bps variety. They are now not only out of their pandemic 'abnormal' zone, they are through 'normalisation' and out the other side into a new abnormal on the high side.

In other news, after a month of steady declines, American mortgage interest rates rose slightly last week, and mortgage applications did too. Perhaps the American housing market has reached a bottom for the year?

Japanese machinery orders rose more in October than September to finally push the year-on-year result to a gain.

On the other hand, Japanese industrial production slipped in October from September to be more modestly ahead on a year-on-year basis.

In Denmark and in a rare bipartisan agreement, the Danish government said it would cut taxes and cut a public holiday from their calendar, as part of an attempt to invigorate an economy they say is weighed down by their 'welfare society'.

British inflation eased in November from October and by a bit more than expected. Overall prices there are still up +10.7% over the year, but rose less than at an annualised +4% rate from the prior month, so signs of cooling are there.

We should also probably note that yesterday's Half Year Economic & Fiscal Update from the NZ Treasury is forecasting a recession in 2024. The RBNZ's forecasts suggest it will be starting earlier in 2023.

The UST 10yr yield started today at 3.50%, unchanged from this time yesterday and holding yesterday's big drop. After the Fed's release it rose to 3.56%. 

Wall Street opened its Wednesday session with the S&P500 up another +0.6% in trade prior to the Fed, but then fell sharply giving up those gains to be -0.3% lower now. 

The price of gold will open today at US$1811/oz and up +US$3 from yesterday.

And oil prices start today up +US$1 from this time yesterday at just over US$77/bbl in the US while the international Brent price is just under US$83/bbl.

The Kiwi dollar opened today at 64.6 USc and holding most of yesterday's big gain. But after the Fed, it fell to 64.2 USc as the US dollar gained ground. Against the Australian dollar we are soft at 94 AUc and down another -¼c. Commodity currencies are still in favour today. Against the euro we are at 60.6 euro cents and back down almost -½c. That all means our TWI-5 starts today at 72.4 and down -40 bps.

The bitcoin price is now at US$18,121 and up another +1.2% from this time yesterday. Volatility over the past 24 hours has been modest at just +/- 1.5%. 

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’ll 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 inflation landscape seems to be changing quickly now.

American inflation slowed more than expected in November, an encouraging sign for Federal Reserve officials who are now meeting in Washington to discuss the next steps in their policy campaign against rapid price increases. The headline rise was 7.1%, a drop from October's 7.7%. Markets had expected a 7.3% rate.

But more importantly, the change to November from October was at an annualised rate of less than 1.5%. And in actual, but not seasonally adjusted terms, it fell at about the same annualised rate. Either way, the impetus has gone out of the American inflation surge in November.

Core inflation rose at about a 2.5% annualised rate in November from October, but that too was less than expected.

All of these shifts do have markets wondering how the recently hawkish Fed will assess this data. Markets are expecting tomorrow's December rate hike to be +50 bps to 4.5%. But the view of how policy is to be set for 2023 will be the key factor markets will be watching for. After today's data, they seem to be betting there will be less need for the Fed to take as hard a stance as they did in 2022. Which means 2023 will face less inflation pressure and fewer rate hikes. And that a soft landing is much more likely now. Commodity prices rose. Bond rates fell. And the US dollar retreated on the rising risk appetite.

Meanwhile the US Redbook retail sales data for last week improved from the week before, but only slightly, and by less than inflation. It rose by +5.9% from the same week a year ago.

In China, one of the consequences of the eased pandemic response is that travel bookings for the January Spring Festival/Chinese New Year are surging. We may see a record internal migration around the January 23 event.

In the EU, they have agreed to impose a new import tax on imports based on the greenhouse gases emitted to make them, inserting climate-change regulation for the first time into the rules of global trade. The initial focus will be on cement, steel, aluminium, fertilisers, electricity production, and hydrogen. Brussels has said countries could be exempted if they have equivalent climate change policies to the EU.

Meanwhile, German investor sentiment improved much more than expected in the ZEW survey, but to be fair it is still sharply negative overall, just much less so. Stabilising energy markets, and wider confidence their winter stress can be handled in the face of Russian threats, and cooling inflation, are all helping improve the mood which is now its least negative in nine months.

In Australia, consumer sentiment bounced off its recent lows, an 'improvement' that wasn't very convincing or significant. But those in their 'mortgage belt' seemed to be noticeably cheerier, probably on the basis that they think the bulk of the RBA interest rate hikes are behind them. Good luck with that.

But the mood of businesses in Australia turned somewhat downbeat according to the NAB business confidence survey for the month. It was the first time this survey has turned negative in 2022. Sentiment about the future is deteriorating, but survey respondents agreed that current conditions are good.

The UST 10yr yield starts today at 3.50% and down a very sharp -12 bps from this time yesterday. 

The price of gold will open today at US$1808/oz and up +US$23 from yesterday.

And oil prices start today up +US$3 from this time yesterday at just on US$76/bbl in the US while the international Brent price is just over US$81/bbl.

The Kiwi dollar will open today at 64.8, and nearly +1¼c higher than this time yesterday. Against the Australian dollar we are soft at 94.3 AUc and down -¼c. Commodity currencies are back in favour today. Against the euro we are at 61 euro cents and up +½c. That all means our TWI-5 starts today at 72.9 and up +50 bps.

The bitcoin price is now at US$17,782 and up +4.6% from this time yesterday. Volatility over the past 24 hours has been moderate at just +/- 2.8%.

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’ll 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 inflation might be easing, but the level of economic activity is as well.

In the US, consumer inflation expectations are falling now. A Fed survey revealed they fell to 5.2% in November, the lowest since August 2021. That is down from 5.9% in October and is the sharpest single-month fall since this survey started in 2013.

The US reveals its CPI data tomorrow and a 7.3% headline rate is expected, down from October's 7.7% rate

Japanese producer prices rose at an annualised +7.2% rate in November from October to be +9.3% higher than year-ago levels. This recent slowing isn't as much as the +6% annualised rate expected, but at least it is slowing now. Japan's factories have been hit with the combination of high commodity prices and a weak yen. But starting in mid-November these weaker trends started to reverse, so the pressure may be coming off faster in December.

Orders for Japanese machine tools also fell sharply in November. This is leading-edge data for essential technical components in the global economy. The fall was a sharp -4.9% from October and -7.9% from the same month a year ago. Export orders fell -8.4% in November from October.

China's new yuan loans swelled +11% in November, but that was actually slightly less than was expected. But it is very sharp loan growth year-on-year and approaching three times the growth in economic activity. It's not inflation boosting these debt levels, rather a rush to add liquidity to keep their property sector from imploding.

Meanwhile, confusion is growing over the relaxation in China's Covid-response rules. There is a reluctance to 'go out', fearing getting caught by some technical aspect, and a fear that enforcers are as confused as everyone else. Further, infections are spreading very quickly now and there are reports hospitals are overwhelmed in some places. Key city retail zones are struggling despite the expectations the 'relaxations' would bring a surge of shoppers. Equity markets can sense the hesitations, risks and confusion, and yesterday marked down retail-related stocks sharply.

India's industrial production also fell sharply, by -4% in October from a year ago and a far larger retreat than was expected. That's its worst post-pandemic result.

At the same time, India reported its consumer inflation for November, and that rose +5.9% from a year ago, but actually fell marginally from October.

In Australia, there is full-on pushback by the gas industry to proposed price capping to help consumers. A supply and investment 'strike' is being threatened, but probably won’t happen.

The UST 10yr yield starts today at 3.62% and up +3 bps from this time yesterday. 

The price of gold will open today at US$1785/oz and down -US$13 from yesterday.

And oil prices start today up +US$1.50 from this time yesterday at just on US$73/bbl in the US while the international Brent price is down to just under US$78/bbl.

The Kiwi dollar will open today at 63.7 USc, and and nearly -½c lower than this time yesterday. Against the Australian dollar we are firm at 94.6 AUc. Against the euro we are still at 60.4 euro cents and down -½c. That all means our TWI-5 starts today at 72.4 and little-changed.

The bitcoin price is now at US$17,006 and down -0.9% from this time yesterday. Volatility over the past 24 hours has been modest at just +/- 1.1%. In the US prosecutors are assessing whether to proceed with a criminal indictment of Binance, the world largest crypto exchange. The issues are money laundering and evading sanctions.

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’ll 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 this week brings the final chance by central banks to tackle inflation.

In the upcoming week, some influential data and policy positions will be released. First we will get the REINZ housing transaction data for November tomorrow and it is widely expected to be weak. Next we will get Chinese new yuan loans data on Wednesday which is expected to swell as Beijing pushes its state-owned banks to shore up struggling property developers. Then the US will release its November CPI data which is expected to show inflation easing somewhat. And that will be followed by the US Fed who will raise its policy interest rate, probably by +50 bps. But their commentary will be hugely influential. Bond markets have already priced in a more dovish stance.

That will be preceded by the New Zealand current account position (which should be important, but it is unlikely to move markets), then the NZ Q3 GDP which might show a +5.5% growth rate off a low base, and followed by Australian labour market data for November.

We will end the week with US retail sales data and an ECB rate review, expected to bring a +50 bps rise to 2.5%. That ECB rate hike will be the last official central bank effort to tackle inflation in 2022. 2023 will start with the Bank of Japan's first review on January 18 who will kickstart a year of tough choices for central bankers.

However, investors are now favouring funds that would benefit from slowing inflation and falling rates, in a sign that markets think a soft landing is now the more likely outcome in 2023.

Over the weekend, China said its CPI inflation fell to +1.6% in November from 2.1% in the prior month. This shift lower was as expected. It was the lowest level since March, mainly due to a sharp slowdown in cost of food, rising +3.7% which was down from the +7.0% in October. A lot was due to pork prices which eased further after authorities released national reserves into the market. Beef and lamb prices changed little in November, milk prices eased up slightly.

On the factory front, producer prices are deflating now in China. They fell at a -15% annualised rate in November to be level-pegging with year-ago levels. That is two consecutive months of a sharp deflation in their PPI, and it is hard to see it ending any time soon. The only 'positive' in these November numbers are that analysts had expected an even sharper fall.

There may be some positive signs emerging for China's economy however. For example, deliveries of the construction equipment, rose +2.7% in November, breaking a 10-month losing streak. But it also should be noted that this gain is off a depressed base. Separately we need to be careful of Chinese reports of economic gains; many local jurisdictions are turning to subsidies and incentives to try and restart their retail impulse.

But their shift to trying to treat Covid "like the flu", which will undoubtedly be welcomed locally because of the reduced heavy hand of the State, is likely to reveal a widespread hesitancy about venturing out, for large numbers of people. That will stunt their recovery until confidence in safety returns.

Also over the weekend, American producer prices rose a bit more than expected. But they rose at an annualised rate of just +3.6% in November to be +7.4% higher than a year ago. Both were lower than the +8.1% year-on-year rise in October. Markets had expected the November annualised rise to be as low as +2.5%. Producer inflation is ebbing, just not as fast as expected.

American wholesale inventories also rose, and slower than expected at an annualised rate of +6% and probably still tracking inflation. However they are +24% higher than year-ago levels, so this overhang remains substantial.

Improving is the mood of American consumers, at least according to the widely-watched University of Michigan survey. It also reported lower inflation expectations. These improvements weren't expected.

In Europe, they seem increasingly confident that their electricity supplies will be stable at reasonable prices over the coming winter. The disengagement from Russia has taught them valuable energy supply lessons, even if the costs have been high and wouldn't otherwise have been chosen.

The UST 10yr yield starts today at 3.59% and up +6 bps from this time Saturday. 

The price of gold will open today at US$1798/oz and down -US$2 from Saturday. A week ago it was at US$1796, so little net movement from then.

And oil prices start today up +50 USc from this time Saturday at just on US$71.50/bbl in the US while the international Brent price is down to just over US$76.50/bbl. These are down -US$10 from a week ago and are back to year-ago levels. In fact we first were at these levels in 2006.

The Kiwi dollar will open today at 64.1 USc, and little-changed from Saturday. Against the Australian dollar we are still firm at 94.4 AUc. Against the euro we are still at 60.9 euro cents and holding its Saturday rise. That all means our TWI-5 starts today at 72.5 and little-changed.

The bitcoin price is now at US$17,164 and essentially unchanged from this time Saturday. Volatility over the past 24 hours has also been very low at just +/- 0.3%.

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’ll do this again tomorrow.

Geopolitical tensions are playing a significant role in the growth of cybercrime and New Zealand should consider following Australia's lead and having a Minister of Cyber Security.

That's the view of Adam Boileau, Executive Director of security, testing and assurance at cyber security provider CyberCX.

Speaking in a new episode of interest.co.nz's Of Interest podcast, Boileau says it's clear cybercrime is getting worse. Criminal gangs can make good money out of computer crime, and when the likes of Russia won't extradite criminals, doing so has become a viable occupation, Boileau says.

"The world around us has shaped how computer security has become relevant to individual people and to businesses, to enterprises, to government," says Boileau.

In the podcast Boileau explains why he's closely watching Australia, where Minister for Cyber Security Clare O'Neil pledges to "punch back at the hackers," taking the attack to cyber-criminals. He describes the Aussie approach as "a pragmatic answer to a very real problem"

New Zealand, Boileau adds, should also have a Cyber Security Minister.

"Computers are so important to everything now. ..This is no longer a thing [just] for nerds."

I have a message for all cybercriminals: Australia is fighting back.#Insiders pic.twitter.com/jEyk6rzgGj

— Clare O'Neil MP (@ClareONeilMP) November 13, 2022

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 global trade networks seem to be fracturing at a faster pace now.

But first, there was an outsized jump in initial American jobless claims last week, up to +286,000 and pushing the total number of people on these benefits to just under 1.6 mln. The insured jobless rate jumped to 1.1% and while this is still incredibly low, it may well signal the economic slowdown is starting and starting to hit the American labour market.

But their latest update for consumer debt isn't indicating households are pulling back. It rose at a moderate pace in October, and there weren't any credit card red flags in this data.

And it looks like some major components of American inflation are starting to ease. Mortgage interest rates fell last week, back under 7% and back to September's levels. Rents are falling. American petrol prices are too and back to year-ago levels. These three are large enough categories to be noticeable in household budgets.

But markets don't think these reduced pressures will bring a change in inflation-fighting attitude at the Fed, and still see them raising rates from here.

China is cosying up to Saudi Arabia, shoring up its energy supplies and going its own way on global trade. While the Xi's trip there is mostly theatre, it does underscore the fracturing of the previous integrated global trade network. It isn't a great time for China to try this however. Its new grouping with Russia and the Middle-East looks more fragile than the US-Japan-EU network. India wants to be seen as a major power too, but is unlikely to join up with a China-dominated bloc.

In China, more evidence of the economic cost of their Covid-Zero policies are coming to the fore. More than 40% of their car dealers went out of business in November, and car sales dipped sharply.

The establishment of new not-China advanced computer-chip manufacturing facilities is gathering pace as China pushes ahead with its own. And India says it will do the same. This key industry is emblematic of a hardening of the trade fault-lines.

But trade is still going on, especially in basic commodities.

Australia reported another jumbo trade surplus in October of AU$12.2 bln for the month.

Container shipping rates continue to ease fast, down another -6% last week from the week before. Again, it is China-related trade that is taking the heaviest reductions. They are now -77% lower than year-ago levels, and -21% below the ten year average. But bulk cargo rates are not showing the same retreats.

In fact, there is little evidence of demand falls for key commodities, either mineral or food (although perhaps wheat prices are well passed their peak).

Back in Australia, their Federal Parliamentary Budget Office warned that unless the government addresses bracket creep, more and more taxes paid by fewer and fewer taxpayers will eventually undermine their tax system (see section 4.3) by encouraging "tax planning" by many, and lower workforce participation rates by other groups.

The UST 10yr yield starts today at 3.49% and up +5 bps from this time yesterday. 

The price of gold will open today at US$1790/oz and up another +US$7.

And oil prices start today down another -50 USc from this time yesterday at just on US$72.50/bbl in the US while the international Brent price is down to just over US$77.50/bbl.

The Kiwi dollar will open today at 63.8 USc, and again a little firmer than this time yesterday. Against the Australian dollar we are -½c softer at 94.2 AUc. Against the euro we are at 60.4 euro cents and down slightly. That all means our TWI-5 starts today at 72.1 and very little-changed.

The bitcoin price is now at US$16,838 and up a mere +0.1% from this time yesterday. Volatility over the past 24 hours has also been low at just +/- 0.6%.

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’ll 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 China is scrapping their tough pandemic restrictions as the economic toll mounts. It was a broader back-down than expected as their stagnant economy now demands remedies.

But first in the US, mortgage applications and mortgage interest rates fell last week in an extended retreat reflecting a weakening of an already weak housing market.

However, there are signs in the US that holiday season retail sales may not be as weak as feared. Many retailers are embracing their higher inventory levels and see it as a competitive advantage. Consumers seem to be responding.

In Canada, their central bank raised its policy rate by +50 bps to 4.25% earlier today. It is also shrinking its balance sheet in a continuing tightening phase. However, it has opened the possibility that they may be near the end of their rate hike cycle for now.

In Beijing, their National Health Commission set out 10 new measures, less than a month after it started the reopening process with 20 guidelines for officials to minimise social disruption. Despite a buildup in expectations in recent weeks, markets appeared to be taken aback by how far-reaching these moves were. An initial rally fizzled as investors worried about a spike in infections and the chaos that might result from such sweeping changes.

Separately, Chinese exports dived by nearly -9% in November from a year ago. Their imports fell more than -10% on the same basis. Both were results far worse than expected, and far worse than the falls recorded in October. This was the second straight month of decline in shipments, amid weakening global demand due to high inflation and as production disruptions lingered.

China's official foreign reserves rose in November however, buoyed by a rise in the USD and rising asset values in the month.

In India and as expected, their central bank raised its policy rate by +35 bps to 6.25% late yesterday. It was seen as a hawkish shift in policy.

In Australia, their economy expanded +5.9% (real) in Q3-2022 from Q3-2021, but only +0.6% of that was in the September quarter, and that was less than was expected. Nominally, their dollar rise was +13.1% from a year ago, but the Q3 weakness was very pronounced in this nominal data.

One of the most striking parts of this GDP release is the level of embedded inflation it reveals. Household prices are rising at an +8% rate in Q3 (+2.0% q-on-q), and wage inflation is running at an even faster +10% rate (+2.6% q-on-q)

The UST 10yr yield starts today at 3.44% and down -12 bps from this time yesterday. 

The price of gold will open today up at US$1783/oz and up +US$12.

And oil prices start today down another -US$1.50 from this time yesterday at just on US$3/bbl in the US while the international Brent price is down to just over US$78/bbl.

The Kiwi dollar will open today at 63.6 USc, and again a little firmer than this time yesterday. Against the Australian dollar we are also firmer at 94.7 AUc. Against the euro we are at 60.6 euro cents and up slightly. That all means our TWI-5 starts today at 72.2 and up another +30 bps overnight.

The bitcoin price is now at US$16,812 and down -0.9% from this time yesterday. Volatility over the past 24 hours has modest at just +/- 1.3%.

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’ll do this again tomorrow.