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.

And today we lead with economic news is taking a bit of a back seat today but there are still key trends to note.

First in the US, the latest PMI reading for the American manufacturing sector has it out of contraction to its best level in six months. This same 'flash' report for October for their services sector recorded a three month high. Both were better than anticipated.

The next regional Fed factory survey, this one from the Richmond Fed, broadly confirmed the factory levels in their mid-Atlantic region. But they recorded a much weaker services result there.

Nationally however, the latest Redbook retail survey of bricks & mortar stores (on a same store basis) records a good expansion last week from a year ago (+5%), better than inflation by some margin now.

A feature of all these indicators is that job growth is holding and that inflation is easing.

In China, Bloomberg is reporting that Xi Jinping made his first known visit to China’s central bank since he became president a decade ago, underscoring an increased focus on shoring up the Chinese economy and financial markets. He went with other senior officials, and he also visited their sovereign wealth fund. It is doubly interesting that the central bank is not mentioning the visit. It is rare for Chinese government departments not to make a big deal about visits by Xi. China's senior leadership are meeting next week to address the growing risks in their economy.

China said it will issue ¥1 tln new sovereign debt in Q4-2023 as it raised its fiscal deficit ratio from 3.0% to 3.8%. Couching the move as 'disaster relief' is interesting and somewhat ironic.

Staying in China, it seems that while demand for infant milk powder is declining with their demographic shift, milk powders aimed at the middle-aged and elderly are seeing fast rising demand.

Meanwhile in Hong Kong, just how far they are going down the CCP rabbit-hole is clear with a new "patriotic education" program to be announced, one that is not only for students in formal education but the population as a whole. One Country, Two Systems is long gone.

In Europe, the latest flash PMIs for October are not good. Their economic downturn deepened with private sector output declining at the steepest rate for over a decade (excluding the pandemic affected months). New orders fell at an accelerating rate, pointing to a worsening demand environment for both goods and services.

Globally, a new report is noting that billionaires pay as little as 0% to 5% in income taxes, and that a global agreement for a minimum 15% income tax could raise as much as US$250 bln annually. Involved would be just 2700 global billionaires.

The UST 10yr yield has changed little from this time yesterday, now still at 4.84%.

The price of gold will start today at US$1974/oz and up +US$2/oz from yesterday at this time.

Oil prices have fallen another -US$2 today to be now at just on US$83.50/bbl in the US. The international Brent price is now just over US$87/bbl.

The Kiwi dollar starts today at 58.3 USc and down -20 bps from this time yesterday. Against the Aussie we are down to 91.8 AUc and a five week low. Against the euro we have risen slightly to 55.1 euro cents. That all means our TWI-5 starts today at just on 68.3, marginally up from yesterday.

The bitcoin price starts today at US$33,998 and up another sharp +8.7% from this time yesterday to an eighteen month high. Over the past week, this crypto price has risen more than +NZ$10,000. Volatility over the past 24 hours has been extreme again at just on +/- 5.4%.

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.