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 first from China.

In a 105-minute speech overnight, (here and here) Chinese President Xi highlighted the challenges and risks faced by his country and warned party members to brace for “dangerous storms” ahead. But by rallying around him, he promised they would be able to ride out those storms and guide the country to “incomparable glory”. He set a 27 year goal for China to dominate all aspects of global activity.

Away from political fantasy and more immediately, Chinese inflation data for September was released late on Friday. This was as expected at 2.8% and a small rise. The Chinese also reported that producer prices rose at only +0.9% in September from a year ago, a very low rate and mirroring the struggles the Chinese economy currently faces.

We were expecting China to release its September export and trade results, but it seems they have been delayed a day so as not to clash with the Party Congress's opening speech..

The central bank of Singapore tightened its monetary policy on Friday, the fifth time it has done so since October last year.

Across the Pacific, American retail sales were unchanged in September from August, but were +8.6% higher than the same month a year ago, only just keeping pace with inflation. It was a result that missed analysts' expectations, but is was car sales that drove the miss. Other than that, it beat expectations.

Business inventories rose quickly again, even if not as fast as expected. This is a growing problem as overall there is now +US$376 bln more in inventories than a year ago, or +18% more. However, it is fair to note that the stocks-to-sales ratio is just back to where it was a year ago.

It is also fair to note that the latest American consumer sentiment survey, this one from the University of Michigan, shows consumers are happier about their present situation, even if they are more concerned about the future prospects. This was a better result than expected.

In the UK, their new prime minister has threw her finance minister (and friend) under the bus late Friday and scrapped her radical tax plan, all in an effort to save her position. It isn't clear yet whether the u-turn will be sufficient. It is up to her party members to decide that. Financial markets have already decided it isn't enough and she should resign, although that seems unlikely at this time.

Then over the weekend, the Bank of England said clearly that they will respond to the public policy turmoil with sharply higher policy rates if the British Treasury can't get things back under control. The UK Government will release its revised-revised plan on October 31. Their central bank will respond on November 3. They are on a bit of a knife-edge there.

Elsewhere in Europe we might look at their inflation rate and worry that could possibly be our prospect. Open democracies, of which there are many in Europe, are really struggling with the inflation pressures that flow from the war on Ukraine. Inflation ranges from over 20% on the war's front lines in the Baltic states, to just 7% in "far away" Malta. Germany is over 10%, France is just +6%. The inflationary pressure are very real, and more than just for fuel now.

But how are the iconic autocrats handling these pressures?, you know, the ones with know-all tough-man presidents who don't think the laws of economics (supply & demand) don't apply to them, of if they do, they can bend them to their will. Well Hungary has September inflation at over +20% now and rising fast. Turkey has it over 80% and still rising. Autocracy isn't out-performing democracy in the economic management arena.

Autocrats are poor decision makers. The Q3 filings at the US Federal Election Commission shows that Donald Trump raised US$24 mln in the period, but to do that it cost $22 mln in fundraising expenses. The high-cost, low-margin fundraising came as Trump’s legal problems mounted.

The UST 10yr yield starts today at 4.02%, unchanged since Saturday but up +14 bps in a week.

The price of gold will open today at US$1645/oz. This is up +US$2 from this time Saturday, but down -US$55 in a week.

And oil prices start today unchanged from Saturday at just on US$84.50/bbl in the US while the international Brent price is just over US$90.50/bbl. A week ago these prices were US$91.50/bbl and US$97/bbl respectively, so a -7.6% fall in a week.

The Kiwi dollar will open today at 55.6 USc and unchanged. Against the Australian dollar we are still at 89.5 AUc. Against the euro we are at 57.2 euro cents. That all means our TWI-5 starts today at 66.5 and very little-changed from week-ago levels - or even two weeks ago.

The bitcoin price is now at US$19,139 and down -1% from this time Saturday. Volatility over the past 24 hours has however been very low at just +/- 0.5%.

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.