Economy Watch

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 start with news we are entering the end of year shadow of economic releases, but there are still some important things to come. And the upcoming sentiment signals as the holidays approach are not overly optimistic. Today tech industry concerns are weighing on equity markets.Elsewhere, US mortgage applications fell -3.8% last week, the biggest dip in a month. Applications to purchase a home declined -2.8% while home loan refinance fell -3.6%. Benchmark mortgage interest rates were little-changed.More Fed speakers were out overnight, with a Trump favourite (Christopher Waller) saying US rates can be cut by -1%. Waller is a candidate for a Trump nomination to replace Powell. But Atlanta Fed boss Bostic says any rate cuts now will just fuel inflation which he sees as already too high.In Canada, foreign investment in Canadian securities in October rose to their highest level since March 2022, a sharp rise from the high September level and far above what analysts were expecting.And we should note that the Bank of Canada is moving ahead with its plan to support an official stablecoin.Also in Canada, we should note they had their biggest dip in population in Q3-2025 as they effectively shut their doors to immigrants. It was their first-ever drop (outside the pandemic)In Japan, machinery orders, (but excluding volatile sectors such like ships and electric power systems), jumped +7.0% in October from September's good 4.2% gain. This is even better than expected, because a -2.3% decline was anticipated. The October level was also the highest since March.So it won't be a surprise to know that Japan’s exports rose +6.1% in November from a year ago, the third consecutive monthly gain and better than the expected rise. In fact, it was the fastest pace in export shipments since February, and was driven by demand from the US who have just accepted that they have to pay their tariff-taxes. This gain pushed Japan back into a trade surplus.In Indonesia, their central bank left its policy rate unchanged in its meeting yesterday at 4.75%, as expected. They see inflation holding in its +/-1% target around 2.5%. In Europe there will be monetary policy decisions tonight, with the ECB expected to hold and the Bank of England to cut.The UST 10yr yield is now at 4.16%, little-changed from this time yesterday.The price of gold will start today at US$4332/oz, and up +US$35 from yesterday, and touching its record highs. Silver is at US$66.50/oz and a new record high. We should also keep an eye on platinum too, also near its recent record highs. 2026 could be "interesting" for precious metals.American oil prices are up +50 USc from yesterday at just over US$56/bbl, while the international Brent price is up +US$1 at just on US$60/bbl.The Kiwi dollar is down -10 bps from yesterday, at just on 57.8 USc. Against the Aussie we are +20 bps firmer at 87.5 AUc. Against the euro we are unchanged at 49.2 euro cents. That all means our TWI-5 starts today still just on 62, and little-changed from yesterday.The bitcoin price starts today at US$86,671 and down -1.0% from this time yesterday. Volatility over the past 24 hours has been moderate, at just on +/- 2.1%.Join us at 10:45am this morning when we will be reporting the Q3-2025 change in economic activity (GDP). Markets are expecting a +1.3% rise from a year ago, a +0.9% from Q2. And they are expecting Q2 to be revised up. Material variations from that will have financial market implications.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 start with news of some messy US data which Wall Street is nervous about, but elsewhere most other countries are on the improve (China excepted).But first up today, the overnight dairy auction was another bad one with prices down -4.4% in USD terms and down -5.4% in NZD terms. The key WMP price fell -5.7% in USD terms. This is now serious. The recent downgrades to current season milk payout forecasts are going to get looked at again by the analysts. Since the peak in May, theses prices have dropped -25% and are down -17% from this time last year. We are in a full bear market for dairy prices. Making it worse is that we are now just past the seasonal peak of the milk curve, which will take the top off the country's export earnings. Yesterday's MPI SOPI is already out of date, and even that wasn't very positive about earnings from dairy exports.The catch up update of the US labour market didn't really reveal much or surprise many. It reported a steep drop in October and a half-bounce-back in November. The net result is a loss of -41,000 jobs over the period of the US Government shutdown. Not seasonally adjusted, there was a good +920,000 rise in employment from September to November, but this is far less than the +1,355 mln in the same 2024 period. Despite their unemployment rate rising to 4.6% and a four year high, their labour market isn't a net drag yet, but it is now getting close.The more current weekly jobs report from ADP recorded a small gain last week, but the prior week's gain was revised sharply lower.But overall, this latest jobs data is messy, and probably no help to the Fed when setting monetary policyMeanwhile US retail sales in October showed no gain from September to maintain their year-on-year +3.8% gain, just marginally ahead of current US inflation. These latest results have been dragged lower by declining car sales.The flash American December factory PMI came in positive, but only just and a six month low.Across the Pacific in Japan, their flash December PMI reported an increase in new orders supporting a rise in business activity. But their factory PMI isn't quite yet at expansion despite the improvement.In India, their factory PMI shows output rising strongly, but the momentum is showing signs of slowing. Most countries would love PMI's like they have however.In the Eurozone, business activity rose again in December to complete full calendar year of expansion. But their factory PMI dipped slightly to take the top off the result. Hurting was the re-emergence of inflationary pressure.The latest S&P Global PMI for Australia for December finds the factory sector expanding in a minor way and a little faster than in November helped by expanding new order levels. But the service sector is now expanding slower, in fact barely expanding.Staying in Australia, the Westpac-Melbourne Institute survey of consumer confidence retreated in December and by more than expected and into net negative territory. In fact, no change was expected. The survey found a sharp change in what is expected for mortgage rates, going from a expecting a fall, to now expecting them to rise. Views on the economic outlook and household finances have deteriorated, but those surveyed are still confident about the Australian labour market. Views on homebuying and house prices have been pared back.The UST 10yr yield is now at 4.16%, down -2 bps from this time yesterday. The key 2-10 yield curve is still at +67 bps. The price of gold will start today at US$4297/oz, and up +US$2 from yesterday.American oil prices are down another -US$1 at just under US$55.50/bbl and a new five year low, while the international Brent price is now just on US$59/bbl.The Kiwi dollar is unchanged from yesterday, at just on 57.9 USc. Against the Aussie we are +10 bps firmer at 87.3 AUc. Against the euro we are down -10 bps at 49.2 euro cents. That all means our TWI-5 starts today at just on 62, and littel-changed from yesterday.The bitcoin price starts today at US$87,541 and up +1.4% from this time yesterday. Volatility over the past 24 hours has been modest, at just on +/- 1.5%.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 start with news the US Fed is struggling with its diverging views ahead of tomorrow's catch up non-farm payrolls report. Wall Street is dipping in anticipation. The oil price is falling on concerns demand is weakening.Overnight, two Fed speakers were out delivering different views. Trump insert Stephen Miran essentially called affordability concerns overblown and reckoned the data doesn't show an affordability problem. Whereas NY Fed boss John Williams sees 'resilience' and on-going price pressures.Meanwhile, the latest regional Fed factory survey is from the New York region and it turned into a contraction in December after two months of expansion. It was an unexpected turn lower. New orders held steady, and inflation pressures eased, but activity declined noticeably.On the home building front, the widely watched national survey of home builders remained glum, even if it did improve marginally. This measure stayed in contraction for the 20th consecutive month. Builders are contending with higher construction costs, economic and tariff risks, and muted demand from buyers who cite affordability concerns.In Canada, their CPI inflation came in at 2.2% in the year to November, unchanged from October. However, food prices rose 4.2%. Meanwhile, Canadian housing starts rose in November, consistent with the building permit trend we have noted before. But there are questions about whether that will last because November real estate sales were lower on volume and lower in price.In Japan, a series of Q4-2025 business sentiment surveys show good or rising confidence levels, now up to a four year high. This is true for large firms (recall our reports of how they are winning against the Trump tariff-taxes), the local services sector, and now a good jump for small businesses.In China, new home prices across their 70 major cities dropped -2.4% in November from a year ago, deepening from a 2.2% decline in the previous two months. The latest results are the 29th consecutive month of price drops and the steepest pace since August. Beijing is involved in a long struggle to overcome the seemingly endless weakness in their property sector. The price declines for housing resales are deeper, but not more sharp, even if they are just relentless.China's retail sales were notably weak in November, rising just +1.3% from a year ago and far below the expected +2.9% (with some expecting a +3.3% gain). This is a real cold-water moment for the Chinese economy and will undoubtedly bring emergency actions from Beijing. One reason for the weakness may have been the end of consumer goods subsidies, and the widespread expectation that they would be reinstated. Such subsidies are a trap on public finances.Chinese industrial production rose +4.8% in November, below the expected +5.0% rise and near the lowest growth level since late 2023. Despite its lowish level, there are reasons to be sceptical of even this level. (See next item.)But November electricity production in China was up only +2.7% from the same month a year ago, showing up the October year-on-year surge as an outlier.In India, their November exports rose while their imports fell, delivering a much smaller trade deficit for the month than was expected; in fact their lowest since June. And the November shifts were true for both goods and services.The UST 10yr yield is now at 4.18%, down -2 bps from this time yesterday.The price of gold will start today at US$4295/oz, and down -US$4 from yesterday. And we should note that silver is up +US$1 at just over US$62/oz.American oil prices are down another -US$1 at just on US$56.50/bbl and a five year low, while the international Brent price is now just over US$60/bbl.The Kiwi dollar is -10 bps softer from yesterday, now at just over 57.9 USc. Against the Aussie we are unchanged at 87.2 AUc. Against the euro we are down -10 bps at 49.3 euro cents. That all means our TWI-5 starts today at just over 62, and down -20 bps from yesterday, shifted by a fall against the Japanese yen.The bitcoin price starts today at US$86,357 and down -2.8% from this time yesterday. Volatility over the past 24 hours has been moderate, at just on +/- 2.1%.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 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.And today we lead with news today dominated by the vile attack in Sydney, extremism begetting extremism all permitted by unfiltered hatreds flowing out from its center. Financial news seems trivial in light of this. Of course we won't be covering this Australian tragedy. But it is likely to harden attitudes just when they need to soften.In the meantime, we are noting tech weakness dominating equity markets, and Fed speaker comments (here and here) pushing long benchmark bond yields higher. The USD is soft and down nearly -1% for the week. But first, the week ahead will locally feature Wednesday's current account data, and more so by Thursday's GDP tracking of Q3-2025 economic activity. The final consumer and business confidence survey results will likely come this week too.In Australia on the economic front, it will be about tracking household wealth, also out on Thursday.In the US, they will release catch-up data for non-farm payrolls on Wednesday for both October (??) and November. (+35,000 expected) That will be followed by November CPI data (3.2% expected). A slew of other US activity data will hit the news as well.In Japan, financial markets will be glued to their central bank meeting results (expect a +25 bps rise to 0.75%) along with a 3%+ CPI reading. From China, they will have their big monthly data dump of retail and industrial activity. In India they will release a lot of data too, including PMIs, but then, we will also get PMIs from many other countries, including our own PSI as well.Over the weekend, China said its new loan demand remains unusually weak, and in November came in even lower than the weak forecasts by observers. Chinese banks extended ¥390 bln in new yuan loans, up from the unusually low October level but still below both last year’s weak ¥580 bln and market expectations of ¥500 bln. Soft household demand continues to weigh on stimulus efforts. Remember, over the past five years, this loan demand has averaged ¥830 bln in a November month so the current drag is notable.And it is looking increasingly like investors, including boardroom directors in charge of making capital expenditure decisions, have goner on a quiet strike in China.And staying in China, things just got worse for wavering China Vanke on Friday, once one of China's largest property developers. The Shenzhen-city controlled business was unable to get bondholder support for its latest financial restructuring. So current lenders took more of its assets as security.India's CPI inflation remains very low at +0.7% in November from a year ago, up from its record low level in October. This was driven by an almost -4% fall in food prices.India's bank loan growth is back up +11.5% from a year ago and its fastest expansion this year.In Malaysia, both their retail sales (+7.2% year-on-year) and their industrial production (+6.0%) expanded at an accelerating pace in October data released overnight.In Japan, it is becoming clear (from company financial reporting) that the Trump tariffs on Japanese exports have backfired. Japanese companies raised their prices after the initial tariff hit, the Americans paid the higher prices, and when Washington backed away from some of the more extreme levels after negotiation, and those hiked prices didn't retreat. They stayed up and boosted Japanese company profits. The picture was probably similar elsewhere. The ultimate losers have been the American buyers. American reshoring has been weak, so much so that one Fed member is now more worried about jobs than inflation.Canadian building consents surprised analysts with quite a surge in October, especially residential consents for multi-unit buildings in Toronto. That drove an outsized +15% national gain from September to be +19% higher than a year ago. On an annual basis, residential consents are also up +19% with Ontario up more than +28%.The UST 10yr yield is now at 4.20%, unchanged from this time Saturday, up +6 bps from this time last week. The price of gold will start today at US$4299/oz, and up +US$5 from Saturday, up +US$84 from a week ago and back near its mid-October peak. And we should note that silver unchanged at US$62/oz.American oil prices are holding at just on US$57.50/bbl, while the international Brent price is down -50 USc at just over US$61/bbl. Both are -US$2.50 lower than a week ago. Separately, it is very noticeable that the North American rig counts are still languishing near their four year lows. No-one is rushing to invest as prices and demand stay very low.The Kiwi dollar is -10 bps softer from Saturday, now at just over 58 USc. But it is up +430 bps from a week ago. Against the Aussie we are unchanged at 87.2 AUc. Against the euro we are unchanged too at 49.4 euro cents. That all means our TWI-5 starts today at just under 62.2, and up +10 bps from Saturday, up +20 bps for the week.The bitcoin price starts today at US$88,831 and down -1.6% from this time Saturday, and and essentially unchanged from last week at this time. Volatility over the past 24 hours has been low, at just on +/- 0.9%.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.And today we lead with news the world's economy is handling the US tariff-tax buffeting quite well.Financial market reactions to the US Fed rate cut yesterday, and the nature of its split decision, has seen the USD fall, bonds shift to a risk averse tone, and Wall Street retreat, although it has recovered to break-even in the past hour. The oil price has fallen as demand estimates in the US fade.Today, in a very big shift, there were 313,100 actual initial jobless claims last week in the US which is the largest weekly rise since early in 2020. There are now 1.965 mln people on these benefits, +2% more than at this time last year.We should also note that the US home ownership rate in Q3-2025 was 65.3%. A year ago it was 65.6%. (In New Zealand it is 66.0%.) Their rental vacancy rate is now 7.1%, up from 6.9% a year ago.US wholesale inventories are rising according to late-released September data, now up +4.8% from a year ago. But their inventory-to-sales ratio isn't anywhere near concerning levels yet.US exports rose marginally in September, largely driven by the export of gold which accounted for 70% of the monthly rise. Computer exports fell, and travel receipts by visitors also retreated notably. Meanwhile imports into the US were little-changed. The shift of gold out enabled them to record their lowest trade deficit since 2020.In Canada however, their export growth was much stronger, and also featuring gold. Their exports jumped +6.3%, while imports were down -4.1%. That turned a trade deficit of -C$6.4 bln in August to a small trade surplus of +C$153 mln surplus in September and ending the 2025 negative monthly outcomes. Canada's exports of aircraft, and energy products (oil and electricity) rose significantly in September.Across the Pacific, Japan’s Business Survey Index for large manufacturers rose to +4.7% in Q4-2025, up from 3.8% in the prior quarter and the strongest reading this year. This was better than expected, underscoring continued resilience despite trade frictions, growth concerns and their mounting fiscal risks.China has signaled that 2026 economic support from Beijing will be more modest than many had thought it would be.Switzerland reviewed its interest rate overnight and left it at 0%. They have inflation at +0.2%.We can also note the Central Bank of Turkey cut its policy rate by -150 bps to 38% overnight, a fourth consecutive reduction, and by more than markets expected. They claim inflation is starting to ease, especially food inflation. Overall inflation is still running over 30% pa, although that is half the rate of a year ago.In Australia, their November labour market report showed employment fell -21,300 (s.a.) from October, an unexpected result, but remained +182,400 higher than a year ago. Full-time employment fell -56,500 but part-time employment rose +35,200. Their jobless rate was stable at 4.3%. Underemployment rose to 6.2%.Container freight rates rose +2% last week from the prior week, largely on the back of rising rates from China to the EU. Rates from China to the US are falling as trade volumes ease. These container rates are now -45% lower than year-ago levels. Meanwhile bild cargo rates are +111% higher than year-ago levels, after last week's -14.8% fall off the recent peak.The UST 10yr yield is now at 4.12%, down -4 bps from this time yesterday.The price of gold will start today at US$4273/oz, and up +US$70 from yesterday and back near its peak. And we should note again that silver has set a new record high, just under US$64/oz with another big move.American oil prices are down almost -US$1 at just over US$57/bbl, while the international Brent price is just under US$61/bbl.The Kiwi dollar is +30 bps firmer from yesterday, now at just on 58.2 USc. Against the Aussie we are up +10 bps at 87.2 AUc. Against the euro we are down -20 bps at 49.5 euro cents. That all means our TWI-5 starts today at just under 62.3, and up +30 bps from yesterday.The bitcoin price starts today at US$89,977 and down another -2.5% from this time yesterday. Volatility over the past 24 hours has been moderate, at just over +/- 2.5%.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.