American jobless claims rise as do mortgage rates; China's pandemic threat meets mixed reactions; Hong Kong exports slump; UST 10yr 3.83%; gold up and oil stable; NZ$1 = 63.5 USc; TWI-5 = 71.6

Here's our summary of key economic events over the holiday that affect New Zealand, with news the year is ending on some quiet notes. The year's crescendos have all happened, as we seem to look forward to a tame 2023. A soft landing is the most likely.

Many global economic indicators point to slower growth or minor contraction as central banks continue to raise policy interest rates in the battle against inflation. Growth projections are being trimmed as challenges grow, including policy tightening, inflation, Russia’s invasion of Ukraine, and ongoing disruptions related to the pandemic. Global GDP growth will be about +3.2% in 2022 and slow to +2.7% in 2023 according to the IMF. For the major economies in 2023, they say China will recover with +4.4% growth while Germany will contract -0.3%. The US economy is expected to expand by +1% in 2023. Australia can look forward to +1.3% and New Zealand also +1% they say. That is all consistent with a soft landing while the central banks tackle inflation.

Meanwhile, American jobless claims rose last week to +271,000 which was about the expected seasonal rise. Despite that, they remain near historic lows. There are now a bit less than +1.6 mln people of these benefits.

And after about two months of easing mortgage interest rates, these turned higher last week for American borrowers. They end the year at almost double the APR rate than where they started.

Italy, Taiwan, Japan, India and Malaysia have all now joined the US is requiring clear PCR tests from travelers arriving from China. But the EU, and notably France and Germany, say the situation does not yet warrant imposing such a restriction. Australia isn't imposing PCR tests either. It is worth noting that international airlines are not lining up to restart flight to China; only PRC airlines are flying out.

South Korean industrial production rose in November from October in a surprise gain. Another fall was anticipated. This recent improvement is their best in five months, although they are still running behind year-ago levels.

South Korea retail sales however weren't flash as consumers haven't yet changed their dour mood. They ran -1.8% lower in November than October in a grim retreat, and are also well lower than year-ago levels.

In China, the market for baby formula is contracting, as sales fall sharply amid the pandemic and a declining birthrate while raw materials get costlier. Prices are rising, suppressing demand too.

Hong Kong exports slumped badly in November, down -24% from year-ago levels. That follows a -10% fall their prior month and is the sharpest fall in almost 70 years! It is grim for them. Low demand from both China, Taiwan and Japan was especially notable, and especially for electronic equipment.

We should also note that Vietnam says its GDP rose more than +8% in real terms in 2022. That rate of growth slowed in Q4, but it is still a stellar +6% higher than the same period a year ago.

The UST 10yr yield started today at 3.83%, and down -6 bps from yesterday. But it started the year at 1.5%. The UST 2-10 rate curve is slightly more inverted at -53 bps. But their 1-5 curve isn't noticeably more inverted at -77 bps. And their 30 day-10yr curve has moved less positive, now at +10 bps. The Australian ten year bond is down -2 bps at 4.03%. The China Govt ten year bond is also down -2 bps at 2.89%. And the New Zealand Govt ten year will start today up slightly at 4.58%. Recall it started 2022 at just 2.30%.

We should also note that all Japanese Government bond yields from a 1 year maturity and longer have turned positive now. This is a major change for the year, when both the 1 and 2 year yields started at -0.9%. In fact both had been negative since 2014.

On Wall Street, the S&P500 is up a strongish +1.9% in Thursday trading. That makes it -19.7% lower for the year so far. European markets ended more than +1% firmer overnight, except London which only managed a +0.2% gain. Yesterday, Tokyo ended down -0.9%, Hong Kong ended down -0.8%. And Shanghai fell -0.4% on the day. The ASX200 fell -0.9%. But the NZX50 was almost unchanged. If it stays like that today we will book a -12% drop for the year, about mid-pack for the markets we follow.

The price of gold will open today at US$1818/oz and up +US$12 from yesterday. But at the beginning of 2022 the gold price was US$1820, so essentially no net change.

And oil prices start today virtually unchanged from yesterday's levels at just under US$78/bbl in the US while the international Brent price is just over US$82.50/bbl. You may recall we started the year with the international price at US$76, so the net change is a rise of +8%.

The Kiwi dollar opened today at 63.5 USc and up another +½ from this time yesterday. We started the year at 68.3 USc so a net -7% devaluation since then. Against the Australian dollar we are up too at 93.7 AUc. Against the euro we are firm at 59.5 euro cents. That all means our TWI-5 starts today at 71.6 and up +20 bps. But we started the year at 72.8 so that devaluation is only -1.6% on a trade-weighted basis.

The bitcoin price is now at US$16,627 and virtually unchanged from this time yesterday. Recall we started 2022 at US$47,128 so it has dropped by two-thirds since then. Volatility over the past 24 hours has again been low at just under +/- 0.6%.

The easiest place to stay up with event risk today is by following our Economic Calendar here ».