Here's our summary of key economic events over the holiday that affect New Zealand, with news that wraps up 2022.
First, Wall Street is wrapping up its worst year since 2008, down a net -20%. But even though that is the worst performance among the major world bourses, it is minor compared to the losses over the year for bitcoin 'investors'. And don't talk to equity, bond or crypto holders about inflation, which has made the nominal losses much worse.
All up (and on a nominal basis) it has been estimated that the equity and bond losses exceed -US$30 tln - which is more than the annual economic activity of the giant US American economy.
Residential real estate has taken a bath too. As have some commodities - but not all. WMP fell -16%, wheat rose +4%, beef prices fell -5%. Iron ore prices ended the year at the same level as where it started. Copper prices fell -14%. But for most financial and commodity prices - but not real estate - they have ended the year well off their mid-year lows.
The Q4 improvements are surprising some. And there was another today. The widely-watched Chicago PMI for heartland American manufacturing, December has brought a surprise and unexpected improvement from November. It is not expanding yet, but the worst seems to be behind it.
In China, lockdowns added to the country’s woes in 2022, including an ongoing housing slump and fading exports, but Beijing’s year-end pivot to living with the virus raises the prospect of a recovery in 2023. But first they have to navigate through a raging surge in omicron which seems to be overwhelming their healthcare system as they kick off 2023. The upcoming Chinese New Year travel surge will take it to every corner of their country. Their bounce off the forgettable 2022 will allow them to crow about a 'recovery', but it will be one that came with a high cost after a low year.
Globally, the climate situation is still an 'emergency' in the minds of many, but we should note that while there are some regional peaks, the average 2022 global temperature will likely come in at its 'lowest' in eight years, less than +0.8oC above its 150 year average - although to be fair that average is skewed heavily by rises in the past 40 years. Ignoring that, it will be up by a full +1oC above.
The UST 10yr yield started today at 3.88%, and up +5 bps from yesterday. But it started the year at 1.5%. The UST 2-10 rate curve is slightly more inverted at -56 bps. But their 1-5 curve is little-changed at -75 bps. But their 30 day-10yr curve slipped sharply back to inversion, now at +18 bps. The Australian ten year bond is up +2 bps at 4.05%. The China Govt ten year bond is down -1 bp at 2.88%. And the New Zealand Govt ten year is ending unchanged from yesterday at 4.58%. Recall it started 2022 at just 2.30%.
On Wall Street, the S&P500 is down -1.2% in the final trading session of the year with a couple of hours to go. That makes it -20.7% lower for the year and a bear market. But since its low point at the end of September, it has risen +6.5%. European markets ended an a weakening note, all down about -1.5% on the day. That means Frankfurt was down -13.1% for the year, Paris down -10.3%, and London down -0.7% although it started out depressed too. Yesterday, Tokyo ended unchanged on the day but down -11.0% for the year, Hong Kong ended up +0.2% on the day to lock in a -15% annual fall. And Shanghai rose +0.5% on the day also for a -15% annual decline. The ASX200 rose +0.3% in its final daily session, ending the year down -7.3%. But the NZX50 ended its Friday session down -0.6% on the day, to be -12.8% lower for the year. But it is worth noting that from its low point in June, it is up -8.3% since then - a year of two halves.
The price of gold will open today at US$1821/oz and up +US$3 from yesterday. But at the beginning of 2022 the gold price was US$1820, so essentially no net change in USD.
And oil prices start today up +US$1 from yesterday's levels at just on US$79/bbl in the US while the international Brent price is just over US$84.50/bbl. You may recall we started the year with the international price at US$76, so the net change is a rise of +11%.
The Kiwi dollar has ended the year at 63.5 USc and unchanged from this time yesterday. We started the year at 68.3 USc so a net -7% devaluation since then. Against the Australian dollar we fell -½c since yesterday to 93.2 AUc. That is a minor -1% fall for the year. Against the euro we are at 59.3 euro cents and an annual -1.6% retreat. Against the Japanese yen we have appreciated +6.1% for the year. That all means our TWI-5 starts today at 71.4, down -20 bps from yesterday and a small annual -1.9% annual devaluation on a trade-weighted basis.
The bitcoin price is now at US$16,518 and down -0.7% from this time yesterday. But for the year it has lost -62% of its starting price in USD terms and -65% in NZD terms. Volatility over the past 24 hours has remained low at just +/- 0.9%.
Now back to your Summer break. These updates will return on Wednesday 4, January 2023. Happy New Year.
The easiest place to stay up with event risk today is by following our Economic Calendar here ».
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