US eyes on CPI and inflation expectations; APEC meeting between Biden and Xi confirmed; China car sales top out; India factories unexpectedly retreat; UST 10yr 4.62%; gold down and oil up; NZ$1 = 58.9 USc; TWI-5 = 68.9

Here's our summary of key economic events overnight that affect New Zealand, with news hopes are building that an upcoming US-China summit may ease some global tensions.

But first, the latest consumer sentiment survey for the US, the one by the University of Michigan, reported a sharpish retreat of sentiment in November from October. But to be fair it is still 6.5% higher than a year ago. Almost all the fall is in the 'current conditions' component. The future expectations component rose marginally. Of more concern is that the inflation expectations component rose somewhat to 4.4% for the year ahead. Long term inflation expectations in this survey hit a 12 year high of 3.2%.

US CPI data will be released on Wednesday NZT and is expected to come in at 3.7% with their 'core' rate at 4.1%, unchanged for October from September. A more comprehensive and professional reading of inflation expectations will come from the New York Fed this coming week as well.

Still in the US we should note that they regularly adjust their tax rate bands for inflation, avoiding bracket-creep. This year they rise by 5.4%, following last years +7% rise in the bands. The IRS released the details yesterday

Staying in the US, Fed boss Powell said it is too early for them to definitively announce the conclusion of its interest-rate hikes. But he didn't make a case for further rate hikes either. Powell was quite cautious acknowledging the dangers overtightening, while also noting the danger of being “misled by a few good months of data.” The tone reinforced they are not ready to declare an end to their tightening campaign, even though financial markets and many economists have concluded the central bank is done raising rates. He noted the supply-side benefits that have helped slow American inflation so far may have run their course, and repeated that stronger growth could warrant further tightening.

Japan and Korea are partnering up on building out hydrogen infrastructure, a major effort to decarbonise their domestic freight systems. They also signaled that they will cooperate closer on the technology around quantum technology and semiconductors. These agreements are expected to be signed on the sidelines of teh San Francisco APEC meeting.

Also at that meeting, China has finally confirmed a worst-kept 'secret', that President Xi will meet with the US President.

China’s October vehicles sales rose at a faster pace of 13.8% year-on-year to 2.85 mln units, a record high for an October. But still, that level was fractionally lower than for September, despite the rising levels of discounting in the drive to meet every higher sales targets. Production is rising faster than sales now, so the crunch is on. Electric and hybrid sales were up +33.5% year-on-year to 956,000 units, now representing a third of total sales.

The world's biggest holiday shopping bonanza, Singles Day, or 11/11, peaks today. The commercial shopping event similar to back-to-school sales, Black Friday and Cyber Monday in the US features major discounts from China's retail giants like Alibaba and JD.com. But all indications are that sales are muted sales in this year's spending spree. Which is why Hong Kong and Shanghai stock markets ended the week on a downer.

India's industrial production was up +5.8% from a year ago in September, a sharp slowdown from the 14-month high of a +10.3% gain in August. This is also well below market expectations of +7% year-on-year gain. Most key sectors are in retreat, especially for factory production and electricity production. Overall, industrial production fell -3.5% in September from August, with factories down -2.0% and electricity production down -6.6%. They won't want this recent trend to embed.

The OECD said 48 countries have signed a data sharing agreement for crypto asset reporting as part of their global tax transparency data sharing moves. The US, Canada, Japan, and the EU are core signers, as is Australia, Korea and Singapore. Tax haven like the British Channel Island and the Caymans are signed up too. But New Zealand is not on the list. Nor is China, Russia, or North Korea obviously.

We should note that ratings agency Fitch has maintained Australia's AAA rating with a 'Stable' outlook.

And staying in Australia, the RBA released its Monetary Policy Review with updated data and forecasts and noting there “was likely to be less progress” in bringing down inflation in the quarters ahead than it had previously thought, and that had increased the risks of inflation remaining higher for longer. They now see inflation only down to 3.5% by the end of next year, and to just 3% by the end of the following year.

And more from Australia, flying between Sydney and Melbourne is now the highest revenue generating air route in the world, and that is despite a fall in the number of passengers traveling the route. According to updated data, for the first six months of 2023 it generated US$1.2 bln in revenue - even while suffering sharply rising rates of cancellations. It beat out the New York to London route, and the New York to Los Angeles routes, despite flying fewer planes. It is a river of gold for Qantas and Virgin, without them having to provide decent service. It is what happens when competition authorities let entrenched players run wild.

The UST 10yr yield is unchanged from yesterday, still at 4.62%. And that is up from 4.56% a week ago. And their key 2-10 yield curve is now inverted by -42 bps which is 3 mps more. Their 1-5 curve is now inverted by -73 bps which is 8 bps less. Their 3 mth-10yr curve inversion is now -77 bps and that is 5 bps less than yesterday. The Australian 10 year bond yield is now at 4.65% and up +8 bps from yesterday. The China 10 year bond rate is little-changed at 2.67%. The NZ Government 10 year bond rate is much higher at 5.22%, and up +11 bps. A week ago it was at 5.35% however.

Wall Street has opened higher with the S&P500 up +1.3% in Friday trade and heading for a +0.9% weekly rise. Overnight European markets closed -1.0% lower however, bookended by Paris which was down -0.8% and London which was down -1.3%. Yesterday Tokyo ended its Friday session down -0.2% with a late recovery to be up +0.4% for the week. Hong Kong ended down a sharp -1.8% for a crunchy -4.0% weekly retreat. Shanghai was down -0.5% on the day to be -0.3 lower for the week. The ASX200 ended its Friday session down -0.6%, and no change for the week. The NZX50 fell -0.5% yesterday, but did end the week with a modest +0.2% gain.

In New York, a ransomware attack on one of China's largest state-owned bank by Russian hackers has brought Chinese and American authorities together to fight the threat.

The Fear & Greed index we follow is still on the 'fear' side but only just, so the same as this time last week. Or the four weeks before.

The price of gold will start today at US$1936/oz and down -US$27/oz from this time yesterday. A week ago this price was US$1991/oz, so a -US$55 drop since, or down -2.8%.

Oil prices have recovered +US$1 overnight, to be just on US$77/bbl in the US. The international Brent price is now just on US$81/bbl. A week ago these prices were US$80 and US$84.50/bbl respectively.

The Kiwi dollar starts today at 58.9 USc and down -½c from this time yesterday. A week ago it was at 59.9 USc so a -1c drop since. Against the Aussie we are unchanged at 92.6 AUc. Against the euro we are almost -½c lower at 55.1 euro cents. That all means our TWI-5 starts today at just on at 68.9, and down -40 bps. A week ago it was at 69.3.

The bitcoin price starts today at US$37,215 and up another +2.0% from this time yesterday. A week ago it was at US$34,417 so a +8.1% ruse since then. Volatility over the past 24 hours has been modest however at just on +/- 1.8%.

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