US holiday retail sends positive signals; Canadian retail up; China faces shadow bank risks; governing realities face Argentine & Dutch election winners; UST 10yr 4.47%; gold up and oil down; NZ$1 = 60.8 USc; TWI-5 = 69.8

Here's our summary of key economic events over the weekend that affect New Zealand, with news the early indications are that end of year retailing might be coming in with more upside than expected.

But first, this week, all eyes will be on the RBNZ Monetary Policy Review on Wednesday even though no change in the benchmark policy rate is anticipated. A preview is here. We will also get Australia's monthly consumer price indicator for October on the same day and that is expected to reveal a 5.2% inflation rate, down from the 5.6% in September. In the US, eyes will be on the ISM PMI, and their PCE inflation rate.

At the end of last week the November Markit PMI for the US came in unchanged with the modest expansion continuing. That covers a factory sector that is still contracting slightly, and a services sector expanding at a slightly faster rate. Of note was that US companies lowered their workforce numbers during November for the first time in almost three-and-a-half years, although the shift was very minor.

But it looks like retail sales have been strong over the Thanksgiving holiday weekend - online at least. Adobe is reporting Black Friday sales up +7.5% from last year in the sectors they monitor. Salesforce is reporting a +9% gain in the US sectors they monitor. And Shopify says they saw a +22% gain in their specialty sectors. But the real key will be bricks & mortar store sales, and it will be a few days before those details start to surface. Cyber Monday (tomorrow NZ time) is the final test in this important pre-Christmas retail weekend.

Canadian retail sales rose more than expected in October, up +2.7% from a year ago in value terms, so while that was better than expected it masks a -0.4% drop in volume terms.

And Canada has won a dispute with the US over its dairy quota system, with the final USMCA panel agreeing that the Canadian restrictions don't breach the North American  trade Treaty. It is a result that can't be appealed. The US isn't happy. New Zealand has a CPTPP dispute with Canada over roughly the same issue.

In Japan, their inflation rate rose to 3.3% in October from 3.0% in the prior month, and a three month high.

Singapore’s manufacturing production surprised in October with a big +7.4% year-on-year jump, the first growth after a year-long series of successive contractions, easily beating market expectations of a -2.1% drop, and recovering from a downwardly revised -1.1% fall in September.

Meanwhile, Malaysia reported its inflation rate at a very low 1.8% in October.

In China, and despite being controlled by the Shenzhen city authorities, Moody's has downgraded Vanke, China's fourth largest property developer. Meanwhile, Beijing is ramping up pressure on banks to support struggling real estate developers, something even the big state-owned banks are wary about doing due to the size of the impending risks. The pressure is on to provide unsecured working capital 'loans' - allowing them to pay past bills to just keep these firms solvent for a while, even though this would be very bad banking.

China has also opened an official investigation into the insolvent shadow bank, Zhongzhi. This is no small deal as it is likely to hurt a large number of wealthy and influential clients who face large losses.

Meanwhile Chinese health officials say everything is normal for their 'colds & flu' season. But doctors have been warning for weeks about a likely spike in “walking pneumonia” cases and local Chinese media have reported a steady rise in infections from mycoplasma among kindergarten and primary school children.

In Argentina, the new President's dollarisation plan has hit a stumbling block as his appointment to the central bank refused to take the role. So the new President reappointed officials from the previous government.

In the Netherlands, even though a far-right party surged to be the top vote-getter, it still needs other partners to form a government and there seems to be a great reluctance to join the 'winner'. It may take months to stitch together a functional government. The harsh lessons of Brexit may prevent a Nexit.

The UST 10yr yield is unchanged from Saturday, still at 4.47%. That's up +5 bps for the week. The key 2-10 yield curve is still inverted by -48 bps. Their 1-5 curve is marginally more inverted, by -79 bps. Their 3 mth-10yr curve inversion is now -94 bps and little-changed. The Australian 10 year bond yield is now at 4.60% and up +4 bps from Saturday. The China 10 year bond rate is up +1 bp at 2.73%. And the NZ Government 10 year bond rate is down -1 bp at 5.09%. A week ago it was at 4.98%.

The price of gold will start today just under US$2003/oz and up +US$3/oz from Saturday.

Oil prices have softened since Saturday, down -US$1 to be just over US$75/bbl in the US. The international Brent price is now at just over US$80/bbl. A week ago these prices were US$76/bbl and US$80.50/bbl respectively, so very little changed since then.

The Kiwi dollar starts today at 60.8 USc and little-changed from Saturday. A week ago it was at 59.8 USc so a full +1c gain. Against the Aussie we are firmish at 92.5 AUc. Against the euro we are also firm at 55.7 euro cents. That all means our TWI-5 starts today just on 69.8, up +10 bps since Saturday and up +60 bps in a week.

The bitcoin price starts today at US$37,189 and down -1.9% from this time Saturday. But it is up +2.2% from a week ago. Volatility over the past 24 hours has also been low at just on +/- 0.9%.

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