Here's our summary of key economic events over the holiday period that affect New Zealand, with another quick news wrap-up so you can get back to 'time-off'.
Firstly, the American retail sector provided more evidence of a good and widespread expansion with the Redbook survey of traditional outlets expanding +4.1% last week from the same week a year ago. That's it strongest expansion in December and its second best in eight weeks. It is clear holiday spending has risen, another metric in defiance of the expected slowdown.
Texas factory activity stabilised in December after contracting in November. Their services sector turned expansionary in a rebound from negative activity..
The Richmond Fed factory survey turned more negative in its December edition. It may have only been a slight change but it was driven by a sharpish retreat in new order levels.
In Japan, it looks like the embedding of inflation that the Bank of Japan wants to see is happening. Many bosses of large enterprises say they expect pay rises to be about +5% in 2024.
In China, industrial profits surged almost +30% in November from a year ago, although the base was low in 2022. However that is four months of good recovery. And that goes some way to making up the very weak start to the year.
In Taiwan, they are in an election campaign, but that is not stopping consumer sentiment recovering. It fell to late 2022 but has been moving higher during all of 2023.
In Australia, they are burnishing their "lucky" reputation with news that the iron ore price is back up to US$140/tonne and at that level it will deliver huge royalties and tax takes for their state and federal governments.
The UST 10yr yield is -10 bps lower today, now at 3.79%. The key 2-10 yield curve is marginally less inverted, now by -44 bps. Their 1-5 curve inversion is a little more inverted, now by -99 bps. And their 3 mth-10yr curve inversion is more at -159 bps. The Australian 10 year bond yield is now at 3.89% and -14 bps lower. The China 10 year bond rate is down -1 bp at 2.60%. And the NZ Government 10 year bond rate is also lower, down -7 bps at 4.50%.
Wall Street is unchanged in Wednesday trade although they are now close to record highs. European markets were up about +0.2% overnight. Yesterday Tokyo ended its Wednesday session up +1.1%. Hong Kog was up +1.7%, and Shanghai ended up +0.5%. The ASX200 ended its thin session up +0.8% and the NZX50 ended up +0.4%.
The price of gold will start today up +US$19 at just on US$2078/oz and near its all-time high. It did hit an ATH in London overnight.
Overnight oil prices are -US$2 lower at just over US$74/bbl in the US. The international Brent price is now just on US$79.50/bbl. The reversal is down to increased use of the Red Sea and the Suez Canal. Maersk is returning but Hapag-Lloyd says its still too dangerous.
The Kiwi dollar starts today at 63.4 USc and up another +20 bps from yesterday. Against the Aussie we are nearly +½c higher at 92.8 AUc. Against the euro we are marginally softer at 57.1 euro cents. That all means our TWI-5 starts today just on 71.1, and up +10 bps from yesterday.
The bitcoin price starts today higher at US$43,039 and up +2.3% from this time yesterday. Volatility over the past 24 hours has been modest at just under +/- 1.4%.
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13 Comments
The UST 10yr yield is -10 bps lower today, now at 3.79%.
The difference between GDP and GDI is gotten huge. If you're the Fed and you know GDI is more accurate at at times like these, you're getting a little nervous just on account of economic risks. Then look at the BTFP, no wonder Powell pivoted. Link
In China, industrial profits surged almost +30% in November from a year ago, although the base was low in 2022. However that is four months of good recovery. And that goes some way to making up the very weak start to the year.
US, Europe Likely On Track to Become 'Failed Economies'
During an interview with Sputnik, Hudson argued that the US' gross domestic product growth occurs only for the 10% of the population, with the remaining 90% of Americans being left empty-handed.
Back from Japan. Had a great time as usual. Checked out Hokkaido for the first time - great.
Well, lots of things defying the odds, including the NZD. So really not going to make any predictions for ‘24, other than I think NZ’s domestic economy will be weak and house prices to be no more than 3-5% higher over the year
They may also be fairly bold predictions:
- If inflation is beaten it could lead to a good year for the global economy. NZ could of course be an outlier but it may not be. The inflationary effects of Covid should mostly disappear next year (if they haven’t already).
- House prices will just do their normal completely unpredictable thing, I’m not sure why anyone bothers to predict.
Bank economists picking 7% house price gains next year. And they say that is a modest increase! https://www.oneroof.co.nz/news/how-much-will-house-prices-rise-in-2024-…
Iran and Russia finalize deal to trade in local currencies, ditching USD.
In what may well be a massive development for the BRICS alliance, both Iran and Russia have agreed to trade in local currencies, ditching the US dollar. Indeed, Reuters reported that the two nations have finalized a deal that will have a massive impact on their trade dealings.
https://www.reuters.com/world/iran-russia-trade-local-currencies-instea…
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