Here's our summary of key economic events over the holiday that affect New Zealand, with another quick news wrap-up so you can get back to 'time-off'.
This is our final holiday briefing and we return with normal service on Monday.
First up, American producer prices unexpectedly fell in December from November but only by a tiny amount. That means that their producer prices were up only 1.0% in the year, up from a rise of +0.8% in November on that basis. A year ago US PPI was rising at a +6% rate. Today's PPI data was less than expected.
The January edition of the USDA's WASDE report forecasts lower American beef exports in 2024 and higher imports from Australia and New Zealand. The American milk production forecast is lowered too. (See page 4.)
Indian industrial production momentum fell away in November. It was up +2.4% from a year ago, marking the lowest reading since March last year, following a downwardly revised +11.6% growth in October. Analysts had expected November to expand by 4%. Output decelerated sharply across all key sectors. Meanwhile consumer inflation ticked up slightly in December, up to 5.7%, above the November 5.4% but less than the expected 5.9% rate.
China's new yuan lending for December came in well short of what was expected. Beijing is clearly having trouble getting funding out of its large policy banks. The December +¥1.17 tln was marginally higher than in November but well short of the expected +¥1.4 tln. In their context ¥1.4 tln isn't large by historic standards. And the +10.4% rise from a year ago is very low by Chinese standards - in fact a record low expansion on that annualised basis. This may be a factor.
China's exports rose from US$292 bln in November to US$304 bln in December, a +4.0% rise and a bit more than expected. They were up +2.3% from the same month a year ago. But the good December result - aided by a depreciated currency - masks that for all of 2023 exports dropped -4.6% from the record 2022 level.
Helping the December result was that producer prices fell -2.7% in China, quite a different pressure than the virtual no change in December 2022.
And as expected, consumer inflation was negative - that is, deflation - with prices -0.3% lower in December than the same month a year ago. This was slightly "less worse" than expected, and is the third month in a row of year-on-year deflation. But that is their longest deflation streak in 14 years. Overall food prices rose +0.6% in the month to be -2.0% lower than a year ago. But beef prices are -6.0% below year ago levels, lamb -5.7% down, and milk down a lesser -0.9%.
Today is election day in Taiwan, a free and fair contest. It is annoying Beijing who are making bellicose threats. The results will be available early tomorrow, probably, although media forecasts will come before the official counts. It is expected to be a close-run thing. It is a modified MMP style election with voters having two votes, for a local electorate and one for the overall party. But the party votes only account for 34 seats in the 113 member parliament, the balance being constituencies.
The RBNZ reported that the total value of our housing stock as at the end of September rose by +$27.6 bln from June to $1.59 tln. That was the first quarter-on-quarter rise since December 2021, although a year ago this value was $1.63 tln, so it is still some way down on that basis and still -$172 bln lower than the peak in December 2021. Over that time we have been building new houses, aggressively in some places (Auckland), so that data shows the per-dwelling value down more than -13% from that peak, nationally, a retreat of -$118,000 per dwelling.
We should note the rise and rise of the price of uranium. There is a global shortage as new nuclear electricity plants are being developed worldwide, in fact +170 of them (60 in construction, +110 planned).
The UST 10yr yield starts today at 3.96% and down -7 bps from this time yesterday. A week ago it was at 4.03%. The key 2-10 yield curve is much less inverted, now by -20 bps. But their 1-5 curve inversion is little-changed, now by -84 bps. And their 3 mth-10yr curve inversion is more inverted, now by -143 bps. The Australian 10 year bond yield is now at 4.07% and down -5 bps. The China 10 year bond rate is now at 2.52% and little-changed but still near its lowest since 2002. The NZ Government 10 year bond rate is -5 bps lower at 4.72%.
Wall Street has started its Friday session with the S&P500 little-changed from yesterday but that is holding a +1.8% gain for the week. Overnight, European markets were all back up +1% except London which only managed a +0.6% gain. Yesterday Tokyo ended its Friday session up another impressive +1.5% rise for an even more impressive +6.5% weekly jump. But Hong Kong fell -0.3% yesterday locking in a -2.0% weekly loss, and Shanghai fell -0.2% yesterday for a -1.2% weekly retreat. Singapore ended its Friday session down -0.3% for a -0.5% weekly dip. The ASX200 ended yesterday down a minor -0.1% for a weekly finish up +0.1%. But the NZX50 booked a better +0.5% gain yesterday for a weekly rise of +0.9%.
The Fear & Greed index remains little-changed in the "greed" range which is also where it was a week ago.
The price of gold will start today up +US$26/oz at just on US$2043/oz. That is up a net +US$2 from a week ago.
Oil prices are -50 USc lower to be now just over US$72.50/bbl in the US. The international Brent price is unchanged at just under US$78/bbl. Earlier reprisal strikes in Yemen had these markets shifting prices higher, but that impetus has reversed now. A week ago these prices were US$73.50 and US$78.50/bbl respectively.
The Kiwi dollar starts today at 62.4 USc and more than +¼c higher than yesterday. A week ago it was at exactly this same level. Against the Aussie we are little-changed at 93.4 AUc. Against the euro we are +¼c firmer at 57 euro cents. That all means our TWI-5 starts today just on 70.9, up +20 bps from yesterday and marginally firmer from a week ago.
The bitcoin price starts today lower, now at US$43,284 and down -5.9% from this time yesterday. A week ago it was at US$43,436 so actually little-changed since then. The first flush after the US SEC ETF approval hasn't delivered the sector's hoped-for demand rush. Volatility over the past 24 hours however has been very high again at +/-4.4%.
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