Here's our summary of key economic events overnight that affect New Zealand with news that Robert Lighthizer, one of the leading figures in Trump’s earlier trade war with China, has been asked to return as US Trade Representative. How effective he will be the second time around now depends on the billionaire elite that is central to the new Trump administration and whether they profit from new trade restrictions. There are likely to be many voters who don't get what they expected, (obvious to those outside).
Americans remain cautious taking on new personal debt. That rose by only +US$6 bln in September, a slowdown from the almost +$9 bln rise in August and well below the expected +US$14.5 bln increase. Now the average balance is US$23,087, up from US$18,008 four years ago. These are not actually high levels. (The divisor we used is the total population 18 years and older.)
For the first time since May 2020, the US Fed saw its balance sheet assets fall below US$7 tln last week. That is a -US$53 bln fall in a month, a -US$2 tln fall since it peaked at US$8.96 tln in April 2022.
Before their election, consumer sentiment as tracked by the University of Michigan survey, rose for the fourth consecutive month, rising 3.5% to its highest reading in six months. While current conditions were little changed, the expectations index surged across all dimensions, reaching its highest reading since July 2021.
The November WASDE report from the USDA sees 2025 with more world wheat, slightly less coarse grains, and more rice. The world's ability to feed itself seems stable, without unusual price pressures. They expect to import more beef from Oceania. In a change they now expect more US milk production even though cow herd numbers might slip slightly. Access to this market now depends on the incoming capricious Administralion.
The October Canadian labour market report shows a +14,500 rise in jobs, less than expected. But full-time jobs rose more than +25,500 and part-time jobs slipped -11,000.
Japanese households aren't feeling all that great. Household spending fell by -1.1% in September from a year ago, a smaller decline than the -1.9% drop in August and better than market expectations for a -2.1% decrease. This marks the seventh month of reduced household spending in 2024.
Foreigners love the place however, not only as tourists, but as investors too, raising their equity investment stakes in each of the past six months.
Taiwanese exports rose +8.4% from a year ago in October, building from a +4.5% rise in the previous month. Imports were up +6.5%, a slower rate of increase than we have seen in the prior four months. Robust Taiwanese trade contrasts with what its unfriendly and jealous neighbour is able to achieve,
Speaking of whom, China will release its October CPI data later today and it is expected to stay out of deflation, just, with an unchanged +0.4% rise from a year ago.
And China has sharply raised (+40%) their local governments’ debt ceiling to ¥35.5 tln (NZ$8.3 tln) when they announced the total value of the current program increase will be ¥10 tln (NZ$2.3 tln). But officials did not announce additional measures to directly stimulate domestic demand, probably disappointing markets that had been hoping the package would also help consumers. The did say however they are 'studying' such moves, probably waiting to see the impact of the challenge from Trump.
In Australia, they released life expectancy data yesterday - and it declined for a second straight year. An Aussie born today is expected to live to 83.1 years (boys less, girls more). The years 2021-2023 saw the highest number of COVID-19 deaths with 15,982 in Australia, which was up by 4,100 from 2020-2022. (The emergence of the antivax movement and weird alternative approaches won't be helping either.) As a result, life expectancy has fallen by 0.1 years for men and 0.2 years for women over this period. Despite this decrease, Australians still have a higher life expectancy than many comparable countries, like New Zealand (82.8 years), the UK (82.2 years), the US (77.6 years), and Canada (81.5 years). Today, a 60-year-old Australian man can expect to live another 24.2 years, and a woman another 27.1 years.
The UST 10yr yield is now at just on 4.30% and down -5 bps from this time yesterday. A week ago it was at 4.37%. The key 2-10 yield curve is now less positive, by +8 bps. Their 1-5 curve inversion is more inverted, now by -13 bps. And their 3 mth-10yr curve inversion is also more inverted, now by -28 bps. The Australian 10 year bond yield starts today at 4.59% and down -9 bps. The China 10 year bond rate is little-changed at 2.12%. The NZ Government 10 year bond rate is down -5 bps to 4.67% but up +18 bps from a week ago.
Wall Street has opened its Friday with the S&P500 up +0.4% to a new record high which is +4.8% higher than a week ago. Overnight, European markets all fell about -1%. Yesterday, Tokyo ended its Friday session up +0.3% for a +2.6% weekly rise. Hong Kong fell -1.1% yesterday to be +0.7% higher than a week ago. Shanghai fell -0.5% taking it to a +5.4% weekly gain. Singapore surged another +1.4%. The ASX200 ended its Friday session +0.8% higher on the day and +2.2% higher for the week/ And the NZX50 jumped +1.5% yesterday for a weekly +1.7% rise.
The Fear & Greed Index ends the week having moved into the 'greed' zone which will be no surprise given the week's events.
The price of gold will start today at US$2685/oz and down -US$8 from this time yesterday. That is -US$52 lower than week-ago levels.
Oil prices are -US$2 lower at US$70/bbl in the US while the international Brent price is now just on US$73.50/bbl. Both are just +50 USc firmer than a week ago.
The Kiwi dollar starts today at 59.7 USc and and down -½c from this time yesterday. A week ago we were at exactly the same level. Against the Aussie we are up +40 bps at 90.7 AUc. Against the euro we have dipped -10 bps to 55.7 euro cents. That all means our TWI-5 starts today at just on 68.8, and down -20 bps from yesterday at this time but up +10 bps from a week ago..
The bitcoin price starts today at US$76,099 and up just +0.3% from this time yesterday. But it is up +9.2% from this time last week. Volatility over the past 24 hours has been low at just on +/- 0.9%.
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