US Fed pulls back from rate cut track; US retail up, factory production down; China data weak except retail sales; China to cut some export subsidies; UST 10yr at 4.45%; gold and oil down; NZ$1 = 58.7 USc; TWI = 68.5

Here's our summary of key economic events overnight that affect New Zealand with news markets are starting to worry about the 'bust' that will come after the initial sugar-hit Trump boom for the elite billionaires inside the Trump circle. Equities are falling on that concern, and benchmark interest rates are rising on it too. The new Administration is inheriting a well-functioning economy but navigating the upcoming inevitable distortions is going to be tricky.

In the US, it seems the Fed is in no hurry to cut interest rates. “The economy is not sending any signals that we need to be in a hurry to lower rates,” Powell said yesterday in Dallas. “The strength we are currently seeing in the economy gives us the ability to approach our decisions carefully.” And NY Fed boss Williams said essentially the same thing.

Retail sales in the US rose +4.6% (actual) in October from year-ago levels, following a +0.2% rise in September. Reported seasonally adjusted levels were less that these. Rising car sales (+6.6% actual) were ar large part of this gain.

But US industrial production actually decreased -0.3% in the same year to October. This is a volume-based survey. The Boeing strike got most of the blame for this, but was expected in the data.

In the New York region, the Empire State factory survey surprised analysts with strong new order flows, and rising optimism, far greater than expected. Factory activity rose sharply too.

In Canada they also released factory data but it was for September and the Boeing strike squished its data too. But Canadian car sales rose +2.6% in volume and +5.7% in value in the same period

The Canadian loan officer survey for Q4-2024 sees things in rough balance between expansion and contraction.

In an economy that faces slowly rising central bank interest rates, Japan reported Q3-2024 GDP growth of +0.9% and down from a +2.2% annualised rate in the previous quarter, which was itself revised down from the previous +2.9%.

On average, Chinese house prices for new homes fell -5.9% in the year to October. That's this official data's largest drop in nine years. But for the first time in a while there were a few cities where they actually rose. For used house sale transactions the October price change was -18.8% from a year ago. Construction of housing is still deeply negative, even if marginally less so in October.

China reported slightly lower industrial production growth for October, but it was still good at +5.3% even if it was less than the expected improvement from September. Electricity production only rose +2.1% in October from a year ago, undercutting the veracity of the industrial production data. They reported better than expected retail sales growth at +4.8% from a year ago, and suggesting some of their stimulus moves are working. But much of this is the previously noted rise in car sales (which involved incentives).

Aluminium prices surged on Friday after China said it would cancel export tax rebates on this and other commodities, raising the prospect that their heavy flow of subsidised export shipments abroad may quickly fade.

The UST 10yr yield is now at just on 4.45% and up +5 bps from yesterday, up +15 bps for the week. The key 2-10 yield curve is still positive by +13 bps. Their 1-5 curve inversion is now inverted by only -4 bps. And their 3 mth-10yr curve inversion is also little-changed, still by -15 bps. The Australian 10 year bond yield starts today at 4.66% and down -6 bps. The China 10 year bond rate is unchanged at 2.10%. The NZ Government 10 year bond rate is down -1 bp from yesterday at 4.78%. A week ago it was at 4.67% so an +11 bps rise since then

Wall Street has started its Friday with the S&P500 down -1.5% heading for a -2.5% weekly drop. Overnight European markets were all lower with London down -0.1% and Paris down -0.6% to bookend these markets. Yesterday Tokyo ended its Friday session up +0.3% to limit the weekly drop to -2.0%. Hong Kong was little-changed on the day but wended its week down -4.1%. Shanghai fell another -1.5% for a -3.0% weekly retreat. Singapore was however up +0.2%. The ASX200 ended its Friday session up +0.7% to end the week down a mere -0.1%. And the NZX50 fell a minor -0.1% for a -0.7% weekly fall.

The Fear & Greed Index ends the week having moved back to the 'neutral' zone which also reflects the rising uncertainty of the new US Administration.

The price of gold will start today at US$2566/oz and down another -US$8 from this time yesterday. But that is down -US$119 or -4.4% from a week ago.

Oil prices are -US$1 lower at US$67.50/bbl in the US while the international Brent price is now just under US$71.50/bbl. These levels are about -US$2 lower than week-ago levels.

The Kiwi dollar starts today at 58.7 USc and down -10 bps from yesterday. A week ago it was at 59.7 USc so a full -1c drop since then. Against the Aussie we are +10 bps firmer at 90.8 AUc. Against the euro we unchanged at 55.6 euro cents. That all means our TWI-5 starts today at just under 68.5, and little-changed from yesterday, but down -30 bps in a week.

The bitcoin price starts today at US$89,631 and up +0.9% from this time yesterday. A week ago it was at US$76,099, so a sharp +18% rise since then. Volatility over the past 24 hours has been moderate at +/- 2.3%.

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