US mortgage application levels stay weak; Japanese exports rise; Taiwanese export orders rise; Chinese banks feel consequences; EU warned on high debt & low growth; UST 10yr at 4.41%; gold up again and oil still on hold; NZ$1 = 58.7 USc; TWI = 68.5

Here's our summary of key economic events overnight that affect New Zealand with news both China and the EU seem to be facing banking & debt pressures, different of course, but each challenging in its own way.

But first in the US, mortgage applications edged slightly higher last week from the week before to be -30% lower that at the end of September and about the same weak level as a year ago. Rising mortgage interest rates are holding them back with the latest rise to 6.90% the fourth week in a row and the highest since early July. Trump and market expectations that the new Administration policies will be inflationary, is getting the blame for the higher interest rates.

Yesterday we noted the bullish outlook for Walmart, as part of stronger American retail activity. But today we also need to note the downbeat assessments from another major retailer, Target.

After the unexpected September dip, Japanese exports rose again in October even if the rise of +3.1% from a year ago was less than the rises they had in 2024 to August. Imports rose too, but even more modestly (+0.4%).

Taiwanese export orders remain very buoyant, up +4.9% in October from a year ago and a rising pace. The rise was mainly driven by increased export orders for electronic products.

The Chinese central bank left its November Loan Prime Rates unchanged at the new lower October levels of 3.10% for the one year LPR, and 3.60% for the five year LPR.

And chickens are coming home to roost for Chinese banks that went along with emergency lending during the pandemic. A government-encouraged surge in lending designed to be a lifeline for small businesses during the pandemic has started to worry their banks, as misappropriation has caused the loans to go bad at an increasing rate due in part to China’s stubborn real estate slump. The official response to the problem? ease back on lending standards.

The Indonesian central bank reviewed its policy rate yesterday and left it unchanged at 6%, as expected. Although they trimmed -25 bps in mid-September, they haven't really started their easing cycle yet. Inflation is running at a very low +1.7% pa, and within their policy target band so they must be close. But a big factor for them in currency stability and a high real interest rate is keeping the rupiah from depreciating at a faster rate. Global tensions, both trade and geopolitical tensions, are the main factors here.

In its latest financial stability review the ECB is warning that the combination of low growth and high debt is about to play out there with some severe economic stress.

In Australia, employers paid more than AU$103.7 bln in wages and salaries in the September month, up +6.3% from a year ago, and the first time it has exceeded AU$100 bln any month. It is part of a longer trend and is up +14.1% from September 2022 levels.

The UST 10yr yield is now at just on 4.41% and up +2 bps from yesterday at this time. The key 2-10 yield curve is now positive by +10 bps. Their 1-5 curve inversion is now inverted, by -10 bps. And their 3 mth-10yr curve inversion is also still inverted, now by -18 bps. The Australian 10 year bond yield starts today at 4.64% and up +5 bps. The China 10 year bond rate is up +1 bp at 2.10%. The NZ Government 10 year bond rate is unchanged from this time yesterday at 4.69%.

Wall Street has started its Wednesday down -0.5% on the S&P500. European markets were down about -0.3%. Tokyo ended its Tuesday session down -0.2%. Hong Kong ended up +0.2% while Shanghai was up another +0.7%. Singapore was down -0.4%. The ASX200 fell its own -0.6% and the NZX50 matched that with its own -0.6% retreat.

The price of gold will start today at US$2649/oz and up another +US$26 from this time yesterday.

Oil prices are little-changed, still just over US$69/bbl in the US while the international Brent price is still just over US$73/bbl.

The Kiwi dollar starts today at 58.7 USc and back down -30 bps from this time yesterday. Against the Aussie we are -10 bps lower at 90.4 AUc. Against the euro we unchanged at 55.8 euro cents. That all means our TWI-5 starts today at just over 68.5, and down -10 bps from yesterday.

The bitcoin price starts today at US$93,816 and up +1.6% from this time yesterday. Volatility over the past 24 hours has again been modest at +/- 1.9%.

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