Here's our summary of key economic events overnight that affect New Zealand with news the US and India are both leading the global growth stakes, but one of them (or both?) probably can't maintain the momentum for long. However, both are exceeding what analysts had expected and have done so for some considerable time now. Pessimist had expected that the GFC was the turning point for the US but they clearly got that wrong. Pessimists had thought that Indian corruption would stymie its turn for economic expansion, and that hasn't happened so far either.
First, in the US their manufacturing PMI for November stayed in contraction territory, hardly moving from the prior two months. But their services PMI rose strongly to a much faster expansion, and a 32 month high. There were no inflationary signals in this survey. Business expectations were the highest level since May 2022, reflecting optimism about potential interest rate cuts, stronger economic growth, and pro-business policies.
On the consumer front however, the November University of Michigan sentiment served was down-graded from its 'flash'-reported rise, so that in fact little improvement was evident in the month. These sentiment levels remain about -30% lower than pre-pandemic levels.
And we should probably note that the US Fed balance sheet continued its slow shrinkage and 'normalisation' last week, taking its size back to where it was in May 2020, just after the emergency pandemic response, and down -23% from its peak in mid 2022.
Canadian retail sales rose unexpectedly in October and now for a fourth straight month. Excluding car sales, which were strong in September, a small correction was expected. But in fact the non-car retail activity rose very strongly. Perhaps the recent Bank of Canada interest rate cuts are working? They have trimmed -125 bps since May this year and now have an official cash rate of 3.75%.
Japanese inflation fell again in October, now running at an annual rate of +2.3%. That is sharply lower than the 3% rate they had in August but it is still within their central bank's target range.
And staying in Japan, their November PMI stayed positive, also bolstered by the service sector, but manufacturing output contract less - in fact hardly at all - in November which was a good improvement for them.
In India, they again reported strong expansions in both their factory and service sectors. But worryingly, there are tangible signs of serious over-heating (metaphorically) with cost inflation pressures near extreme levels. Something will break soon. And climate over-heating could also leave the economic situation in a messy place.
In China, a selloff in Chinese stocks deepened on Friday as disappointing tech earnings hurt sentiment already weakened by concerns over Trump’s imminent return.
In Europe, their PMIs were disappointing again, with the expansion in their services sector ending, and it joining the contraction they have had for a while in their factory sector. New orders slipped for a sixth month running. Although modest, the rate of contraction in November was the most marked since January.
In Australia, their November PMIs were again disappointing. Business activity slipped as services activity joined manufacturing output in contraction. The reduction in activity coincided with a slowdown in new order growth while external demand remained subdued. But despite this, business sentiment was resilient as confidence in future conditions reached a 15-month high. Go figure.
The UST 10yr yield is now at just on 4.41% and down -1 bp from yesterday at this time. A week ago it was +4 bps higher. The key 2-10 yield curve is less positive, now by only +5 bps. Their 1-5 curve inversion is now inverted, by -12 bps. And their 3 mth-10yr curve inversion is more inverted, now by -20 bps. The Australian 10 year bond yield starts today at 4.59% and down -3 bps. The China 10 year bond rate is unchanged at 2.08%. The NZ Government 10 year bond rate is down -5 bps from this time yesterday at 4.67%, and -11 bps lower than this time last week.
Wall Street started its Friday up +0.3% on the S&P500 and up +1.6% for the week. European markets were up about about +0.7% across the board. Tokyo ended its Friday session also up +0.7% on the day, little-changed for the week. Hong Kong ended yesterday down -1.9% and down the same for the week, while Shanghai was down a very sharp -3.1% in Friday trade to be -2.3% lower for the week. Singapore was up +0.2% yesterday. The ASX200 ended up +0.9% in its Friday session for a weekly gain of +1.3%. And the NZX50 ended with a strong daily gain of +2.2% for a weekly rise of +2.8% and the best of the equity markets we benchmark against.
The Fear & Greed Index ends the week having moved back to the 'greed' zone from 'neutral' last week.
The price of gold will start today at US$2705/oz and up another +US$43 from this time yesterday. That makes the weekly gain +US$139 or +5.4%.
Oil prices are up +US$1.50 to just under US$71/bbl in the US while the international Brent price is now just under US$75/bbl. A week ago these prices were US$67.50 and US$71.50 respectively.
The Kiwi dollar starts today at 58.3 USc and down -30 bps from this time yesterday. A week ago it was at 58.7 USc so a -40 dip since then. Against the Aussie we are -30 bps lower at 89.7 AUc. Against the euro we up +20 bps at 56 euro cents. That all means our TWI-5 starts today at just over 68.1, and down another -20 bps from yesterday, down -40 bps in a week.
The bitcoin price starts today at US$99,043 and up +1.9% from this time yesterday. But it is up more than +10% from this time last week. Although its price is still in the 'nervous 90s' and the delay is probably frustrating its fans, the US$100K even is undoubtedly close - still. Volatility over the past 24 hours has been modest at +/- 1.2%.
Daily exchange rates
Select chart tabs
The easiest place to stay up with event risk is by following our Economic Calendar here ».
We welcome your comments below. If you are not already registered, please register to comment
Remember we welcome robust, respectful and insightful debate. We don't welcome abusive or defamatory comments and will de-register those repeatedly making such comments. Our current comment policy is here.