Wall Street stutters; China 'investigates' beef imports; China to dam India's Brahmaputra River; Korean political crisis deepens; UST 10yr at 4.61%; gold down and oil up; NZ$1 = 56.3 USc; TWI = 66.9

Here's our summary of key economic events over the holidays with news of a sharpish pull-back in US equities as the year nears it's end. The Nasdaq 100 sunk nearly -2%, the S&P500 was down -1.6% and US Treasury yields are rising as markets assessed the corporate outlook in light of potential tariffs.

US inventories, both retail and wholesale were little-changed in November. But they are likely to rise from here as traders rush to beat the impending tariffs.

US exports rose +6.0% in November compared with the same month a year ago. But US imports are zooming higher on the expectation of those rising tariffs, up +7.3%. That caused a Trump-induced trade deficit of -US$99 bln in the month, up from -US$90 bln in the same month a year ago.

Across the Pacific, Japanese retail sales rose +2.8% in November from year-ago levels, up from a downwardly revised +1.3% rise in October, and easily beating market expectations of a +1.7% gain. This marked the 32nd straight month of expansion in retail sales and the fastest growth since August, with rising wages continuing to support consumption.

However, Japanese industrial production fell by -2.3% in November from October, compared with market expectations of a -3.4% fall. The latest result followed a +2.8% growth in October and is the first contraction in industrial output since August. Year-on-year the November decline was -2.8%. A dip in machinery orders took the blame.

Chinese industrial profits fell -7.0% in November, compared to the same month a year ago. Even the Chinese habit of only reporting year-to-date results shows a decline now of -4.4%, so the recent months are coming in weaker than earlier. After peaking in 2021, these profits have fallen each year since. Interestingly, state-owned enterprises, which tend to be very large businesses are doing the weakest, down -8.4%. Private foreign-owned businesses are doing the least-worst (-1.0%). And other private sector businesses are down -4.7%. It is hard to see private investors happy in this environment.

China’s commerce ministry said yesterday that it has launched an investigation into imported beef at the request of representatives from its struggling domestic industry. New Zealand is one source, including through the Silver Fern Farms link. But the main focus is on imports from Brazil and Australia.

Taiwanese consumer sentiment dipped in December from November, but remains sharply higher than year-ago levels, and still in the high recovered range after the low point in late 2022. However, it isn't yet back to pre-pandemic levels.

In South Korean their currency plunged to a 16 year low, as political unrest escalated further. South Korea’s parliament has impeached Acting President Han Duck-soo, delivering another setback to a government already grappling with the suspension of President Yoon Suk Yeol less than two weeks ago following his brief declaration of martial law. Moreover, South Korea's anti-corruption body has summoned impeached President Yoon Suk Yeol for questioning over his brief martial law declaration, his third summons after previous refusals. Meanwhile, Finance Minister Choi Sang-mok stated that the government will take 'decisive' market stabilisation measures if market trends turn excessive. Still, business confidence dropped sharply in December, its lowest level since July 2020, and highlighting growing concerns over an economy struggling with the political instability, and the looming threat of tariffs from the US.

In Tibet, and in an area China controls but is disputed with India, China just committed to build a vast hydro-electric river dam, so large it is expected to take a decade to finish, and then deliver three times the output of their famous Three Gorges Dam. But they are damming the Yarlung Tsangpo River, which is known as the Brahmaputra River in India and one of India's great rivers. Expect a rise in tension between India and China because of this, although the main impact will be on Bangladesh.

In Iran, their currency is under severe pressure and energy shortages are growing. The country is bracing for a spike in civil unrest.

In Europe, a footnote about the Russian ship accused of being behind the cutting of Baltic Sea cables, the Eagle S - it is registered in the Cook Islands. Sadly, the Cooks are the legal home of a wide variety of very dodgy organisations, protected by their secrecy laws.

The UST 10yr yield is now at just on 4.61%, and up +3 bps from yesterday, and up +10 bps from this time last week. The key 2-10 yield curve is more positive, now by +30 bps. Their 1-5 curve inversion is +24 bps and little-changed. And their 3 mth-10yr curve is also positive at +29 bps. The Australian 10 year bond yield starts today at 4.47% and down -3 bps. The China 10 year bond rate is now at 1.70% and down -3 bps. The NZ Government 10 year bond rate is now at 4.52% and down -3 bps from yesterday, down -13 bps from this time last week..

Wall Street is ending its Friday session, now down a sharpish -1.2% on the S&P500. Overnight, European markets were mixed in a +0.2% (London) to +1.0% (Paris) range. Tokyo ended its Friday session up +1.8%. Hong Kong was little-changed, and Shanghai only rose +0.1%. Singapore rose +0.3%. The ASX200 rose +0.5% and the NZX50 rose a full +1.0%.

The Fear & Greed Index ends the week still in the 'fear' zone, and unchanged from last week. A month ago it was in the 'greed' zone. A year ago it was in the 'extreme greed' zone.

The price of gold will start today at US$2614/oz and down -US$16 from yesterday. And that is -US$11 lower than at this time last week.

Oil prices are up +50 USc at just under US$70.50/bbl in the US while the international Brent price is still just under US$74. A week ago these prices were -US$1 lower.

The Kiwi dollar starts today just under 56.3 USc and unchanged from yesterday but down -40 bps for the week. Against the Aussie we are up +30 bps at 90.7 AUc. Against the euro we are still at 54 euro cents. That all means our TWI-5 starts today at just on 66.9 to be little-changed from yesterday and down -20 bps from this time last week.

The bitcoin price starts today at US$94,057 and down -2.2% from this time on yesterday. A week ago it was at US$97,137 do down -3.2% since then. Volatility over the past 24 hours has been moderate at +/- 2.0%.

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