IMF upgrades global growth estimate on US strength; China claims +5% expansion; Singapore exports surge; aluminium price rises; UST 10yr at 4.60%; gold and oil softish; NZ$1 = 56 USc; TWI = 66.8

Here's our summary of key economic events overnight that affect New Zealand with news the world's strongest economy is on track to maintain its dominance.

First up today, the January update of the IMF's World Economic Outlook estimates global growth to be +3.3% in 2025, a slight increase from the 3.2% forecast in October. The rise was driven by the US which offset downgrades in other major economies. Growth for 2026 is also expected at 3.3%, unchanged from the previous projection. They say the US faces upside risks that could bolster growth in the near term, but other nations remain exposed to downside risks amid heightened policy uncertainty. The US economy is now forecast to grow by 2.7% in 2025 (vs 2.2% in October), and China's GDP growth was revised slightly higher to 4.6% (vs 4.5%). Conversely, the Euro Area's growth projection was downgraded to 1% (vs 1.2%), while Japan's growth forecast remains steady at 1.1%. Projections for India’s GDP growth were maintained at 6.5%. Australia is expected to grow +2.1% in 2025 and +2.2% in 2026. New Zealand doesn't get a mention in these forecasts.

Underscoring the US growth upgrade, American housing starts surged by almost +16% from the previous month to an annualised rate of 1.5 mln units in December, the most since March 2021 and well above the expected 1.32 mln level.

And industrial production in the US was up an outsized +0.9% in December and well above the +0.3% expected rise to the strongest increase since February. It was helped by the end of strikes, and a jump in the production of aircraft.

Across the Pacific, China’s new home prices in 70 cities dropped by an average -5.3% in December from a year ago, slowing from a -5.7% decline in the previous month. This was the softest fall since August but is the 18th consecutive month of decreases. "Second hand home" prices fell faster, and there were no cities where prices rose. The string of decreases come despite efforts from Beijing to reduce the impacts of a prolonged property weakness, efforts such as lowering mortgage rates and cutting home buying costs. Meanwhile, the CEO of property developer Vanke has been 'detained' for questioning as that Shenzhen giant is now on its knees. He has been detained by Shenzhen authorities, and we should note that the Shenzhen local government is Vanke's largest shareholder. It is not good to dud your largest shareholder especially if they are also the effective 'law'.

China's electricity production was only up +0.6% from a year ago in December. For the whole of 2024 the rise was +4.6%. The year ended weakly with neither November nor December rising more than +1%. This is a telling indicator of real activity. (This is the metric then-to-be Premier Li Keqiang famously referred to after dismissing their GDP results.)

But they said industrial production was up +6.2% in December. Retail sales were up +3.7%. And through all this they claimed Q4-2024 GDP rose +5.4% and its fastest pace of the year. Frankly, that is hard to see based on the components that make it up. Apparently it is based on export growth, but as good as that is, it is hard to see that behind the claimed growth. But the links here, plus this one, should be enough to inspect their data and for you to make your own judgement.

Singapore’s exports surged +9% in December from the same month a year ago, after a +3.4% gain in November. This exceeded the +7.4% rise in November and is the fastest pace in export growth since August. A key driver is a sharp rebound in non-electronic product sales.

And we should probably note that the aluminium price is at a two month high, and heading toward a two year high.

We should also probably note the extended wild weather on the Australian east coast and the destruction involved.

The UST 10yr yield is now at just on 4.60%, and down -1 bp from this time yesterday. A week ago it was at 4.76% so a -16 bps drop since then. The key 2-10 yield curve is less positive, now by +34 bps. Their 1-5 curve is also less positive at +22 bps. And their 3 mth-10yr curve has flattened slightly too, now to +30 bps. The Australian 10 year bond yield starts today at 4.55% and up +1 bp. The China 10 year bond rate is now at 1.65% and unchanged. The NZ Government 10 year bond rate is now at 4.75% and down -1 bp, but up +10 bps from a week ago.

Wall Street is in its Friday session and up +1.3% on the S&P500 and heading for a +4.0% weekly gain. Overnight, European markets all rose about +1.2%. Tokyo ended its Friday trade down -0.3% for a -2.8% weekly loss. Hong Kong was up +0.3% yesterday for a +3.5% weekly gain. Shanghai was also up +0.2% for a +3.0% weekly gain. Singapore was up +0.3% yesterday The ASX200 ended its Friday down -0.2% and a weekly +0.2% rise, while the NZX50 ended up +1.0% and a +1.8% weekly gain.

The Fear & Greed Index ends the week in the middle of the 'fear' zone, and little-changed from last week.

The price of gold will start today at US$2716/oz and down -US$3 from yesterday, but it is up +US$27 from last week at this time.

Oil prices are little-changed from yesterday, down -50 USc at just under US$78.50/bbl in the US while the international Brent price is now just under US$81.50. Interestingly, both Chinese and Indian oil customers of Russian crude have indicated they will accept the latest US sanction ban on the Russian product from March. This will help demand for the Middle Eastern product and there will be a net rise in cost for those who used to buy heavily discounted Russian oil. But the overall impact is not expected to be large.

The Kiwi dollar starts today just under 56 USc and down -20 bps from this time yesterday. A week ago it was at 55.6 USC so up +40 bps since then. Against the Aussie we are also down -20 bps at 90.1 AUc. Against the euro we are down -10 bps at 54.4 euro cents. That all means our TWI-5 starts today just on 66.8 and down -10 bps from yesterday, but up +20 bps from a week ago.

The bitcoin price starts today at US$104,991 and up +5.8% from this time yesterday. Volatility over the past 24 hours has been moderate at +/- 2.9%.

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