Here's our summary of key economic events overnight that affect New Zealand, with news China is feeling an extended squeeze on foreign investment that just won't ease.
China released its August year-to-date foreign direct investment data overnight. They said they only attracted ¥507 bln in net foreign investment in those eight months. They said they attracted ¥467 bln in the seven months to July. So that means they gained a net +¥39 bln in August alone and that is a very low +US$5.5 bln and that is only one third of the August 2024 gain. Basically foreign direct investment into China from all sources is close to dead in the water.
This doesn't mean that China's economic expansion won't be good in 2025 (over +5%). But it does point out how the two big powers are isolating themselves, with cross-border investment and economic connections all retreating.
A recent example is that China's new iron ore buying monopoly has moved to shut out a key Australian blend from BHP. They have other options and are using their heft to try and bring BHP and Australia into line.
Separately, Japan's inflation eased to 2.7% in August from 3.1% in July, the level since October 2024. There was a notable slowing in the rise in rice prices, enabling food price inflation to ease to 'only' 7.2% in August from a year ago. Overall prices weer up +0.8% in the month with food prices up just +0.3% for the month.
Japan's central bank announced the results of its policy rate review and as expected left it unchanged at 0.5% at Friday's. This came amid the political uncertainty around the resignation of Prime Minister Ishiba. They also said that it will sell its holdings of exchange-traded funds and Japan real estate investment trusts (J-REITs) to the market. Here is their decision.
Germany said its producer prices fell an outsized -2.2% in August from a year ago, a deflation sign they will not welcome and extends their deflationary pressure that started in July 2023. But most of that is coming from the lower cost of imported energy with local producer prices basically unchanged.
Canada said its August retail sales rose +1%, more than offsetting its July dip. But it isn't clear now much of that is inflation related. But financial markets reacted positively, seeing consumer 'resilience' in the data. (One more -25 bps rate cut is expected in Canada before the end of the year.)
In Australia, they are facing the prospect of another wet and stormy summer. It is a turn that makes their recent national climate impact report more realistic. Insurers will be bracing
This week our look at one core global resource focuses on iron ore. At current production levels at existing mines, these are expected to last at least 65 years. But that doesn't account for known resources that are yet to be mined. Not only does the latest reviews not include large recent African discoveries the Chinese are developing, they also don't include grades that are currently avoided because easier access is currently available. This resource will last many centuries at current production levels. Like oil and gas, inflation-adjusted current pricing is near all-time lows. (H/T PDK)
The UST 10yr yield is now at 4.13%, up +3 bps from yesterday to be up +6 bps from a week ago. The key 2-10 yield curve is now steeper at +56 bps. Their 1-5 curve is no longer inverted, now positive by +9 bps. And their 3 mth-10yr curve is now +3 bps positive. The China 10 year bond rate is up +1 bp at 1.87%, up +7 bps for the week. The Australian 10 year bond yield starts today at 4.26, up +2 bps overnight up +3 bps from a week ago. The NZ Government 10 year bond rate starts today at just under 4.23%, down -2 bps from Friday and down -8 bps from a week ago.
Wall Street was marginally firmer in Friday trade with the S&P500 up +0.5% to be up +0.9% for the week and a new record high. Overnight, European markets were little-changed everywhere. Yesterday, Tokyo closed down -0.6% on Friday and up +0.5% for the week. Hong Kong closed unchanged for a +0.9% weekly gain, and Shanghai closed down -0.3% on Friday for a 1.4% weekly drop. Singapore ended its session down -0.2%. The ASX200 ended its Friday up +0.3% for a net -0.5% fall for the week. And the NZX ended up +0.9% on Friday for a little-changed week.
The Fear & Greed index is now back in the 'greed' zone from 'neutral' last week.
The price of gold will start today at US$3681/oz, up +US$39 from yesterday. That is up +US$33 from a week ago. Silver had another spurt overnight, now up over US$43/oz, a weekly gain of +US$1.
American oil prices are down almost -US$1 at just on US$62.50/bbl and back to where they were a week ago, with the international Brent price just over US$66.50/bbl and down -50 USc.
The Kiwi dollar is at just under 58.6 USc and down -25 bps from yesterday, and down a full -100 bps from a week ago. Against the Aussie we are down -10 bps 88.8 AUc. Against the euro we are little-changed at 49.9 euro cents. That all means our TWI-5 starts today at just over 65.8, down -20 bps from yesterday but down -100 bps for the week.
The bitcoin price starts today at US$115,479 and down -1.8% from this time yesterday, down -0.8% from a week ago. Volatility over the past 24 hours has been modest at just on +/- 1.0%.
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19 Comments
hat tip from PDK re low priced iron ore and oil?? What's the context PDK?
Perhaps in this context “H/T” might better translate as - heave to?
PDK prodded us to look more at resource sustainability, which is a good idea. So weekly we will check the data on a key resource used in modern life. Last week it was copper. For minerals, we tend to refer to the USGS resources because they are deep and comprehensive. We are open to suggestions. We can review more than just minerals.
Then the HT, him belong DC.
:)
https://www.zerohedge.com/markets/world-must-spend-540-billion-every-ye…
US will just invade Venezuela and take theirs.
I read that link and think of the NZ gas situation...years of pre warning and we suddenly(?) discover it is no longer available in sufficient quantity and the subsequent consequences.
It is more than individual resources, it is a systems problem.
if you live rural then def get solar backup genset and plant trees that are good for firewood as wind breaks thicker then normal so you can harvest for firewood in 10-20 years and keep the stands going. one 30 year old gum is enough for me for 2 years of winter fires, best think ahead here, no gas will be bad unless we burn coal to transition.
In fact its already too late, we will probably turn Port Taranaki into LNG import facility in the next few years, but then we are vulnerable to international LPG prices, gas has always been cheaper here. IMHO we are stumbling into a nightmare here.
I have a gas BBQ and a low slow wood burning one. I can see $100 bottles of LPG in a decades time.
Mean while we have debates about treaty, supermarkets and other things because the big issues are too hard for these jnr pollies. You have no idea how much faith I have lost in National. Crappy CEO style leadership where he expects his ministers to come up with ideas rather then the wider party.
Meanwhile the left just wants to debate social ideology.
Lol...oddly enough that I already do and am unconcerned that it is likely to greatly impact me, but like many (most?) others I have children and grandchildren.
I struggle to think if they would allow such a risk as a LNG port at New Plymouth given the crater it would leave in an explosion.
DC are you bench marking these resources vs 1972 Club of Rome - copper to run out in 2020. Like oil and gas, inflation-adjusted current pricing is near all-time low makes a mockery of the pessimists.
Doers 1 Doomers 0.
"Copper, with a 36-year lifetime at the present usage
rate, would actually last only 21 years at the present rate of
growth, and 48 years if reserves are multiplied by five. It is
clear that the present exponentially growing usage rates greatly
diminish the length of time that wide-scale economic growth
can be based on these raw materials."
https://www.clubofrome.org/publication/the-limits-to-growth/
All three swap yield curves back into positive territory and Wall Street at record high. Time to sell ?
The Trump admin changed the H-1B visa program by signing a proclamation that imposes a new $100,000 annual application fee for every H-1B visa request made by employers. Stunning. There are plans to increase required prevailing wages for H-1B workers, so employers must offer higher salaries, purportedly to protect U.S. workers.
This will obliterate Indian staffing companies. Many H-1B workers are hired via IT consulting and contracting companies, not directly by businesses. These companies have big market caps:
Cognizant: $34B
Infosys: $70B
Tata Consultancy: $130B
Wipro: $30B
HCL: $45B
Tech Mahindra: $15B
For companies like this, $100k annual fees simply don’t work. Most of these workers are paid $90-110k, so the $100k fee doubles the cost of the worker and destroys the staffing companies' margins.
https://edition.cnn.com/2025/09/19/politics/trump-h1b-visa-fee
They will just work remotely.... i work with TCS a lot, in general the better coders are great but you need to be clear with specifications , as you always do with devs who do not have domain knowledge. TCS maybe $800 a day vs $1200 a day here for a contractor.
Time zone has a big impact if you have devs in both countries same with testers.
Yes. Which makes you wonder why they need the visa in the first place for the majority. And at the end of the day, Trump still wants the cream of the crop in the U.S.
And apparently there ere are huge numbers of Indians with the H1B who are in India and working remotely. All of these scammers will be screwed.
These developments have led some employers, such as Microsoft, to issue a 24-hour deadline warning, urging Indian and other foreign H-1B employees to return to the US before a critical fee deadline due to a new $100,000 annual fee per visa-holder taking effect on September 21, 2025.
https://timesofindia.indiatimes.com/technology/tech-news/microsoft-has-…
GDX (VanEck Gold Miners ETF) hit a new all-time high y'day After 14 long years. GDX is the closest you can get to owning a broad piece of the gold mining industry. Now up 109% year to date.
Of course, GDX is outperforming the gold spot price but it is also outperforming the ol' rat poison in the past year. GDX is now beating the S&P 500:
- By 21% in the last month
- by 101% year to date
- by 128% the last 3 years
- by 160% the last 10 years
Following on from a different thread where I said NZ house prices are no longer looking too bad, here are the English speaking medians in NZD
USA: $439,894 USD = $750,000
UK: £269,000 = $620,000
Canada: $693,300 CAD = $860,000
Ireland: €374,999 = $750,000
Australia: $920,003 AUD = $1,035,000
NZ: $761,000
Feel free to correct, I just took googles AI answer for each.
Can you add the average house hold incomes so we can access affordability
"Te Kaha project stadium, Christchurch, late stage progress" Not sure what this has to do with week end briefing. Original budget, cost to date and forecast cost to completion would be useful and how far behind schedule. I'm taking the latter as a given.
took them ages to get funding, would have been cheaper if they proceeded earlier...
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