Here's our summary of key economic events over the weekend that affect New Zealand, with news even the giant American economy can't seem to maintain its momentum, with Trump grabbing at all the levers of government. He is even taking government domain names and inserting is personal interests. It will become increasingly hard to separate real American economic data from that skewed by his army of MAGA blackshirts who have been inserted into these agencies.
The week ahead will be busy, with major economic releases that will culminate with the US September non-farm payrolls report and related labour market data. Ordinarily they impact the policy path for the Fed this year. Markets currently expect jobs growth of less than +50,000 and settling in to a low trajectory. Before that we will get the ADP private employment report (expect even less), results from the JOLTS report, and Challenger job cuts (a big jump is expected by analysts).
Besides labour updates, investors will also be on alert for the risk of a US government shutdown at the start of the new fiscal year on October 1.
The September update of the ISM PMI is due (analysts think it will be more contractionary than in August), and we will also get PMI releases from China, Canada, Brazil, South Korea, and ASEAN countries.
Regionally, the RBA will be reviewing its monetary policy settings on Tuesday, and now no rate cut is expected due to rising inflation pressures, so markets expect it to stay at 3.6%. India will also be reviewing its monetary policy position late Wednesday, and no change is expected there either, keeping their rate at 5.5%.
Daylight savings time has started in New Zealand of course, but not yet in Australia. So we will be 3 hours ahead of eastern Australia. But Queensland, the Northern Territory, and Western Australia do not observe daylight saving time, making it a patchwork system across their country.
Over the weekend, China released August industrial profits data. After struggling all year to July to show any improvement on the equivalent month a year ago, August industrial profits rose at a good clip, up by more than +20% on the prior August's lame result. There was faster growth in the private sector while state-owned enterprises recorded a much smaller decline.
And we should note that China is about to go on its 2025 national Golden Week holiday which will run from Wednesday, October 1st to Wednesday, October 8th, an extended eight-day holiday that combines National Day with the Mid-Autumn Festival. This is a major time for domestic and international travel, resulting in busy transportation and tourist activity. Businesses largely suspend their operations in this time but key government departments do operate.
Over the weekend, Singapore released industrial production data delivering a large negative surprise. This activity was down a massive -7.8% in August from a year ago. The month-on-month data was sharply negative too. It was largely driven by very big drops in the electronics and biomedical sectors and caught analysts very much by surprise.
And over the weekend in the world's largest economy, they released personal income and spending data for August which came in pretty much as anticipated. Personal disposable income rose +0.4% in the month and personal consumption expenditure rose +0.6% on the same basis - all from the prior month. But if you think about it, these are actually fast annualised rises, with costs rising much faster than incomes.
This same data shows incomes were up +1.9% from a year ago, consumption up 2.7% on that year-ago basis. And as we noted, recent changes are rising faster than these annual shifts. The Fed will have noticed, as PCE inflation is now running well over 3% and its fastest since February. Goods inflation is 4.2% with durable goods up +5.2% in a year in this data. Clearly the tariff-tax effect is not transitory.
The updated September University of Michigan consumer sentiment survey for the US was revised slightly lower to be -21% lower than a year ago. Consumers surveyed continue to express frustration over persistently high prices, with 44% spontaneously mentioning to surveyors that high prices are eroding their personal finances. And they say they expect inflation to be +4.7% higher in a years time - interestingly similar to the current goods inflation data.
Markets are going to have to accept that inflation is being structurally embedded at above target levels and that the prospect of more rate cuts is receding if the Fed is to have any credibility with an inflation-fighting mandate. Financial markets have priced in one -25 bps rate cut this year, two by the end of January 2026. Politics may deliver them but it will be at the expense of inflation - which is clearly rising again and quite fast.
And the US has also arbitrarily decided to impose new tariffs on pharmaceutical imports, adding to the costs their consumers will have to pay, either via import duties or from new facilities to be built locally. If it goes as Trump plans, the excess capacity internationally (after removing production for the US) will cause international prices to fall as US prices rise. Lose-lose for Americans, win-win for international consumers.
The UST 10yr yield is now at 4.19%, little-changed from Saturday to be up +5 bps from a week ago. The key 2-10 yield curve is now at +54 bps. Their 1-5 curve is no longer inverted, now positive by +10 bps. And their 3 mth-10yr curve is now +6 bps positive. The China 10 year bond rate is up +3 bps at 1.91%. The Australian 10 year bond yield starts today at 4.39%, up +1 bp from Saturday, up +12 bps from a week ago. The NZ Government 10 year bond rate starts today at just under 4.26%, unchanged from Saturday and up +3 bps from a week ago.
The price of gold will start today at US$3759/oz, down -US$14 from Saturday. That is up +US$78 from a week ago. Silver had another big spurt over the weekend, now up over US$46/oz, a weekly gain of +US$3.
American oil prices are down -50 USc at just over US$65/bbl, with the international Brent price now just over US$69.50/bbl.
The Kiwi dollar is at just under 57.7 USc and down -10 bps from Saturday, and down -80 bps from a week ago. Against the Aussie we are unchanged at 88.2 AUc but down -60 bps for the week. Against the euro we are down -10 bps at 49.3 euro cents. That all means our TWI-5 starts today at just on 65.2, similar to Saturday at this time.
The bitcoin price starts today at US$110,271 and up +0.6% from Saturday. Volatility over the past 24 hours has been very low at under +/- 0.5%.
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7 Comments
Almost never, have I felt ashamed to be a Kiwi.
But this weekend I did.
Our cabinet (I almost wrote government, but it doesn't qualify anymore) has prostituted morals for money; some of us have better value-sets (it seems they think we will do well out of golden-dome - to hang with the consequences).
The link below (warning, it's 2+ hours with never an 'um') helps explain where we are on the stratification trajectory (and why staying aligned with psychopathy in the end-game disintegration of democracy, is a wrong move).
Well said. We are shamed.
Here's Israeli journalist Gideon Levy, ashamed of his prime minister:
https://archive.is/t87ud
MAGA blackshirts? The Blackshirts killed thousands of people and to equate that with some politics you don't like seems OTT.
Eh?
Chloe Swarbrick is on Gary Stevenson's podcast. For those unfamiliar, Gary is a retired trader who has positioned known as an inequality economist and author of "The Trading Game," a book in which Gary claimed to be Citi's "most profitable trader globally" in 2011. But Citibank did not formally rank traders globally by profitability, leading several former Citi colleagues and finance journalists to argue that Stevenson's self-designation as the "best in the world" is an exaggeration or marketing spin. Allegations of "delusions of grandeur" have surfaced, with several insiders doubting he would have ranked even in the top 10 of Citi's FX division in the most competitive year.
Anyway, I watched it and found it dreadfully superficial. That doesn't mean I disagree with the sentiments expressed.
My suggestion to David Chaston is to quit talking about Donald Trump. Its messing up his analysis.
He could talk about policy instead. example: Friends recently visited relations in North Dakota. Wealthy Republican folk interested in politics and talking of it a lot. Talked of policy but Trump was not mentioned.
Point is. It's about policy, not Trump.
Who's making the policy?
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