Here's our summary of key economic events overnight that affect New Zealand, with news investor 'greed' appetite is being challenged by super-high valuation premiums, a slowing of the giant American economy, and dodgy politics. Financial markets are ending the week high, but with no enthusiasm. The Nasdaq is lower, the S&P500 barely holding its current levels, and the Dow's limited big-company index is higher. Even in the equity market, the concentration of 'value' into just a few still hasn't corroded the confidence of equity funds to buy. There seems to be a transition to 'wagering' there will be a buyer in the future willing to pay ever higher prices, and away from 'economic fundamentals'.
With the US Federal agencies largely shut down, and there being no September non-farm payrolls release, financial markets are having to use other data to assess how the giant American economy is faring. Overnight, ISM released its services PMI and that showed a sector no longer expanding. New orders did though, barely, and a sharp slowdown from August. Business activity actually contracted, down near the brief dip in mid-2024, and apart from that its lowest level since the pandemic in 2020. Analysts were not expecting this widely-watched metric to be so downbeat.
The S&P Global/Markit services PMI for the US was more positive, but also showed a cooling.
Part of both is that price rise impulses were restrained. Businesses are not able to pass on the tariff taxes in full, and that makes them feel quite constrained.
In Canada, five provinces raised their minimum wages this week, following five who did it earlier in the year. As a result, British Columbia is now at C$17.85/hr (NZ$21.95), Ontario is at C$17.60/hr. Quebec at C$16.10/hr and Alberta is the lowest at C$15/hr (NZ$18.45).
Canadian housing markets are operating on a two-track basis now; rising sales volumes and falling sales prices. In Toronto, sales volumes rose +8.5% in September from a year ago to 5592 homes sold, but average prices fell -4.7% on the same basis. And that was despite a central bank rate cut in the month.
In China, the massive Mid-Autumn Festival holiday travel is underway. China's railways handled an all-time record 23.1 million passenger trips on Wednesday, the first day of the eight-day holiday.
The FAO global food price index fell in September and in part that was due to retreating dairy prices. But they are still +9% higher than year-ago levels. On the other hand, meat prices rose again to be +6.6% higher than year-ago levels. Sheepmeat surged on limited supply and good demand. Beef prices rose sharply to all-time high levels.
This week our look at one core global resource focuses on nickel, a key ingredient of stainless steel. At current production levels at existing mines, these are expected to last at least 35 years. But that doesn't account for known resources that are yet to be mined. On known reserves, there is at least 100 years of resource available at current production levels.
The UST 10yr yield is now at 4.12% and up +4 bps from yesterday but down -6 bps for the week. The key 2-10 yield curve is now at +55 bps. Their 1-5 curve is positive by +6 bps. But their 3 mth-10yr curve is now -2 bps inverted. The China 10 year bond rate is holding at 1.88% while they are on holiday. The Australian 10 year bond yield starts today at 4.34%, up +2 bps overnight, down -4 bps from a week ago. The NZ Government 10 year bond rate starts today at just on 4.24%, up +2 bps from Friday but down -2 bps from a week ago.
Wall Street was marginally firmer in Friday trade with the S&P500 up +0.1% from yesterday, up +0.8% for the week and while it is off its intra-day high it ends with an all-time weekly high. US equity prices are now trading at a record premium over their forward EPS. Overnight, European markets were mixed with London up +0.7% but Frankfurt dipping -0.2%. Yesterday Tokyo closed up +1.9% to be +1.6% higher for the week and a new ATH. Hong Kong closed down -0.5% but up +3.3% for the week. Shanghai was closed for their national holiday. Singapore ended its session up +0.4%. The ASX200 ended its Friday up +0.5% for a net +2.0% gain for the week. And the NZX also ended up +0.5% on Friday for a +3.1% rise for its week.
The Fear & Greed index is still in the 'neutral' zone, little changed from last week but tending to 'greed'.
The price of gold will start today at US$3882/oz, up +US$41 from yesterday and a new high. That is up +US$110 or +2.9% from a week ago. Silver had another big spurt this week, now just under US$48/oz, a weekly gain of +3.8%.
American oil prices are up +50 USc at just on US$61/bbl, but down -US$4 from a week ago, with the international Brent price now just over US$64.5 and down -$5.50 from a week ago.
The Kiwi dollar is at just over 58.3 USc, up +10 bps from yesterday and up +50 bps from a week ago. Against the Aussie we are up +10 bps at 88.3 AUc. Against the euro we are unchanged at 49.7 euro cents up up +40 bps for the week. That all means our TWI-5 starts today at just over 65.5, up +10 bps from yesterday and up +30 bps for the week.
The bitcoin price starts today at US$122,986 and up +2.5% from this time yesterday and a new all-time high. It is up +12% from this time last week. Volatility over the past 24 hours has been modest at just on +/- 1.9%.
Daily exchange rates
Select chart tabs
The easiest place to stay up with event risk is by following our Economic Calendar here ».
12 Comments
Here comes a 50 point OCR cut.....
It feels like the most likely outcome. The next review would then be very interesting, probably a pause.
My bank sent me a non-automated reminder to lock in a rate (not due for a few weeks). Thats usually a sign they want to lock in margin.
most cut 26 bps off 1 year where they will make the most margin according to a connected friend....
expects floating to drop on a 50 and we see how much more they cut off 1 year maybe another 10 bps
Its about swap based funding now and lower.
https://www.zerohedge.com/markets/huge-red-flag-chanos-joins-growing-cr…
Car subprime lender specializing in lending to undocumented "Americans" has issues, well no shit sherlock given trumps ice parade
Nevertheless, while traders can't pin down the driver of the weakness in 'Alts', The FT concludes that several large banks have also been caught up in the collapse, including JPMorgan Chase and Fifth Third, which are exposed to losses on hundreds of millions of dollars' worth of auto loans.
A second investor who has since sold their position in packaged-up Tricolor loans said they had no idea how potential financial irregularities went unnoticed by JPMorgan Chase, one of the banks that underwrote debt offerings.
“That’s the shocking part of it,” the investor said. “JPMorgan is one of the most sophisticated lenders in the entire world. How the hell could they have missed this?”
JPMorgan declined to comment.
Sorry kids I can see NZ Credit rating cuts during 2026
A few hundred mil is probably nothing to JP
Your right , there is only one cockroach JP Morgan is more aware of the risk in their other investments, just not in this one.
Car subprime lender specializing in lending to undocumented "Americans" has issues, well no shit sherlock given trumps ice parade
You couldn't make this proverbial up. And they have the temerity to call BTC a scam. Despite the wonderful Jim Chanos shedding some light, the following sums it up for me.
A second investor who has since sold their position in packaged-up Tricolor loans said they had no idea how potential financial irregularities went unnoticed by JPMorgan Chase, one of the banks that underwrote debt offerings.
“That’s the shocking part of it,” the investor said. “JPMorgan is one of the most sophisticated lenders in the entire world. How the hell could they have missed this?”
ok but how about this bit, they are Lending on M o t o r c a r s
For context: Since 2007, Tricolor has specifically marketed to customers excluded from traditional banking systems, like undocumented immigrants.
-
But the business of underwriting loans for this cohort (typical among smaller subprime lenders) has become riskier during President Donald Trump’s second term.
-
In a bond deal this year, Tricolor disclosed that 68% of its borrowers had no credit score, and over half didn’t hold a driver’s license.
They were double pledging assets as collateral,
But JPM can lose 100s mils on this POS, so traders will have positions across everyone else like this (risk has no issues remember)
An pretty soon you are talking real money
Whoever was selling those bonds had good lines and knew strippers and how to party.
And someone over at JPM is no longer there because he liked to party with that guy....
Maybe they where entertaining the trade the risk guy and the credit guy
.
So
- beef at an all-time high
- S&P all-time weekly high
- US equities prices at record premium to forward earnings
- Tokyo stocks at an all-time high
- gold at an all-time high?
- BTC at an all-time high
because the world is such a lovely, benign place at the moment ...
(did I miss any?)
that a FHBer in aussie can now buy a house with 5% down....
(I remember Westpac NZ once lent 105% to FHBers so they could buy furniture etc.....)
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.