Here's our summary of key economic events over the weekend that affect New Zealand, with news that while much of the financial world seems disconnected from economic reality, we are about to reminded of our local realities this week.
This week will be all about the RBNZ OCR review on Wednesday. Will it be a -25 bps cut or a -50 bps cut? Financial markets do not know, but then again neither do analysts. Banks have been assuming -25 bps at least and have trimmed their one year fixed home loan rates by this much. But since the last OCR review one year swap rates have fallen -31 bps, so if there is a -50 bps cut on Wednesday, expect those swap rates to fall almost immediately, and banks to follow that up with more fixed rate mortgage reductions. Savers will be looking on nervously because the rates offered to them in term deposits also face the same downward pressures.
In Australia, it will be all about the Westpac consumer confidence survey, the NAB business confidence survey, and consumer inflation expectations. And of course, parts of the eastern states are now on Daylight Saving Time, so basically back to 2 hours behind New Zealand (except Brisbane, which stays 3 hours behind).
The US government shutdown will remain the focus this week in the world's major financial markets as the extended impasse between members of Congress showed little signs of improvement. The shutdown jeopardises releases from US Federal agencies including the trade balance, jobless claims, and the budget statement after the September jobs report and other key data has already been delayed. Still, the minutes from the FOMC's last meeting is still expected.
Among non-US governmental releases, October's Michigan Consumer Sentiment surveyed will be eyed.
Over the weekend the ruling LDP party in Japan selected a new prime minister, notable because it is Japan's first female prime minister, Sanae Takaichi. Takaichi, 64, was known to be close to the late Prime Minister Shinzo Abe, another prominent right-wing leader of the LDP. She has publicly stated that she sees former UK Prime Minister Margaret Thatcher as her role model. She has been called a "China hawk". Some locally fear they may be getting a Liz Truss.
In China, the massive Mid-Autumn Festival holiday travel is underway. China's railways handled an all-time record 23.1 million passenger trips last Wednesday, the first day of the eight-day holiday.
Across the Pacific in the US over the weekend, the ISM released its services PMI for September and that showed a sector no longer expanding. New orders did though, barely, but a sharp slowdown from August's rise. 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.
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 last 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.
More globally, 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.
And we should probably note that after rising to €84/tonne in 2024 to start this year, EU carbon prices then fell to about €60/tonne at the end of March. But since then they have risen back to almost €80/tonne now and putting on a bit of a spurt in early October. While local carbon markets are struggling, the same is not true elsewhere.
The UST 10yr yield is now at 4.12% and unchanged from Saturday but down -6 bps for the week. The key 2-10 yield curve is still at +55 bps. Their 1-5 curve is positive by +6 bps. But their 3 mth-10yr curve is now -1 bp 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 4.32%, down -2 bps from Saturday. The NZ Government 10 year bond rate starts today at just on 4.24%, unchanged from Saturday but down -2 bps from a week ago.
The price of gold will start today at US$3885/oz, up +US$3 from Saturday and a new high. That is up +US$113 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 softish at just under US$61/bbl, but down -US$4 from a week ago, with the international Brent price now just on US$64.50/bbl and down -$5.50 from a week ago.
The Kiwi dollar is at just over 58.3 USc, little-changed from Saturday but up +50 bps from a week ago. Against the Aussie we holding at 88.3 AUc. Against the euro we are also unchanged at 49.7 euro cents. That all means our TWI-5 starts today at just under 65.6, up +10 bps from Saturday and up +40 bps for the week.
The bitcoin price starts today at US$122,805 and virtually unchanged from this time Saturday. Volatility over the past 24 hours has been modest at just on +/- 1.5%.
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27 Comments
FAO can't bring themselves to use the word "record" in a world ravaged by global warming predictions.
"FAO’s latest forecast for global cereal production in 2025 has been raised by 10.1 million tonnes (0.3 percent) this month, putting the total at 2 971 million tonnes. The increase reflects upward revisions to production forecasts across all crops, led by wheat, maize and rice (in order of magnitude). At this level, world cereal production is 3.8 percent higher year on year, marking the largest annual growth since 2013."
https://www.fao.org/images/worldfoodsituationlibraries/default-album/cs…
It does feel like global warming might not be as bad as we were told. Voters don't seem so interested in it anymore; you would think it would increase in support over time but it seems like people were more concerned 5 years ago than now.
Feels, eh?
Good scientific stuff.
The problem is that society cannot operate without high-quality (low-entropy) energy; a fact that most people and apparently all economists, overlook.
And there is no scalable substitute for fossil energy, the burning of which is the CO2 cause. So society is reacting by rejecting. Doesn't alter the science, though - just points to increasing ignorance.
I’m not denying the science and never have done. But the effects of global warming may not be as bad as we were told; at least I suspect that’s how voters are feeling. And yes politics is more about feelings than science.
At the end of the day, science can't tell us how badly we will be affected, it can't put a meaningful number on what people's lifestyle will be like in 20 years time, 50 years time, 100 years time. The best science could probably do is put a monetary value on it, but it would be a very crude estimate, and you don't believe in money so that wouldn't be helpful. Voters have to go by feel.
On the one hand we are being told that things are going worse than predicted, the planet is warming faster, every year is a new record, we should have famines and storms and be underwater etc. On the other hand, most of us have not been affected in any meaningful way.
Are you saying my feeling is wrong, and that people are more concerned about the environment than they were 5 years ago? Why are we voting in Trump / NACT / etc?
The flaws in PDK's ideas have been pointed out so many times in this forum.
"At the end of the day, science can't tell us...." I think it's not science so much as models which are not science.
Bacteria in a jar.....one minute before midnight there is still plenty of room.
Scaring yourself with the word "exponential" again.
Or demonstrating that your 'reckons' about abundance are deceptive.
You miss his point PDK. Climate change is slipping from the front and centre view, until the next weather disaster, and insurance not stepping up.
Even the politicians are putting more effort into keeping the status quo going than taking a bite at trying to get people to prepare for what's to come (except of course - defence).
Cost of living vs environment. Cost of living wins every time. Even if it results in bigger costs in the future (such as fossil fuel reliance).
I doubt even Labour will go big on environment in the next election. Maybe the greens won't either!
"no scalable substitute for fossil energy" - the only real issue with electricity is storage, with lithium ion being ~50x less energy density. I think we will solve that before we run out of oil - although there is no guarantee of course. On the flip side, electricity is much more efficient to convert to motion than oil, so you don't need to store as much.
Sensible decision at last for storm control measures that save a town but needed an independent review. Pity it took two years of beating their head against the wall to get it.
https://www.waikatotimes.co.nz/nz-news/360843422/surf-club-gets-consent…
And DJT has told his team to do something to save their farmers. $billions in bailouts likely the outcome. Interesting though that with a government shutdown his team are still finding government employees to consult with. The chaos continues.
Not really a problem with the world's human population predicted to diminish rather dramatically. Also, of course food takes more energy to produce than it provides. Always has been that way since the beginning of life. The flow towards entropy is life. Otherwise we could produce perpetual motion machines. We cannot eat sunlight or coal so it far better to turn it into food even if it seems to be expensive to some wonks. In the future nuclear energy can assist us in providing our fertilizer needs.
Humans require meat in their diet. We are not going to thrive on slave-slop cereals and artificial "meat".. There is absolutely no reason to go without nutritious food from an energy point of view.
"on average, 3.37 MJ is required to produce 1 kg of wheat in the EU or 15.08 GJ is required to cultivate 1 ha."
1 kg wheat is 12-14 MJ/kg ME. So at the farm gate farmers get far more energy out than they put in even in intensive annual crops like wheat. That is ignoring by products like straw.
That's good. I was considering the stored energy in the soil and from sunlight too.
https://www.stuff.co.nz/politics/360844741/pm-says-jobseeker-benefit-cu…
Not sure how I feel about this. I guess its a bit like NZ super eligibility age, a fairly arbitrary number. I would have thought that once you were 18 you are no longer the financial responsibility of your parents.
I agree Jimbo. I'm not a supporter of youth going onto benefits, but there has to be jobs that pay decent money. I also know many parents who already support their kids by providing a home, food, power etc. Most of those kids are already working, but the wages they get are not sufficient to enable them to live independently. Some of them are studying at a uni.
I think the problem is at the bottom end - kids who don't want to work, don't comply with the law and so on. But that's a different problem.
And its the same problem regardless of whether you are 18, 20, or 50.
I suspect this is about breaking the circuit where young kids that should have a future go from school straight on the dole because they don't want to make the transition to work. I think I was on the dole for a short period when I was young mainly because I couldn't make that transition (I'll try harder to get a job next week etc). Once you get that first job, most people become workers for life.
"...there has to be jobs that pay decent money"
https://www.thepost.co.nz/business/360826340/nz-minimum-wage-9th-highes…
https://www.kiwiblog.co.nz/2025/09/nz_has_one_of_the_highest_minimum_wa…
Yep, when I was a kid you got paid bugger all for your first job, not the case now. Of course the flip side is that you no longer get the big pay reviews we used to get either.
I don't understand what everyone is whining about. Our great leader says there's jobs in Dargiville picking kumara.
Sorted.
Cheap housing too no doubt. I actually agree with him, people should move if the alternative is the dole. Although that’s hard if you aren’t eligible for the dole if it goes wrong and have to live with your parents!
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