Here's our summary of key economic events overnight that affect New Zealand, with news financial markets are running positively, but without the guardrails of American economic data, while the US Federal shutdown extends. In their absence, consumer and tech speculations are generating considerable froth.
But first in China, their Mid-Autumn festival holiday spending should tell us a lot about their economic activity, and the initial signs are promising for them; unprecedented travel levels, active holiday destinations. But we will have to wait for the overall outcomes. The final day of this holiday period is tomorrow.
In Japan, their stock market took off in a wave of euphoria following the vote to make Sanae Takaichi the leader of the LDP and PM in waiting. But the yen fell, probably a boon for Japanese exporters.
In Europe, August retail sales volumes were mixed. They were up only +1.0% from the same month a year ago, the least in more than a year. But the change from July were slightly more encouraging driven by food purchases, especially in France and Spain. Germany and Italy were laggards however. Easing fuel consumption was part of the reason for the retail growth restraint which they will take as a 'good thing'.
In France, a newly appointed Prime Minister resigned when his new cabinet could not survive its first parliamentary vote.
In Australia, the Melbourne Institute Monthly Inflation Gauge recorded a +0.4% increase in monthly inflation for September from August, primarily influenced by higher recreation and transport related prices. The monthly cost of living also rose. Annual headline inflation now lies at the top-end of the 2-3% target band at just on +3.0%. This is the same as the last ABS Inflation Indicator for August. At this rate, it seems unlikely that the RBA will be looking at any rate cut at their November 4, 2025 review. But not everyone links like that. The central bank is still expected to slash the cash rate despite these sticky prices, according to the latest quarterly survey of economists by The Australian Financial Review.
In the US, no progress at all on their Federal government shutdown. And to distract attention, as autocrats always do, Trump is moving to impose National Guard military presence in major cities, even when the evidence is clear there are no crime waves, as he claims. But the distraction is the point.
And we should note that aluminium prices are rising significantly again, up at US$2720/tonne. They are now near their highest ever, (apart from the unusual 2021-22 bubble in the pandemic recovery). Tin, zinc and even copper are also on the rise. The main metal price not changing much is nickel. Iron ore is also flat-lining, as it has done since early 2024. But precious metals, the ones much more subject to consumer speculation, are surging. The most spectacular is platinum which is up +60% since May. (In the same time, gold has risen +22% and silver +47%).
Also perhaps we should note that the Nobel prizes are being awarded this week. Those for the sciences and medicine are already out. The economics prize will come on October 13, and the Peace prize on October 10 (all Scandinavian time).
The UST 10yr yield is now at 4.16% and up +4 bps from yesterday at this time. The key 2-10 yield curve is still at +57 bps. Their 1-5 curve is now positive by +9 bps. And their 3 mth-10yr curve is now +4 bps positive. 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 4.39%, up +7 bps from yesterday. The NZ Government 10 year bond rate starts today at just on 4.27%, up +3 bps from yesterday.
Wall Street has opened its week up a better-than-modest +0.5% on the S&P500 with a new tech boost and enough to claim a new record high. European markets were little-changed, except Paris which fell -1.4% on domestic political instability. Tokyo had domestic political change too, but markets loved that change surging +4.8% in Monday trade. Hong Kong fell -0.7% in their Monday trade. Shanghai was still closed. Singapore ended up +0.2%. The ASX200 ended its Monday down -0.1%. And the NZX50 was down -0.2%.
The price of gold will start today at US$3952/oz, up +US$67 from yesterday and a new high and powering toward US$4000. Silver is up too, but less, now at US$48.50/oz.
American oil prices are up +US$1 at just under US$62/bbl, with the international Brent price now just on US$65.50/bbl.
The Kiwi dollar is at just on 58.4 USc, up +10 bps from yesterday. Against the Aussie we soft -10 bps at 88.2 AUc. Against the euro we are up +20 bps at 49.9 euro cents. That all means our TWI-5 starts today at just under 65.7, up +10 bps from yesterday.
The bitcoin price starts today at US$125,294 and up +2.0% from this time yesterday. Volatility over the past 24 hours has been modest however at just on +/- 1.1%.
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54 Comments
"France's deficit reached 5.8% of its GDP in 2024 and its national debt is 114% of its GDP. That is the third highest public debt in the eurozone after Greece and Italy, and equivalent to almost €50,000 per French citizen."
https://www.bbc.com/news/articles/cewn9k0w9rxo
"The cost of servicing national debt this year is estimated to be €67 billion - it now consumes more money than all government departments except education and defence.
Forecasts suggest that by the end of the decade it will outstrip even them, reaching €100 billion a year."
"We have all become totally addicted to public spending. It's been the method used by every government for half a century – of left and right – to put out the fires of discontent and buy social peace.
"Everyone can sense now that this system has run its course. We're at the end of the old welfare state. But no one wants to pay the price or face up to the reforms which need to be made."
https://www.bbc.com/news/articles/cvg9n6vr2eyo
France has a lot of social spending doesn't it? I seem to recall significant subsidies for farmers, short working weeks amongst it all?
Socialism doesn't work and capitalism results in most becoming slaves of some form or another as wealth is accumulated by a few.
Why can't politicians navigate the middle ground?
In times of prosperity and peace, the middle ground can indeed be reached, but in times of scarcity and chaos the extremes (on both sides) gain popularity and the middle ground is a compromise that no one will agree to, Murray.
I've pointed out for a long time, that surplus energy underwrites everything. Surplus energy - particularly measured 'per head', is dwindling, as entropy is increasing. The squeeze has come on, exponentially, from both ends at once.
Add to that the fact that we believed economics, as taught. So we had no idea that this is an inexorable change, largely because we chose to believe in GDP as a holy-grail count. Which it ain't.
'And to distract attention, as autocrats always do, Trump is moving to impose National Guard military presence in major cities, even when the evidence is clear there are no crime waves, as he claims. But the distraction is the point.'
I disagree, DC. The point here is that we have a fascist state emerging. This is classic Goebbels/Bernays playbook, and we're up to about 1934/5. There may well never be another real election in the US. They need the military onside (hence the recent meeting/harangue) and if they get that, they're away. And the UN will have to leave the US and will falter in the process - shades of the League. My guess is that the high-water-mark of global democracy is in the rear-view mirror.
This means we need to actively distance ourselves from the US - it ain't coming back. Knock-ons are that we need to arm ourselves if we intend to defend, or be prepared to succumb to a very different master than we've been used to. We also need to be prepared for supply-line cessation - perhaps abrupt. We'll need competence ex ideology - not a lot of that around...
GDP isn’t the holy grail. But I bet if you sort the worlds countries by GDP per capita, you’d be much better off living in the ones at the top than the bottom.
The predominant examples of fascism that is Germany and Italy, grew out of the earlier unification efforts relatively of Bismarck and Cavour/Garibaldi.It’s roughly a hundred years on and that earlier breeding ground hardly exists in form, having been overwhelmed by the speed of travel and most specifically communications instantaneous, worldwide. Still the four essential elements remain. The military, the judiciary, the press and the education system.
Trump can't be assured he'll have the military onside. There are a lot of bright, politically astute people in all branches of their military. The likely outcome will be splintering, maybe into state or command groups. Will the states go first? And what side will they be on? The questions is who will move first and what response will they get? There is no certainty in the US right now.
Interestingly it seems the current interpretation is that the President is to all intents the Constitution, rather than being subject to it. I can't think of any other interpretation that would explain why none of the authorities have removed him from office. The Governor of Illinois, JB Pritzker has indicated the 25th Amendment to remove him, but that would require some level of certification......
Your last paragraph is right on the money.
'There are a lot of bright, politically astute people in all branches of their military.
That is who Hegseth was looking to weed out - not quite a night-of-the-long-knives, yet. But shave your beard or you're out, meet top-end male standards or you're out - German Youth - Physical Training And Sports Meeting (1937) - YouTube
We've discussed whether the US is a failed or a failing State - we'd better decide now whether a fascist state is failed or not failed?
:)
If Trump succeeds in creating a fascist state then the America we knew has gone. Your comment; "we have a fascist state emerging" is correct, but it is not there yet.
I think the issue for us is we don't know what Americans see or understand from the inside, or why.
I suggest there is still time for America to be saved, but there is no doubt that a big part of their society are hell bent of aligning themselves with history's worst jackboots. That so many can't see the national trajectory to the point they won't act is astounding. Are we seeing Pastor Martin Niemöller's vision re-enacted?
First they came for the socialists, and I did not speak out—because I was not a socialist.
Then they came for the trade unionists, and I did not speak out—because I was not a trade unionist.
Then they came for the Jews, and I did not speak out—because I was not a Jew.
Then they came for me—and there was no one left to speak for me.
When you have individual States, for example California, Texas, New York, all markedly diverse but all the same each of economies that outsize the like of Russia, then would hazard a guess that the first deep meaningful signal of pending dissolution will be the bogey of secession. That would be driven predominantly by the compulsion of self interest before that of national interest. Hypothetically for fascism to succeed in that gigantic hodgepodge of an arena, coast to coast, you might as well add the weather to the four essential controls of my earlier post.
No - just who controls the military.
That's where it will shake out.
https://www.youtube.com/watch?v=zeLw5R153O8
I always worried that overshoot/competition would reduce democracy and lead to conflict - I guess I just hoped it would always be tomorrow.
The USA military oath of enlistment (allegiance) is to the US Constitution - & obeying the orders of the POTUS.
No mention of any cognitive dissonance arising...
https://en.m.wikipedia.org/wiki/United_States_Armed_Forces_oath_of_enli…
That cognitive dissonance is the point. For the US what is more important, the Constitution or the President? I doubt anyone in history envisaged a person like Trump being elected President. But ask Trump or his sycophants and we know what the answer is. But for the greater US republic? This is the discussion that should be happening now, inside the US. I would suspect that many would see such a conversation as treasonous. For world order Trump's vision is not the desired outcome. If the US fractures China won't have to invade Taiwan, they'll be able to waltz across the Pacific and walk ashore in the US with less than half the scrap they otherwise would have faced, and then clean up the outliers and details afterwards.
Even if it is Trump’s ambition to create a fascist state then take some comfort in the fact that that will be impossible to achieve in full in the three years left of his office. He is out of time and likely will be too, out of sorts at the end of it all. Whatever Trump is he is unique in that none of his underlings can possibly succeed him and hold together the pent up ambitions and power brokers in the GOP alone. This at present is the beginning but also is the beginning of the end at which time hopefully there will be sufficient intelligence and will present to undergo the necessary reset.
It is not Trump on his own that is driving their agenda....he is but the frontman. As has been noted by various observers JD Vance may well be a more effective (from their point of view) option.
Sure it’s not Trump alone but it is his weight on the lid that keeps the seething mass of snakes of the GOP in the barrel. It’s all about grabbing power (hardly unique though) and settling scores, they’ll be at each other throats given any chance. For example just review the same knives at play during the recent ousting of Leader of the House Kevin McCarthy.
Trump may just be taking advantage of our current times. The people in the middle, which is the majority of people in the Anglosphere and Europe are kind of sitting on the fence. When times are good it is safe to sit on the fence. Those susceptible to the call of socialism either have to be ivory tower types or workers who have endured a long period of being downtrodden. Those susceptible to fascism, see their modest privileges, which they believe they worked hard for, or at least their ancestors did, being eroded. They have a mythical view of the halcyon past. They essentially want to maintain and improve their lot while having little empathy for freeloaders. Fascism provides the appeal of a cult while also promising fairly equitable, for the in-group at least who are the majority, material gain. Fascism is like monarchy for the masses. A modern idea. This is where it ultimately differs from socialism/communism. It's elitism spread wide, with some distribution of wealth and status, sure, but also mandatory membership of a warrior cult. It's like everyone is royalty, demanding of high standards, working hard and playing hard, role playing and ultimately, probably heading toward Ragnarök.
I don't agree that a fascist state will encompass a majority. I suggest the majority will be silent as Martin Niemoller was. And that is the problem. These problems are easily solvable when they are small, not so much when they grow.
According to Wikipedia, Niemöller was a national conservative and initially a supporter of Adolf Hitler...
https://en.wikipedia.org/wiki/Martin_Niem%C3%B6ller
...too easy
Yes he did due to the ravages of the Treaty of Versailles. He was also a successful U Boat commander.
But the parallel's with what is happening in the US here are eerie. He came to see what the Nazis were doing, probably about the time they came knocking. I think there are many in the US in the same boat. Just keeping their heads down, trying to get on with life and avoiding politics ....until it's too late. Some of them are illegal immigrants trying to live the American dream, not criminals, just supporting their families, working hard and paying taxes. More than a few of them, themselves or have children who joined the military too. It's no protection.
Why don't you blame the illegal immigrants for what is happening? Many legal immigrants voted for Trump. My contention is illegal immigration and what some might call "woke" politics practically hands power on a plate to people like Trump.
Niemöller was an interesting case. He was very much protected by the state even when incarcerated in a camp. He offered to fight for a National Socialist Germany even after being imprisoned. The majority thought like Niemöller, or von Braun, Heisenberg, Speer or Heidegger. It took quite a lot to knock some sense into them, even Niemöller, who was likely more negatively influenced by Weimer than Versailles.
"Fascism provides the appeal of a cult while also promising fairly equitable, for the in-group at least who are the majority, material gain."
You have a strange idea of 'the majority'.
Case in point...the German Nazi Party had a membership of 130,000 in 1929 which grew to approx 13 million by 1945, many of whom joined because it was a requirement of employment....this from a population of around 70 million.
The 'appeal' (or false promise) is the self delusion that you are (and will remain) one of the privileged few ....good luck.
In Germany the majority were looking forward to getting a Volkswagen (people's car) and their own home, healthcare, holidays and good industrial jobs. I'm just saying this is what differentiates it from communism and makes it appealing to the middle classes facing eroding living standards.
I am in agreement with Murray and PDK, there will be some form of civil war and possibly no election. Seems Trump has decided USA can't win a war against China with Nth Korea, Russia at their back. So he is turning inward as stated in comments above.
Europe are basically on their own and will implode because of internal issues mainly caused by immigrants. I feel NZ is in a position with few options. Stay neutral I say and when China arrives show them where the Beehive is and tell them to take it easy as we will carry on BAU they are welcome to the book work.
Sure try and stay neutral but China will ruthlessly exploit NZ in every way if they get the chance in future. No concept of fairness, or justice. Thousands of years of brutal warfare on the Great Plains of China. Ethnicity matters and we aren't the master race.
They reached peak boomer. "French pensioners now have higher incomes than working-age adults"
Giving the population free stuff is easy. Taking it back is hard
Seems like the rest of the world is well out of recession and humming along while we’re still going backwards. By the time we start going forwards again the rest of the world will have created inflation and we’ll need to put the brakes back on. RBNZ doing a terrible job, although they also have a very conservative mandate they must adhere to.
I’d give every RBNZ governor an F grade going back to Bollard. Created a house price boom by holding rates way too low for years trying to create inflation, then when they finally got it they panicked and rise the OCR by a factor of 22, then they were too slow to drop it back down again.
You must be living on a different planet (see my comment re GDP, above).
Which is good, because we may need one...
Edit - to your simultaneous reply above. If the construct - the collection of infrastructure and your way of life - is unmaintainable, then it was a waste of time and resources. It may well be that looking backwards, those were the places to be, by choice. But as they decay, earliest-established-first, they are increasingly the places to avoid. The US being a classic.
Every time there’s a recession it proves your point. But every time there’s growth, GDP is a pointless measure.
Try thinking - always good.
Surplus Energy Economics | The home of the SEEDS economic model – Tim Morgan
Read - I mean REALLY read, ex assumptions - both Part1 and Part2.
Growth, schmoth...
I’d believe you if there was a genuine supply shortage of energy. But right now I can go buy a litre of 91 for pretty much the same inflation adjusted price as I could 30 years ago. It makes no sense that there would be a shortage without the price increasing.
In the longer term you may be right. My personal opinion is that we will solve that through technology (which has already advanced significantly in the last 20 years). But maybe we won’t.
And debt has increased by? And FF subsidy totals?
So price is a valid/invalid measure?
Asking for a friend.
Oh - and we need to be well past that 'technology' chimera. Drive your car until it runs out of whatever the energy source is. Same happens with a Model-T, as happens with a computered-to-hell modern vehicle.
You cannot create energy - merely harness it, at some level of efficiency. So simple a concept - so hard to get across...
Debt is irrelevant. If there was a supply shortage, it would be much harder for you or I to buy that item, regardless of how much debt the world has.
Imagine there is only 1 barrel of oil left in the world. It wouldn't matter how much debt the world had, that barrel of oil would be bloody expensive, and you or I couldn't dream of owning it.
You didn't read them, did you?
"I’d believe you if there was a genuine supply shortage of energy."
https://newsroom.co.nz/2025/10/07/the-power-plan-without-much-of-a-plan/
https://www.deloitte.com/fr/fr/Industries/energy/analysis/facing-electr…
https://energycrisiscommission.uk/
etc etc
"In the longer term you may be right."
It depends upon your definition of 'long term'....2027 is a little over a year away.
"Despite record U.S. crude oil production, limits to the growth have started to emerge, executives acknowledge.
Vicki Hollub, the chief executive of Occidental Petroleum, said at the CERAWeek conference early this month, “We think that between 2027 and 2030 it's likely that the U.S. will see peak production, and after that some decline.”
https://oilprice.com/Energy/Crude-Oil/Peak-Permian-Geology-and-Water-Sa…
How will the yanks manage without being able to drive their 5-7L pickup trucks due to increases in fuel prices from scarcity. Heads will roll
More importantly how will the world cope with declining oil production?
'But precious metals, the ones much more subject to consumer speculation, are surging. The most spectacular is platinum which is up +60% since May. (In the same time, gold has risen +22% and silver +47%).'
It is interesting to see who is jumping on the speculation bandwagon.
https://www.reuters.com/markets/wealth/morgan-stanley-cio-favors-602020…
Sept 16 (Reuters) - A 60/20/20 portfolio strategy that includes 20% gold is a more resilient inflation hedge at a time when U.S. equities are offering historically low upside over Treasuries and investors are demanding higher yields for long-term bonds, Morgan Stanley (MS.N), opens new tab Chief Investment Officer Mike Wilson said on Tuesday.
A 60/40 portfolio, which typically has 60% of its holdings in stocks and the remaining 40% in fixed income, counts on moves in the two asset classes to offset one another, with stocks strengthening amid economic optimism and bonds rising during turbulent times.
The Week in Breakingviews newsletter offers insights and ideas from Reuters' global financial commentary team. Sign up here.
Wilson, however, favors a 60% allocation to equities and 20% each to fixed income and gold . Within bond markets, the prominent Wall Street bear prefers shorter-duration Treasuries of five years over the 10-year notes to capture rolling returns along the yield curve.
On an annualized basis, China's imports of basic metals (blue) are up $60 bn versus pre-COVID 2019. This is primarily copper, nickel and aluminum. China's imports of precious stones and precious metals are also up $60 bn annualized (black). A huge inventory build is underway...
If the likes of Stanley Morgan are only just recently thinking about increasing their holdings in Gold, then Gold has a lot further to go.
Gold and Silver going up, uP & UP
Bit late to be cosplaying as a forecaster of precious metal prices at your water cooler Dr Y.
But everyone's an expert on PMs now, even though their prices are entirely irrelevant compared to the Ponzi.
I'm not sure what prompts you to try to put others down JC, I know your're aware of my post of 2 years ago that I was buying Gold under $US 1,950.
Interestingly, I remember thinking "what if Gold reaches $US 3,000?". Of course now, with the benefit of hindsight, I regret not buying even more Gold.
Also, I'm still buying, maybe I'm a fool? It wouldn't be the first time I hung to an asset for too long and lost $.
The graph is looking pretty exponential, it's a little concerning. I'm considering lightening my load of gold miners - checking my records they've given 50%+ AGR since I bought in a couple of years ago, not sure how long that can go on for.
The graph is looking pretty exponential, it's a little concerning. I'm considering lightening my load of gold miners - checking my records they've given 50%+ AGR since I bought in a couple of years ago
GDX is up 128% YTD. IMO, some gold mining stocks have a long way to go. Can I tell you which ones? No I can't.
Also, I think you need to approach gold differently than low-cap cryptocurrencies. Entirely different dynamics.
I was going to reply the same, VanEck has gone up much more than 50% in 2 years.
So why can't you tell us which miners you think have much more to go?
50%+ AGR, so up the equivalent of more than 50% per year since I purchased, according to sharesight. One is at 80% AGR since I bought in mid 2024.
For the comment above yours, I'm not into low-cap crypto investing. Simply looking at the gold miner part of my portfolio growing pretty strongly and eventually I'll want to rebalance. Although in fact this year has been strong for a few parts of the portfolio so it's not so urgent.
Well done mfd !
I don’t like giving advice but I suspect you are right Y. There are multiple reasons;
- Central banks are being forced to cut interest rates while inflation is not under control.
- Commentators indicate the central banks & govts (see link below) are increasing the ratio of physical metal in their reserves.
- Some commentators are saying physical metal demand (rather than paper metal demand, see link) is starting to exceed available metal supplies.
- Demand for physical metal was always going to be a driver for higher prices as the price suppression systems of the commercial banks are based on control of ‘paper metal’.
- The percentage of precious metal ‘investments’ held by the public is very small – apparently 1-2% of overall portfolios.
- Morgan Stanley is apparently the first major bank to ‘acknowledge’ gold.
https://www.macleodfinance.com/p/gold-signals-the-end-of-fiat-currencies
I consider gold as insurance rather than an investment. If the fiat based financial system goes down the drain then there is something to leave to others in your will.
I won’t be surprised if there is a pull-back in PM prices, however I doubt it would last long.
I consider gold as insurance rather than an investment.
That's an overused cliche. The “insurance” metaphor oversimplifies gold’s complex price behavior, ignores its volatility, and can be misleading if investors expect consistent short-term crisis performance or fail to consider opportunity costs.
Consider = opinion, don't get hung-up on it.
Fully agree 3Cents
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