Here's our summary of key economic events overnight that affect New Zealand, with news both Fed boss Powell, and the IMF are increasingly concerned about financial stability.
But first up today, there was a dairy Pulse auction overnight for milk powders. Prices for both SMP and WMP dipped -0.5% in USD terms, extending the easing we have noted recently. But the exchange rate fell faster, so in NZD both commodities were up about +1%.
But the key economic influence today is the overnight speech from US Fed boss Powell. He (politely) bemoaned the lack of key current data, but is clearly worried about what is happening in the giant US labour market. He sees payroll about to shrink, not only because of the immigration crackdown, but softening economic activity and business hesitation due to tariff costs and uncertainty. He also said the Fed will likely end its reductions in its balance sheet because liquidity conditions are tightening. His speech sets the Fed up for defensive actions ahead of what they expect are growing economic risks. Basically, they are ready to cut rates.
Financial markets noted his caution, and while they didn't retreat, they aren't as gung-ho as yesterday or last week either, despite the rate-cut implication.
“My antenna goes up when things like that happen,” Jamie Dimon, said on a call with analysts about stresses like the First Brands debacle. “I probably shouldn’t say this, but when you see one cockroach, there are probably more. Everyone should be forewarned on this one.”
In the absence of official data while their shutdown extends, trade data is filling the gap. Today the NFIB Optimism survey came in mich lower than expected, and a fall was expected. Small business owners are increasingly frustrated with supply chain disruptions and are seeing inflation emerging in what they are paying, and having a struggle passing on those costs as sales levels turn soft.
Across the Pacific, China has set an ambitious new vehicles sales target for 2025 of 32.3 mln units, far and away the world's largest market (The US is second at about 18 mln vehicles.) They will likely hit that target. In September, sales were the strongest of the year at over 3.2 mln in the month, almost +15% higher than the same month in 2024. NEVs accounted for 1.6 mln, up be almost +25% from a year ago. This is now a globally significant sector driving both the Chinese and global economy.
Singapore was bracing for a +2.0% year-on-year Q3-2025 GDP expansion, down from the +4.5% expansion they had in Q2-2025. But they actually got a +2.9% expansion in the September quarter. Services and construction did more heavy lifting there than was assumed when all the focus was on the troubles their factory sector was having.
In Australia, the NAB Business Confidence Index rose in September from August’s three-month low, staying above the long-run average. Business conditions were unchanged, as stronger sales and profits were offset by weaker employment. However, forward orders slipped into contraction indicating softer demand ahead.
Through all these global changes, the IMF is trying to make sense of how this is affecting the world's economy. They are somewhat confused by "complex forces". Their World Economic Outlook update projects overall economic growth to slow to +3.2% in 2025 and +3.1% in 2026, down from 3.3% in 2024. They see the world adjusting to rising protectionism and fragmentation and we are now below pre-policy-shift levels. American growth is now expected lower at +2.0% in 2025 and similar in 2026, while China’s economy is projected to slow to +4.8% and +4.2% in 2026. Europe is forecast to expand +1.2% in 2025 and +1.1% in 2026, Japan by +1.1% and +0.6%, Australia by +1.8% and +2.1%. Meanwhile, global inflation is expected to continue easing, though trends will vary across countries, above target in the US, with risks tilted to the upside, while staying subdued elsewhere.
The UST 10yr yield is now at 4.03% and down -4 bps from this time yesterday. The key 2-10 yield curve is still at +55 bps. Their 1-5 curve is still positive by only +2 bps now. And their 3 mth-10yr curve is now -5 bps inverted. The China 10 year bond rate is down -1 bp at 1.76%. The Australian 10 year bond yield starts today at 4.25%, down another -4 bps from yesterday. The NZ Government 10 year bond rate starts today at just on 4.11%, down -1 bp from yesterday at this time.
Wall Street has eased up slightly today with the S&P500 up +0.2%. European markets were mixed between London's +0.1% inch up and Frankfurt's -0.6% fall. Tokyo ended its Tuesday down a sharp -2.6%, Hong Kong was down -1.7%, and Shanghai fell -0.6%. Singapore fell -0.8%. Locally, the ASX200 rose +0.2%. But the NZX50 fell -0.6%.
The price of gold will start today at US$4145/oz, up +US$35 from yesterday.
American oil prices are -US$1 lower at just over US$58.50/bbl, with the international Brent price now just under US$62.50/bbl. That is changed by lower demand and higher supply expectations.
The Kiwi dollar is at just on 57.2 USc, down -20 bps from yesterday. Against the Aussie we are up +20 bps at 88.1 AUc. Against the euro we are down -30 bps at 49.3 euro cents. That all means our TWI-5 starts today at just under 61.8, down -10 bps from yesterday. Also, see this.
The bitcoin price starts today at US$112,593 and down -1.8% from this time yesterday. Volatility over the past 24 hours has been moderate at just over +/- 2.6%.
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17 Comments
Basically, they (the Fed) are ready to cut rates
Thats the signal to send Gold and Silver to the moon and beyond.
Yes please.
How does Powell still have a job? Thought Trump was going to axe him long ago? Or is the threat working, for example they are lowering rates while inflation risk is increasing.
Trump does not have the legal rights to fire Powell. Also Powell's term ends in about 6 months.
This has been going on forever. Read: Woodward's 'The Agenda' - in that case Clinton/Greenspan.
Like people crowing about gold and silver, it's largely hogwash.
Zero-sum games atop a regime of exponentially-increased physical activity, with exponentially-serious implications. All un-recorded by economists/economics. Look at the Nobel Prize-winners; all correct as to the narrow focus of their studies - but absolutely blind to the limits of the underwrite.
And not one of the global financial press - not one - will challenge them on that blindness. They will merely parrot. Which gives carte-blanch to those indulging in zero-sum games (based on reducing ones) to continue.
For now. A very short now.
Why don't you save yourself time and misery PDK, you can end your life now.
Yvil, I enjoy reading your posts.
But this one, no. Pull your head in mate. Not funny, not respectful.
Don't worry - water off a duck's back.
I always ask 'why'? when folk disparage. Usually fear; fear of having been wrong; fear of peer disapproval, fear full stop.
There's going to be a lot of it about...
That's below any social media level. I thought there would be better handling here.
"People seemed to be thinking a bit more about how they spent their money, he said, which has meant some surprising results for the cafe.
For the past six months, Victus had been offering a selection of rare and deluxe coffees - many around $15 to $20 a cup, and the top of the range at $50.
“We’ve seen a really big pick-up in that menu,” Schryvers said."
https://www.stuff.co.nz/nz-news/360854044/hospitality-spend-surges-some…
If your growth engine depends upon $50 dollar coffees you may begin to wonder why the growth is failing to appear.
Perhaps not. Those who could afford $50 coffee, can still afford them now. It's the people who struggled to afford a $5 coffee, who can now no longer afford it.
"Those who could afford $50 coffee, can still afford them now."
That is the point....and where does the growth come from? Even those who currently are happy to spend such a sum will decline as the reduced wider activity feeds through.....theres a reason high end offerings tend to be very limited.
I beg to differ are luxury brands like LVMH, Chanel, Hermes, YSL etc struggling ? I don't think so.
PS, I'm not saying it's "right" or "good", but it is so.
Wealth disparity is the common characteristic of civilisations in their end-phase.
"I beg to differ are luxury brands like LVMH, Chanel, Hermes, YSL etc struggling ? I don't think so."
Whether LVMH, Chenel etc are struggling or not (and who would know....theres never only one cockroach) is not the point....we know there is more money than there has ever been but it isnt circulating in the needed areas.
Society will not cease to function due to a lack of handbags or the like.
You are changing the topic, which was "there is still money at the top, but less so in the middle and bottom"
So the elite are going to buy 4 million toasters apiece? 640 Corollas apiece?
That's the trouble with a consumption-based regime when scarcity puts the screws on, and those with the clout outmanoeuvre those with less. Most of the production is 'mass'. And without a buying mass, mass is in a mess.
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