Here's our summary of key economic events overnight that affect New Zealand, with news that while the 'real economy' is barely able to expand - but is in fact doing so modestly - there are two extreme bubbles brewing - in AI firm valuations, and in precious metals valuations. One or both will end sometime, and the losses will be extraordinary when they do, likely hurting the 'real economy' when it happens. But who knows when? Financial market risk aversion is in evidence today in the bond markets.
There are other stresses of course (geopolitical, retribution stupidity, commodity distortions, climate, etc.) and they have to play out at the same time.
But first in the US, their economic data is dominated today by the October version of the Philadelphia Fed factory survey for the important Pennsylvania rust belt region. That reported an unexpected sharp slowdown in activity and a six month low in this index. If there is a silver lining however, it is that new order levels picked up from what were very low levels. Not helping however is that firms are again reporting higher than average cost increases. Most firms reported struggles passing on those higher costs in higher prices.
American house-building activity has been struggling for the past five months but sentiment in the industry picked up in October somewhat, mainly on the expectation that lower interest rates would help. It's a sentiment improvement, not an activity improvement however.
Yesterday we noted slightly improved factory sentiment in the New York state area. But today we can report that their services sector is in a tough spot, in fact its lowest since the pandemic-affected January 2021. It is glum there and firms are not expecting much improvement.
In Canada, their small business sentiment has turned negative too.
But Canada's housebuilding sector is on a roll, reporting strong housing starts again in September and well above what analysts were expecting. That is now five of the past six months with elevated housing start data.
Across the Pacific in Japan, core machinery orders, excluding the large volatile sectors, fell -0.9% in August from July to ¥8.9 tln but it was much less than the sharp -4.6% drop in July. Analysts had expected a small gain however.
And staying in Japan, it now looks like Sanae Takaichi will in fact become prime minister after more coalition talks.
In France, the Macron-allied new prime minister has survived a no-confidence vote (on the second attempt) bringing some stability to their political mess.
In Australia, their September jobless rate ticked higher to 4.5% and their jobs growth, especially full-time jobs growth, came in lower than expected.
For the first time since June when rates started falling fast, global container freight rates rose last week, overall by +2%. In the meantime they had fallen -52%, so that suggests these costs may be bottoming out. They are now -50% lower than year-ago levels. There were modest rises everywhere, even in outbound China rates. There will be activity trying to front-run potentially new tariffs by the US, and there is Christmas-goods flows starting too.
Bulk cargo rates rose a net +2% last week too, but in between it was unusually volatile. These latest levels are now +12% higher than year-ago levels.
The UST 10yr yield is now at 3.97% and down -8 bps from this time yesterday. The key 2-10 yield curve is now up at +57 bps. Their 1-5 curve is now negative but by only -1 bp. And their 3 mth-10yr curve is now -10 bps inverted. The China 10 year bond rate is little-changed at 1.75%. The Australian 10 year bond yield starts today at 4.15%, down a sharpish -9 bps from yesterday. The NZ Government 10 year bond rate starts today at just under 4.06%, down -3 bps from yesterday at this time.
Wall Street has retreated today with the S&P500 down -0.5%. European markets were mostly firmer between London's +0.1% and Paris's +1.4%. Tokyo ended its Thursday up +1.3%, Hong Kong dipped -0.1% however Shanghai up +0.1%. Singapore fell -0.3%. Locally, the ASX200 rose another +0.9%. And the NZX50 rose +0.6% in Thursday trade.
The price of gold will start today at US$4273/oz, up +US$77 from yesterday and far away a new ATH. Silver is up to just under US$54/oz and an ATH. Platinum is roaring too, now at US$1732/oz and up +71% from the start of the year and approaching its 2011 highs.
American oil prices are down -US$1 at just on US$57.50/bbl, with the international Brent price now just on US$61/bbl.
The Kiwi dollar is at just on 57.3 USc, and up +10 bps from yesterday. Against the Aussie we are up +60 bps at 88.4 AUc. Against the euro we are down -10 bps at 49.1 euro cents. That all means our TWI-5 starts today at just on 61.8, up +10 bps from yesterday. Also, see this.
The bitcoin price starts today at US$108,652 and down another -2.0% from this time yesterday. Volatility over the past 24 hours has been modest at just on +/- 1.9%.
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11 Comments
Brent crude to dip below USD $60 per barrel?
The EIA thinks so. WTI to below $48.
We forecast that growing global oil supply and the transition away from peak summer seasonal demand will lead to significant growth in global oil inventories over the forecast, causing crude oil prices to fall in the coming months. We forecast that oil prices will fall to an average of $62/b in the fourth quarter of 2025 (4Q25) and $52/b in the first half of 2026 (1H26). We expect inventory builds will average 2.6 million barrels per day (b/d) in 4Q25 and will remain elevated through 2026, putting significant downward pressure on oil prices.
Bitcoin is in a major bear market if priced in its more illustrious real, shiny, wannabe cousin.
Beware the Ides of March Dr Y. Different time, same water cooler, you would be holding court singing the praises of the Ponzi and explaining the 7-10 yr theory.
I've seen it all before.
Anyway, my reckon is that gold isn't overbought. More like it's under-owned. You're not going to read about it in Granny Herald. That's for sure.
In reality, S'pore is a cesspit. Most Westerners just look at things at surface level.
The alleged head of a Cambodian criminal ring and his associates set up a family office in Singapore that claimed to receive tax breaks, while also building relationships with firms backed by state investor Temasek Holdings Pte and spending millions on properties in the city-state.
Chen Zhi, the chairman of Prince Holding Group, heads what US prosecutors say is one of the largest transnational criminal organizations in Asia. He and multiple associates, including three Singapore citizens, were sanctioned by US authorities Tuesday over their alleged involvement in a ring that used cryptocurrency to launder billions generated from online investment scams.
The operation allegedly used forced labour in Cambodia to emotionally manipulate thousands of victims around the world, fattening their accounts and then draining them in a practice known as “pig butchering.” Now the case is prompting authorities and firms in Singapore to review the group’s financial ties to the business hub.
Thought for a minute there I was reading about Visa and MasterCard.
They're the Ireland of Asia when it comes to business ethics. When it comes to clipping the ticket they don't ask questions
At least they have invested in infrastructure I guess. Regardless, it's a shallow place and ethically questionable. Someone once said to me that it's Asia for white people.
The Switzerland of Asia.
Gold (and silver) acting as the last bastion (as history shows it always does). All assets including bitcoin dropped sharply when Trump announced new tariffs on china. Gold and silver were like “what tariffs?”
Bitcoin more reliant on rare earths/electricity infrastructure than gold/silver.
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