Here's our summary of key economic events overnight that affect New Zealand, with news Australia seems to have avoided American ire when Prime Minister Albanese visited Washington overnight. They ended with a rare earths agreement, confirmation of the AUKUS submarine deal, and unchanged 10% tariff rates into the US.
Albanese also seems to have avoided being forced into an overt anti-China position, and has resisted committing to defense spending above 2% of GDP. Trump wanted 3.5% but that seems sidelined.
It is also pretty clear that having US support can be a toxic advantage - for the US. Despite the US committing more than US$20 bln of US taxpayer funding to bolster its currency, Trump support of Argentina is leaking those funds fast with traders taking the support funds as fast as they can (the peso is still weakening fast), and Argentina rushing to sell China soybeans to replace American farmers. You couldn't make this stuff up.
In Canada, producer prices rose 4.0% in September from a year ago, the most since January, and prior to that the most since January 2023. But this strong rise was mostly caused by the rise in precious metals, especially gold.
Meanwhile, the latest Business Outlook Survey for Canadian businesses undertaken for their central bank shows a modest recovery in sentiment, but conditions remain quite subdued.
In China, their central bank kept their key lending rates at record lows for a fifth consecutive month in October, as was expected.
The rate of fall in China's new house prices mellowed in September according to official data. They were down overall by -2.3%. Shanghai remained the outlier with a +5.6% rise, slightly below August’s +5.9% increase for that city. But for resales, it is still tough, with none of their 70 largest urban areas reporting a gain, either month-on-month or year-on-year, not even Shanghai. If you buy new, you can only still sell into a falling market.
In a surprise to no-one, China said its Q3-2025 GDP was up +4.8% from a year ago. But that showed weaker than expected consumer demand. They also reported that retail sales were up only +3.0% in September (and a one year low, compared with +3.4% in August) whereas industrial production was up +6.5% in September (+5.2% in August). Regular readers will know that we also track electricity production as a hard check against these other top-line claims. That only showed a +1.5% rise from a year ago. It regularly trails claims of big industrial output and is a core reason we are sceptical of those outsized official claims.
The latest trade and tariff threats from the US is causing trans-Pacific freight rates to spike again as goods are rushed to beat the threatened imposition. But this spike is much more muted this time as most Chinese firms have transitioned away from US supply in a significant way.
On the import front, some decoupling by China is stark. China's monthly soybean imports from the US have fallen to zero for the first time in seven years. They were replaced by mostly South American sources. China is also strangling rare earth magnet exports to the US, which could be serious for some American companies, including defense contractors.
In France, after a tense political week, S&P downgraded France's credit rating in a rare, unscheduled adjustment, citing political instability that threatens the government’s efforts to repair its finances. Basically their public purse can't afford their generous retirement benefits, but the population insist they be kept irrespective of the damage to the State.
In Germany, producer price deflation stayed well embedded, with prices falling -1.7% in September from a year ago, although this was less than the -2.2% retreat in August.
The UST 10yr yield is now at 3.99% and down -2 bps from this time yesterday. The key 2-10 yield curve is now at +53 bps. Their 1-5 curve is now positive again but only by +2 bps. And their 3 mth-10yr curve is now -6 bps inverted. The China 10 year bond rate is unchanged at 1.76%. The Australian 10 year bond yield starts today at 4.15%, up +5 bps from yesterday. The NZ Government 10 year bond rate starts today at just on 4.03%, up +4 bps.
Wall Street has started its week with a +1.2% rise and heading back towards Wednesday's ATH. Overnight European markets rose between Paris's +0.4% and Frankfurt's +1.8%. Yesterday, Tokyo ended its Monday session up a spectacular +3.4% and a new all-time high (ATH). Hong Kong rose +2.4% and Shanghai gained +0.6%. Singapore was the only market we follow that declined, down -0.6%. The ASX200 ended its Monday up +0.4%. And that was mirrored by the NZX50.
The price of gold will start today at US$4346/oz, up +US$95 from yesterday, a +2.2% surge to start the week. Silver hasn't had the same surge.
American oil prices are -50 USc lower at just on US$57/bbl, with the international Brent price now just on US$60.50/bbl.
The Kiwi dollar is at just on 57.5 USc, and up +10 bps from yesterday. Against the Aussie we are down -10 bps at 88.2 AUc. Against the euro we are up +10 bps at 49.3 euro cents. That all means our TWI-5 starts today at just under 62, up +10 bps.
The bitcoin price starts today at US$110,505 and up +1.6% from this time yesterday. Volatility over the past 24 hours has been modest at just on +/- 1.7%.
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27 Comments
There is an interesting chart in this article: https://www.stuff.co.nz/politics/360859795/inflation-fixation-situation…
Although National claims to have fixed the inflation problem, the chart clearly shows the downwards trend had already been established well before National were elected. Considering it takes time to implement policy, you could argue that National have actually caused inflation after it got to a trough of 2.2%.
Personally I think it was just global forces and interest rates that created and fixed inflation, pretty much nothing to do with either party.
Global forces, yes.
Neither Party: correct.
We need to remove the word 'funding' from political speak. Because ' funding' was always, in reality, the allocation of energy/resources. And as Hipkins/Edmonds will find (re yesterday's ' announcement') you cannot conjure up what isn't there.
Budgeting should be the allocation and setting-aside (earmarking) of physical resources - and the energy to manipulate them - ahead for the expected life-time of any proposed infrastructure. The process would be an interesting wake-up call.
"Global forces, yes. Neither Party: correct."
You really do believe that you know the one and only truth PDK.
Canute comes to mind.
Global forces, neither Party.
Yup.
You seem to have missed my point, so let me explain my earlier comment better. You often write "absolute" comments, such as:
"Wrong"
"Correct"
"Yes"
"No"
This shows that you believe that you know better than anyone, and that in your mind, there can be no alternative to your absolute truth. These are dangerous beliefs, which preclude learning and show a lack of understanding for alternate possibilities.
Or maybe they show a lot of learning, which in turn has eliminated beliefs?
Right, so you have learnt more than all of us, and YOU KNOW, whereas we don't, and we need to be told THE TRUTH by you ?
Labour definitely lacked fiscal discipline. Inflation would not have been as bad if National were in power during the pandemic. You’re right though to a degree. Inflation was largely dictated by external pressures and National take a lot of credit for bringing inflation down that isn’t their doing,
So, Australia has struck a deal to supply the USA with Rare Earth Minerals.
The big question is not about the mining, but about the refining. That's the difficult, expensive and very polluting part.
The key question is: Is Australia going to refine the REMs? They may face heavy opposition from Green parties.
Over the last 25 years, western countries didn't want the dirty, polluting work of refining the REMs, so they were happy for China to pollute itself, increasingly sending REMs mined in the US, to get refined in China. Now China controls 90% of the refining, and given the importance of REMs for the military, super chips for AI, the Automotive industry, phones, computers, batteries, magnets, solar panels, elaborate motors, China can truly hold the rest of the world ransom.
Lead-time is also a question.
I’d love to see an article on this page about rare earth metals. It’s been a massive blind spot that governments have ignored. You would have thought they would have learned their lesson since the pandemic. You’re right Yvil. It’s dirty work that the west has left to China. That’s all very well in times of peace, it’s also surrendering a lot of power to one nation. Does anyone know if the New Zealand has rare earths? I’m sure Shane Jones will be onto it. Chat GPT didn’t have too much information. There are great investment opportunities in rare earths. You’re still early enough
Rinse and repeat of the 2010 rare earth scare.
"REEs are no doubt important strategic materials, and for policymakers, China’s alleged 2010
embargo marked an important new chapter in China’s willingness to use its growing market strength
to punctuate a geopolitical point. But the actual events that unfolded in the global REE market
following the 2010 episode proved these initial concerns were just the newest entry in a long line of
exaggerated fears and panics about leading economies’ access to raw materials."
"Firms that had been using rare earths when they were cheap decided they didn’t really need them when they were expensive.
New suppliers came on line as prices rose.
Innovations created substitutes and ways to get more from using less."
“If Beijing wants to raise its prices and start using supplies as geopolitical bargaining chips,” he wrote, “so what? The rest of the world will simply roll up its sleeves and ramp up production, and the monopoly will be broken.”
https://marginalrevolution.com/marginalrevolution/2014/11/what-happened…
http://i.cfr.org/content/publications/attachments/Energy%20Report_Gholz…
“so what? The rest of the world will simply roll up its sleeves and ramp up production, and the monopoly will be broken.”
"Simply" ? I'm no expert, and I'm open to being corrected by facts, but I think there is nothing "simple or easy" about refining REEs
Perhaps read up what happened in 2010, the last time China pulled this stunt?
Ah, 2010.
1.3 billion less of us.
Consuming 124 k/tons, vs 390 now (the best, most concentrated fields went first).
Yup, valid comparison...
"Of those, many are outside China – and there are about 4,000 tonnes a year of gallium running through those plants globally. As the world uses possibly 200 tonnes a year and 50 percent of that comes from the reprocessing of manufacturing scrap the world doesn’t have a lack of raw, or basic, gallium. We might need more gadgets but that’s it. "
...Germanium has two major sources: sphalerite being processed for zinc (which can also be a gallium source) or fly ash from coal power plants. That second source obviously has no shortage at all. As it happens, the germanium in the original coal concentrates about 10 to 1 in the fly ash going up the chimney. A little plant to get the few tonnes a year from the one power plant might cost $4 or $5 million"
I'm happy to be educated Profile, do you please have a link about "what happened in 2010 ? Thanks.
Click on read more on my 1.11 comment - there are a couple of links at bottom.
Thanks Profile, I have read the first link, unfortunately I can't open the second one. I find the first link a bit light on detail, it acknowledges that having such high dependance on China for REM is a problem and then concludes that "New suppliers came on line as prices rose". It would be nice to have an understanding of how long it took for these "new suppliers" to be able to provide REM, and what country they were located in, because I still believe that the refining part is incredibly difficult, costly and environmentally challenging to carry out in "a short timeframe"
Years away and no guarantees
"There's no mining yet. That was first discussed as a possibility in the '70s, but is still years away. But NioCorp says the drilling will provide more details on what's in the ground and allow them to unlock the funding necessary to start."
https://www.ketv.com/article/nebraska-rare-earths-mine-drilling/64626271
https://www.npr.org/2025/07/23/nx-s1-5475137/china-rare-earth-elements
"The US has one operational rare earths mine, but it does not have the capacity to separate heavy rare earths and has to send its ore to China for processing."
https://www.bbc.com/news/articles/c1drqeev36qo
As you say Yvil, not a simple as made out....and also be aware this 'deal' with Australia is a Trump construct...the deals you have when no substance is required merely a photo op.
The bbc and npr?! I think I see how you have developed your TDS world view! Completely ignore rare earth derived from waste products and recycling and the tiny scale of a $5 billion industry. China is throwing its weight around because it could care less about losing a $5 billion market.
Try this link
https://www.cfr.org/report/rare-earth-elements-and-national-security
And this think has some other links at the bottom.
https://www.strausscenter.org/news/in-cfr-report-gholz-examines-case-of…
Both links over 10 years old and what progress has the US made?....SFA
by profile | 21st Oct 25, 1:45pm
Perhaps read up what happened in 2010, the last time China pulled this stunt?
Perhaps understand that what occurred in 2010 has had no impact on the the US (or anyone elses) capacity and capability.
*If you choose to learn nothing from history.
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