Here's our summary of key economic events overnight that affect New Zealand, with news benchmark bond rates are on the move higher as the bond market passes its judgment on the geopolitical trade situation and the US Fed's signals.
Basically they are pricing in risks where American inflation risks are not contained, and there is no real resolution to the trade tensions triggered by Trump.
The Trump/Xi meeting ended with Trump claiming it was "an amazing meeting" with "all issues resolved". Markets discounted the hubris seeing the outcome actually making little practical progress. But at least it seems to be a truce. If there is any progress, it will come after further negotiations. Basically it was a photo op resulting in an invitation for Trump to visit Beijing where his ego can be stroked.
The meeting brought China more time to finesse its position with the US, and more broadly, it made clear just how much stronger China has become since Xi and Trump last met. And interestingly, neither country has yet bothered to release a readout of the leaders meeting.
In Japan, their central bank kept its benchmark short-term rate unchanged at 0.5% in its October meeting and extending a pause since the last hike in January. It was the market-expected decision, but it was a split 7-2 result, with two members pushing for a rise to 0.75%, as they had at the prior meeting.
Japanese shares erased losses after the central bank boss gave his press conference review, but the yen dipped.
In Europe, with inflation under control and its economy humming along at a modest level, but near potential, the ECB left all their settings unchanged, both interest rates (at 2.15%) and their balance sheet run-down pace. It has been a long time since they can claim their objectives are running as they would like.
Meanwhile, overall economic sentiment is picking up in the EU, consistent with the improving economic data. Both industry and consumer sentiment are up in October and expectations are back to long-term averages, a position they haven't been in since early 2022.
So it will be no surprise to know the Q3-2025 EU GDP rose from Q2 to be +1.5% higher than a year ago.
In Germany, their October inflation rate inched lower to 2.3% from 2.4% in the prior month. But this wasn't quite as bigger move as the 2.2% rate expected. Energy costs there are falling and food prices are up only a modest +1.4% within the overall result.
Globally, passenger air travel rose +3.6% in September from a year ago, with international travel up +5.1%. This was led by Asia/Pacific's +7.4% increase and trailed by North America's +2.5% rise. US domestic travel stood out with its -1.7% fall, the only region to record a shrinkage.
Container freight rates rose another +4% last week, as China-USWC, and China-EU rates picked up notably. Overall they are now -41% lower than year-ago levels.
Bulk freight rates fell -4.9% last week to now be +42% higher than year-ago levels.
The UST 10yr yield is now at 4.10%, up +7 bps from yesterday after the Fed announcement and after the US-China talks. The key 2-10 yield curve is now at +48 bps. Their 1-5 curve is still +2 bps positive and the 3 mth-10yr curve is now +14 bps positive with a big shift. The China 10 year bond rate is down -1 bp at 1.75%. The Australian 10 year bond yield starts today at 4.30%, up +4 bps from yesterday in a continuing move higher. The NZ Government 10 year bond rate starts today at just on 4.11%, up +3 bps from yesterday.
Wall Street is down -0.6% on the S&P500 after the China-US trade meeting. Overnight, European markets were little-changed, except Paris fell -0.5%. Yesterday Tokyo ended unchanged. Hong Kong dipped -0.2% again but Shanghai fell -0.7%. Singapore dipped -0.1%. The ASX200 was down -0.5% in Thursday trade. But the NZX50 was up +0.4 in its trade yesterday, and the best of the markets we follow.
The price of gold will start today at US$3999/oz, up +US$6 from this time yesterday.
American oil prices are unchanged from yesterday at just on US$60.50/bbl, with the international Brent price just on US$65/bbl.
The Kiwi dollar is now at just on 57.5 USc, and down -30 bps from this time yesterday. Against the Aussie we are unchanged at 87.7 AUc. Against the euro we are also little-changed at 49.7 euro cents. That all means our TWI-5 starts today at just under 62.1 and down -30 bps from yesterday.
The bitcoin price starts today at US$108,076 and down another -2.8% from this time yesterday. Volatility over the past 24 hours has again been modest at just on +/- 1.9%.
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10 Comments
Watching Trumpy kowtow to Xi was interesting, you can see who wears the pants. Thinking he is a dictator and king he messed with the balance of power and lost
A dying hegemony threw up an autocrat. So much so unsurprising (but those who didn't see it coming, need to ask why they were blindsided?).
That hegemony needs energy; is currently consuming more than any other, per-head (some of that obviously discretionary, but we can say that about most First-World consumption).
Hence the 2 Iraq wars, hence destabilisation time after time in places like Iran (though that was originally the Brits) and Venezuela, pipeline blow-ups (although perhaps that was via Ukraine; same forcing anyway) and currently the push to own Russia. War with Venezuela is probably next (narco-terrorists is alle same Axis of evil or weapons of mass d or or or - you're either drug-runner, or you're a political activist. And Venezuela isn't the target if you're looking at hitting drug-running - so what are you covering? And when there's bull---t spin...
Add in the local commander resigning; add in nuclear-weapons testing - and worry.
You failed to mention that Trump has directed the US military to resume nuke testing at the same levels that Russia and China are doing it. Russia has already responded as saying that is a provocation.
need to ask why they were blindsided
Yes blind leading the blind. While I have you there, can I ask whether the environmental scares are subsiding with Bill Gates and now Scott Morrison both speaking out. Scomo isn't a powerhouse but Gates has credibility as an environmentalist?
Be careful what base-line you start from (I strongly sense a pre-skew).
We have levered fossil energy (millions of years in the accumulating) into a 300-year over-run of the planet. Few people seem to be able to see the change; most see 'what is' as if it is permanent. All those paddocks, all that reclaimed wetland, all that fossil-driven activity - that is the aberration, not the norm.
So we got big enough to be globally-forcing. Not surprising; we live on a thin crust on a little sphere, with a little gas layer outside that surface. And the Laws of Physics are immutable; dissipation/entropy is inexorable.
One manifestation of that forcing is the emitting of CO2, and ramifications thereof. Others are soil depletion, aquifer depletion, the many pollutions (all degraded/dissipated resource/energy results). Generally, that comes under 'environmental'.
The problem Gates et al have, is the same one the Green New Dealers have; they thought they could continue their consumption (lifestyle) but in a green manner. That was the EV brigade, in a nutshell. They were wrong; you can't. The upper range of maintainable-rate energy/resource throughput on this planet, is orders of magnitude LESS than we're currently indulging in. And the physics doesn't care if you identify as green - or as anything.
Read Soddy Wealth, Virtual Wealth and Debt - Wikipedia - or Wells' Men Like Gods (200 million on a planet). This problem has been well understood for a century - our level of throughput/consumption requires a global population south of 1 billion - which says no Microsoft...
Gates has less life ahead, than behind. Peer-respect and legacy are less and less likely to allow 'I got it wrong' as life progresses. Imagine him saying 'everything I did was ultimately unsustainable, and has been detrimental to the biosphere (without which we're all dead)? He isn't going to go there - more likely to get religion as a way out.
I regard Scomo as an intellectual featherweight. Alle same Hegseth.
The thing is everyone misses a core point about what Bill Gates said. "Bill Gates says climate crisis won’t cause ‘humanity’s demise’" I would suggest he is correct. There will be survivors who can rebuild the species. What he doesn't say, and likely chooses to ignore is that climate change will likely cause millions of deaths and reshape geography and probably also the geopolitical landscape.
He misses the point about what he is trying to address - deprivation and poverty. Those are all driven by politics and religion (which is just politics with a different coat), and nothing he or any of the worlds billionaires can do will change that. Changing the politics can only start with organisations like the United Nations and they will not go there because they are undermined by the veto powers.
People are busy swapping parts and wondering why the "engine" still rattles without understanding how its built. Maybe the problem isn’t the mechanics but the direction.
I’ll trade you and read Wealth, Virtual Wealth and Debt — if you’ll invest just 40 days, 10 mins a day in Rick Warren's The Purpose Driven Life. Seems fair — 40 days out of a lifetime of 25,550 days isn’t much to risk for a clearer map.
Trump didn't kowtow to Xi. Having a meeting isn't kowtowing
Kowtow: The act of deep respect shown by prostration, that is, kneeling and bowing so low as to have one's head touching the ground.
What happened: The US lowered its tariffs, while China eased access to critical minerals, and pledged to resume importing US agricultural products and increase purchases of US oil and gas.
Sounds like a deal was made.
Yes. If anything Trump would like Xi to kowtow to him. Ain't gonna happen!
Good new chaps.
"Prominent research studies have suggested that our planet is currently experiencing another mass extinction, based on extrapolating extinctions from the past 500 years into the future and the idea that extinction rates are rapidly accelerating.
A new study by Kristen Saban and John Wiens with the University of Arizona Department of Ecology and Evolutionary Biology, however, revealed that over the last 500 years extinctions in plants, arthropods and land vertebrates peaked about 100 years ago and have declined since then. Furthermore, the researchers found that the past extinctions underlying these forecasts were mostly caused by invasive species on islands and are not the most important current threat, which is the destruction of natural habitats."
https://royalsocietypublishing.org/doi/10.1098/rspb.2025.1717
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