Here's our summary of key economic events overnight that affect New Zealand, with news American investors are turning quite negative about future prospects.
We start today with more negative news from the world's largest economy. The November update of the University of Michigan's consumer sentiment index has fallen to near an all-time low in a survey that began almost 80 years ago. Only the June 2022 recording was lower. A small dip was expected but this time a large dip was recorded. Americans are worried about both current personal finances and in year-ahead expected business conditions. It's glum reading and the index is now -30% lower than year-ago levels. American consumer attitudes are in a full bear mode.
It will be no surprise to know that financial markets are in full retreat, flashing 'extreme fear' signals and risk-aversion.
Meanwhile, the New York Fed's latest update of their Survey of Consumer Expectations reports inflation expectations dipped to 3.2% and some key opinions about their labour market weakened.
US consumer credit flows fell sharply in October, especially for revolving (credit card) debt, yet another indication of tightening economic conditions there.
And the US federal government shutdown continues with the White House unable to get its way in the Senate, either with the Democrats changing their healthcare bottom line, or the Republicans adoption the 'nuclear option'. And that means the air traffic restrictions are rolling out and become more pervasive. Thousands of flights have now been cancelled or delayed.
In Canada they delivered something of an unexpected positive surprise from their labour market in October, You may recall the unusually strong +60,000 September jobs gain, driven by very strong full-time employment. Analysts had expected a pause. But in fact, they reported a +67,000 jobs gain in October, although this one was largely driven by a rise in part-time jobs. Rather than the expected rise, their jobless rate fell (but by most standards, it is still pretty high).
China reported that their October foreign exchange reserves swelled more than expected and are back to their highest level in a decade.
China also said its exports dipped unexpectedly from October a year ago as shipments fell -18% to the US. Imports from the US fell even more. But other than that it seems to be business-as-normal. Australia and New Zealand both recorded healthy trade surpluses with China in October. Overall, China's October trade surplus came in at +US$90 bln for the month, and missing many analysts expectations that it might top +US$100 bln as it did in August.
In Taiwan, exports from the island nation surged +50% from October a year ago to a record high of US$62 bln, accelerating from a +34% rise in the previous month which itself was very impressive. Taiwanese exports were one fifth those of China, despite only having 1.6% of the population level. For reference, Australia's exports in October are expected to be reported on December 4 at US$30 bln - and Australia has a similar population to Taiwan. The comparison emphases how special the Taiwan export prowess is.
(China is grumpy that a cross-party group of MPs attended an official Taiwanese event in Wellington recently. Punishment may well be some trade interruptions, if prior form repeats.)
German exports were also reported overnight, but for September. They rose +2.0% from the same month in 2024, to US$151 bln.
In Australia, new data reveals the size of the surge by investors back into residential housing chasing rising capital gains (even with a CGT), essentially driving their unaffordability issues.
The UST 10yr yield is now at 4.08%, unchanged from yesterday at this time, down -3 bps from a week ago. The key 2-10 yield curve is still at +53 bps. Their 1-5 curve is now +4 bps positive and the 3 mth-10yr curve is now +14 bps positive. The China 10 year bond rate is little-changed at 1.75%. The Australian 10 year bond yield starts today at 4.33%, up +2 bps from yesterday, up +1 bps from a week ago. The NZ Government 10 year bond rate starts today at just under 4.12%, down -4 bps from yesterday, up +3 bps from this time last week.
Wall Street has ended its Friday with the S&P500 down another -0.1% in an extending risk pullback. That makes it down -2.9% for the week. Overnight, European markets were all negative between Paris's -0.2% and Frankfurt's -0.7%. Tokyo was down -1.2% yesterday for a weekly -2.6% retreat. Hong Kong fell -0.9% but up +0.9% for its week and Shanghai was down -0.3% for a +1.1% weekly rise. Singapore ended its Friday session up +0.2%. The ASX200 also ended down -0.7% on Friday to end the week down -1.0%. The NZX50 rose +0.2% for a weekly rise of +0.3%.
The Fear & Greed index is now well into the 'extreme fear' zone, from last week's 'fear' zone.
The price of gold will start today at US$4005/oz, up +US$26 from this time yesterday, basically back to week-ago levels.
American oil prices are +50 USc firmer from yesterday at just on US$59.50/bbl, with the international Brent price now just under US$63.50/bbl. These levels are -US$1 lower than a week ago.
The Kiwi dollar is now at just on 56.2 USc, and down -10 bps from yesterday, down a full -1c for the week. That is its lowest level in seven months. Against the Aussie we are -30 bps lower at 86.7 AUc but that is a 12 year low. Against the euro we are down -30 bps at 49.5 euro cents. That all means our TWI-5 starts today at just over 60.8 and down -10 bps from yesterday, and its lowest since July 2009, a 16 year low.
The bitcoin price starts today at US$102,148 and recovering +1.6% from yesterday's drop. For the week ii is down-6.5% Volatility over the past 24 hours has been modest at just on +/- 1.6%.
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17 Comments
It shows how rubbish those surveys are. Sure Trump’s done stupid stuff, but the worst in 80 years? Worse than Covid, GFC, wars, etc?
Well they weren’t too good when Biden took over and they weren’t any better when Trump came back for another go.So all up that’s nine years now of dismay and unhappiness at large and current indications are hardly encouraging either. Trump told the electorate they would be better off. Would suggest he now has something of a tiger by the tail.
They were doing bloody well under Biden, and not that bad with Trump. Either that or numbers like unemployment rate, GDP growth, wage growth etc are lies. Which might be true now.
They were not doing bloody well under Biden if the lead up to , and the result of the 2024 , election is considered as being meaningful.
I don’t think people know what hardship is. These days it’s only eating takeaways 5 days a week and only having 3 TV subscriptions.
After the war my Grandad was in charge of cutting up the newspaper to make into toilet paper.
Understand all of that. Kids at school with hankies made out of old sheets. Kerosine lamps and wet back incinerator when the electricity couldn’t be paid. And agree entirely with your take on perception relative to that and that is exactly illustrated by such as I heard on a radio interview - in four years under Biden my healthcare plan has gone from 10k per annum to 16k. Unfortunately it takes a real bad destructive event, a war, a cyclone, an earthquake etc etc to compel people to reconsider their priorities in terms of basic necessities.
The yanks would be loving that, there’s nothing they hate more than affordable healthcare. But again it’s not necessarily that the cost has gone up, it’s the expectations that have gone up. I’ve heard that the GP will send you to an MRI for the smallest thing, and why not when insurance will pay.
In Grandads day you wouldn’t go to the doctor unless you were pretty much dead, and if you did he’d probably finish you off. And if everyone did the amount of exercise he did and ate home cooked meals like he did, healthcare would probably be halved.
Unemployment moved from 3% to 5%! Makes the great depression look like a pony ride.
4.3% in the US. That’s pretty much as good as it gets, but apparently the worst in 80 years. And their median wage of $2,100 NZD a week, how do they cope? Imagine raising a family on only $4200 a week, poor buggers.
Export prowess/origin washing.
“Chinese manufacturers that have the U.S. as their main market must find a way to survive,” Taiwanese businessman Lee Meng-chu told Radio Free Asia, noting the “huge demand” for transit solutions that enable exporters to sell to the U.S. but evade the 145% U.S. tariffs imposed on Chinese imports.
Freight forwarders, or customs brokers, have emerged as key facilitators, managing customs declaration documents, clearance, and certificates of origin, with their service fees set to rise with the spike in demand, said Lee. Some freight forwarders are even helping exporters change or reload containers to disguise origins, he said.
https://www.rfa.org/english/china/2025/05/06/china-tariff-exports-origi…
48.5 euro cents to the NZ dollar not 49.5? Wishing otherwise...
Why is our dollar getting sold down? Not just against the USD, against the basket. Farming is firing on all cylinders, retail is quiet but not dead, future interest rates are looking reasonable stable, what am I missing?
Have we just been recategorized as a major loser going forward as we depend so much on international trade while nationalism is back in fashion?
Been wondering the same, this level could well feed imported inflation which could cause the currency to correct via a higher local interest rate. Maybe immigration/migration is having an impact via less purchases of kiwi dollar. But exports are high so should balance out the currency flows as exporters sell USD.
I feel with a lot of market movements, they're occuring due to interest in the momentum, as opposed to any sort of objective appraisal.
In Taiwan, exports from the island nation surged +50% from October a year ago to a record high of US$62 bln
It's not too hard to imagine some exports from China being re-routed via Taiwan to be "re-exported" from Taiwan to avoid higher tariffs imposed upon China by the US. China benefits from lower tariffs, Taiwan benefits by clicking the ticket.
It is arguable, very much so in fact, that Taiwan, rather than a possession, is more valuable to China as it is. In terms of convenience of backdoor trade and other connections, daresay Taiwan has assumed much of that activity, previously managed by Hong Kong.
Chinese bureaucracy favours predictable stability. Territorial expansion brings with it a lot of chaos and uncertainty, very had to plan around.
So I feel the oft-publicized, imminent Chinese invasion is less about reality and more about cultivating anti Chinese support.
Then again it's an authoritarian dictatorship with closed internal information, so who knows where they're really at.
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