Here's our summary of key economic events over the weekend that affect New Zealand, with news there are more twists and turns in international trade to report today.
But first in the US, the NY Empire factory survey came in positively in November, on the back of a good rise in new orders. But they got a similar jump in November 2024, and this latest 2025 result is -7.5% lower than that.
In Canada their inflation rate dipped slightly in October to 2.2% from 2.4% in September, and far less than the 3.0% and rising inflation rate last reported in their southern neighbour. Canadian petrol prices fell sharply, and the steam seems to have gone out of their grocery prices.
Meanwhile, foreign investors are finding Canadian securities attractive, raising their holdings sharply. They increased them by +C$31.3 bln in September, an unusual spike for a month that usually attracts only modest levels. Canadians themselves are choosing local securities increasingly too, in a substantial out-of-cycle rise of their own.
In China, there is increasing talk that the weekend's very soft economic data will bring rate cuts to their loan prime rates when they are next reviewed on Thursday, even a cut in their reserve ratio requirement of banks. Both are currently at record low levels already.
In something of a big positive surprise, Singapore's October non-oil exports rose sharply to S$17.2 bln, up more than +23% from year-ago levels up +15% from September. That is up from the +7% rise in September. Their non-oil exports to Thailand rose a massive +91%, to Taiwan a massive +61%, to South Korea by +38%. Going the other way, their exports to the US dropped -12%, and to both China and Japan were virtually unchanged.
India exports fell almost -12% in October from a year ago, but Indian imports surged more than +16% in the same month. Indian exports to the US fell notably. That has resulted in a huge merchandise trade deficit blowout of -US$41.7 bln and by far and away their largest trade deficit. Fortunately they run trade surpluses for services, but even after than it was still a record -US$22 bln deficit and more than double year-ago levels.
And we should note that aluminium prices, which are already very high, are likely to rise further on tight supply. Rio Tinto is adding surcharges on shipments to the US, where prices are globally elevated anyway due to tariffs, due to the supply shortage and the need for American to have to pay to get the product. That cascades through to consumer prices and inflation. These cost increases will be particularly troublesome for US-made cars.
The UST 10yr yield is now at 4.13%, down -2 bps from this time yesterday. The key 2-10 yield curve is still at +51 bps. Their 1-5 curve is +2 bps positive and the 3 mth-10yr curve is now +16 bps positive. The China 10 year bond rate is unchanged at 1.81%. The Australian 10 year bond yield starts today at 4.46%, up +3 bps. The NZ Government 10 year bond rate starts today unchanged at 4.34%, up +15 bps for the week in catchup mode following the Aussie pressure..
Wall Street has started its week with the S&P500 down -0.4%, and awaiting the Nvidia earnings report. Actually, the whole tech sector is weighing on market sentiment. Overnight, European markets were all lower between London's -0.2% and Frankfurt's -1.2%. Yesterday, Tokyo closed is Monday session down -0.1%. Hong Kong was down -0.7% and Shanghai was down -0.5%. Singapore dipped -0.1%. The ASX200 was unchanged in its Monday trade. But the NZX50 rose +0.3%, the best of the markets we follow.
The price of gold will start today at US$4067/oz, and down -US$14 from this time yesterday.
American oil prices have held from yesterday to be just over US$60/bbl, with the international Brent price still just under US$64.50/bbl.
The Kiwi dollar is now at just on 56.7 USc, and down -10 bps from yesterday. Against the Aussie we are up +20 bps at 87.1 AUc. Against the euro we are little-changed at 48.9 euro cents. That all means our TWI-5 starts today at just over 61.3, and also little-changed from yesterday.
The bitcoin price starts today at US$93,687 and down -0.5% from yesterday and it is now lower than year-ago levels. Volatility over the past 24 hours has been modest at just on +/- 1.5%.
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5 Comments
China considering lowering their loan prime rates from already existing record lows. That risks introducing a wicked negative cycle whereby borrowing undertaken for the sake of borrowing often outcomes in bad debt. NZ evidenced exactly that during covid. The OCR was already well down and had sufficiently stimulated good finance for sound purpose. What came next was not so much so, and that included a very big boom in property prices. China though is thought to have an immediate supply of underutilised property? Perhaps that is the target?
Fundamentally any economy only works when people have money to spend. So most, if not all, countries have two economies; an internal one where people go about their lives and spend money supporting internal business's and an external one where export industries develop international revenue for the country.
For most countries internal demand would not likely be sufficient to support a lot of long term jobs at reasonable pay rates, so exporting industries contribute what could be considered cream for the country in both jobs and income.
NZ's failing is the single focus on agricultural exports makes us vulnerable. People argue that's what we do best, but that maybe have been the case once, but no longer. Individuals like Peter Jackson, Peter Beck and others prove that we are capable of much more and government policies should be to support and promote the development of other industries.
True. Total market cap of Xero is around $28bn. Input costs when in NZ was an office building and several hundred smart staff. I know it's gone to Aus stock exchange but a lot of value will still be retained in NZ.
Thats bigger than wine, fish, maybe hort? But the inputs in land, water, people, chemicals etc are huge in primary industries. And pollution externalities are big too.
Maybe tech sector needs a bit more government support, or at least as much as the primary industries, which seem to have a vocal and effective lobbying industry
Yep the Kiwi ingenuity is being wasted
Meanwhile, our elected leaders have decided to make inefficient cars cheaper to buy, guaranteeing that we will be importing more petrol for the next 15-20 years.
NZ will be 'dumping ground' for high-emission cars, EV advocate warns https://www.rnz.co.nz/news/political/579158/nz-will-be-dumping-ground-f…
Seriously, WTF? Between this and the gas importing plant at Marsden point, it's like they are trying destroy our balance of payments
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