Here's our summary of key economic events overnight that affect New Zealand, with news markets have essentially been on hold overnight awaiting the US Fed's decision.
In the end, the Fed's FOMC trimmed its key rate by -25 bps to 3.75% as markets had guessed it would do. But it was not unanimous. The Trump stooge on the committee wanted a far larger cut. But the professional members fear inflation still and the small trim was the uneasy compromise. The voting was 9 members to cut by -25 bps, two to hold unchanged, and Miran wanting a big cut.
Immediately after, the UST 10yr benchmark was active with a softish tone but really little-changed. the S&P500 rose, and the USD fell slightly. More reaction will come after Chairman Powell's press conference which is about to start soon.
Earlier, the report on US mortgage applications was quite positive, up 4.8% last week from the week before which you may recall brought a small but unexpected retreat. The latest week however was all about refinance application which were up +15% on that same prior week basis.
An Q3-2025 data for US payroll compensation costs (pay plus payroll taxes plus benefits) were up +3.5% from a year ago, rising at about that rate in the latest quarter too. So American inflation isn't getting any respite from this direction.
Quite how odd the US public policy has become is revealed in a current court case. US Federal prosecutors spent over a year extraditing a Belarusian woman to the US to face charges she illegally smuggled US tech to Russia for its war on Ukraine. Then ICE stepped in accusing her of being in the country illegally, and deported her, collapsing the case. Moscow smirked in satisfaction.
In Canada, their central bank stood pat, holding their policy rate unchanged at 2.25% as widely expected. The say this is about the right level in the current uncertain environment. But they were surprised by the upside growth of GDP at +2.6% in the third quarter, found the labour market improvement better than anticipated as their unemployment rate fell. CPI inflation slowed to 2.2% in October and they see core inflation remaining in the 2.5% to 3% range.
Across the Pacific in China, there was a slight rise in CPI inflation, enhance because the previous inflation was so low. Their inflation rose 0.7% in November from a year ago, as expected and accelerating from a +0.2% increase in October. This time, food price inflation was very low. It was the second consecutive month of consumer inflation and the fastest pace since February 2024.
Meanwhile China's producer prices fell into a steeper deflation, down -2.2% in November from a year ago.
And the IMF has raised its forecast for growth of the Chinese economy for 2025 and 2026, now expecting to see an expansion of +5.0% this year.
And some influential analysts are saying the Chinese yuan is 25% undervalued and will appreciate more than forwards contracts are pricing for 2026.
And in the EU, the ECB boss Christine Lagarde says they will likely raise their forecast for EU growth as well.
In Australia, if you are retired and have assets, you need to pay a tax on a deemed rate of interest on your assets (irrespective of what they actually earn, if anything). That rate depends on how many assets you have. They raised it in September 2025 and have now signaled they will raise it again in March.
The UST 10yr yield is now at 4.16%, dipping -1 bp from this time yesterday and holding that after the Fed decision. The key 2-10 yield curve is still at +57 bps. Their 1-5 curve is now positive by +15 bps and the 3 mth-10yr curve is still positive by +45 bps. The China 10 year bond rate is down -1 bp at 1.85%. The Japanese 10 year bond yield is holding at 1.96%. The Australian 10 year bond yield starts today at 4.78%, unchanged from yesterday. The NZ Government 10 year bond rate starts today at 4.64%, up +3 bps.
Wall Street has started its Wednesday with the S&P500 up just +0.1% after the Fed decision. Overnight, European markets were mixed between Paris's -0.4% drop and London's +0.1% rise. Yesterday, Tokyo ended its Wednesday trade up +0.1% again. Hong Kong was up +0.4% but Shanghai ended down -0.2%. Singapore was little-changed. The ASX200 ended its Wednesday with a -0.1% dip. But the NZX50 finished down -0.6% and the most of any markets we follow.
The price of gold will start today at US$4204/oz, and down -US$17 from yesterday. And we should note again that silver has set a new record high, just under US$61/oz.
American oil prices are little-changed at just on US$58/bbl, while the international Brent price is just under US$62/bbl.
The Kiwi dollar is +10 bps firmer from yesterday, now at just under 57.9 USc. Against the Aussie though we are again essentially unchanged at 87.1 AUc. Against the euro we are down -10 bps at 49.7 euro cents. That all means our TWI-5 starts today at just over 62, and down -10 bps from yesterday.
The bitcoin price starts today at US$92,274 and down -2.3% from this time yesterday. Volatility over the past 24 hours has been modest, at just over +/- 1.4%.
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13 Comments
"Quite how odd the US public policy has become is revealed in a current court case. US Federal prosecutors spent over a year extraditing a Belarusian woman to the US to face charges she illegally smuggled US tech to Russia for its war on Ukraine. Then ICE stepped in accusing her of being in the country illegally, and deported her, collapsing the case. Moscow smirked in satisfaction."
Odd is not a suitable descriptor. The world (outside US tech) should be panicked by the misuse of power underway as declared in the recent US strategic review....if they remain undeterred we can forget about any so called economic norms.
Comical is better, but I doubt even a script writer out of Hollywood would have dared include that scenario in a comedy show. They'd run the risk of getting their citizenship cancelled and deported to a place called "No mans land".
USD is about to fall I think buy AUD for the xmas lift trade
When is the trick.
Others will think you're just being Chicken Little.
"In Australia, if you are retired and have assets, you need to pay a tax on a deemed rate of interest on your assets (irrespective of what they actually earn, if anything). That rate depends on how many assets you have. They raised it in September 2025 and have now signaled they will raise it again in March"
Is this a manifestation of the "Boomers ripped us off" attitude? Superficially it almost feels like being prudent with your earnings, like saving, is becoming a crime of sorts. Ordinary people are not supposed to get ahead somehow across a working life? Are we supposed to be dependent and grateful to the governments who provide for us? What about the governments who hold us back, and work to keep us poor?
IIRC I understood that deemed rate only applied to people receiving state pensions (< half aged population).? Happy to be corrected.
"If you’re a member of a couple and neither of you get a pension
The first $53,100 of each of your own and your share of joint financial assets has a deemed income of 0.75% per year. Anything over $53,100 is deemed to earn 2.75%."
Basically irrespective of whether you actually have any cash inflow, you'll get a tax bill. All from:
- savings accounts and term deposits
- managed investments, loans and debentures
- listed shares and securities
- some income streams
- some gifts you make.
It all feels like a rip off by the government. Socialist policies that resent people being able to build a nest egg for retirement.
Thanks for that, I'd found but hadn't read the link
Unlike NZ Oz does not have universal super. Oz's super is means tested and a deemed rate of return is applied to asset rich retirees to ensure rich people do not receive a state funded benefit. No income tax is payable on the deemed rate of return, the calculation is only for determining eligibility for state super.
NZ needs the same system in NZ so poor young people are not forced to pay for a benefit paid to multi millionaires over 65.
Agreed. With scarce public sector resources the option of funding a multi-millionaire retirees second foreign holiday of the year must fall pretty low in the priority list.
Tax isn't a punishment
"Ordinary people are not supposed to get ahead somehow across a working life?"
What are you trying to 'get ahead' of Murray?
And if you're saving as you say you are above...then have your wealth in savings accounts, which gets taxed....but no you have it all locked away in real estate in a manner that it never becomes taxed....then you whinge if somebody tries to tax your 'savings' (while those trying to save for a house with a savings account get those savings taxed...). When really its a form of tax avoidance. But all in the spirit of 'getting ahead'. (of what exactly?) Do younger people locked out of the market because your savings plan (real estate) has been so thoroughly successful also want the opportunity to do well? How do they do that if all of the spoils have been given to one generation and not others? (via crazy monetary policy, fiscal policy, immigration settings, and tax regulations).
Taxation, if done well, is a way to share the love (and the pain) - those who have received much can help those who have not, but the odd thing is is that in your case Murry those who have received a lot (hundreds of thousands or even millions of dollars of capital gains for often minimal labour on the properties they own) don't want to share the love at all for those who they have created a lot of pain for (those locked out of the market or those who have had to take on $500,000 + loans just to buy a shitty starter house in a bad suburb that is falling apart).
So how many hundreds of thousands of dollars or even millions of untaxed capital gains have you received in the property you own, that you are now complaining about if any of that wealth gain was ever possibly taxed? Be honest....Most of the boomers I know have received well over $1,000,000 - and that $1,000,000 is a cost that the following generations have to pay via greater debt on the properties they have purchased (because that is how this system works - their debt, is your capital gains). But yes, poor old boomers, being treated so badly....we just want to 'get ahead'...(of what again? Your children?)
The Govt is clipping the ticket on inflation which is not any real "gain". For property owners its still the same asset with the same relative market value. The $ price +/- simply reflects money as the medium of exchange, re/devalued by monetary and fiscal policies outside the control of asset owners. A logical policy of Deeming / CGT would see refunds for any capital losses.
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