Here's our summary of key economic events overnight that affect New Zealand, with news of an interesting spike in Australian long term bond yields, coming as Japanese long term bond yields rose even though most observers thought they had priced in the widely anticipated Japanese rate rise.
But first in the US, the University of Michigan consumer sentiment survey was revised lower in December although up marginally from November's unusual low. It is however -28% lower than year-ago levels. Both measures for current conditions and expectations were revised down. Meanwhile, inflation expectations for the year-ahead were revised up to 4.2% from 4.1% in the November survey. Perceived 'affordability' issues are building.
Going the other way, November US existing home sales rose from October to an annualised rate of 4.13 mln, a third straight increase to the highest level in nine months. But a rise was anticipated and the actual result came in lower than the market expectation of 4.2 mln, and down -1.0% from a year ago.
In Canada, retail sales jumped +1.2% in November from October, the largest gain in five months, and reversing a -0.2% fall in October. That puts them up +1.7% from a year ago. Canada reports this data on a volume (price adjusted) basis.
In Japan, and as clearly signaled, their central bank moved their policy rate up by +25 bps to 0.75% late on Friday. It was their second hike this year after their similar January move. Policymakers there see extended wage inflation and rising company profits. But it did point out that real interest rates remain significantly negative and that overall financial conditions are 'broadly accommodative'. Markets took these signals to be slightly more hawkish than expected and pushed the Japanese 10 year bond yield higher, to a twenty year high.
Malaysia's booming economy is now drawing in imports faster than the rise in their exports, and it was barely able to post a trade surplus in November. Exports were up +7.0% from a year ago, but imports jumped at more than twice that rate, up +15.8%.
Foreign direct investment into China turned higher in October, up a net +US$6.6 bln from September and higher than the year-ago gain of +US$6.2 bln, although that still leaves the year-to-date level -7.5% lower and extending the streak of contractions that began in May 2023. The current gains are actually tiny for a country the size of China. Later on Saturday they will review their official loan prime rates, but no changes is expected from the current record low levels.
Euro area consumer sentiment slipped in December in their latest survey, news because another small improvenet was anticipated. The slip was driven by a decline in Germany. In the broader EU, overall sentiment was stable.
Meanwhile, Germany reported that lower energy prices kept its PPI reducing, but other than energy, producer prices were little-changed in November from a year go.
In Australia, although private sector debt is continuing to grow at elevated levels (up +7.3% overall from a year ago) and is being largely driven in quantum by borrowing for residential real estate (+6.6%), business borrowing rose even faster, up +9.2% from a year ago. But what was not expected was a surprising fall in November from October in non-housing personal lending which dipped -0.5% in the month alone.
But borrowers seem happy to take on elevated debt because there is a real 'wealth effect' still evident. The national accounts show that household wealth rose +3.1% in the September quarter to be up almost +10% from a year ago, driven by two major factors - rising residential real estate values and global equity market values, boosting super balances.
And staying in Australia, ASIC has hit Macquarie Securities with a A$35 mln penalty for misreporting short sales over many years, mainly because it was cavalier with its internal systems. It is estimated that Macquarie misreported between 298 million and 1.5 billion short sales!
Meanwhile, their Federal Court has added A$10 mln to the largest fine ever on an Australian bank, taking it to a A$250 mln penalty for ANZ. It is for widespread misconduct and systemic risk failures affecting the Australian Government, taxpayers and at least 65,000 retail bank customers.
And we should note that the Australian 10 year government bond yield is now almost at 4.8%, just shy of its 2023 brief peak, and matching levels last seen embedded in 2011 in the GFC. It's a metric worth watching now.
The UST 10yr yield is now at 4.15%, up +2 bps from this time yesterday but down -5 bps from this time last week. The key 2-10 yield curve is still at +66 bps. Their 1-5 curve is now positive by +18 bps and the 3 mth-10yr curve is now positive by +52 bps. The China 10 year bond rate is up +4 bps at 1.83% but down -2 bps from last week. The Japanese 10 year bond yield is up +5 bps at 2.02% after their central bank rise, up +7 bps from a week ago and a 20 year high. The Australian 10 year bond yield starts today at 4.80%, up +8 bps from yesterday, up +4 bps from a week ago. The NZ Government 10 year bond rate starts today at 4.52%, down -4 bps from yesterday, and down -11 bps from this time last week.
Wall Street opened firmer in Friday trade with the S&P500 up +0.9%, probably driven by options trading. That makes it down just -0.4% for the week so far. Overnight, European markets were mixed between Paris's no-change and London's +0.6% rise. Yesterday Tokyo ended Friday up +0.4% to be down -1.7% for the week. Hong Kong was up +0.8% for a -0.1% weekly dip. Shanghai ended its Thursday up +0.2% and a +0.7% weekly rise. Singapore ended Friday unchanged. The ASX200 ended up +0.4% on the day, down -0.3% for the week. But the NZX50 ended up +0.6% to close its week down -0.6%.
The Fear & Greed index has moved just into the 'neutral' zone from last week's 'fear' zone.
The price of gold will start today at US$4351/oz, and down -US$17 from yesterday, but up +US$57/oz from a week ago. Silver is now just under US$67.50/oz and up sharply to a new record high. That's up more than +UIS$5/oz from a week ago.
American oil prices are little-changed from yesterday at just under US$56.50/bbl, while the international Brent price is now just under US$60.50/bbl and up +50 USc. From a week ago these prices are down -US$1/bbl.
The Kiwi dollar is down -20 bps from yesterday, now at just on 57.6 USc which is down -40 bps from a week ago. Against the Aussie we are also -20 bps softer at 87.1 AUc. Against the euro we are down -20 bps too at 49.1 euro cents. That all means our TWI-5 starts today just under 61.8, and down -20 bps from yesterday, down -30 bps from a week ago.
The bitcoin price starts today at US$87,301 and down -0.9% from this time yesterday. It is down -3.3% from this time last week. Volatility over the past 24 hours has remained moderate, at just on +/- 2.4%.
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1 Comments
The two incidents reported above concerning the penalising of two Australian banks for let’s say misconduct reminded me of years ago when “The Bulletin” was a great hard hitting magazine, their front cover caption “Why the Banks are Bastards.” And then not all that many months later “Why the Banks are Still Bastards.” Some things inevitably change and stay the same don’t they.
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