US Fed minutes show expected divisions, likely 2026 rate cuts; regional surveys negative; Korean data dips; China moves on local support; UST 10yr at 4.13%; precious metals recover some; oil stays low; NZ$1 = 58 USc; TWI-5 = 62.1

Here's our summary of key economic events over the holiday break that affect New Zealand, with news its almost time to wrap up 2025, and to try and do better in 2026. End of quarter and end of year portfolio profit-taking and square ups are now underway.

First up today, the release of the US Fed minutes hasn't been very enlightening, just confirming the review boss Powell had after the meeting. There is a split between the growth hawk(s) and those more concerned about reigniting inflation. But the net sentiment was that a rate cut or two may come in 2026 in response to a weakening labour market.

These minutes sort of took the wind out of any Wall Street momentum today. Rate curves widened, and the 3 month-ten year curve is now is widest since mid-2022.

In the heart of the US economy, the Chicago PMI for December, while still deeply contractionary, came in better than expected and recovering somewhat from its unusually poor November result.

However things shifted less positively in the Texas services sector. The small contraction reported by the Dallas Fed for November became a little deeper contraction in December. And that is now four consecutive months this index has been negative.

Meanwhile, Tesla made an unusual announcement, signaling a steep drop in Q4-2025 deliveries. It's share price has slipped since md December although it is up +10% for the year.

Across the Pacific in South Korea, industrial production dipped in November, down -1.4% from a year ago, a big miss from the expected +0.3% gain. And their retail sales may have slipped in November too, according to early reports.

In China, they announced that their banks will be required to pay interest on e-yuan held in digital wallets from January 1. It'd a move aimed at increasing public and market adoption of their digital currency.

And China also announced it will cut tariffs on nearly 1000 items to below MFN rates in another move to bolster its domestic economy and be seen to balancing its export success which it getting increasing pushback internationally.

Also, we should perhaps ask "where the money went". China's trade surplus exceeded +US$1 tln in 2025, but its foreign exchange reserves only rose by +US$140 bln. That difference isn't insignificant in the global economy, and sort of suggests Chinese exporters are not repatriating funds from export activity.

The UST 10yr yield is now just on 4.13%, up +1 bps from this time yesterday. Remember it started the year at 4.60%, so a -47 bps net change (or -9.3%) since then. The key 2-10 yield curve is now at +67 bps. Their 1-5 curve is now positive by +20 bps and the 3 mth-10yr curve is now positive by +57 bps in a bif end-of-year move. The China 10 year bond rate is up +2 bps at 1.87%. It started 2025 at 1.60%. The Japanese 10 year bond yield is up +2 bps and now at 2.07%. It started the year at 1.08%. The Australian 10 year bond yield starts today at 4.76%, up +2 bps from yesterday. It started the year at 4.39%. Going the other way, the NZ Government 10 year bond rate starts today at 4.51%, down -5 bps on that same basis. It started the year at 4.53%.

Wall Street has opened with the S&P500 down -0.1% from yesterday. For the year it is up +16.9%. Overnight, European markets were higher, between Frankfurt's +0.6% and London's +0.8%. Yesterday Tokyo closed down another -0.4%, but is up +26% for the year. Hong Kong closed up +0.9% and is up 29% for the year. Shanghai was little-changed, but is up +16% for the year. Singapore rose +0.5% yesterday. The ASX200 dipped -0.1% to be up +5.8% for 2025. And the NZX50 was was up +0.2% yesterday and ends the year up a net +3.3%.

The price of gold will start today at US$4366/oz, and up +US$38 from yesterday. Remember it started the year at US$2626/oz so it is up +66% over that period. Silver has made back much of yesterday's sharp drop, up +US$6 to just under US$77.50/oz and up from US$29.50/oz. Platinum is up to US$2225/oz and up +US$126/oz on the day, up from US$896/oz a year ago.

American oil prices are essentially unchanged from yesterday at just on US$58/bbl, while the international Brent price is still at just under US$61.50/bbl. Still that just leaves its price at the same levels it was just prior to the pandemic. At the start of 2025 these prices were US$73/bbl and US$76/bbl respectively an a net -20% annual fall.

The Kiwi dollar is little-changed from yesterday, now at just over 58 USc. We started the year at 56.4 USc. so a net +2.9% revaluation. Against the Aussie we are also down -10 bps at 86.6 AUc. Against the euro we are unchanged at 49.4 euro cents. That all means our TWI-5 starts today just on 62.1, and also unchanged from yesterday, an insignificant net -0.4% devaluation for the year.

The bitcoin price starts today at US$88,337 and up +0.8% from this time yesterday. Volatility over the past 24 hours has been modest at just under +/- 1.3%. The price was US$92,672 at the start of 2025 so it has fallen a net -4.1% from then.

The easiest place to stay up with event risk is by following our Economic Calendar here ».