US trapping itself in stagflation; China stuck with subsidies for internal growth; Korean exports star; India holds expansion; EU turns down; UST 10yr at 4.19%; gold little-changed; oil stays low; NZ$1 = 57.6 USc; TWI-5 = 61.7

Here's our summary of key economic events over the holiday break that affect New Zealand, with news the global manufacturing sector closed out 2025 on a subdued basis as output growth eased and both new order inflows and employment levels were unchanged. But both input cost and output price inflation rose faster. The fundamental inflation drivers remain key challenges.

In the US initial jobless claims rose by +5,000 to 270,000 in the last week of December, a typically volatile period due to the holiday season, but seasonal factors had expected a stronger rise. There are now 1.88 mln people on these benefits, little different to the 1.86 mln this time last year.

New orders in American factories fell for first time in a year in December, but output growth remains solid Tariffs continue to push up prices at an elevated pace, embedding inflation. Higher prices and weaker demand discouraged purchasing activity, just the ingredients for stagflation.

And it won't help that tariff taxes are pushing key manufacturing commodity costs like copper to record highs, making US goods even less competitive.

Eyes are now turning to the US Supreme Court decision on the legality of Trump's tariff-taxes. It is due sometime this month. Trump himself is nervous about the ruling.

He should be more worried about the affordability issue for his subjects. Not only are his tariff-taxes hitting household budgets, but his attack on Obamacare is about to sharply raise the costs of healthcare for millions, especially in 'red' states.

Across the Pacific, Beijing unveiled early investment plans for 2026, signaling a renewed push to bolster China's economic growth through infrastructure spending. They are frontloading their stimulus. And their 2025 consumer goods subsidy programs will extend into 2026.

China's property sector drag isn't going away, despite official ambivalence to the issue now. But some heavy hitters are calling for more forceful rescue plans.

Meanwhile, Chinese president Xi said he expects 2026 growth to come in close to 5%.

China has tightened silver export controls from January 1, widening restrictions on a commodity now seen as vital to many industries. This signaled tightening is behind the recent sharp run-up in price. Currently more than 60% of global production comes from China.

China official PMIs both moved from contraction in November to a steady-state in December, and unexpected improvement for both the factory sector, and their services sector - although neither are actually expanding yet. The gains are all from internal demand however, a shift Beijing is keen to encourage. The factory improvement is notable because it ends eight consecutive monthly declines.

The private Markit/RatingDog China factory PMI unexpectedly rose as well in December from November’s four-month low, besting market forecasts. This version also relied on better internal demand, offsetting weaker export demand.

South Korea's exports hit a record US$710 bln in 2025, the first time they have rosen above US$700 bln. In December, their exports jumped +13.4% from a year earlier, the seventh consecutive month of growth and the strongest increase since July 2024. This was an acceleration from an +8.4% November rise.

In India, they still had good factory growth in December, but a notable slowing of new orders has them on edge to end the year.

In Europe, factory output declined for first time since February 2025 as their manufacturing PMI contracted in December. New orders fell. The overall situation was dragged down by Germany.

In Australia, Cotality said that national home values recorded the smallest gain in five months in December, with overall value rising just +0.7% in the month. Sydney and Melbourne were the biggest drag on the headline growth outcome with values sliding -0.1% lower. Brisbane, Adelaide and especially Perth continued their strong gains.

The UST 10yr yield is now just on 4.19%, up +1 bp from this time yesterday. The key 2-10 yield curve is now at +71 bps. Their 1-5 curve is now positive by +26 bps and the 3 mth-10yr curve is now positive by +55 bps. The China 10 year bond rate is unchanged at 1.86%. The Japanese 10 year bond yield is unchanged at 2.07%. It started the year at 1.08%. The Australian 10 year bond yield starts today at 4.82%, up +8 bps from yesterday. The NZ Government 10 year bond rate starts today at 4.51%, unchanged because bond markets here were closed.

Wall Street has opened its Friday session with the S&P500 up +0.2% from yesterday, down -1.1% over the past five sessions. Overnight, European markets were up +0.2%, except Paris which was up +0.6%. Yesterday Tokyo was closed. Hong Kong ended up +2.8%. Shanghai was was up +0.1%. Singapore rose +0.2% yesterday. The ASX200 rose +0.2%. But the NZX50 was closed of course.

The Fear and Greed Index is back in the 'fear' zone - just - from the neutral zone last week.

The price of gold will start today at US$4313/oz, and down -US$5 from yesterday.

American oil prices are down -50 USc from yesterday at just oven US$57/bbl, while the international Brent price is still at just under US$60.50/bbl.

The Kiwi dollar is down -10 bps from yesterday, now at just over 57.6 USc. Against the Aussie we are up +10 bps at 86.3 AUc. Against the euro we are up +20 bps at 49.2 euro cents. That all means our TWI-5 starts today just under 61.7, and little-changed from yesterday.

The bitcoin price starts today at US$90,143 and up +2.6% from this time yesterday. Volatility over the past 24 hours has been modest at just over +/- 1.5%.

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