Here's our summary of key economic events overnight that affect New Zealand with news its all about the 'debasement trade" today - Trump debasing US public policy resulting in a rush to gold, a jump in US Treasury yields, and a fall in the greenback. Equities and cryptos are falling.
In the US overnight, there was another good rise mortgage applications, largely on the back of a rush of refinance activity as 30 year mortgage rates eased.
However December data for pending home sales took an unusually large dip from November to be -3.0% lower than year ago levels.
In Canada, producer prices actually fell in December, unexpected because a small rise was anticipated. That puts them +4.9% higher than year ago levels, the slowest rise since August.
In Indonesia, they reviewed their policy rate overnight, leaving it at 4.75% as expected.
In Europe, the European Parliament has suspended the approval of a key US trade deal agreed in July in protest at Trump's demand to take over Greenland. Both Trump and some of his cabinet are at Davos, and in full arrogant insult mode.
In Australia, the Westpac–Melbourne Institute Leading Economic Index inched up 0.1% in December from November to +0.42%, following the no-change in the previous month. The recent uptick is led by commodities and an improved homebuilding outlook. But the December rise was less than expected. A year ago its was +0.25%, so nearly a doubling since that tame benchmark.
We should perhaps also note that cocoa prices have fallen sharply today, back to US$4400/tonne and the same level as two years ago. You may recall they reached US$12,250/tonne in April 2024 at the height of its surge.
The UST 10yr yield is now just on 4.28%, unchanged from this time yesterday. The key 2-10 yield curve is now at +69 bps. Their 1-5 curve is now at +31 bps and the 3 mth-10yr curve is now at +60 bps. The China 10 year bond rate is unchanged at 1.82%. The Japanese 10 year bond yield is back down -5 bps at 2.30%. The Australian 10 year bond yield starts today at 4.76%, down -2 bps from yesterday. The NZ Government 10 year bond rate starts today at 4.59%, up +4 bps from yesterday.
Wall Street is in its Wednesday session with the S&P500 recovering +0.3% but the earlier much larger recovery gains (over +1%) seem to be fading. The S&P500 has fallen a net -1.8% in the past two days, so far. It's the same for the Nasdaq which is now back with a small loss today, down -2.2% for the same two days. Overnight European markets were mixed between Paris's tiny +0.1% rise and Frankfurt's -0.5% dip. Yesterday Tokyo closed down -0.4%. Hong Kong was up +0.4%. Shanghai was up a minor +0.1%. Singapore fell -0.4%. The ASX200 also fell -0.4%. And the NZX50 ended down a sharpish -1.2% and the worst of the markets we follow.
The price of gold will start today at US$4843/oz, and up another +US$93 from yesterday and a new record again. Silver is lower at US$93.50/oz and off its record high.
American oil prices are up a bit more than +50 USc from yesterday at just on US$60.50/bbl, while the international Brent price is unchanged at just under US$65/bbl.
The Kiwi dollar is holding from yesterday, still at just under 58.5 USc. Against the Aussie we are down -30 bps at 86.4 AUc. Against the euro we are up +20 bps at just on 50 euro cents. That all means our TWI-5 starts today just on 62.5, and unchanged from yesterday and still its highest since early October.
The bitcoin price starts today at US$87,927 and down -2.0% from this time yesterday. Volatility over the past 24 hours has been modest at just on +/- 1.4%. And we perhaps should note that the $TRUMP memecoin has plunged more than -90% from its peak a year ago, burning its adherents bigtime.
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16 Comments
As predicted Trump and his sycophants are entirely ignorant of the effect they are having and will be fully unable to prevent the world turning their back on the US. Macron's indication of stopping US access to European markets is taking shape.
Trump's entire business MO of going in hard at the beginning (bullying) is coming back to bite him. The TACO phrase has clued in the world to methods of dealing with him. The cost to the US will be huge.
If he tries to put off the elections due to some manufactured excuse, will the people stand by and let it happen?
It would be fascinating to take a time machine back to 1930s Germany or Italy and compare.
We must also remember that while Trump is the face of this he could not operate without the substantial facilitation that exists and will not disappear when he departs.
President Lincoln’s quote ended on the note that you can’t fool all the people all the time. President Trump though twice. Has fooled a lot of the people a lot of the time. Don’t think anyone else could carry that. As well, in comparative form to Adolf’s immediate underlings at the time you mention, the Republican Party is a barrel load of seething ambitions and feuds and it is, in similar fashion to back then, only the form of the top dog sitting on the lid, that keeps all that from breaking out. After effusively promising the American people he would make them better off, indications are emerging, the rural sector for instance, that Trump is achieving the opposite. That is where the fooling will grind to a halt, the figurative worm will turn en masse. The mid terms are therefore going to be the great telling point.
Assuming there are unencumbered elections going forward, the worm may well turn....how confident can we be that will occur? Not very I would suggest. Remember there is approaching 300 Rep. members of Congress/Senate that appear to concur, nevermind the voting public.
Meanwhile his backers have increased their hold on various institutions and gathered even more wherewithal to their cause.
Great comments both.
Macron was ahead of Carney, states=person-wise.
The Age of Abundance is Over... So How do We Prepare?
And there are a few subtle levels to all this: Trump's Elite cannot survive without a massed-churn 'economy'. That, in turn, cannot survive without forward material (not monetary) underwrite. Trump has somehow understood that real resources are the real wealth and is eyeing-off any and everything. As has to happen soon, if you're growing exponentially, plus increasingly parrying entropy (decay).
Carney didn't address Macon's point - but the rest of his speech was magisterial. We need to be careful not to diss the content (of any speech/statement) because of the past history of the speaker. Churchill was no saint...
Seems to me there's a trend towards Europe, Canada, NZ becoming a compatible bloc. Australia will have trouble coming out from under the US petticoat (it was always closer kulturally) and the UK isn't guaranteed; depends on whether their Elite outflank the rabble or not.
I'm picking the US will dump (assasinate?) Trump, but that that won't solve their predicament one jot.
Key difference of course is that Hitler was popular. Trump is deeply unpopular with most of the electorate.
That would be how he got elected. Twice.
Beware confirmation bias.
Admittedly, the light may be dawning - but polarisation is strong in that Shire...
That is why a time machine would be useful....we dont know how popular Hitler was on the ground. You say Trump is deeply unpopular in the US, but he achieved the nomination and a majority vote a year ago even after 4 years of exposure, nevermind his previous history on display for all to see.
I would suggest there is one key difference that perhaps may work in the worlds favour....Trump is decades older than Hitler or Mussolini were at the time.
Trump goon blasted with heckles and jeers as his Davos event goes off the rails
French President Emmanuel Macron has led the charge against Trump’s rhetoric. He took the stage at the World Economic Forum on Tuesday sporting Top Gun-style sunglasses and delivered a sharp rebuke.
“Let’s not be divided, let’s not accept the global order which will be decided by those who claim to have the bigger voice, or the bigger teeth, or the bigger... I don’t know,” Macron, 48, said.
“Let’s be coordinated. Let’s not waste time with crazy ideas.”
Macron also took a swipe at the “bullies” on the world stage. “We do prefer respect to bullies. We do prefer science to politicism. And we prefer the rule of law to brutality,” he said.
It's coming...
"It 's coming..." and yet the fantasy that NATO (or any other agreement) still exists persists.
A day of reckoning for the European segment then taking the form of a large and persistent bogeyman that has been on their north east border since 1918. Twice America has ventured across the Atlantic to sort out world wars started by the Europeans amongst themselves. That was accompanied by billions of American dollars and thousands of young American lives that did not come back. Post WW2 the generosity of the Marshall plan catalysed the reconstruction of Europe. It is long overdue for the European nations to finally just stand up for themselves but it seems that they are still incapable of even providing for their own internal security and that is exactly where Trump has got them.
Europes ability to defend itself is the consequence of US design since the end of WW2
Exactly, the US has created the Euro weakness by insisting that they are in control and denying other countries the right to weponise.
Germany, Poland and Sweden could build a nuclear arsenal very quickly, lets see what happens.
Where do you think the US growth came from?
They have done very nicely out of the hegemony they designed.
You need to remember that America was popularly isolationist prior to both WWs before intervening and then ask yourself what Europe would be like if they hadn’t, and nor provided the Marshall plan. Up until WW1 America had not been a so called world power although the false flag war against Spain was certainly a turning point. Ample growth had been generated from their own vast internal resources and then about this time the realisation and exploitation of the value of oil brought about the dawn what I like to refer to as the Oil Age.
What is playing out is in alignment with the concepts/theory from ‘The 4th Turning’ and Dalio’s book ‘The Changing World Order’.
Two great reads if you want to make sense of what is unfolding currently.
People seem to think it’s the end of the world, but it isn’t. These events have happened throughout history, regularly, and stability is again restored but it looks different to what was before.
It is only painful for those who cling to the past, thinking that the world is always ‘nice and stable’. It isn’t and countries use economic and military force to maintain the status quo or for change depending upon how the conditions are benefiting or impacting their nations.
It doesn’t seem entirely crazy to me what various leaders are doing if you’ve read enough history. Unless you believe that what happened from 1945 - now was going to last forever!! Which means you haven’t read enough history!!!
Hate Trump as much as you like - he’s just a product of his life experiences, as was Stalin, as was Mao, as was Hitler as is Putin. As are the leaders of the other nations who have allowed the geopolitical and economic environment to degrade to this level of dysfunction. It’s happens every 80-100 years. I’ve been saying on here for sometime that it is due as we are 80 years from 1945 when the last order was established. Over time, that order becomes disorder (as people who didn’t have to fight or sacrifice to create the existing order take it for granted and/or abuse the conditions for their own gain) and then we have to fight to see what the new order looks like.
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