Here's our summary of key economic events overnight that affect New Zealand with news that as the world adjusts to the isolation track the US is choosing, most other countries are finding ways to expand their economies and live with the geopolitical pressures.
First up today, we are starting to get the early January PMI reports for many key economies. The US factory version was little-changed in a modest expansion and it was the same for their services sector. But both recorded slightly better new order flows. Both noted cost pressures from their tariff-taxes. But as you will note from below this expansion lags most of the other large global economies.
The Conference Board's leading economic indicator tracking for the US isn't positive reading, with the latest update reporting further declines.
And in the US, there is a surge of new measles infections among young, unvaccinated children. In 2025, the US had 2,255 confirmed measles cases, a 34-year high and more than six times higher than in 2024. So far in 2026 it has reported 416 new cases in twelve more states, so they are on track to more than double it again in 2026. The explosion of cases in 2026 is about to become a major health story. Measles in the US isn't the only spreading health issue they have as a consequence of dodgy politics.
In Canada, their retail sector reported good gains in November, up +3.1% from a year ago, but these may not have extended into December, according to their overnight update.
Taiwan said industrial production surged more than +21% in December from the same month a year ago, the strongest growth since May. For all of 2025 it was up +16.7%, so the latest activity is an acceleration. But their local retail sector is not showing the same exuberance, up just +0.9% in December from a year ago but down -0.2% for all of 2025. Consumers there are prioritising saving over spending, just like in the country to their west.
China released its December FDI data overnight and it was negative again. For all of 2025 foreign direct investment fell -9.5%, following a sharp -24.7% fall in 2024 and that makes it the third consecutive year of contraction. December alone recorded a good pickup from November but even with that it was -7% lower than the December 2024 month. But at least it didn't shrink as it did in November from October.
In an interview with state media Xinhua, the Chinese central bank governor indicated that cuts to their interest rates and reserve ratio requirements are on the cards in 2026.
Japanese inflation eased to 2.1% in December from 2.9% in November, the lowest since March 2022. Food inflation fell to a 13-month low of +5.1%, driven by the slowest rise in rice prices in 16 months.
The Japanese January 'flash' PMIs were quite positive with private sector output expanding at their quickest rate for nearly a year-and-a-half to start 2026.
The Japanese central bank reviewed its monetary policy and no change was made, held at 0.75% - because an election is imminent. But now inflation concerns seem to be easing too.
In India, their 'flash' January PMIs rose across both sectors, maintaining the very high rates of economic expansion there.
In the EU, output continues to rise in January and business confidence strengthened. That raised their factory PMIs to expansion, but their services PMI's hesitated.
And here is something to keep an eye on, Europe's largest pension fund cut its holdings of US Treasury debt sharply in 2025, a trend that seems to be gathering steam, the 'divest America' trade.
In Australia this week, they posted stronger than expected labour market data. That has sharply changed financial market pricing. And in turn there has been a rush by banks, both a major (NAB) and some challengers, to hike their fixed home loan rates today. They get their December CPI result next week and it is widely expected to challenge the upper end of their policy tolerance. If it does, suddenly Australian floating mortgage rates are at risk of a rise on February 3, 2026. If they do hike then, the Aussie policy rate will be 3.85% (3.60% +25 bps). And that will put it 160 bps higher than the RBNZ current 2.25%. It has been 14 years since this difference was that large.
In Australia, private sector output expanded at its fastest pace in five months in December according to the S&P Global 'flash' PMI report. Both the factory and services sector expansions picked up, the services sector more than the factory sector however. Faster new order growth, including for exports, was a noted feature.
And we should probably note that China received its first shipment of iron ore from their giant African mine at Simandou, Guinea. This likely marks a shift in China's iron ore import focus, likely to Australia's detriment.
The UST 10yr yield is now just on 4.26%, up +1 bp from this time yesterday, up a net +3 bps for the week. The key 2-10 yield curve is now at +65 bps (unchanged). Their 1-5 curve is now at +32 bps (also unchanged) and the 3 mth-10yr curve is now at +56 bps (slightly flatter). The China 10 year bond rate is little-changed at 1.83%. The Japanese 10 year bond yield is little-changed at 2.27% although up +8 bps for the week. The Australian 10 year bond yield starts today at 4.84%, unchanged from yesterday but up +13 bps from a week ago on the labour market signals. The NZ Government 10 year bond rate starts today at 4.62%, up +2 bps from yesterday, up +15 bps for the week as markets adjusted to the higher inflation risks.
Wall Street is in its Friday session with the S&P500 down -0.1% and heading for a -0.8% fall for the week. Overnight European markets were mixed between London's -0.1% dip and Frankfurt's +0.2% surge. Yesterday Tokyo closed up +0.3% for a +0.9% weekly gain. Hong Kong was up +0.4% for the same weekly rise. Shanghai was up +0.3% for a +1.1% weekly gain. Singapore rose and impressive +1.3% yesterday. The ASX200 ended up +0.1% in Friday trade capping a down week, falling -0.3%. And the NZX50 ended down -0.8% on Friday, for a -2.0% weekly retreat and easily the worst of the markets we follow.
The Fear and Greed Index is now back in the 'neutral' zone from last week's 'greed' zone.
The price of gold will start today at US$4982/oz, and up another +US$73 from yesterday and a new record again. US$5000 could come quickly now. It is a fast-moving situation so these prices are likely to be different when you read this. Silver is up even more sharply, up +US$5/oz at US$101/oz and also a record high. Platinum is the star today, now up to US$2763/oz. A week ago these precious metals prices were: Gold US$4581, so up +8.8%; Silver was at US$88.50 so a +14.1% weekly jump. Platinum was at US$2312, so a +19.5% surge for the week.
American oil prices are up +US$1.50 from yesterday at just under US$61/bbl, while the international Brent price is now just over US$65.50/bbl. A week ago these prices were US$60/bbl and US$63.50/bbl, so a net +US$1 gain.
The Kiwi dollar is firmer from yesterday, up another +40 bps to 59.4 USc as the USD is still being devalued in financial markets. That makes it almost a -2c loss for the greenback. Against the Aussie we are down -20 bps at 86.2 AUc. Against the euro we are up +10 bps at just on 50.4 euro cents. That all means our TWI-5 starts today just over 63.1, and up +20 bps from yesterday, its highest since late September, and up +150 bps for the week, all against the USD.
And we should probably note that the official Chinese yuan setting by the Peoples Bank of China slipped below 7 to the US dollar in yesterday's fixing, the first time it has done that since May 2023.
The bitcoin price starts today at US$89,785 and up +0.8% from this time yesterday. A week ago it was at US$94,581 so a -5.1% net drop over that period. Volatility over the past 24 hours has been modest at just under +/- 1.3%.
Finally, just a reminder that this is a long holiday weekend in the north of the North Island, Auckland Anniversary Day, and businesses will generally be closed in the region on Monday. It is also Australia Day across the Tasman. However, we will have normal service on Monday.
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8 Comments
It would have been very reasonable to expect Silver to find some resistance at USD 100, but nope, it's right through it and already knocking at USD 102. This is a very real, fundamental price restructuring.
When does it become speculative euphoria (instead of fundamental price restructuring)?
And how do you get a fundamental price for something that doesn't generate an income stream that one can do fundamental analysis upon using discount rates? (e.g. like how you might price houses or shares or bonds based upon the cash flows they provide relative to interest rates/return over the risk free rate).
If it were fundamental price restructuring (in my opinion), it would mean there is some floor that justifies the price increases (like increasing cash flows). Or is this a pump with a future dump ahead of us (like bitcoin or past silver price booms/busts) - and in which case when will you consider selling?
Yes, Gold and Silver don't produce any income so they cannot be valued in ROI, at least cashflow wise, but here is what I see.
The fundamental cause for Gold's repricing is the gigantic amount of debt governments have. This debt can quite simply not be repaid, and therefore our fiat currencies must be devalued. Share markets and precious metals at ATH simultaneously proves that IMO, because they're measured in $ which are depreciating fast. Then I believe the COMEX has lost its 30 year long fight to short both Gld and Slv. Few people realise that the Shanghai exchange has become the new price setter and the COMEX and LBMA are increasingly followers, because COMEX deals primarily in paper contracts, whereas Shanghai deal in physical deliveries. Countries have woken up to the benefits of possessing the physical metals after the USA sanctioned (= confiscated) Russian assets held in USD. No one can confiscate Gold internationally. Another point to consider is that the US Treasury has its Gold reserves still valued at only $42/ounce, it has a vested interest in the Gold price rising significantly, to perhaps to $20,000/ounce and then revalue its reserve to help write off some of its debt. Finally, there is the high likelihood that when our current fiat currency dies, whatever new currency will rise will once again be backed by Gold. Nixon's detachment of the USD from Gold in 1971 was meant to be temporary! Probably it will actually be so.
Silver is a little different, because it has commercial value, which was insignificant 10-20 years ago. Silver is the best conductor of all metals and it is also the brightest. This matters for today's increasing use in photovoltaic solar panels, electronics, data centres, the latest batteries for EVs and advanced weaponry, all of which have rising demand for Silver. That is why the Shanghai exchange is running at such a premium to the Comex and LBMA (about 7 to 10 USD premium per Silver once). Samsung, EV makers, Solar panel manufacturers cannot afford to run out of physical Silver so they are therefore front-loading their orders before March which is traditionally the highest delivery month of the year. Finally, despite its spectacular rise, Silver has not yet reached it's ATH of $50/ounce reached in 1980, in inflation adjusted terms, which is somewhere around $200/ounce today.
WARNING: I have no doubt that there will be some significant pullbacks in the prices of both metals and especially so for Silver, it is notorious for being volatile, but I personally believe that in the long term, both metals prices have much upside. This is not financial advice, but just my opinion.
Reasonable?
There are a lot of people who just climb on Ponzis, while doing nothing real.
This will have that element.
But silver is an essential-to-manufacturing, finite resource. And growth is exponential.
Or was...
consequence of dodgy politics.
Murders fell 21% last year in 35 large U.S. cities — the biggest one-year drop ever and likely the lowest rate since 1900, Axios-reviewed data shows.
Beyond homicide, crime broadly trended downward. Of 13 major offenses tracked by the Council on Criminal Justice, 11 declined in 2025 compared with the prior year. Nine categories dropped by 10% or more. Aggravated assaults decreased 9%, while gun assaults and robbery fell 22% and 23%, respectively. Drug-related crimes were the only category to rise, increasing 7%.
"The explosion of cases in 2026 is about to become a major health story. Measles in the US isn't the only spreading health issue they have as a consequence of dodgy politics"
Aren't measles cases rising around the globe - but this article seems to infer the problem is only in the US and only because of the politics/policy of Donald Trump/RFK Jr - which seems more like an opinion of misinformation by David (based upon a bias of dislike of Trump and RFK Jr) than that of the truth of what is really happening.
https://www.unicef.org/stories/measles-cases-spiking-globally
This article might be closer to the truth than Davids 'opinion' that seems to think its only dodgy politics in the US casing the problem (www.ndtv.com/health/measles-is-back-why-outbreaks-are-rising-across-the…):
In the post-COVID years, many regions across countries saw reduced access to routine childhood vaccinations such as MMR, even critically low levels, due to increased strain on over-extended public health facilities overwhelmed by the COVID-19 outbreak. This created conditions where an increasing number of parents couldn't access hospitals for timely vaccinations for their children.
www.ndtv.com/health/measles-is-back-why-outbreaks-are-rising-across-the…
Thanks for calling out this bias.
When we lived in the USA, our neighbourhood a typical blue collar, there was a definite resistance to even the annual flu shot even though it was free and easily accessible. This was twenty odd years ago. The locality had too a fair presence of illegal workers who wouldn’t come forward for obvious reasons.
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