Here's our summary of key economic events over the weekend that affect New Zealand with news we need to keep an eye on the 'Sell America' trade, which until now has been more headlines that substance and mainly about China's divestment in US Treasuries. But the Greenland kerfuffle has triggered a serious rethink by many pension fund managers, and more are taking this action.
But first, the week ahead will be a relatively quiet one locally on the data front, but we will get a big range of December banking sector data, allowing us to cap the 2025 year on a number of important metrics. In Australia, the key event will be Wednesday's CPI data where it is expected to rise to 3.6%, the final indicator before next week's RBA rate review.
Globally, all eyes will be on the gold price and its expected push up through US$5000/oz which could come early in the week.
And in the US, all eyes will be on the Fed and its January 29 meeting, amid increasingly contrasting takes by voting members on the appropriate rate path. But most things related to public policy are in turmoil in the US, and the Fed's position is just part of that. We will be watching for bond market reactions.
Elsewhere, official interest rate decisions are expected in Canada, Brazil, and Sweden, and the Bank of Japan will publish meeting minutes.
An don't forget it is a holiday today in the north of the North Island (Auckland Anniversary Day), and in Australia (Australia Day),
In the first news up today, China released its December FDI data over the weekend 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.
China also release minimum wage rate data that showed 27 of the country’s 31 provincial jurisdictions have increased monthly minimum wages over the past year, with half introducing double-digit rises.
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.
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.
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. But markets are on alert for official intervention to support the yen.
In India, their 'flash' January PMIs rose across both sectors, maintaining the very high rates of economic expansion there.
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.
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 weekend update.
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.
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 Friday. 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 4.24%, down -2 bps from this time Saturday. The key 2-10 yield curve is now at +63 bps (down -2 bps). Their 1-5 curve is now at +31 bps (down -1 bp) and the 3 mth-10yr curve is now at +51 bps (also down -1 bp). The China 10 year bond rate is little-changed at 1.83%. The Japanese 10 year bond yield is also little-changed at 2.26%. The Australian 10 year bond yield starts today at 4.81%, down -3 bps from Saturday but up +10 bps from a week ago on the labour market signals. The NZ Government 10 year bond rate starts today at 4.62%, unchanged from Saturday, up +15 bps for the week as markets adjusted to the higher inflation risks.
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 'sell America' trade, one started by Norway's sovereign wealth fund late last year.
The price of gold will start today at US$4983/oz, up a minor +US$1 from Saturday bit still a new record again. US$5000 could come quickly now. Silver is up +US$2/oz at US$103/oz and also a record high. Platinum ihas eased marginally to US$2741/oz.
American oil prices are holding at Saturday's at just on US$61/bbl, while the international Brent price is firmish, now just under US$66/bbl.
The Kiwi dollar is little-changed from Saturday, still at about 59.4 USc. That makes it almost a -2c loss for the greenback for the week. Against the Aussie we are up +10 bps at 86.3 AUc. Against the euro we are down -10 bps at just on 50.3 euro cents. That all means our TWI-5 starts today just under 63.1, and up +10 bps from Saturday, its highest since late September, and up +150 bps for the week.
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 Saturday's fixing, the first time it has done that since May 2023. Although to be fair, most currencies are rising against the USD, ours included.
The bitcoin price starts today at US$87,968 and down -2.0% from this time Saturday. Volatility over the past 24 hours has been modest at just under +/- 1.0%.
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22 Comments
Winston Peters starying to show the true problem - politicians vs science.
Says we shouldn't fund WHO.
Mentioned nitrates - of course.
Reminds one of Groucho... "well, I have others". So if what we want is beyond what science says is acceptable, let's pull the pin on the science.
Ultimately, this is a question of whether democracy - in its present form, where lobbying, a biased media and self-interest dominate to keep voters ignorant - is applicable anymore.
Democracy? In addition to Groucho, try Churchill - the best argument against democracy is a five minute conversation with the average voter. Those sort of cover both ends of the stick, I would suggest.
This one is for the Keynesians:
"Keynes's Bancor idea needs revisiting in wake of Trump"
https://www.abc.net.au/news/2026-01-26/trump-us-dollar-keynes-bretton-w…
It is an interesting point that I've been intrigued by. The article re Life after the US Dollar mentions the Reserve Currency Status, and I've asked about it before.
That status props up the value of the dollar through demand, but is there some form of treaty or international law that directs the status, or is just consensus?
Take away that status and the value of the dollar would crash, as would the economic power of the US to bully others.
I always understood it was post WW2 consensus (USA being last economy standing?) however the link article stated that the USA agreed with Saudi Arabia that oil would be traded in USD which probably drove everything.
In later years a few countries & blocs (eg Europe & BRICS) moved to develop alternatives eg Euro & more recently Bitcoin - & Gold is now having a moment atm.
I think gold may become defacto reserve here, hell it will goto 40k usd if that happens,
AI may disrupt countries from paying bond coupons... is gold the only alternative?
US Secretary of Commerce spoke at Davos last week . Don't know if you call it bullying, but he certainly left no doubt that the US Presidents of the past-Clinton, Bush,Obama, and Biden greatly harmed the working American working class. While Clinton's VP was booing I'm sure if Mr Peters had been there he would have been clapping.
Globalization has failed the West and the United States of America. It’s a failed policy. It is what the WEF has stood for, which is export offshore, far-shore, find the cheapest labor in the world and the world is a better place for it. The fact is, it has left America behind. It has left the American worker behind. And what we are here to say is that America First is a different model—one that we encourage other countries to consider—which is that our workers come first. We can have policies that impact our workers.
Lutnickt old Davosians the free ride was over. In onstage remarks and at an invitation-only dinner, the Commerce chief and longtime head of the Cantor Fitzgerald investment bank slammed former American pols for submitting to “lies”: that “offshoring was necessary, borders were not, and our national interest needed to submit to global lower cost of labor.” These remarks generated event-wide outrage, even inspiring Al “He’s Still Alive?” Gore to start booing and European Central Bank chief Christine Lagarde to walk out, though some dispute this.
The death of globalization is the real headline from the international self-indulgence festival at Davos
Trump was abrasive and insulting and no one budged. Lutnick was rational and clear, and the WEF attendees who didn’t throw fits cried anonymously to media. Trump is surely hated, but on Planet Davos the most unforgivable sin is abandoning the globalism gravy train in favor of a return to national-interest politics.
Matt Taibbi Rocket News 23 Jan, 2026
Globalisation is an extension of Friedman's 'Free Market' economic theories. It is an American design and goal where US power is entrenched through corporate expansion. Look at the Transpacific free trade agreement and investor state dispute processes.
Personally I think the Neo Liberals moved the US Manufacturing base to China to insure that the former "bamboo curtain" was able to Trade using US Reserve Currency. By sending all those US factories to China they set up a situation where ultimately those Chinese made exports resulted in US dollar in Chinese banks, and many of those dollars would come back to the US Fortune 500 coffers. In1998 I heard it first hand from one of our Vendor's engineers who installed machines in a GM factory in China. The factory footprint and maker machines were an exact duplicate of the Connecticut factory they closed.General Electric CEO was the hero of Wall Street in the '90's. Earnings went through the roof by keeping the price the same and dropping labour costs by a factor of 50 to 1. In the long run though GM was eaten alive by Chinese clones.
In 2016 for the first time the people had some one running for President who put a spot light on the China Trade, and as they say the rest is history.
I well remember in the 80s and 90s the Chinese reputation for piracy. It was understood back then that the Chinese were copying the designs and technology and learning from it to produce cheaper products. I remember meeting a chap who was a salesman for Honda. He told me that the Japanese were increasingly outsourcing their production to China and that he had run across a standing motor to drive a pump or generator which looked familiar. He said a closer inspection indicated that the motor was an almost identical copy of the Honda ones. The variations were mostly on the interfaces to attach the pumps or generators. These motors where a third of the cost of the Honda ones. He also told me that if you gave them a contract to produce 100, they'd make 1000, but 900 would be without the branding.
It has been long understood that outsourcing manufacturing to China was in effect gifting them your designs and technology.
It was still all American design to make money.
find the cheapest labor in the world and the world is a better place for it.
That's a bit rich coming from him considering it is US manufacturers who took their business offshore to increase profits by downsizing labour costs. Perhaps then they should be upset with the economic model they themselves have promoted and boasted to the world about, claiming to have fought and died for it also: Capitalism.
Exactly, USA has benefited immensely from the current system
Well Reagan supported keenly by Thatcher were the architects of globalisation and for sure the Americans then ran away with the spoon. What is being said here is that altered drastically the tiers of the nation’s traditional manufacturing and attached work force. The in-surge of cheap illegal labour further compounded the problem. Trump & Co may well have identified the negative impact on the nation, but heck you can’t turn the ship around overnight.
Pity they resorted to fascism to address it.
Replacing a poor system with a worse one is not the answer required...as Keynes recognised.
"The Democrats are too irresponsible, debt is out of control. How about we get someone different who will also blow up the deficit, but with a side of subverting democracy and placing a masked militia beyond the control of law on the streets, while alienating all our closest allies and trading partners?"
It was briefly revisited post GFC and buried....think we will have to wait for the whole shooting box to collapse before it is adopted....hopefully without any additional war.
May not have to wait much longer.
Then we will only have CC, inequality and resource depletion to worry about.
"2026 is a "Goldilocks" year for first-home buyers, with lower interest rates, lots of houses to choose from and banks willing to lend to people with small deposits, market commentators say."
https://www.rnz.co.nz/news/business/584944/why-2026-is-a-goldilocks-yea…
But we were told that unless people purchased by the end of 2023 or 2024 they would have missed this cycle and would have been priced out of the market until 2030? Were vested interests trying to mislead people again for their own financial gain?
This is very good - The diary of a CEO latest
Political commentator Konstantin Kisin breaks down Iran’s turning point, how Greenland could reshape global power, why he thinks mass immigration must stop, and how Trump’s actions in Venezuela exposes Europe! Konstantin Kisin is a political thinker and co-host of the podcast TRIGGERnometry, known for his sharp analysis of geopolitics, immigration, and cultural issues. He is also the best-selling author of the book, ‘An Immigrant's Love Letter to the West’.
He explains: ◼️Why the post-war rules-based order is collapsing, and what a multipolar world really looks like ◼️How nuclear weapons have become the only true source of national security ◼️Why Europe’s economic and energy choices destroyed its global influence ◼️Why AI-driven job losses could fuel extremism and radical redistribution ◼️How Greenland could shift global power dynamics in America’s favour 00:00 Intro 02:51 What’s Really Going On in the World Right Now? 08:32 How Much of This Chaos Links Back to Nuclear Weapons? 13:17 Why Every Global Superpower Is Acting Alone 19:41 Where Is the UK Headed If This Keeps Up? 20:45 Can the UK Still Make a Comeback? 24:20 Why Socialism Is Rising Again—And What It Means 30:36 Are We Actually Moving Toward a Communist World? 37:04 What the Iran Protests Reveal About Global Unrest 44:01 Did Trump Really Try to Buy Greenland—And Why? 46:07 Are Multipolar Powers Helping or Hurting the World Order? 46:35 What China's Shrinking Child Population Means for the Future 53:09 What Do You Really Think of Keir Starmer? 57:43 The Real Debate Around Taxing the Rich in the UK 01:04:46 What Kind of Leader Does the UK Desperately Need? 01:08:48 Why the UK’s Wealth Mindset Needs a Rethink 01:16:07 What History Can Teach Us About Today’s Crisis 01:19:28 How Power Struggles Shape Nations—and Collapse Them 01:20:34 Is Trump the Leader for This Moment in History? 01:23:14 What Would Make You Leave the UK for Good? 01:26:08 The One Issue You Can’t Ignore on the Right 01:29:15 Are You Truly Happy Right Now? 01:31:08 What’s Your Biggest Worry for Your Kids’ Future? 01:32:06 Who Shaped You Most, Outside of Family?
If you have AI and robots at the scale outlined and the consequent lack of need for human labour AND you have an increasingly damaging climate and declining resources what are the incentives to maintain a population of 8 billion?....indeed what would be the incentives to ascertain the optimum population and time frame to achieve such and plan accordingly.
A world of perhaps millions rather than billions and asap....."we will be so rich"
Team Trump understands a multipolar world much better than most of the Anglosphere ruling elite.
In my opinion.
Aotearoa seems to be quite ignorant on such matters.
Surprised he remains in the UK....having listened further it sounds like he would be right at home in Trumps America. Another selling the infinite growth on a finite planet message.
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