Here's our summary of key economic events overnight that affect New Zealand with news repricing for American risk is underway, evidenced by rising UST yields, a falling US dollar, and commodity price spikes.
First up today, American durable goods orders rose in November by more than expected to be +10.5% higher than year ago levels, a gain that has impressed markets, and came as a complete surprise. Non-defense capital goods orders, excluding aircraft, were up +4.3%, also a good gain.
But there are a number of factors we should take into account when assessing this data. It is 'nominal' and not inflation adjusted and tariff-taxes will be a part of the increase. Second, we looked back at the ISM and S&P Global factory PMIs for November and they did not pick up this type of gain. The ISM one actually reported contraction, the S&P Global and unchanged expansion. And then there is the 'new management' at the US data agency that releases this data. All three factors mean we should wait a bit to see if this is an outlier result. Risks abound.
Meanwhile, the Chicago Fed's National Activity Index came in below trend in November, although not as negative as it was in October. This is the ninth below-trend reading in the past twelve months.
It was a similar story for the Dallas Fed factory survey, which also recorded a pullback, for January, although not as steeply as it did in December. Output and new orders rose, but the overall index was held back by a sharp jump in prices paid for inputs. Only about half that was recovered by prices received even though that rose sharply too.
There was a US Treasury bond auction today and while it was well supported, it did bring a notable rise in the yield achieved. The 2 year bond delivered a yield of 3.55% at todays event, up from 3.45% at the prior equivalent event a month ago. This is the largest shift in yields we have observed at these events in more than a year. The US's ballooning deficit can't really afford rising interest rates, but then again it couldn't afford the tax cuts for the rich either.
Singapore's industrial production dipped rather sharply in December to end up +8.3% from the same month a year ago. But the December pullback was less than observers had expected.
In addition to Auckland, and Australia, Monday was also a public holiday in India, Republic Day. And the two top EU officials were in New Delhi to seal a key trade deal between the two economic powers. In fact, it has been called "the mother of all deals" and is set to be signed later today. Both sides are making major concessions to get it done and it is likely to boost trade in a globally significant way. The EU will get major access to India's car market. India will get the EU's preferential tariff MFN treatment.
The UST 10yr yield is now just on 4.21%, down -3 bps from this time yesterday. The key 2-10 yield curve is now at +62 bps (down -1 bp). Their 1-5 curve is now at +30 bps (down -1 bp) and the 3 mth-10yr curve is now at +52 bps (up +1 bp). The China 10 year bond rate is little-changed at 1.82%. The Japanese 10 year bond yield is down -2 bps at 2.24%. The Australian 10 year bond yield starts today at 4.81%, unchanged because it didn't trade yesterday. The NZ Government 10 year bond rate starts today at 4.62%, also unchanged from yesterday.
Wall Street has started its week positively with the S&P500 up +0.6%. Overnight, European markets were mixed between Paris's -0.1% dip and Frankfurt's +0.2% firming. Yesterday Tokyo ended its Monday session down -1.8%. Hong Kong was up +0.1% and Shanghai was down -0.1%. Singapore ended down -0.6%. The ASX200 was on holiday. But the NZX50 did trade, up only +0.1% however.
The price of gold will start today at US$5087/oz, up +US$104 from yesterday and a new record again. Silver is up proportionately more, up +US$12/oz at US$115/oz and also a record high. Platinum has risen to US$2857/oz, up +US$116/oz.
Tin prices are up +9.5% today, and copper is up +1.5%. Both build on recent surges to record highs. A falling greenback accentuates these rises, but all commodities are still priced in USD.
American oil prices are holding at yesterday's at just under US$61/bbl, while the international Brent price is softish, now just under US$65.50/bbl and down -50 USc.
The Kiwi dollar is up +30 bps from yesterday, now at 59.7 USc. Against the Aussie we are up +10 bps at 86.4 AUc. Against the euro we are also up +10 bps at just on 50.4 euro cents. That all means our TWI-5 starts today just under 63.5, and up +40 bps from yesterday, its highest since late September.
The bitcoin price starts today at US$87,677 and down just -0.3% from this time yesterday. Volatility over the past 24 hours has been modest at just under +/- 1.4%.
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18 Comments
Well well well boys and girls,
The slow moving car crash is picking up speed. I thought the old system had 2-3 more kicks of the can, maybe 30-40 years. I radically over estimated our ability to remember and learn the past.
Looks like Orange Man is wanting to speed up the program. Ironically his administration's attempts to front run changing global fortunes will actually speed up that process. His successors, regardless of political party, will not reverse most of what he has put into motion, we are on a way one trip. Our leaders, and most of us, will take so long to adjust to the new paradigms, effective responses will be learned the long hard way. But, likely learned eventually.
Over the next 5-10 years, all the things people have been complaining about, wokeness, inequality, "productivity", will seem quaint and trivial (if they're not already). What we take as normal will be flipped on its head, and COVID style supply side inflation will seem like a pony ride. If this won't see the end of consumerism, it'll certainly chop it off at the knees for the majority.
Most people won't have stacked anywhere near enough gold to make a difference. Many other stores of wealth will become worthless. The focus now should be on determining what things people with gold (or any money) will need or want to buy. The method of production of these goods and services is preferable, but stockpiling efficient and reliable technology will likely go some way. A productive patch of dirt might not go astray either.
Personal relationships will be a new gold, as will having a good spiritual and moral grounding. So make hay while the sun shines, work on your in-person social groups, and try to not get yourself so lost in the woods in the small stuff.
Oh, and happy 2026 everyone!
A new year, a new you??
The only global certainty nowadays is the uncertainty Trump’s administration has created. But that is nothing compared to the uncertainty that will abound when he departs. The man is unique in terms of a power grip. So too was for instance Stalin. The problem is that plenty of the underlings are wannabes of the same ilk. The process to succeed Trump will not be a serene event.
Painter nails it.
Remove Trump and nothing changes, except perhaps the rate of change.
The pressures were there, and his appraisal is spot-on - as is his suggestion as to what to cultivate...
Remains to be seen. We share a premonition that the test of it may yet arrive within this term. The GOP emblem is an elephant. To paraphrase the old quote - when those elephants fight there is little concern as to what gets trampled.
At the moment though, there's virtual silence from other Republicans in opposition to the administrations' actions and words. There's been a revolution inside the party making it quite the different beast.
Very difficult to say how bad things could get in only for years, partially because:
- Trump's behaviour will only worsen the more he gets away with
- Someone may eventually stand up to him in a more significant way than just a speech, and his response could be fairly dramatic.
Welcome back.
‘Personal relationships will be a new gold, as will having a good spiritual and moral grounding’
They always were gold Painter! Nothing new about them at all unless they were being disregarded by those you know recently?
But then housing bubbles turned people away from moral and spiritual grounding as they focused on greed and self interest (the theme of most of my comments here). Ie the opposite of good morals and spiritual grounding.
Funny how hard times cause people to say ‘oh we better focus on being good humans again!’ but when it’s going good it’s ‘who cares about morals and principles - I can screw others over by buying another rental for my portfolio and making them my rent slaves - and who cares about the financial and social stability of the nation as a whole..? My personal wealth and gain comes before any of that!!’ Ie many NZers these past 10-15years.
They always were gold Painter! Nothing new about them at all unless they were being disregarded by those you know recently?
Since about the 50s, but that's accelerated greatly over the past decade or so.
But then housing bubbles turned people away from moral and spiritual grounding
That's not the prime mover away from spirituality over the past century. We used scientific materialism to dismantle many of religions' claims, and then followed it up with a raft of social and cultural changes.
But good to see you clinging to old chestnuts.
Funny how hard times cause people to say ‘oh we better focus on being good humans again!’
That's my de facto position, I just don't feel the need to evangelize it (you live it instead). Part of the point of raising it here is as a precursor that many status quos will upend, and we're going to need to call on each other more than is the current norm.
"I can screw others over by buying another rental for my portfolio and making them my rent slaves."
You know, people appreciate being able to rent a property. Everyone seems very silly in the comments today.
The appreciation is just the superficial, in the moment response Zac. Then they learn they are being screwed, fleeced and denied the opportunity to escape the rent trap by parasitic landlords and an apathetic government.
I am yet to hear of a landlord charging 'affordable' rents, instead it's 'market rents' dontcha know?
Pa1nter, you haven't really made any real predictions in your comment or stated anything concrete. Can you be more specific so we can check back in the future to see if you are right? Your comment seems a tad hysterical.
If you're after "expect x price or action at y date", I can't really be of much help. All I can really attest to is likely future trends and tendencies on the trajectory we are on. Including, but not limited to:
- increased domestic violence
- increased international violence
- unrestricted global trade becoming restricted
- movements into war economies and subsequent impacts on other facets of the economy
- worsening fortunes of most of the planets' human inhabitants
So expect increased scarcity, volatility, and some of the promises on paper we take as a given to vanish. I'm not saying run round with your hair on fire, just expect status quos to fundamentally alter.
"expect status quos to fundamentally alter"
Aren't status quos constantly changing? Off the top of my head I can think of quite a few over recent decades. Women's rights, Gay rights, indigenous rights, Western demographics, migration, human fertility, shifting manufacturing centres, travel, incandescent lightbulbs, photography, telephony, audio visual entertainment, working from home, drone warfare, publishing, artificial intelligence ...the list goes on.
We have been pretty much in a state of constant status quo change for my entire life.
China Daily says that the Spring Festival holiday will run from February 15 to 23, 9 consecutive days. The extended break will be longer than in previous years. This potentially will impact travel and spending plans, but also amplify the effects of policies designed to unlock consumption potential, particularly in services, travel and experience-driven spending.
This boils down to whether to boost total consumption Chinese households need more time to spend or more money to spend.
https://www.chinadaily.com.cn/a/202601/26/WS6976a32da310d6866eb35a26.ht…
Don't hold your breath on Chinese consumer spending...
https://www.abc.net.au/news/2026-01-27/chinas-aging-population-is-savin…
Pvte credit is a dead swamp globally. Talk to anyone at the water cooler and they may say 'Yeah nah. Aotearoa has low exposure to pvte credit mkts.' Probably correct, but it has been booming in Aussie. Hard to understand exactly how big it is, but the hospitality industry relies on it.
https://au.finance.yahoo.com/news/pub-owner-huge-call-over-011611021.ht…
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