US data mixed as risk aversion rises; Singapore & Sweden hold rates; EU sentiment rises, inflation expectations dip; air travel & cargo buoyant; UST 10yr at 4.23%; precious metals prices hesitate; oil rises; NZ$1 = 60.5 USc; TWI-5 = 63.9

Here's our summary of key economic events overnight that affect New Zealand with news risk aversion is prominent in markets today. Markets aren't looking at recent past economic data. They are more concerned about what lies ahead. And excessive spending on AI is part of the reason investors are growing more nervous.

But there was recent data reported. US initial jobless claims fell sharply last week to 231,000, but only by as much as seasonal factors would have indicated. There are now 2.15 mln people on these benefits, marginally lower than at the same time last year and similar to the 2024 level.

US exports fell in November from October, and imports rose in the same period, accentuating their trade deficit in goods and services to -US$57 bln and back to April levels. The American trade deficit with Asia rose to -US$71 bln in November as a shrinking deficit with China was offset by growth in Southeast Asian imports. The drivers of this shift are American multinationals.

American factory orders rose in November from October to be +4.2% higher than the same month a year ago. What is interesting about this data is that neither the ISM PMI, nor the S&P Global factory PMI picked up this rise in November. Maybe part of this is because wholesale inventories rose and perhaps intercompany orders aren't accounted for in this data.

In Canada, they booked a slightly larger trade deficit in November which was more than expected, also on falling exports.

The Monetary Authority of Singapore (their central bank) held monetary policy steady for a third consecutive review yesterday, maintaining the slope, width, and center of the Singapore dollar nominal effective exchange rate (S$NEER) policy band, as markets expected. However, they lifted their inflation outlook for the coming year to 1% to 2%, up from the 2025 forecast range of 0.5% to 1.5%. Actual CPI inflation in Singapore came in at +0.9% in December.

In Europe, both economic sentiment and employment confidence picked up in December. Of equal importance is that this survey picked up more modest inflation expectations at the same time. In the same region, the Swedish central bank held its policy rate unchanged at 1.75%.

International air passenger travel was up +7.1% in December from the same 2024 month with Asia/Pacific travel up +10.9% and driving the overall shift. North America recorded the weakest rise at +2.1%. International air cargo traffic was up +4.2% in December, up +6.6% in the Asia/Pacific region, up just +0.8% in North America, also the weakest region.

Container freight rates fell again last week to be -37% lower than year-ago levels, mostly due to a weaker outbound China trade. Bulk cargo rates were up +14% in the past week, to be +175% higher than year-ago levels, but that is distorted by an unusually low base. In a much longer perspective, this is actually only back at levels it was 30 years ago.

The UST 10yr yield is now just on 4.23%, down -3 bps from this time yesterday. The key 2-10 yield curve is now at +69 bps (up +1 bp). Their 1-5 curve is now at +31 bps (down -2 bps) and the 3 mth-10yr curve is now at +54 bps (down -3 bps). The China 10 year bond rate is down -1 bp at 1.81%. The Japanese 10 year bond yield is up +2 bps at 2.26%. The Australian 10 year bond yield starts today at 4.79%, up +3 bps from yesterday. The NZ Government 10 year bond rate starts today at 4.65%, down -1 bp from yesterday.

Wall Street is lower with the S&P500 down -0.7% in Thursday trade on tech weakness. Overnight, European markets were quite mixed with London up +0.2%, Paris unchanged, but Frankfurt down a very sharp -2.1%. Yesterday Tokyo ended its Thursday session little-changed again. Hong Kong was up another +0.5% and Shanghai was up +0.2%. Singapore ended up +0.4%. The ASX200 dipped -0.1% again yesterday. The NZX50 fell -0.5% in its Thursday trade.

The price of gold will start today at US$5273/oz, down -US$16 from yesterday and basically holding its recent highs. Silver is down -US$1.50 to US$112.50/oz, also still holding high. Platinum has slipped slightly as well and now at US$2604.

Aluminium and tin have both hesitated today too.

American oil prices are up another +US$2 at just over US$65/bbl, while the international Brent price is also higher, now just under US$70.50/bbl. These are four month highs, spruiked by the Epstein-distraction adventures by Trump aimed at Iran.

The Kiwi dollar is up +20 bps from yesterday, now at 60.5 USc. Against the Aussie we are up +10 bps at 86.3 AUc. Against the euro we are also up +10 bps at just over 50.6 euro cents. That all means our TWI-5 starts today just over 63.9, and up +10 bps from yesterday, its highest since late September.

The bitcoin price starts today at US$84,778 and down a sharp -5.2% from this time yesterday as the general risk aversion sentiment spreads. Volatility over the past 24 hours has been high at just under +/- 3.6%.

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