Here's our summary of key economic events overnight that affect New Zealand with news commodity prices are still falling after last week's crazy surge. The retreats are widespread and substantial. Oddly, it isn't having much effect on commodity-based currencies however.
But first today, the January factory PMIs for the US were positive, based on good new order growth. The closely-watched local ISM version expanded for the first time in 12 months, preceded by 26 straight months of contraction. Prices rose sharply for both inputs and outputs, and some buying appears to be to get ahead of expected price increases due to ongoing tariff issues, they said.
Meanwhile the S&P Global factory PMI came in with similar trends, finding rises in production when sales growth was subdued. These two surveys are positive, but we should remember that January is "reorder month" and with the tariff threats lingering, it might mean this distortion is playing an outsized role.
In China, their PMI's trends were not too different from the US, even if they were in contrast to their official version. They reported an expansion in production at a faster pace amid higher new orders. Employment rose. Output charges increased for the first time in 14 months.
In Taiwan, their factory sector recovery gathered pace in January, but cost pressures intensified.
In Singapore and Malaysia, they recorded a January uptick, but the expansions there are still modest in their factory sectors.
India and the US announced an agreement to lower tariffs and lower the temperature in their trade disputes. Given that India's exports to the US were already rising even with the higher tariff's, this is likely to be a substantial boost for India.
Back in the US, and under the radar, they have entered a new federal government shutdown, with layoffs. This one is expected to be short because a deal between Congress and the White House seems to be in effect. But it will delay this weekend's non-farm payrolls report announcement.
In Australia, Cotality said low supply levels, first home buyer incentives and a resilient labour market are combining to keep house prices rising. They are up +9.4% nationally from a year ago. But there is wide variation. They said mounting affordability and debt headwinds are butting up against 'fragile sentiment'. This is especially true where the prices are highest, in Sydney and Melbourne, where prices rose only +6.4% and +5.4% in January from a year ago, the least of any major city. The median house price in Sydney is now AU$1.29 mln (NZ$1,5 mln). It is now also above AU$1 mln in Brisbane at AU$1.055 mln (NZ$1.22 mln).
The UST 10yr yield is now just on 4.27%, up +3 bps from this time yesterday. The key 2-10 yield curve is still at +71 bps. Their 1-5 curve is now at +33 bps and the 3 mth-10yr curve is now at +57 bps. The China 10 year bond rate is holding at 1.80%. The Japanese 10 year bond yield is down -2 bps at 2.23%. The Australian 10 year bond yield starts today at 4.83%, up +2 bps. That is near its highest since 2011. The NZ Government 10 year bond rate starts today at 4.65%, up +1 bps.
Wall Street has started its week positively with the S&P500 up +0.7%. Overnight European markets closed up between London's +1.2% and Paris's +0.7%. Yesterday Tokyo ended its Monday session down -1.3%. Hong Kong fell a sharpish -2.2% and Shanghai fell even more, down -2.5% which is a big drop for them. Singapore slipped -0.3%. The ASX200 retreated -1.0%. But the NZX50 ended down just -0.1%.
The price of gold will start today down -US$183 from yesterday at US$4707/oz. Silver is down -US$6 to US$US$78.50/oz. Non-precious metals are falling hard too.
American oil prices are down -US$3 at just under US$62/bbl, while the international Brent price is now just on US$66/bbl.
The Kiwi dollar is down -20 bps against the USD from yesterday, now at 60.1 USc. Against the Aussie we are also down -20 bps at 86.3 AUc. Against the euro we are up +10 bps at just on 50.9 euro cents. That all means our TWI-5 starts today just under 63.8, and down -10 bps from yesterday.
The bitcoin price starts today at US$78,946 and recovering +2.0% from this time yesterday. Volatility over the past 24 hours has been high at just on +/- 3.0%.
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9 Comments
Shane Jones needs to be investigated. By the NZ media.
This morning on M/R, he essentially said we will be acquiescing to the biggest hegemony on the planet, in its insatiable resource-suck.
And that it will be a Cabinet decision so not public?
Bullsh-t. We are witnessing the intensification of the resource-grab, inevitable given that there's only the 'last half' of the planet left - and the worst half at that. But here, have ours (just don't let real Kiwis know what is happening).
Some would call it rape.
Edit - Rape or not, it is temporary...
Shane Jones should have been investigated years ago on a lot of things. I can't figure why Winnie tolerates him. Occasionally though he does produce some gems, but to quote a lady talking about Trump a few years ago; "Even a blind squirrel finds the occasional nut!"
Selling the country for a few muskets to give away our resources is plain stupid when we have history to tell us the consequences.
PDC and Murray86
If the NZ Govt had half a brain between them, they would take a leaf out of Norway's success story in the way in which they manage their national resources - by investing the revenues into a sovereign wealth fund, rather than allowing multinational corporations to rape them without benefit to the country.
Quoted from Search Assist...
"Norway has successfully avoided the pitfalls of resource wealth by establishing a sovereign wealth fund, which is currently valued at around $800 billion. This fund invests the profits from oil and gas, allowing the country to save for future generations rather than spending excessively. Only a small percentage of the fund's surplus is used for public projects, promoting long-term financial stability.
Trust in Governance
A key factor in Norway's success is the high level of trust citizens have in their government. Norwegians believe that their tax money will be managed wisely, which encourages them to support policies that prioritize saving over immediate spending. This trust has been crucial in maintaining a stable economy and avoiding the "resource curse" that affects many other nations.
Historical Context
Norway's approach to its natural resources has roots in its history. After gaining independence in the early 20th century, the country focused on ensuring that its resources benefited all citizens rather than a select few. This commitment to equality and responsible management has shaped its policies regarding natural resource exploitation.
Taxation Policies
Norway has implemented progressive taxation on natural resources, ensuring that the wealth generated benefits the broader society. This approach has sparked debates but is seen as essential for equitable distribution of wealth derived from natural resources.
In summary, Norway's success in managing its natural resources stems from a combination of strategic financial planning, strong governance, historical values, and effective taxation policies."... end quote...
IMO, NZ ticks none of the boxes in the summary.
Also, to take creating societal wealth to the next level, if NZ converted our MS creation over to a public utility model, the interest received by the Treasury, rather than being paid out as unearned rent to the multinational banking cartels, could be used for infrastructure investment and to develop our productive economy, making us far more competitive in the global economy.
If we managed our resources intelligently, plus adopted the public banking solution at the same time, NZ could escape its current debt doom-loop trajectory in as little as three years.
Plus, a Financial Transaction Tax (FTT) at a flat rate of between 0.25 and 1% could be the trifecta that would turn this country around.
FAT CHANCE! - because politicians like Jones find it easier to sell out our societal wealth to overseas interests.
No doubt, in some instances, there are substantial bribes in US dollars printed up out of thin air, and lodged into the bank accounts of treasonous politicians - domiciled, of course, out of sight in the likes of the Cayman Islands, Bermuda, Luxembourg, the British Virgin Islands, etc.
Tragically, NZ's economy will have to crash and burn before this reform is even contemplated.
With fiat currencies already in parabolic freefall, when indexed against the only real money (gold and silver) - IOWs they carry zero counterpart risk, 2026 is looking like the year this train-wreck will happen.
Gold and silver are the only two reliable measuring sticks for goods and services rendered that humanity has left in their toolkits. Trying to value anything in fiat tokens is an exercise in both futility and delusion.
Rgards
Col
Gold and silver are the only two reliable measuring sticks for goods and services rendered that humanity has left in their toolkits
Gold and silver are currently performing the same as most other speculative assets in recent years. Fiat currency has ironically been the most stable, relative to the price of goods.
Well, if you believe that, then you have just proved to me that you have zero understanding of the fundamental difference between real money and credit.
Blimey... judging by the show of thumbs, I see that there are at least 3 other people here who don't understand the difference between money and credit... or is this some kind of club?
No, Norway hasn't avoided the pitfalls.
It has turned a real asset - fossil energy - into digits which will be worthless when the fossil energy leaves us. Because no 'production' will be happening.
So it is as misguided as all the rest.
Norway's per capita wealth in the sovereign wealth fund is more than USD $320,000. The fund now totals ~ US $1.8 trillion.
NZ's NZSF doesn't even make US $10,000 per capita - IOWs it is 35 times lower per head of population! The total is a paltry $51 billion, for a very similar sized population.
Facts don't lie. They highlight how patently absurd and poorly researched your comment is.
Norway most definitely has avoided at least this pitfall. This allows infinitely more monetary and fiscal flexibility than NZ could even dream of.
Meanwhile, our total debt, including unfunded liabilities, is more than 600% of GDP.
I agree with your comments re Norway.
Not so much gold and silver.
You seem to consider it 'real money' but it would be a little hard to use as a day to day spending medium. Current activities tend to suggest it is more a speculative asset, albeit with some real substance, unlike most.
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