Here's our summary of key economic events overnight that affect New Zealand with news financial markets are taking more notice of the lackluster US economic data today, with Wall Street equity markets hesitating, bond yields in a defensive twist, and the USD staying weaker.
But first, the overnight dairy Pulse auction not only confirmed the prior week's sharp rises, it added to them. WMP was up a marginal +0.4% from a week ago to be up +14% from the start of 2026. Butter was up +6.8% from last week, up +18% year-to-date. And the SMP price was up +1.7% from last week, also up +14% so far this year. Everyone in the industry will welcome this confirmation of the recent rising trend, even if some of it is just USD weakness.
Not so positive was the US retail sales report for December, which showed zero growth from November, to remain +2.3% higher than a year ago. Given CPI inflation is +2.7%, there is clear stagflation involved here.
Meanwhile the weekly ADP employment report only showed private payrolls gaining +6,500 nationally, well within the margin of error. But at least it was better than the prior week's no-change.
The January NFIB optimism index was also little-changed and still below the benchmark 100 level.
US household debt as at the end of 2025 was recorded at US$18.8 tln, a +4.2% rise from the end of 2024. Non-housing debt rose only +2.6% in the same period, so Americans are taking on more housing debt at a faster pace. The same report shows delinquency rates on all loans rose to 4.8% of outstanding household debt, the highest level since 2017, driven by higher defaults among low-income and young borrowers.
The overall soft US data probably helps make the case for another Fed rate cut at their next meeting on March 19, 2026 (NZT) but there is a lot to be revealed before then.
In Australia, consumer sentiment slipped in February, and not insignificantly. Recall, the RBA has recently pushed through a rate rise. Analysts say the fall is a muted response compared to previous rate hikes. Over 80% of those surveyed expect interest rates to rise further in the next 12 months. Homebuyer sentiment has sunk as price expectations hit new 15 year high.
Meanwhile, the NAB business sentiment survey results inched up in January, although revenues softened. That was offset by costs easing a bit faster.
The UST 10yr yield is now just under 4.15%, and down a sharpish -5 bps from yesterday. The key 2-10 yield curve is flatter at +70 bps. Their 1-5 curve is also flatter at just under +30 bps and the 3 mth-10yr curve is much flatter at +46 bps (down -6 bps). The China 10 year bond rate is back up +11 bps at just under 1.81%. The Japanese 10 year bond yield is back down -8 bps at 2.24%. The Australian 10 year bond yield starts today at 4.79%, down -6 bps. The NZ Government 10 year bond rate starts today at 4.56%, down -1 bp from yesterday.
Wall Street has started its Tuesday with the S&P500 essentially unchanged. Overnight, European markets were mixed between London's -0.3% rise and Paris's +0.1%. Yesterday Tokyo ended its Tuesday up another strong +2.3% in its extended post-election glow. Hong Kong was up +0.6%. Shanghai ended it up only +0.1% however. Singapore also closed up +0.1%. The ASX200 ended its Tuesday little-changed. But the NZX50 closed up +0.5%.
The price of gold will start today down -US$55 from yesterday at US$5018/oz. Silver is down a sharp -US$3 at US$80.50/oz and continuing its extreme volatility.
American oil prices are down -50 USc at just on US$64/bbl, while the international Brent price is now just under US$69/bbl.
The Kiwi dollar is little-changed against the USD from yesterday, still just under 60.5 USc. Against the Aussie we are up +20 bps at 85.5 AUc. Against the euro we are holding at 50.8 euro cents. That all means our TWI-5 starts today unchanged at 63.9.
The bitcoin price starts today at US$69,517 and down -0.7% from this time yesterday. Volatility over the past 24 hours has been moderate at just on +/- 2.3%.
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