Here's our summary of key economic events overnight that affect New Zealand with news real wages are falling in Australia.
[Please note, there will be no Economy Watch podcast today due to some equipment failure.]
But first, after falling almost -20% over the past three weeks, US mortgage applications rose +2.8% last week on stronger refinance activity. Demand for mortgages to buy a new home actually fell last week.
We also got US housing starts data overnight, but for December. They rose +6.2% from November to an annualised rate of 1.4 mln, up from 1.322 mln in the previous month and well above the expected 1.33 mln. This latest data is the highest level since July and up from October’s 15-month low. Single-family housing starts rose +4.1% while multi-family starts climbed +10.1% to a three-month high.
New orders for US-made durable goods fell by -1.4% in December from November, following an upwardly revised +5.4% jump in November. The drop was milder than the -2% decline expected by analysts and was largely driven by a -5.3% fall in aircraft-related orders. Orders also declined sharply for capital goods, also largely aircraft-related. This leaves capital goods orders up +21% from a year ago, however, and overall orders up +12% on the same year-ago basis.
More currently, January US factory production rose +0.6% to be +2.4% higher than year-ago levels.
Interestingly, tariffs haven't been enough to stop the US losing another aluminium smelter, leaving the country with just five primary metal production plants.
And in other tariff news, Kevin Hassett, a top Trump economic adviser lashed out at a study from the New York Fed that found that American companies shoulder most of the costs of tariffs. He called for the central bank to punish the four researchers behind the work.
In Japan, manufacturer sentiment rose to extend the current positive run to 11 months. The Reuters Tankan index rose to +13 in February from +7 in January, driven by sharply better machinery orders - and a weaker yen.
In Australia, the Westpac–Melbourne Institute Leading Index six-month annualised growth rate, which indicates the likely pace of economic activity, stalled in January from December's positive outlook. This means they no longer have above-trend growth; it is back to their normal level.
And yesterday, the latest data out of Australia on wage growth pegs it at 3.4% in 2025. While that may seem a healthy rise, their CPI inflation rose 3.8% in the same year. Real wages are going backwards, it seems.
The UST 10yr yield is still just under 4.08%, up +3 bps from this time yesterday. The key 2-10 yield curve is unchanged at +62 bps. Their 1-5 curve is holding at just over +15 bps (-1 bp) and the 3 mth-10yr curve is just under +39 bps (up +3 bps). The China 10 year bond rate is unchanged at just on 1.81%. The Japanese 10 year bond yield is holding at 2.14%. The Australian 10 year bond yield starts today at 4.73%, up +4 bps today. The NZ Government 10 year bond rate starts today at 4.40%, down -5 bps from yesterday.
Wall Street is firmer with the S&P500 up +0.9% today on a rebounding tech sector. Overnight, European markets were up +1.2% except Paris which rose +0.8%. Yesterday Tokyo closed up +1.0%. Hong Kong, Shanghai and Singapore were all on holiday for CNY. The ASX200 ended its Wednesday trade up +0.5%. But the NZX50 ended up +1.7% and the best of the markets we follow.
The price of gold will start today back up +US$149 from yesterday at US$5007/oz. Silver is up +US$5.50 at US$78/oz today.
American oil prices are up +US$2.50 at just over US$64.50/bbl, while the international Brent price is now at US$69.50/bbl.
The Kiwi dollar is down -40 bps against the USD from yesterday, now just on 59.9 USc, a -5% devaluation. Against the Aussie we are down -60 bps at 84.7 AUc. We are down -10 bps against the yen. Against the euro we are down -20 bps at 50.9 euro cents. That all means our TWI-5 starts today down -40 bps from yesterday, now at 63.4.
The bitcoin price starts today at US$67,150 and down -0.6% from this time yesterday. Volatility over the past 24 hours has been modest at just under +/- 1.2%.
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5 Comments
If your job involves engaging logic, I wouldn't worry about AI taking your job tomorrow:
“The car wash is 40m from my home. I want to wash my car. Should I walk or drive there?” the prompt reads, with the distance varying among users, but still walkable.
AI often suggests to walk to the car wash. Better for you health, faster, saves wear and tear on the car.
https://cybernews.com/ai-news/ai-car-wash-test/
Most the newer AI models got it right.
This is always going to be the issue with AI, it can and does get things wrong, just like people. If a person gets something wrong the company can blame the person. If the AI gets it wrong, and the AI is provided by the company, then the company is at fault. Imagine if it gives incorrect legal advice for example.
When the price of anything falls to zero demand tends to rise...
AI will allow us to build free software but someone will have to specify the problem and test cases that must be solved.
With AI we have never been able to build the wrong thing this fast, the key skill will be understanding the customer problem that needs to be solved and being able to articulate that.
It was crap last year, is stunning but still not quite there now, this is not moving in a linear fashion.
People who simply co-ordinate the movement of information across companies will be the first to go.
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