US inflation tops 4% again drawing heightened concern by the Fed; US beef production in decline; China exports reveal distortions; Aussie sentiment slides; Anthropic IPO to go ahead; UST 10yr at 5.01%; gold and oil lower; NZ$1 = 55.9 USc; TWI-5 = 59.9

Here's our summary of key economic events overnight that affect New Zealand, with news the US is getting a brutal lesson on how to make their economy uncompetitive, by looking inward, applying tariffs, and accepting higher costs.

But first, there was a Pulse dairy auction overnight that was relatively positive in USD terms, more so in NZD terms. Of note, the dominant WMP price rose +2.2% from the prior week's full auction and is back over US$4000/tonne for the first time since July 2025.

But the big market-moving news overnight is the US inflation result. They skipped posting a year-on-year result because the year-ago data is 'missing' due to a Government shutdown at that time. But everyone else can calculate it as just over 4.0%, up notable from September's 3.7% and above analysts' estimates of 3.9%. They did note that fuel costs are up +37.4% in the year to October. No-one was impressed by this result (or the way it was 'avoided'). Equities fell, bond yields jumped, and markets generally went into risk-off mode.

And Fed speakers turned hawkish on inflation. Governor Waller warned that a +50 bps rate hike in December may be needed. That was followed by a speech by Dallas Fed boss Logan, who backed at least two additional quarter-point hikes, adding those may be necessary at a quicker pace. The Warsh Fed is signaling in a way Kevin Warsh promised they wouldn't, and in a rising track in a way Warsh promised Trump they wouldn't do. And that is because they have a serious inflation problem. They haven't had average almost 4% inflation like they have in the past six months (other than in the pandemic recovery) since briefly in 2008, and prior to that in 1988.

Other US data out overnight shows jobs growth in the private sector averaging 19,750 per week in the past four weeks (no change).

There was little-change in the NFIB sentiment survey showing uncertain but still net-negative levels in thsi sector.

And US household debt for Q3 was reported showing an unusual rise in non-housing debt by +US$54 bln and delinquency rates rising. That said, the overall growth in household debt was only 'moderate' due to slower housing debt growth.

The November WASDE report from the USDA has confirmed that US beef production is on the decline and in a serious way, so much so that US meatpacking plants are closing. That means a continuing appetite for beef imports.

Across the Pacific, China reported that exports rose at a fast clip in October, aided in part by generous subsidies, tax breaks, and official support. Exports were up +35.2% in the month from the same month a year earlier. The official MIC2025 policies have also helped enormously to build the comprehensive infrastructure they have to dominate a vast range of key industries. For a country like New Zealand this is very helpful, allowing us to buy goods at prices and specifications we couldn't otherwise afford. But for China's main economic rivals, the coordinated strategy looks predatory in a way that would be illegal in just about every market economy that values competition. And even for us, we are increasingly addicted to their supply chains. The pushback from this hugely successful national strategy is growing, starting from the strategic vulnerability risks. In just ten months, China has recorded a trade surplus exceeding +US$1 bln and is on target to easily beat their 2025 record.

China has its own problems with this success. Its domestic economy is stuttering and exports are one of just a few sectors than are growing. It pays their bills - even if it isn't sustainable long-term. Beijing knows what the problem is and its distorting effects; it just can't seem to do anything about it

Malaysian industrial production rise +6.3%in September from a year ago, up from a +5.0% gain in August, and above the expected +5.8% recovery. It was their strongest growth since June.

In Australia, consumer sentiment is sinking again in November, and has now breached a new four year low. In fact, it was only lower in April 2020. The Westpac-Melbourne Institute survey shows over 70% consumers expect further rises in mortgage rates over the next year. There was a big downgrade in consumer house price expectations. And job loss concerns are rising gradually although most are still not overly alarmed. This survey reveals Christmas spending plans will be softer as the mortgage belt is hunkering down.

Australian business confidence and conditions both fell again in October, and a sharp drop in forward orders suggests tougher trading ahead, according to the latest NAB Monthly Business Survey. Business confidence edged down in the month, while business conditions fell also. Forward orders fell sharply in October with the decline broad-based but led by construction and manufacturing 

And it isn't only in Australia that consumers are feeling under pressure. The latest Japanese survey of household spending reveals a sharp retreat in September, in fact to the largest shrinkage since the pandemic period.

The UST 10yr yield is up +14 bps from yesterday on the US inflation result, now at 5.01%. The 30 year yield is at 5.37%, up +10 bps. The key 2-10 yield curve is now at +26 bps (down -6 bps). Their 1-5 curve is at +27 bps (-5 bps) and the 3 mth-10yr curve is at +107 bps (+14 bps). The China 10 year bond rate is up +1 bp at just on 1.58%. The Japanese 10 year bond yield is up +2 bps at 2.72%. The Australian 10 year bond yield starts today at 4.98%, down -2 bps from yesterday. The NZ Government 10 year bond rate is now at 4.73%, down -6 bps from yesterday.

Wall Street has ended its post-election rally and is lower today with the S&P500 down -0.8% and the Nasdaq down -1.1%. Nvidia's fall from grace isn't helping. Overnight, European markets were mixed, between London's -0.3% fall and Paris's +0.8% gain. Yesterday Tokyo had another +2.9% surge. Hong Kong rose a modest +0.4% and Shanghai only managed a +0.1% gain. Singapore was up +1.5%. The ASX200 ended up +1.1%. The NZX50 bested that, up +1.4%.

It looks like the gigantic US$90 bln Anthropic IPO is going ahead, which values the firm at US$1.4 tln, despite ructions related to Nvidia. Promoters will have the pressure on fund managers to join in.

The price of gold is down again, down -US$88 at US$4023/oz. Silver is now just under US$51.50/oz and down -US$1.50 from yesterday.

Oil prices have fallen another -US$1.50 today, to just over US$86.50/bbl in the US, while the international Brent price is down -US$2 at just on US$92/bbl. Hormuz transits have stayed very low today with just three ships exiting over the past 24 hours, two tankers escorted (2 dark with transponders off) and three entering for new loads, no tankers (1 dark). The Red Sea activity features a return to sub-20 crossings at the Yemen chokepoint.

The Kiwi dollar has fallen overnight, down -30 bps to be just on 55.9 USc. Against the Aussie however we are up +30c at 81.6 AUc. Against the euro we are unchanged at 50.1 euro cents. That all means our TWI-5 starts today at just on 59.9 and down -10 bps.

The bitcoin price starts today at US$72,857, and down -2.9% from this time yesterday. Volatility over the past 24 hours has again been modest at +/-1.7%.

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