Here's our summary of key events over the weekend that affect New Zealand, with news many key economies are struggling to find meaningful growth and expansion.
But firstly in China, both of their official PMI measures reported improvements in November. These were better than expected results. The factory one was a surprise because it moved from contraction to expansion, even it its weak. The services one was more positive, moving up to 54.4 and a solid, moderate expansion. (The comparable US services expansion has an index of 51.6, the New Zealand one is at 55.1.)
However, a respected analysts is saying that growth in the Middle Kingdom will fall to only +5.7% in 2020 as investment levels stay weak.
In Hong Kong, there were more demonstrations on the streets overnight. This time students were joined by the elderly who came out in support because they claim the 'job is not done'. But the rally grew quickly into tens of thousands, and then descended into violence. October house price data shows that prices are lower now than this time last year. But the falls for micro and tiny apartments are modest. However the falls for large apartments over 70m2 exceed -10%. For those over 100m2, the drop is -13%. And for those over 160m2 the drop is even larger but the number of units selling has collapsed. The well-to-do are either selling up or just wanting to get out.
In India, their Q3 2019 economic growth is also sliding, down to +4.5% year-on-year and way below their official targets.
In Japan consumer confidence rose again in November continuing a trend that started in July and that was unexpected. But it still remains very weak. In fact, the IMF said that Japan's growth over the next two years is likely to be less than +1% in each year.
In the US, early reports are that shopping mall crowds haven't been at their usual Thanksgiving holiday levels, and that online options are strong. Some major retailers are said to be absorbing the cost of tariffs to keep prices unchanged. Not helping sentiment is that the slimmed-down 'phase one' trade deal with China still isn't done.
In Canada, their Q3 GDP growth slowed to just +1.3% above the same quarter a year ago. And that is even slower than the US which slipped to a +1.9% gain. But the Bank of Canada is not expected to change its 1.75% policy rate when they review it Wednesday night (NZT).
In Germany, their retail sales data for October was weak and way below what was expected. But at least their jobless numbers didn't weaken. Employment rose. But that might not last - Daimler said it would cut 10,000+ jobs as it shifts to electric vehicles. Audi is cutting almost as many. In transportation, going green is going to cost jobs in a major way. But Germany has dodged slipping into recession with surprise but small growth in Q3-2019.
In Australia, the RBA is signaling that buy-now, pay-later payments platforms aren't going to be allowed to prevent retailers surcharging customers for the fees they impose. This is because such rules 'no surcharge' rules raise prices for everyone including those who don't use the system.
Aussie private sector debt growth slowed in October to its weakest growth rate in almost ten years. Part of the reason is that the growth of BNPL schemes is siphoning off traditional personal credit growth and is not being counted. But there are also sharp slowdowns in both housing and business debt growth as well.
And the international media is noticing the recent New Zealand restart of government infrastructure projects, pointing out these come at a time growth is slowing and taxpayer 'investment' is required to keep it alive. It is the 'fiscal friend' that the RBNZ has been calling for.
The UST 10yr yield is unchanged at 1.77% and that is unchanged for the week. Their 2-10 curve is positive at +16 bps. Their 1-5 curve is weaker for the week at +3 bps. Their 3m-10yr curve is also less positive +12 bps. The Aussie Govt 10yr is at 1.04% and that is a -6 bps fall for the week compounding the same fall last week. The China Govt 10yr is now at 3.20%, and unchanged for the week. The NZ Govt 10 yr is now at 1.30%, and down -5 bps for the week. But expect NZ rates to rise after the NZ stimulus announcement.
Gold is at US$1,464 and little-changed for the week.
US oil prices are down further to just on US$55/bbl. The Brent benchmark is just on US$62.50/bbl. Fear of demand falls is behind the sudden reduction. And the price falls comes despite OPEC output cuts.
The Kiwi dollar remains remarkably stable, now still at 64.2 USc and is essentially unchanged in a week. On the cross rates we are now at 94.9 AUc and another +½c gain in a week. In fact for November it has gained more than +2c. Against the euro we are little-changed at 58.3 euro cents. That puts the TWI-5 at just over 69.6.
Bitcoin is lower today at US$7,321 and down -5.7% from where we left it on Saturday. The bitcoin rate is charted in the exchange rate set below.
The easiest place to stay up with event risk today is by following our Economic Calendar here ».
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