Here's our summary of key economic events overnight that affect New Zealand, with news inflation is easing at different paces in the world's largest economies.
American producer prices rose a bit more than expected, dashing hopes we would see clearer signs inflation's pressure was easing. But they rose at an annualised rate of +3.6% in November to be +7.4% higher than a year ago. The core components rose at a +5% rate. The data cast a pall on Wall Street. At least both were lower than the +8.1% year-on-year rise in October. Markets had expected the November annualised rise to be as low as +2.5%. Producer inflation is ebbing, just not as fast as expected.
American wholesale inventories also rose, but slower than expected at an annualised rate of +6% and probably still tracking inflation. However they are +24% higher than year-ago levels, so the overhang remains substantial.
Improving is the mood of American consumers, at least according to the widely-watched University of Michigan survey. It also reported lower inflation expectations. These improvements weren't expected.
The recently released December USDA WASDE report sees very little change in global supply or demand for key agricultural products. Despite the war on Ukraine, food stress levels are reducing.
In China, CPI inflation fell to +1.6% in November from 2.1% in the prior month. This shift lower was as expected. This was the lowest level since March, mainly due to a sharp slowdown in cost of food, rising +3.7% which was down from the +7.0% in October. A lot was due to pork prices which eased further after authorities released national reserves into the market. Beef and lamb prices changed little in November, milk prices eased up slightly.
On the factory front, producer prices are deflating now. They fell at a -15% annualised rate in November to be level-pegging with year-ago levels. That is two consecutive months of a sharp deflation in their PPI, and it is hard to see it ending any time soon. The only 'positive' in these November numbers are that analysts had expected an even sharper fall.
There are some positive signs emerging for China's economy. For example, deliveries of the construction equipment, rose +2.7% in November, breaking a 10-month losing streak. But it also should be noted that this gain is off a depressed base. Separately we need to be careful of Chinese reports of economic gains; many local jurisdictions are turning to subsidies and incentives to try and restart their retail impulse.
In Europe, they are increasingly confident that their electricity supplies will be stable at reasonable prices over the coming winter. The disengagement from Russia has taught them valuable energy supply lessons.
And back in the US and for the record, we should note that the US Fed's balance sheet continues to shrink. After peaking at just under US$9 tln in April (36.2% of US GDP) is has fallen more than -US$380 bln to 33.4% of US GDP.
The UST 10yr yield starts today at 3.56% and up +7 bps from this time yesterday. A week ago it was 3.53%. The UST 2-10 rate curve is 7 bps less inverted at -75 bps. Their 1-5 curve is less inverted at -96 bps, while their 30 day-10yr curve is now inverted by -14 bps. The Australian ten year bond is up +1 bp at 3.36%. The China Govt ten year bond is up +2 bps at 2.94%. And the New Zealand Govt ten year will start today up +3 bps at 4.10%.
On Wall Street, the S&P500 is ending its Friday session little-changed but will end with a -2.3% drop for the week. Overnight, European markets all ended up +0.5% except London was unchanged. Tokyo ended yesterday up +1.2% which meant it could book a small +0.5% weekly gain. Hong Kong had another strong day, rising +2.3% yesterday to end +3.5% ahead for the week. Shanghai was much more modest in its changes, up +0.3% on Friday for a +0.8% weekly gain. The ASX200 ended its Friday session up +0.5% which limited its losses for the week to -1.2%. The NZX50 was down -0.2% yesterday and down -0.4% for the week.
The price of gold will open today at US$1800/oz and up another +US$10 from yesterday. A week ago it was at US$1796, so little net movement from then.
And oil prices start today down another -US$1.50 from this time yesterday at just on US$71/bbl in the US while the international Brent price is down to just over US$76/bbl. These are down -US$10 from a week ago and are back to year-ago levels. In fact we first were at these levels in 2006. The US$60 price cap on Russian oil actually isn't far away now.
The Kiwi dollar will open today at 64.2 USc, up nearly +½c from this time yesterday. That takes it to its highest in four months and a remarkable +15% appreciation since mid October. However, it is still a +5.5% devaluation since this time last year. Against the Australian dollar we are firm at 94.4 AUc. Against the euro we are at 60.9 euro cents and also a daily +½c rise. That all means our TWI-5 starts today at 72.6 and up +50 bps from yesterday and also a four month high.
The bitcoin price is now at US$17,161 and up +1.9% from this time yesterday. It is up +1.2% from this time last week. Volatility over the past 24 hours has also been modest at just +/- 1.2%.
The easiest place to stay up with event risk today is by following our Economic Calendar here ».
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