IMF sees modest global growth but big trade risks; US data second-tier & better; Canadian PPI deflates; EU car sales stay weak; UST 10yr 4.20%; gold and oil up; NZ$1 = 60.4 USc; TWI = 69.1

Here's our summary of key economic events overnight that affect New Zealand with news the global bond selloff has eased, but the reasons for it don't seem to have changed.

First up today, the IMF has lowered its global growth forecast and warned of increasing risks ahead. The growth they see is from the stronger-than-expected performance in the US despite slowdowns in China and Japan. They still see 2024 expanding 3.2% this year in spite of all the supply-chain disruptions. Five years from now, global growth should reach 3.1%, a mediocre performance compared with the pre-pandemic average.

It sees zero growth in New Zealand in 2024, a +1.9% expansion in 2025 and only rising to +2.4% by 2029. Still, that would be better than it sees for most advanced economies - and slightly better than in Australia.

The US Treasury Secretary Yellen claimed that the US rejection of "Made in America" isolationism had made the world a better place than if it had continued, and was the basis of the current global expansion.

The decline in inflation worldwide is helping to keep growth momentum steady, with headline inflation projected to slow to 3.5% by the end of 2025, below the average of 3.6% between 2000 and 2019, they said. Australia is the laggard on progress in taming inflation, they observe.

The new threats they see relate to the rise and rise of trade wars.

Meanwhile, the US retail pulse as measured by the Redbook monitoring eased slightly last week to be +4.6% higher than a year ago. This is better than inflation but at the lower end of the gains since March.

The Richmond Fed's factory survey recorded a small improvement in October, a shift that was not expected. But it remains negative all the same. Their arguably more important services survey turned positive in October, and although also minor it was a shift that was also better than expected.

Although it had been positive since April, Canadian producer prices sank in September, resuming the trend that has started in March 2023.

Here is something we don't normally follow, but it helps explain why the EU manufacturing base remains in the doldrums. EU car registrations came in just over 810,000 in September, a bounce-back from August but well below the 1.1 mln June level. Since the pandemic, the average has been about +800,000 per month. But that is a long way down from the pre-pandemic average of about +1.4 mln per month. It a radical step lower.

The UST 10yr yield is now at just on 4.20% and up +2 bps from this time yesterday. The key 2-10 yield curve is positive, and still +16 bps. Their 1-5 curve inversion is less inverted by -26 bps. And their 3 mth-10yr curve inversion is again shallower at -55 bps. The Australian 10 year bond yield starts today at 4.46% and up +8 bps. The China 10 year bond rate is at 2.13% and up +1 bp. The NZ Government 10 year bond rate is still just under 4.51%, uup +5 bps from yesterday.

Wall Street is still soft today with the S&P500 up only +0.1% in Tuesday trade. Overnight, European markets were barely changed to marginally softer. Tokyo ended yesterday down -1.4%. Hong Kong was up a minor +0.1% and Shanghai rose +0.5%. Singapore fell -0.8%. The ASX200 ended its Tuesday session down -1.7% and the NZX50 was down a lesser -0.9%.

The price of gold will start today at US$2742/oz and up +US$22 from yesterday.

Oil prices are +US$2 higher at just under US$72/bbl in the US while the international Brent price is now just on US$76/bbl.

The Kiwi dollar starts today at 60.4 USc and up a minor +10 bps from this time yesterday. Against the Aussie we are down -10 bps at 90.5 AUc. Against the euro we are back up +20 bps at 55.9 euro cents. That all means our TWI-5 starts today at just on 69.1, up +10 bps from yesterday at this time.

The bitcoin price starts today at US$66,933 and down -0.3% from this time yesterday. Volatility over the past 24 hours has been modest at just under +/- 1.0%.

The easiest place to stay up with event risk is by following our Economic Calendar here ».