Here's our summary of key economic events overnight that affect New Zealand with news China has dropped the word "prudent" as it changes tack in its approach to economic support. Commodity currencies, including the NZD, got a boost from the shift.
But first, US consumer inflation expectations for the year ahead increased to 3% in November from 2.9% in October which was the lowest since October 2020. Inflation expectations also increased for the three-year-ahead (2.6% vs 2.5%) and the five-year outlook (2.9% vs 2.8%).
The same survey shows increasing confidence their pay will increase, driven by those without any college education.
Across that Pacific, Japan's Q3-2024 GDP expansion was revised up, which was a surprise even if it was only a minor gain. The growth was still small however.
China’s annual CPI rate fell to 0.2% in November from 0.3% in the prior month, missing market forecasts. China's producer prices dropped by -2.5% year-on-year in November, following a 2.9% fall in the previous month and a softer decline than market expectations of a -2.8% fall.
Meanwhile, the Chinese Politburo met and told the People’s Bank of China to adopt a “moderately loose” strategy for monetary policy in 2025. The Central Economic Work Conference is about to meet. The move marked an aggressive shift from the previous “prudential” stance since 2011. Along with wording that indicates more fiscal stimulus, they also said they will directly support property and equity markets next year. They are going all-in on new stimulus to try and move their economic needle.
Taiwanese exports continue to rise aggressively, up +9.7% in November from the same month a year ago. We get China's November export data later today and it is also expected to show a sharp rise from a year ago, although that may only to try and beat upcoming tariffs from the US.
In India, the rupee dropped to nearly 85 to the USD and a record low as evidence of fresh capital outflows magnified the impact of dovish monetary policy and signs that their economy is slowing more than expected.
Meanwhile, they are about to change out the Governor of their central bank.
Also in India, the close ties between corruption-accused Gautam Adani and Prime Minister Modi were on full display yesterday.
In Australia, new data out yesterday shows the median weekly earnings of those in full-time employment rose +6.3% to AU$1700/week (AU$88,400 per year). For women the rise was faster, up +6.5%, for men slower, up +5.2%. In 2022, men had a +18% pay advantage over women. By 2024 this had shrunk to +12%. That current advantage is worth AU$191/week (AU$9,900 per year).
The UST 10yr yield is now at just on 4.20%, up +5 bps from this time yesterday. The key 2-10 yield curve is still positive, now by +6 bps. Their 1-5 curve inversion is a little less, now by -14 bps. And their 3 mth-10yr curve inversion is also less, now at -25 bps. The Australian 10 year bond yield starts today at 4.27% and up +2 bps. The China 10 year bond rate is at 1.96% and unchanged. The NZ Government 10 year bond rate is now at 4.43% and down -3 bps.
Wall Street has started its week down -0.5% on the S&P500 in Monday trade. Overnight European markets were mostly higher, led by Paris which was up another +0.7%. Yesterday Tokyo closed up +0.2%. Hong Kong rose a sharp +2.87% and Shanghai ended little-changed. Singapore also ended little-changed. The ASX200 ended its Monday session little-changed as well after recovering a steepish opening drop. And the NZX50 didn't quite make it back to par after its opening drop, down a net, but minor, -0.1%.
The price of gold will start today at US$2669/oz US$2636 and up +US$36 from yesterday.
Oil prices are up +US$1.50 to just over US$68.50/bbl in the US while the international Brent price is now just on US$72.50/bbl.
The Kiwi dollar starts today at 58.8 USc and up +50 bps from this time yesterday. Against the Aussie we down -30 bps to 91 AUc. Against the euro we are up +40 bps to 55.6 euro cents. That all means our TWI-5 starts today at just under 68.4 to be up +35 bps from yesterday.
The bitcoin price starts today at US$97,373 and down -2.4% from this time yesterday. Volatility over the past 24 hours has been moderate at +/- 2.6%.
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42 Comments
Methinks the hammer is about to drop on the Aussies with that kind of data
Yup, more headache for RBA and likely NACT who promised to stem the flow of Kiwis to Aussie and to staff our frontline services better. Hard to compete with such high pay rates.
Cannot keep up with the broken promise list for NACT ...tomorrow should add a couple more pages. and some type writer ribbon..
From a facebook page,
"Jenna lynch asked the following questions and the answer was the same for each "we dont discuss what was said in cabinet / we will make an announcement before the end of the year"
(1) Did cabinet agree today today to preparing two medium sized non rail cabable ferrys
(2) Did Cabinet agree to establish a 4A company to procure and run the new ferrys?
(3) did cabinet agree to a fiscal envelope of $900 Million dollars for two new ferrys when the rail enabled ones were only going to cost $550Million?
(4) Is Winston Peters going to get a new associate ministership for KiwiRail?"
Maybe Winston could set up casinos on the new non rail enabled ferries, with his mates at TAB running the show...visionary!
might become the Malboro ferries, compulsory smoking onboard.
Seem quite specific questions that come from a leak , winston getting a minister role looks like a sop for no rail enabled ferries to me.
He loves his baubles...especially around Xmas.
Ferry replacement project to cost less than Labour's iRex - Luxon
https://www.rnz.co.nz/news/political/536203/ferry-replacement-project-t…
Of course they will..smaller non rail enabled, does he think the public are thick? Well we are ..
Note she said the new ferries will be cheaper than the whole iRex project, rather than just the previously ordered ferries.
Won't that be because they aren't going to do a whole lot of port infrastructure upgrades? I bet the new ferries themselves will cost more than the old ones on order (especially over their lifetimes if they are just leasing them)
Has to be , only 2 small ferries replacing 3 existing, ferries costing 40 % more , $ 500 million plus cancellation costs, doesnt leave much for infrastructure.
Lucky successive governments have ensured affordable housing is delivered to offset the impact of our lower wages
/s
According to a few here Aus does not offer significant financial advantages to NZ…..
Australia has some of the highest wages in the world, so yes you would probably be financially better off there. They are 10th in the world, we are 13th, so we aren't doing that badly considering our size and lack of resources: https://en.wikipedia.org/wiki/List_of_countries_by_average_wage
As for being more affordable, that really depends on how much the most expensive item, housing, costs. And that would depend on where you live in NZ vs where you live in Aus.
Constantly comparing ourselves to Aus is getting tedious. Imagine if the Europeans did that, they would have 742 million people living in Luxembourg.
Why? It's a huge country that's less than a two hour flight away which would offer a substantial upgrade in either living standards, earnings capacity or both for many New Zealanders.
It's a far more relevant comparison and makes far more sense than those who want to pretend we have no problems at all because other people have it substantially worse in war-torn couuntries and so on.
I guess we can just pretend everything is ok, that it is ok to just keep losing many of our skilled people in areas like healthcare to Aus, and allow our living standards to keep deteriorating
She’ll be right!
The alternative to "She’ll be right!" is to bitch and moan about it when realistically we are never going to be richer than Aus (or maybe we will be once it is too hot to live there).
Almost every country has a richer one nearby, this is not something unique to NZ.
Yep. And our migration there ebbs and flows depending on temporary conditions.
People seem to get caught on there being something specifically unique going on in times when the natural order of things is playing out.
If you want NZ to be a better place then today's the day to do your part.
"who want to pretend we have no problems at all" - who's doing that? Every country has problems.
We have the 13th highest wages in the world, Aus is 10th. We have the 6th highest median wealth in the world, Aus is 3rd. We are doing bloody well for a little island in the middle of nowhere, but unless you can think up a way for us to match their ability to pull money out of the ground, we will never be richer than them. So the moaning is tedious, unless you can provide a solution.
The median wage in Spain is €2,520, in Luxembourg is it €6,118, but Spain isn't empty.
How about if we had invested much more in affordable housing? Sure, it wouldn’t stop the outflow but it’s very likely it could help.
I have previously mentioned the New Zealand Housing Foundation and their shared equity programs. Many of the residents at their development in Puhinui, Manukau, are police officers, teachers and nurses. I worked on this development and I know a couple of the residents.
Much more funding to such community housing providers could really help. Yes it costs, but what are the costs of continuing to lose key workers to Australia???
Will it help though? If you can have the same lifestyle in Aus as NZ but retire with a $2 million dollar house instead of a $500k one, wouldn't that make people leave for Aus too?
I have a few friends that live in countries with affordable housing (Japan, Germany), they have similar jobs and qualifications to me, but I have a house with a lot of equity while they have almost no assets. Is that really better?
You can buy out the equity over time as means allow
But you are still better off in Aus where you are gaining equity from the day you buy a house. You will always be better off having a higher wage and investing a big chunk of it into a mortgage, than having a lower wage and either not investing or investing less.
But I agree it is probably worth looking into. Does the government need to come up with the equity, or is the equity in government owned land? I like the latter, it wouldn't increase government debt. Get a free section from the government, build a house on it, and pay for the section when you can (with maybe a small interest repayment). But like many of these things, will it end up that Bob who tries hard is not eligible while his mate Dave who is lazy gets a sweet piece of free land.
The theory is that if houses are cheaper there'd be more energy going into the active economy.
Which isn't conclusively evidenced in countries of varying housing affordability, but it's nice to tack on.
But yes a way to make houses cheaper would be to alter the nature of titles to a longer term lease than freehold. Whether the punters will want to play, is another story. Most likely it'd end up like Singapore, where leasehold housing is expensive, and freehold housing is moonbeams.
It could do more damage than good. When Dr Dave can't get the subsidy because he is too rich, and he has mates in Sydney with $5 million in equity they have paid for through their higher wages, he has even more reason to leave.
That is the problem with interfering with the free market, someone is going to lose. If we want to keep our best and brightest through subsidies, then we need to subsidise the upper middle, and that will not be a popular idea.
One answer to everything is to tax wealth.
Sounds pretty fair.
Problem being, our wealthiest are the most capable demographic of leaving. England is expected to drain 20% of it's millionaires over the next 5 years. I guess we'll be able to determine in due course whether society does better by clamping down on them.
She's a pickle, no matter how you look at it.
Sounds like the worst possible answer to doctors leaving to Aussie. Yet another reason for them to go.
If we want to keep the best people here, you almost need the opposite, cut the higher income taxes and stop all the subsidies. But you need to be honest and say "we want to keep the best and lose the rest", I can't see that happening.
We need a shitload of doctors and nurses over the coming decade, so we need to do something.
Or we could just shrug our shoulders and let our healthcare fall into total decay
https://www.nzherald.co.nz/nz/new-zealand-health-system-needs-3450-more…
Not enough people voted to increase healthcare spend. In fact both Labour and National seem to want to go out of their way not to handsomely remunerate our medical professionals.
So complaining about it is like yelling at clouds.
Agree, that is easy to fix, just pay them more.
Who wants to do it?
*Everyone in the room shoves their hands in their pockets*
Up next, water is wet.
Could have easily done that instead of the tax cuts. It will happen when we can't find anyone to accept the current wages...
The cost of living payment could probably have paid a few extra surgeons
Australia has some of the highest wages in the world, so yes you would probably be financially better off there.
Most of the job / wage growth in Aussie is in the public sector. In the past two calendar years 87% of employment growth occurred in the non-market sector despite its accounting for just 30% of jobs. In September it was 91%.
https://www.afr.com/policy/economy/public-sector-is-strangling-economy-…
They are going all-in on new stimulus to try and move their economic needle
If the economic needle is measured by GDP, then stimulus moves the needle by default. Stimulus is the addition of money into the economy - either banks add it in when they make loans, or Govts add it in when they deficit spend. The addition of money allows companies in aggregate to collect up a surplus of money. How else would all companies in aggregate make a surplus if new money were not added to the economy?
GDP basically measures the amount of surplus. So, add money in, companies collect it up from consumers and give it to shareholders. Voila. Growth. Great job everyone. Let's do another round.
It's all good Jfoe, until a block of cheese is $25, a weekly food shop is $600 and the proleteriat realise they are actually worse off.
Well on our way to those costs, for a family of 4
Shhhh, if too many of us know the systems a merry-go-round no one will want to hop on.
Annual average changes of 5% house prices, 4% private debt, 3% inflation, and 2% prices. All perfectly sustainable as long as we grow the population, keep interest rates around 2%, and continue getting ever cheaper stuff from offshore.
And here we reach the core issue: That we grow the population on an exponential trajectory. I guess Temu helps us out as well then XD
With our current birth rates we are in asymptotic decline so where are you getting your core issue exponential trajectory from? A lot of wealthier countries can afford to pay a lot more for doctors and nurses to emigrate - assuming enough have been trained to met the baby boom sunset.
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