Here's our summary of key economic events overnight that affect New Zealand with news Australia has been assessing their exposure risks to upcoming Trump tariffs - and they are nervous.
But first in the US, their November CPI rate came in without any surprises. It rose for a second consecutive month to 2.7% in November from 2.6% in October. But the rise is partly influenced by low base effects from last year. Core inflation, without food and energy, was stable at 3.3%. Food prices rose +2.4% and rents +4.7% (which will please landlords, like The Trump Organisation). Petrol costs fell -8.1%.
For a fifth straight week, US mortgage applications rose, and by +5.4% from the week before, driven by a surge in refinancing (loans for new homes actually fell), putting them +4% higher than year-ago levels. At the same time, mortgage interest rates dipped, but it was a minor move.
Another very well-supported UST 10yr bond auction this morning delivered a median yield of 4.19%, down from 4.29% at the prior equivalent event a month ago.
As expected, the Bank of Canada cut its key interest rate by -50 bps for a second consecutive time in its December meeting, to 3.25% and make -175 bps of cumulative rate cuts from this cycle’s peak of 5%. Still, rhetoric from policymakers suggested that there will not be any more outsized rate cuts next year, and officials dropped the statement that borrowing costs are due to be lowered should their base case hold. The sharp interest rate cut followed data showing that the Canadian GDP grew an annualised +1% in the third quarter, below the central bank’s projections, and shrank on a per capita basis, and growth in the fourth quarter poses the risk of also missing forecasts.
In Japan, producer prices rose +3.7% in November from a year ago, higher than in October and exceeding market estimates of +3.4%. It was the 45th straight month of producer inflation, marking the highest figure since July 2023. These pressures will eventually show up in consumer prices. And that in turn will encourage the Bank of Japan to raise its +0.25% policy interest rates. They next review it on Thursday, December 19, 2024, when a +25 bps rise is anticipated by financial markets.
In China, Reuters is reporting that officials are open to let the value of the yuan slide in 2025 as a way to push back against the expected Trump tariffs.
In Malaysia, retail sales rose +7.1% in October from the same month a year ago, rising from a +5.5% rise in the previous month. It was the strongest growth in retail sales there since June. Malaysian CPI inflation is running at +1.9% pa.
In Australia, their policymakers have been reviewing their risks from upcoming Trump tariffs. They found direct risks were low - in fact very low. But indirect risks were unusually high and cited some startling analysis from the BIS. (See graph 6.) The more China is affected, the more Australia is.
The UST 10yr yield is now at just on 4.24%, unchanged from this time yesterday. The key 2-10 yield curve is more positive, now by +11 bps. Their 1-5 curve inversion is a little less, now by -10 bps. And their 3 mth-10yr curve inversion is also less, now at -15 bps. The Australian 10 year bond yield starts today at 4.23% and up +1 bp. The China 10 year bond rate is at 1.88% and unchanged. The NZ Government 10 year bond rate is now at 4.43% and up +3 bps.
Wall Street is up +0.9% on the S&P500 in Wednesday trade. Overnight European markets were all +0.4% firmer. Yesterday Tokyo closed unchanged. Hong Kong fell -0.8% but Shanghai rose +0.3%. Singapore also ended lower by -0.5%. The ASX200 ended its Wednesday session down -0.5%. But the NZX50 ended up +0.3%.
The price of gold will start today at US$2713/oz and up +US$20 from yesterday, and a two-week high.
Oil prices are up +50 USc to just under US$70/bbl in the US while the international Brent price is unchanged at just under US$72.50/bbl. OPEC has cut its forecasts for global oil demand growth in 2024 and 2025.
The Kiwi dollar starts today at just under 58 USc and unchanged from this time yesterday. Against the Aussie we are down -10 bps at 90.9 AUc. Against the euro we are unchanged at 55.2 euro cents. That all means our TWI-5 starts today at just over 67.8 to be down -10 bps from yesterday.
The bitcoin price starts today at US$100,588 and up +6.0% from this time yesterday. Volatility over the past 24 hours has been high at +/- 3.6%. (And there's this.)
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62 Comments
https://www.oneroof.co.nz/news/listed-yesterday-must-be-sold-today-home…
And its gone............
The home has a 2021 CV of $1.1 million but similar homes in the area have been selling around $700,000. “We have no time for price by negotiation or offers - we just have to take it to auction straight away. They need an unconditional result,” Lemalu said.
Wonder why they had to "beat the bank"?
This owner has 1 DAY to BEAT THE BANK!
https://www.trademe.co.nz/a/property/residential/sale/auckland/manukau-…
Last Market Sale on 15 Jul 1992 for $93,000
"Had they [crude oil prices] gone up as expected by many ..."
Who were the many?
I don't recall any knowledgeable source making any such claims. That said, there was lots of talk by people who don't know much about the oil industry and were trying to feather their own nests made all sorts of silly claims. Note too that future priced contracts are not a good indicator of what prices will be when the oil gets served from the pump. Before you give credence to such claims, check the source.
On a side note the Trump bashing is getting old already! I get it you don't like him or his policies but give him a chance he isn't even in office yet and I recon you have mentioned him more in the last month than Biden over the last 4 years. Get over it he's coming. I don't expect you will publish this comment.
DC seems to operate from the POV that GROWTH IS GOOD.
Like most of the economists we treat as High Priests, that narrative dumps everything else in the 'externalities' folder - although the MSM have generally accepted climate-forcing as a fact. It follows that when real Limits to Growth impact - and it's the bottom who get impacted first - the repercussive voting catches Limits-blind commentators flat-footed. They diss the Trumps, rather than ask why the Trumps?
Most folk don't get that degrowth will be exponential on its way down; the Trumps will be blamed (well, it has to be someone/something!).
The real societal debate - in the US as with here - is where to pin the tail on the donkey, such that the chosen level of activity can be maintained. Otherwise it becomes a series of abandoned plateaus. Trump is as incapable of doing that, as anyone, indeed Harris might have had the inside running in that regard - just...
U.S. Office Rents Report November 2024 | CommercialEdge
Not so bullish as implied above for the US Commercial real estate market-as I understand it the Trump organization are not Residential Landlords.
What I said yesterday:
"The biggest risk the Coalition is running in this delay is that there will not be a serious safety incident with loss of life. Because no matter what the public assurances of DNV audit on current ferry working life & Kiwirail on current ferry maintenance/management NZdrs will not forgive them.
It looks a lot like a solution agreed by a committee."
I disagree. I think this will follow them around like a bad smell until the next election. They still have more bad news to deliver in March next year if (when?) they realise that the port infrastructure is still going to cost a huge amount. That's not even mentioning the risk that something goes wrong with the current ferries.
With the banksters doing their best to "appear" to be turning green, to adhere to the Paris accord on climate change, and not lending to service stations that are still dispensing those fine petroleum products. All this, while under the "illusion" that everyone in 2-3 years will be able to afford an electric car, are in for a "shock" - pardon the pun.
Banks are all about profits - nothing else, and all this will do is increase the demand for electricity, when even now there is not enough production in NZ already. So where will this electricity come from - burning more dirty, imported coal ? .....just another climate change "paradox". all in aid to enrich the already wealthy.
This western ideal of growth, growth, growth at all "costs" in NZ, is now facing a pie that is slowly going mouldy, with only agriculture, that is providing any sort of refrigeration to halt the mould.
NZ has to look at GDP per capita NOT the GDP figure itself, and grow that, instead of importing "wage slaves" to lower labour costs, rent out houses with exorbitant rents or to buy some crappily built, no parking, tiny townhouse.
In the meantime, I'm keeping well out of the completely inflated, over-priced F.I.R.E economy, the NZ sharemarket and NZ property. So, where to invest you may ask ???
Great post.
Just remember that energy underwrites money. So invest in your own energy, or stuff you will want which needs it. Or - in the case of fossil energy - the stuff its feedstock comprises.
But the addition the electricity will come from distributed solar - it is way cheaper already, doesn't rely on supply chains (once installed) like coal and gas, and doesn't demand such a grid-upgrade. The more solar PV we have in the country, the more resilient we are - simple as that. It's not a long long term plan, but it's a good medium term one.
Intermittent proponents always leave out that part. As oz is finding out.
"...Broken Hill’s experience shows how crucial baseload generation is to the grid’s stability. Without it, balancing supply and demand becomes impossible.
Some $650m worth of renewable energy investment within a 25km radius of Broken Hill has proved to be dysfunctional. The technical challenges of operating a grid on renewable energy alone appear insurmountable using the current technology.
...AEMO’s assertion that its blueprint for the transition to renewables was “the lowest-cost pathway” is misleading. AEMO chief executive Daniel Westerman told the committee its modelling only considered the wholesale cost of electricity. AEMO did not model network costs, transmission and distribution costs or retailer margins. “A home electricity bill will need to consider all of those factors,” he said.
Senator Matt Canavan asked: “You’re saying you cannot guarantee that the current government policy settings you model will deliver lower power prices?”
Westerman replied: “I can’t guarantee that. No.” He said AEMO “explicitly doesn’t consider other parts of the consumer energy bill”
https://www.theaustralian.com.au/commentary/even-with-a-price-tag-our-r…
> where will this electricity come from ?
Maybe from all the consented wind/solar/geothermal plant that is finally getting built now that Tiwai has signed a long term contract?
And yes residential solar is showing good growth too. https://www.emi.ea.govt.nz/Retail/Reports/GUEHMT?_si=tg|distributed-gen…
So, where to invest you may ask ???
"Methamphetamine use across sample sites increased substantially in Q3 2024, averaging an estimated 32.4 kilograms per week. This was double the average quantity consumed per week over the previous four quarters (108% or 16.8 kilograms)."
https://www.police.govt.nz/about-us/publication/national-drugs-wastewat…
Global plastic waste to double by 2050, study says
If not us, then less developed countries will take up the reigns regardless of what the west desires.
Forget about November CPI, we need to do something about the Sun swallowing the Earth
https://askanearthspacescientist.asu.edu/top-question/sun-dying
I work for a chemical company relying on products made from Palm Kernel Oil and fossil fuels among other things.
Will the company be debanked by the ANZ in the future?
Will I be debanked as well due to my association?
Can you see where this CO2 is 'pollution' bullshit will lead to?
The banks seem quite content to debank Gloriavale's innocent women and children, leaving them financially vulnerable, unable to purchase food and other items from outside their commune. Why dont they start debanking the families of known gang members and other criminals? Leave those kids to starve as well once the drug cash runs out.
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