US Fed cuts policy rate again; Japanese exports rise; Binance Australia offends again; Aussie fiscal update released; Brazil devalues; UST 10yr at 4.40%; gold down and oil up; record coal use; NZ$1 = 57.2 USc; TWI = 67.4

Here's our summary of key economic events overnight that affect New Zealand with news all markets have been waiting for the US Fed decision.

And as expected, they have cut their key policy rates by -25 bps with the targeted range now 4.25%-4.50%. Progress on taming inflation gets the main credit from them. As we publish, Chairman Powell has yet to hold his press conference, so more about their thinking will be revealed then. But this move takes their rollback to -100 bps since August, and back to the level they had at the start of 2023. A slower pace of cuts are expected in 2025.

Meanwhile US mortgage applications slipped slightly last week, ending a run of five straight weeks of gains to be +6% higher than year-ago levels and a bit more activity on the purchase side.

US housing starts however unexpectedly fell in November and by -1.8% to an annualised rate of 1.3 million units, the lowest in four months. Only in one month since the pandemic has it been this low. American consumers may say they are feeling more optimistic, but they aren't showing it in their housing markets.

And staying in the US, Mastercard stock is up +25% over the past year. And it will get another boost because after-hours the company said it will buyback US$12 bln in stock. They have so much money they are having trouble investing it, so are returning it to shareholders via the buy-back scheme and +15% higher dividends. Their cash horde was US$11.1 bln at their last financial filing in September, up +29% from June. Locally, the Commerce Commission is trying to regulate the fee-gouging.

Japanese exports rose in November and by more than expected to be at the upper end of the monthly range in 2024. It was a rise that beat expectations. But imports fell, and by much more than expected, to a three-month low, and about the average level in 2024.

In Malaysia their exports also rose much more than expected, and like Japan their imports, which were also expected to surge, didn't. Obviously not every country can have rising exports and falling imports but those that do count themselves 'winners' in the international trade arena. For Malaysia however, this is a rare monthly result, a small balance for a long period when imports exceeded exports.

The Indonesian central bank kept its policy rate unchanged at 6% in a meeting late yesterday.

In Hong Kong, major builder New World Development, which recently posted a large and unusual loss, is reportedly trying to renegotiate its loan obligations with banks. Not a great sign for them, and indications China's property sector woes are impacting Hong Kong directly now (rather than just Chinese companies listed in Hong Kong).

And in Australia, a major builder there, APH Holdings, has gone under. This notable because it too is Chinese-owned.

Staying in Australia, ASIC is suing crypto company Binance Australia Derivatives for consumer protection failures. More than 500 retail clients of Oztures Trading, trading as Binance Australia Derivatives, were denied important consumer protections after being misclassified as wholesale clients, ASIC alleges in documents filed in the Australian Federal Court.

And still in Australia, their Mid-Year budget update by the federal government shows a slightly smaller deficit in the 2024-25 financial year than what was presented in May, but larger deficits over the next three years. All up, that is a cumulative deficit increase of A$22 bln.

In Brazil, their currency, the real, depreciated to a record low of 6.16 to the USD, as mounting fiscal concerns, inflationary pressures, and political uncertainty drove an investor loss of confidence. Investor confidence has been shaken by fiscal measures deemed insufficient to stabilise Brazil’s rising debt trajectory, as President Lula’s tax breaks and modest spending cuts prioritise growth over fiscal discipline. The central bank aggressively tightened monetary policy, raising the interest rate to 12.25% from 11.25%,with two further hikes signaled.

The UST 10yr yield is now at just on 4.40%, up +1 bp from this time yesterday. The key 2-10 yield curve is more positive, now by +17 bps. Their 1-5 curve inversion is +2 bps positive. And their 3 mth-10yr curve is still positive at +8 bps. The Australian 10 year bond yield starts today at 4.34% and unchanged. The China 10 year bond rate is now at 1.74% and also unchanged from yesterday. The NZ Government 10 year bond rate is now at 4.53% and down -2 bps.

Wall Street has opened its Wednesday session with a +0.2% firming on the S&P500. Overnight European markets were all little-changed. Yesterday, Tokyo closed down -0.7%. Hong Kong closed up +0.8%. Shanghai closed up +0.6%. Singapore was down -0.5%. The ASX200 ended its Wednesday session down a minor -0.1%, and the NZX50 ended with a -0.4% retreat.

The price of gold will start today at US$2634/oz and down -US$7 from yesterday.

Oil prices are back up +US$1.50 to be just on US$71/bbl in the US while the international Brent price is now just on US$74.

And the IEA says coal consumption hit a record high in 2024, led by China and capping a 30 year surge. They also say this is probably 'peak-coal' and that the transition to renewables. But that is not certain, because India's use is rising fast. In the meantime, Australia is set to become the fourth largest producer by 2027, surpassing the United States and Russia.

The Kiwi dollar starts today just on 57.2 USc and down -40 bps from yesterday. That makes it the lowest level in more than two years. Against the Aussie we are down -20 bps at 90.7 AUc. Against the euro we are also down -20 bps to 54.6 euro cents. That all means our TWI-5 starts today at just on 67.35 to be down -25 bps from yesterday at this time. And that is also more than a two year low, since October 2022.

The bitcoin price starts today at US$104,225 and down -2.5% from this time yesterday. Volatility over the past 24 hours has been moderate at +/- 2.1%.

Today is the final day our Auckland office is open in 2024. Of course, we will report the news all the way though the holiday break, but our offices won't re-open fully until Monday, January 20, 2025. It will be our holiday service until then. Our daily and weekly free email newsletters are also taking a break until then. But our databases and rate tables will continue to be updated as changes are reported. We wish all our readers a fun, safe, and relaxing break.

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