Here's our summary of key economic events overnight with news that China is starting the new year on the back foot. But they are signaling the rate cuts and consumer subsidies are coming to rescue their situation.
But first in the US, a good rise in new orders saw the widely-watched ISM factory PMI rise by 0.9 points in December from the previous month to record only a very minor contraction and very much better than was expected. The result reflected the softest pace of contraction in the US manufacturing sector since March. Oddly, the narrative for the internationally-benchmarked S&P/Markit PMI was the inverse with weaker new orders and slipping output. However, both surveys landed at the same spot, reporting a very minor contraction.
US vehicle sales ended the year on a solid note, running at a 16 mln annualised rate. EV sales accounted for 9.0% of those. (For reference, NZ EV sales in 2024 were 7.3%.)
In Canada, their factory PMI delivered a solid performance with good new order levels and rising output contributing to a rising expansion.
Across all reporting countries, the global factory PMI contracted slightly in December, shifting from the slight expansion in November. Good expansions in India, Taiwan, Canada, and China (among eight others) was offset and more by retreats in the US, Australia and especially the Europe (among seven others). On balance, it was soft new order levels that is turning the global tide.
Containerised freight rates rose marginally last week (+3% overall), built on a +7% surge on transPacific rates from China to the USWC. Traders are trying to beat what are expected to be new tariffs from the incoming US Administration. Bulk cargo rates stopped falling this week, essentially holding at an 18 month low.
On the commodity front, both lithium and iron ore prices slipped on concerns about the prospects for the Chinese economy. The Shanghai tock exchange fell yet again, by -1.6%. And the benchmark yield for Chinese government bonds slumped to a new record low of 1.61% for the 10 year. The yuan fell, testing its lowest level since 2007 after their central bank stopped defending 7.3 to the USD.
China is ramping up its subsidy program for consumer durables, trying to spark some extra consumption activity.
China's central bank said it will cut banks’ reserve requirement ratio and interest rates at the “proper time” during a quarterly meeting of its monetary policy committee held last week, according to a statement published yesterday (Friday).
The FAO World Food Price Index fell -0.5% in December from an upwardly revised November. Dairy prices fell -0.7% but meat prices rose +0.4%. Overall it is +6.6% higher than year-ago levels with dairy up +17% and meat up +7.0% on that annual basis.
The UST 10yr yield is now at just on 4.59%, and up +2 bps from yesterday, down -2 bps from this time last week. The key 2-10 yield curve is still positive by +33 bps. Their 1-5 curve inversion is also little-changed, now positive by +22 bps. And their 3 mth-10yr curve is slightly less positive, now by +25 bps. The Australian 10 year bond yield starts today at 4.47% and down -3 bps. The China 10 year bond rate is now at 1.61% and down another -2 bps. The NZ Government 10 year bond rate is now at 4.52% and down -7 bps but essentially unchanged from this time last week.
Wall Street is ending its Friday trade up +1.2% on the S&P500 but is still down -1.1% from this time last week. Overnight, European markets were very mixed again with London down -0.4%, Frankfurt down -0.6% and Paris down -1.5%. Yesterday Tokyo was closed for a holiday. Hong Kong was up +0.7%. Shanghai fell another -1.6%. Singapore was essentially unchanged. The ASX200 was up +0.6%, but the NZX50 closed yesterday down -0.3%.
The Fear & Greed Index ends the week still in the 'fear' zone, and unchanged from last week.
The price of gold will start today at US$2640/oz and down -US$19 from New Year's eve. A week ago it was US$26/oz lower.
Oil prices are up +50 USc from this time yesterday at just on US$74/bbl in the US while the international Brent price is still just on US$76.50. Both are up +US$2.50 since this time last week.
The Kiwi dollar starts today just on 56.1 USc and up +10 bps from yesterday, but down -20 bps from a week ago. Against the Aussie we are also up +10 bps to 90.3 AUc. Against the euro we are down -10 bps at 54.5 euro cents. That all means our TWI-5 starts today at just under 66.9 and unchanged from this time yesterday - and unchanged from a week ago.
The bitcoin price starts today at US$97,969 and up +0.8% from this time on yesterday. Volatility over the past 24 hours has been modest at +/- 1.2%.
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18 Comments
Hey David, I think the stats you keep running for EV adoption in NZ are misleading. You are only looking at New car sales when over 50% of first registrations for 2024 came from Used Imports. This is the true measure as they are all the vehicles that were added to the fleet for the year.
When you include New and Used the EV (BEV) % of first registrations is only 4%. In fact, we added slightly more Diesels to the fleet than EV's last year.
The current government has correctly started making all road vehicles pay RUC's via petrol levy or odometer distance to maintain and build roads. Currently, the TCO of a NEW EV is similar to ICE when all the inputs including depreciation are included.
As a result, we are now one of the laggards in EV adoption globally.
It will take government mandates or a Black Swan event that causes a Petrol/Diesel price spike to tip the scales in EV's favour.
If only we had gas/oil/coal that we could have sold to the rest of the world to finance our transition to an EV future....you know, like Norway did......the global leader in EV adoption.....
Electricity currently at $0.06/MWh not to shabby.
Don't fret Jimbo - we balance out our aussie brothers.
"Within Australasia, Australia was a net source of 38.2 ± 75.8 million tonnes C yr−1, and New Zealand was a net CO2 sink of −38.6 ± 13.4 million tonnes C yr−1."
https://agupubs.onlinelibrary.wiley.com/doi/10.1029/2023GB007845
Imagine how much better we could do if we had a giant battery?
https://www.odt.co.nz/news/national/spills-after-south-islands-hydro-la…
Not on Nationals watch we bloody won't.
US stocks just did something they haven’t done in nearly three decades
"Precursors also racked up that kind of performance three other times, in 1927 and 1928, 1935 and 1936 and in 1954 and 1955...."
Check the years ... Take care.
USA "EV sales accounted for 9.0% of those." I'd suggest EVs are not for your average American. A niche market and poor infrastructure (charging stations). A much better idea of EV sales would be the EU as a whole and the UK where I believe the latter has good infrastructure and I think heavily subsidised/ICE penalised.
Can you provide a source for the notion of good infrastructure in the UK?
I ask because in recent years their public chargers were expensive and many Brits don't seem to have garages (or offstreet parking). In addition, electricity retailers offered power plans for EV owners that had good off peak rates but atrocious peak rates such that a consumer was always going to pay more than if they'd stayed on a non-EV plan (my source being motoring journalist Jonny Smith on his YouTbe channel "The Late Brake Show").
Yet another mainstream US economist group calls for the US to do better in balancing the federal budget.
Of note - they want CGT rates to honestly reflect the income for the wealthy (as I've been saying, CGT rates worldwide are way too low!) ...
https://budgetmodel.wharton.upenn.edu/issues/2024/12/4/illustrative-ref…
Meanwhile ... back in NZ ... we continue to tax work & innovation - but give rentier'ism a free ride - sucks to be the 80% in NZ, ay?
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