Here's our summary of key economic events overnight that affect New Zealand with news the week has started tentatively. But there was an eye-catching housing affordability proposal in Spain,
But first, there were no real surprises in the latest survey of American inflation expectations. Consumers still see a 3% rate for the year ahead, more for food (+4.0%), less for petrol (+2.0%), but still high for rent (+5.5%). For three years ahead, expectations are for no relief, up from +2.6% to +3.0% per year.
But more than expected, Chinese exports surged +10.7% in December from year-ago levels, much more than the market forecasts of +7.3% and accelerating from a +6.7% rise in November. Traders are clearly front-loading orders in anticipation of new aggressive tariffs from the incoming US administration. But Chinese exports to New Zealand were down -1.8% in the month, their imports from us down -7.9%.
Chinese imports only rose +1.0%.
China's new vehicle sales rose to 3.5 mln units in December, spurred by those taxpayer discounts to encourage spending. They were more than +10% higher in the month than the same month a year earlier. NEVs took a record 45% share of these latest sales. Traditionally, December is their peak sales month of the calendar year.
India's CPI inflation rate eased from +5.5% in November to +5.2% in December. Food prices, which account for nearly half on their survey, rose +8.4%. If there is good news among this data it is that prices fell in December from November.
Meanwhile, the Indian currency fell to more than 86.7 rupee to the USD. At the start of the year it was 'only' 85.5 so that is -1.4% in two weeks. At the start of 2024 it was at 83 so -4.3% since then. (Still, that is nothing like the -10.4% fall by the NZD against the USD since the start of 2024.)
In Australia, the Melbourne Institute's Monthly Inflation Gauge rose by +0.6% in December, sharply accelerating from a +0.2% increase in November and marking the highest level since December 2023. It was also the fourth consecutive month of gain.
The ANZ-Indeed Australian Job Ads survey rose by +0.3% in December from November, swinging from a revised -1.8% drop in the prior month. The latest level suggests their labour market is still resilient on a short-term basis despite elevated interest rates. On an annual basis however, job ads dropped -12.5% from December 2023. They have dropped almost -28% from their peak in 2022.
In Europe, Spain like many others is facing a housing crisis. They fear a "rich owner / poor tenant" split that is developing elsewhere. Their government has twelve measures proposed to deal with the issue, one of which is a 100% tax on non-EU house buyers.
And for the record, the coal price fell further overnight. Oddly, demand is up in China, but so is output - more so - and they have fast-building inventories.
The UST 10yr yield is now at just on 4.77%, and up just +1 bp from this time yesterday. The key 2-10 yield curve is still positive by +39 bps. Their 1-5 curve is slightly positive at +37 bps. And their 3 mth-10yr curve is also more positive, now by +49 bps. The Australian 10 year bond yield starts today at 4.69% and up +16 bps. The China 10 year bond rate is now at 1.65% and up +3 bps. The NZ Government 10 year bond rate is now at 4.72% and up +7 bps.
Wall Street is starting its week down -0.2% on the S&P500. Overnight, European markets all fell about -0.3%. Tokyo ended its Monday trade down -1.0%, Hong Kong was also down -1.0% and Shanghai slipped -0.2%. Singapore dipped -0.3%. The ASX200 ended its Monday trade down a sharpish -1.2% while the NZX50 ended down -0.5% with a small late recovery.
The price of gold will start today at US$2665/oz and down -US$25 from yesterday.
Oil prices are up +US$2 from yesterday at just over US$78.50/bbl in the US while the international Brent price is now just over US$81.
The Kiwi dollar starts today just on 55.5 USc and down -10 bps from this time yesterday. Against the Aussie we are down -20 bps at 90.2 AUc. Against the euro we are up +10 bps at 54.4 euro cents. That all means our TWI-5 starts today at just over 66.6 and down less than -10 bps from yesterday.
The bitcoin price starts today at US$92,068 and down -3.0% from this time yesterday. Volatility over the past 24 hours has been high at +/- 3.5%.
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87 Comments
And in another faux pas, Electric Jesus Elon Musk has been caught out cultivating a persona of being a top tier computer gamer, when really he's been paying others to play games for him, while promoting how awesome he is at them.
It'll likely be a while (or ever) for his fans to realize they're sycophants to a manufactured deity, but it'll be interesting watching the process unfold.
Nope, Elon is the planets premier techbro/manchild with god complex and increasingly fascist tendencies. Of course others of his ilk still worship him, but his star is fading among the rest of us mere mortals.
Seems MAGA have discovered they've been digging their own swamp.
https://theconversation.com/elon-musk-and-the-tech-titans-v-the-rest-of…
Elon Musk’s biographer, Seth Abramson, claims the billionaire’s mental state is deteriorating, citing stress, controversial online behavior, and could "endanger us all", says he is "deeply unwell".
I have the same concerns with some commentators here as well and they are not even as productive as Elon?
@baywatch...good points, but for me, his point had no linked article and bordered on the rantings of a madman. I agree conversation about Elon ARE relevant, but then again so could convo about Andrew Tate becoming UK PM... I mean, we have to draw the line of sensibility somewhere?
I recon its a 50/50 at this point if we even get a cut. Things are changing fast out there and we still have another month to go. My pick is the RBNZ will now hold and wait for several things to unfold first. Putting it up now would cause general panic amongst mortgage holders and tank the economy even further.
Business Leaders are trying to tell NAct that the economy is the most important priority.
Consumers are telling NAct that cost of living and economy is most import priority.
NAct will want lower rates to help stimulate, they will not want to fiscally spend
but they are going to have to soon or the next election will be real tight
Tanking the NZ$ isnt probably helpful, unless you are a primary exporter. For the rest of the consumer oriented importers like retailers, and manufacturers that rely on imported inputs, it will be a disaster. Inflation will rebound with a vengeance. Hello late 1970's.
I want to see if NZ2Y yield climbs if RBNZ holds rates. Maybe the markets has priced in a cut, not sure. The key 2-10 yield curve is still positive by +94 bps. Our 2Y yield has finally climbed to 3.69%, up from 3.62% yesterday. Waiting to see if we make a big move like Australia’s 2Y.
To go from a signaled 50 to none would seem a big step. The surprise moves generate the biggest profits if you are the correct side, Kiwi would bounce upwards and the future track would price fewer cuts if he goes 25.
The significance is this is a full MPS not just an OCR review.... he has the opportunity to present a full release and press conference, IMHO as abetting man I think he goes 50 now as we need it, but then says look we are on data watch and international development monitoring. I think this is the risk position in Feb, kiwi would rise a bit, great chance to short it...
What are your thoughts on the timing of a bottom on this NZD slide? In terms of market perception, the USD is still on an upside, but looking at the COT reports, the markets are at a record short position on the NZD, hinting that the turning point may come soon.
I've just decided recently to start doing some active management of my money, and boy is it a shitstorm of overlapping factors to try to understand the global economic system.
Thanks for the reply, this is similar to my thinking to. It looks like there will likely be some more upside moves to US rates expectation in the coming weeks.
If RBNZ still go with the 50 that is likely to further weaken the NZD side of things, even if they do signal an end to further cuts.
What is the best way to get exposure to the upswinging USD, short term treasuries?
I am paid in USD and have been stacking away the bills for a few years now...but since October last year have been converting chunks into NZD every month or so as the NZD weakens. No idea where the bottom will be or if I'm doing a smart play so I'm happy to cash in on an advantageous situation rather than trying to time it perfectly.
This Kryptonite death emanating radiation towards the NZ Housing Ponzi cannot stand ......utter the hyperplectic and ear steaming, Ponzi exposed TA, AC and the entire Onroof Cabal.
This talk of inflation reflaring and interest rates holding high/rising is total heracy and it will shatter the current brittle shards of market confidence. Such Business Desk writers must be crucified. They are off script, how dare they!
So now, the NZ housing Ponzi tied writers at Granny Herald and Onspoof are feverously writing a new set of epistle's to their scared flock of 101 reasons property "must rise in 25". Sad and sorry sacks they are.....
As I've pointed out before, history shows that property prices dont begin (sustained) rising until the interest rate cutting cycle is completed - not when it begins. The boom-bust-boom cycle is usually about 6 years. So the longer this drags out, the more house prices will fall.
As observed a lower OCR tends to devalue the NZ currency, which is of course good for our exporters but critically this benefit takes time to flow through to the general economy as it's a 'trading out of the hole' effect (ie we don't get the whole benefit of the future more profitable export activity all at once). However, imports become immediately more expensive, including fuel, and hence tradable inflation goes up which happens faster than the benefits accrue from export trading.
So, cutting the OCR would have (at least) a deleterious effect on tradable inflation. It will be for the RBNZ to estimate the potential size of that effect and act prudently.
With Trump soon to take his seat as President, is this not just uncertainty and money being moved to the US$ as a safe haven?
Yes there will be a lot of downstream effects, but Trump's rhetoric on all manner of topics tends to make one wonder if chaos will abound when he take office. In that event how do you protect yourself?
Perhaps physical invasions of Greenland and Panama will be sufficient distraction?
Chaos, effectively both a smokescreen and distraction. Reminiscent of the bombers over Europe in WW2 dropping aluminium strips to confuse the radar. They called it chaff I believe, the objective to throw off the interceptor fighters and disguise the intended target. That does sound rather like Trump tactics doesn’t it.
From above - Oil prices are up +US$2 from yesterday at just over US$78.50/bbl in the US while the international Brent price is now just over US$81.
The oil price is worth watching. - the politics behind this is a separate issue
Biden has decided that it is finally time to do the "right thing" and send oil prices surging by announcing the most sweeping and aggressive sanctions yet on Russia’s oil trade, making life for his successor hell as gas prices are about to soar following closely the spike in oil.
https://www.zerohedge.com/markets/parting-gift-trump-biden-sends-oil-prices-soaring
Biden is entering himself in history with one of the worst presidential legacies in history. It is often overlooked that he had failed multiple times to get the nomination in previous runs for the presidency, Obama couldn’t even endorse him, his vice president as is mostly customary, and in the 2020 primaries he was down and out after New Hampshire but then rescued only when the Dems woke up that all their other contenders were completely unelectable. Given those known inherent flaws and previous lack of confidence and not the least, his age, the Dems should have made damn sure he was going to a one term president, have him declare that and set about locating and grooming a viable successor.
Bidens biggest accomplishment in the last 40 years ???
- Ensuring his son, the aptly named, Hunter, never does serious hard time, for the various drug, gun and alleged financial crimes....... thought those Dems hate and rail against white and rich privilege ???
Great lot, those Bidens.....
They're a result, though - not the driver.
We are seeing an elite-vs-elite scrap as to who(m) gets to sit at the best table - Bidens and Bushes and Clintons are the old cabal, Trump/Musk the new. Add in the military/industrial tie-up, these days corporatised, and the fact that military spend is often - mostly? - misdirected. But Senators get elected in states which rely on military-work 'incomes' (taxpayer-debt funded) so never rock the boat. Those just outside that tie-up want a piece of the taxpayer action - could be an interesting shake-out.
Meantime the US fleets are roaming the planet looking for the Yamato... yet without military stand-over posturing, the US hegemony is a gone goose. And the 'info' we get is filtered, not too much differently from that which reported the Whites vs the Reds, in the post WW1 years.
Interesting times.
Meanwhile, we could be about to shoot ourselves in the foot.
https://newsroom.co.nz/2025/01/14/nzs-climate-credentials-on-the-line-i…
For gold bugs everywhere ...
A student accidentally created a rechargeable battery that could last 400 years
... sad for petrol heads.
(Lithium down. Gold up. What could be going on.)
[discl: Stirring the metallurgy pot.]
But did you see the last sentence in that article?
This article originally appeared two years ago.
A battery management designer I worked with a few years ago reckoned at the time it took $1 billion to get a new battery formulation from a laboratory into production and on the market. That might be stalling updates on this battery.
Yes. Old article.
I can't supply anything covered by NDAs. Nor could I find the more recent one I read recently. But this tech bubbles along making, by most accounts, quite good progress.
re ... "$1 billion to get a new battery formulation from a laboratory into production and on the market."
It's much more. But for a battery that lasts this long? Peanuts.
Where the F--K do you get that from?
I made a technical comment - from a POV of some considerable expertise.
You - despite having this suggested as reading material: http://www.withouthotair.com/ - shied away from becoming informed. Your method of avoiding is to put-down and slander. Funnily enough, those who choose not to become informed, tend to be the belief-based crowd. Perhaps look hard in the mirror?
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