Here's our summary of key economic events overnight that affect New Zealand with news the US is today moving from a prosperous and strong four years into an unknown future; the age where billionaires get all the gains. Markets are showing caution, especially the bond market which is likely to be the most reliable predictor of what is to come. And the USD fell. It is all very fluid.
And in the US, it seems the 'promise' of immediate tariffs on his first day in office isn't going to happen. The Trump team now says it plans to direct federal agencies to study trade relations with China and other countries without imposing new tariffs on his first day in office. (He has the office now, so the promise to voters is so last year.) But the tariff uncertainties and their threats to inflation control remain.
One thing he did re-promise in his speech today is war with Panama, committing to seize the Panama Canal. (Almost certainly, that will start work on a wider, more efficient alternative canal in another country.)
In Canada and in a central bank survey of firms taken in mid-November, after the Trump victory and before the Trudeau resignation, Canadian businesses were girding for a rocky relationship with the US marked by higher costs and new tariffs. But they were seeing improved demand. And if they can navigate the new US policies, they seem confident businesses there will improve.
Across the Pacific, Japan released machinery order data yesterday for November and that brought a much stronger result than expected. Excluding volatile items like ships and power companies, they rose +9.5% from the same month a year ago to a nine month high. And for the first time in more than a year, that propelled the annual levels to a small +1.2% gain. The recent strength comes on top of a good result for October as well.
China held its loan prime rates unchanged yesterday at its January review. The one year LPR, the benchmark for most corporate and household loans, remains at a record low 3.10% and their 5 year, the benchmark for mortgages, stays at a record low 3.60%.
In Australia, and following its pull-out of personal banking in New Zealand, HSBC is said to be considering doing the same there for its much larger retail banking operation.
The UST 10yr yield is now at just on 4.58%, and down -4 bps from this time yesterday. The key 2-10 yield curve is also less positive at +31 bps. Their 1-5 curve is holding at +22 bps. And their 3 mth-10yr curve has flattened, now to +29 bps. The Australian 10 year bond yield starts today under 4.53% and up +3 bps. The China 10 year bond rate is now at 1.67% and up +3 bps. The NZ Government 10 year bond rate is now at 4.75% and again unchanged.
Wall Street is having its standard inauguration holiday so there is no Monday trade. Overnight European markets were up about +0.3%. Yesterday, Tokyo rose +1.2%, Hong Kong rose +1.7%, but Shanghai was only up +0.1%. Singapore dipped -0.1%. The ASX200 rose +0.4% in its Monday trade while the NZX50 fell -0.3%.
The price of gold will start today at US$2707/oz and up +US$5 from yesterday.
Oil prices are down -US$1.50 at just over US$76.50/bbl in the US while the international Brent price is now just under US$80.
The Kiwi dollar starts today just under 56.6 USc and up +70 bps from this time yesterday. Against the Aussie we up +30 bps at 90.4 AUc. Against the euro we are unchanged at 54.4 euro cents. That all means our TWI-5 starts today just on 67.1 and up +30 bps from yesterday.
The bitcoin price starts today at US$106,643 and up +1.9% from this time yesterday. Volatility over the past 24 hours has been very high at +/- 4.8%.
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