Economy Watch

Kia ora,Welcome to Wednesday’s Economy Watch where we follow the economic events and trends that affect Aotearoa/New Zealand.I'm David Chaston and this is the international edition from Interest.co.nz.And today we lead with news American data is weaker today, and China is on a sharp turn inward.But first we should note bitcoin's sharp rise in price. However the surge seems to have run out of steam as you read this. But it is enough to note that prices are back to November 2021 high levels.In the US, durable goods orders slumped in January, primarily driven by sharply lower aircraft orders. That makes them -0.8% lower than the same month a year ago. A pattern of surges and slumps interspersed by 'no-change' months, has developed over the past year. However, non-defense capital goods orders actually rose slightly in January from December but these too were lower year-on-year.American retail sales at physical stores (on a same-store basis) were up +2.7% last week from the same week a year ago, not really enough to account for inflation.Consumer sentiment as measured in the Conference Board survey retreated in February, although they noted it is essentially range-bound. It is in a range that is lower than before the pandemic, but at about the same level as pre-GFC.The US Richmond Fed factory survey reported a sluggish situation in February although expectations for better order levels rose sharply. But the service sector in the same district took a sharpish dip.However the Dallas Fed services survey for February reported a notable improvement.The latest US Treasury bond auction for their 7 year Note again brought very good solid support, but the median yield rose from 4.05% a month ago to 4.27% today.Across the Pacific, Japanese consumer price inflation was expected to slow in January, and that is what happened, falling to 2.2% from 2.6% in December. But core inflation fell slightly less to 2.0% from 2.3%, and that is down from over 3% a year ago. They will be nervous that their long-run deflation tendency is not yet beaten.Taiwanese export orders recovered from their December dip to be +1.9% higher in January than the same month a year ago.China has widened its national security laws to include anything Beijing claims is a 'secret', including company information within a foreign owned company. There are harsh penalties for finding out you have shared such information with company bosses who reside outside the country. Obviously the law is wider than just this, but that is one important aspect and it will cast an even darker pall over foreign investment plans. And through the new 'national security' laws in Hong Kong, which extend Beijing laws into the City, businesses there will be concerned too.The overnight GDP Pulse auctions delivered lower prices for both WMP (down -4.2% from the last full GDT auction and down -3.4% from the prior Pulse event), and SMP (-2.6% and -2.0% respectively). These lower results will have surprised the derivatives market.The UST 10yr yield starts today at 4.29% and little-changed from this time yesterday. The price of gold will start today up +US$6/oz from yesterday at US$2033/oz.Oil prices are up +US$1 at just over US$78/bbl in the US while the international Brent price is now just over US$82/bbl.The Kiwi dollar starts today at 61.7 USc and unchanged from this time yesterday. Against the Aussie we are at 94.3 AUc. Against the euro we are still at 56.9 euro cents. That all means our TWI-5 starts today at just under 71.1 and little-changed.The bitcoin price starts today at US$57,114 and up a spectacular +7.1% from this time yesterday. It is now back to where it was more than two years ago. Volatility over the past 24 hours has been high at +/- 3.9%.Join us at 2pm this afternoon for full coverage of the RBNZ's February Monetary Policy Statement and OCR review. Financial markets don't expect any rate change, but of more interest is hearing how the RBNZ views the medium term inflation risks.You can find links to the articles mentioned today in our show notes.You can get more news affecting the economy in New Zealand from interest.co.nz.Kia ora. I'm David Chaston. And we will do this again tomorrow.

Kia ora,Welcome to Tuesday’s Economy Watch where we follow the economic events and trends that affect Aotearoa/New Zealand.I'm David Chaston and this is the international edition from Interest.co.nz.And today we lead with news ahead of tomorrow's closely-watched RBNZ OCR decision.First in the US, new home sales rose but by less than expected. The tame result continues a now-long trend of sales levels that are not really growing. Of concern in this market is that they now have over eight months of unsold supply at the current sales rate. 'High mortgage rates' are getting the blame.The February update to the Dallas Fed factory survey in America's oil patch turned from being negative to positive, both on the activity index and the outlook index. But both levels remain below their long term levels. A brighter new order level turned this around.Another very well-supported UST 2yr Note auction brought rising yields, now at 4.64% pa (median) which was up from 4.31% a month ago.Industrial production in Singapore shrank -5.7% in January from December, the second large fall in the past three months. From the same month a year ago it was up just +1.1%.In China, their equities markets are in a post-holiday lull. Prices are retreating. There are no scheduled listings and in fact no applicants cleared for stock exchanges’ review. Existing applications to list are being withdrawn. A heavy clamp is going on the private sector, in complete contrast to official speeches extolling the importance of the private sector. Investors notice the disparity. And investors know that home team interventions never last and are wary of having a stake in an essentially rigged market.Also in a lull are business expectations in China. Steel rebar prices fell to their lowest level in nearly four months. We point out there interesting big trends, but that does not necessarily indicate that their whole economy is backsliding - it just explains why the growth impetus in the world's second largest economy is leaking away. The bulk of their SOE-led economy is still active and supporting their huge population and demand.In Australia, the scale of the discounts on CBD office buildings is getting some focus. Values are still falling to entice buyers, and in Sydney insiders think they will bottom out at a -23% retreat. But those insiders are industry boosters, so you would be brave believing their "the bottom is close" talk. The depreciation is less in other main centers, they reckon.The UST 10yr yield starts today at 4.30% and up +5 bps from this time yesterday. The price of gold will start today down -US$8/oz from yesterday at US$2027/oz.Oil prices are up +50 USc at just on US$77/bbl in the US while the international Brent price is now just under US$81.50/bbl.The Kiwi dollar starts today at 61.7 USc and down -¼c from this time yesterday. Against the Aussie we are still at 94.4 AUc. Against the euro we are nearly -½c lower at 56.9 euro cents. That all means our TWI-5 starts today at just on 71.1 and -30 bps lower.The bitcoin price starts today at US$53,313 and up a solid +3.9% from this time yesterday. It is now back to where it was more than two years ago. Volatility over the past 24 hours has been moderate at +/- 2.6%.You can find links to the articles mentioned today in our show notes.You can get more news affecting the economy in New Zealand from interest.co.nz.Kia ora. I'm David Chaston. And we will do this again tomorrow.

Welcome to Monday’s Economy Watch where we follow the economic events and trends that affect Aotearoa/New Zealand.I'm David Chaston and this is the international edition from Interest.co.nz.And today we lead with news China is having a tough time sharking off its housing blues.However in the week ahead, the Americans will release PCE data that will be closely watched. They will also release updates for the ISM Manufacturing PMI, the second estimate of GDP growth rate, durable goods orders, consumer sentiment, and housing sales data. There will be CPI inflation updates coming from Japan, Australia, and the EU. GDP growth for India and Canada will be updated. And factory PMIs for China, Russia, and Canada will out. And the RBNZ MPS and OCR interest rate decision will attract international focus on Wednesday afternoon. Locally, it is the key focus this week of course.But today we start first in China. They released official data that showed foreign direct investment in January was down more than -11% from the same month a year ago. That is their biggest retreat since the GFC. And the more recent data is even worse, falling more than -20% from December.It wasn't the only retreat released in official data. China's new house prices fell the most in almost a year in January with prices in 60 of their 70 largest cities retreating. For resales, this official data only showed two of the 70 cities in their survey with a month-on-month gain, none with year-on-year gains. For such pervasive declining prices to show up in official data probably means the situation is much worse, and it is now quite difficult to sell a house. Buyers have vanished, unwilling to buy a depreciating property. It is notable that China does not release official sales volume data.Recall that in February, the Chinese central bank chopped its 5 year MLF rate by a record -25 bps to its lowest ever. This is the rate on which home loans are based. They also cut the reserve ratio earlier in the month, another easing that might help their property sector.EU inflation expectations are essentially holding at 3.3% for the next twelve months. The ECB would have been disappointed at that, and the fact that the "last mile" is proving very sticky. However, it is not a problem that they have alone.The German economy slipped into recession in the second half of 2023 if you buy into the "two negative quarters" rule on GDP changes. The retreat is minor however and was as expected.In Australia, Rio Tinto has given the go-ahead for a big new iron ore mine. It is in West Africa. The iron ore price has held relatively high, encouraging miners, and Rio Tinto's decision is just one of many. But the accumulation worries some. Iron ore prices are not factoring in the wave of new supply, leaving it vulnerable to the same collapse that smashed battery metals like nickel, some say. If that were to happen to iron ore, it would rock Australia.The UST 10yr yield starts today at 4.25% and down -1 bp from Saturday, down -5 bps from a week ago. The price of gold will start today down -US$3/oz from Saturday at US$2035/oz and up +US$25 from a week ago.Oil prices are still lower at just on US$76.50/bbl in the US while the international Brent price is still down to just under US$81/bbl. Both levels are -US$2 lower than a week ago.The Kiwi dollar starts today at just under 62 USc and little-changed from Saturday. But it up more than +¾c from a week ago. Against the Aussie we have settled back to 94.4 AUc. Against the euro we are slightly firmer at 57.3 euro cents. That all means our TWI-5 starts today at just under 71.4 and that is +60 bps higher than a week ago.The bitcoin price starts today at US$51,299 and up a minor +0.5% from this time Saturday. But it is down -1.9% from a week ago. Volatility over the past 24 hours has been low at +/- 0.7%.You can find links to the articles mentioned today in our show notes.You can get more news affecting the economy in New Zealand from interest.co.nz.Kia ora. I'm David Chaston. And we will do this again tomorrow.

Kia ora,Welcome to Friday’s Economy Watch where we follow the economic events and trends that affect Aotearoa/New Zealand.I'm David Chaston and this is the international edition from Interest.co.nz.And today we lead with news that while all the market chatter is about the spectacular rise of Nvidia and the emergence of AI as a "new industry", the rest of the global economy seems to be generally expanding modestly.But first up, we should note it is a public holiday in Japan, the world's fourth largest economy, the Emperor's Birthday.In the US, new jobless claims fell to near their record lows of under 200,000 last week and far below what was anticipated. Continuing claim levels fell too and there are now 2.1 mln people on these benefits out of a 161 mln employed labour force, a tiny fraction. Still no labour market stress to report.US existing home sales rose marginally back to an annual sales rate of 4 mln which it was last at in August 2023. (It peaked at 7.25 mln in 2005 so it remains modest and currently at the level first reached in 1975.) It's a market essentially in hibernation.Canadian retail sales probably slipped in January after they reported a strong December expansion and taking overall 2023 sales volumes up +2.3%.Across the Pacific, the Bank of Korea kept its base rate unchanged at 3.5% during its February meeting. This was as expected. Korea's inflation rate is 2.8%.In China, vehicle shipments are projected to drop almost -16% in February from the same period last year, according to preliminary data released yesterday. Demand for electric vehicles is also slowing.China’s overseas investment in metals and mining as part of its Belt and Road Initiative surged by more than +150% in 2023, hitting US$19.4 bln with energy transition metals the main focus. Total Belt and Road investments now top +US$1 tln, this updated report shows.Some preliminary PMIs for February are starting to come through and the first was from Japan, showing its factory sector contracted more than expected, and its services sector expanded again, but by less than expected. Together they paint a picture of growth stalling in Japan.In the US, there were rising expansions to report in their factory sector, to a 10 month high, even if still modest, and they had a slight easing in their services expansion.In Germany things contracted harder, but for the EU overall their services sector is no longer contracting, helping keep things stable.In India, they are in a quite different space with manufacturing expanding strongly, and their services sector doing even better. India has replaced China as a major source of global growth, bolstering the continuing expansion in the US.Australia said average weekly ordinary time earnings for full-time adults was AU$1,888.80 in November (NZ$2030/week). The annual increase of +4.5%, or AU$81 a week, was the strongest since May 2013, other than a brief spike in average earnings early in the pandemic.There was another small decrease in container freight rates last week from the week before, but they remain unusually high on the insecurity same drivers around the canal choke-points. Bulk cargo rates have started to move modestly higher but are not outside 'normal' ranges.The UST 10yr yield starts today at 4.33% and up +1 bp from this time yesterday. The price of gold will start today down -US$8/oz from yesterday at US$2019/oz.Oil prices are +50 USc/bbl firmer at just over US$78.50/bbl in the US while the international Brent price is up to just under US$83/bbl.The Kiwi dollar starts today at just on 61.9 USc and up nearly +¼c from yesterday. Against the Aussie we are also +¼c firmer at 94.6 AUc. Against the euro we are little-changed at 57.2 euro cents. That all means our TWI-5 starts today at just over 71.3.The bitcoin price starts today at US$51,432 and essentially unchanged from this time yesterday. Volatility over the past 24 hours has remained modest at +/- 1.3%.You can find links to the articles mentioned today in our show notes.You can get more news affecting the economy in New Zealand from interest.co.nz.Kia ora. I'm David Chaston. And we will do this again on Monday.

Kia ora,Welcome to Thursday’s Economy Watch where we follow the economic events and trends that affect Aotearoa/New Zealand.I'm David Chaston and this is the international edition from Interest.co.nz.And today we lead with news markets are awaiting signals from the minutes of the late January Fed meeting.In the US, mortgage applications fell rather sharply last week, down more than -10% from the prior week to be -13% lower than a year ago. A key reason for the sharpish pullback was an unexpected surge in mortgage interest rates which jumped +19 bps to 7.06% (plus points) for the benchmark 30 year fixed loan. That is their highest of 2024. These higher rates reflect the shift in market pricing as the chances of near-term Fed rate cuts recede.Another assessment of Fed rate trajectories will come this morning (8am NZT) when they release the minutes of the FOMC's January meeting. The next Fed meeting isn't until this time next month. (But there is an RBNZ one this time next week.)American retail sales rose +3.0% last week from a year ago at bricks & mortar stores in the Redbook survey. This is barely enough to keep up with inflation, a second straight week like this after nine weeks of significant volume growth. A hesitation was always on the cards.Sharply lower oil prices, and exports at a 14 month high have combined to deliver Japan a sharply lower January trade deficit. Those exports were on the basis of good demand from both the US and China.European consumer sentiment improved marginally in February even if it still remains quite negative - just less negative.In Indonesia, their central bank kept its policy rate unchanged at 6%.In Australia, wages rose +0.9% in the December quarter, and +4.2% for the full year, (marginally more than the CPI rise of +4.1%). That's its highest growth since 2008.The UST 10yr yield starts today at 4.32% and up +6 bps from this time yesterday. Wall Street in its Wednesday trade is down -0.4% on the S&P500. Overnight European markets were very mixed again with Frankfurt up +0.3% and London down -0.7%. Yesterday Tokyo ended its Wednesday session down -0.3%. But Hong Kong rose +1.6% in their Wednesday trade while Shanghai rose +1.0%. The China Securities Regulatory Commission has imposed a restriction that prevents sales in the first and last 30 minutes of trading for prices that are lower, part of increasingly drastic measures to prevent the Chinese stock-market slump from extending into a fourth year. The price of gold will start today down -US$3/oz from yesterday at US$2027/oz.Oil prices are +US$1/bbl firmer at just under US$78/bbl in the US while the international Brent price is up to US$82.50/bbl.The Kiwi dollar starts today at just on 61.7 USc and unchanged from yesterday. Against the Aussie we are marginally firmer at 94.3 AUc. Against the euro we are still at 57.1 euro cents. That all means our TWI-5 starts today at just under 71.2 and little-changed.The bitcoin price starts today at US$51,382 and down another minor -0.4% from this time yesterday. Volatility over the past 24 hours has again been modest at +/- 1.8%.You can find links to the articles mentioned today in our show notes.You can get more news affecting the economy in New Zealand from interest.co.nz.Kia ora. I'm David Chaston. And we will do this again tomorrow.

Kia ora,Welcome to Wednesday’s Economy Watch where we follow the economic events and trends that affect Aotearoa/New Zealand.I'm David Chaston and this is the international edition from Interest.co.nz.And today we lead with both the US and China are both back from holiday breaks - to lackluster prospects.But first, the GDT dairy auction earlier today resulted in little overall change (+0.5%), although the strengthening NZD did push the result in local currently lower (-1.1%). This auction did record a big drop in the cheddar cheese price (-7.6%) but a good rise for mozzarella (+5.3%). SMP also rose (+1.3%) but the key WMP price fell (-1.8%. Today's result does not interrupt the general trend of rising prices that started in September last year and is probably an inconsequential hesitation at this point. No farm gate payout prices are likely to be affected by this even if it is the weakest result since November.In the US, the Conference Board's index of leading indicators slipped again in January. It has been slipping slightly for a while, but this update was the least in the series.The FT is pointing out that large banks have more commercial property bad debt than they have reserves for it. The steady discounting of commercial property values as interest rates rise is catching out even the majors now. Their analysis shows that the average reserves at JPMorgan Chase, Bank of America, Wells Fargo, Citigroup, Goldman Sachs and Morgan Stanley have fallen from US$1.60 to 90 cents for every dollar of commercial real estate debt on which a borrower is at least 30 days late, according to filings to the FDIC.Canadian CPI inflation fell to 2.9% in January from 3.4% in December. The Bank of Canada has a formal target to keep inflation at the 2% midpoint of a 1% to 3% range. The move lower is seen as a positive development in their battle against inflation.The Chinese central bank has surprised markets somewhat with its Loan Prime Rate moves. They didn't change their one year rate, holding it at 3.45% when a -15 bps cut was expected. But they did cut their 5 year LPR by -25 bps when a -15 bps cut was expected. That is the biggest cut they have ever made to this rate. The five year rate underpins their home loan market. The one year rate is more of a reference for other consumer and business lending. These changes show that Beijing's worries about their failing property sector are front-of-mind. However, despite its boldness the moves met with yawns in the market.Prices for steel reinforcing bar (rebar) fell in China yesterday, and sharply to their lowest level of the year. These buyers have not returned from their New Year break in a positive mood, it seems. The retreat isn't overly large but it does essentially wipe out the gains built up in the expectation of major new infrastructure stimulus.The UST 10yr yield starts today at 4.26% and down -7 bps from this time yesterday. The price of gold will start today up another +US$11/oz from yesterday at US$2027/oz.Oil prices are -US$1.50/bbl lower at just on US$77/bbl in the US while the international Brent price is down a bit less to US$81.50/bbl.The Kiwi dollar starts today at just on 61.7 USc and up +¼c and it’s highest in more than a month. Against the Aussie we are also firmer at 94.2 AUc. Against the euro we are still at 57.1 euro cents. That all means our TWI-5 starts today at just on 71.1 and up another +20 bps from yesterday.The bitcoin price starts today at US$51,608 and down a minor -0.6% from this time yesterday. Volatility over the past 24 hours has been modest at +/- 1.8%.You can find links to the articles mentioned today in our show notes.You can get more news affecting the economy in New Zealand from interest.co.nz.Kia ora. I'm David Chaston. And we will do this again tomorrow.

Kia ora,Welcome to Tuesday’s Economy Watch where we follow the economic events and trends that affect Aotearoa/New Zealand.I'm David Chaston and this is the international edition from Interest.co.nz.And today we lead with global eyes are on how China will manage itself out of its economic funk.First a reminder that it is a public holiday in the US, holiday, Presidents Day, and financial markets are closed there.To the north, Canada said it's producer prices fell marginally in January from December, as expected, and they are now -2.9% lower than a year ago. This is the fourth consecutive month of falls.Across the Pacific, Japanese machinery orders bounced back in December after a terrible November. They came in better that expected (+2.7% vs +2.5%) but nowhere near enough to make up for that November -4.9% fall.Later today the Chinese central bank will reset its Loan Prime Rates. They are widely expected to cut them both to support an economy that seems to be misfiring. The cuts won't be large, probably -15 bps for both the one year and the five year rates. Premier Li is urging officials to do everything they can to support the Chinese economy and "boost confidence".Rivals are becoming concerned that China will dump production resulting from stimulus boosts on world markets. The US has already issued a warning to China on this.In Europe, more evidence inflation is proving quite sticky in the lower ranges, just as it is here. The "last mile" is tough for everyone. Sweden said its rate rose to 5.4% in January, from 4.4% in December. Not exactly what they want or need. A rise was expected, but not by this much. This sort of backsliding affects inflation expectations, a crucial central bank mentric.And European natural gas reserves are at decade highs, and prices have dived. Overall EU gas reserves are currently over 65%, their highest level for the time of year since at least 2011, with Germany at 72%, Italy at 60%, and France at 50%. They started winter with almost 100% of their requirements stored in underground facilities, far above the targets they set for themselves. In the US prices are falling sharply too, now back to levels first seen in 1995. Too much supply, not enough demand. Suppliers using energy as a weapon no longer seems effective.Off the coast of Yemen, although things have quietened recently, there was another serious attack overnight with a South American-registered bulk cargo ship attached and probably sunk. Underwater drone attack weapons were likely used.The UST 10yr yield starts today at 4.33% and up +5 bps from this time yesterday. The price of gold will start today up another +US$3/oz from yesterday at US$2016/oz.Oil prices are still just over US$78.50/bbl in the US while the international Brent price is also still just over US$82.50/bbl.The Kiwi dollar starts today at just on 61.4 USc and up +20 bps overnight. Against the Aussie we are also marginally firmer at 94 AUc. Against the euro we are firmer still 57.1 euro cents. That all means our TWI-5 starts today at just on 70.9 and up +20 bps from yesterday.The bitcoin price starts today at US$51,908 and a mere +0.2% up from this time yesterday. Volatility over the past 24 hours has been low at only on +/- 0.8%.You can find links to the articles mentioned today in our show notes.You can get more news affecting the economy in New Zealand from interest.co.nz.Kia ora. I'm David Chaston. And we will do this again tomorrow.

Kia ora,Welcome to Monday’s Economy Watch where we follow the economic events and trends that affect Aotearoa/New Zealand.I'm David Chaston and this is the international edition from Interest.co.nz.And today we lead with all eyes will be on China this week, especially its financial markets, as it returns from a week-long holiday.In the week ahead, there will only be second-tier data and events. The Fed's FOMC will drop the minutes of its late January meeting on Thursday, NZT. They will be watched for rate-cut signals. There will be a big set of preliminary PMIs for February released this week for a range of key countries. Canada will release its CPI result for January on Wednesday. And Wednesday is when we will get the results of the latest dairy auction.In China, financial markets return later today after the Chinese New Year break. Authorities will be ready to cover any weaknesses, and investors are likely to take advantage. The 'Beijing put' is going to save many investors. But it might work for Beijing who seem to be engineering a substantial rise in the proportion of SOE control of overall GDP. Private ownership and control of large enterprises is now not seen by Beijing as in the country's best interests.Overnight the People's Bank of China kept the rate of ¥500 bln worth of one-year policy loans to some core state financial institutions, known as the medium-term lending facility, at 2.5%. The 'hold' was seen as an effort to prevent more pressure on the yuan. The operation resulted in a net ¥1 bln injection into their financial system (+NZ$227 mln), the smallest boost since August, because ¥499 bln worth of MLF loans are set to expire over the rest of February. A related Loan Prime Rate cut is still likely in February however.And official data claims that this Chinese New Year activity was the best ever. Total domestic trips for the eight-day long holiday rose more than a third to 474 million, while tourism receipts grew by almost +50% to ¥633 bln. That's +19% more in term of trips and +7.7% more in terms of tourism spending from the equivalent 2019 holiday period.Meanwhile, updated data also released overnight on China's balance of payments transactions shows that inbound investment in 2023 was its lowest since 1995 at just ¥148 bln (NZ$34 bln). In fact that 2023 level is just one tenth of the 2021 level.Singapore's exports rose notably in January from December and were up almost +17% from a year ago. Analysts were expecting a more modest +5% rise so that is a notable change.And as widely expected, the Russian Central Bank held its policy rate unchanged at 16%, a pause to the +850 bps hiking campaign that started in July 2023.We should also note that it is another long holiday weekend in the US. Monday in the US (Tuesday NZT) will be President's Day and markets, both bond and equity markets, will be closed.The next release of a survey on consumer sentiment has it rising and confirming earlier surveys. The University of Michigan version rose slightly to a fresh high since July 2021 even if it was marginally below market forecasts.US residential building consents slipped in January from December, but were +8.6% higher than a year ago.But American housing starts slumped almost -15% in January to an annualised rate of 1.331 mln, lower than year-ago levels and the lowest since August and missing market forecasts by a lot. It is the biggest fall since April 2020.Inflation is clearly not beaten yet even if it is down. US producer prices were up +0.3% in January from December, the biggest month-on-month increase in five months, following a -0.1% decline in December. Analysts expected a rise of +0.1%. Cost of services rose +0.6% m/m, the largest increase since July. But that all means producer prices are only a modest +0.9% higher than a year ago. It is the recent pickup that worries markets.On Wall Street, with the December company results three quarters released by now, they show a modest +3.2% lift from a year ago. Against expectations however the story is more positive; 75% of S&P 500 companies have reported a positive EPS 'surprise' and 65% of S&P 500 companies have reported a positive revenue 'surprise'. This reminds us that late 2023 expectations were low - and unnecessarily so it turns out.Money that shifted out of equities into money market funds is now moving back. Global equity funds racked up significant inflows in the week to February 14 as investor optimism returned for this stock market rally, despite lingering uncertainties over the Federal Reserve's rate cut plans. It is a global thing, including Australia.Earnings reported in Australia have also been better than expected overall. About a third of the major companies have reported earnings for the December half so far; almost a half of those have beaten consensus expectations, an unusually high proportion, and while a third have missed analyst estimates.The UST 10yr yield starts today at 4.28% and down -2 bps from Saturday. The price of gold will start today up +US$3/oz from Saturday at US$2013/oz.Oil prices are still just over US$78.50/bbl in the US while the international Brent price is slightly softish at US$82.50/bbl.The Kiwi dollar starts today at just on 61.2 USc and unchanged from Saturday. Against the Aussie we are marginally firmer at 93.8 AUc. Against the euro we are still at 57.8 euro cents. That all means our TWI-5 starts today at just on 70.7 and little-changed.The bitcoin price starts today at US$51,784 down -0.4% from this time Saturday. But it is up a net +9.2% from this time last week. Volatility over the past 24 hours has been modest at just on +/- 1.1%.You can find links to the articles mentioned today in our show notes.You can get more news affecting the economy in New Zealand from interest.co.nz.Kia ora. I'm David Chaston. And we will do this again tomorrow.

The coalition government's select committee banking inquiry could look at how to encourage banks to lend more to "productive" sectors of the economy rather than having such a big focus on "unproductive" housing lending, Commerce and Consumer Affairs Minister Andrew Bayly says.The National-NZ First coalition agreement says the government will establish a select committee inquiry into banking competition "with broad and deep criteria to focus on competitiveness, customer services, and profitability."Speaking in interest.co.nz's Of Interest podcast, Bayly said the government will wait to see what the Commerce Commission has to say in its market study into personal banking services before launching the select committee probe. The Commission's draft report is due on March 21."Why have we seen outflows from the productive sector like small businesses, farming and property development which is really important if you want to build houses in New Zealand? We've seen funding going out of that sector, going into what I would term the unproductive sector which is the mortgage market. That's interesting because it obviously has a big impact on businesses and the productive sector," said Bayly."Then there are things around margin [and] capital adequacy ratios that the Reserve Bank manages. That will help banks determine where they put their money, and whether they want to invest in more mortgages, or whether they want to invest in supporting businesses.""I'm approaching it with an open mind. I want to see where they [the Commerce Commission] have got to with retail [banking], but I think inevitably there's some other areas we want to cover," said Bayly.Under bank regulatory capital rules overseen by the Reserve Bank, banks are required to hold less capital against housing lending than against other types of lending such as business/corporate and agriculture lending. The major lending exposure of all NZ's major banks is housing. ANZ NZ, the country's biggest bank, has 72% of its total lending in housing.Bayly is also Minister of Statistics, plus Small Business and Manufacturing Minister.On Statistics NZ, Bayly said it will deliver the 7.5% annual spending reduction the government has asked for. Decisions and preparation are ahead for the 2028 census, he said, noting the 2023 census cost $326 million, "a lot of money.""I'm wanting to make sure that what we do drives economic growth for New Zealand, how we can power up those businesses. That's the big strategic intent," he said."Do you run another huge census every five years? That's the first question. And if you read the Stats NZ] briefing [to the incoming minister] there's a proposal that you don't run those big things again. Because governments all around the world are having the same issue where if you front up to someone now and say 'can you fill out this long form' most of them tell you to naf off," Bayly said.The next census could look to make more use of administrative data like home addresses or tax returns, he said, information and data that lies within various government entities."Obviously they've got to do it within privacy settings. But that is certainly the trend overseas and we will have to look at it.. that you may move towards more localised, small surveys, targeted surveys, and look to buttress that information using existing data sources that are potentially untapped at the moment."In the podcast Bayly also talks about Stats NZ reporting Consumers Price Index (CPI) data monthly, funding to update the CPI that's overdue, the Credit Contracts and Consumer Finance Act, the conduct of financial institutions (CoFI) regime, buy now, pay later, anti-money laundering rules, and his plans to rewrite the Companies Act.*You can find all episodes of the Of Interest podcast here.

Kia ora,Welcome to Friday’s Economy Watch where we follow the economic events and trends that affect Aotearoa/New Zealand.I'm David Chaston and this is the international edition from Interest.co.nz.And today we lead with the giant US economy is putting most other major economies in its shadow, expanding while others stumble.But first, the number of people claiming unemployment benefits in the US fell by -12,500 from the prior week to 222,000, firmly below market estimates. It was the lowest reading in nearly one month, adding to the latest jobs report that indicated historical tightness in the US labour market, and so maintaining the leeway for the Federal Reserve to remain hawkish.But American retail sales fell -0.8% in January from December, reversing December's rise, and worse than market forecasts of a -0.1% fall. It is the biggest decrease in retail sales since March last year, primarily driven by the aftermath of the holiday shopping season and cold weather. Car sales were notably weaker.Business inventories rose, but in relation to sales they remain stable and slightly below historical averages.But they need to be cautious; industrial production edged slightly lower in January from December, missing market expectations of an expansion after recording no change in December. And that meant there was zero change from a year ago. Frigid weather got some of the blame for the January result.But things may be on the improve. Both the Philly Fed's factory survey, and a similar one in New York both recorded sharp improvements in their February surveys.Canadian housing starts came in lower than expected in January, and by quite a bit.Official data in Japan suggests their economy was in recession in the second half of 2023. Japan's GDP unexpectedly shrank -0.1% in Q4 from Q3, missing market forecasts of a +0.3% growth and following a revised -0.8% fall in Q3, flash data showed. That is a big miss for the world's third largest economy. That is their first recession in five years, as private consumption, which accounts for more than half of the economy, declined for the third successive quarter. What is off about this is that the granular data that makes up the result was relatively positive in the period.This Japan retreat was enough to sink it from the world's third largest economy, to #4 behind Germany. But while Japan's nominal economic activity slipped below Germany, the country's growth rate has surpassed that of China for the first time in almost half a century (on a nominal basis).India reported very strong growth in car sales in January, driven in large part by sales in rural communities. In fact, they "smashed" the previous record, up almost +14% year-on-year.The British economy contracted -0.3% in Q4 from Q3-2023, following a -0.1% decline the previous period. That was worse than market forecasts of a -0.1% fall. Their economy entered recession (if you use the two-quarter rule) amid a broad-based decline in output, including in services. This is election year in the UK.The euro zone economy will grow slower than expected in 2024 according to updated forecasts from the European Commission. But they also expect to face reduced inflation pressure.For the first time in two years, the Australian jobless rate has risen above 4%. The actual 4.5% rate means they now have 654,000 people without jobs, the highest level since October 2021. (The headline rate is the 4.1% seasonally adjusted rate.)Australian inflation expectations held unchanged in February at 4.5% in this Melbourne Institute survey. Their central bank would have been disappointed in that.Globally, container shipping freight rates slipped slightly last week but are still unusually high. The risks keeping them high are basically unchanged. Bulk cargo rates are again little-changed, and low.The UST 10yr yield starts today at 4.24% and little-changed from yesterday. The price of gold will start today up +US$10/oz from yesterday at US$2001/oz.Oil prices are back up +US$1.50 at just over US$78/bbl in the US while the international Brent price is up a bit less to US$82.50/bbl.The Kiwi dollar starts today at just on 61 USc and little-changed from this time yesterday. Against the Aussie we are still at 93.8 AUc. Against the euro we are still at 57.7 euro cents. That all means our TWI-5 starts today at just under 70.6 and little-changed.The bitcoin price starts today at US$52,232 and another +1.0% from this time yesterday. Volatility over the past 24 hours has been modest at just on +/- 1.5%.You can find links to the articles mentioned today in our show notes.You can get more news affecting the economy in New Zealand from interest.co.nz.Kia ora. I'm David Chaston. And we will do this again on Monday.