Here’s our summary of key economic events overnight that affect New Zealand, with news of some messy US data which Wall Street is nervous about, but elsewhere most other countries are on the improve (China excepted).

But first up today, the overnight dairy auction was another bad one with prices down -4.4% in USD terms and down -5.4% in NZD terms. The key WMP price fell -5.7% in USD terms. This is now serious. The recent downgrades to current season milk payout forecasts are going to get looked at again by the analysts. Since the peak in May, theses prices have dropped -25% and are down -17% from this time last year. We are in a full bear market for dairy prices. Making it worse is that we are now just past the seasonal peak of the milk curve, which will take the top off the country’s export earnings. Yesterday’s MPI SOPI is already out of date, and even that wasn’t very positive about earnings from dairy exports.

The catch up update of the US labour market didn’t really reveal much or surprise many. It reported a steep drop in October and a half-bounceback in November. The net result is a loss of -41,000 jobs over the period of the US Government shutdown. Not seasonally adjusted, there was a good +920,000 rise in employment from September to November, but this is far less than the +1,355 mln in the same 2024 period. Despite their unemployment rate rising to 4.6% and a four year high, their labour market isn’t a net drag yet, but it is now getting close.

The more current weekly jobs report from ADP recorded a small gain last week, but the prior week’s gain was revised sharply lower.

But overall, this latest jobs data is messy, and probably no help to the Fed when setting monetary policy.

Meanwhile US retail sales in October showed no gain from September to maintain their year-on-year +3.8% gain, just marginally ahead of current US inflation. These latest results have been dragged lower by declining car sales.

The flash American December factory PMI came in positive, but only just and a six month low.

All this is happening under a delusional President (see this tweet), and so far he hasn’t managed to break the US economy. Getting closer though. The Supreme Court decision on the legality of the Trump tariffs will likely come in January now. We should also note that taxes raised from tariffs unexpectedly fell.

Across the Pacific in Japan, their flash December PMI reported an increase in new orders supporting a rise in business activity. But their factory PMI isn’t quite yet at expansion despite the improvement.

In India, their factory PMI shows output rising strongly, but the momentum is showing signs of slowing. Most countries would love PMI’s like they have however.

In the Eurozone, business activity rose again in December to complete full calendar year of expansion. But their factory PMI dipped slightly to take the top off the result. Hurting was the re-emergence of inflationary pressure.

The latest S&P Global PMI for Australia for December finds the factory sector expanding in a minor way and a little faster than in November helped by expanding new order levels. But the service sector is now expanding slower, in fact barely expanding.

Staying in Australia, the Westpac-Melbourne Institute survey of consumer confidence retreated in December and by more than expected and into net negative territory. In fact, no change was expected. The survey found a sharp change in what is expected for mortgage rates, going from a expecting a fall, to now expecting them to rise. Views on the economic outlook and household finances have deteriorated, but those surveyed are still confident about the Australian labour market. Views on home buying and house prices have been pared back.

The UST 10yr yield is now at 4.16%, down -2 bps from this time yesterday. The key 2-10 yield curve is still at +67 bps. Their 1-5 curve is now positive by +19 bps and the 3 mth-10yr curve is now positive by +48 bps. The China 10 year bond rate is holding at 1.85%. The Japanese 10 year bond yield is down -1 bp at 1.95%. The Australian 10 year bond yield starts today at 4.73%, unchanged from yesterday. The NZ Government 10 year bond rate starts today at 4.57%, down -4 bps from yesterday..

Wall Street has fallen so far in Tuesday trade with the S&P500 down -0.8%. Overnight, European markets were all lower between Paris’s -0.1% and London’s -0.7%. Yesterday Tokyo ended down -1.6%. Hong Kong was down -1.5%. Shanghai ended its Tuesday down -1.1%. Singapore was down -0.2%. The ASX200 retreated -0.4%. However the NZX50 ended up +0.1% and the best of the markets we follow.

The price of gold will start today at US$4297/oz, and up +US$2 from yesterday.

American oil prices are down another -US$1 at just under US$55.50/bbl and a new five year low, while the international Brent price is now just on US$59/bbl.

The Kiwi dollar is unchanged from yesterday, at just on 57.9 USc. Against the Aussie we are +10 bps firmer at 87.3 AUc. Against the euro we are down -10 bps at 49.2 euro cents. That all means our TWI-5 starts today at just on 62, and little-changed from yesterday.

The bitcoin price starts today at US$87,541 and up +1.4% from this time yesterday. Volatility over the past 24 hours has been modest, at just on +/- 1.5%.

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