Here’s our summary of key economic events overnight that affect New Zealand, with news China is feeling an extended squeeze on foreign investment that just won’t ease.

China released its August year-to-date foreign direct investment data overnight. They said they only attracted ¥507 bln in net foreign investment in those eight months. They said they attracted ¥467 bln in the seven months to July. So that means they gained a net +¥39 bln in August alone and that is a very low +US$5.5 bln and that is only one third of the August 2024 gain. Basically foreign direct investment into China from all sources is close to dead in the water.

This doesn’t mean that China’s economic expansion won’t be good in 2025 (over +5%). But it does point out how the two big powers are isolating themselves, with cross-border investment and economic connections all retreating.

A recent example is that China’s new iron ore buying monopoly has moved to shut out a key Australian blend from BHP. They have other options and are using their heft to try and bring BHP and Australia into line.

Separately, Japan’s inflation eased to 2.7% in August from 3.1% in July, the level since October 2024. There was a notable slowing in the rise in rice prices, enabling food price inflation to ease to ‘only’ 7.2% in August from a year ago. Overall prices weer up +0.8% in the month with food prices up just +0.3% for the month.

Japan’s central bank announced the results of its policy rate review and as expected left it unchanged at 0.5% at Friday’s. This came amid the political uncertainty around the resignation of Prime Minister Ishiba. They also said that it will sell its holdings of exchange-traded funds and Japan real estate investment trusts (J-REITs) to the market. Here is their decision.

Germany said its producer prices fell an outsized -2.2% in August from a year ago, a deflation sign they will not welcome and extends their deflationary pressure that started in July 2023. But most of that is coming from the lower cost of imported energy with local producer prices basically unchanged.

Canada said its August retail sales rose +1%, more than offsetting its July dip. But it isn’t clear now much of that is inflation related. But financial markets reacted positively, seeing consumer ‘resilience’ in the data. (One more -25 bps rate cut is expected in Canada before the end of the year.)

In Australia, they are facing the prospect of another wet and stormy summer. It is a turn that makes their recent national climate impact report more realistic. Insurers will be bracing

This week our look at one core global resource focuses on iron ore. At current production levels at existing mines, these are expected to last at least 65 years. But that doesn’t account for known resources that are yet to be mined. Not only does the latest reviews not include large recent African discoveries the Chinese are developing, they also don’t include grades that are currently avoided because easier access is currently available. This resource will last many centuries at current production levels. Like oil and gas, inflation-adjusted current pricing is near all-time lows. (H/T PDK)

The UST 10yr yield is now at 4.13%, up +3 bps from yesterday to be up +6 bps from a week ago. The key 2-10 yield curve is now steeper at +56 bps. Their 1-5 curve is no longer inverted, now positive by +9 bps. And their 3 mth-10yr curve is now +3 bps positive. The China 10 year bond rate is up +1 bp at 1.87%, up +7 bps for the week. The Australian 10 year bond yield starts today at 4.26, up +2 bps overnight up +3 bps from a week ago. The NZ Government 10 year bond rate starts today at just under 4.23%, down -2 bps from Friday and down -8 bps from a week ago.

Wall Street was marginally firmer in Friday trade with the S&P500 up +0.5% to be up +0.9% for the week and a new record high. Overnight, European markets were little-changed everywhere. Yesterday, Tokyo closed down -0.6% on Friday and up +0.5% for the week. Hong Kong closed unchanged for a +0.9% weekly gain, and Shanghai closed down -0.3% on Friday for a 1.4% weekly drop. Singapore ended its session down -0.2%. The ASX200 ended its Friday up +0.3% for a net -0.5% fall for the week. And the NZX ended up +0.9% on Friday for a little-changed week.

The Fear & Greed index is now back in the ‘greed’ zone from ‘neutral’ last week.

The price of gold will start today at US$3681/oz, up +US$39 from yesterday. That is up +US$33 from a week ago. Silver had another spurt overnight, now up over US$43/oz, a weekly gain of +US$1.

American oil prices are down almost -US$1 at just on US$62.50/bbl and back to where they were a week ago, with the international Brent price just over US$66.50/bbl and down -50 USc.

The Kiwi dollar is at just under 58.6 USc and down -25 bps from yesterday, and down a full -100 bps from a week ago. Against the Aussie we are down -10 bps 88.8 AUc. Against the euro we are little-changed at 49.9 euro cents. That all means our TWI-5 starts today at just over 65.8, down -20 bps from yesterday but down -100 bps for the week.

The bitcoin price starts today at US$115,479 and down -1.8% from this time yesterday, down -0.8% from a week ago. Volatility over the past 24 hours has been modest at just on +/- 1.0%.

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