Here’s our summary of key economic events overnight that affect New Zealand, with news of leaking economic signals everywhere we look today. And the NZD is in retreat as the mood sours on commodity currencies, and Wall Street follows.

First, the overnight full dairy auction brought lower prices yet again, down -2.4% in USD terms this time, down -1.0% in NZD terms. Butter (-4.3%) and cheddar cheese (-6.6%) were the big deliners this time, but the key WMP also fell -2.7%. If it wasn’t for China buying, the situation could have been worse as a bearish tone was very evident and markets for milk fats (butter, cheese) are now oversupplied. This was the sixth consecutive drop, taking the fall since early August to more than -10%. So the softness is mounting up now and analysts will be dusting off their new season $10/kgMS payout forecasts for a serious review.

In the US there was a large retreat in optimism as reported by the RCM/TIPP sentiment survey. It fell a sharp -9.1% in November to the lowest since June 2024, a shift that was not expected and certainly the size of the shift wasn’t anticipated. Confidence among investors slipped -3.1% but for non-investors it plunged -10.4%.

The US Logistics Managers Index shows that freight costs are rising and at an increasing rate, but that inventory levels are contracting. This monitoring also reports that warehousing costs and utilisation are now rising at a much softer pace. This metric seems to suggest more momentum is leaking from the heart of the giant US economy, but it isn’t in retreat yet.

And staying in the US, the Americans had said China would return as a big buyer of their soybean crop after the Trump/Xi meeting. But as we noted at the time, the Chinese were silent on that commitment. And so far they have not placed any orders in the US (while continuing to buy in Brazil). It makes sense – why would you buy from a supplier who uses trade as a pawn? The uncertainty and unreliability would make anyone shy away from such commitments.

All this American negativity is seeing Wall Street in retreat today. At the same time, there are some signature elections being held in parts of the US today and all eyes are on the retribution the US president may apply if results don’t go his way. Withholding food aid to the poor is already underway. More will surely follow.

In Australia, their central bank held its cash rate target at 3.6% again in yesterday’s review but it is admitting to worries about inflation pressures. However, they are hoping those pressure are transitory. Still, remarks yesterday will have financial markets removing any chance of any rate cuts in the foreseeable future.

The UST 10yr yield is now at 4.08%, down -3 bps from yesterday at this time. The key 2-10 yield curve is still at +51 bps. Their 1-5 curve is still +2 bps positive and the 3 mth-10yr curve is now +14 bps positive. The China 10 year bond rate is unchanged at 1.74%. The Australian 10 year bond yield starts today at 4.31%, down -4 bps from yesterday. The NZ Government 10 year bond rate starts today at just on 4.14%, up +1 bp from yesterday.

Wall Street has started its Tuesday with the S&P500 down -1.1% as the froth seems overdone and risk aversion sets in. Overnight, European markets were mixed between London’s +0.1% hold and Frankfurt’s -0.8% fall back. Tokyo was down a sharpish -1.7% yesterday. Hong Kong fell -0.8% and Shanghai was down -0.4%. Singapore ended its Tuesday session down -0.5%. The ASX200 ended down -0.9%, but the NZX50 rose -0.4$ and was the best of the markets we follow.

The price of gold will start today at US$3968/oz, down -US$39 from this time yesterday.

American oil prices are -US$1 lower from yesterday at just over US$60.50/bbl, with the international Brent price now just under US$64.50/bbl.

The Kiwi dollar is now at just under 56.7 USc, and down -40 bps from yesterday. Against the Aussie we are down than -10 bps at 87.2 AUc. Against the euro we are down -20 bps at 49.3 euro cents. That all means our TWI-5 starts today at just over 61.3 and down -40 bps from yesterday.

The bitcoin price starts today at US$102,729 and down another -3.8% from this time yesterday. Volatility over the past 24 hours has been moderate at just on +/- 2.3%.

Join us at 1pm this afternoon for the live press conference presenting the latest RBNZ update of their Financial Stability Report.

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