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 the fading of confidence in the US is spreading, but trailing the international reputation demise.

First up today, the widely-watched Chicago Fed's National Activity Index for the US fell in January from an upwardly revised result for December, suggesting American economic growth decreased to below trend. The personal consumption and housing categories, along with the production sector, both retreated.

The Dallas Fed's regional factory survey fell sharply in January from a positive expansion in December to quite a negative contraction in this latest survey. New orders led the shift lower, while the company outlook index fell 24 points and the outlook uncertainty index surged to a seven-month high of 29.2 from nearly zero last month. There are some suddenly worried folks in the US oil patch - or as the Dallas Fed themselves noted, businesses are faltering under increasing uncertainty.

So investors are shifting to risk-free options. There was a large two year US Treasury auction earlier today, one that was again well supported, It delivered a median yield of 4.13%, down from the 4.17% yield at the prior equivalent event a month ago.

Singapore's CPI inflation rate fell to 1.2% in January from a slightly revised 1.5% in the prior month. This was well below analyst expectations of 2.2% and is the lowest level in four years. (In between, it peaked at 7.5% in September 2022, but it has been falling since.) Lower food prices were a key contributor in this January result.

Locally, we should probably note that the annual maintenance of the Cook Strait power cable has been putting huge pressure on an already stretched power supply. There was a very wide divergence in pricing between the Islands yesterday (very high in the South Island in the early afternoon) and a "low residual notice" was issued. (H/T TR.)

The UST 10yr yield is at 4.41%, down -2 bps from yesterday at this time.

The price of gold will start today at just under US$2942/oz and up +US$7 from yesterday.

Oil prices are up less than +50 USc at just under US$71/bbl in the US and the international Brent price is now just under US$75/bbl.

The Kiwi dollar is now at 57.5 USc and up +10 bps from yesterday. Against the Aussie we are unchanged at 90.3 AUc. Against the euro we are also unchanged at 54.8 euro cents. That all means our TWI-5 starts today just on 67.2, and up +10 bps from yesterday.

The bitcoin price starts today at US$94,565 and down -1.1% from this time yesterday. Volatility over the past 24 hours has been modest at +/- 1.4%.

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.

US fades both at home and abroad

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