Episode Details

Shutterstock Track 1219389

Monetization ID TFGEPGEI0LHEIJAI

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.

Today we lead with news tech equity wobbles is driving a sudden, sharp flight to the relative short-term 'safety' of government bonds.

The Nasdaq is down -2.5% so far today with Meta down -7.2% (see below), SpaceX is down -8.5%, Google is down -9.6%, and many other FANGS are down about -4.4%.

But first in the US, there was a notable drop in initial jobless claims last week, more than accounted for by seasonal factors. It is hard to know whether this indicates  a freer labour market or just much tighter qualification standards. Probably the latter, based on the weekly ADP data. There are now 1.48 mln people on this out-of-work support, the lowest level since late 2022 - and prior to that, the 1970s. The new qualification standards are very tough.

The Kansas City Fed's factory survey eased in October to its lowest level since May although it remains quite positive. New order levels eased and new export order levels fell sharply. That is likely because costs are rising faster again with raw material costs rising much faster than price growth.

Overnight there was a US Treasury 5yr TIPS auction and investors are signaling and getting a much higher risk premium over an above inflation. In this latest result, the premium was 2.30% (median), up from 1.91% at the prior equivalent event four months ago.

In Canada, producer prices were up +14.5% in September from a year ago, a larger rise than was expected and accelerating from August's high +13.2%. Raw materials were up +27% on that same basis. Fuel is the core reason of course, but this cost pressure is spreading.

China said that foreign direct investment fell by -4.3% in September to ¥549 bln (or NZ$145 bln) in the first nine months of the year, compared to a -5.3% drop in the first eight months of 2026. For September alone it was up +1.6% from the same month in 2025. However both benchmarks are unusually low, the lowest in at least 12 years. From the recent peak in 2022, the current September FDI is a remarkable -47% lower.

The Bank of Korea left its key policy rate unchanged at 3% in its review yesterday, as widely anticipated. This came after two rate back-to-back increases earlier in the year because they have CPI running at 3.4% and a 2% policy target. But they claim the rate will fall back into line under the current settings.

In Japan, the expectation now is that their central bank will hold its policy rate at 1.25% at its meeting next week.

In the EU,

Listen Now