NEW ZEALAND: PMI Surges, Led By New Orders, Points To Improved Growth Outlook
The New Zealand BusinessNZ Manufacturing PMI surged to 56.1 in Dec, up from a revised 51.7 in Nov. This is the highest print since late 2021, see the chart below where we plot the PMI (white line) versus NZ GDP y/y. Sharp spikes and more elevated readings in the PMI often leads better y/y GDP momentum. The rise in the PMI is consistent with other sentiment readings, most notably the ANZ confidence and activity prints from late 2025. This points to improving NZ economic momentum through the tail end of 2025 and into 2026. It's likely to reinforce an on hold RBNZ backdrop in the near term. Market pricing has an RBNZ hike priced more towards year end. Any bring forward of this view, given growth is coming from a low base, may rely on stronger inflation (note get Q4 NZ inflation data next Friday).
- In terms of the detail on the PMI, all sub components rose, with the standout being new orders up to 59.8, from 52.2 prior.
- Via BBG: “PMI is positive for Q4 GDP calculations and points to good momentum heading into the New Year. At face value, it suggests upside risk to the positive view we already have for manufacturing and near-term GDP growth forecasts”: BNZ senior economist Doug Steel".
Fig 1: NZ BusinessNZ PMI & NZ GDP Y/Y
Source: Bloomberg Finance L.P./MNI
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NEW ZEALAND: Further Weakness In Whole Milk Prices, Back To Mid 2024 Levels
Overnight the GDT whole milk auction price fell sharply, down 5.7% on the prior outcome to $3161/mt. This is the lowest levels since mid 2024 for the twice monthly auction outcome. The chart below plots this auction price outcome against the Citi NZD terms of trade proxy. The two series typically fairly closely with each other, although of late the terms of trade proxy has risen, with weaker energy prices a potential driver and positive offset to lower milk prices. The Q3 official terms of trade print for NZ showed a 2.1%q/q fall. We were still up 7.2% in y/y terms. Export prices are moving off earlier 2025 highs, consistent with lower whole milk auction price outcomes.
Fig 1: GDT Whole Milk Auction Price & Citi NZD Terms Of Trade
Source: Citi/Bloomberg Finance L.P./MNI
JPY: USD/JPY - Holds Above 154.30-50 Support
The overnight range was 154.40 - 155.00, Asia is currently trading around 155.75. The pair chopped around in a 50 point range without really going anywhere. The market is pricing in a hike by the BOJ for this week, for the time being this is keeping the JPY contained and confined to a wider 154.00-157.00 range having capped its upward momentum. Technically USD/JPY is in an uptrend, the first big support is back toward the 152.50-154.50 area. In today's Asian session, look for resistance back toward the 155.00-155.30 area initially, should this hold look for a retest of the 154.30-50 area at some point a break of which could signal a deeper pullback. A break above 155.20-30 and the price could move back toward 155.70-156.00.
- MNI POLICY: Risk BOJ Accelerates Hikes Mid-2026. The Bank of Japan would be prepared to increase the pace of hiking from its current expected six-month cycle should data around the middle of next year point to a pick-up in inflation and wage growth, something which officials consider to be a real possibility, particularly if yen weakness persists, MNI understands. {NSN T7CZ9C6QRTHC <GO>}
- Options : Close significant option expiries for NY cut, based on DTCC data: 153.75($900m), 156.00($760m). Upcoming Close Strikes : 157.00($4.15b Dec 18 ), 158.00($4.98b Dec 18 ), 159.00($6.46b Dec 18 ) - BBG.
- The USD/JPY Average True Range(ATR) for the last 10 Trading days: 101 Points
- Data/Event : Trade Balance, Core Machine Orders
Fig 1 : USD/JPY Spot Daily Chart
Source: MNI - Market News/Bloomberg Finance L.P
ASIA: Government Bond Issuance Today
- Bank of Korea to Sell KRW1 tn 3-Year Bonds
- Vietnam To Sell VND 14.0Tln 2035 Bonds; (TD2535029)
- Vietnam To Sell VND 0.5Tln 2030 Bonds; (TD2530010)
- Vietnam To Sell VND 0.5Tln 2055 Bonds; (TD2555052)
- Vietnam To Sell VND 1.0Tln 2040 Bonds; (TD2540037)
- China to Sell CNY60 bn 91-Day Bills
- India to Sell INR60 bn 182-Day Bills
- India to Sell INR70 bn 91-Day Bills
- India to Sell INR60 bn 364-Day Bills
- Bank Indonesia to Sell 367D SUVBI Bills
- Bank Indonesia to Sell 32D SUVBI Bills
- Bank Indonesia to Sell 185D SUVBI Bills
- Bank Indonesia to Sell 96D SUVBI Bills
- Bank Indonesia to Sell 276D SUVBI Bills
