New Zealand’s government has signalled a prolonged period of fiscal strain, with updated forecasts showing no return to a budget surplus over the next five years, as Finance Minister Nicola Willis doubled down on spending restraint while acknowledging the economy’s fragile recovery.Speaking alongside the release of the half-year economic and fiscal update, Willis struck a cautiously optimistic tone on growth while reinforcing the government’s commitment to tight fiscal discipline. She argued that recent data point to an economy beginning to stabilise after a prolonged downturn, even as the broader outlook remains clouded by weak domestic demand and external uncertainty. The updated forecasts follow earlier guidance on government funding plans (see earlier bond issuance update), reinforcing the picture of near-term restraint alongside elevated medium-term borrowing needs.The government now expects the economy to grow modestly in the third quarter, following contractions in three of the past five quarters. Treasury forecasts suggest momentum should gradually improve over the next 18 months, though the near-term recovery remains uneven and vulnerable to global risks, including shifting U.S. trade policy and softer international growth.Despite signs of stabilisation, the fiscal outlook has deteriorated. The government now expects a wider deficit in the current financial year than projected at the May Budget, and does not anticipate returning to surplus within the five-year forecast horizon once the costs of the national accident insurance scheme are included. While the deficit narrows significantly toward the end of the forecast period, the outlook underscores the challenge of restoring balance while supporting growth.Willis emphasised that restraint will remain central to fiscal strategy. Any new spending at the May Budget will be tightly targeted, with health, education, defence and law and order identified as priority areas. The government’s approach reflects a view that credibility and discipline are essential to rebuilding confidence, even as critics argue that spending cuts risk weighing further on activity.The updated forecasts also show a slightly weaker growth profile than previously assumed and a marginally higher inflation outlook over the next year, complicating the policy mix. Net government debt is now expected to peak at just under 47% of GDP later in the decade, modestly higher than earlier projections, reinforcing the case for ongoing fiscal restraint.Overall, the update highlights a government attempting to balance an emerging economic recovery with a determination to keep a firm grip on the public finances, even as the path back to surplus remains distant. —A weaker fiscal outlook combined with continued spending restraint reinforces a cautious growth backdrop, supporting expectations of limited upward pressure on yields and keeping focus on RBNZ policy settings. The fiscal update is broadly neutral to mildly negative for the New Zealand dollar (see attached screenshot). While improved near-term GDP expectations offer some support, the absence of a surplus over the forecast horizon and a higher projected debt peak reinforce perceptions of constrained policy flexibility. With fiscal settings tight and growth still fragile, NZD is likely to remain driven by global rate differentials and risk sentiment rather than domestic fiscal signals, leaving the currency sensitive to shifts in U.S. yields and broader risk appetite. This article was written by Eamonn Sheridan at investinglive.com. 🔗 Source 💡 DMK Insight New Zealand’s fiscal outlook just got a lot murkier, and here’s why that matters: With no expected return to budget surplus for five years, traders should brace for potential volatility in the NZD. The government’s commitment to spending restraint amid a fragile economic recovery signals a cautious approach that could impact consumer sentiment and investment flows. This could lead to a weaker New Zealand dollar, especially against stronger currencies like the USD or AUD. Keep an eye on key economic indicators, such as GDP growth and inflation rates, which could further influence the NZD’s trajectory. If the Reserve Bank of New Zealand decides to adjust interest rates in response to these fiscal pressures, it could create significant trading opportunities. On the flip side, if the government manages to stabilize the economy faster than expected, we might see a rally in the NZD. But for now, the focus should be on the downside risks. Watch for any shifts in economic data or central bank commentary that could signal a change in market sentiment. The next few months will be crucial for gauging how these fiscal policies play out in the currency markets. 📮 Takeaway Monitor NZD closely; a prolonged budget deficit could weaken the currency, especially against the USD and AUD, impacting trading strategies.

Ford Motor is taking a major step back from its electric-vehicle ambitions, announcing roughly US$19.5 billion in charges largely tied to its loss-making EV operations, as the automaker pivots toward hybrids, extended-range vehicles and conventional gasoline models amid weakening EV demand. The Wall Street Journal with the info. In brief:The impairment is among the largest ever recorded by a U.S. industrial company and represents the clearest acknowledgment yet from Detroit that the transition to fully electric vehicles will take longer and be less profitable than previously expected. Ford has lost around US$13 billion on its EV business since 2023, underscoring the scale of the challenge.In response, the company said it will redeploy capital away from unprofitable EV assets and refocus investment on gas-powered vehicles, hybrids and extended-range electric models that combine battery power with onboard gasoline engines. These powertrains are seen as more commercially viable given current consumer preferences, infrastructure constraints and regulatory uncertainty.Ford’s revised strategy includes discontinuing the fully electric version of its F-150 Lightning pickup in favour of an extended-range variant, reflecting softer-than-expected demand for large EV trucks. While the company is pulling back from high-cost EV bets, it reiterated plans to launch a US$30,000 electric pickup by 2027, positioning low-cost EVs as the core of its future electric offering in the U.S.By 2030, Ford expects hybrids, extended-range vehicles and EVs to account for around 50% of its global sales volume, up from roughly 17% today, highlighting a shift toward a more gradual, diversified electrification path rather than a rapid transition to pure EVs.Beyond vehicles, Ford will repurpose its Kentucky EV battery facility into a battery-storage business, targeting customers such as utilities, renewable energy developers and data centres supporting artificial intelligence workloads. While the move will result in layoffs for about 1,600 workers at the site, the company said it plans to hire thousands of new employees across its broader U.S. operations.Overall, Ford’s retrenchment reflects a broader recalibration across the auto industry, as manufacturers confront the economic realities of EV adoption and seek profitability over speed in the energy transition. —Ford’s retrenchment is likely to reinforce investor rotation toward automakers with flexible powertrain strategies and nearer-term profitability. Legacy OEMs with strong hybrid line-ups and pricing power may be favoured over pure-play EV manufacturers facing margin pressure, subsidy risk and slower demand growth. The move also supports selective opportunities across auto suppliers tied to internal combustion, hybrid systems and battery-storage infrastructure, while tempering enthusiasm for capital-intensive EV capacity expansion. This article was written by Eamonn Sheridan at investinglive.com. 🔗 Source 💡 DMK Insight Ford’s $19.5 billion charge signals a significant shift in the EV landscape, and here’s why that matters: This move comes as EV demand wanes, which could ripple through related sectors, including battery manufacturers and raw material suppliers. For traders, this shift might affect stocks tied to the EV supply chain, like lithium producers or companies focused on battery technology. If Ford’s pivot leads to a broader industry trend, we could see volatility in EV-related stocks and commodities. Keep an eye on the technical levels of these stocks; if they break below key support levels, it could trigger further selling. On the flip side, this could create hidden opportunities in hybrid and traditional auto sectors, which may see renewed investment as Ford reallocates resources. Traders should monitor Ford’s stock price closely for any signs of recovery or further declines, especially as earnings reports come out in the next quarter. The immediate impact could be felt in the next few weeks, so stay alert for any market reactions to Ford’s strategic changes. 📮 Takeaway Watch for reactions in EV-related stocks and commodities; key support levels could indicate further selling if breached.

China is likely to set a pragmatic and flexible GDP growth target for 2026, with policymakers seeking to balance stabilisation objectives against mounting external and domestic pressures, according to commentary and analyst assessments following the Central Economic Work Conference. This follows lacklustre data yesterday, but a still solid yuan:China yuan hits 14-month high even as weak consumer demand clouds economic growth outlookChina signals more policy support (same old?) as economy ‘stabilises’ in NovemberCommentary published by China Securities Times suggests policymakers are divided over whether to anchor next year’s growth target at around 5%, or adopt a slightly wider 4.5%–5.0% range that would allow greater policy leeway. Analysts argue that flexibility will be critical given a more challenging global backdrop, slowing external demand and persistent domestic supply-demand imbalances.The Central Economic Work Conference underscored this cautious tone, reaffirming the guiding principle of “seeking progress while maintaining stability.” Policymakers emphasised the need to stabilise employment, businesses, markets and expectations, while delivering “reasonable quantitative growth” alongside qualitative improvements as China embarks on the 15th Five-Year Plan. Importantly, the meeting reiterated continuity in macro policy, maintaining a more proactive fiscal stance and a moderately loose monetary policy, alongside stronger counter-cyclical and cross-cyclical adjustments.Most analysts expect the 2026 growth target to remain close to 5%, with policy support front-loaded to ensure a solid start to the year. Measures are likely to focus on expanding domestic demand, unlocking consumption potential, lifting effective investment and offsetting the drag from weaker exports, while continuing efforts to stabilise the property sector.Economists anticipate further monetary easing, with interest rate cuts of 10–20 basis points and reserve requirement ratio reductions of 50–100 basis points pencilled in for 2026. Some analysts expect the People’s Bank of China could move as early as January, ahead of the Lunar New Year, to shore up confidence and liquidity.On the fiscal side, projections point to a deficit ratio of around 4%, unchanged from 2025, alongside an expanded issuance of ultra-long-term special treasury bonds and steady or slightly higher quotas for local government special bonds. Authorities are also expected to deploy targeted tools, including relending facilities and subsidies, to support consumption, infrastructure, technological innovation and small businesses. —A pragmatic and flexible 2026 growth target reduces near-term downside risks for the yuan by signalling policy responsiveness rather than hard growth constraints. While further rate and RRR cuts may cap CNY upside, front-loaded stimulus and a clearer demand-support narrative should help limit depreciation pressure, keeping USD/CNY anchored within managed ranges rather than prompting a disorderly weakening. This article was written by Eamonn Sheridan at investinglive.com. 🔗 Source 💡 DMK Insight China’s flexible GDP growth target could impact global markets, including crypto and forex. With SOL currently at $128.43, traders should keep an eye on how China’s economic policies influence investor sentiment. A pragmatic approach to GDP growth may stabilize the yuan, which could lead to increased risk appetite among traders. If the yuan strengthens, we might see a corresponding uptick in demand for cryptocurrencies as investors look for alternative assets. However, if the growth target fails to inspire confidence, we could see a sell-off across risk assets, including SOL. Watch for key levels in SOL; a break below $125 could signal bearish momentum, while a push above $130 might attract bullish traders. Keep an eye on upcoming economic data from China, as it could provide further clues about market direction. 📮 Takeaway Monitor SOL closely; a break below $125 could trigger bearish sentiment, while a rise above $130 may attract buyers.