'We're OK if we can avoid the shocks'

<p>Kia ora,</p><p>Welcome to Tuesday’s Economy Watch where we follow the economic events and trends that affect Aotearoa/New Zealand.</p><p>I'm David Chaston and this is the international edition from Interest.co.nz.</p><p>And today we lead with news geopolitical risks remain high but they don't seem to be escalating from here, and markets are taking that as a positive signal. But benchmark interest rates are back rising again.</p><p>First up today, global banking giant HSBC has <a href="https://www.interest.co.nz/sites/default/files/2023-10/231030-3q-2023-earnings-release.pdf" target="_blank"><strong>announced</strong></a> a doubling of its profits in Q3-2023. They made NZ$13 bln in the three months to September, benefiting from higher global interest rates.</p><p>Second, General Motors has <a href="https://www.reuters.com/business/autos-transportation/gm-reaches-tentative-deal-with-uaw-source-says-2023-10-30/" target="_blank"><strong>apparently settled</strong></a> its dispute with its union who have been on strike, the last of the big three American carmakers to resolve the dispute. It appears, like the other settlements, the UAW has prevailed in all its substantive claims.</p><p>In Japan, all eyes are on their central bank who later today are <a href="https://asia.nikkei.com/Economy/Bank-of-Japan/BOJ-to-tweak-policy-again-to-allow-10-year-yields-to-exceed-1" target="_blank"><strong>expected</strong></a> to make a significant shift in policy and let some of their interest rate targets rise.</p><p>The World Bank has been assessing <a href="https://openknowledge.worldbank.org/server/api/core/bitstreams/b404c014-37ed-4e68-8c6c-83df97bbc41f/content" target="_blank"><strong>the prospects for commodity prices</strong></a>. It sees oil prices falling away - assuming we avoid a sudden supply-constrained geopolitical shock. Their base case has oil falling from here, to the low US$80/bbl range. But in their worst-case scenario they see US$150/bbl oil. They also see food prices falling as rising supply more than makes up