Here's our summary of key economic events overnight that affect New Zealand with news of an unexpected US jobs report.
The rise in US non farm payrolls for November was a sharp disappointment, with the headline number rising just +210,000 when a rise of +550,000 was expected. It is the lowest monthly rise of 2021. But again, we need to question the seasonal adjustments being made. The actual data shows payrolls rising to 150 mln for the first time since the start of the pandemic, an actual rise of +778,000 from October. Recall we noted a +1,576,000 rise in October from September, and +638,000 in September from August in the actual data. This +3.5 mln swelling in four months of actually employed payrolls tells quite a different story to the reported seasonally adjusted numbers. The pandemic twists may have undermined those calculations. However, it is the seasonally adjusted result that markets are reacting to, although now others are cottoning on to the oddities we have been pointing out.
Average weekly hours worked rose. Their participation rate rose. Average weekly earnings in November were up +5.6% from a year ago, and that is above the 2021 average. None of this data really supports the weak payroll number reported.
The Fed is likely to overlook today's headline jobs numbers.
US factory orders were reported +1.0% higher in October than September, and +17% above year ago levels.
And the widely-watched ISM services PMI rose very sharply in November to an all-time high (and after a fall was expected from its already high level). Strong demand, labour shortages, and high prices all feature in this survey. The Markit services PMI for the US shows similar attributes, even if it isn't at a record high.
In Canada, their November payroll data beat expectations, and by some margin. Even if you discount that half of the big gain was for part-time jobs, the full-time jobs rise was double the overall expected increase.
In China, Evergrande said: "In light of the current liquidity status of the Group, there is no guarantee that the Group will have sufficient funds to continue to perform its financial obligations." Local government authorities have descended on the company to see if they can save it. Kaisa is teetering too. The collateral damage could spread widely.
Despite low consumer confidence, the Japanese service sector PMI rose in November to its highest in more than two years. Meanwhile, the private Caixin services PMI for China expanded more slowly with a lame result, and one that was weaker than the official services PMI. But the same services PMI survey in Australia is reporting a rising expansion. (We don't get the November PSI for New Zealand until Monday, December 13, 2021.)
EU retail sales volumes surprised on the upside in October data released overnight. It isn't running hot, but it is expanding modestly and the September data was revised up as well.
In Turkey, the president has dismissed his finance minister as the currency collapses and ration queues start to form for subsidised bread.
Global wheat prices are near ten year highs on struggling northern hemisphere production. They are likely to rise from here because Russia is contemplating an export limit this year. Australian production is strong and they have the most to benefit.
In Australia, pandemic cases in Victoria were 1188 reported yesterday. There are now 12,913 active cases in the state - and there were another 11 deaths yesterday. In NSW there were another 337 new community cases reported yesterday, a jump, with 2851 active locally acquired cases. They had no deaths yesterday, but there is a growing Omicron outbreak in Sydney. Queensland is reporting three new cases. The ACT has 4 new cases. Overall in Australia, just over 87% of eligible Aussies are fully vaccinated, plus a bit over 5% have now had one shot so far.
The UST 10yr yield opens today at 1.36% and -10 bps lower from this time yesterday and a 72 day low. Bond markets are taking the jobs data at face value. The UST 2-10 rate curve starts today flatter yet again at +77 bps. Their 1-5 curve is also flatter at just over +89 bps, while their 3m-10 year curve is down at +134 bps. The Australian Govt ten year benchmark rate has fallen -11 bps to 1.57%. The China Govt ten year bond is up +1 bp at 2.92%. The New Zealand Govt ten year is down another -3 bps at 2.35%.
Wall Street is finishing the week on a down note with the S&P500 -1.0% lower in late Friday trading. That means it is heading for a -2.1% weekly retreat. European markets finished their Friday sessions all lower as well, down an average of -0.4%. Frankfurt shed -1.6% for the week, Paris was down -1.0%, but London gained +1.1% for the week. Tokyo ended its Friday session up +1.0%, Hong Kong was flat on the day, while Shanghai rose +0.9%. For the week the changes have been -1.1%, -0.6% and +2.2% respectively. The ASX200 ended yesterday up +0.2% and limiting the weekly fall to -0.5%. The NZX50 ended Friday flat, for a weekly gain of +0.4% with most of that earlier in the week.
The price of gold will start today at US$1782/oz and up by +US$15 from this time yesterday. We started the week at US$1786/oz.
And oil prices are still languishing, just marginally firmer at just over US$66.50/bbl in the US, while the international Brent price is up +US$1 and now just under US$70.50/bbl.
The Kiwi dollar opens today softer yet again at 67.5 USc and almost a -¾c fall from this time yesterday. Against the Australian dollar however we are firmer at 96.4 AUc. Against the euro we are -½c softer at 59.7 euro cents and it lowest since early October. That means our TWI-5 finished the week at 72.4 and a 100 day low.
The bitcoin price has fallen to US$55,039 -2.1% below the level at this time yesterday. Essentially, it hasn't recovered from the big -8% correction of a week ago. Volatility over the past 24 hours has been moderate at just over +/- 2.7%.
The easiest place to stay up with event risk today is by following our Economic Calendar here ».
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