US factory PMIs reflect lower demand; Canada jobless rate up; China factory PMI finds new orders; China has bankruptcy problem; UST 10yr 4.21%; gold hits record while oil drops; NZ$1 = 62.1 USc; TWI-5 = 70.8

Here's our summary of key economic events over the weekend that affect New Zealand, with news the social consequences of the Chinese economic slowdown are just not going away.

But first, in the week ahead in the US, the focus will be on their non-farm payrolls report, expected to deliver +170,000 more jobs and a higher tempo than in October, probably after the ending of strikes at carmakers.. Before that we will get their ADP and JOLTS reports and the ISM Services PMI. Then there is the last monetary policy decision of the year from Australia, and similar central bank decisions from India and Canada. Meanwhile inflation rates will be closely watched in China, Turkey, Switzerland, South Korea, and the Philippines. GDP growth rates from South Korea, South Africa, Brazil, and Australia will also merit some attention.

There were a flurry of factory PMIs released over the weekend confirming a global manufacturing downturn remains, even it is minor.

But not minor is the widely-watched US ISM version as that reports a noticeable shrinkage across the board. The internationally benchmarked S&PGlobal (ex-Markit) version however records barely a drop. But it does confirm lower demand.

In a Friday speech, Fed boss Powell signaled that they are likely done raising rates, but his comments were laced with caution.

Canada's labour force grew at a faster pace than expected in November, faster than the good +24,900 increase in employment. Payrolls swelled much more, but the number of self-employed fell rather sharply. That meant that their jobless rate inched up to 5.8%. This wasn't unexpected.

In China the Caixin factory PMI diverged from the official NBS version again, and again was more positive. But to be fair it is just oscillating around a steady state with this an 'up' month. However this report does note "a sustained rise in new orders".

Meanwhile, Beijing has pledged to target ¥1 trillion in manufacturing and infrastructure development. Along with some supply knocks in Panama, this has helped jerk up the price of copper to US$8,615/tonne, it highest since August. (But still a long way below the US$9400/tonne it reached in January.)

Overall, China's economic performance remains problematic, and along with the implied criticism he received from Party elders during their summer retreat, it now looks like President Xi is delaying a major set-piece economic conference (the "third plenum"), one where Xi's new team (the one appointed at the "second plenum") releases its longer-term economic plans.

Meanwhile, Chinese borrowers are defaulting in record numbers as their economic troubles extend. More than 8.5 mln people are sharply downgraded in their 'social credit' which essentially means they are blacklisted, after missed payments on mortgages and business loans. That is about 1% of working-age Chinese adults, and is up from 5.7 mln defaulters in early 2020.

And another Chinese property developer is scrambling to save itself - Gemdale.

We should also note a sudden uptick in China's actions to take over the whole South China Sea, with a particular flashpoint in the Philippines.

In Australia, CoreLogic reported that in November the heat came out of their housing market as values across Melbourne dipped and Sydney slowed.

Australia faces its final RBA rate review for 2023 on Tuesday and markets don't expect their 4.35% rate to be changed. This is the last of their monthly reviews. In 2024 they change to a less frequent meeting schedule much like the RBNZ one.

The UST 10yr yield fell sharply on Saturday, now just under 4.21%. That is a massive -22 bps retreat for the week and is now at a 2½ year low. The key 2-10 yield curve is less inverted at -34 bps. (It was inverted by -48 bps last week.) Their 1-5 curve inversion is more inverted at -91 bps. And their 3 mth-10yr curve inversion is now -119 bps and also more inverted. The Australian 10 year bond yield is now at 4.40% and down -3 bps from Saturday. The China 10 year bond rate is unchanged at 2.70%. And the NZ Government 10 year bond rate is still at 5.10% exactly where it was a week ago.

The price of gold will start today just on US$2071/oz and up +US$11/oz from this time on Saturday after briefly touching its all-time high of US$2,089.70 intraday. A week ago it was at US$2000/oz, so a +3.6% gain since then.

Oil prices fell a sharpish -US$2.50 over the weekend to just on US$74/bbl in the US. The international Brent price also got a sudden shift and it is now down to US$79/bbl.

The Kiwi dollar starts today at 62.1 USc and up +10 bps from Saturday. A week ago it was at 60.7 so a +1½c gain from then. Against the Aussie we are still at 93 AUc. Against the euro we firm at 57.1 euro cents. That all means our TWI-5 starts today just on 70.8 and up +10 bps from this time Saturday, up more than +100 bps in a week.

The bitcoin price starts today at US$39,703 and up +2.4% from this time Saturday, and confirming the break out of its recent range. A week ago it was at US$37,928 so up +4.7% rise from then. Volatility over the past 24 hours has remained modest at just on +/- 1.4%.

The easiest place to stay up with event risk is by following our Economic Calendar here ».