Here's our summary of key economic events overnight that affect New Zealand with mixed news but the underlying vibe is positive.
First in the US, all eyes are now on tomorrow's August non-farm payrolls report. Analysts expect a rise of +160,000 jobs. But today's pre-cursor ADP Employment Report sharply undershot that level suggesting only +99,000 jobs will be added. If that is the case that would make it the smallest gain since 2021.
This data has clouded financial markets today.
A jump in reported layoffs in August added to the mood, but to be fair they only rose back to 'normal' levels.
But there was good news about the US economy too.
The level of jobless benefit claims last week fell, when a rise was anticipated.
The ISM services PMI rose more than expected, on the basis of better new order levels. That was backed up by the companion S&P/Markit services PMI.
And the latest update for American productivity (for Q2) was particularly positive with a strong rise.
So you would have to think there might be upside in tomorrow's US labour data. We will know soon enough.
Wages in Japan rose by +3.6% year-on-year in July, slowing from a +4.5% rise in June which was the highest in 26 years, since January 1997. Markets expected a July rise of +3.1%.
EU retail sales volumes rose in July, the fourth rise in the past sixth months. Better yet, they were higher than a year ago on a volume basis.
German factory orders for July were another overnight surprise. They bounced back in June and July was expected to be weak. But in fact a good rise was posted again in July.
And it might also surprise you to know that after being hooked on Russian energy, the Germans have made a substantial shift away, not to other fossil-fuel suppliers, but rather to renewables. More than 60% of electricity production is now by renewables. And the overall energy intensity in the German economy is declining (ie improving). Both are huge shifts for Europe's largest economy.
Australia's merchandise trade surplus rose in July to its highest since February as exports grew to a 5-month high while imports fell to a 3-month low.
But the iron ore price took a sharp tumble yesterday. While that isn't great news for Australia, it isn't all bad. They have advantages over their rivals in Africa and South America in both freight costs and mine productivity.
Although China's media mouthpieces are talking up the prospects for recovering steel production, their trade association is warning that any short-term bump will probably be just a "flash in the pan".
Bulk freight rates continue to rise however. And global container freight rates are still extremely high essentially because of the Suez Canal/Horn of Africa security issues. They did fall -8% last week, but they remain +236% higher than pre-pandemic levels. (China to Europe rates fell quite sharply, but trans-Pacific rates didn't move much.)
The UST 10yr yield is now at just on 3.73% and down another -4 bps from yesterday. The key 2-10 yield curve inversion has returned today but only -2 bps. Their 1-5 curve inversion is unchanged at -68 bps. And their 3 mth-10yr curve inversion is still inverted by -143 bps. The Australian 10 year bond yield starts today at 3.95% and down -4 bps. The China 10 year bond rate is at 2.11% and sharply lower by -4 bps. It is a move that Beijing is trying to prevent. The NZ Government 10 year bond rate is now just on 4.21% and down -2 bps from this time yesterday.
Wall Street has stayed lower with the S&P500 down -0.2%. Overnight, European markets were all down with London down another -0.3% and Paris down another -0.9%. Tokyo ended its Thursday trade down a further -1.1%. Hong Kong just fell -0.1% and Shanghai rose and equally minor +0.1%. Singapore was was up +0.5%. The ASX200 rose +0.4% in its Thursday trade. And the NZX50 outshone all others with a full +1.0% rise in a late surge.
The price of gold will start today up +US$10 from yesterday at US$2513/oz.
Oil prices are -US$1 lower at just under US$69/bbl in the US while the international Brent price is now at just on US$72.50/bbl. That has forced OPEC to delay is planned rise in production.
The Kiwi dollar starts today up +30 bps from yesterday at 62.3 USc. Against the Aussie we are +10 bps firmer at 92.4 AUc. Against the euro we are also up +10 bps at 56 euro cents. That all means our TWI-5 starts today at 70 and up +10 bps from yesterday.
The bitcoin price starts today at US$56,336 and down -2.7% from this time yesterday. Volatility over the past 24 hours has been moderate at just on +/- 2.3%.
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