US services expansion slows; US vehicle sales ease; India to change rate & inflation focus; England cuts rates; Aussie trade surplus lower; freight rates fall; UST 10yr at 4.44%; gold and oil ease; NZ$1 = 56.7 USc; TWI = 67

Here's our summary of key economic events over both the Waitangi Day holiday and overnight that affect New Zealand with news the American rich get insulated from legal scrutiny, while the US economic data loses its shine.

First in the US, their services sector expanded slower in January than expected, according to the widely-watch ISM survey. It is still a good expansion, just with lower new order flows and business activity than they have had over the past five months. And the internationally benchmarked S&P/Markit version essentially told the same story, although that one had a faster retreat.

We get the US labour market report for January on Saturday. The precursor ADP Employment Report showed a rise of +183,000 private jobs in January, better than the +150,000 expected. The good momentum was based on customer-facing payrolls; the business services and production sectors shrank in the month. Tomorrow's non-farm payrolls are expected to rise by +170,000 in January.

Announced job cuts were modest in January.

We should perhaps note that as part of the revenge purges of US government agencies, the FBI white-collar crime division has been virtually closed down. Not only are ethics out the door, corporate and financial activities that are illegal won't be investigated by them. Even national security cases are on the back burner. It open slather.

But US initial jobless claims rose slightly more than expected with 240,000 more claims added last week. Seasonal factors had suggested this level should have fallen slightly. There are now 2.25 mln people on these benefits, well above the 2.1 mln at this time last year.

US mortgage interest rates were little-changed last week, although now just shy of 7%. And mortgage applications moved little, still bumping along the low levels that have existed for the past five years.

As it was last year in the US, vehicle sales fell sharply in January from December, but this year the retreat was it bit more pronounced than last year. Prior to 2023 in January, sales 'usually' rose. Having noted that, they were up +4.9% from January 2024, although the 2025 level is still -4.9% lower than in January 2020 and just before the pandemic.

Later today, the Reserve Bank of India will release the results of its monetary policy review and is widely expected to cut rates by either -25 bps or -50 bps, maybe to 6%. They have a new governor who is de-emphasising inflation control and re-emphasising growth. He was appointed by PM Modi for that shift. Currently inflation is running at 5.2% and the 4% goal is no longer a priority.

As widely anticipated, the Bank of England cut its policy rate for a third consecutive time, taking it down to 4.50%. No surprises here and this time it was a unanimous decision.

Australia's merchandise trade surplus fell in December and November's surplus was revised lower, both to levels less than markets expected. The December result was the smallest trade surplus since last September, as exports rose less than imports.

The pullback on global trading volumes are showing up in container freight rates. They fell another -3% last week with general softness. They are now below year-ago levels, but still +130% higher than pre-pandemic. Trans-Atlantic rates outbound from the US are very low. Bulk cargo rates remained very low, still at about the level that prevailed more than 50 year ago.

The UST 10yr yield is at 4.44%, up +2 bps from yesterday at this time. The key 2-10 yield curve is flatter at +24 bps. Their 1-5 curve is also a lot flatter at +10 bps. And their 3 mth-10yr curve is now at +15 bps and much flatter than yesterday. The Australian 10 year bond yield starts today over 4.40% and up +9 bps. The China 10 year bond rate is down -2 bps at 1.61%. The NZ Government 10 year bond rate is now at 4.55%, down -2 bps from yesterday.

Wall Street has opened its Thursday trade with a +0.3% rise on the S&P500. Overnight European markets were all up about +1.5% except London which was up +1.1%. Yesterday Tokyo closed up +0.6%. Hong Kong jumped +1.4%. Shanghai was up +1.3%. Singapore ended up +0.4%. The ASX200 ended its Thursday session up +1.2% and of course the NZX50 didn't trade for the holiday.

The price of gold will start today at US$2850/oz and down -US$16 from yesterday and from its record high record high.

Oil prices are down -US$1.50 at just on US$71/bbl in the US and the international Brent price is now US$74.50/bbl.

The Kiwi dollar is now at 56.7 USc and down -20 bps from this time yesterday. Against the Aussie we are down -20 bps at 90.3 AUc. Against the euro we are up +10 bps at just on 54.7 euro cents. That all means our TWI-5 starts today just on 67, and down -10 bps from yesterday.

The bitcoin price starts today at US$96,526 and down -1.4% from this time yesterday. Volatility over the past 24 hours has been modest at +/- 1.5%.

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

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