US data positive; Fed minutes take steam out of rate rise thoughts; Japanese machine tool orders jump; Taiwan exports rise; EU inflation expectations stay low; UST 10yr 4.61%; gold up but oil falls again; NZ$1 = 60.2 USc; TWI-5 = 70.2

Here's our summary of key economic events overnight that affect New Zealand, with news that in the shadow of the sudden geopolitical risks in Gaza, economic markers are generally positive. But the chances of more rate rises seem to be receding.

US mortgage applications were steady last week, little-changed from the prior week so still -19% lower than year-ago levels, which was when the down-trend started biting hard. Meanwhile their benchmark 30 year mortgage interest rate rose to 7.67% and a new high since 2000.

American producer prices came in just +2.2% higher than year ago levels in September. This was up marginally from August and analysts had expected a small slip. They rose +0.5% from the prior month however, the least in three months, following a +0.7% rise in August. Goods prices were up +0.9%, mainly because petrol jumped +5.4%.

The US Fed released the minutes of its September 21 meeting today. That showed a new but small disagreement on the rate hold decision, although all voting members were agreed. Several want to shift the focus of decisions to how long to keep rates high, rather than how high to raise them. But all indications are that there will be no change again in November. There was little initial market reaction to this release.

Across the Pacific, Japanese machine tool orders rose sharply in September from August even though they remain lower on a year-on-year basis. But that annual deficit was cut significantly in this latest update. The rise was especially sharp for orders from local manufacturers, although export orders jumped as well.

Taiwanese exports rose +3.4% in September from August when a slip of -3.0% was expected, a much better outcome than anticipated.

In China, car sales rose in September to well over 2.5 mln vehicles in the month, a good sign their manufacturing sector is stabilising. But capacity is high and there are many carmakers, especially of EVs who are struggling for profitability at the recent low prices that have driven the sales rise. Innovation is high, prices are low, and there are mountains of cars that get scrapped quickly.

And staying in China, their sovereign wealth fund snapped up shares in the nation’s Big Four banks and said it plans to buy more. Although all those banks are state-owned, with only a portion of their shares listed on equity markets, a show of support to keep their share values from falling in difficult times is deemed important for confidence.

European inflation expectations are staying low - at 3.5% - even if inflation itself is finding it hard to fall to that level.

The UST 10yr yield starts today down -5 bps from yesterday at 4.61%. Their key 2-10 yield curve is more inverted, now by -41 bps. Their 1-5 curve is now at -78 bps and fractionally more inverted. Their 3 mth-10yr curve inversion is deeper by -5 bps today at -84 bps. The Australian 10 year bond yield is now at 4.36% and down -9 bps from yesterday. But the China 10 year bond rate is up +2 bps at 2.74%. The NZ Government 10 year bond rate is down -4 bps at 5.48%.

The S&P500 is unchanged in its Wednesday trade. Overnight, European markets mixed, bookended by London up +0.2% and Paris down -0.4%. Yesterday, Tokyo ended its Wednesday session up +0.6%. Hong Kong ended up +1.3%. But Shanghai only closed up +0.1% however. The ASX200 rose +0.7%. The NZX50 ended its Wednesday session up a mere +0.1%.

The price of gold will start today at just on US$1873/oz and up another +US$11 from this time yesterday.

Oil prices have slipped -US$1.50 to just over US$83/bbl in the US. The international Brent price is now just on US$86/bbl.

The Kiwi dollar starts today at 60.2 USc and down -20 bps from yesterday. Against the Aussie we are still at 94 AUc. Against the euro we are down -10 bps to 56.8 euro cents. That all means our TWI-5 starts today at just on 70.2 which is back -10 bps from yesterday.

The bitcoin price starts today at US$26,679 which is down a sharpish -2.8% from this time yesterday. Volatility over the past 24 hours has been modest however at +/-1.6%. Crypto giant Binance is facing official pressure in Brazil for running a ponzi scheme. It is not the only company accused.

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