US spending holds up despite income slip; Evergrande makes second payment; Japan more confident; Aussie retail sales rise encouraging; UST 10yr 1.55%, oil firm and gold soft; NZ$1 = 71.6 USc; TWI-5 = 75.2

Here's our summary of key economic events overnight that affect New Zealand with news inflationary pressures remain intense.

But first in the US, the US FDA has approved the Pfizer vaccine for children 5-11 years. Multi-country trials show it has the same effectiveness and the same safety as for the 12-16 year old peer group already approved. Medsafe will no doubt follow quickly.

Staying in the US, the inflation number the Fed watches was out today, core PCE, and that came in unchanged from August at +3.6% and well above its policy target but well below the headline CPI rate of 5.4%. Of equal interest was that personal income retreated quite sharply in September as pandemic support was withdrawn. Personal expenditure rose a modest amount, and it was an unexpected surprise that it rose in these circumstances.

But that tightening didn't affect sentiment much, at least according to the University of Michigan survey. It slipped just a minor amount but it is recording high uncertainty levels again.

The Chicago PMI reported a pickup to quite a high level after two months of consecutive slippages. New orders were up, but prices paid rose again and to a 42 year high. But supply chain issues dominate sentiment here.

Q3-2021 GDP data for Mexico disappointed with an unexpected slip from Q2.

In China, Evergrande has made a second overdue bond interest payment late on Friday, late but not so late as to trigger default. It seems to be successfully buying time to organise its finances and negotiate with creditors. But it is one thing to make interest payments; it is quite another to repay the bond principal amounts none of which are due quite yet.

Japanese consumer confidence rose again in October continuing its recovery, even if it isn't quite back to pre-pandemic levels yet. But data for Japanese industrial production wasn't so flash, in fact quite disappointing given most other recent industrial measures like their PMIs. Supply chain issues are crimping production and shipments still.

Also slightly less than expected was the Taiwanese Q3 economic expansion. However strong investment levels probably mean this will improve well from here and rate hikes are less than a year away now.

Singapore business confidence is holding and looks better ahead. But Singaporean producer prices are rising faster that the expected fast rise. But again, this is really all about energy (oil) costs.

Annual consumer inflation in the Eurozone jumped to 4.1% in October of 2021 from 3.4% in September and higher than market forecasts of 3.7%. It is all about energy costs there.

Economic activity expanded +3.7% from a year ago in the EU in Q3-2021 and that was more than anticipated.

Australian retail sales rose in September, but it is hard to know what to make of the data given the pandemic effects. But most analysts saw it as "encouraging".

And staying in Australia, the RBA turned down another chance to suppress runaway bond yields yesterday, reinforcing the view the central bank will bring forward its cash rate guidance to no later than 2023 amid rising inflation. By skipping the opportunity, that has powered up their wholesale market yields - and it has turned a consolidating market in New Zealand into one where earlier falls were cancelled.

In Australia Delta cases in Victoria have risen to 1655 cases reported there yesterday, and less than the day before's spike. There are now 23,730 active cases in the state and there were another 10 deaths yesterday. In NSW there were another 268 new community cases reported yesterday with 3,951 active locally acquired cases which is lower, and they also had 2 deaths yesterday. Queensland is reporting zero new cases. The ACT has 10 new cases. Overall in Australia, more than 76% of eligible Aussies are fully vaccinated, plus 12% have now had one shot so far.

On Wall Street, the S&P500 is ending its week flat on the day but up +1.0% for the week to record high levels. The good earnings reports just keep coming, althouigh Apple disappointed. Overnight, European markets were also flat, but Paris rose again by +0.4% to be +1.2% higher in  a week. Frankfurt gained +0.7% for the week, London +0.5%. Yesterday, Tokyo closed up +0.3% on the day for a +1.3% weekly gain. Hong Kong ended its Friday down -0.7% for a -2.5% weekly retreat. Shanghai was up +0.8% yesterday, limiting its weekly loss to -0.8%. The ASX200 dropped -1.4% yesterday consigning the week to a -1.2% loss. The NZX50 rose almost a full +1.0% so that it could end the week just shy of unchanged.

The UST 10yr yield opens today down -2 bps to 1.55% and down -9 bps in a week. The US 2-10 rate curve recovered some steepness today at +107 bps. Their 1-5 curve is also at +107 bps, while their 3m-10 year curve is unchanged at +149 bps. The Australian Govt ten year benchmark rate has held yesterday's sharply higher level, now at 1.95%. A week ago it was at 1.79%. The China Govt ten year bond is unchanged at 2.99%. The New Zealand Govt ten year is holding at 2.60%. A week ago it was at 2.44%. See this.

The price of gold is down -US$19 from this time yesterday, now at US$1783/oz. At this level it is -US$10 below the week-ago price.

And oil prices are back up by +US$1.50 to just under US$83/bbl in the US, while the international Brent price is now just under US$84/bbl. But these are still slightly lower than week-ago levels

The Kiwi dollar opens today -½c weaker at 71.6 US. Against the Australian dollar we are soft at 95.2 AUc. Against the euro we are a firmer at 62 euro cents. That means our TWI-5 starts today marginally lower at just under 75.2, up +30 bps in a week and still well over the top of the 72-74 range of the past eleven months, possibly now resetting this range.

The bitcoin price has recovered by +2.2% since this time yesterday, and now at US$62,524. Volatility over the past 24 hours has been very high at just over +/-4.3%.

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