US payrolls rise much more than expected; Canadian payrolls swell too; Japanese service sector expands; Aussie rent crisis worries RBA; UST 10yr 4.16%; gold and oil up; NZ$1 = 59 USc; TWI-5 = 69.6

Here's our summary of key economic events overnight that affect New Zealand, with news that is surprisingly positive today.

But perhaps unsurprisingly, the US non-farm payrolls rose more than the conservative forecasts, up +261,000 s.a. in the headline result and well above the expected +200,000.

But as regular readers will recall, we prefer to watch the 'actual' numbers and those rose +1,172,000 in October from September and taking their paid workforce to a massive 154.3 mln, and easily its largest ever. That is +1 mln more than the 'seasonally adjusted' numbers report. The pay for +1 mln extra people is likely to be highly stimulating and power American consumption for some time to come. That will also be adding to inflationary pressures, bolstering demand. They have a paid workforce +3.4% larger than this time last year. (New Zealand's paid workforce rose +1.2% in the year, for comparison.)

By any measure these are strong numbers. Their participation rate rose to a modest 62.2% (NZ = 71.7%). As might be expected, less than 20% of their jobless are 'long term unemployed' which is consistent with a very strong labour market. (In NZ almost all jobless are long-term unemployed, as we have previously noted.)

It is now a chicken-or-egg issue going forward. Will the new expanded employment drive an economic expansion? Or will a stuttering economic expansion make the higher employment unsustainable? Seemingly endless 'warnings' that the US economy is running out of steam have so far proven unfounded. But there is one cloud in today's US jobs numbers - the vast increase in paid workers were at lower hourly rates.

North of the border, Canada also reported a strong and strengthening jobs market. They expected a +10,000 rise in paid jobs but actually reported +108,300 new jobs - and even more for full-time positions, and a reduction in part-time jobs. Their participation rate is 64.9%.

Adding to the positive vibe, Japan's services sector is well on the mend, with it expanding at a faster rate in October. They reported faster growth in activity levels and employment and optimism in that sector is now at all-time highs.

Singaporean retail sales rose more than expected in September and extending a new positive trend. They are now up +3.2% from August and up more than +11% from year-ago levels.

South Korea's top three battery producers posted sharp increases in sales for the third quarter, according to results released by Friday, thanks to skyrocketing demand for electric vehicle batteries. Much of their good fortune comes as international buyers try to stay clear of Chinese suppliers and the geopolitical risks that entails.

China's seemingly endless promises of "reform and opening up' are just pointing out how closed and controlled their economy is, even if they know they do need those economic reforms. Their Party Congress focus on control and security indicates a deep distrust of their own people and market forces. It is hard to see how international companies can have much confidence in supply chains that rely on China after these recent shifts.

German factory orders fell in September and by more than expected. This extends a recent weakening trend. Export orders are holding these from being even worse.

In Australia, their residential rental market is in crisis with vacancy rates at 1% or below in most urban areas. There are reports that some renters were making up to 100 applications for a home unsuccessfully, sometimes after receiving a no-grounds eviction with a set end date. The conditions for widespread social unrest are brewing in these circumstances.

Also under stress are casinos. Australia has a widespread gambling addition and giant companies have grown over the years to take advantage. High profile slap-downs of Crown and Star casino operations have exposed they have become huge money laundering operations. The next to be hit is likely to be our own SkyCity Entertainment (SKC, #16). Austrac is expected to hit them with their own huge penalties on money laundering charges in the next week. SKC shares have been under-performers so far this year with an -11% year-to-date retreat. This imminent Austrac decision probably won't help.

And the Australian central bank expects a couple of tough years for Australians, with real wages continuing to fall as inflation persists and unemployment starts to rise. These forecasts are part of its latest Monetary Policy Statement. They echo their new Government's warnings. "Given the importance of avoiding a price–wage spiral, the board will continue to pay close attention to both the price-setting behaviour of firms and the evolution of labour costs in the period ahead," it warned. They are also concerned that recent jumps in rent, especially in Australia's two biggest cities, might further entrench inflation.

The UST 10yr yield started today at 4.16% and +3 bps higher than yesterday. It is up +16 bps for the week. The UST 2-10 rate curve is a little less inverted at -50 bps. Their 1-5 curve is slightly more inverted at -42 bps. And their 30 day-10yr curve is flatter at +49 bps. The Australian ten year bond is down -6 bps at 3.87%. The China Govt ten year bond is up +3 bps at 2.72%. And the New Zealand Govt ten year will start today unchanged at 4.60%. A week ago it was at 4.34%.

Wall Street's Friday session is up +0.9% from Thursday in volatile trading, and they are heading for a weekly loss of -3.3% which is unusually large and driven by the Fed's clear focus on inflation which brings with it a P/E revaluation. Overnight, European markets all rose strongly, mostly up +2.5% although London lagged. Yesterday Tokyo ended down -1.7% to limit its weekly gain to +0.4%. Hong Kong had a strong comeback party yesterday, up a massive +5.4% to cap a weekly almost +9% gain. Similarly, Shanghai rose +2.4% yesterday for a +6.1% weekly rise. Yesterday the ASX200 ended up a minor +0.5% for a weekly +1.6% rise. And the NZX50 rose +0.4% for a +0.9% weekly rise. The NZX's big move was the prior week's +3% gain.

The price of gold will open today at US$1675/oz. This is up +US$47 from this time yesterday and up +US$33 for the week.

And oil prices start today up +US$3.50 from this time yesterday at just on US$91.50/bbl in the US while the international Brent price is just on US$98/bbl. A week ago these two prices were US$87/bbl and US$93/bbl respectively.

The Kiwi dollar will open today at 59 and almost +1¼c higher than this time yesterday. For the week it is up +1c and driving a strongish revaluation. Against the Australian dollar we have stayed firm at 91.6 AUc and near our highest since April. Against the euro we are up slightly at 59.5 euro cents. That all means our TWI-5 starts today at 69.6 and our highest since mid September.

We should also note that we are at a four month high against the Chinese yuan, which itself is at a 13 year low against the US dollar which is quite the loss of face by the official Chinese currency.

The bitcoin price is now at US$20,763 and up +2.3% from this time yesterday. It is virtually unchanged from this time last week when it was US$20,693. Volatility over the past 24 hours has been moderate however at just on +/- 2.8%.

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