US labour market better than expected in November; Canada's improvement confirmed; China's property pressures mount; EU PPI retreats; Food prices slip; UST 10yr 3.53%; gold and oil lower; NZ$1 = 64 USc; TWI-5 = 72.3

Here's our summary of key economic events overnight that affect New Zealand, with news of strong US wage gains, complicating the Fed's December decision.

The US labour market has again outperformed analysts expectations with a headline seasonally adjusted rise of +262,000 non-farm payroll jobs in November when a +200,000 was expected. The labour market expansion hasn't stalled yet. But as regular readers know, we also look at the raw, unadjusted data, and that shows payrolls actually rose +574,000 to 155 mln and a new record high. That is +4.8 mln more employed than a year ago, and almost +2 mln more employed than the peak pre-pandemic. That is a lot of extra payroll cascading through the giant American economy. It is no wonder that some analysts think a softer landing is possible.

The same data shows that US hourly earnings rose +5.8% in the year to November, and weekly earnings were up +4.9%. Hourly earnings are rising at a faster annualised pace in November from October, up at the rate of +8.1%. Workers seem to be keeping up, and that demand-induced gain is consistent with a tight labour market.

Wall Street seemed under pressure after this data was released, now unsure whether the US Fed will ease back in the way that was signaled earlier in the week. Clearly wage-push inflation is a policy 'thing', and the much larger expansion of the overall workforce is providing the currency to sustain higher prices for longer.

That's not to say its all roses. It isn't. The Fed's Beige Book surveys show that businesses expressed greater uncertainty and increased pessimism for the American economy as prices and interest rates continue to rise.

Canada's labour market also turned in a better-than-expected result in November too. Total employment was little changed in November (+10,000), but that follows a big increase of +108,000 in October and the November data shows the prior month's result was not an outlier.

In China, the pressure on property developers is never-ending. To bail them out, Beijing has ordered its top four state-owned banks to issue offshore loans to help developers repay overseas debt. And toi encourage buyers to return, mortgage interest rates for first home loans have been dropped by over one percentage point since the start of 2022. As of the end of November, the average first home loan rate in China stood at 4.17%.

In Europe, producer prices are now falling, and quite quickly after a heady, uncontrolled run-up induced by Russia's invasion of Ukraine. They fell -2.5% in October from September (or falling at an annualised -30 rate), but they are still +31 higher than year-ago levels.

Global food prices eased slightly in November, continuing a downward trend since the peak in March. Prices for both meat and dairy contributed to the easing.

The UST 10yr yield starts today at 3.53% and down -2 bps overnight. A week ago it was at 3.69% so a -13 bps drop since. The UST 2-10 rate curve is little-changed again at -76 bps. And their 1-5 curve is still inverted at -98 bps, while their 30 day-10yr curve is less inverted at -29 bps. The Australian ten year bond is down -8 bps at 3.38%. The China Govt ten year bond is unchanged at 2.92%. And the New Zealand Govt ten year will start today down -9 bps at 4.03%.

Wall Street has opened its Friday session soft again, with the S&P500 down -0.5% but heading for a weekly rise of +1.2%. Overnight European markets all closed down about -0.2% except Frankfurt which was up +0.3%. Yesterday, Tokyo ended down -1.6% to end its week down also -1.6%. Hong Kong was down -0.3% yesterday but that locked in a spectacular +9.9% weekly leap. And Shanghai closed down -0.3% for a weekly gain of +3.3%. The ASX200 ended its Friday session down -0.7% for a weekly rise of +0.6%, while the NZX50 ended Friday down a mere -0.1% but that meant it booked a +2.2% weekly rise, largely on the back of F&P Healthcare's +16.4% rise in capitalisation for the week.

The price of gold will open today down -US$6 to US$1796/oz. A week ago it was US$1753/oz, so a +US$43 gain since then, mostly exchange-rate induced.

And oil prices start today down -US$1 from this time yesterday at just over US$81/bbl in the US while the international Brent price is down to just over US$86/bbl. These are about +US$4 higher for the week as the US dollar sank. The EU has reached a deal to impose a US$60/bbl cap on Russian oil exports.

And we should note that the distribution of hydrogen as a fuel, via liquid ammonia, may have taken a very big step ahead with a new inexpensive light catalyst development that solves many practical issues for the fuel.

The Kiwi dollar will open today at 64 USc, and up another +¼c since this time yesterday to it highest since August. Against the Australian dollar we are +½c firmer at 94.1 AUc and an eleven month high. Against the euro we are firm at 60.8 euro cents and a two month high. That all means our TWI-5 starts today at 72.3 and a three month high.

The bitcoin price is now at US$16,965 and virtually unchanged from this time yesterday. A week ago it was at US$16,496. Volatility over the past 24 hours has low at just +/- 0.9%.

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