American housing starts rise; missing workers may be found; US & China struggle with FDI; Canada PPI lower; UST 10yr 4.43%; gold eases but oil recovers; NZ$1 = 59.8 USc; TWI-5 = 69

Here's our summary of key economic events overnight that affect New Zealand, with news that as weak economic data and recession fears fade, risk is returning to financial markets.

Housing starts in the US rose by +1.9% in October from September, above market expectations as limited supply in the resale market has boosted new construction. Also, residential building consents, a forward-looking indicator of future construction, moved +1.1% higher. However, these might be recent trend increases but both are still lower than year-ago levels..And completions are now running higher than new housing starts.

In August the US TIC flows were positive into the US by +US$62 bln. Expectations were that September's inflows would top that at +US$89 bln. But in the event there was a surprise outflow in September. The net foreign acquisitions of long-term securities, short-term U.S. securities, and banking flows was a net TIC outflow of -$67 bln. Of this, net foreign private outflows were -$62 bln, and net foreign official outflows were -$5.3 bln. That is a massive US$156 bln surprise in just one month.

A new Boston Fed research paper released this weekend examines how much labour market surveys undercount gig-workers. It could be by a lot, and answer the question about why the US participation rate seems so low. US employment is already at a record high. It may well be very much higher than those official levels, and that has monetary policy implications.

Given that it is widely accepted that the US is battling a flood of illegal immigrants, in ordinary times some facts might quell the angst. But these are not ordinary times where facts matter.

In Canada, producer prices are falling, essentially due to the much lower fuel prices. They fell by more than -1% in October from September, the steepest decline in producer prices since August 2022. Year-on-year they are down -2.7% on the same oil-cost retreat.

In China, October foreign direct investment was only +¥106.5 bln from September (+$24.5 bln), continuing the run of weak inflows. In fact these are now -9.4% from year-ago levels.

At the APEC conference in San Francisco, lots of talk, a few agreements, but even at the margins the consequences will be light. Nothing seems substantial. However, talking is better that the alternatives..

The UST 10yr yield is little-changed from yesterday, now at 4.43%. A week ago it was 4.62% so down -19 bps from then. But their key 2-10 yield curve is now much more inverted, now by -46 bps. Their 1-5 curve is marginally more inverted, by -80 bps. Their 3 mth-10yr curve inversion is now -96 bps and slightly more inverted. The Australian 10 year bond yield is now at 4.47% and down -4 bps from yesterday. The China 10 year bond rate is unchanged at 2.67%. And the NZ Government 10 year bond rate is down -10 bps from yesterday, now at 4.98%. A week ago it was at 5.22% so a notable fall since.

Wall Street's Friday session looks like it will end little-changed on the S&P500 and so it books a +2.3% weekly rise. Overnight, European markets closed up about +0.9% to catch up with Wall Street's Thursday jump. Yesterday, Tokyo ended its Friday session with a late rally to be up +0.5% for the day and up +2.3% for the week. Hong Kong went the other way, down -2.1% to end its week up +1.1%. Shanghai ended Friday little-changed and was up +0.3% for the week. The ASX200 ended Friday also little-changed for a weekly rise of +1.0%. And the NZX50 closed out its Friday session down -0.5% for a minor weekly rise of +0.3%

The Fear & Greed index we follow has moved over to the 'greed' side as risk appetites return.

The price of gold will start today at US$1980/oz and down -US$2/oz from yesterday. A week ago the yellow metal was at US$1936/oz so a weekly gain of +2.3%.

But oil prices have recovered a bit less than +US$3 overnight, to be just over US$76/bbl in the US. The international Brent price is now down to US$80.50/bbl. Markets over-reacted yesterday apparently, not in the direction, just the scale of the pullback. A week ago these prices were US$77 and US$81/bbl respectively, so we are essentially just back to those levels.

The Kiwi dollar starts today at 59.8 USc and essentially unchanged from yesterday. But it is up almost +1c from a week ago. Against the Aussie we are down -½c at 91.9 AUc. Against the euro we are also down -20 bps from yesterday to 54.9 euro cents. That all means our TWI-5 starts today at just on under 69, and a net -20 bps lower. A week ago it was at 68.9 so very little changed from then.

The bitcoin price starts today at US$36,386 and down a net -0.5% from this time yesterday. A week ago it was at US$37,215. Volatility over the past 24 hours however has also been modest at just on +/- 1.6%.

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