US labour market strength extends; new orders up; Japanese consumer confidence up; Zhongzhi bankrupt; EU inflation sticky; UST 10yr 4.03%; gold little-changed and oil firm; NZ$1 = 62.4 USc; TWI-5 = 70.8

Here's our summary of key economic events over the holiday period that affect New Zealand, with another quick news wrap-up so you can get back to 'time-off'.

But first, yet again the giant US labour market has impressed with more job gains that expected. The headline expansion was +216,000 when a gain of about +170,000 was anticipated. This is the employer payroll data. They also survey households and that reported a fall, something unusual in the November to December period. For the full year, payrolls rose +2.7 mln, whereas the household survey reported a gain in employment of +1.9 mln for the year. It seems workers are shifting out of self-employment onto employer payrolls.

Average weekly earnings rose +3.8% for the year in this survey, enough to best inflation but not by much. But the pace slowed in December from November, so this is one to watch.

Meanwhile, the ISM services PMI delivered only a minor expansion in December, although new order growth was good.

And American factory order growth recorded its best rise in three years, a +2.6% expansion pace in November from October, and +3.3% year-on-year.

Overall today's data probably pushes back when the US Fed will feel a need to start trimming rates. The current sanguine situation may well have them keep current levels for some time. This is not the scenario that bond markets have assumed.

Canada disappointed in its labour market change in December, with virtually no change from November when a +13,500 rise was expected and after a +24,500 rise in November. Worse, full-time employment fell -24,000 jobs and part-time employment rose +24,000 jobs. They will be quite disappointed in this.

Japanese consumer sentiment rose in December and to its best level in two years.

Singapore retail sales made some sort of recovery in November after falling in October. They are now +2.5% higher than in November 2022.

Yesterday (Friday), a Beijing court placed Zhongzhi Enterprise Group (ZEG) into bankruptcy. It has been a major player in their US$3 tlm shadow banking sector and has lent billions to real estate firms. Zhongzhi has US$64 bln in debt and now far more than its fast-depreciating property loan base. It will not end well for its managers (some of whom have skipped town).

And they may be joined by some carmakers in 2024. Bloomberg is reporting that only four of the 13 brands that have disclosed annual sales figures accomplished their 2023 targets, with many missing by a wide margin. A consolidation is due, but those that aren't picked up, it could be a messy end.

European inflation seems sticky above levels they want to see, according to the December data. While lower energy costs are certainly helping, food costs are not. Their +6.9% pa rise in food costs and -11.9% fall in energy costs balanced out to a +2.9% rise in overall inflation in December, up from +2.4% in November. In Germany, inflation is running at 3.7%.

A sharper than expected pullback in November German retail sales won't hep either as those price pressure mount.

The UST 10yr yield starts today at 4.03% and up +2 bps from this time yesterday. The key 2-10 yield curve is now less inverted, by -35 bps. Their 1-5 curve inversion is also less inverted, now by -83 bps. And their 3 mth-10yr curve inversion is little-changed, now by -136 bps. The Australian 10 year bond yield is now at 4.15% and +6 bps higher. The China 10 year bond rate is now at 2.57% and down -1 bp and back down to levels we last say in August and prior to that in the pandemic. And the NZ Government 10 year bond rate is +6 bps higher at 4.66%.

Wall Street has started today up +0.2% in Friday trade on the S&P500. But if it holds this, it will be down -1% for the shortened week. Overnight European markets all fell about -0.4%. Yesterday Tokyo ended up +0.3% to end its week down -0.5%. Hong Kong fell -0.7% to be -3.2% for the week. Shanghai fell -0.9% and ended its week down -1.5%. On the other hand, the ASX200 was little-changed yesterday but was -1.6% lower for the short week. The NZX50 got off lightly in the circumstances; it was little-changed yesterday, and also little-changed for the week.

The price of gold will start today down -US$2/oz at just on US$2041/oz.

Oil prices are +US$1 higher at just under US$73.50/bbl in the US. The international Brent price is now just over US$78.50/bbl.

The Kiwi dollar starts today at 62.4 USc and +20 bps higher than this time yesterday. Against the Aussie we are holding higher at 93 AUc. Against the euro we are firmer at 57 euro cents. That all means our TWI-5 starts today just on 70.8 and up +20 bps.

The bitcoin price starts today lower, slipping to US$43,436 and a retreat of -1.5% from this time yesterday. Volatility over the past 24 hours has been moderate at just over +/- 2.4%.

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