American NFP gains burst higher; US waterfront strike ends; Fed gets breathing room; EU agrees to EV tariffs on China; food prices rise unexpectedly; UST 10yr 3.84%; gold down and oil up, NZ$1 = 61.6 USc; TWI = 69.7

Here's our summary of key economic events overnight that affect New Zealand with news today it is all about the American labour market.

In an eye-catching showing, the headline (s.a.) rise in US non-farm payrolls (NFP) was +254,000 and almost double the expected +130,000 rise. And as regular readers will know, we also check the actual change, which was almost double that, at +460,000. All very impressive. There are now 162 mln people employed in their civilian labour force. There is momentum here and the impact of +460,000 more paid workers will be widespread and impact the whole global economy.

Both their unemployment rate, at 4.1%, and the number of unemployed people, at 6.8 million, changed little in September.

And the East Coast/Gulf port strike seems to have been settled. So that is no longer an economic irritant.

This result is of outsized change and it had an impact on the financial markets. While the equity markets didn't react, the bond markets did, juicing up benchmark UST yields noticeably. The USD rose sharply too.

The US Fed may well be restrained by this labour market surge. Cutting rates into a fast-rising economy would be inflationary and they have only just gotten things back on an even keel. By any measure, they have achieved a 'soft landing'. They seem set up for a solid 2025 expansion (provided their economic management stays professional of course). The latest Q3 estimate of economic activity is +2.5% which would take their nominal GDP to US$29.4 tln and +US$1.4 tln more than a year ago. It is impressive. However, given today's labour market surge, there are upside 'risks' to these estimates.

And we should note that all this is going on while the US Federal Reserve shrinks its balance sheet. It is now down to just over US$7 tln, a -US$76 bln drop in one month, a -US$900 bln drop in a year, and an almost -US$2 tln drop since its 2022 peak. Monetary policy resilience is being built back up. Yes, US Federal debt held by the public is rising in dollar terms but not as a proportion of overall economic activity (GDP). But a stock-to-flow ratio like that is a bit a a junk sideline stat. You will hardly ever see that ratio in the commercial world.

China is still on its week-long holiday. By all accounts, travel-related activity is 'normal' but other aspects of their economy are still a worry. When they return next week we will likely start to see the rollout of their signaled fiscal 'bazooka'.

When they come back, they will note that the EU has voted in favour of imposing 45% tariffs on China-made EVs.

Singapore delivered good retail results for August, to be up +0.6% from a year ago and almost all of that in the latest month.

This is a long weekend for many of the east coast states in Australia (although not Victoria). We will notice their absence on Monday.

The monthly value of new home loans in Australia (not refi) rose again in August to be +23% higher than a year ago. But that is off a very weak base. From August 2021 they are actually down -3.4%.

And Aussie household spending was flat in August. Home loans and other housing costs are keeping a lid on discretionary spending, not to mention their elevated inflation levels - which you will recall is only being restrained by some recent chunky temporary energy subsidies.

More broadly, world food prices in September rose much more than expected, and across the board. In fact, it was the largest month-on-month increase since March 2022. Rising dairy prices were among tha gainers, but not so much meat prices.

The UST 10yr yield is now at just on 3.99% and up +15 bps from yesterday. That is up +22 bps from this time last week. The key 2-10 yield curve is still positive, but lesser at +7 bps. Their 1-5 curve inversion is now inverted by -39 bps. And their 3 mth-10yr curve inversion is now less at -88 bps. The Australian 10 year bond yield starts today at 4.20% and up +15 bps. The China 10 year bond rate is at 2.16% and unchanged. The NZ Government 10 year bond rate is now just on 4.29% and down -1 bp from yesterday, up +3 bps from this time last week.

Wall Street is in its Friday session on the S&P500 and up +0.6% and moving back towards its record high. For the week it will be little-changed. There was a range of closes for European equity markets overnight bookended by London's no change to Paris's +0.9% gain. Tokyo finished yesterday up +0.2% to be down -1.2% for the week. Hong Kong was up +2.8% yesterday to be up a spectacular +11% for the week. Shanghai was closed for the public holidays. Singapore was up +0.3%. The ASX200 ended its Friday down -0.7% to end its week down -0.8%. And the NZX50 rose +0.4% yesterday for a good +1.3% weekly gain.

The Fear & Greed Index ends the week hard over on the 'greed' range, just more so than last week. Overall markets are comfortable with their risk appetite.

The price of gold will start today at US$2649/oz and down -US$6 from yesterday, but up +US$6 from a week ago.

Oil prices are up +US$2 at just under US$75.50/bbl in the US while the international Brent price is still just on US$79/bbl. Middle-East tensions are now starting to affect these prices as the never-ending 'retaliation' cycle shows no sign of ending. A week ago these prices were US$8 lower at US$67.50 and US$71.50 respectively.

The Kiwi dollar starts today at 61.6 USc and down -60 bps from this time yesterday. That is a big -2c fall from 63.5 USc a week ago however. Against the Aussie we are -20 bps lower at 90.6 AUc. Against the euro we are also down -20 bps to 56.2 euro cents. That all means our TWI-5 starts today at just under 69.7, and down another -30 bps from yesterday, down -100 bps from a week ago.

The bitcoin price starts today at US$62,254 and up +3.5% from this time yesterday. A week ago it was at US$54,884 so a -5.5% fall since then. Volatility over the past 24 hours has stayed modest at just on +/- 1.6%.

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