US labour market stays in low-growth mode; attention turns to inflation monitoring; Canadian jobs rise; Japan bond tapering causes angst; India and Russia cut; UST 10yr at 4.51%; gold down and oil up; NZ$1 = 60.2 USc; TWI-5 = 68.2

Here's our summary of key economic events overnight that affect New Zealand, with news Trump is back targeting the Fed and bond markets priced in a jump in yield for the added risks.

But in something of a relief, the May non-farm payrolls growth came in at +139,000, little different to the expected +130,000 and only a minor retreat from the +147,000 growth in April. But that is a bit below the average for 2024 and well below the average for 2023, and the lowest expansion for a May since 2020. In data not seasonally adjusted, it was the lowest since 2016. The US labour market seems to be plateauing after a rather strong recovery in the prior four years.

Average US weekly earnings rose +3.9% in May from the same month a year ago, similar to earlier 2025 months and the same as the average for a May over the past ten years. The jobless rate was unchanged at 4.2%.

But financial markets liked that this data did not reflect the weakness the earlier ADP Employment Report.

The bond markets cut back their bets that the Fed will trim its policy rates in 2025. The next big test will come on Thursday when the US releases it's May inflation result. It was 2.3% in April and is expected to rise marginally to 2.5% for May. The Fed says it is 'data-driven' in its decision making so this will have an outsized influence on their June 19 (NZT) meeting.

But Trump did not like it, calling for a -100 bps rate cut from the Fed. He is clearly worried that his economic program won't work without cheap money and believes his own propaganda that there is no inflation risk from that.

And the data is becoming clearer that foreigners are avoiding the US as a travel destination, and not just Canadians, with anti-American sentiment on the rise in Europe too. Companies like Airbnb, Booking.com and Expedia all said that their financial results will be weaker than expected because of the softening demand.

Total US consumer credit rose by +US$18 bln in April or +4.3%, up from a +$10 bln increase in March and better than expected. So this expansion, while modest, is back to a 'normal' pace. Revolving credit (credit cards) increased at an annual rate of +7%, while nonrevolving credit (car loans and similar) rose at a letter 3.3% rate.

There was May Canadian labour market data out overnight too. Somewhat surprisingly, that delivered an expansion of +8,800 jobs when a -15,000 reduction was anticipated. Even better, +57,700 new full-time jobs were added in May shifting from a reduction of -48,800 part-time jobs. So, overall a rather surprising net gain.

In Japan, the level of central bank bond buying tapering continues to raise concerns and undermine demand by other potential investors. It is also roiling the value of the yen. There is elevated debate about the right level from here and the central bank may have to slow its tapering operation. The void their tapering is leaving is not being filled by the private sector. And that could seriously twist Japanese interest rates.

Later on Friday, the Indian central bank cut its policy rate again, with an outsized -50 bps cut to 5.5% when a -25 bps trim was expected. That makes it a full -100 bps reduction since February. They say the outsized move was required by the combination of fast- easing inflation and ongoing uncertainty surrounding global trade tensions.

The Russian central bank also surprised with a rate cut when one wasn't expected. It cut -100 bps to 20% under Kremlin pressure, and claiming that "inflation is under control".

EU retail sales for April came in surprisingly strong. They report these on a volume basis and were +2.8% higher than in April 2024. Only a +1.4% expansion was expected, and the March expansion was +1.9%. So a great result for them. Most other countries are not getting inflation-adjusted retail growth anything like this.

In Australia we should probably note the rise and rise of the value of CBA shares. Although they took a slight hesitation in trading yesterday, they hit AU$181.30 and a record high this week, cementing in a +43% rise over the past year, +17% in 2025. That compares well with bitcoin (!) which rose +49% in the past year, +10.5% so far in 2025. Owning a bank with 'future maintainable earnings' of quite different to owning a non-earning crypto lottery ticket.

The UST 10yr yield is now at 4.51%, and up +12 bps from yesterday. up +9 bps for the week. The key 2-10 yield curve is now at +47 bps. Their 1-5 curve is inverted by only -4 bps. And their 3 mth-10yr curve now positive at +27 bps in a big move. The Australian 10 year bond yield starts today at 4.34% and up +10 bps from yesterday at this time, up +6 bps for the week. The China 10 year bond rate is down -1 bp at just over 1.69%. The NZ Government 10 year bond rate starts today at 4.63% and up +9 bps to be up a net +6 bps for the week.

Wall Street has recovered today with the S&P500 up +1.0% in Friday trade, up +1.8% net for the week. Here is the latest Wall Street earnings update. Overnight, European markets gained a marginal +0.2%. Tokyo ended its Friday trade back up +0.5% on the day, up +0.2% for the week. Hong Kong fell -0.5% to be +3.3% higher for the week and Shanghai was unchanged in the day, up +0.8% for the week. Singapore ended up +0.4%. The ASX200 was down -0.3 at the end of Friday trade but up +1.0% for the week. The NZX50 ended down just -0.1% on Friday but up +2.3% for the week.

The Fear & Greed index is still in the 'greed' zone, unchanged from a week ago.

The price of gold will start today at US$3,318/oz, and down another -US$33 from yesterday. That is up +US$24 from US$3294/oz a week ago. We should also note that the silver price is now US$35.91/oz, up from US$33.00/oz so an outsized +8.8% gain.

American oil prices are up +US$1.50 at just over US$64.50/bbl while the international Brent price is up the same at just over US$66.50/bbl. A week ago these prices were US$60.50 and US$62.50 respectively so a +6.6% rise since then. The North American rig count continued its atrophy last week, down again and now back to levels last seen in November 2021. There is certainly no new drilling going on in the US.

The Kiwi dollar is now at 60.2 USc, down -20 bps from yesterday at this time. A week ago it was 59.7 USc so a net +50 bps rise since then. Against the Aussie we are down -10 bps at just on 92.7 AUc. Against the euro we are also down -10 bps at 52.8 euro cents. That all means our TWI-5 starts today at just on 68.2 and down -10 bps from yesterday. And up +30 bps from 67.9 a week ago.

The bitcoin price starts today at US$104,694 and up +1.3% from yesterday. A week ago it was US$104,760 so virtually no change since then. Volatility over the past 24 hours has been moderate at just under +/-2.4%.

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