US inflation edges up but less than expected, sentiment edges down; Canada gets under Trump's skin; India & Japan expansions roll on; Russia cuts; UST 10yr at 4.00%; gold rises and oil dips NZ$1 = 57.5 USc; TWI-5 = 62.1

Here's our summary of key economic events overnight that affect New Zealand, with news that while US inflation is up (marginally) and sentiment is down (modestly), business conditions improved (moderately).

Markets cheered the inflation result thinking it allows the Fed to cut at its next meeting.

American CPI inflation rose to 3.0% in September, up from 2.9% in August. This was slightly less than the expected 3.1% but it is still its highest level since June 2024. Energy costs, food and rents came in higher than that but petrol prices were lower.

On factor to watch is that the rate of increase in the past two months is closer to +4% on an annualised basis. The number reported today relies on the low increases they had in 2024 and February to May. When those months work their way out of the annual calculation, the higher pressure outside those periods will come into play.

Meanwhile, the University of Michigan consumer sentiment survey reported that American feel inflation is running at 4.6% and they downgraded their earlier confidence reading to now be -24% lower than year-ago levels.

The internationally benchmarked PMI report for the US for October reported a strong start to the fourth quarter, with expansions in both the services (55.2) and factory sectors (52.2).

Overnight, Trump hit out further at messages he doesn't like. He claimed a message from the Ontario government was 'fake' and cancelled trade negotiations with Canada. (The speech by Ronald Reagan was a famous real one.) Trump believes black is white if he says so, and white is black, if he says so. And his desperate need for money constrains how he acts.

In Canada, the price of new-built housing fell again, and in fact it has fallen in ten of the past twelve months, so the trending lower is setting in. This trend comes as sales activity for existing homes seem to be picking up, in the major cities at least.

In India, their early PMI reports showed still high expansions in services (58.8) and in factories (58.4) but both levels were slightly lower than for September or any of the prior four months.

Japan’s inflation rate rose to 2.9% in September, up from a 10-month low of 2.7% in the previous month. Core inflation also came in at 2.9%, both basically as markets had expected.

Japan's services PMI eased slightly in October but is still expanding, even if not quite at the pace of September. But their contracting factory PMI got slightly worse in the month, according to the internationally benchmarked S&P Global PMI report out overnight.

Interestingly, China's President Xi did not send a congratulatory message to new Prime Minister Takaichi when she was elected, and unusual and pointed signal.

In the EU, their early October PMI reported new order growth hitting a 2½ year high, and their services sector expanding at a good rate (52.8), and their factory sector no longer contracting (50.0).

In Russia, they cut their policy interest rate by -25 bps, the fourth consecutive rate cut and taking it to 16.5%, and contrasting with market expectations of a hold. The recent American sanctions probably caused them to act.

Australia's October services PMI rose to a faster expansion in October. But their factory PMI retreated from a small expansion to a small contraction.

The UST 10yr yield is now at 4.00% unchanged from yesterday, down -1 bp from this time last week. The key 2-10 yield curve is still at +52 bps. Their 1-5 curve is now at +1 bp. And their 3 mth-10yr curve is still -1 bp inverted. The China 10 year bond rate is up +1 bp at 1.78%. The Australian 10 year bond yield starts today at 4.16%, unchanged from yesterday and a week ago. The NZ Government 10 year bond rate starts today at just on 4.02%, also unchanged from yesterday, up +3 bps from a week ago.

Wall Street is firmer today, up +0.8% on the S&P500 cheered by the inflation data and a +1.5% weekly gain. Overnight European markets were mixed between London's +0.7% gain and the no-change in Paris. Yesterday, Tokyo ended its Friday session up +1.4% for a +2.0% weekly gain. Hong Kong was up +0.7% and a +1.1% rise for its week while Shanghai also gained +0.7% on Friday but a +2.2% weekly jump. Singapore was up just +0.1% in its final weekly session. The ASX200 ended its Friday down -0.2% on the day, up +0.3% for the week. The NZX50 was up a minor +0.1% for the day, up +0.8% for the week.

The Fear & Greed index is now firmly in the 'fear' zone, unchanged from last week.

The price of gold will start today back up sharply at US$4108/oz, a dip of -US$21 from yesterday, but down -US$113 for the week.

American oil prices are -50 USc softer at just on US$61.50/bbl, with the international Brent price still just on US$66/bbl. Both at +US$4 higher than week-ago levels.

The Kiwi dollar is still at just on 57.5 USc, and again little-changed from yesterday, up +20 bps for the week. Against the Aussie we are also holding at 88.3 AUc. Against the euro we are have dipped -10 bps to 49.4 euro cents. That all means our TWI-5 starts today at just under 62.1 and essentially unchanged but up +30 bps for the week.

The bitcoin price starts today at US$110,545 and up +0.5% from this time yesterday. But it is up +4.1% from this time last week. Volatility over the past 24 hours has been modest at just on +/- 1.0%.

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