US factories contract faster, struggling with tariff-tax costs; other global factory PMIs mixed; Australia faces new inflation threat; CPTPP to expand again; UST 10yr at 4.11%; gold firms slightly and oil holds; NZ$1 = 57.1 USc; TWI-5 = 61.7

Here's our summary of key economic events overnight that affect New Zealand, with mixed news about how the world's factories are faring.

First up today we need to report that the closely watched US ISM factory PMI undershot expectations, and those expectations were for a contraction anyway. Weak new order flows and production levels were behind the dour result. They say almost every component is contracting, and that customers are letting their inventories shrink. Costs and prices are rising however, although at a slower pace. They are being held up by own-goal tariff-taxes.

It was a data report that took the wind right out of Wall Street's Monday session.

But that is just one view. The alternate S&P Global factory PMI records an expansion in the sector, although it agrees that costs and prices are rising faster than normal. Both surveys noted that employment in the sector has stopped expanding.

The Canadian factory PMI, which has been negative all year, seems to have stabilised. To be accurate, it is still contracting, but is back on the cusp of stabilisation, which they haven't had in 2025 so far.

Likewise, the overall EU factory PMI is 'stable', neither expanding nor contracting overall. Germany and France are recording small contractions but less than previously, while there are expansions in Spain and the Netherlands. Greece again recorded the strongest expansion among EU members.

In China, their factory sector is still expanding, although at a slower pace, according to the S&P Global (RatingDog) private factory PMI. New orders from domestic customers rose, but new export orders fell at their fastest pace since May. The similar official survey had this sector contracting.

And the same S&P Global factory PMIs for Taiwan, Korea and Malaysia all contracted, even if only slightly. But this measure for Indonesia turned more positive. In Vietnam the upturn was sharp, hitting a 15 month high.

But the S&P Global factory PMI for Australia is sounding a bit more of a warning for October. It recorded its first fall in manufacturing output in four months driven by the fastest retreat in new orders since December 2024. Employment headcounts declined for the first time since February.

Staying in Australia, there was more evidence of higher & rising inflation, although this data isn't really sounding warning bells. The Melbourne Institute Monthly Inflation Gauge recorded an increase in monthly inflation for October, primarily influenced by higher recreation and housing related prices. The monthly cost of living also rose. Annual headline inflation as recorded by the Inflation Gauge is slightly above the top-end of the RBA's 2-3% target band.

Australia also released September residential building consent data today and it jumped +12% from August, up +15% from September a year ago. This activity has been particularly volatile over the past few months, so the September surge is actually more just a recovery rather than a serious push higher. Much of their recent gains are for townhouses and apartments. The most impressive gains are in Victoria where a real resurgence seems to be underway (despite the ugly union-mafia (CFMEU) control of their building trades).

Job ads fell -2.2% in October from September in the ANZ-Indeed tracking, following a revised -3.5% drop in the previous month. This marked the fourth straight monthly decline, reinforcing signs of a loosening labour market despite elevated inflation.

So it will be no surprise to know that household spending in Australia is rising only at about the rate of [household] inflation.

And it will be inflation's rise that will be at the heart of what analysts will be looking at in this afternoon's RBA rate review. Markets don't expect any change in the 3.6% cash rate target, but they do want to see how the central bank plans to tackle the resurgent inflation threat.

Globally, we should note that the twelve member CPTPP is about to grow again. Costa Rica is in the final stages of joining. And now the Philippines and the UAE have applied, which will take this group up to fifteen members. It seems multilateralism is far from dead, even a group like this with relatively high labour and environmental standards. In the background there are always rumours that China wishes to join too, although that never materialises. They prefer their own captive 15-country RCEP and its lower standards. Seven countries are members of both, including Australia and New Zealand

The UST 10yr yield is now at 4.11%, up +1 bp from yesterday at this time. The key 2-10 yield curve is now at +51 bps. Their 1-5 curve is +2 bps positive and the 3 mth-10yr curve is now +13 bps positive. The China 10 year bond rate is down -2 bps at 1.74%. The Australian 10 year bond yield starts today at 4.35%, up +4 bps from yesterday. The NZ Government 10 year bond rate starts today at just on 4.13%, also up +4 bps from yesterday.

Wall Street has started its week with the S&P500 up just +0.3% after starting strong, then fading quickly on the PMI news. Overnight, European markets were mixed between London's -0.2% dip and Frankfurt's +0.6% rise. Tokyo was on holiday yesterday. Hong Kong rise +1.0% and Shanghai was up +0.5%. Singapore ended its Monday session up +0.4%. The ASX started its week with a negligible +0.1% rise, and that was matched by the NZX50.

The price of gold will start today at US$4007/oz, up +US$6 from this time yesterday.

American oil prices are +50 USc firmer from yesterday at just under US$61.50/bbl, with the international Brent price now just over US$65/bbl.

The Kiwi dollar is now at just under 57.1 USc, and down almost -20 bps from yesterday. Against the Aussie we are down more than -10 bps at 87.3 AUc. Against the euro we are also down -20 bps at 49.5 euro cents. That all means our TWI-5 starts today at just under 61.7 and down -10 bps from yesterday.

The bitcoin price starts today at US$106,767 and down a full -3.0% from this time yesterday. Volatility over the past 24 hours has been moderate at just on +/- 2.4%.

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