Here's our summary of key economic events overnight that affect New Zealand with news of what seems to be an outlier jobs report that has financial markets sceptical.
US non-farm payrolls were claimed to have risen +130,000 in January in delayed data released today, far above the downwardly revised +48,000 level for December and more than double analysts' collective estimates. All the gains seem to be in their healthcare sector. If it stands, it undermines the case for Fed rate cuts.
Market reactions have not been supportive, with bond yields rising, rate curves fattening, the equity markets falling, and the USD falling.
The detail of this jobs report remains 'interesting' all the same. Raw (not seasonally adjusted) data shows payrolls actually fell -2.65 mln in January from December, down -2.85 mln from November. And nested within this data are revisions for calendar 2025 now showing employment growth for 2025 revised down to +181,000 from +584,000 previously reported, implying average monthly job gains of just +15,000.
These revisions bring the official data back looking like the private ADP data - except for the January headline result. Markets expect this to be revised sharply down in coming months.
US mortgage applications fell again last week, the third consecutive dip, although not as sharp as the prior two.
There was another US Treasury bond auction overnight, this one for their ten year Note. It was well supported. The median yield came in at 4.11%, down from the 4.13% at the prior equivalent event a month ago.
Meanwhile, the US budget deficit keeps getting worse. It will grow in fiscal 2026 to -US$1.85 tln, the Congressional Budget Office said overnight. Current policy settings are worsening the country's fiscal picture amid low economic growth, particularly the enormous tax-cuts for the rich. They say the "One Big Beautiful Bill" tax cuts will add $4.7 tln to US deficits.
Across the Pacific, there is still no inflation in China, and it has turned toward deflation faster than expected. Their annual inflation rate eased to +0.2% in January from an already very low 0.8% in the previous month. This is its lowest level since October and below market estimates of 0.4%. Food prices fell for the first time in three months (-0.7% vs 1.1% in December) while non-food inflation slowed sharply too (0.4% vs 0.8%). Meanwhile, Chinese producer price deflation eased to -1.4%.
China also released January car sales data, coming in at 2.35 mln for the month. However, that was -3.3% lower than for January 2025 and -3.8% lower than the same month in 2024. Notably soft were NEV sales in January. Perhaps we are seeing signs of maturing (or exhaustion?) in this very dynamic market. It's is hugely important to China's industrial base, selling more than 34 mln units in 2025.
In Australia, the number of new owner-occupier new home loan commitments rose +7.5% in the December 2025 quarter compared with a year ago. On a value basis, that rose +18.9%. For housing investor loans for the same periods, the number of new loans rose +24%, and their value rose +32%.
The UST 10yr yield is now just under 4.17%, and up +2 bps from yesterday. The key 2-10 yield curve is flatter at +65 bps (+5 bps). Their 1-5 curve is also flatter at just under +27 bps (+3 bps) and the 3 mth-10yr curve is also flatter at +45 bps (down -3 bps). The China 10 year bond rate is down -1 bp at just under 1.80%. The Japanese 10 year bond yield is unchanged at 2.24%. The Australian 10 year bond yield starts today at 4.78%, down -1 bp. The NZ Government 10 year bond rate starts today at 4.52%, down -4 bps from yesterday.
Wall Street has started its Wednesday with the S&P500 up +0.1%. Overnight, European markets were mixed between London's +1.1% rise and Frankfurt's -0.4%. Yesterday Tokyo didn't trade Wednesday for Foundation Day. Hong Kong was up +0.3%. Shanghai ended it up only +0.1%. Singapore also closed up +0.4%. The ASX200 ended its Wednesday up +1.7% with CBA's gains in the top 5. But the NZX50 closed little-changed.
The price of gold will start today up +US$58 from yesterday at US$5075/oz. Silver is up +US$3.50 at US$84/oz and extending its new volatility.
American oil prices are up +US$1 at just on US$65/bbl, while the international Brent price is now just under US$70/bbl.
The Kiwi dollar is up a minor +10 bps against the USD from yesterday, still just under 60.6 USc. Against the Aussie we are down -50 bps at 85 AUc. We are also down against the yen. But against the euro we are up +20 bps at 51 euro cents. That all means our TWI-5 starts today little-changed, still at about 63.9.
The bitcoin price starts today at US$65,965 and down -5.1% from this time yesterday. Volatility over the past 24 hours has been moderate at just on +/- 2.8%.
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16 Comments
I thought the tariffs were meant to sort the deficit? If that was the case I’d argue the US would be better with tariffs, but if the money is just being used for rich tax cuts then pointless.
They're all necessary in order to fix the real problems in the world. You know, who pees in what toilet, and migrants stealing your jobs, that sort of thing. We must give the elites more so they'll get the job done.
You insist on seeing 'money' as something real.
It isn't. It's a proxy-demand on resources and energy, both finite (or at the very least, physically limited).
So yes, the rich are displacing the poor - were, they're now eating into the middle - in relative terms, but the whole shebang is physically-limited and therefore temporary.
Which fact - FACT - you can only avoid by fixatedly believing in 'money'.
Entropy is what is killing the US:
I Explored The Empty Streets Of A Dying ARIZONA Town - Also, Wild Donkeys & The Actual London Bridge
Trading in a larger economy often bests what one can produce under their own steam, and money is the most efficient, sensible way of doing that. You don't need to believe in the underlying foundations to determine the utility.
I wouldn't say entropy is killing the US, more that as market and technologies advance, existing regions and centres may become redundant.
It's hard to change the vernacular, eh?
'Markets' and 'technologies' are just cultural methods of extracting.
Materials and energy-stocks.
From the finite.
In ever-more-complex (and therefore fragile) ways.
That's our timeline, yup.
Not sure who'd want to trade for aboriginal living.
Many however may trade aboriginal living for not living at all.
Where did you get the link to the deficit Jimbo? Trump just wanted all the manufacturing to be brought home. His very wild bull in a china shop approach was never going to succeed.
I feel like I remember reading somewhere that "these beautiful tariffs are going to pay off our deficit". Could be mistaking...
You may be correct. I too remember something of the sort. But that would never have happened.
He would have been better off telling people that all tarriff income was to be use to support the re-establishment of manufacturing in the US. Would still have been problematic.
Peak Oil (Not!), Peak Dispatchability, and WEF Risks | Frankly 124 - YouTube
So we're slurping what's left, ever-faster, building a collection of infrastructure ALL dependent on? The stuff we're slurping. Doubling-time or quits...
The USS Honduras sets sail again | Donald Trump | Al Jazeera
As Carney pointed out, you are either at the table or you're on the menu. We need to decide; my vote is to distance ourselves from the thuggery.
MSNBC is reporting that the House failed to renew the bill that gave Trump all the power he needs to keep imposing tariffs. Three Republican Congressmen crossed the floor to block the bill. The bill in effect redefines the meaning of a calendar day. It seems a few in the party are waking up to the harm they're doing to the country, albeit not many. Still with majorities in both houses, there is no certainty that the tariffs will be blocked.
Mid-terms may give us an indication of the rate of disillusionment.
All else is too clouded by pre-bias (think DC re Trump 2).
And no change of governance can change the physics of their predicament - or ours.
Pretty much agree. Trump has significantly accelerated the decline. The Dems taking control will make him a lame duck which will mean his flailing will only get worse unless he is impeached and removed from office. If that happens I think we could likely expect a repeat of the Capitol riot at least.
It was clear from that riot that there is a sector of the US public who believe that the only way to restore the US to some Utopian ideal is through a violent coup. Raging nutters. History shows nothing positive has ever been gained from that approach, only worse tyrannies. The only way for the results they want is for both parties to recognise the flaws in their system and work together to correct them. But then that would threaten their power and privileges. And then there is the limits to resources which they're all in denial of.
The runes go interestingly silent, when we have run this experiment locally. The Long Count stops; Tikal gets enshrouded in forest... Rome gets down to 1100 people, livestock grazing the Colosseum... Sumer is a saline stretch of desert...
It is interesting that the Supreme Court is still dithering over a decision to that actual legality of Trump’s tariffs. Basically that such action is not available to a President as an executive order. Now there is a slight precedent that was established during Nixon’s presidency but I would wager that their dilemma is that to rule the tariffs have not been legally set then they undercut the very weapon their president is using to browbeat, extort or whatever, other nations to succumb to his demands. Trump’s reaction to that would be nothing less than explosive.
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