US jobs report weak; US factory orders also weak, worse after adjusting for PPI; China carmakers in profit crisis; Australia reports rare trade deficit; UST 10yr at 4.48%; gold firm and oil stable; NZ$1 = 56.9 USc; TWI-5 = 60.8

Here's our summary of key economic events overnight that affect New Zealand, with news of a surprisingly weak American jobs report for June. There is no World Cup bounce there. And economists are divided over whether Federal Reserve policymakers will be holding rates steady, lifting or lowering them over the next six months based on this latest data.

The US economy added just +57,000 jobs in June, the weakest gain in four months and far below expectations of +110,000. Their labour force participation rate dropped sharply to 61.5%, its lowest since early 2021. But seasonal adjustment has a lot to do with these headline results and the actual payroll change isn't anywhere near as weak.

However, when you broaden this view to everyone in employment, not just those on a company payroll, things don't look so good. There are now 162.7 mln people in employment in June, down -175,000 from May and down -1.2 mln from June a year ago. In fact that employed civilian workforce level is their lowest since the end of 2024.

US jobless claims rose last week, but only marginally and by about what seasonal factors would have accounted for. There are now 1.76 mln people on these benefits, pressed lower by much tighter entitlement standards, which is consistent with the employment drop.

US factory orders fell -1.3% in May and were down -4.5% for durable goods orders. But this needs to be seen in the context of rises in the prior three months, and April was revised higher. From a year ago though, the value of these factory orders were up only +1.8% overall but down -4.3% for durable goods. Given producer price inflation has been high over this period (+6.5%), these are terrible results. And surprising given the factory PMI data, so we should be sceptical of them. But don't forget this data is from agencies with imposed partisan leadership that replaced professional leadership when the President didn't like their earlier data.

Meanwhile US vehicle sales rose in June to an annualised rate of 16.5 mln, a rise from May and from June a year ago. So that demand may improve their factory order data for June. The US vehicle market is about half the size of the Chinese equivalent (which currently runs at a 31 mln annualised sales rate).

We got all this data today because tomorrow they will be on holiday for their 250th Fourth of July celebrations. It is a milestone worth celebrating but the background economy will likely take the gloss of it for those negatively affected.

In China, those huge vehicle sales numbers mask structural problems. Prices have been low to build volume, but few of these manufacturers are profitable. A dramatic shakeout is coming because sales volumes are falling now. And that is already having implications for their steel industry, among others.

In Australia, their May exports fell -6.9% from April to be just +3.1% higher than a year ago. Their imports were +2.6% higher than April to be up +13.9% from a year ago. So their merchandise trade balance shrank to -AU$1.7 bln in May, their first deficit since January 2018. They also reported that after hitting AU$7.9 bln in February, their gold exports retreated to just AU$4.5 bln in May.

Global container freight rates rose +9% last week to be +61% higher than year-ago levels. This is all about demand for outbound cargo space out of China. Bulk cargo rates fell -2.8% last week to be +72% higher than year-ago levels, although that low base will rise quickly in future weeks.

The UST 10yr yield is now just on 4.48%, unchanged from this time yesterday. The key 2-10 yield curve is now at +35 bps (up +5 bps). Their 1-5 curve is now at +28 bps (+4 bps) and the 3 mth-10yr curve is at +88 bps (+5 bps). The China 10 year bond rate is down -2 bps at 1.73%. The Japanese 10 year bond yield is up +7 bps at 2.78% and back to the 30 year-high levels we saw in May. The Australian 10 year bond yield starts today at 4.82%, up +3 bps from yesterday. And the NZ Government 10 year bond rate is at 4.48%, up +4 bps.

Wall Street is lower today, down -0.5% on the S&P500, down -1.3% on the Nasdaq. Overnight, European markets were much stronger, up between Paris and London's +1.7% and Frankfurt's +2.2%. Yesterday Tokyo closed down -2.5%. Hong Kong closed up +0.8% although Shanghai was down a chunky -2.0%. Singapore ended unchanged. The ASX200 ended its Thursday also unchanged. The NZX50 slipped -0.2%.

The price of gold has risen to US$4106/oz, up a net +US$36/oz from yesterday. Silver is now under US$60.50/oz, up +50 USc from a day ago.

Oil prices are up +50 USc from yesterday at just on US$68.50/bbl in the US, while the international Brent price is unchanged at US$71.50/bbl. Hormuz transits have stayed at their lower level after the recent volatility & uncertainties with just 19 crude or product tankers exiting over the past 24 hours (1 dark with transponders off) and 24 entering for new loads (3 dark). Over 84% of vessel movements are related to cargoes headed to China, Russia or are Iran-linked.

The Kiwi dollar is up +10 bps from this time yesterday at just over 56.9 USc. Against the Aussie we are unchanged at 82.3 AUc. Against the euro we are down -10 bps at just on 49.8 euro cents. That all means our TWI-5 starts today at just on 60.8 which is up another +10 bps from this time yesterday.

The bitcoin price starts today at US$61,635 and up +2.5% from this time yesterday. Volatility over the past 24 hours has again been moderate at just under +/- 2.1%.

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