Here's our summary of key economic events overnight that affect New Zealand, with news of a defensive end to the week where the data out overnight hasn't really clarified much, and the geopolitical situation remains a toxic mess.
In the US they have now headed into their long Labor Day weekend holiday, ending their summer holiday season. They face petrol prices +40% higher than when Trump started his Persian Gulf war with Iran. Diesel there are almost +80% higher now and that is having broad inflationary impacts in secondary goods costs. That these are rising faster recently is not a sign that Kevin Warsh will be able to ignore, even if he is under renewed pressure from the White House to do so.
First, US non-farm payrolls rose much more than expected in both the headline version and the actual version, up +154,000 in August from July when just a +15,000 rise was expected, up +456,000 from a year ago to 158.9 mln people on payrolls. This result is sharply different to the ADP Employment report which tracks most of this weekly.
The broader employed civilian labour force data however isn't so upbeat, showing a -133,000 fall from July, down -621,000 from August a year ago and to 162.7 mln employed people. Take your pick from these two official results, but it does suggest a widening gap where it is substantially harder to sustain employment unless you are on a company payroll.
Markets seem sceptical of the strong headline jobs report, suspecting it is something that will be corrected in future. Wall Street is lower, benchmark bond yields are higher, both shifts you may not expect if they did believe the headline data was genuine.
Meanwhile, the New York Fed's global supply chain pressure index rose in August, to remain elevated which it has been all year. Apart from the pandemic, this is an unusual level of pressure since the GFC.
Across the border, Canada reported a tougher labour market. Employment there declined by -41,700 in August, missing expectations for a +15,000 increase and following a +75,100 gain in July.
Across the Pacific, Japanese household spending was weak in June and it got weaker in July, a result that wasn't expected. It was a contraction at the sharpest pace since January 2024. Only the furniture and recreation categories were positive.
In South East Asia, forest burning in Indonesian Borneo has brought air quality health warnings for Singapore and parts of Malaysia.
In the overall EU, retail sales volume growth slowed to just +1.0% in July from a year ago, from an upwardly revised +1.7% in June. This was slightly lower than market expectations of a +1.1% gain and was the smallest increase in retail trade since April. But at least they have positive volume growth.
In Germany they reported a sharp rise in factory orders in July, up +2.5% from June to be more than +13% higher than year-ago levels. This was much better than observers were expecting.
In Germany, there are state elections that have many nervous with the AfD polling strongly.
In Norway, their gigantic US$2 tln sovereign wealth fund is moving to sharply cut back on its exposure to US Treasury bonds. Yesterday we noted the Dutch move to insulate risks by moving their gold holdings out of the US.
Global food prices rose notably in August to their highest since November 2022. All food groups rose including for meat and dairy, although the biggest rises were for cereals, sugar, and vegetable oils.
More Aussies are taking "secondary employment" according to the ABS on June quarter filled jobs data. Full time jobs rose +1.9% from a year ago, but secondary jobs jumped +11.6% on the same basis. That is, +288,400 more full-time jobs and +122,000 new part-time secondary jobs over the year. They now have 16.3 mln filled jobs.
The UST 10yr yield is now just on 4.78%, up +1 bp from yesterday at this time, up +5 bps for the week. The 30 year yield is at 5.25%, down -3 bps for the day but up +3 bps for the week. The key 2-10 yield curve is now at +40 bps (down -1 bp). Their 1-5 curve is now at +41 bps (+3 bps) and the 3 mth-10yr curve is at +106 bps (unchanged). The China 10 year bond rate is down -1 bp at 1.68%. The Japanese 10 year bond yield is now at 2.91%, down -4 bps. The Australian 10 year bond yield starts today at 5.19%, down -3 bps, but up +10 bps for the week. The NZ Government 10 year bond rate is now at 4.82%, up +1 bp from Friday, up +5 bps for the week.
Wall Street is softer today with the S&P500 up down -0.4% but up +0.2% for the week, and the Nasdaq also down -0.4% today but up +0.5% for its week. Overnight, European markets were mixed between Paris's -0.1% and Frankfurt's +0.2%. Tokyo ended its Friday trade up +1.3% for a weekly -1.0% drop. Hong Kong rose +1.7% on Friday for a weekly +0.9% rise. But Shanghai fell -0.3% to end its week up a minor +0.1%. Singapore rose +0.9%.The ASX ended its Friday down -0.2% to end the week down -0.7%. But the NZX50 was up +0.9% for a weekly +1.5% gain and the best weekly result of the markets we follow.
The Fear & Greed index is now in the 'fear' zone from the 'neutral' zone a week ago.
The price of gold is now at US$4424/oz, and down -US$62 from yesterday at this time, down -US$38 from a week ago. Silver has fallen -US$1 to just on US$66/oz, down -50 USc for the week.
Oil prices are -50 USc lower at just on US$91.50/bbl in the US, while the international Brent price is just over US$96.50/bbl and up +US$1.50. A week ago these prices were US$83.50 and US$88/bbl respectively. Hormuz transits have basically stopped with just one ship exiting over the past 24 hours, and not a tanker (0 dark with transponders off) and only two entering for new loads (1 dark). The Red Sea activity is marginally higher than yesterday but still around 20 each way at the Yemen chokepoint.
The Kiwi dollar is down -10 bps from yesterday at just on 58.8 USc but down -30 bps from a week ago. Against the Aussie we are also down -10 bps at 81.6 AUc. Against the euro we are up +10 bps at 50.7 euro cents. That all means our TWI-5 starts today at just on 62.1, down -10 bos from yesterday, down -50 bps from last week.
The bitcoin price starts today at US$79,624 and down -1.7% from yesterday at this time, but up +2.5% from last week at this time. Volatility over the past 24 hours has been moderate at just on +/-2.1%.
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