Mixed US data but bond costs jump; Taiwan export orders star again; EU sentiment dips; RBA softens up markets for another rise; UST 10yr at 4.97%; gold holds but oil eases; NZ$1 = 57.2 USc; TWI-5 = 60.7

Here's our summary of key economic events overnight that affect New Zealand, with news inflation's pressures are building everywhere, even if oil prices took a small dip today.

But first, overnight there was a Pulse dairy auction where prices dipped marginally in USD except for SMP, but were all higher in NZD, although this too was only marginal.

In the US, the ADP weekly jobs data rose to an average of a +20,000 jobs gain per week over the past four weeks. That recovers it back to late June levels.

Meanwhile the Richmond Fed factory survey was expected to rise marginally in September, but it fell and its first retreat in six months. This was essentially driven by retreating new order levels and order backlogs shrank as well. Input and output costs both rose however and at a faster pace in both cases.

There were a few Fed speakers out overnight. New York Fed boss Williams defended how they have been handling monetary policy, although he didn't give any guidance on what is coming next. Vice Chair Jefferson also avoided guidance comments although he has been on record recently of supporting their rate hikes. But Richmond Fed boss Barkin did address the recent rising trend and what comes next. More hikes are possible, he said.

There was a giant US Treasury two year bond auction overnight and this one did not display the sagging demand of the other recent events. However, it came with much higher yields. This lates one delivered a median yield of 4.74% (high 4.79%), up notably from the 4.16% at the prior equivalent event a month ago. This is a meaningful rise given the 2 year Note has the largest supply of any maturity they offer - US$79 bln. Just for this bond, that has the US Treasury paying +14% more in interest pa than just a month ago. Debt servicing is becoming an ugly problem, and fast.

Just when you might have thought Taiwanese export orders couldn't grow much faster, they did in August. They exceeded US$100 bln in the month for the first time, up a staggering +71% from a year ago (which itself was rising and close to a record at the time). In local currency, they were up +82%.

After improving since April (that is, getting less negative) EU consumer sentiment hit a setback in September, one that was not expected. Winter is approaching there and with the energy supply issues unresolved there, perhaps it is understandable that concerns are rising again.

In Australia, RBA governor Bullock suggested that their labour market is too tight and that is putting upward pressure on inflation. This suggests they will continue raising their benchmark rate until they see the jobless rate rise and labour-cost pressures ease. She is on a track that will create difficult politics. Not helping is the rise and rise of petrol prices, now approaching their pandemic highs again. An RBA rate rise is now almost a certainty next week, taking it to 4.6%. 

The UST 10yr yield is now just on 4.97%, up +1 bp from yesterday. The 30 year yield is at 5.29%, down -2 bps. The key 2-10 yield curve is now at +21 bps (down -1 bp). Their 1-5 curve is now at +44 bps (up +1 bp) and the 3 mth-10yr curve is at +109 bps (unchanged). The China 10 year bond rate is down -1 bp at 1.67%. The Japanese 10 year bond yield is now at 2.98%, unchanged. The Australian 10 year bond yield starts today at 5.27%, also unchanged. The NZ Government 10 year bond rate is now at 4.98%, unchanged as well.

Wall Street is level-pegging today with the S&P500 up less than +0.1%, and the Nasdaq is up +0.5%. Overnight European markets were mixed between London's -0.3% and Paris's +0.2%. Tokyo was on holiday and is so again today. Hong Kong ended its Tuesday up +0.2% while Shanghai was up +0.1%. Singapore rose +0.9%. The ASX200 ended its Tuesday session up +0.3%. The NZX50 rose +0.4%.

The price of gold is at US$4352/oz, and up a minor +US$7 from yesterday. Silver is at just over US$66.50/oz and up +50 USc.

Oil prices have fallen another -US$4.50 to at just on US$91/bbl in the US, while the international Brent price is down -50 USc to US$99.50/bbl. Hormuz transits are back at a standstill today with just three ships exiting over the past 24 hours, one tankers escorted (2 dark with transponders off) and one entering for new loads (0 dark). The Red Sea activity is noticeably lower too in both directions at the Yemen chokepoint.

The Kiwi dollar is unchanged from yesterday, still at 57.2 USc. Against the Aussie we are up +20 bps at 80.5 AUc. Against the euro we are up +10 bps at just over 50 euro cents. That all means our TWI-5 starts today at just over 60.7 and little-changed.

The bitcoin price starts today at US$86461 and up +0.8% from yesterday. Volatility over the past 24 hours has been low at just over +/-0.6%.

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