Here's our summary of key economic events overnight that affect New Zealand, with news as winter gets closer in the northern hemisphere, the energy situation is worrying the supply industry and consumers. American heating oil prices are rising again, approaching their record highs.
The overnight Pulse dairy auction was a positive one with WMP and butter up more than +2% from the prior week's full auction event, and SMP continuing its rise, up +1%. Prices in NZD were up slightly more.
At its meeting in Bangkok, the IMF says 2026 growth is holding up a bit better than expected mainly due to the AI buildout. But 2027 will almost definitely slow they say. The pick the 2026 advanced economy's expansion at +2.1%, and the 2027 one at 1.8%. But they see emerging economies' growth rise from +3.7% ins year to +4.4% next year, and they say neither China nor India will drive that expansion. It will be all due to a recovery in the Middle East because the assumption is that the US war on Iran will be over then.
They see Australia's expansion slowing from +1.9% this year to +1.6% in 2027. The jobless rate is expected to rise to 4.7%. In contrast they see New Zealand's expansion going from +2.0% this year to +2.6% in 2027. But our jobless rate will stay high at 5.1%.
Separately, the latest update of the US labour market was positive, with slightly more jobs reported in the weekly ADP monitoring, almost +25,000. That will suppress any worries Fed voters will have about their jobs mandate and focus everything on their inflation mandate.
Small businesses are finding labour harder to get, at a time their views of future prospects are souring. The September NFIB optimism index slipped again and currently sits lower than in the past three months and lower than last year, but it is still at about its two year average.
US existing home sales stayed at a lowish level and slightly above the level expected. But they remain down -2.2% in September from a year ago. The realtors who release this data are clearly worried that high mortgage rates are setting the scene for a tougher period ahead.
There was another Fed speaker out today. Christopher Waller noted that higher yields are doing some of the Fed's work for it, and that Trump's pressure to its independence isn't succeeding.
In Canada we should probably note that the Canadian province of Alberta will vote on October 20 on a local referendum about ceding from the country and joining the US. But support is reported to be low for the proposal.
Across the Pacific, Japan's producer price index growth slowed slightly in September. They are up +6.8% year-on-year, slowing from August’s pace and the market expectation of +7.6%.
In Australia, the widely watched NAB business confidence survey fell in October although business conditions were little-changed from the prior month. The drop in confidence is still well below long run averages, holding at weak levels.
The latest RBA minutes release confirms they are very focused on upward inflation pressures. They see signs of tech-driven price pressures from the AI boom emerging in Australia. On top of that the Middle East clashes have intensified, and oil prices exceed their forecasts. The increase in global neutral interest rates may weigh on the Australian dollar if domestic rates stay flat, they say. The AUD dipped when these minutes were released.
The UST 10yr yield is down -2 bps at just on 5.22%. The 30 year yield is at 5.56%, down -4 bps. The key 2-10 yield curve is now at +41 bps (-4 bps). Their 1-5 curve is now at +54 bps (-2) but the 3 mth-10yr curve is at +125 bps (up +3 bps). The China 10 year bond rate is unchanged at 1.66%. The Japanese 10 year bond yield is now at 3.02%, up +2 bps from yesterday. The Australian 10 year bond yield starts today at 5.30%, down -4 bps from yesterday. The NZ Government 10 year bond rate is now at 5.01%, and down another -4 bps.
Wall Street is slightly softer with the S&P500 little-changed and the Nasdaq down -0.1% and that is despite some strong profit reports, especially by banks. Overnight, European markets all eased a minor -0.1%. Yesterday, Tokyo ended down -1.8%. Hong Kong was up +0.3% and Shanghai by +0.1%. Singapore ended up +0.3%. The ASX200 closed its Tuesday trade unchanged. But the NZX50 was fell -0.6%.
The price of gold is at US$4154/oz and down -US$10 from yesterday. Silver is down -US$1.50 at just under US$59/oz.
Oil prices have risen +50 USc from yesterday to just over US$94.50/bbl in the US, while the international Brent price is down -50 USc at US$106/bbl. Transiting ships in the Strait of Hormuz are under constant daily attack now and the pace of the attacks isn't slackening. Hormuz transits have stayed very low today with just six ships exiting over the past 24 hours, two tankers escorted (4 dark with transponders off) and 8 entering for new loads but no tankers (2 dark). The Red Sea activity is still in the low 20 vessels although outbound transits are well down at the Yemen chokepoint.
The Kiwi dollar is back up +30 bps from yesterday, back to just on 56.1 USc. Against the Aussie we are up +10 bps at 80.4 AUc. Against the euro we are also up +10 bps at just on 50.2 euro cents. That all means our TWI-5 starts today at just on 59.9 and up +20 bps from yesterday and off its recent lows.
The bitcoin price starts today at US$83,393 and up +1.0% from yesterday. Volatility over the past 24 hours has been modest at just over +/-1.7%.
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