US data reinforces diverging economic drivers; Chinese sentiment low; Beijing rushes out large-scale monetary support; airlines taxed much harder by card processors; UST 10yr at 4.99%; gold firm but oil eases; NZ$1 = 56.9 USc; TWI-5 = 60.7

Here's our summary of key economic events overnight that affect New Zealand, with news economic issues are coming to a head in both the US and China.

But first up today, there was a Pulse dairy auction overnight which basically recorded lower prices for both SMP and the butter fats, down about -1% in both USD and NZD terms. But the WMP product bucked that trend, up +1% for both.

In the US, the weekly ADP jobs monitoring saw the expansion fall back again last week to under +17,000 new jobs nationwide in private payrolls, the lowest gain since mid August.

US durable goods orders for September were up a very strong +10.0% from a year ago. Non-defence, non-aircraft capital goods orders were up +13.7% on the same basis. The AI buildout is clearly a significant part of this because "computers & electronic products" were up +16.3% within these rises.

However, sales of new single family homes were down -0.6% in September from August, down -5.3% from a year ago.

Surprising analysts, the Conference Board's October survey of consumer sentiment was suddenly very positive, up very sharply when a solid fall was anticipated. The said the turnaround was driven primarily by improved perceptions of current and expected business conditions.

That turnaround was not obvious in the October factory survey in the Richmond Fed's district which is now at its lowest level since February. They report new orders fell and the employment index fell as well.

And we should note that Boeing shares have fallen sharply today as they scale back their delivery targets. They are down almost -10% so far today, down a quarter over the past year. It is another example to the widening gulf between the AI economy and the core industrial base of the US.

In Texas, their services sector did bounce back in October from a weak September and that was better than the expected extended weakness.

In Taiwan, after an unusually positive result in September, their consumer sentiment slipped back but only to the good levels it has been at since May 2025.

Interestingly, there are no local consumer sentiment surveys out for China. Obviously surveyors are concerned about reporting unflattering results. But the OECD has been running a very long-running one in China beginning in 1990 but the last data point is July 2026. That reveals the post pandemic doldrums have never been shaken  over the past three years.

Bolstering sentiment is now a sudden priority in Beijing. Overnight their central bank inject more than ¥1 tln in reverse repo funding into their banking system, a record new injection. And that has the effect of driving down Chinese government bond yields to their own record lows.

And the state-owned investment businesses used to underpin demand in Chinese financial markets looks to be wobbling, no longer as effective as it was once thought to be. If it does fail, it will be a serious undermining of their economy.

Maybe one reason for the sudden action is that 2026 car sales are now forecast to fall -22% in China, to be even below pandemic levels.

Separately, China is reporting that industrial profits rose +14.4% in September from the same month a year ago. That is a very sharp rise from the +4.2% gain in August from a year ago which eased sharply from an +11.2% rise in July. But you suspect Beijing is worried this 'recovery' won't be repeated.

In Brazil, the Bolsonaro party has acknowledged their loss in the election and won't challenge it. But their candidate has fled to the US, although the reason isn't clear. Meanwhile Israel is voting in their elections. The turnout there is reported to be very high.

The grip Visa and Mastercard have on business payments has been highlighted by the global airline industry. They say in 2025 they paid the various payment systems a massive US$20.7 bln in fees to process passenger ticketing transactions. a +10% increase in just two years. The average "Visa tax" was said to be 1.97% of each transaction. Of course, the companies organised themselves to essentially pay no income tax on this extraction, making no contribution to the societies they operate in.

The UST 10yr yield is up +1 bp from yesterday at 4.99%. The 30 year yield is at 5.31%, also up +1 bp from yesterday. The key 2-10 yield curve is now at +26 bps (-1 bp). Their 1-5 curve is now at +37 bps (unchanged) and the 3 mth-10yr curve is at +98 bps (+2 bps). The China 10 year bond rate is down a sharp +5 bps at under 1.58% which we make a record low. The Japanese 10 year bond yield is up +2 bps at 2.81%. The Australian 10 year bond yield starts today at 5.17%, down -1 bp. The NZ Government 10 year bond rate is now at 5.00% and up +3 bps.

Wall Street is firmer today with the S&P500 up +0.6%. The Nasdaq is up +1.1%. Overnight, European markets were mixed between London's -0.8% and Frankfurt's +0.8%. Yesterday Tokyo closed up +1.7%. Hong Kong fell -0.7% while Shanghai was down -1.3%. Singapore ended down -0.3%. In Brazil, markets are marginally lower but the prior day's rout seems over and overdone. The ASX200 ended its Tuesday session up +0.5%. But the NZX50 was closed down -0.4%.

The price of gold is up +US$38 at US$4060/oz. Silver is just over US$54.50/oz and up +50 USc from yesterday.

Oil prices have dropped -US$3 from yesterday to just over US$100/bbl in the US, while the international Brent price is down -US$3.50 at just over US$113.50/bbl. Hormuz transits have jumped today to get out ahead of expected extra hostilities with 13 ships exiting over the past 24 hours, 5 tankers escorted (3 dark with transponders off) and 5 entering for new loads, no tankers (1 dark). The Red Sea activity features a similar rise in outbound traffic at the Yemen chokepoint.

The Kiwi dollar is up +10 bps from yesterday at just on 56.9 USc. Against the Aussie we are down -10 bps at 80.9 AUc. Against the euro we are up +30 bps at 51.1 euro cents. That all means our TWI-5 starts today at just under 60.7 and up +10 bps from yesterday.

The bitcoin price starts today at US$80,547 and up +0.7% from yesterday at this time. Volatility over the past 24 hours has remained low at +/-0.7%.

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