Google miss highlights AI risks; US GDP rise features AI buildout; ECB holds rates, Largarde quits early; airfreight surged in September; UST 10yr at 4.99%; gold and oil ease; NZ$1 = 56.3 USc; TWI-5 = 60

Here's our summary of key economic events overnight that affect New Zealand, with news Google's Q3 profit miss and AI cash burn have revived investor concerns about the whole race for AI dominance and the valuations driving the sector.

And that is so large, it shows up in US national accounts.

First, the US released its early, first estimate of Q3-2026 GDP growth and that shows a very good +3.4% rate, although that is lower than the year-ago level. The major components featured the tech buildout (consumption +2.5%, investment +3.3%, government +0.9%, exports -0.7%, imports -2.6%. The AI buildout contributed 1.2% of that and rising inventories 1.6%. Without those two it would have been rather grim and both apply to only a small slice of American society. The result does not portray what is going on in the economy as a whole, just their tech sector.

The Atlanta Fed's GDP Now monitoring sees Q4 US GDP expanding by +3.2%, so little-change anticipated.

Meanwhile US PCE inflation came in at 3.6%, higher than the elevated 3.4% in Q2. This was hardly a reason for the Fed to defer pushing back against inflation's spread. The best you can say is that inflation is stuck above the Fed's target and has been for all of 2026 and the actions they have taken this year have not been effective in restraining it.

US initial jobless claims came in at 179,000 last week, above what seasonal factors would have indicated despite the new tough qualification criteria. There are now 1.49 mln people on this assistance, -12.8% fewer than year-ago levels. Data for October non-farm payrolls will be released in a week and it is expected to show essentially no expansion.

Across the Pacific, Japanese consumer sentiment stayed positive at the modest level it has been at for most of 2026.

We had earlier noted that EU consumer sentiment weakened in October. Further updates out today show that producer sentiment improved in the month (that is, got less weak), but their services sector weakened.

And as expected, the ECB left its policy rate unchanged at its overnight review. But it did announce that boss Christine Lagarde will end her term early next year, so an interesting campaign for her successor will start soon. Central bank bosses from either Spain or the Netherlands are considered frontrunners to replace her.

Global container freight rates dipped last week but remain at the general high level they have been at since July. That makes them +143% higher than year-ago levels, driven by the higher rates out of China to the US and the EU, in turn due to fuel costs. Bulk cargo rates were largely stable for the week, to now be +36% higher than year-ago levels.

And there was a notable surge in air cargo demand in September, according it IATA data out overnight. This was driven by activity in North America - another rush to beat threatened tariffs - and in the Asia/Pacific region.

The UST 10yr yield is down -5 bps from yesterday at 4.99%. The 30 year yield is at 5.34%, up +2 bps from yesterday. The key 2-10 yield curve is now at +33 bps (up +8 bps). Their 1-5 curve is now at +38 bps (up +1 bp) and the 3 mth-10yr curve is at +102 bps (unchanged). The China 10 year bond rate is down -1 bp at under 1.61%. The Japanese 10 year bond yield is up +1 bp at 2.84%. The Australian 10 year bond yield starts today at 5.18%, down -3 bps. The NZ Government 10 year bond rate is now at 4.90% and down -6 bps.

Wall Street is softer today with the S&P500 down -0.6% and the Nasdaq is down -1.6%. Overnight, European markets were firmer between London's +0.3% and Frankfurt's +1.4%. Yesterday Tokyo closed up +1.1% again. Hong Kong fell -0.6% while Shanghai was down -0.8%. Singapore ended little-changed again. The ASX200 ended its Thursday session up +0.5%. The NZX50 closed up a minor +0.1%.

The price of gold is down -US$17 at US$4018/oz. Silver is just under US$52.50/oz and down another -US$1 from yesterday.

Oil prices have fallen back -US$2 from yesterday to just under US$101.50/bbl in the US, while the international Brent price is also down -US$2 at just on US$114/bbl. Hormuz transits have stayed low today ahead of expected new hostilities with just five ships exiting over the past 24 hours, no tankers escorted (1 dark with transponders off) and 7 entering for new loads, no tankers (1 dark). The Red Sea activity features little-change in low outbound traffic at the Yemen chokepoint.

The Kiwi dollar is up +10 bps from yesterday at just on 56.3 USc. Against the Aussie we are also up +10 bps at 80 AUc. Against the euro we are down -10 bps at 50.4 euro cents. That all means our TWI-5 starts today at just over 60 and little-changed from yesterday.

The bitcoin price starts today at US$81,148 and up just +0.9% from yesterday at this time. Volatility over the past 24 hours has been modest at +/-1.3%.

Unless some major international economic news breaks over the weekend, there will be no weekend version of this update. We will cover the intervening news in our regular Monday review.

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