US election reactions positive; US data mixed with trade data showing tariffs are failing other than raising costs; Canada trade surplus rises; EU inflation up; turmoil in Indonesia; UST 10yr at 4.91%; gold rises and oil falls; NZ$1 = 56.2 USc; TWI-5 = 59

Here's our summary of key economic events overnight that affect New Zealand, with news of a notable relief rally in American financial markets after their decisive election results. Big money injections by billionaires failed spectacularly.  If it results in a fairer, broader dispersion of wealth then the consumer engine that drives the US economy will pick up and business opportunities will improve. 

So we are seeing equity markets rise today. Benchmark bond yields are dipping. The US dollar has had the top taken off it.

Meanwhile, US mortgage applications fell again last week, even though refinance activity rose on a small dip in benchmark mortgage interest rates. New purchase activity was weak again, continuing the decline that started in April.

However the US ADP jobs report for October showed modest new hiring levels (+86,000), similar to September (+,86,000) and better than was expected (+69,000). For a labour market as large as the US however (163 mln) these are tiny, even insignificant levels. We will get the October non-farm payrolls report on Saturday and analysts expect this to rise +65,000.

US exports in September held at the good levels they have been at since March, and imports rose marginally. That means that their trade deficit stayed unusually high at -US$105 bln for the month and little-changed from August. If it wasn't for the exports of aircraft and AI equipment, things would have been much worse. Imports of AI components and especially of fuels were the big categories that moved up.

The US ISM services PMI was relatively stable at a good expansion in October even if it did dip slightly. Of note however is that new order levels fell rather more than was expected and price rises stayed very elevated and not showing any moderation. The alternate S&P Global version of their services PMI was slightly more upbeat.

US crude oil stocks were expected to rise last week after the prior weeks chunky fall. But in fact they fell again, not by a lot, but the retreat is unwelcome. Their strategic reserves dipped slightly too.

Meanwhile in Canada, their exports (driven by oil and gold) came in a bit softer than expected in September but their imports fell noticeably on less car-buying. That resulted in a larger trade surplus for them than was anticipated, and much larger than in August. Their exports and trade surplus with the US both rose

In China, the private S&P Global (RD) services PMI expanded modestly in October, a better result that the official version that reported a small contraction. They say job creation accelerated in the month with output charges declining again despite rising cost inflation.

In India their services PMI shows activity growth that ticked higher to a good level, and cost pressures receding to lowest in over six years.

In the EU, they reported 4.0% inflation in October, as widely expected, and up from 3.8% in September. Fuel costs are getting the blame. Excluding energy, the rise was 2.3% and no-change for from September. ("Core" inflation is 2.5%, also no change.) The headline range is from 2.8% in Germany to 6.1% in Lithuania.

In Indonesia, a wiretapping scandal by insiders on their President has seen troops put on alert and generals sacked. An unstable Indonesia poses big risks for Australia.

The UST 10yr yield is down -4 bps from yesterday at 4.91%. The 30 year yield is at 5.29%, down -3 bps from yesterday. The key 2-10 yield curve is now at +31 bps (down -2 bps). Their 1-5 curve is now also at +31 bps (-4 bps) and the 3 mth-10yr curve is at +97 bps (-3 bps). The China 10 year bond rate is little-changed at under 1.61%. The Japanese 10 year bond yield is up +3 bps at 2.81%. The Australian 10 year bond yield starts today at 5.03%, down -7 bps. The NZ Government 10 year bond rate is now at 4.84% and down -8 bps.

Wall Street is in a solid post-election relief rally with the S&P500 up +1.8% and the Nasdaq up +2.0%. Overnight, European markets were up with Frankfurt up +2.4% and London +1.8%. Tokyo closed yesterday with a -1.4% fall. Hong Kong rose +1.7% and Shanghai recovered +2.2%. Singapore ended little-changed. The ASX200 fell -0.6% in its Wednesday trade. The NZX50 rose +0.5%.

The price of gold is up +US$136 at US$4064/oz. Silver is now  just over US$52/oz and up +US$2.50 from yesterday.

Oil prices have fallen -US$6.50 today, to just over US$89.50/bbl in the US, while the international Brent price is down -US$8 at just on US$95.50/bbl. Hormuz transits have gone even lower today ahead of expected new hostilities with just two ships exiting over the past 24 hours, one tanker escorted (1 dark with transponders off) and one entering for new loads, no tankers (0 dark). The Red Sea activity features much lower inbound traffic, higher outbound traffic at the Yemen chokepoint.

The Kiwi dollar is up +10 bps from yesterday at just on 56.2 USc. Against the Aussie we are down -40 bps at 80.2 AUc. Against the euro we are little-changed at 50.1 euro cents. That all means our TWI-5 starts today at just on 59.9 and also little-changed from yesterday.

The bitcoin price starts today at US$80,586 and up +3.9% from this time yesterday. Volatility over the past 24 hours has been high at +/-3.3%.

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