Good morning, wherever you are. Here's our summary of key economic events overnight that affect New Zealand, with news the air is going out of the American jobs market.
American payrolls grew in December by +145,000 and that was considerably below expectations of a +160,000 gain. They were lucky it wasn't worse. The results for the previous two months were revised down. That caps a year where private sector employment rose by +1.9 mln people (or +1.5%), and far less than the +2.6 mln rise in 2018. In December, factory sector jobs actually shrank by -12,000 jobs and over the whole year grew by less than +0.4%. More analysts are saying the American goods producing sector is now in recession. If it wasn't for a curious +39,000 spike by the retail rag trade over the holiday period, the overall result would have been much worse. And going forward, Boeing's increasing woes won't help either.
Average weekly earnings rose less than +2.3% in December from a year ago and that is a sharp slowing from the +2.8% rise in November. (For factory pay, the gain was just +1.6%.) In fact, you have to go back almost three years to find a slower wage gain. It is unsure what the Federal Reserve will make of today's jobs report.
In Canada, the jobs market was a lot better in December. They added +35,000 jobs and all of them full-time. Their jobless rate reduced. Average weekly earnings rose +3.7% although that was slightly lower than expected and lower than the +4.5% rise in November.
Back in the US, the Federal Reserve paid to the US Treasury US$55 bln in dividends in 2019, down from US$65 bln in 2018 and a ten year low. It's not as profitable being a central bank as it once was.
Australian retail sales came in better than expected for November, according to official data. They were up +3.2% year on year and that is the best rise since April 2019. Apparently Australians took to the Black Friday event more enthusiastically than excepted. Now the question will be, was this at the expense of the traditional Christmas season? In November, Queensland, Tasmania and the ACT all starred, Western Australia was average, Victoria and South Australia were below average, and NSW was weak. Bush fires are unlikely to help December and January in NSW or Victoria.
Those bush fire threats are rising. Firefighters are bracing for the creation of a mega blaze as horrific conditions were expected to see several bush fires merge in NSW and Victoria overnight. Sydney water storage is still falling fast. They are even lower for Newcastle.
International air travel rose +3.1% in November with the Asia/Pacific region rising +3.9%. These rates are similar to the growth recorded in previous recent months. Of special concern in January however will be travel in China during the major Golden Week holiday. It has the chance to rapidly spread a new deadly pneumonia virus discovered in central China - a kind of SARS II.
Equity markets are finishing the week in a generally timid fashion although there are already some outliers. So far for 2020 the S&P500 is up +0.5%. The German DAX is up +0.7% while the Paris CAC40 is flat. The London FTSE100 is down -0.2%. In Asia, the Nikkei225 is a standout, up +2.8%, the Hong Hong market is up +0.3%, while the Shanghai index is up +0.2%. Locally, the ASX200 is up a surprising +3.6% while the NZX Capital Index is down -0.4% since the start of the year.
The UST 10yr yield is down -4 bps overnight at just on 1.83%. Their 2-10 curve has tightened up, now at +25 bps. Their 1-5 curve is flatter at just +10 bps. And their 3m-10yr curve is moved the most, much narrower at +30 bps. The Aussie Govt 10yr is down -4 bps overnight at 1.23% but very similar to where it was a week ago. The China Govt 10yr is down -5 bps from this time last week at 3.14% with an unusual -4 bps overnight fall. And the NZ Govt 10 yr is unchanged overnight but -10 bps lower for the week at 1.49%.
Gold is higher today, up +US$9 from yesterday, now at US$1,558/oz.
The Fear & Greed index we follow is still hard over on the 'extreme greed' side. Volatility is low, with the VIX now at just over 12. The average for the past year has been 15.
US oil prices have fallen further today now just over US$59/bbl and the Brent benchmark is down too at just over US$65/bbl. The US rig count fell sharply this week, its biggest fall in three months and it is now approaching a three year low.
The Kiwi dollar is back up overnight but not quite to the same level as this time last week. It is now at 66.4 USc. On the cross rates we are at 96.1 AUc. Against the euro we are at 59.7 euro cents. That puts our TWI-5 at 71.5 and the same level it was this time last week.
Bitcoin is up +1.4% from where we left it yesterday and it is up +8% from this time last week. The bitcoin rate is charted in the exchange rate set below.
The easiest place to stay up with event risk today is by following our Economic Calendar here ».