US employment grows but construction falls; German bonds yield less than 1%; GDT dairy prices fall sharply; UST 10y 2.43%; NZ$1 = US$0.779, TWI = 76.2

Here's my summary of the key news overnight in 90 seconds at 9 am, including news of another big fall in dairy prices overnight.

But first, America's manufacturing industry expanded in September, though a tad slower than during August, while the ADP employment report suggested the upcoming non-farm payrolls report will show solid employment growth well above +200,000 new jobs in September. Both of these markers were better than expected.

However, construction spending unexpectedly fell in August, hit by weaker private spending outside the housing sector and a pullback in public investments.

In Europe, Germany auctioned 10-year bonds to yield less than 1% for the first time, reflecting Europe’s economic quagmire and the possible steps the European Central Bank will take to engineer a recovery.

France has reneged on further adjustment to its economy, breaking the EU rules it signed up to and it helped to impose on others. French manufacturing's fall eased in September but it is still contracting.

But the big news is local. The overnight auction of dairy commodities saw another -7.3% price slump taking the globaldairytrade index back to levels last seen in May 2012 and equal to what was paid in the 2004-2006 period. Make no mistake, prices are now at an all-time low on inflation-adjusted real terms.

The main falls were for the high-volume wholemilk powder which is down -10% from the last auction. Butter is down -6.6% from the last auction just two weeks ago. Overall volumes sold were up +10%.

The situation is not so dire in NZD terms; the overall fall is -2.4% in local currency from two weeks ago. But this takes us to 2005 price levels, a nine year low even after our recent currency fall. If prices don't start rising by the end of this month the Fonterra payout forecast will not be sustainable.

On Wall Street stocks opened the fourth quarter with sharp declines amid growing jitters about global economic growth.

UST 10 yr yields have fallen today to 2.43% in line with the jittery sentiment.

And the oil price remains low, under US$92/barrel, with the Brent price under US$95/barrel. Gold has had a little bounce to US$1,218/oz.

We start today with our currency unmoved by the dairy auction. It is now just on 77.9 USc, at 89.4 AUc, and the TWI is at 76.2. But remember, while dairy prices might be tanking, prices for many other exports are going the other way - beef especially - and the lower exchange rate is giving those exporters a boost.

If you want to catch up with all the changes yesterday we have an update here.

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