Draghi hints at easing; US jobs data solid; AU jobs data very good; China in big spendup; UST 10yr yield 2.34%; oil falls on excess supply; NZ$1 = 65.3 US¢, TWI-5 = 70.9

Draghi hints at easing; US jobs data solid; AU jobs data very good; China in big spendup; UST 10yr yield 2.34%; oil falls on excess supply; NZ$1 = 65.3 US¢, TWI-5 = 70.9

Here's my summary of the key events overnight that affect New Zealand, with news China is spending up large.

But first, a signal from ECB president Mario Draghi that further policy easing is coming on December 4, pushed the euro and government bond yields lower overnight but failed to lift stocks, which have wobbled from some gloomy corporate and oil commodity news.

Across the Atlantic, US jobs data out overnight maintained the positive outlook. The Job Openings and Labor Turnover survey (JOLTS) shows healthy levels, while the weekly jobless claims data is still running at low levels.

There is now near-unanimous agreement among private forecasters that the Fed will begin raising short-term interest rates next month after holding them near zero for seven years.

Australian unemployment fell to a surprising five-month low of 5.9% in October from 6.2%, sparking scepticism over whether the improvement would last. The job gains there were sudden and almost too good to be true. But the scepticism did not extend to the currency markets who have bid the Aussie higher, buoyed also by rising consumer confidence.

In China, it is becoming clearer that the government there has significantly boosted spending in an attempt to push back at their economic weakness. Fiscal expenditures rose +36% in October from a year ago. This week's record Singles Day trading will no doubt also help.

In New York, the UST 10yr yield benchmark gave up another fraction of gains it made earlier in the week, now at 2.32%.

The US benchmark oil price has slipped lower again today, now under US$42/barrel, while the Brent benchmark is at US$44/barrel. Surplus oil inventories are at their highest level in at least a decade because of increased global production, according to OPEC. They see growing demand, but supply is far outstripping requirements. Low oil prices will be here for some considerable time, it seems.

The gold price is unchanged however at US$1,087/oz.

The New Zealand dollar joined in the slippage and is down with other commodity currencies. It is now at 65.3 US¢, a lot lower against the Aussie at 91.7 AU¢, and a lot lower against the euro as well at 60.5 euro cents. The TWI-5 is now at 70.9, its lowest level in more than a month.

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

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

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In China, it is becoming clearer that the government there has significantly boosted spending in an attempt to push back at their economic weakness. Fiscal expenditures rose +36% in October from a year ago.

The PBOC is apparently active on many fronts.

There isn’t much to advise which is cause and which is effect (as is China’s “regular” wholesale operation the catalyst for instability or merely one of its main and focused victims?) but in the end it may not truly matter. The reprieve of the Golden Week might propose the Asian “dollar” as the nexus of disorder, which would explain quite a bit about conditions in October thereafter but then the date of October 15, being related to that quarter-end repetitive eurodollar case, might suggest otherwise. In either case, the funding strain is once again more obvious and its reach growing. Read more

There is now near-unanimous agreement among private forecasters that the Fed will begin raising short-term interest rates next month after holding them near zero for seven years.

Fed's Fischer Says Waiting to Raise Helped Offset Dollar Harm

Back pedaling already

For all the economic weakness in China they are still opening a Starbucks a day. Someone must be buying the expensive coffee. I trust there is plenty of milk going into that coffee.

http://www.cnbc.com/2015/10/30/schultz-a-new-starbucks-opens-daily-in-ch...