Here's my summary of the key events over the weekend that affect New Zealand, with news of surprisingly strong labour markets in the US.
American payrolls rose strongly in December and the job counts for both October and November were revised higher as well. Almost 300,000 new jobs were added in December, significantly above expectations. The US economy seems to be on solid ground despite a troubling Chinese situation.
And despite low wage growth of +2.5% year-on-year, given inflation is very low as well, real wages are rising.
Adding to the positive news, stocks in American businesses are falling. While that may show up in restrained GDP growth data, it also shows that excess inventory stress is not building. In fact, these results drew one Fed member to say that if growth picks up, the pace of rate hikes will need to as well.
While we were on vacation, the US SEC issued a staff report on how the credit ratings agencies are performing. They were not overly impressed, documenting evidence of serious conflicts. Hard to be convinced the major credit ratings agencies are any better than they were before the GFC. Certainly the staff at the SEC aren't, although they do say they are "improving".
This is important because the better jobs report and rising American consumer confidence is encouraging their households to borrow more. The incentives are there to grease the system.
In China, inflation is rising. In December, consumer prices rose at the rate of +1.6%, the second highest pace in 2015. However, producer prices are still falling. Neither data was different to market expectations.
Although it is 'opinion' more than 'news', it has been interesting to watch seasoned observers wonder whether President Xi is losing his grip on events. No doubt Central Committee members will be wondering too.
Back in New York, the UST 10yr yield benchmark has continued its fall and is now at 2.12%. Local swap rates have softened as well, but do not yet reflect the full Wall Street shift down.
And crude oil just gets cheaper and cheaper. The oil price has fallen yet again and is now just over US$33/barrel. That's now a 12 year low. In the past week or so, the US rig count has dropped sharply, down -5%.
And the gold price has inched back down on the good US jobs data and is now at US$1,102/oz. The recent run-up does not look like it can be sustained.
The New Zealand dollar fell sharply against the greenback following the good US data, now at 65.4 US¢, but held its own against the Aussie, now at 94.1 AU¢, and it fell against the euro too, now at 59.9 euro cents. So these changes mean the TWI-5 is now at 70.9 and back to where it was in nearly November.
If you want to catch up with all the local changes on Friday, 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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