Here's our summary of key events overnight that affect New Zealand, with news all eyes have been on the American labour market overnight.
The US payrolls data reported a gain of +201,000 jobs in August, right on expectations. Impressively, wage data showed a +2.9% year-on-year rise and that is an improvement that wasn't expected. It was the largest rise since 2009. But there are some other signs worth noting. Prior month gains were revised down by a sizable -50,000 jobs. Their participation rate slipped (when most thought it would be rising), and new manufacturing jobs actually fell in August when a big gain was expected.
Actually, that lower participation rate was significant. Because of it, the total civilian workforce in employment actually fell from 156.0 mln to 155.5 mln. The headline 'gain' of +201,000 jobs comes from 'establishment' data surveys. The measurement of labour force employment comes from a separate 'household' data survey. This surveying difference will come out in the wash over time, but it is not necessarily obvious which way yet.
However, on the headline data (and especially the wage gain item), expectations of another Fed rate hike rose. The US dollar rose. Benchmark bond rates rose. But none of this is stopping Wall Street posting a small retreat on the day.
In Canada, the headline jobs report was very negative, showing a loss of -52,000 jobs following two months of strong increases. But it might not be as bad as it first looks - all the losses were of part-time position. Full time employment actually grew by +40,000 jobs. Still, the result was not expected, and they too saw a fall in their participation rate - even if it sits quite a lot higher than the US level. Separately, a central bank official has said that Canada's economy can tolerate more interest rate hikes.
In Mexico, their August inflation rate edged up to +4.9% from +4.8% in July. It seems more official interest rate hikes are on the way there too.
In Europe, the final measure for their Q2 GDP growth was pegged back a little to +2.1%.
China released data on its foreign currency reserves, not more closely watched given the trade war they are in with the United States. Those reserves slipped a little more than expected, but are still comfortably above US$3.1 tln.
And speaking of the trade war, the US President today threatened to impose new tariffs on US$267 bln of Chinese exports to the US. Apparently, these are in addition to the $200 bln that the US is preparing but not yet imposed. So far only $50 bln of tariffs have actually been put in place. Although this latest threat may just be more bluster, it does seem as though chances of a negotiated resolution is fading. It is this news that is keeping Wall Street in lower territory. China may respond with matching 'export rebates'.
In Australia, their unique superannuation industry has been caught with a rort. Funds have been automatically classing customers as smokers, resulting in higher insurance premiums when they upsell life insurance with superannuation membership. About 70% of all life insurance in Australia is sold this way.
The UST 10yr is higher today at 2.94% following the US payroll data. Their 2-10 curve is little changed however at just under +24 bps. The Aussie Govt 10yr is at 2.57% (up +2 bps overnight), the China Govt 10yr is at 3.65% and unchanged, while the NZ Govt 10 yr is at 2.55%, down -1 bp. New Zealand swap rates have edged lower with the 2 year now at 1.97%.
The VIX has moved higher again this week reflecting rising volatility and is currently at 14.8. Both political and economic risks are unsettling markets. The average index level over the past year of 12. The Fear & Greed index has moved back to a neutral position, giving up all its 'greed' positioning of the past month.
Gold is marginally weaker from yesterday and is now just on US$1,196/oz in New York, down -US$2.
US oil prices are unchanged today from yesterday and now just under US$68/bbl. The Brent benchmark is now just under US$77/bbl. The US rig count is unchanged this week.
The Kiwi dollar is ending the week -¾c lower than at this time last week at 65.4 USc, this time as the US dollar rises. On the cross rates we are little changed at 92 AUc, and softer at 56.5 euro cents. That puts the TWI-5 at 69.4 and -60 bps lower over the week.
Bitcoin is now at US$6,424 and -8.8% lower for the week.
The easiest place to stay up with event risk today is by following our Economic Calendar here ».
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