US jobs growth unexpectedly strong; US consumer confidence drops; world PMIs dip; China on holiday; eyes on Hayne; UST 10yr 2.68%; oil up and gold down; NZ$1 = 69 USc; TWI-5 = 72.9

US jobs growth unexpectedly strong; US consumer confidence drops; world PMIs dip; China on holiday; eyes on Hayne; UST 10yr 2.68%; oil up and gold down; NZ$1 = 69 USc; TWI-5 = 72.9

Here's our summary of key events over the weekend that affect New Zealand, with news factory data worldwide seems to be trending down.

But first, American jobs growth surged, with employers hiring +304,000 new workers in January, the most in 11 months. But the number of people in part-time work rose by about +500,000 with an odd strong post-holiday boost in warehouse and delivery jobs. Their very low participation rate edged up fractionally and the larger workforce caused their jobless rate to rise to 4.0%. Still, this was regarded as a very good result by market analysts.

But that data is at odds with another consumer sentiment survey that recorded a sharp drop-off in consumer confidence. The latest level is still positive and not yet in worrying territory, but like other such surveys it indicates American consumers are not as confident as they once were. In fact, these latest readings are the lowest in two years.

Around the world there were a slew of factory PMIs released over the weekend. There were two in the US. The Markit one recorded a flat-lining. The ISM one was slightly more positive, especially for new orders. Both indicate a moderate expansion in the American factory sector is continuing. The one in Canada's factory PMI was a little weaker. On the other hand, Mexico's PMI picked up in January after flirting with a contraction at the end of 2018.

In China, the Caixin factory PMI fell further to 48.3 in January, the deepest contraction since February 2016. The subindex for new orders dipped further as the screws tighten across their manufacturing sector.

China is now on its week-long Spring Festival holiday and there will be little news from there, although the trade talks in Washington continue and both side say they are 'positive'. But analysts remain deeply sceptical that a deal can be secured by March 1, when American tariffs on Chinese goods are set to rise. Insiders see no big breakthrough imminent. However, an extension seems on the cards if the timing gets close - an this is probably the Chinese strategy.

But that has not stopped China messing with the ships bringing coal and iron ore to the country - a strange clearance slowdown is in place, affecting as many as 300 ships, and may be part of signals China is thinking it is sending during the trade talks.

In Europe, their factory sector stalled in January, heading steadily towards contraction, on a path that way since the peak in early 2018. New order levels were the lowest since April 2013.

EU inflation is running at +1.4% in January, slightly lower than the +1.6% rate in December.

And so far in Australia, there has been no leaking of the Hayne Report. It will be officially released after markets close in Australia today, at about 6:15pm NZT. Of course tomorrow the RBA releases its monthly rate review but no change is expected.

Wholesale swap rates are little-changed at the short end but are noticeably lower for longer durations. Our 2-10 curve is down to just +59 bps and the flattest we have seen it since October 2016. The UST 10yr yield has settled to be just on 2.68% but still a -7 bps fall for the week. Their 2-10 curve is at +18 bps. The Australian Govt. 10yr yield is at 2.25% and a +3 bps weekly gain. The China Govt. 10yr yield is little-changed at 3.15%, while the New Zealand Govt. 10yr yield is at 2.23% and a -12 bps dive for the week.

Gold has drifted lower over the weekend from Friday to US$1,317/oz. but that is a +US$10 gain for the week.

US oil prices have moved higher are now just over US$55/bbl while the Brent benchmark is just under US$63/bbl. Both are gains of about +US$1/bbl.

The Kiwi dollar will open today at 69 USc. On the cross rates we are at 95.1 AUc, and at 60.2 euro cents. That pushes the TWI-5 up to 72.9.

Bitcoin has changed very little over the weekend, holding at US$3,425 but that is a -3.5% decline in the past seven days. This 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 ».

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8 Comments

Thankfully our banks , insurers ,mortgage brokers and agents are all different to our cousins.( at least our agents are different ) Otherwise the median Auckland property price would be lower than Sydney or the NZ median lower than the Aussie median .

"no leaking of the Hayne Report."
There doesn't have to be, that's the risk of keeping potentially affected markets open.
If MegaBank decides to hit the market with a big trade, others will notice and wonder "Do they know something?" and either get on board or take precautions. It's the uncertainty factor that's the problem. Who is going to take the chance that Megabank with all their paid for information, doesn't know? Much better to halt trading in any sensitive stock, or even better, release the report on Day 1 not after 3 days of hibernation!

Looks like the US is winning the trade war, no surprise there when they have such a strong position. I just wish Drumpf was making China great again instead of trying to Make America Great Again.

Is it really a trade war or is it a war dance? I say the latter and for that reason see it as ongoing.

US stops buying and China stops selling. Sounds like no victory for US consumers or Chinese workers.

Will Barfoots January sales hit a record for the century

"Commonwealth Bank's financial planning arm has been banned from charging fees for ongoing services just hours before the release of the banking royal commission's final report."

"Australia’s big banks have launched a public mea culpa ahead of the release of the long-anticipated, likely scarifying, findings of the banking royal commission, acknowledging they have failed their customers"

Cracks?

bw.

More cracks than the Opal Tower!