Breakfast Briefing: Job growth outweighs the costs of inflation

Here’s a summary of the major economic events affecting New Zealand overnight, with news. So far, the sky has not fallen despite the rise in benchmark interest rates.

First, in the United States, the actual number is First time application for unemployment benefits The number of jobs fell last week to just under 175,000, underscoring the continued strength of the U.S. labor market. Admittedly, the seasonally adjusted version has risen slightly, but still, this data has been declining since July, returning to the very low levels of almost a year ago. This may not be “news,” but it’s an impressive performance and means the Fed will have a much harder time fulfilling its anti-inflation mandate even if it is on its way to achieving full employment. .

they too released Today, the third and “final” 2023 Q2 GDP results were released, confirming an annualized increase of +2.1%, down slightly from +2.3% in Q1. (This brought nominal GDP to USD 27.1 trillion, an increase of +5.9% year-on-year, or +USD 1.5 trillion. Of this, inflation accounted for USD 0.9 trillion.) Perhaps in real terms Inflation will expand much faster on an adjusted basis in the third quarter than in the second, perhaps twice as fast. +4.9% growth.

However, one sector in the US, the residential real estate sector, continues to be in a slump. pending home sales Sales in August decreased significantly by -18.7% compared to the previous year, and sales in August decreased significantly compared to July. No asset class is exempt from asset price revaluation. Rising interest rate marketand certainly not housing.

Kansas City Fed September Factory Survey report Slippage occurs across the board, including new orders. But interestingly, it’s not about employment.

In Canada, weekly income Growth is accelerating, increasing by +4.3% year-on-year. His CPI for the same period was +4.0%. The profit growth was the highest since March 2022.

european union Business sentiment September was stable as opposed to reversal consumer psychology level.

On the other hand, Germany released September CPI data While still high at 4.5% overnight, it was lower than expected (4.6%), significantly lower than August (6.1%), and the lowest level since February 2022.

Container transport freight It plunged again last week, dropping -5.1% week over week and 65% below last year’s level. Although transatlantic rates seem to have bottomed out, it is outbound rates from China that still represent the main weakness. bulk freight charges However, it is still rising, almost back to last year’s level and close to its long-term average.

The UST 10-year yield started today at 4.62%, down -2bps from yesterday, but remains essentially at recent highs. The curve in the opposite direction has flattened further. The key 2-10 yield curve has not reversed much from yesterday’s negative 47 basis points. And that his 1-5 curve is now -81 bps and that reversal will also be less. The 3-month to 10-year reversal curve also has a smaller reversal, also at -76 bps. The Australian 10-year bond yield is currently 4.53%, up +7bps since yesterday. Additionally, China’s 10-year bond interest rate fell -2bps to 2.71%. However, the NZ government 10-year bond rate is +6bps higher at 5.31%.

Wall Street was trading higher Thursday, with the S&P 500 up +0.7% today. European markets were little changed overnight, with the exception of London, which all rose by similar amounts. Yesterday, Tokyo ended at -1.5%, Hong Kong at -1.4%, while Shanghai rose slightly by +0.1%. The ASX200 ended Thursday’s trading down -0.1%, while the NZX50 fell sharply in the second half, falling to -1.2%. The squaring of the portfolio at the end of the quarter will affect today’s trading.

gold price Today started at exactly USD 1,863 per ounce, down another -12 USD from yesterday. This is the lowest since February 2023, all due to a sharp rise in yields.Gold prices in China rose faster than most other world markets, but not overnight. depressed The insurance premiums will be lowered and most of the accumulated premiums will be written off.

After rising to US$95 per barrel overnight, oil prices are trending lower today, at just under US$91.50/barrel in the US, -US$1.50 lower than this time yesterday. The international price for Brent is just under US$93.50 per barrel. The long-term trend remains strong, but the much-talked about jump to $100 is not happening today.

The Kiwi dollar started today at USD 59.7, up +1/2 USD from this point yesterday. However, against Australia, it is down almost -1/4c to 92.9AUc. Against the euro, it was almost unchanged at 56.5 euro cents. So his TWI-5 today starts at 69.6 at +20 bps.

Bitcoin price has risen sharply since yesterday and is currently at USD 27,191, +3.7% higher than at the time. Volatility over the past 24 hours was moderate at just under +/-2.3%.

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