Kia ora,

Welcome to Friday’s Economy Watch where we follow the economic events and trends that affect Aotearoa/New Zealand.

I'm David Chaston and this is the international edition from Interest.co.nz.

And today we lead with news the US Treasury’s debt issuance plan eased investors’ fears of a looming deluge of long-term government debt that had triggered a bond market rout and bond markets have rallied very sharply.

But first in the US initial jobless claims rose last week by a mere +2800 last week to 197,000 and there are now 1.58 mln people on these programs. But after seasonal adjustment the rises were magnified as reported elsewhere and stated to be the highest since April and an indication their labour market is turning (even if that is not what the actual data shows yet).

Meanwhile, American factory orders rose a sharp +2.8% in September from August, the most since January 2021. (Year-on-year they are up +2.2%.) Durable goods orders were up a remarkable +4.7% as orders for aircraft roared back, up +65% from a year ago.

October vehicle sales were expected to dip slightly from September, to an annual rate of 15.3 mln from 15.7 mln. But the actual dip was a lesser 15.5 mln annual rate. This is very much higher than the year-ago levels of about 14.5 mln rate.

In American factories making all this stuff, labour productivity surged in the September quarter, up a remarkable +4.7%.

In New York, authorities there have prevailed in a case that held ride sharing companies like Uber have "systematically cheated" New York drivers out of pay and benefits. They are making huge restitution.

In Toronto, the gloss is coming off their housing market and sales volumes are falling. October brought the third straight monthly drop and the fastest pace of decline in 15 months. In Vancouver, things are steady.

In Japan, their government has approved a program of tax cuts and other measures to help households battle inflation's pressures. The overall package is worth about NZ$190 bln.

Singapore's factory PMI expanded more in October than September, a second consecutive expansion and a fifth straight rise.

In Norway, their central bank kept its policy rate unchanged at 4.25%, but signaled that a hike is likely before the end of the year, because they are not on top of inflation yet.

Meanwhile the Bank of England kept is key policy rate at a 15-year high of 5.25% for a second consecutive meeting, in line with market forecasts. They are grappling with persistently high inflation and signs of an economic slowdown. Three of nine policymakers actually voted for a rate hike, but that is less than the four at their prior review.

In Germany, their unemployment rate is holding. The number jobless fell by -20,000 in October from September (when a +15,000 rise was expected) and there are now just over 2.6 mln people without jobs there, an unchanged 5.7% rate. But the rise is up +165,000 from a year ago.

In Australia, Westpac’s new business banking boss says the fate of many struggling small firms will hinge on the December-January period. Might be so here too. The the new Westpac Australia chief economist, ex the RBA, says her old employer may be forced into more than one more rate rise because inflation isn't tamed there yet. That won't help those SMEs either.

Australia's merchandise trade surplus fell to a 30-month low of +AU$6.8 bln in September from an upwardly revised AU$10.2 bln in August. The September result was well below market forecasts of an AU$9.4 bln surplus as exports fell -1.4% while imports surged +7.5% from the prior month.

Housing investor demand (+2.6% from a year ago) is keeping mortgage lending up in Australia, while owner occupiers are borrowing less. Lending for new houses remained at 20 year lows. On the commercial side, construction loans rose, and rather sharply (+55%).

In global container freight markets there was a surprise +5% rise in freight rates last week, driven by very sharp +11% increases on the Chine-Los Angeles route. Meanwhile, bulk cargo rates continued last week's retreat.

The UST 10yr yield is down a sharpish -14 bps from this time yesterday, now at 4.67% as bond markets rally after the US Treasury’s debt issuance plan. It has had a global flow-through. 

The price of gold will start today at US$1982/oz and up +US$6/oz from this time yesterday.

Oil prices have held at risen +50 USc to US$82/bbl in the US. The international Brent price is now at US$86.50/bbl.

The Kiwi dollar starts today at 58.8 USc and up +½c from yesterday. Against the Aussie we are firmish at 91.7 AUc. Against the euro we are marginally firmer at 55.4 euro cents. That all means our TWI-5 starts today +30 bps higher at just under at 68.7.

The bitcoin price starts today at US$34,604 and +0.4% higher than this time yesterday. Volatility over the past 24 hours has been moderate at just on +/- 2.3%.

You can find links to the articles mentioned today in our show notes.

You can get more news affecting the economy in New Zealand from interest.co.nz.

Kia ora. I'm David Chaston. And we will do this again on Monday.