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 that currency markets, bond markets and equity markets all react to unexpectedly 'strong' US data releases overnight, much of it sceptical. In fact we are getting rising risk aversion questioning its believability.

US initial jobless claims came in last week at just over 180,000, and less than expected, and less than seasonal factors would have indicated. There are now 1.728 mln people on these benefits, but still +100,000 more than at the same time last year.

And new orders for manufactured durable goods rose marginally in August from July, following two consecutive monthly decreases. That puts them a good +5.4% higher than year-ago levels. But non-defence, non-aircraft capital goods orders were low in the month, up just +1.6% from a year ago and it seems clear boardrooms are not enthusiastic investors at this point.

This data is far more positive than the regional Fed factory survey are picking up, so we will need to wait before we conclude reshoring is actually happening.

The September factory survey from the Kansas City Fed described only very modest changes in factories in their region. Order backlogs reduced as did new orders for export.

In fact, US exports fell -1.4% in August in updated trade data, while imports fell -5.6%. That narrowed their trade deficit but only to the level it was in June, and not materially different to August a year ago. So it is hard to see much 'progress' here in shrinking this.

But, the final US GDP result for the June quarter came in with a huge revision higher, up +3.8% from a year ago. This was apparently driven by a decrease in imports, and an increase in consumer spending, offset by decreases in investment and exports. There was a one-off revision to the consumer spending data in this release which twisted things somewhat. Again, this data is hard to reconcile with the real-time high-frequency data that we saw in the second quarter, but this is what they are reporting.

If the Fed accepts this GDP data, rate cuts there are likely pushed further away.

Meanwhile, August data on existing home sales dipped in August.

In Canada, they reported average weekly earnings for July and they were up +3.3% to C$1,308 from a year ago, following a +3.6% increase in June.

And staying in Canada, their federal government has instructed Canada Post to end door-to-door postal delivery.

In China, the yuan has appreciated to the highest level in nearly 10 months against the American dollar as concerns over frictions between the world's two largest economies subside and China's economic growth prospects remain steady.

In Taiwan, after four consecutive months of decreases, their reported retail sales that rose in August from a year ago. This data is modest compared to their booming industrial sector as we noted yesterday.

And perhaps we should note that the Swiss central bank left its policy rate unchanged at 0% in an overnight review. Switzerland has inflation running at just +0.2% pa.

Container freight rates fell faster last week, down -8% for the week to be a massive -55% lower than year-ago levels. And it was again outbound rates from China that is driving this retreat. But bulk freight rates actually rose again last week by +2.9% to be +10.5% higher than year-ago levels.

The UST 10yr yield is now at 4.17%, up +2 bps from yesterday at this time.

The price of gold will start today at US$3739/oz, up just +US$6 from yesterday. Silver is on the mover however, up approaching US$45/oz.

American oil prices are little-changed at just under US$65/bbl, with the international Brent price still just over US$69/bbl.

The Kiwi dollar is at just on 57.6 USc and down another -50 bps from yesterday and that is its lowest level since mid-April. Against the Aussie we are down just -10 bps at 88.2 AUc and near a three-year low. Against the euro we are actually unchanged at 49.5 euro cents. That all means our TWI-5 starts today at just over 65.2, and down another -30 bps.

The bitcoin price starts today at US$108,928 and down -4.3% from this time yesterday. Volatility over the past 24 hours has again been moderate at just over +/- 2.3%.

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.