Here’s our summary of the weekend’s key economic events affecting New Zealand, with the news that while it may be a pivotal week when it comes to the US election, we remain at l deviation from this event. There are many other places to get the orientation that’s right for you.

The highlight in the coming week will be the Fed’s rate decision on Friday morning. Analysts expect a drop of -25 basis points to 4.75%. They will not be the only central bank to review interest rates this week. We will also receive them from Norway, Brazil, Poland and the UK, as well as of course Australia tomorrow, where analysts expect no change at 4.35%.

In the US, there will be strong factory orders data, more services PMI results and more sentiment surveys. German data is also forthcoming. And in China, they will release the results of CPI, PPI, trade data and services PMI this week.

But the big news of the weekend was the underperformance in the American labor market. The US economy added only +12,000 jobs in October on a seasonally adjusted basis, well below the slightly downwardly revised +223,000 in September and forecasts of +113,000. On this basis, it is of the weakest employment growth since December 2020, and it is this which sets the tone.

The “reasons” for this low result would be a combination of the effects of the hurricane (there were two) and the ongoing Boeing strike.

Regular readers will know that we also look at actual data, in addition to seasonally adjusted data. Somewhat surprisingly, this figure increased by 826,000 to 160 million people on corporate payrolls, the highest on record. And this represents a gain for the year of +2.1 million jobs. (Seasonally adjusted data shows essentially the same thing on an annual basis.)

The broader household measure (which includes unincorporated self-employed workers) continued to report large shifts from self-employment to corporate payrolls. So the overall year-over-year job gain is not as large, just below +300,000.

Average weekly earnings rose +4.0% in the year to October, the best since March and much better than current inflation. Over the past four years, the average weekly wage has increased by +4.5%; over the previous four it was +2.7%.

Market reactions to the low overall employment figure suggest it views it as an outlier. Fears were under control and expectations that the Fed might finally cut interest rates at its meeting next week appeared to be gaining strength.

The much-watched American ISM Manufacturing Index Unexpectedly, it fell in October compared to September and was lower than expected. This survey highlighted a new contraction in the manufacturing sector and the worst since July 2023. On the other hand, the global benchmark economy S&P/Markit version reported an improvement, although she too still records a contraction, a little less. Some people do well, but a few find it difficult. (It’s just normal human psychology to focus on those who do things hard and ignore those who don’t.)

North in Canadathere was an expansion of the factory. An increase in new orders propelled their results to their highest level in 20 months.

In China, the PMI index of the Caixin factory became slightly positive, roughly confirming the Official factory PMI it was released earlier.

In Australia, CoreLogic Reports that Sydney has now followed Melbourne in recording a monthly decline in house prices. Nationally, prices rose slightly due to continued increases in Brisbane, Adelaide and Perth. But the pace is slowing down everywhere now. The limits of financial accessibility seem to have been reached.

During this time there has been virtually no growth real estate loan activity in September compared to August, and for investors, these levels have fallen. Both recent trends have been weaker than expected, particularly for first-time homebuyers.

The international benchmark Australian factory PMI index reported that the contraction in the manufacturing sector eased in October, but still remains in a deep contraction.

The US 10-year yield now sits at just 4.39%, up +2 basis points from Saturday, up +14 basis points from last week. The key 2-10 yield curve is now +17 bps positive. Their 1-5 curve inversion is also now much less inverted, now only -7 bps. And their 3 month-10 year curve inversion is also much less inverted, now at -26 bps. The Australian 10-year bond yield starts today at 4.56% and remains unchanged. The Chinese 10-year bond rate is also unchanged at 2.13%. The 10-year New Zealand Government bond yield still sits at just 4.49% and up +4 basis points for the week.

Note that Warren Buffett’s Berkshire Hathaway reported its third-quarter results over the weekend, and this included that its “cash” reserve had risen to US$320 billion/NZ$538 billion (page 2) – most of which was made up of short-term US Treasury bills. It has inflated because Buffett is selling stock positions, including in Apple. (Interesting fact for us: New Zealand’s nominal GDP is “only” NZ$413 billion.)

The price of gold will start today at US$2,736/oz and down -US$1 from Saturday and still well below its high, and -US$9 lower than a week ago.

Oil prices remain at US$69.50/barrel in the United States, while the international Brent price remains at US$73.50/barrel. These levels are approximately -US$2.50 lower than a week ago.

The Kiwi dollar starts today at 59.6 USc and is down -10 basis points from this time on Saturday. A week ago, it was at 59.8 USc, so little changed. Against the Aussie, we are unchanged at 90.9 AUc. Compared to the euro, we are down -10 basis points at 55 euro cents. All of this means our TWI-5 starts today at just 68.7, unchanged from this time Saturday and unchanged from this time last week.

Bitcoin price starts today at US$68,139, down 2.3% from this time on Saturday. A week ago, it stood at $66,267. Volatility over the past 24 hours has been modest, at just +/- 1.6%.

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