Here’s our summary of key events overnight that affect New Zealand, with news the US jobs growth ADP reported yesterday was not followed up today in the official report.
In the US, their jobs recovery lost some steam in December, with the level of new jobs created coming in at +148,000 and well below market expectations and the lowest December in the past four years. Their retail sector lost more than 20,000 workers. The December unemployment rate was steady at 4.1%. Annual wages growth crept up from +2.4% in November to +2.5% pa. There were revisions in the job growth data for October and November but together they resulted in a small decline. Their participation rate is 62.7%.
Equity markets have pretty much ignored the data with the S&P500 up +0.5% on the day, but the US dollar has retreated and bond prices fell.
The jobs story was better north of the border. Canada’s unemployment rate dropped to a 42 year low in December of 5.7% and job creation exceeded expectations by a wide margin for a second straight month, adding +78,600 jobs in December which nearly matched the previous month’s employment gain of +79,500. This marked the best two-month performance in Canada’s labour market since April 2012. Their participation rate is 65.8%.
In China, their securities regulator has placed a cap on the pay of bond traders. They now say annual salary and bonus from bond trading business for securities brokerage employees should not exceed 1 million yuan (NZ$215,000) and if there is anything above that it needs to be delayed and paid in two years.
The UST 10yr yield is higher at 2.48% today (+3 bps). In China, the equivalent 10yr sovereign bond is yielding 3.94% (unchanged) while the equivalent NZ 10yr sovereign bond is yielding 2.76% (-1 bp). We should also note that the US 2-10 yield curve is now just +50 bps and its lowest in more than a decade.
Further, corporate credit risk indications via CDS spreads are now almost back to their 2007 levels. In fact, Australasian corporate CDS spreads are now at their lowest since 2007 (and probably their lowest ever).
Oil prices are lower by -US$0.50 in the US today with the WTI benchmark now just under US$61.50 a barrel, while the Brent benchmark is just under US$67.50.
Gold is up another +US$3 to US$1,321/oz.
This morning the Kiwi dollar is firmer this morning at just on 71.7 USc, and on the cross rates it is at 91.2 AUc, and against the euro it’s also higher at 59.5 euro cents. That puts the TWI-5 at 73.9 and its highest since when Winston Peters anointed Jacinda Ardern.
Bitcoin has had a major boost overnight, and is up US$1,600 to US$16,434 US$14,823 or +10.8% on the day.
The easiest place to stay up with event risk today is by following our Economic Calendar here ».