US non-farm payrolls surge; markets expect liftoff; China trade shrinks, imports more than exports; Aust. looks at GST on financial services; UST 10yr yield 2.33%; NZ$1 = 65.2 US¢, TWI-5 = 71.1

Here’s my summary of the key events over the weekend that affect New Zealand, with news of record high Chinese trade surplus that signals trouble.

But first, the big weekend news is that US payrolls expanded significantly in October, significantly in the sense that it makes it much more likely that the Fed will start ‘liftoff’ next month by raising its policy interest rate.

Stocks initially fell, the thought better of it and rose on most indexes by the end of trading. More significantly the bond market now accepts a rise is coming and yields rose strongly.

In fact, bond issuance is running at a record rate as corporates try to lock in lower rate deals ahead of a rising rate environment.

In China, their trade data missed expectations by a wide margin in October, adding to the view that they will have to do more to stimulate domestic demand. Exports fell -6.9% compared with last year, down for a fourth month, while imports dropped -18.8%, leaving them with a record high trade surplus of US$62 bln, China’s General Administration of Customs said overnight.

This data could well mean more stimulus measures are about to be announced.

The complexity of applying GST to the financial services has always been the reason it has been exempt. But necessity is making the Aussies take another look at the issue and they are being tempted because there is a pot of gold there. If they do go ahead, you can be sure Wellington will be looking at it too.

In New York on Friday, the UST 10yr yield benchmark jumped to 2.33%.

The US benchmark oil price fell sharply on Friday, now at US$44/barrel, and the Brent benchmark is at US$47/barrel.

The gold price also dropped and is now at US$1,088/oz.

The New Zealand dollar starts the week at 65.2 US¢, at 92.6 AU¢, and at 60.8 euro cents. The TWI-5 is at 71.1.

Later this week, watch out for the October real estate data from the REINZ, possibly tomorrow, and on Wednesday we get the Financial Stability review from the RBNZ.

If you want to catch up with all the local changes on Friday, we have an update here.

The easiest place to stay up with event risk today is by following our Economic Calendar here »

Daily exchange rates

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for(i=0;i

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