Powell gets ready to support a dipping US economy; US SME optimism fades; China car market roars; Singapore doing better; IMF cautious; UST 10yr at 4.03%; gold up again, oil lower; AU$1 = 64.9 USc

​Here's our summary of key economic events overnight that affect New Zealand, with news both Fed boss Powell, and the IMF are increasingly concerned about financial stability.

First up today, the key economic influence is the overnight speech from US Fed boss Powell. He (politely) bemoaned the lack of key current data, but is clearly worried about what is happening in the giant US labour market. He sees payroll about to shrink, not only because of the immigration crackdown, but softening economic activity and business hesitation due to tariff costs and uncertainty. He also said the Fed will likely end its reductions in its balance sheet because liquidity conditions are tightening. His speech sets the Fed up for defensive actions ahead of what they expect are growing economic risks. Basically, they are ready to cut rates.

Financial markets noted his caution, and while they didn't retreat, they aren't as gung-ho as yesterday or last week either, despite the rate-cut implication.

“My antenna goes up when things like that happen,” Jamie Dimon, said on a call with analysts about stresses like the First Brands debacle. “I probably shouldn’t say this, but when you see one cockroach, there are probably more. Everyone should be forewarned on this one.”

In the absence of official data while their shutdown extends, trade data is filling the gap. Today the NFIB Optimism survey came in mich lower than expected, and a fall was expected. Small business owners are increasingly frustrated with supply chain disruptions and are seeing inflation emerging in what they are paying, and having a struggle passing on those costs as sales levels turn soft.

Across the Pacific, China has set an ambitious new vehicles sales target for 2025 of 32.3 mln units, far and away the world's largest market (The US is second at about 18 mln vehicles.) They will likely hit that target. In September, sales were the strongest of the year at over 3.2 mln in the month, almost +15% higher than the same month in 2024. NEVs accounted for 1.6 mln, up be almost +25% from a year ago. This is now a globally significant sector driving both the Chinese and global economy.

Singapore was bracing for a +2.0% year-on-year Q3-2025 GDP expansion, down from the +4.5% expansion they had in Q2-2025. But they actually got a +2.9% expansion in the September quarter. Services and construction did more heavy lifting there than was assumed when all the focus was on the troubles their factory sector was having.

In Australia, the NAB Business Confidence Index rose in September from August’s three-month low, staying above the long-run average. Business conditions were unchanged, as stronger sales and profits were offset by weaker employment. However, forward orders slipped into contraction indicating softer demand ahead.

Through all these global changes, the IMF is trying to make sense of how this is affecting the world's economy. They are somewhat confused by "complex forces". Their World Economic Outlook update projects overall economic growth to slow to +3.2% in 2025 and +3.1% in 2026, down from 3.3% in 2024. They see the world adjusting to rising protectionism and fragmentation and we are now below pre-policy-shift levels. American growth is now expected lower at +2.0% in 2025 and similar in 2026, while China’s economy is projected to slow to +4.8% and +4.2% in 2026. Europe is forecast to expand +1.2% in 2025 and +1.1% in 2026, Japan by +1.1% and +0.6%, Australia by +1.8% and +2.1%. Meanwhile, global inflation is expected to continue easing, though trends will vary across countries, above target in the US, with risks tilted to the upside, while staying subdued elsewhere.

The UST 10yr yield is now at 4.03% and down -4 bps from this time yesterday. The key 2-10 yield curve is still at +55 bps. Their 1-5 curve is still positive by only +2 bps now. And their 3 mth-10yr curve is now -5 bps inverted. The China 10 year bond rate is down -1 bp at 1.76%. The Australian 10 year bond yield starts today at 4.25%, down another -4 bps from yesterday. 

Wall Street has eased up slightly today with the S&P500 up +0.2%. European markets were mixed between London's +0.1% inch up and Frankfurt's -0.6% fall. Tokyo ended its Tuesday down a sharp -2.6%, Hong Kong was down -1.7%, and Shanghai fell -0.6%. Singapore fell -0.8%. Locally, the ASX200 rose +0.2%.

The price of gold will start today at US$4145/oz, up +US$35 from yesterday.

American oil prices are -US$1 lower at just over US$58.50/bbl, with the international Brent price now just under US$62.50/bbl. That is changed by lower demand and higher supply expectations.

The Australian dollar is at just on 64.9 USc, down -30 bps from yesterday. Against the Japanese yen we are down -90 bps at ¥98.5. Against the euro we are down -40 bps at 55.9 euro cents.

The bitcoin price starts today at US$112,593 and down -1.8% from this time yesterday. Volatility over the past 24 hours has been moderate at just over +/- 2.6%.