Eyes on the RBA, US jobs and China's holiday activity; US durable goods order data mixed; The US Fed in a tough spot; no deal to re-open Hormuz; UST 10yr at 5.17%; gold and oil hold; AU$1 = 70.3 USc

Here's our summary of key economic events over the weekend that affect New Zealand, with news nothing was resolved in the Xi-Trump talks, and nothing is resolved in the US-Iran standoff.

But first, this week will be dominated by the RBA policy rate decision on Tuesday as the next major set piece review in the midst of the global bond sell-off and inflationary pressures. They are widely expected to raise the rate +25 bps to 4.60%. Australia will also release important household spending data, its August CPI update, and building permit data this week.

The week will end with the US September non-farm payrolls report - expect +100,000, although its cred is being undermined from within. And there will be US data on personal income and spending out this week, other labour market data, and a key PMI report.

In China, the focus will be on the September PMIs, with data from both the NBS and private S&P Global ones expected to point to a modest improvement in manufacturing and services activity. August industrial profits will also be released. Meanwhile, Chinese markets will be closed from October 1 to October 7 for the National Day holidays.

Of course, the global geopolitical mess rolls on chaotically, so we will be watching for either diplomatic agreements or escalatory strikes between the US and Iran.

Over the weekend in the US, August durable goods orders were essentially unchanged from July, which was better than the expected -0.4% decline. From a year ago they are +8.4% higher although we should note that PPI inflation ran at 5.4% in the same period. Non-military capital goods orders are up +5.8% on a year-ago basis, but given the huge surge in data center buildouts this is surprisingly weak.

Late last week, US petrol prices breached the +50% rise since Trump's war on Iran started in early March. Diesel prices are now up +67% in that market.

The University of Michigan September survey of consumer sentiment tracks anxiety of the inflationary pressure these sort of cost increases are bringing and the weekend update is grim reading. Only once since this survey started in 1946 has this reading been as low as it is now - and that was in May. Year-ahead inflation expectations jumped from 4.0% in August to 4.6% this month, the highest reading since June. The current level substantially exceeds the 3.4% seen in February before the Iran conflict began, along with all 2024 levels.

Financial markets are betting that rising inflation will be more important to the Fed than falling sentiment and the US Fed will raise rates at its next meeting on October 29, which is just days ahead of their mid-term elections. This market positioning is more than 2:1 now, and is bolstered by recent Fed speakers who are clearly worried that delays could cause them to lose control of the US inflation impetus.

Over the weekend China was on holiday for Mid Autumn Festival and their central bank said it injected up to ¥1 tln of liquidity into their banking system for this holiday via reverse repos. (During the same holiday last year it injected ¥735 bln in reverse repo operations, but later it revealed another ¥500 bln in direct repo purchases.) And they have their Golden Week holiday starting this week (October 1 - 7) and much depends on their internal spending impulse during this period. Beijing economy watchers will be nervous.

The UST 10yr yield is now just on 5.17%, unchanged from Saturday but up a net +16 bps from this time last week. The 30 year yield is at 5.50%, up +1 bp and +17 bps higher for the week. The key 2-10 yield curve is now at +30 bps (down -2 bps). Their 1-5 curve is now at +53 bps (+1 bp) and the 3 mth-10yr curve is at +120 bps (down -2 bps). The China 10 year bond rate is little-changed at 1.68%. The Japanese 10 year bond yield is now at 3.07%, down -1 bp from Saturday but up +9 bps for the week and a generational 30 year high. The Australian 10 year bond yield starts today at 5.37%, down -2 bps from Saturday, up +8 bps for the week and a 16 year high.

The price of gold is at US$4285/oz and down a mere -US$4 from Saturday, down -US$96 from this time last week. Silver is at just over US$64.50/oz and unchanged but down -US$2 for the week.

Oil prices have held from Saturday to just on US$92.50/bbl in the US, while the international Brent price is still at US$104.50/bbl. The US has rejected Iran's plan to re-open the Strait. Hormuz transits are still low today with just eight ships exiting over the past 24 hours, of which one are tankers escorted (3 dark with transponders off) and only six entering for new loads (0 dark). The Red Sea activity is holding low at about 20 vessels in both directions at the Yemen chokepoint.

The Australian dollar is unchanged from Saturday, still at 70.3 USc but down -50 bps for the week. Against the Japanese yen we are holding at ¥110.5. Against the euro we are also holding at just on 61.7 euro cents. 

The bitcoin price starts today at US$84,386 and down +0.5% from Saturday but up a net +4.1% from a week ago. Volatility over the past 24 hours has been low at just over +/-0.7%.