Bond markets rally as rate expectations retreat

<p>Kia ora,</p><p>Welcome to Friday’s Economy Watch where we follow the economic events and trends that affect Aotearoa/New Zealand.</p><p>I'm David Chaston and this is the international edition from Interest.co.nz.</p><p>And today we lead with news the US Treasury’s debt issuance plan eased investors’ fears of a looming deluge of long-term government debt that had triggered a bond market rout and bond markets have rallied very sharply.</p><p>But first in the US <a href="https://www.dol.gov/sites/dolgov/files/OPA/newsreleases/ui-claims/20232339.pdf" target="_blank"><strong>initial jobless claims rose</strong></a> last week by a mere +2800 last week to 197,000 and there are now 1.58 mln people on these programs. But after seasonal adjustment the rises were magnified as reported elsewhere and stated to be the highest since April and an indication their labour market is turning (even if that is not what the actual data shows yet).</p><p>Meanwhile, <a href="https://www.census.gov/manufacturing/m3/prel/pdf/s-i-o.pdf" target="_blank"><strong>American factory orders rose</strong></a> a sharp +2.8% in September from August, the most since January 2021. (Year-on-year they are up +2.2%.) Durable goods orders were up a remarkable +4.7% as orders for aircraft roared back, up +65% from a year ago.</p><p><a href="https://www.nada.org/" target="_blank"><strong>October vehicle sales</strong></a> were expected to dip slightly from September, to an annual rate of 15.3 mln from 15.7 mln. But the actual dip was a lesser 15.5 mln annual rate. This is very much higher than the year-ago levels of about 14.5 mln rate.</p><p>In American factories making all this stuff, <a href="https://www.bls.gov/news.release/prod2.nr0.htm" target="_blank"><strong>labour productivity surged</strong></a> in the September quarter, up a remarkable +4.7%.</p><p>In New York, authorities there have prevailed in a case that <a href="https://ag.ny.gov/press-release/2023/attorney-general-james-secures-328-million-uber-and-lyft-taking-earnings-drivers#:~:text=NEW