Commodities rise as US debt issues fade

<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 markets want to move on from the US debt-ceiling debate but there are details to deal with.</p><p>In Washington DC, the House of Representative has approved the Biden-McCarthy debt deal compromise. It is unlikely to fail in a Senate vote soon. The Biden Budget is largely intact in the end. All eyes will now turn to the bond markets as the US Treasury races to raise the necessary funds to avoid default. They will come at a higher cost than it these theatrics hadn't played out.</p><p>US-based employers announced <a href="https://www.challengergray.com/blog/may-2023-layoffs-jump-on-tech-retail-auto-ytd-hiring-lowest-since-2016/" target="_blank"><strong>80,089 cuts in May</strong></a>, a +20% increase from the 66,995 cuts announced one month prior. This tally is rising; so far this year, companies have announced plans to cut 417,500 jobs, a 315% increase from the 100,694 cuts announced in the same period last year. But these layoffs are tiny compared to both their overall labour force, and even the expansion of those employed.</p><p>The pre-cursor <a href="https://adp-ri-nrip-static.adp.com/artifacts/us_ner/20230601/ADP_NATIONAL_EMPLOYMENT_REPORT_Press_Release_2023_05%20FINAL.pdf?_ga=2.224739674.1766735450.1685644256-751211893.1683138104" target="_blank"><strong>ADP jobs report</strong></a> came in way stronger than expected, reporting private payrolls expanded +278,000 in May when +170,000 was expected. But they did report pay growth was slowing. Markets are still expecting tomorrow's non-farm payrolls report to deliver +190,000 extra jobs for May.</p><p>American <a href="https://www.dol.gov/sites/dolgov/files/OPA/newsreleases/ui-claims/20231210.pdf" target="_blank"><strong>initial jobless claims</strong></a> totaled 208,000 last week, little-changed from the prior week