Here's our summary of key economic events overnight that affect New Zealand, with news of some awful economic records.
Today's big news is that more than 20 mln people lost their jobs in the US in April, according to their official data.
At the same time, another 2 mln people lost their jobs in April in Canada. Between the two, that is 22.5 mln extra people jobless in just one month. We want to try and put that into perspective.. That is like saying everyone in the workforce in New Zealand (2.8 mln), Australia (13.0 mln), Singapore (3.8 mln), and Hong Kong (3.9 mln) all lost their jobs in one four week period.
But it is worse than that. The US data is based on a survey taken on April 12, and things got substantially worse after that. And at the same time, the same survey reveals that the American labour force shrank because a remarkable -6.5 mln adults withdrew from their labour force on top of the -1.6 mln who did the same in March. So in two months 8 mln more people gave up looking for work and these people are no longer counted as being in their workforce, so the unemployment numbers ignore them. Their participation rate fell to almost 60%, the lowest since 1969 more than fifty years ago.
And of course, the jobless numbers don't count those who have had their pay cut, their working hours cut (or both), or are in the casual, gig economy (survey data for these workers is difficult). All up it is an epic economic disaster and one that will probably be repeated in May, despite the desperate attempt there to restart their economy. You just cannot take the purchasing power of that many people out of the giant American economy and not have long-term global economic implications. The hurt will spread to New Zealand and our export markets.
And the impact is playing havoc with the US Federal Government finances. The federal budget typically records a surplus in April because of the timing of tax payments. But this year, the incurred a deficit of -US$737 bln in April compared with a surplus of +US$160 bln last year. Remember, it was just a few weeks ago, estimates were being made that the full year deficit could exceed -US$1 tln. Well, they got close in April by itself. The revised estimates are now closing in on -US$4 tln.
There is a heap of hurt being reported elsewhere around the world for April. For example, the Brazilian car production fell -99% (!), Mexico's car production fell by almost the same, Israel's factory sector dived, and industrial production in Spain, Germany and Norway all fell very sharply in data reported overnight. The global economic carnage is widespread.
Not everything was disastrous. Canada's housing starts fell sharply, but not by as much as feared. And Canada's building permit levels were also down sharply, but not to levels feared. (But there may be questions now about whether any of these projects will be started soon.)
And in Europe overnight, finance ministers accepted a plan for a €240 bln credit extension on very cheap terms allowing under-pressure governments to access huge amounts of new borrowed money.
And in China, there is more evidence that a return to normal life is also bring an economic upswing. But being the only game in town also means that China is pressing its advantages for access to that rebound. It is pretty callous in how it is doing that. It cares little for its neighbours.
The latest compilation of Covid-19 data is here. The global tally is now 3,910,100 and up +126,000 from this time yesterday which is a substantial level of increase.
Now, just under 33% of all cases globally are in the US, which is up +42,000 since this time yesterday to 1,274,000. This is also a faster rate of increase. US deaths are now more than 77,000. Global deaths now exceed 272,000. The much faster increases are coming in four key countries, Russia, Brazil, India and Peru. And there is no slowing in either Sweden or the UK although almost all other European countries seem to have fast declining daily infection rates. The public policy choices made in Sweden and the UK have been a disaster for them both and on a population basis, even worse than the US.
In Australia, there are now 6914 cases (+18 since yesterday), 97 deaths (unchanged) and an unchanged recovery rate of just on 88%. 58 people are in hospital there (-4) with 23 in ICU (-4).
There are 1490 Covid-19 cases identified in New Zealand, with one new case yesterday in an Auckland aged care cluster (the day prior was +1). Twenty-one people have died, unchanged in a day, almost all geriatric patients. There are now three people left in hospital with the disease (+1), and none are in ICU. Our recovery rate is now up over 90% and still rising, which means there are now only 143 people known to be infected in New Zealand and the lowest since March 24.
Wall Street is higher today, and more US states move to re-open for business. The S&P500 is up +1.7% so far and heading for a weekly rise of +3.5%. Overnight European markets rose by more than+1% and markets like the Frankfurt DAX were up only +0.4% for the week, but the FTSE100 was up +3%. Yesterday, both Shanghai and Hong Kong markets rose about +1% on the day with Shanghai up +1.2% for their shortened week, and Hong Kong was down -1.7% for the period. Tokyo registered no gain, falling for most of the week but recovering it all at the end. The ASX200 gained +2.8% over the week, while the NZX50 Capital Index gained +2.4%.
The UST 10yr yield is rising in trade in New York, now just over 0.68% and a +5 bps gain. Their 2-10 curve is up sharply to +52 bps. Their 1-5 curve is unchanged at +17 bps, and their 3m-10yr curve is also little-changed at +58 bps. The Aussie Govt 10yr yield is up +4 bps at 0.95%. The China Govt 10yr is up another +3 bps at 2.63%. And the NZ Govt 10 yr yield has gone the other way, down -6 bps to 0.57%.
Gold is lower today, down -US$14 to US$1,706/oz.
Oil prices are marginally higher today, up about +50c. In the US, they are currently at just on US$24.50/bbl. International oil prices are just on US$30.50/bbl. The closing of US drilling wells continues with a much lower rig count again, now back to record-low levels since the current data set began in 1991. It will likely go much lower yet.
The Kiwi dollar is +½c higher overnight, and is now at 61.3 USc on a slipping greenback. On the cross rates we are back up to 94 AUc. Against the euro we are +¼c firmer at 56.6 euro cents. These rises mean the TWI-5 is up to 67.3 and its highest in two months.
Bitcoin is higher again today, but by less than +1% to US$9,963 but that means it has risen +US$1100 or +12% in just the past week. The bitcoin rate is charted in the exchange rate set below.
The easiest place to stay up with event risk today is by following our Economic Calendar here ».
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