Here's our summary of key economic events overnight that affect New Zealand, with news the next stage of this economic crisis will be hard and positives will be rare.
Firstly in Australia, their prime minister is expected to warn today that the road ahead will be very difficult, and success is not assured. And he will warn companies that subsidies and handouts can't be sustained. He will say companies will need to "get off the medication" of handouts like JobKeeper, by declaring, "at some point you've got to get your economy out of ICU".
There is one exemplar that we should keep an eye on - Taiwan. They reported some unusual April data. Taiwanese industrial production rose +3.5% in April from the same month in 2019. However, it is not all positive in Taiwan - retail sales fell -10% on the same basis in April, although it has to be said that is far less than just about any other country for that month.
We should also note that on the mainland, the Chinese central bank authorities let their currency fall to its lowest level against the US dollar in more than 12 years. It wasn't a large daily move, but it is at a level that is sure to infuriate Washington - and probably intentionally. A weaker yuan keeps China in the trade game.
At the same time, there is a hint of a changed strategy in Beijing. The Chinese president said he is pursuing a new development plan, focusing on its domestic market rather than an export-led growth model. But what President Xi says and what actually happens often differ. However, if they do turn inward it will be a very major shift indeed.
In Germany overnight, a business sentiment survey has been seen as a bit of a turning point. It was still very negative, but less so in May than April, and less so than was expected.
And in Europe, there is mounting evidence that liquidity injections are not having the impact authorities expect. Fearful households are saving as hard as ever and stimulus cash does not have the multiplier impact intended. It is evidence that helicopter money doesn't work in times like these. And it helps explain why bank deposits are growing fast even as interest rates are virtually zero. The heightened savings impulse is a problem for policy makers.
Meanwhile, world trade is lower, but maybe not by as much as you might think. And certainly, that is the case for New Zealand. Trade has definitely not come to a grinding halt - that has been the feature of the domestic economies, rather than international trade. One item that has seen a huge spike in international trade during the lockdowns is for laptops - and of course almost all of them are being shipped from China.
The latest compilation of Covid-19 data is here. The global tally is now 5,460,700 and up +100,000 from this time yesterday, which is rising at a faster pace than recently. "Opening up" isn't helping.
Now, just over 30% of all cases globally are in the US, which is up +20,400 since this time yesterday to 1,633,000. This is an unchanged rate of increase and the highest daily increase of any country worldwide. US deaths are now exceed 98,000. Global deaths now exceed 346,000. Brazil, Russia, UK and India are the other hotspots where daily infections are rising faster than +5000. No other country is close to that benchmark.
In Australia, there are now 7118 cases (+9 since yesterday), 102 deaths (unchanged) and a recovery rate of just over 91% (unchanged). 31 people are in hospital there (-5) with 5 in ICU (unchanged). There are now 484 active cases in Australia (-17).
There were zero cases added yesterday locally, leaving the total at 1504 cases identified as either confirmed (1154) or probable (350). There is still only one person left in hospital with the disease, and they are not in ICU. Our recovery rate is still just under 97%, with only 27 people known to be still fighting the infection.
The UST 10yr yield is unchanged at 0.66%. Their 2-10 curve is at +49 bps. Their 1-5 curve is at +17 bps, and their 3m-10yr curve is +56 bps. The Aussie Govt 10yr yield is down -1 bp to 0.86%. The China Govt 10yr is up +4 bps at 2.65%. And the NZ Govt 10 yr yield is also firmer, up +2 bps at 0.64%.
The gold price is down slightly again today, down another -US$5 to US$1,728/oz.
Oil prices are firmer today, but only marginally. The US crude price is now just over US$33.50/bbl. The international oil price is just over US$35.50/bbl.
The Kiwi dollar is staying firm, now still at 61 USc while New York markets are closed. On the cross rates we are marginally lower at 93.2 AUc. Against the euro we are holding at 56 euro cents. That means our TWI-5 is little-changed at 67.
Bitcoin is softer again today, down nearly -1% to US$8,868 since this time yesterday. 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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