Here's our summary of key economic events overnight that affect New Zealand, with news of spreading economic confusion and pessimism.
But first, we should remind ourselves that the sun is shining and it will again tomorrow, and that the issues du jour will pass.
However, Wall Street is still running very scared, with investors collectively consumed by a risk-off mood that is throwing up some odd reactions. Stocks are down sharply again, benchmark bond yields have reached record low levels, there is a general flight to 'safety' - but the gold price has ... collapsed.
Trading on Wall Street is volatile. The S&P500 started today down -4% from yesterday, then staged a small recovery to be down just -1% at mid-day. Then it has turned down again for the afternoon session, now down -2.2%. It is heading for a weekly loss of more than -12% so that is a major correction underway. Update: The S&P500 closed down -0.8% for the day, down -11.5% for the week.
In the real world of economic data, the widely-watched Chicago area PMI is still contracting, but less so and also less that analysts were expecting.
The US Fed's preferred measure of inflation came in unchanged at +1.6% pa, and not making the rise that was expected. The same January data showed a surprisingly strong rise personal incomes which should have been market-positive. But consumer spending dipped more than expected, indicating American consumers are fearful of the future. These are measures of actual behaviour.
But you would know that from what they tell surveyors. The latest February consumer sentiment survey rose to near a record level.
On the business side, wholesale inventories keep on falling while retail inventories keep on rising. And American trade data shows exports falling marginally in January, while imports fell slightly faster. So there was a small improvement in their merchandise trade deficit even if it wasn't significant for their economy on a year-on-year basis.
North of the border, Canada posted a better-than-expected GDP result for the final quarter of 2019 - but was still only at a tepid +1.9% pa level.
But none of this slew of basically positive data means much today. It's is all about fear and panic by investors on how consumers are reacting to the Covid-19 virus.
The WHO has still not declared a pandemic, preferring to focus on positive progress in China.
The latest compilation of Covid-19 data is here. There are now 5043 cases outside China, a rise of +780 in one day. A week ago that outside-China number was 1371 so it has more than trebled in a week. South Korea, Italy and Iran have all reported a spike in cases. Of course, we now have one too from an incoming Kiwi who traveled to Iran.
The US Fed is under pressure from the financial markets to cut its policy rate, but most governors are not sympathetic to a bailout cut right now. In fact in most countries, bankers and financial industry analysts are seeking rate cuts and other monetary policy easing measures in response to the pressures - in essence, taxpayer support for their businesses. Update: The US Fed has put out a short Statement saying they will use all their tools to act if it becomes necessary.
Part of China's response to the economic impacts is to ease up on home buying regulations. But there is no sign it is working yet.
Elsewhere, eyes are on the vast world of junk bond-financed businesses - investors seem to be fleeing quickly now and this will be existential for many if they can't roll over their debt financing.
The UST 10yr yield is now just under 1.17% and lower by -9 bps overhight - and down by a sharp -30 bps for the week. Update: The UST 10yr closed under 1.14%. And their rate curves are behaving strangely today. Their 2-10 curve is more positive at +23 bps. Their 1-5 curve is less negative at -5 bps. but their 3m-10yr curve has shifted sharply more negative at -32 bps. These are more like signs of confusion rather than indicators. The Aussie Govt 10yr is down -21 bps for the week at 0.73%. The China Govt 10yr now at 2.80% and down -13 bps for the week. The NZ Govt 10 yr is down -20 bps for the week at 1.06%. All these are are unprecedented drops.
And gold has also made a spectacular retreat overnight, down -US$78 to US$1,572/oz. And it is still falling as this article is published. The expected behaviour in the face of sudden rising rises is that the gold price would jump - but it has done the opposite today. That is a -% fall overnight and a -3.5% fall for the week, and overnight. Gold bugs will be scratching their heads. Update: Gold was at US$1,279 at 4pm NY time, down -US$71/oz.
The Fear & Greed index we follow is now at the 'extreme fear' side of the dial. The VIX volatility index has leaped to 47, up from just over 17 a week ago and its highest since March 2009. Both are brutal short-term changes.
US oil prices are sharply lower overnight at just under US$45/bbl. The Brent benchmark is also lower at just under US$50.50/bbl. But both represent big falls for the week. The US rig count is still stable at its new low level but is hard to see it staying at this level for much longer. A dive is imminent, you would think.
The Kiwi dollar ending the week at 62.2 USc and another -1c fall for the week. It is now at its lowest level since 2009. Since the start of 2019 the devaluation is down to -7.5%. On the cross rates we have held at 95.8 AUc. Against the euro we are also down nearly -1c for the week at 56.7 euro cents. That means our TWI-5 is now at 68.1 and its lowest since September 2019.
Bitcoin is now at US$8,538 which is more than an -13% retreat in a week on top of last week's -5% fall. 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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