Here's our summary of key economic events overnight that affect New Zealand, with news it's even grimmer today than yesterday.
First up today, the US Fed has announced its money printing operations are now unlimited. Today, the NY Fed has entered into US$61 bln in repo transactions, US$30.1 bln on mortgage-backed security purchases, and US$62 bln in US Treasury purchases - all in just one day so far, and their day isn't ended yet. That is a massive daily total of +$150 bln just to keep their financial system ticking over. This is how the US Fed's "whatever it takes" policy works.
Wall Street is falling still however, with the S&P500 down -3.2% in mid-afternoon trade. It was down double that earlier, clawed some back, and has started falling again. Update: The S&P500 closed down -2.9%.
Industrial giant Boeing is closing its main facilities near Seattle. That will hurt a lot. Of course, they are not the only ones hurting - the pain is nationwide in both their factory and service sectors.
So the Fed has announced more programs to back-up bank lending to companies so they can access working capital at this time. The Fed is essentially guaranteeing such bank loans so that they will be made, even in damaged credit conditions. This is real life-support "lending" - even when it is quite unclear if any of these "loans" can be paid back.
Meanwhile in Congress, they can't agree on a fiscal package. Republicans don't want to include provisions for the low-paid and uninsured; Democrats are baulking at the lobbyist-inspired corporate welfare grab the Republicans are promoting. So nothing is agreed.
The US Fed is the only effective functioning responder, but is using tools that can't deal with the underlying problem.
And the US Administration is avoiding any lockdown mandate to protect the economy - lockdowns are now only state initiatives. That means the virus explosion will only get much worse before it peaks - and for a country as large as the US it also means they are now a global virus threat.
Much of Europe is now in lockdown. EU consumer confidence has dived, but only by about as much as was expected. It could have been much worse.
Germany is readying major fiscal stimulus that could exceed €0.8 tin, even approach €1 tln.
Both the IMF and the OECD now see a long economic recession ahead. And that is principally because the US won't deal with the core viral issue properly. Sacrifice now for a quicker return doesn't fit the Administration's re-election goals.
India is suffering serious economic fallout, and their stock market crashed -37% since the end of February.
And while China is getting back on its feet, the economic shock waves will roll on relentlessly. Businesses that restarted are finding few orders, especially few international orders.
In Australia, more than 300,000 people could lose their jobs in the first wave of heavy cost-cutting as businesses desperately attempt to stave off collapse. Welfare lines have mushroomed all over the country. Worse, beer production is under threat in Australia.
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The latest compilation of Covid-19 data is here. The global tally is now 355,000 of officially confirmed cases, up +11% in one day and almost doubling in a week. There are now 273,000 cases outside China and almost all of them are in five core countries. The US is the big new global hotspot with +8000 new cases overnight and no recorded recoveries in the country. That contrasts with Italy whose caseload rose +5500 in a day and a recovery rate up to 12% now. No other countries come close to these daily infection levels although there is still rapid growth in most European countries. Switzerland and the UK will rise above South Korea in a day or so as the Koreans are clearly getting on top of their contained infection community. The other country with amazing control is Japan with only 1100 cases recorded since the first identification on January 22. In Australia, their confirmed caseload is up to 1682 after quadrupling in a week. The number of New Zealand cases is now up to 102.
Large parts of the developed world are now in complete shutdown. More than one billion people are in these lockdowns.
The UST 10yr yield is falling again and still on its wild ride. It is now at 0.75% and down -14 bps since yesterday. Rate curves have moved sharply positive as short term rates stay collapsed. Their 2-10 curve is still very positive at +49 bps even if that is a pullback. Their 1-5 curve is more positive at +41 bps. and their 3m-10yr curve is still out there at +74 bps even if less. The Aussie Govt 10yr yield is now at 0.92% which is a net fall of -15 bps in a day. The China Govt 10yr is down -4 bps to 2.72%. The NZ Govt 10 yr yield is now at 1.46% and a dip of -2 bps since yesterday.
Gold has risen sharply today, up +US$46 to US$1,545/oz.
US oil prices are little-changed US$22.50/bbl although the Brent benchmark is lower at US$26.50.
The Kiwi dollar is also starting today a little lower than this time yesterday and now at 56.8 USc. Given what happened yesterday that is a very minor reaction on currency markets. On the cross rates however we are little-changed at 98.6 AUc but that disguises a fall yesterday and an overnight rise back up. Against the euro we are also little-changed at 52.9 euro cents. That means our TWI-5 is now at 64.7 and holding the lower level we have been at for almost a week..
Bitcoin is now up to US$6,292 which is a daily rise of +3.7% from 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 ».