Here's our summary of key economic events overnight that affect New Zealand, with news of some absolute stunning reversals today.
First up, there has been a stunning increase in claims for unemployment benefits in the US. We have previously suggested that there would be a huge spike up from 281,000 last week, itself a +30% jump from the prior week. A level approaching 2 mln was suggested. But the actual level of claims has come far, far higher at 3,283,000. And this may be understated as some state unemployment registration systems were overwhelmed with applicants. Given that the American middle class is the global engine of economic activity, we can't overstate the importance of this disaster. It has global implications and there will be global repercussions. There has never been as swift an economic shock in the world, ever.
Reinforcing the gravity, was a minor regional Fed survey, this time from the Kansas City Fed. It reported a very sharp drop in all factory measures in that district. New order levels dived. Firms are reporting they may have to shut down. It will be a story repeated nationwide.
So far today, the NY Fed has purchased US$159 bln in repo transactions, US$21 bln in mortgage backed securities, and US$45 bln in US Treasuries. That is US$225 bln in just one day. So far this week - yes, only the four days this week - the NY Fed buying has totalled more than US$1.1 tln in liquidity support, including more than US$¼ tln in US Treasuries, more than US$0.4 tln in mortgage-backed securities and more than US$0.4 tln in repo transactions. That is also the highest weekly level on 'unlimited' financial system support, ever. To put that weekly total in perspective, the US Congress has 'only' enacted fiscal support for the whole crisis of US$2 tln. Clearly, much, much more will be needed. States will need massive bailouts just to run their unemployment claims programs.
The American real estate markets is heading for a deep freeze. US mortgage rates fell.
Unbelievably, after all this wreckage, the equity markets are up strongly, with the S&P500 up +4% so far today. European markets were up too, but less. Asian markets fell yesterday, and fell sharply in Tokyo yesterday, down -4.5%.
China says export orders will drop -30% in March. They may be being optimistic. This is a major threat to their employment levels. Stresses have been building for some time. In fact, balances in Chinese wealth management products fell -16% in 2019. They will have fallen far sharper in 2020 so far.
Job losses in Europe are mushrooming too.
In Australia, a regulator is increasingly concerned about the liquidity of their superannuation funds and is seeking data and reassurance they are still solvent from each of them. Even more fundamentally, S&P says it expects mortgage arrears will soar soon in Australia.
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There are now more than 283 cases identified in New Zealand, with more than 78 new cases in the past 24 hours, including community transfer. Five are now hospitalised. Our officials now expect our caseload to rise into the thousands before we gain control. Even in lockdown and this data, we don't know how lucky we are.
Worldwide, the latest compilation of Covid-19 data is here. The global tally is now 495,000 of officially confirmed cases, more than doubling in a week. There are now 413,000 cases outside China and almost all of them are in five core countries. Italy is up +5000 from just yesterday morning's tally. The US is up 14,000 cases from the same time and now at just under 70,000 cases. Sadly however, case numbers in the rest of the world are shooting up, up to over 100,000 now. Australia now has 2810 cases, a rise +20% in one day. The official death toll is over 22,000 worldwide, but is probably much higher - as is the real infection rate.
The UST 10yr yield is soft again today at under 0.78% but it is quite volatile. Their 2-10 curve is still very positive at +51 bps and unchanged. Their 1-5 curve is more positive at +35 bps, while their 3m-10yr curve is still way out there at +87 bps. Short rates for UST bills have now turned negative. The Aussie Govt 10yr yield is now at 0.91% which is down -5 bps in a day. The China Govt 10yr is down -3 bps at 2.68%. The NZ Govt 10 yr yield is little-changed however at 1.10%.
Gold is up again today, up +US18 at US$1,632/oz.
US oil prices are down sharply today to under US$23/bbl and the Brent benchmark is also sharply lower at just over US$26/bbl. Both represent drops of almost -US$2/bbl. Prices are dropping because there is nowhere to store the oil being produced as demand crashes.
The Kiwi dollar is starting today much firmer than this time yesterday as the greenback takes a hammering, now at 59.7 USc and up +1½c. On the cross rates however we are up +1c at 98.5 AUc. Against the euro we are also up +½c at 54.2 euro cents. That means our TWI-5 is up to 66.5 and its highest in more than a week.
Bitcoin is now at US$6,679 and little-changed. 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 ».