Here's our summary of key economic events overnight that affect New Zealand, with news equity investors are out on their own with economic optimism.
That may be due to the US Congress already looking at new vast stimulus and rescue funds, just days after the passing of a US$2 tln package. The US Administration says its not needed.
Back in the real world, the Dallas Fed factory survey was expected to come in sharply negative (-10 from +1.2 in February), but has come in way worse than expected at -70. A huge dive in new orders was behind the very sharp drop.
We get the March US non-farm payrolls report this weekend but due to the timing of the survey, analysts don't expect it to show up the full extent of the American job losses yet. The weekly jobless claims report, next due on Friday will be a more timely guide. Also out this week are another consumer sentiment survey and some key PMIs for March. Both are expected to be very ugly.
In China, they may be on the other side of their virus emergency, but are having to face up to an economy that will be very hard to restart without export orders. One analyst expects 18 mln job losses there over the next two quarters, out of a 60 mln export-oriented workforce. That is likely to be a major social earthquake. On top of that, more than 2 mln graduates are entering their workforce and have zero employment prospects at present - and another huge social risk.
Meanwhile, China's central bank cut its 7-day reverse repo rate in a surprise move, taking it down by -20 bps to 2.20%. That's its largest cut in five years. At the same time it is issuing ¥2 tln of Treasury bonds, about 3% of GDP.
In Australia, they have announced a huge new stimulus program where almost half the workforce will receive AU$750 a week for the next six months under an emergency AU$130 bln wage subsidy. Its a program worth 9% of Australian GDP and is on top of the previous announcements and takes their total stimulus program to AU$215 bln or 15% of GDP.
The endless stream of stimulus announcements has equity markets excited. The S&P500 is up +2% so far today. European markets were up between 1 and 2% overnight. Yesterday however, Asian markets were all lower by more than -1%. Perhaps equity investors should wait to see if any of this stimulus will actually work before taking such big bets. One piece of data that will move markets will be when employment returns, but that seems a long way off yet.
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There are now 589 Covid-19 cases identified in New Zealand, with another 75 new cases since Sunday, in six important clusters. One person has now died here. We have twelve people in hospital with the disease, and three are expected to be discharged soon.
Worldwide, the latest compilation of Covid-19 data is here. The global tally is now 756,000 of officially confirmed cases, and actually up relatively little from where we left it last night (721,000). The US (148,000), Italy (102,000) and Spain (85,200) each has more cases than China (82,200) but the recovery level in China is now up to 92%. Australia has now over 4200 cases, and 17 deaths. The pace of global infection may not be accelerating as fast today but the global death toll now now exceeds 35,000 and only 3300 in China. The US Administration says it is expecting about 100,000 deaths there alone. Experts suggest it could be double that.
The UST 10yr yield is soft again today at under 0.67% and down another -2 bps. A few hours ago it did get down to 0.60%. Their 2-10 curve is slightly less positive again, at +41 bps. Their 1-5 curve is also less positive at +22 bps, and their 3m-10yr curve is at +62 bps and also less so. The Aussie Govt 10yr yield is now at 0.81% which is down another -5 bps. The China Govt 10yr is up +2 bps at 2.70%. The NZ Govt 10 yr yield is down -7 bps at 1.03%.
Gold is down another -US$17 today, to US$1,611/oz.
US oil prices are even lower today, down US$1.50/bbl to just on US$20/bbl. They were below that earlier in the day. The Brent benchmark is also lower at just under US$22.50/bbl. The world crude supply is far more than anyone needs and place to store output have vanished. The US shale industry is in an existential crisis, but then, so is every other producer.
The Kiwi dollar is starting today marginally softer than this time yesterday, now at 60.1 USc. On the cross rates we are down by -½c at 97.5 AUc. Against the euro however, we are firmer at 54.6 euro cents and at a two week high. That means our TWI-5 is little-changed at 66.5.
Bitcoin is now at US$6,394 and up +4.8% 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 ».