Here's our summary of key economic events overnight that affect New Zealand, with news it is the turn of currency markets to be roiled.
First, the US Fed is scrambling to ensure that the foreign exchange markets continue to function property. Even after today's new FIMA repo facility scheme, the greenback rose on strong demand, something they are trying to prevent. (The RBNZ has since March 20 been providing liquidity in the FX swap market and re-established a temporary US dollar swap line to US$30 bln with the US Fed.)
And the widely-watched Chicago PMI also fell sharply, but also not by as much as was expected.
With the civilian aircraft manufacturing industry all but shut down in the US, all eyes are now on the car industry, awaiting March sales results. A key analysts sees this industry, which sold 17 mln vehicles in 2019, only selling 14.2 mln in 2020, making it much smaller than the also-falling Chinese car market which will probably sell 20 mln vehicles in 2020 even after the steep virus cutbacks. The fall in US sales will cascade through their manufacturing base even harder than the aircraft situation. And it will sharply affect China component factories.
But there has been a stunning bounce-back in the Chinese PMIs for March, a recovery that was as swift as it was unexpected. This is the official data; cue questions on credibility. But it may underpin Western expectations that we will get a similar effect when our virus emergency passes.
Large development deals involving private industry, including many foreign firms, have been signed up in the past week, worth some NZ$100 bln. China is racing to capture more of the world's capital investment budgets.
Meanwhile in the West, it is very much all about economic survival and subsidies. In Canada, it looks like there will need to be a $1 bln bailout or more of public transit systems. And that is probably the tip of a global iceberg.
And the World Bank is warning that after the crisis, there will be growing poverty in most countries that will need to be addressed.
In Australia, consumer confidence has sunk to its lowest on record, and the expectation is that it will fall further from here.
On Wall Street, the S&P500 is down -0.8% after starting lower, then posting some net gains, only to fall away again in afternoon trading. It's a wild quarter-end settle-up there. Overnight, European markets were all in positive territory again, and yesterday Asian markets booked gains - apart from Tokyo. The NZX50 joined the gainers, the ASX200 fell away with a substantial -2% loss on the day.
You get our daily news coverage free. Corporates are starting to pull advertising. That is a big problem for us. You enjoy reading our website, and I am asking you to Become a Supporter now. I personally want to say a big Thank You. (If you are already a Supporter, you're my hero.)
There are now 647 Covid-19 cases identified in New Zealand, with another 58 new cases yesterday and well below the 75 new cases the prior day, now in 14 important clusters. One person has now died here. We have 14 people in hospital with the disease, two in ICU.
Worldwide, the latest compilation of Covid-19 data is here. The global tally is now 823,500 with another global pickup in infections overnight especially in the USA where more than 21% of all cases globally are, and up +27,000 in one day. Australia has now over 4500 cases, and 18 deaths. Global deaths now exceed 40,600 and more deaths have been recorded in the US (3415) than China (3309). (The US level is now also higher than the 9/11 deaths.) The Americans are not happy about that stat and are questioning the accuracy of the Chinese data. They probably have a point.
The UST 10yr yield is unchanged today at under 0.67%. Their 2-10 curve is slightly more positive today at +46 bps. Their 1-5 curve is less positive at +20 bps, and their 3m-10yr curve is at +61 bps and little-changed. The Aussie Govt 10yr yield is now at 0.76% which is down another -5 bps. The China Govt 10yr is down -3 bps at 2.67%. The NZ Govt 10 yr yield is going the other way, up +6 bps at 1.09%.
Gold is down sharply today, adding to the recent declines, down another -US$19 today, to US$1,592/oz.
US oil prices are holding at their new low levels today, at just on US$20/bbl. The Brent benchmark is also low at just under US$23/bbl. This is despite US-Russian talks aimed at reversing the price falls. The US is pleading with them to halt output rises in the Russian/Saudi standoff.
The Kiwi dollar is starting today very much softer than this time yesterday ending a week of elevation, now at 59.3 USc and down almost -1c since this time yesterday. On the cross rates we just a little softer at 97.2 AUc, down -¼c. Against the euro however we are much lower, down to 54 euro cents and a fall of -½c. This shift down has taken us back to levels we had at the same time last week where the TWI-5 was at 65.8.
Bitcoin is now at US$6,453 and up less than +1% 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 ».