Here's our summary of key economic events overnight that affect New Zealand, with news of very bad current data coming from the giant American economy.
Firstly, there has been a stunning development in the US labour force. Last week we reported a huge jump in unemployment benefit claims there from +280,000 in the prior week to +3.34 mln. This week analysts were expecting that to rise further and their estimate was to another +3.7 mln. But they were way off. In fact, the new claims level last week was a stunning +6.648 mln. That takes the March level of new claims for jobless benefits to a massive +10.5 mln in just four weeks - nothing like this has even been seen before. In fact in those four weeks 6.9% of their employed workforce has applied for jobless relief. It is likely many more haven't yet. Tomorrow we will get the March non-farm payrolls report and it is sure to be very grim. Based on this jobless claims data you would think it will report a new unemployment level of close to 10%. But it may not given that the non-farm payrolls report is survey-based and the surveys are done mid-month. But it will be the surveys that are out-of-date.
A related job cut report also revealed a very dramatic surge in direct layoffs. But that ignores the furloughs announced which were widespread.
The American mortgage industry is bracing for as many as 15 mln mortgage holders who stop making payments on their loans, the biggest wave of delinquencies ever. Falling mortgage interest rates mean nothing in a sector grinding to a halt.
One industry hard hit is the car industry. Not all data is available yet but a substantial fall in sales is expected for March, with some early reporting brands weeing drops of more than one third. In fact, overnight the New Zealand car dealers reported a -36% fall in sales in March year-on-year.
Japanese carmakers are sharply curtailing production.
The shutting down of global trade is about to hit iron ore prices according to a major producer. They have remained resilient for longer than many would have expected. The coming hit will be hard on Australia and Brazil.
But export bans, especially of food and medical supplies, are growing as many countries move to protect themselves. And the grain trade with China this year may be less than in past years as China says it is having a bumper harvest.
In Australia, the widely-watched NAB business confidence survey for March shows confidence collapsed there. It will only get worse in April.
Global air travel has been severely impacted as we all know now. The latest data for February shows a -14% decline worldwide, but a massive -41% drop in the Asia Pacific region. These numbers will have fallen to almost -100% in March.
In New Zealand, live tracking of consumer spending by the GDPLive team reveals a very dramatic slump up to April 1, more than halving year-on-year. This will have very widespread negative impacts on jobs.
There are now 797 Covid-19 cases identified in New Zealand, with another +89 new cases yesterday and higher than the +61 increase the prior day. The number of clusters has been reduced to six. Still only one person has died here. There were 13 people in hospital with the disease yesterday.
Worldwide, the latest compilation of Covid-19 data is here. As you read this, the global tally is just going through the 1 mln mark with another global pickup in infections overnight especially in the USA where more than 23% of all cases globally are, and up +35,000 in one day to 226,000. Australia has almost 5100 cases, and 24 deaths. Global deaths now exceed 50,000 and more that 5300 deaths have occurred in the USA, 45% in New York alone. Italian deaths now exceed 14,000 and more than 10,000 have died in Spain so far. Fear is paralysing many countries.
Equity markets are drifting today, unsure of where the next policy bump might come from.
The UST 10yr yield is lower today so far by -2 bps at just under 0.62%. Their 2-10 curve is positive today at +40 bps. Their 1-5 curve is also positive at +21 bps, and their 3m-10yr curve is at +56 bps. The Aussie Govt 10yr yield is now at 0.77% which is up +6 bps. The China Govt 10yr is up +3 bps at 2.68%. The NZ Govt 10 yr yield is holding at 1.10%. There is global central bank activity in these markets keeping rates low and relatively stable, so they no longer reflect true market sentiment.
Gold is sharply higher today, up by +US$27 today, to US$1,610/oz.
US oil prices are sharply and unexpectedly higher today, at just over US$24.50/bbl, a +US$4.50 rise. The Brent benchmark is also higher at just over US$29.50/bbl. The US President has managed to get the Russians and Saudis to agree on output cuts. How this helps the average American is unclear, but it may help their domestic oil companies, the Saudis and the Russians.
The Kiwi dollar is lower by -¼c from this time yesterday at 59 USc. On the cross rates we are a little firmer at 97.7 AUc. Against the euro we are also marginally firmer at 54.4 euro cents. That means the TWI-5 is unchanged at 65.8.
And we should note that Moody's credit rating agency has just reaffirmed New Zealand's Aaa credit rating, the only one of the three to give us a top billing.
Bitcoin is now at US$6,878 and up +11% 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 ».