Here's our summary of key economic events over the weekend that affect New Zealand, with news the virus spread may be easing off but the economic fallout is deepening.
There was a lot going on economically over the long weekend and we have covered much of it in our special weekend editions.
So now is a good time to summarise the really big items.
Firstly in China, new loans extended by Chinese banks surged in March, their aggregate financing hit a record high and their money supply grew at the fastest pace in three years, after a big pump of liquidity to support their economy. New bank lending climbed to NZ$670 bln in March, surging from NZ$215 bln in February.
Going the other way in the US, new jobless claims exploded again, adding +6.6 mln people last week to the prior week's +6.9 mln (itself revised higher). And don't forget the +3.3 mln in the week earlier than that. In these three weeks that is almost +17 mln people suddenly out of work on top of those that have had hours or pay cut but still retain their jobs.
And the US Fed has vastly expanded its backstop lending to companies that are now in dire straits, chiming in with a new US$2.3 tln program on top of the trillions previously announced. It's a move so big that essentially, the US Fed now controls the US bond market. And it is a move that has the Fed supporting companies with risky debt situations. The Fed finds itself completely unsupported by the fiscal authorities, applying monetary solutions to a fiscal problem.
South Korea is getting a wave of severe cutbacks, not because their virus situation is out of control - it isn't - but because demand has plummeted in its key export markets, especially the USA and Europe, for its industrial products. And although their virus situation seems under control, they are still going to the polls tomorrow in national elections.
Japan is ramping up its social distancing efforts again as signs grow of renewed spread. Economically, domestic Japan hasn't been hit hard, but export wise it will be.
Back in China, their commercial property sector is under increasing stress. The vacancy rate for Grade A office buildings in Beijing, Shanghai and Shenzhen rose to 14%, 21% and 25% respectively, at the end of March and involved sharp rises everywhere.
In Australia, the RBA has also pointed to commercial property as an ugly risk for banks. (see page 22.) They say it is not a killer risk for banks, but as they pull back from the commercial property sector, that sector is facing a very tough future as valuations dive and vacancies surge.
The New York equity markets are open today, and lower. The S&P500 is down -1.5% and falling. Yesterday, only Asian markets were open and Shanghai was -0.5% lower, Tokyo was -2.3% lower. Hong Kong was closed.
Worldwide, the latest compilation of Covid-19 data is here. The global tally is now 1,897,400 and up +70,000 this time yesterday which is a slower rising tide. Now, 30% of all cases globally are in the US and they are up +26,000 since Saturday to 568,100. This is a slower rate of increase. The level of US cases that have recovered is up to 7.5%. The UK now has more cases than China and three times the death level, in fact a death rate of 12.7%. Australia has now over 6300 cases, 4500 active, and while the rise in infection is slowing quite quickly now, deaths are not and now exceed 60.
Global deaths now exceed 118,000. Three mutations of the virus are now spreading.
There are now 1349 Covid-19 cases identified in New Zealand, with another +19 new cases yesterday and about the same as the +18 increase on Sunday. These are the lowest daily increases since March 22, three weeks ago. The number of clusters is up to 15 however. Five people have died here, all geriatric patients, while another four are in ICU and one in a critical condition. Fifteen people are in hospital. 40% of all New Zealand cases have now recovered.
The UST 10yr yield is holding at just on 0.75%. Their 2-10 curve is little-changed today at +50 bps. Their 1-5 curve is also still at +16 bps, and their 3m-10yr curve is marginally steeper at +56 bps. The Aussie Govt 10yr yield is now at 0.97% and down -2 bps overnight. The China Govt 10yr is at 2.56% and a rise of +2 bps overnight. The NZ Govt 10 yr yield is unchanged at 0.98%.
Gold is up strongly today, up US$32 to US$1,718/oz.
US oil prices are a little softer at just under US$23/bbl. The Brent benchmark has stayed low at just under US$32/bbl. The expected rise after the OPEC/Russia output cut deal hasn't happened. There still is no demand.
The Kiwi dollar will open the week higher at 61 USc. On the cross rates we are lower at 95.4 AUc and against the euro higher at 55.9 euro cents. That means the TWI-5 will start at 67.1 and its highest in a month.
Bitcoin is now at US$6,768 and a -4.9% fall from where we left it 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 ».