Here's our summary of key economic events overnight that affect New Zealand, with news the IMF is painting a bleak global economic outlook.
But first, already 4% of American home owners aren't making their mortgage payments, a proportion that is sure to grow fast. It was only 0.25% in early March. And a Trump appointee is blocking aid to home owners who are in trouble. We are looking at a banking crash as the Administration steers this sector into a wall.
Customs data in China for March has come in with some surprises, mostly positive. Exports fell -6.6% but that was much less than expected and a much smaller fall than in January and February. And imports also fell less than expected, down just -0.9%. In fact, imports from New Zealand surged in March compared with the prior two months. This data may be encouraging, but with China's export customers not buying, their overall situation will probably worsen from here.
Still, China's infrastructure stimulus spending is ramping up fast. A record number of excavators were sold nationwide in March, far outpacing the growth in previous stimulus periods. The momentum seems strong as shovel ready projects roll out fast. And iron ore prices have turned higher again.
Meanwhile, Australian business confidence has plunged to its lowest level ever, even worse than the 2008 GFC and their early 1990s recession, as Australia braces for a recession of "unprecedented speed and magnitude". New orders have collapsed. That's according to the March update of the NAB business confidence survey. Imagine what their April survey will show.
Meanwhile, Australia’s Treasury forecasts unemployment will almost double in the June quarter to 10% and would’ve gone to 15% if not for fiscal stimulus measures they have adopted.
Worldwide, the latest compilation of Covid-19 data is here. The global tally is now 1,970,200 and up +73,000 this time yesterday which is a slower rising tide. Now, 30% of all cases globally are in the US and they are up +16,000 since Saturday to 584,100. This is a slower rate of increase. The level of US cases that have recovered is unchanged at 7.5%. The number of UK cases is about to go through 100,000, putting them in league with the US, Spain, Italy, France and Germany. Germany is unique however with a very low death rate. Australia has now over 6500 cases, 4300 active, and the rise in infection is slowing quite quickly now, and deaths have stabilised at 61. Australia's recovery rate is now 34%.
Global deaths now exceed 125,000. The WHO is saying the pandemic has not yet peaked.
There are now 1366 Covid-19 cases identified in New Zealand, with another +17 new cases yesterday and lower than the +19 increase the day before. That is the lowest daily increase in more than three weeks, since March 22. The number of clusters is up to 15. Five people have died here now. There are now 15 people in hospital with the disease today, with three in ICU. Far more people recovered today (82) than were infected and our recovery rate is now up to 46% and rising fast.
Eight of the 10 safest places to ride out the coronavirus pandemic are in the Asia-Pacific region, according to new research released overnight. New Zealand is now ranked the sixth safest place, but that is a fall from third one week ago. Topping this list is Israel and Germany. Australia is now ranked ahead of us.
Equities are rising on the basis that the virus spread may be slowing. The S&P500 is up +3% so far today.
But the IMF is saying the economic effects of closed borders will linger much longer than investors expect, and the world will suffer a steep recession with the global economy falling -3% in 2020 with the only region managing any growth in 2020 to be "emerging and developing Asia" with India (+1.9%) and China (+1.0%) the key players. They see a massive -7.2% contraction in New Zealand this year, and worse than for the USA (-5.9%), Australia (-6.7%) and Japan (-5.2%). Essentially the IMF is saying New Zealand will be one of the worst hit nations economically even if we escape most of the direct virus impacts. They see 9.2% unemployment here this year and still 6.8% jobless next year. But the economic bounceback will come with economic growth of +5.9% in 2021 over 2020 - but still leaving us in the hole, lower by -1.3% going into 2022. It is going to be a long slog.
The UST 10yr yield is holding at just on 0.74%. Their 2-10 curve is little-changed today at +52 bps. Their 1-5 curve is slightly more positive at +19 bps, and their 3m-10yr curve is marginally steeper at +58 bps. The Aussie Govt 10yr yield is now at 0.94% and down -3 bps overnight. The China Govt 10yr is at 2.56% and unchanged overnight. The NZ Govt 10 yr yield is also virtually unchanged at 0.97%.
Gold is up strongly again today, up another US$19 to US$1,737/oz.
US oil prices are a lot softer today at just over US$20.50/bbl, a drop of -US$2.50. The Brent benchmark has dropped hard as well to at just under US$29.50/bbl. The OPEC/Russia output cut hasn't had any impact at all. There still is no demand.
The Kiwi dollar will open today marginally softer at 60.9 USc. On the cross rates we are much lower at 94.7 AUc and a drop of more than -¾c, while against the euro we are down almost -½c at 55.5 euro cents. That means the TWI-5 will start today at 66.7.
Bitcoin is now at US$6.927 and +2.3% up from 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 ».