Here's our summary of key economic events over the weekend that affect New Zealand, with news the virus seems to be peaking in the West - except perhaps in the US.
In the US, their respected Congressional Budget Office has updated their forecasts for the US economy, expecting a -7% fall in GDP in 2020 and a rise to "over 10%" in their jobless rate.
The US President declared it was up to State governors to decide when to reopen; then he took to Twitter to encourage protests in States that want to extend the lockdown for public health reasons, and goading people to break lockdown protocols. Essentially that is like encouraging some people to pee in one end of a community swimming pool ("they seem like good people to me") and claim it won't affect most people swimming responsibly at the other end. And the US is blaming everyone else but itself for having the worst public health response to the pandemic, fanning xenophobia.
The Canadians have extended their border closure with the US.
Meanwhile, Boeing said it will reopen its airplane manufacturing plants in Washington state this week, bringing 27,000 employees back to work under new safety protocols. This is despite continuing cancellations for its 737MAX airplane.
And the Fed has established a new $750 bln bond-buying operation for issues from investment grade American non-bank corporates.
Similarly, the Chinese have tightened their border closure with Russia, also fearing reinfection and undoing of the gains they have made.
In China, their Q1 GDP fell -6.8% from the same quarter a year ago. That was worse than the -6.0% markets were expecting. And it is a huge reversal of the +6.0% rise in Q4-2019. It is the first solid indication of the sort of shift other countries can expect when they report their Q2-2020 economic 'growth' data. China's retail sales fell by -16% in March, less than the -21% fall in February but online food sales actually rose +10%. Their electricity production was down -4.6% in March and less than the -8% decline in February. Industrial production crashed almost -14% in February but actually bounced back to be just -1% lower in March. While that data may seem dubious, it is probably dangerous to think all of China suffered as Hubei Province did. Hubei only makes up about 5% of China's overall GDP.
China is expected it will release new major stimulus to right their economic ship. And it turns out the Chinese don't really fear trade trouble with the US - it is trade trouble with Japan they really fear.
And China's real estate market made a strongish comeback in March, down only -15% from the same month a year ago after being locked-down in February.
In the last few days, Baltic Dry index has started to rise noticeably off its depressed base. It isn't back to anything like its September 2019 levels but it is approaching its 2020 highs. Iron ore and steel-making coal prices are staying elevated.
Worldwide, the latest compilation of Covid-19 data is here. The global tally is now 2,374,100 and up +159,000 this time Saturday which is a rising tide. Now, more than 32% of all cases globally are in the US and they are up +59,000 since this time yesterday to 742,400 and up +40% in one week. This is a similar rate of increase. Just on 9% of all US cases have recovered so far, and virtually unchanged. The US is getting the diseas spread into its heartland. Turkey now has more cases than China as cases explode there. Australia has now over 6500 cases and little-changed over the past week, but they are claiming a remarkable jump in their recovery rate to 63%. Two days ago it was only 36%. There is something very fishy about Aussie coronavirus data, but then again, most countries are struggling with reliable data.
Global deaths now exceed 163,000 and up by more than +50% in a week. The UK death rate is up to 13.3%, and only Belgium (14.8%) has a higher rate anywhere.
The 'control group' experiment that is Sweden has a death toll of 10.7% of known cases in a country of 10 mln people (although they are not diligent about testing), and a recovery rate of just 3.8%.
There are now 1409 Covid-19 cases identified in New Zealand, another +9 new cases yesterday which was little-changed the +8 increase the day before. The number of clusters is still at 16. Most of our clusters involving "overseas exposure" involve travel to and from the US. Twelve people have died here now, up 1 from yesterday. There are now 18 people in hospital with the disease, with three in ICU. Our recovery rate is now up to 64% and rising.
In Australia, their largest bank says (in locked research) they expect house prices in Sydney and Melbourne to fall at least -10% in the next six months as virus-triggered unemployment cuts into demand.
And Canberra public policy moves seem to be following official American ones, mirroring Murdoch and FoxNews narratives. It will be an especially dangerous time politically for New Zealand as they work through New Zealand proxies here. There are already signs the New Zealand coalition government is fraying with NZ First taking up the Murdoch talking points.
The UST 10yr yield is holding at just on 0.64%. Their 2-10 curve is little-changed today at +44 bps. Their 1-5 curve is similar at +19 bps, and their 3m-10yr curve is also unchanged at +51 bps. The Aussie Govt 10yr yield is now at 0.85% and also unchanged. The China Govt 10yr is still at 2.56%. The NZ Govt 10 yr yield is also unchanged at 0.96%.
Gold fell hard in its final session last week, giving up all its recent gains and down another -US$22 to US$1,687/oz.
US oil prices have fallen sharply to just over US$18/bbl, down -US$2/bbl. The Brent benchmark has followed it down to be at just on US$28/bbl. These levels represent 20 year lows in nominal terms and 70+ years in inflation-adjusted terms. As a consequence, the North American rig count has fallen very sharply, down to levels we last saw in 2016. And this is probably only the start of a severe pullback.
The Kiwi dollar will open little-changed at 60.3 USc. On the cross rates we are soft at 94.7 AUc. Against the euro we are also soft at 55.4 euro cents. That means the TWI-5 is at 66.4.
Bitcoin is now at US$7,163 and up +1.6% from where we left it Saturday. 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 ».
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