Here's our summary of key economic events overnight that affect New Zealand, with news of grim tales everywhere, and no rebound in oil prices. Bond markets are worried.
But first up today, there was another dairy auction overnight and it was a wobbly one. Overall prices were -4.2% lower in US dollar terms and -3.8% in New Zealand dollar terms. Most products took falls at these levels with WMP down -3.9% and SMP down -4.9%. This adds to a string of chunky falls since the beginning of February with only one auction in the past six able to hold the line. These falls are mounting so that since the start of 2020 overall prices are down -11% and year-on-year they are down -17%. The growing retreat won't be able to be ignored in the farm gate milk price.
Wall Street is sinking today, with the S&P500 down -2.8% so far. Overnight, European markets fell harder, down more than -3%. And yesterday, it was red ink all the way in Asian markets, Australia and New Zealand.
In the US and prior to the real bite of the pandemic, March data for American home sales dropped by the most in almost five years. They tumbled almost -9% from February, back to levels of a year ago and snuffing out their interim recovery. It will get worse of course because April was at a virtual standstill and both realtors and economists expect a further deterioration in housing market activity through the second quarter.
And thousands of small trucking companies that move the vast majority of the goods in American freight markets face a grim future with suddenly shrinking cash flows, limited reserves and uncertain access to credit. They mirror the prospects of most American SMEs as their vaunted bailout funds look like they have raided by large businesses first.
In China, their tax revenues fell -21% in February in the heart of their pandemic outbreak. And then they fell -26% in March when they were supposed to be recovering. Further, profits at their large SOE companies fell -60% in the first quarter of 2020. China has taken a severe economic hit. Despite that, and fanning scepticism of their official data, they say their jobless rate is only 3.7%.
Worldwide, the latest compilation of Covid-19 data is here. The global tally surpasses 2.5 mln, now at 2,531,800 and up +91,300 this time yesterday which is a rising tide. Now, 32% of all cases globally are in the US as caseloads rise faster elsewhere. The US caseload is up and they are up +38,000 since this time yesterday to 804,200 and also a faster rate of increase. Just on 9% of all US cases have recovered so far, and virtually unchanged. The disease is now spreading into the American heartland.
Australia has now over 6500 cases and little-changed over the past week, and their recovery rate has been unchanged for a week as well.
Global deaths now exceed 175,000 and this rise is slowing although it is clear that many countries report these in quite different ways.
There are now 1445 Covid-19 cases identified in New Zealand, with another +5 new cases yesterday and less than the prior day's +9 increase. The number of clusters is still at 16 and there are 569 people in those clusters and 349 have recovered. 4 of the five new cases are in two of these clusters. Thirteen people have died here now, one more than yesterday, all geriatric patients. There are now 12 people in hospital with the disease, with three in ICU. Our recovery rate is now up to 70% and rising.
In Australia, they are rolling out some very big guns to try and save the Virgin airline. But it doesn't look positive.
Also not positive is the outlook for their landlords, including residential landlords. A flood of properties on to residential markets from AirBNB is a key factor.
We should also note that Beijing is using the cover of the coronavirus emergency to arrest Hong Kong democracy activists, and pushing China's "basic law" over the top of the protections Hong Kong citizens currently enjoy. The plan seems to be to imprison them in a group more likely to contract the disease, and at a time group assembly to protest is unwise on a health basis.
The UST 10yr yield is falling, now down -7 bps to just under 0.57% and nearing its all-time spike lower on March 9. Their 2-10 curve is higher today at +47 bps as short rates take a beating. Their 1-5 curve is similar at +19 bps, and their 3m-10yr curve is now at +49 bps. The Aussie Govt 10yr yield is now at 0.82% and down -2 bps. The China Govt 10yr is unchanged at 2.59%. The NZ Govt 10 yr yield is down -1 bp at 0.91%.
Gold is lower today, down -US$15 to US$1,678/oz.
Oil prices have stayed very low, especially US crude prices. They are currently at just US$9/bbl and while that is a rise from yesterday's collapse, it is still at a level the industry can't survive at. Now international oil prices are falling too, and even faster, with the Brent benchmark down -US$8 to US$18/bbl and a -30% drop in one day. That's now at a level below almost every country's cost of production.
The Kiwi dollar will start today weaker. We are now at 59.7 USc and a full -1c lower than this time yesterday. On the cross rates we are -¼c lower at 94.9 AUc. Against the euro we are also almost -1c lower at 54.9 euro cents. That means the TWI-5 has slipped back to 66 and now below its rolling four week average.
Bitcoin has changed very little in the past 24 hours, now at US$6,880. 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 ».