Here's our summary of key economic events overnight that affect New Zealand, with news the global descent is getting steeper economically as the virus spread is widening.
First in the US, their Congressional Budget Office has issued new projections that show that without further action, the American federal budget deficit would be -$3.7 tln in fiscal year 2020, and federal debt held by the public would equal 101% of GDP by the end of the fiscal year. In 2019 the deficit was -$984 bln and the debt 82% of GDP. What they are reporting is a stunningly quick deterioration.
Separately, new data shows US durable goods orders fell more than expected in March. A -12% fall was expected but a -14.4 fall was reported. April will show a sharper decline of course.
Consumer sentiment as measured in the University of Michigan survey was very negative, and a small uptick last week was snuffed out in this week report.
The US domestic rig count has fallen again and by much more than expected. A -5% fall from its new low level was expected for the week, but it actually fell -12% to 465. There were 805 at the start of 2020 and 1083 at the start of 2019. Capacity is being extracted now, not oil. This latest decline is their worst on record.
In Canada, their government is to bail out commercial landlords via 'forgivable loans' provided they give at least 75% rent relief to tenants and promise not to evict them.
In Brazil, the country is facing a new political crisis and their financial markets are recoiling in the fallout.
China is approving new construction as fast as it can. But among the approvals are for 10 gigawatts of new coal-fired power generation capacity in this year’s first quarter, roughly equal to the amount approved for all of last year.
Last week we mentioned the imminent South Korean election, but overlooked the results. The public's perception their government is handling the coronavirus pandemic well has powered President Moon Jae-in's ruling Democratic Party to a landslide general election victory. Perhaps the central lesson for politicians, democratic ones at least, is that prioritising public health, even over economic interests can pay off at the ballot box. Authoritarian ones will need to stuff their ballot boxes harder.
The closely-watched IFO survey of German businesses managers was equally negative, and more so than the gloomy expectations.
The EU is to release its economic forecasts later today and these are also sure to be gloomy.
In Europe, leaders have unexpectedly agreed to a €1 tln collective rescue for Europe's free-falling economies as key data showed much larger declines than in the GFC. That comes after the US Congress agreed an almost US$½ tln addition to their support measures, taking them up to US$3 tln. And Japan has rushed through additions taking their support package to US$1.1 tln.
There are now 1456 Covid-19 cases identified in New Zealand, with 5 new cases yesterday and more than the prior day's +3 increase (net zero). Seventeen people have died, an increase of one, all geriatric patients. There are now 8 people in hospital with the disease, with one in ICU. Our recovery rate is now up over 75% and rising.
We need to fess up to using out-of-date official data for Australia. What we had reported for infection and death data has been correct, but the recovery data was incomplete. We were using the JHU source (below) but there is a more direct official source. That shows their official recovery rate at just under 76% today. (H/T BdB). Worldwide, the latest compilation of Covid-19 data is here. The global tally is now 2,780,094 and up +73,000 this time yesterday which is an unchanged rate from yesterday.
Now, just under 32% of all cases globally are in the US, which is unchanged in a day, and they are up +17,500 since this time yesterday to 886,200. This is a slower rate of increase. US deaths now exceed 50,000. Global deaths are about to exceed 200,000. Sweden (everyone's favoured control) is now reporting 17,600 cases and rising 1000/day with a total now of 2152 deaths in a population of 10 mln. Neighbours Norway and Denmark are reporting deaths of 199 and 403 for populations of 5.4 mln and 5.8 mln respectively. Finland is reporting 177 deaths in a population of 5.5 mln.
China and Singapore are battling renewed virus outbreaks.
The New York state Governor has declared that the virus strain hitting his state hard originated in Europe, not China. It is a claim based on testing and science and throws cold water on White House claims.
After a faltering start, the S&P500's has risen steadily to be up +1.4% in late trade. But even with those gains, it will end the week -1.3% lower than at the end of last week. Overnight, EU markets booked losses of about -1.5% and Frankfurt ended the week -2.7% lower, London was -0.6% lower for the week. Yesterday, Shanghai closed down -1.1%, Hong Kong down -0.6% and Tokyo down -0.9%. The ASX200 was up +0.5% on the day but for the week was down a chunky -4.5%. The NZX50 Capital Index closed -3.3% lower for the week.
The UST 10yr yield has slipped -1 bps to just under 0.60%. Their 2-10 curve is unchanged at +38 bps. Their 1-5 curve is also unchanged at +19 bps, and their 3m-10yr curve is narrower at just under +50 bps. The Aussie Govt 10yr yield is now at 0.89% and up +2 bps from this time yesterday. The China Govt 10yr is down -2 bps at 2.51%. The NZ Govt 10 yr yield is down -7 bps and now at 0.83%.
The VIX volatility measure has fallen this week after spiking mid-week. The Fear & Greed index we follow has stayed on the 'fear' side of neutral all week.
Gold is virtually unchanged at US$1,724/oz.
Oil prices have risen marginally today. They are currently at just over US$17/bbl but still below the level of a week ago. International oil prices are firmish too, with the Brent benchmark just under US$22/bbl.
The Kiwi dollar has changed little overnight as well. We are now back at 60.1 USc and a very similar level to a week ago. On the cross rates it's a different story; we are at 94.1 AUc and a -¾c retreat in a week. Against the euro we are also similar to our week-ago level at 55.6 euro cents. That means the TWI-5 is at 66.3 and just marginally softer than where we were at the wen of last week, and bang-on our four-week average.
Bitcoin is little-changed from this time yesterday at US$7,522 but that is a +6.7% rise for the week. 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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