Here's our summary of key economic events overnight that affect New Zealand, with news of more monumental economic changes.
The first estimate of US Q1-2020 GDP is out and it makes disturbing reading. In real terms, their economy shrank at an annual -4.8% rate in the period, obviously most of that caused by a very sharp retreat in March. But in fact, we all know that the real impact didn't occur until April so this is just a precursor to a much grimmer Q2 result.
Some perspective is required. 'Real' changes are one thing, but we live in a nominal world, and that Q1 fall was -US$191 bln, taking their economy size to US$21.5 tln. A -US$191 bln drop in 3 months is a global-scale shock, and equivalent to wiping out New Zealand's annual economic activity. Annualised, it is also equivalent to the combined GDP of their twelve smallest states, including Alaska, Delaware, West Virginia and a whole bunch of Plains (6) and North East (3) states. It is also the equivalent of wiping out almost all of Pennsylvania, the sixth largest state by GDP. And given that Q2 will be worse, the economic cut will be very deep indeed. Some analysts expect Q2-2020 to fall as much as -30%.
Many eyes are now on May rent payments which are almost due. It is unlikely to be a happy time for most landlords.
The US Fed's meeting this week has just wrapped up and apart for restating their commitment to do whatever it takes, they announced no new policy initiatives.
American mortgage market activity is falling away, and that is despite record low American mortgage rates - although still quite not as low as in New Zealand. Their real estate sales activity was more than -16% lower in March than the same month a year ago, but in good realtor speak, they are calling the dive 'temporary'. But it is likely to get very much worse in April.
Very large job losses were announced overnight with Boeing (-16,000) and British Airways (-12,000) leading the way. GE also announced major cutbacks (-2600) in its airplane engine division.
Worldwide, passenger air travel fell almost -50% in March. It will be lower in April.
Major job losses in Japan and Singapore show the global extent of the cutbacks, with -7% of Asia-Pacific's working hours wiped out in April.
In South Korea, they reported surprisingly robust industrial production growth in March (up +7.1% year on year) but the same was not true in Thailand where their equivalent change was a crash of -11%.
In Australia, regulator ASIC has told banks that when assessing new customers, they should not assume income levels will return to pre-coronavirus levels.
The latest compilation of Covid-19 data is here. The global tally is now 3,167,400 and up +84,000 from this time yesterday which is an unchanged rising rate.
Now, just under 33% of all cases globally are in the US, which is up +25,000 since this time yesterday to 1,027,300. This is a slower rate of increase. US deaths are now almost 60,000. Global deaths are about to exceed 225,000. Brazil is another country getting a very fast rise in cases, up almost +40% in the past seven days. Officially, more than 5000 people have died in Brazil so far. Both numbers are likely to vastly understate the size of their crisis. On the official basis, Brazil is about to push past China's infection level.
In Australia, there are now 6746 cases (+15), 89 deaths (+5) and a stable recovery rate of 84% (unchanged). 93 people are in hospital there (-16) with 38 in ICU (-5).
There are 1474 Covid-19 cases identified in New Zealand, with +2 new cases yesterday and more than the prior day's +3 increase. Nineteen people have died, unchanged, all geriatric patients. There are now just 6 people in hospital with the disease, with none in ICU. Our recovery rate is now up over 83% and rising.
In equity markets, the S&P500 is up +3% in afternoon trading today. That comes after the enthusiastic rally in Europe carried on with most markets up another +2.5% overnight. That is probably on the expectation of massive new ECB stimulus coming soon. Yesterday, key Asian markets were lackluster, and the ASX200 was up +1.5% while the NZX50 fell -0.9%.
The UST 10yr yield is unchanged at 0.61%. Their 2-10 curve is marginally steeper at +43 bps. Their 1-5 curve is unchanged at +20 bps, and their 3m-10yr curve is also marginally steeper at just under +55 bps. The Aussie Govt 10yr yield is now at 0.93% and little-changed since this time yesterday. The China Govt 10yr is marginally lower at 2.51%. The NZ Govt 10 yr yield has recovered +5 bps to 0.79% after yesterday's sharp fall. But it remains well below the Aussie equivalent.
Gold is down another -US$4 to US$1,705/oz.
Oil prices are slightly higher today. They are currently at just over US$15/bbl, a +US$2 gain but still well below the cost of production for almost all firms. International oil prices are up a similar amount to just over US$22/bbl.
The Kiwi dollar has firmed again overnight against the greenback and is now at 61.1 USc. On the cross rates we are holding at 93.5 AUc. Against the euro we are still firm at 56.3 euro cents. That means the TWI-5 is now at 67, and a six week high.
There has been a spectacular rise in the price of bitcoin overnight and it is now up to US$8,901, a leap of +US$1,150 or +15% since this time yesterday. "Halving hype' is behind the jump. 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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