Here's our summary of key economic events overnight that affect New Zealand, with news labour markets keep on contracting, especially in the US.
3.8 mln more Americans filed claims for unemployment benefits last week, suggesting that layoffs were spreading to industries that were not initially directly impacted by business closures and disruptions related to the coronavirus. Last week's tally was more than was expected (3.5 mln) and brings the total who have sought jobless benefits to more than 30 mln. Officially, the insured unemployment rate is 12.4%, but 30 mln of a workforce of 156 mln is 19% extra and they started with more than 4% unemployed, so the total has to be at least 24% now.
It will be no surprise then to learn that in March, personal spending fell sharply, down -7.5% but before the pandemic grip really took hold. The April data will undoubtedly be much more ugly, but all the same, a -7.5% drop is one of the largest month-on-month falls ever. The decreases are just massive, down -US$830 bln in spending for services and down -US$105 bln in spending for goods. Expect the April drop to be very much larger and exceed -US$1 tln. These are world-scale shocks that will reverberate globally.
The PMI for April in the heartland factory region of Chicago has come in lower than expected and of course very much lower than for March. But at least this one hasn't plunged below the GFC levels quite yet.
The US Fed expanded its Main Street lending program to be sure it captured larger firms that were still not big enough to tap public capital markets. And more massive US fiscal stimulus is on the drawing-board.
It is looking increasingly like China isn't going to pull the world up in the absence of the US. After broadly stabilising in March, operating conditions across China's manufacturing sector weakened slightly in April although they aren't contracting. Very weak international orders are holding back any expansion. In fact, export orders plunged after the brief March bounce.
Reinforcing that, a new American Chamber of Commerce poll shows only 42% of China-based US businesses have returned to normal operations as of mid-April, but that is up from 22% a month earlier. But domestic activity is returning to important parts of China.
Not so in Singapore however, their business confidence index fell from -12 in March to -56 in April.
The ECB has decided to effectively pay banks to lend money after their economy shrank the most in decades. But the worst is yet to come, warned Christine Lagarde.
The latest compilation of Covid-19 data is here. The global tally is now 3,249,000 and up +82,000 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 +27,000 since this time yesterday to 1,054,300. This is the same rate of increase. US deaths are now almost 62,000. Global deaths are about to exceed 231,000. The death rate in the UK is now almost 16% and they seem to have one of the worst-managed pandemic responses of any developed country.
In Australia, there are now 6753 cases (+7), 91 deaths (+2) and a stable recovery rate of just under 85%. 89 people are in hospital there (-4) with 34 in ICU (-4).
There are 1476 Covid-19 cases identified in New Zealand, with +2 new cases yesterday, the same increase as the day before. Nineteen people have died, unchanged, almost all geriatric patients. There are seven people in hospital with the disease (+1), but none are in ICU. Our recovery rate is now up over 84% and rising.
In equity markets, the S&P500 is down -1.3% in afternoon trading today. That comes after a very sharp reversal in Europe with most markets down -2.5% overnight. Disappointment that there wasn't more ECB largesse is behind the retreat. Yesterday, all Asian markets were up firmly, as was the ASX200 but the NZX50 fell again.
The UST 10yr yield is firm at just under 0.63%. 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 0.88% and down -5 bps since this time yesterday. The China Govt 10yr is marginally firmer at 2.52%. The NZ Govt 10 yr yield has weakened sharply again, down -6 bps to 0.73% continuing the recent selloff.
Gold is down sharply today, down another -US$19 to US$1,686/oz.
Oil prices are higher again today. In the US, they are currently at just under US$17/bbl, a +US$2 gain but still well below the cost of production for most drillers. International oil prices are up a similar amount to just on US$25/bbl.
The Kiwi dollar has firmed again overnight against the greenback and is now at 61.4 USc. On the cross rates we are back up to 94.2 AUc. Against the euro we are still firm at 56.1 euro cents. That means the TWI-5 is now at 67.1.
The 'halving hype' rise we got yesterday in the price of bitcoin is being unwound now with a -5.1% fall to US$8,444. 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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