Here's our summary of key economic events overnight that affect New Zealand, with news it's all downhill on the factory floor.
US factory orders fell more in March than previously indicated, down almost -15% and that was before the widespread lockdowns started.
Part of this pre-lockdown weakness is from the Boeing woes, and today GE's aviation division said it will cut a quarter of its staff or up to -13,000 people worldwide. They won't be the only GE manufacturing cuts. Another very large company with lockdown indigestion is Disney, especially its theme parks.
The American troubles are mirrored worldwide. The global factory PMIs show output and new orders are falling at near-record rates, new export intakes have fallen the most on record, and manufacturing confidence is at its lowest ebb in the history of this survey.
China is the least affected so far after taking its medicine early. Europe is more affected than even the US with some grim country reports there. The most affected are emerging economies like Russia, South Asia, and Indonesia.
Australia is not immune. Not only has factory activity dived, job ads there fell more that -50% in April from March and are down -62% year-on-year. This is a fall far greater than during the GFC.
Later today, the RBA will release its monthly rate review decision and no change is expected in the rate. But there will be considerable interest in their non-rate actions.
In Hong Kong, they reported an almost -9% contraction in their economy in Q1-2020. And their economy is not being 'helped' by the vanishing of mainland buyers in their housing markets.
In China, they are claiming trade by ship is losing out to trade by rail. The number of overland trains from China to Europe rose by more than +50% in April from the same month a year ago, and this is despite the sharp cutback in overall trade. But it is not all it seems. That rail trade is equivalent to just four large container ships, and not anything like a game changer.
The latest compilation of Covid-19 data is here. The global tally is now 3,476,000 and up +77,000 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 +28,000 since this time yesterday to 1,170,700. This is a marginally slower rate of increase. US deaths are now more than 68,000 and the growth is slowing but their recovery rate is still only 15%. Global deaths are about to exceed 250,000. Another country we haven't mentioned before that is in trouble is Canada, and they will be the next to pass China's infection rate. Caseloads are rising there and now exceed 61,000. Their recovery rate is only 44% and 3900 people have died there so far and not that much less than in China.
In Australia, there are now 6825 cases (+24 since yesterday), 95 deaths (unchanged) and a stable recovery rate of just under 86%. 70 people are in hospital there (-5) with 28 in ICU (unchanged). The Aussies are having issues with cases at meat processing plants (+15).
There are still only 1487 Covid-19 cases identified in New Zealand, with zero net new cases, and less than yesterday (+2 on Sunday). Twenty people have now died (unchanged), almost all geriatric patients. There are four people in hospital with the disease (-4), but none are in ICU. Our recovery rate is now up over 86% and stable.
And one financial metric we will be following is the rise in borrowing by businesses. Early evidence is that credit lines are being drawn down fast as businesses struggle to survive the cashflow consequences of the downturn. There are extreme economic and financial system risks building here if business doesn't restart and recover soon.
And we should note that Wall Street has opened the week flat, unsure of the next direction. But Europe has no doubts. Overnight their equity markets tumbled hard, down about -4% in most markets. Yesterday Hong Kong (-4.2%) and Tokyo (-0.8) closed lower whereas there were gains for the ASX200 and the NZX50.
The UST 10yr yield has firmed in opening trade in New York, now just over 0.64%. Their 2-10 curve is marginally steeper at +46 bps. Their 1-5 curve is also marginally steeper at +19 bps, and their 3m-10yr curve continues the trend at +54 bps. The Aussie Govt 10yr yield is down -2 bps at 0.84%. The China Govt 10yr is unchanged at 2.52% because they are still on a long weekend public holiday. But the NZ Govt 10 yr yield is down further, down another -4 bps to 0.58% and has opened a huge gap with both the Aussie and US equivalents. New Zealand swap rates were lower and flatter yesterday too.
Gold is up marginally again today, this time by +US$4/oz to US$1,707/oz. And this is despite a virtual shutdown in one of the world's largest gold markets, India.
Oil prices are up marginally again today. In the US, they are currently at just on US$20/bbl. International oil prices are just under US$27/bbl.
The Kiwi dollar fell -¼c yesterday but held overnight, and is now at 60.3 USc. On the cross rates we fell -½c to be at 94 AUc. Against the euro we are up strongly however to 55.3 euro cents. That means the TWI-5 is largely holding at 66.3.
Bitcoin is treading water today, virtually unchanged at US$8,815. 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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