Here's our summary of key economic events overnight that affect New Zealand, with news jobs are being lost at an unimaginable pace and consumer demand is shrinking with it.
We get the crucial American non-farm payrolls report on Saturday (NZT) and they are sure to be just awful with a 4% unemployment rate suddenly approaching 20% if you count the sharp moves of many to exit their labour market. Today the pre-cursor ADP Employment Report is out and that records a national payroll drop in April of more than 20 mln people. Every sector took huge hits, including ironically the health sector which shed -1 mln jobs alone. Presumably, that's because it is largely a private sector and the pandemic is a public health issue and woefully under-resourced. Manufacturing lost -4.2 mln jobs. The hospitality sector lost -8.6 mln jobs. Job losses of this scale are unprecedented. The total number of job losses for the month of April alone was more than double the total jobs lost during the whole GFC. All up, their service sector lost more than -16 mln jobs.
And this is reflected in the service sector PMIs for April, which fell to an index level of under 27 in the Markit survey, an all-time record low.
There is a growing drive to re-open the US economy "to save jobs" despite the public health risks.
One American industry hit hard is trucking - the ADP Report says 3.4 mln jobs were lost in the wider distribution sector in April alone - and orders for new trucks crashed in April fell to just 4000 and the lowest monthly level in 25 years. In airfreight, the sudden grounding of the passenger fleet is seeing airfreight rates rise very sharply, more than quadrupling in some key markets.
While US diplomacy shifts to blame mode, China seems to be successfully reopening its economy boosted by internal tourism in its recent May Day holiday period. Car demand seems to be up, helping factories recover some momentum. (One thing driving Chinese car demand is the wish to not be in public transport crushes.)
Meanwhile, news reports suggest White House officials have already considered cancelling all or part of the US$1.1 tln debt owed to China in response to the coronavirus outbreak. This has had an immediate effect on US interest rates and it seems the US will now have to pay more to borrow - a bit of an own goal here by the White House. Every basis point rise in interest rates costs the Federal deficit another US$¼ bln per year, and these rates rose +6 bps today alone. Many other large foreign creditor/funders of the US deficit will be reassessing their position now.
The EU says it is in a "deep and uneven recession" with southern countries suffering harder than northern members. Overall retail trade has crashed, also in an unprecedented way. (It is worth clicking on that retail link to get the scale of the retreat.)
The latest compilation of Covid-19 data is here. The global tally is now 3,711,400 and up +80,000 from this time yesterday which has settled back after yesterday's jump.
Now, just under 33% of all cases globally are in the US, which is up +18,000 since this time yesterday to 1,211,100. This is a slightly slower rate of increase. US deaths are now more than 72,000 and they aren't really getting on top of the pandemic. Global deaths now exceed 260,000. The infection accelerations in Russia, Brazil and India are looking very grim indeed.
In Australia, there are now 6876 cases (+26 since yesterday), 97 deaths (+1) and a higher recovery rate of just on 87%. 62 people are in hospital there (-4) with 27 in ICU (unchanged).
There are 1488 Covid-19 cases identified in New Zealand, with two new cases yesterday, up from zero the previous day. One probable and one confirmed case were reported. Twenty-one people have died (+1), almost all geriatric patients. There are just two people left in hospital with the disease (-2), and none are in ICU. Our recovery rate is now up over 88% and still rising.
In Australia, a new study shows that they have taken a -AU$100 bln hit to their economy from the pandemic, a combination of job losses, pay cuts, reduced hours and share market falls. And it is the dollar cost of the share market falls that have been the largest so far, hitting the well-off disproportionately in dollar terms.
Wall Street is flat today, digesting a string of poor earnings releases. Overnight, EU markets fell by about -1%. Shanghai returned to trading yesterday with a +0.6% gain, Hong Kong with a +1.1% rise. Yesterday the ASX200 fell and the NZX50 rose.
The UST 10yr yield is rising in opening trade in New York, now just over 0.71% and a +6 bps gain. But it is only a rise at the long end. Their 2-10 curve is up now at +54 bps. Their 1-5 curve is also steeper at +22 bps, and their 3m-10yr curve is up at +63 bps. The Aussie Govt 10yr yield is up +9 bps at 0.95%. The China Govt 10yr is up +3 bps at 2.55%. And the NZ Govt 10 yr yield is following the trend, up +9 bps to 0.68%.
Gold is sharply lower today, down -US$22 to US$1,685/oz.
Oil prices are lower today. In the US, they are currently at just on US$23/bbl and a fall of -US$1.50. International oil prices are just on US$29/bbl. Although US crude oil stocks didn't expand as much as expected last week, downstream product stocks rose very sharply.
The Kiwi dollar is -¼c softer overnight, and is now at 60.2 USc. On the cross rates we are also lower at 93.8 AUc. Against the euro we are a little softer at 55.7 euro cents. These dips mean the TWI-5 is down to 66.3.
Bitcoin is +5.2% higher today, now up to US$9,272, and in New Zealand dollars it is above $15,000 for the first time since February. 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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